"I've Actually Invested Twice" - Rajesh on Diversifying Multiple Concentrated Positions

"I've been in the valley for the last 30 years and I think the valley has been kind to many of us," Rajesh Radhakrishnan says.

He built his career across startups, larger companies, and advisory roles. He also invested early in pre-IPO companies. Several of them did extremely well.

"What was initially a very small investment ended up becoming a very large value in the market."

That's how concentrated positions form in Silicon Valley. Small bets that compound. The problem comes later.

Five years of searching

Rajesh didn't act quickly. He thought about diversification for almost five years before finding a path forward.

"I've actually been thinking about how to diversify for a few years," he says. "I'd say almost five years and been struggling to find a way."

The barrier was taxes.

"The challenge obviously is that the diversification creates a huge taxable event."

He watched markets shift. Companies that had driven returns gave way to others. His original investment theses weren't wrong. The environment had evolved.

"Maybe the companies that you initially invested in, your investment thesis was solid," he says, "but the market has changed and they're no longer likely to outperform."

Why Cache felt different

Exchange funds existed. Rajesh knew that. But they were expensive and opaque.

"Exchange funds are offered by other firms and other investment organizations," he says, "but they're always extremely expensive and not as transparent as I wanted them to be."

Cache offered something else.

"What I found with Cache was a company that was leveraging technology, that was very open, that was pretty clear and transparent about how they structure things."

He verified the structural protections before committing. Assets held separately, protected even if Cache shut down. That separation was the anchor.

The decision to invest twice

Rajesh had three highly concentrated positions. He chose to diversify two of them through Cache.

"I actually have three very highly concentrated positions and I chose to go with Cache for two of those three," he says.

He made those choices based on how he expected the market to evolve, particularly around AI.

"As I assessed the market, I thought that these stocks would underperform the market. They would do well, there's no doubt, but they would underperform."

The third position he kept. In hindsight, that one underperformed too.

"I was wrong in that third stock," he says. "But that's more about me than about anything else."

The two he diversified performed. And performed well.

"By diversifying with Cache, I was able to firstly sleep more peacefully because now I am highly diversified and secondly I was able to participate in the remarkable upside both in the Nasdaq and the S&P 500."

Then he adds: "Cache actually did better than both the NASDAQ and the S&P 500 while keeping that diversification. So all in all, that worked out extremely well for me."

Who this is for

Rajesh sees the problem as structural to Silicon Valley.

"Cache is a great solution for many of my friends, many people I probably don't even know in the valley," he says. "People who have been early employees or more recent employees at companies like Nvidia (NVDA) and Google (GOOGL) and Meta (META) and so many other companies who have very concentrated positions because of their employment."

He doesn't dismiss the upside. He frames the trade-off.

"That's good when there's upside. But there's also a lot of risk associated with it."

His recommendation is direct.

"I think a diversification strategy like exchange funds and a solution like what Cache offers is something that from an investment theory perspective is absolutely the right thing to do. I would highly recommend that to everyone."