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years changed me from being the smart kid from New Rochelle to someone who could really understand how to take risks in business and be successful a good amount of the time. Golub is quick to add, I will also tell you that Ive lost some money along the way and that was a harrowing experience. But one of the things that my time at Allen & Company taught me was that you can lose money on a deal and the world doesnt come to an end that was an interesting lesson to learn.
partners were business super heroes and their support was inspiring and terrifying at the same time. By all accounts, the new firms first fund did well. Still, he maintains, the deals were too small. There was no proportionality between the hours of aggravation and the dollars of profits for the general partners. In spite of it all, from 1994 to 2000, we established a great track record. We learned a lot about ourselves during that time a lot about our strengths and weaknesses. By 2000, what started as Lawrence with a helper doing transactions grew to eight to ten people and a fund that raised a couple of hundred million dollars.
Its not about how much volume did we originate or how much fee income we earned, its about the distributions we made and what our credit losses have been. That way we all get a piece of what the income is going to be next year and the years that follow. not only do we eat our own cooking, but we keep it in the freezer and have it again and again
Its the first BDC that gives public shareholders the same kinds of opportunities that sophisticated private institutional investors get in private funds. I think its great and one of our biggest accomplishments and while its still small it represents less than 10% of our assets its going to be an important vehicle for growth for us.
Secondly, our borrowings are set up to be very long term, and they are practically bulletproof whereas subprime credit facilities are set up at a very low default rate. So, when the default rate goes up a point or two, everyone starts getting into trouble. And third, the way we compensate our people is very long-term focused. Our people get bonuses and they include a look back at the credit performance of their deals. But we also offer long-term equity incentives. Every senior person here has hard dollars invested in our funds. Others here get equity grants in the funds and its a big part of what they earn. As a result, everyone here cares, and when we do our internal distribution of quarterly performance, our people care more than our outside limited partners do. If the proof is in the pudding, then for Golub, the puddings main ingredients are the firms great track record for low credit losses and its ability to keep borrowing costs down. By keeping our credit losses down, we have a lower cost of capital. So, when we like a deal, were able to be very competitive. If you add our underwriting and investment strategy to that essentially being a buy and hold investor we focus on loans where the borrower will be able to pay us back. The buy and hold approach is critical here. He emphasizes, Its not about how much volume did we originate or how much fee income we earned, its about the distributions we made and what our credit losses have been. That way we all get a piece of what the income is going to be next year and the years that follow. Not only do we eat our own cooking, but we keep it in the freezer and have it again and again year after year. And if it doesnt taste good, were all going to remember that.
And the strategy has more than paid off. During the darkest days of the most recent recession, Golub Capital has managed to maintain a markedly sunnier disposition than most of its competitors. When asked why, Golub notes. I havent thought about it in this way before, but if you consider what went wrong in the subprime residential mortgage industry from top to bottom and from investor to originator to regulator to borrower, weve succeeded because we approached everything by doing the opposite. That strategy, Golub admits, was not a conscious one. He says, I wish I could tell you that we were smart enough to figure out how dumb the subprime market was, but I cant. I can tell you that two of our alumni Jamie Mai and Charlie Ledley made a ton of money on it and were profiled in Michael Lewis book, The Big Short. We were focused on our core philosophy designing structures that make for long-term, win-win partnerships. Winning is part of our culture.