As Yale did its due diligence, it found that Steyer had all the qualities that the endowment could hope for. This guy was not running a hedge fund because he craved luxury: You just had to look at his office to see that. This guy shared Swensen’s passion for pure compensation incentives: He insisted that Farallon employees keep their liquid savings in the fund so that they would feel the pain if they lost money.13 Steyer also embraced the convention of a “high-water mark,” meaning that if his fund was down he would take no further fees until he earned the money back for his investors.
