I appreciate the opportunity to be here today, to help honor and celebrate the phenomenal contribution UTIMCO has made to our state over the last 20 years.

I want to congratulate, and thank, Bruce and his team, as well as all the investment partners here with us today. 

I would be remiss not to also recognize all the UTIMCO Board Members, past and present, who are with us today – whose vision and leadership have been instrumental.

It’s fair to say that most Texans have never heard – and likely never will hear – of UTIMCO. 

They have no idea of the role you have played, far behind the scenes, as

• Millions of students built bright futures;
• Researchers made breakthroughs on everything under the sun;
• Diseases were cured, lives were saved.

But rest assured, your role in supporting everything we do at the University of Texas System is well understood and deeply appreciated – by me, by the Board of Regents, and by everyone who understands how higher education and health care are funded in this state.

If you think about revenue sources we rely on – tuition, doctor’s fees, state appropriations, research grants, and so on – we are under continuous pressure across the board.

The importance of the endowments you manage cannot be overstated.  As Bruce says, the investment returns UTIMCO generates are the high octane fuel additive that makes so much of what we do possible.

So again, just let me emphasize that while your good work is too often unheralded, it is never unappreciated.

I confess that, with so much investing acumen in the room, I feel a bit out of my depth.  The smartest financial decision I ever made was marrying an accountant.

I did read in the Wall Street Journal last week that 2016 – at least so far – has been the “Year of the Pig,” since of the 118 markets the Journal tracks, lean hog markets have performed the best, surging 17% since the start of the year.

So let me see a show of hands … who called the Year of the Pig?

I hope somebody here did, but the very fact that there are 118 different markets to keep track of underscores the complexity of your challenge. 

And it warms my heart, looking at the agenda for today and tomorrow, to see multiple experts on, among other things, credit and equity markets, venture capital, private equity, health care, real estate, and natural resources – which, for the endowments’ sake, I am hoping includes lean hog futures.

It warms my heart because it’s clear that Bruce and his team are bringing not just the best, but also the greatest variety of expertise to bear on the challenge of investing in these complex – sometimes verging on chaotic – times.

It tells me that the success story that is the last 20 years at UTIMCO – which I fully expect will go on for the next 20 years – is, like the vast majority of success stories, a story of collaboration.

A few weeks ago, I presented my vision for the UT System to our Board of Regents.  Included in that presentation were eight of what we call “Quantum Leaps” – initiatives where we see a real opportunity to make a huge difference for Texas and indeed the world.

The Quantum Leaps touch everything from brain health to national security.  And if there is one theme holding them together it is that for any of them to succeed, we must – to a degree never before imagined – engage and collaborate with each other, and with the world at large.

Nothing is better at solving a difficult problem than collaboration.  That’s something I learned the hard way fighting during my first career.

In the years following 9/11, the enemy we faced in Iraq, Afghanistan, Africa, Asia and across the world adapted quickly to our methods of warfare. 

Using technology, social media and global transportation, they presented tactical and operational problems that our special operations forces had never seen before.

This forced us to collaborate in way that had never been done in the history of special operations warfare. 

The SEALs were working with the Army Special Forces. The Special Forces were working with the conventional infantry. 

The infantry was working with the Naval aviators.  The pilots and crews were working with the logisticians. 

We were all working with the intelligence and law enforcement communities and the locals on the ground.

We connected everyone that wanted to be part of our network.  And, we talked – constantly.  I conducted six video teleconferences a day in order to keep the information moving around the globe.

We called it the Battle Rhythm.  It was a disciplined staffing mechanism that ensured everyone in the network was well informed, and could offer advice on how best to solve problems.

In having this Battle Rhythm, we were able to see problems before they occurred and preemptively react to them.  When a crisis hit, we were able to pool the subject matter experts to deal with the most complicated problems imaginable.

As were developing our human network, I often quoted Metcalf’s Law.  Developed by Robert Metcalfe, the law demonstrates how the addition of one single node in a telecommunication network increases the power of that network—not by a factor of one—but each node increases the effect exponentially. 

While the law was designed for telecommunications, we found that it applied equally well to human networks—as long as the additional person relayed as much information as they received. 

In other words, you had to contribute your ideas—not just listen.

Interestingly enough, I assumed Robert Metcalfe was a historical figure who had likely passed away a hundred years ago—only to find out that Bob Metcalfe is alive and well and working right here at UT Austin.

The relevance of a free flowing information network to investors is obvious, since you are really in the information and ideas business.  Bringing the most possible perspectives to bear will inevitably lead to smarter decisions that are better executed.  It’s as true in the military as it is in investing.

No matter the field of endeavor, anyone who thinks leadership is about a lone heroic figure doing great things is flat wrong.  Leadership is about engaging with all the people around you, and inspiring them to bring forth their best ideas and their best efforts on behalf of a common purpose.

An inclusive, collaborative – and adaptable – approach is particularly important during times of rapid change, when the terrain seems to be shifting and moving beneath your feet.

I believe we are in one of those times right now.  In fact, unlike any time in our history, I believe the rate of change today is no longer linear – it is exponential.

At the UT System, we lead the state and the world in many areas of education, research, and health care – from public health to the performing arts, psychology to cyber security, literature to law.

But if we fail to adapt to the changing environment, we will not serve the people of Texas as well as we should.

The danger of sticking with an outdated, inflexible business model was another lesson we learned the hard way in the military.

In the days of the cold war, the military used a very hierarchical structure—it was a rigid command relationship. 

The orders came from the top down and people did as they were told.

After the fall of the Soviet Union, the military began to understand the value of building tactical and operational teams that were more agile and maneuverable across a dynamic battlefield.

Unfortunately, thousands of years of military tradition made it hard to let go of command from on high.  We gradually evolved into a Command of Teams structure – which was better, but still limited collaboration, creativity and agility in the organization.

The terrible tragedy of 9/11 and the ensuing conflict against an unconventional enemy showed us that we needed to adapt again.

On the battlefields of Iraq and Afghanistan, we needed to rely on the intellect, creativity and boldness of every soldier in our service. The threat was dispersed, complex, local, regional and global. 

As my old boss General Stan McChrystal has written, we had to build a “Team of Teams” so all of our organizations could derive strength from each other and could work together to be successful.

We used our size, our talent and our operational diversity to achieve an unparalleled level of collaboration. 

As a result, we found answers to problems more rapidly, we developed solutions more quickly, and we found that everyone in the enterprise could add value.

This is the structure we are endeavoring to bring to the UT System.  

With your continued support, this is how we will approach some of the tough problems that confront Texas today. 

And of course, anyone who would like to see a Team of Teams approach in action – and succeeding wildly – need only look around this room.

The UTIMCO business model Bruce has created, tapping the intellect, creativity and boldness of the universe of experts and advisors – some internal, many external – is a great example.  In fact, we’ve got teams of teams of teams at work here.

According to the agenda, in a matter of minutes, you’re going to hear from a panel of three experts on “Long-Short Equity Hedge Funds.”  I’m not sure what it means to be Long and Short equities – unless it means you expect stocks to go up and down, in which case that seems like a good bet.

But what I know is that three people – representing three different firms or teams back home – will come together to form a new, albeit temporary team.  That team will, I am sure, share valuable and unique insights, contributing to the UTIMCO team, which as I’ve said – but it bears repeating – is an incredibly important part of the UT System Team.

Which brings me full circle, back to the real reason I wanted to be here today – which is to say congratulations and thank you to Bruce, and the entire UTIMCO team, including all our external advisors.

I know we face some unique challenges, as a public university system, that make your jobs harder than they might be elsewhere.

Don’t for a second think that I or anyone on my team of teams take for granted the talent, dedication, sacrifice, and plain hard work that has gone into building UTIMCO the past twenty years.

And of course, don’t think for a second that we expect anything less in the next twenty years!

We’re counting on you. 

And speaking for our 217,000 students, 20,000 faculty, 70,000 health care professionals, and the entire state of Texas, we thank you.

Thank you for the opportunity to be here.  Enjoy the rest of the program, and I’ll see you at dinner!