Invest Like the Best with Patrick O'Shaughnessy
Episode 433: Alan Waxman - Building Sixth Street
Release Date: July 15, 2025

Introduction

In Episode 433 of Invest Like the Best, host Patrick O'Shaughnessy engages in a comprehensive conversation with Alan Waxman, the Co-Founder and CEO of Sixth Street. With over $110 billion in Assets Under Management (AUM), Sixth Street is renowned for its "go anywhere, do anything" investment mandate, spanning multiple asset classes, geographies, and time horizons. This episode delves into Alan's journey from his early days at Goldman Sachs to building one of the most versatile investment firms in the world.

Early Career and Formative Experiences

Alan Waxman discusses his unconventional entry into finance and his tenure at Goldman Sachs.

• Landing at Goldman Sachs:
  Alan began his career without a traditional finance background. He met Jodi Lanasse on an airplane, which led to an interview and eventual placement in Goldman Sachs' Special Situations Group (SSG), often dubbed the "Navy SEALs" of finance (06:03).

• Culture and Framework at Goldman:
  The SSG's flexibility allowed them to invest across various asset classes and sectors without losing capital. Alan emphasizes the importance of "unitizing risk and return," a framework that compares different investments on a standardized basis to identify the best risk-reward opportunities (08:17; 10:08).

• Protecting Capital During the Global Financial Crisis:
  Alan takes pride in Sixth Street's ability to protect capital during tumultuous periods like the 2008 financial crisis by adhering to their disciplined risk-return framework (16:15).

Building Sixth Street

Transitioning from Goldman Sachs to founding Sixth Street, Alan outlines the strategic vision and cultural principles that define the firm.

• Project Austin and Strategic Planning:
  Before officially launching Sixth Street, Alan and his colleagues developed "Project Austin," a business plan that laid out the firm's values, culture, and a five-year strategic roadmap. This meticulous planning has continued with successive five-year plans, ensuring alignment across the organization (26:33; 27:45).

• Cultural Foundations:
  Inspired by the San Antonio Spurs, Sixth Street prioritizes a "one team" culture devoid of politics, egos, and silos. The firm values individuals who are "over themselves" and emphasizes collaboration and mutual respect. This culture is symbolized by a prominent tiger sculpture in their offices, representing the mantra "face the tiger together" during challenges (15:18; 30:43).

• Investment Philosophy:
  Sixth Street operates as a multi-strategy investing firm, continuously migrating to the best available risk-return opportunities. With approximately 450-500 deals each month and 15-25 active investment themes, the firm remains agile and responsive to changing market dynamics (10:08; 52:10).

Notable Investments and Strategies

Alan shares stories of Sixth Street's strategic investments in high-profile companies like Spotify and Airbnb, highlighting the firm's flexible and creative investment approaches.

• Spotify Investment (2016):
  Amidst concerns over competition from giants like Amazon and Apple, Sixth Street provided Spotify with a $1 billion convertible financing instrument. This strategic move not only supported Spotify’s liquidity needs but also aligned with their long-term vision, allowing the company to navigate market volatility and maintain its growth trajectory (34:32; 36:23).

• Airbnb Investment During COVID-19:
  As the pandemic disrupted the live experiences sector, Sixth Street capitalized on the downturn by investing in Airbnb. By providing a $1 billion loan with warrants, Sixth Street enabled Airbnb to strengthen its balance sheet and emerge from the crisis poised for growth. Alan emphasizes the importance of liquidity analysis and the belief in a post-pandemic recovery as key factors in this successful investment (41:04; 43:23).

• Sports Partnerships with Real Madrid and FC Barcelona:
  Responding to the financial strains imposed by COVID-19 on global sports franchises, Sixth Street formed joint ventures with Real Madrid and FC Barcelona. These partnerships involved strategic investments aimed at stadium renovations and roster stability, demonstrating Sixth Street's ability to tailor solutions to unique industry challenges (46:50; 49:18).

Risk Management and Investment Philosophy

A deep dive into Sixth Street's sophisticated approach to risk assessment and return generation.

• Unitizing Risk and Return:
  Alan explains how Sixth Street quantifies risk across diverse investments by considering factors like business quality, capital structure positioning, and geopolitical considerations. This multi-dimensional risk assessment allows the firm to compare and prioritize investments on a consistent basis (10:08; 19:48).

• Absolute Return Focus:
  Unlike relative performance benchmarks, Sixth Street operates as an absolute return investor. Their success is measured by the ability to meet or exceed the return expectations set by their investors, independent of broader market performance (45:51).

• Adapting to Systemic Risks:
  Alan highlights overlooked systemic risks such as the rapid advancements in AI and the associated economic transitions. He stresses the need for proactive strategies to manage the societal impacts of technological disruptions and the shifting landscape of private capital investment (24:10; 21:59).

Talent Development and Firm Culture

Emphasizing the pivotal role of culture and talent growth in Sixth Street's sustained success.

• Holistic Talent Development:
  Inspired by mentors like Stephen Pless, Alan advocates for a supportive and demanding framework to develop talent. Personal business plans, regular one-on-one interactions, and a focus on long-term personal growth ensure that employees are aligned with the firm's strategic goals and cultural values (61:40; 67:02).

• Retention and Cultural Integrity:
  Sixth Street boasts an impressive retention record, having never lost a partner. This success is attributed to a comprehensive approach that goes beyond monetary compensation, encompassing cultural fit, development opportunities, and meaningful collaboration (69:09; 70:16).

Looking Ahead: Future Plans and Strategic Themes

Alan outlines the forward-looking strategies and key investment themes that will drive Sixth Street's growth in the coming years.

• Strategic Investment Themes:
  Currently, Sixth Street is exploring themes such as partnering with large corporations to enhance their operations, wealth technology, and live experiences. These themes reflect the firm's adaptability and commitment to staying ahead of market trends (54:04; 55:08).

• Five-Year Strategic Plans:
  The firm's disciplined approach to strategic planning involves comprehensive five-year plans that align individual contributions with overarching goals. This ensures cohesive progress and maintains the firm's competitive edge (26:33; 27:45).

• Maintaining an Investor-First Ethos:
  Sixth Street remains steadfast in its commitment to being an investor-first firm. By continuously refining their investment strategies and maintaining a robust cultural framework, they aim to sustain long-term success and deliver exceptional outcomes for their Limited Partners (72:29; 74:24).

Personal Insights and Closing Thoughts

Alan shares personal philosophies and the values that drive both his professional and personal life.

• Future Self and Return on Time:
  Alan emphasizes the importance of aligning one's professional efforts with personal life goals. By building a robust toolkit early in his career, he ensures the ability to spend quality time with family in the future—a principle that guides his leadership and decision-making at Sixth Street (70:14; 72:20).

• Impact of Mentors:
  Reflecting on his time at Goldman Sachs, Alan credits mentors like Stephen Pless for imparting critical knowledge and shaping his investment philosophy. This mentorship underscores the firm's dedication to personal and professional development (66:45; 68:05).

• Cultivating a Collaborative Environment:
  Sixth Street's unique culture fosters open communication, collaboration across different investment platforms, and a relentless pursuit of excellence. Alan underscores that this collaborative spirit is essential for navigating complex investment landscapes and achieving collective success (55:30; 60:48).

Final Quote:
"The idea of having to develop new themes every year and new ideas, we need entrepreneurial people." — Alan Waxman (24:10)

Key Takeaways

• Flexible Investment Mandate: Sixth Street's "go anywhere, do anything" approach allows for unparalleled flexibility in capturing diverse investment opportunities across various asset classes and geographies.

• Robust Risk-Return Framework: By unitizing risk and return, Sixth Street ensures disciplined decision-making, protecting capital during downturns and capitalizing on growth opportunities.

• Strong Cultural Foundations: A collaborative, ego-free culture focused on continuous learning and team cohesion underpins the firm's sustained success and high retention rates.

• Strategic Agility: Continuous strategic planning and thematic investment focus enable Sixth Street to remain adaptive and forward-thinking in a dynamic global market.

• Commitment to Talent Development: Investing in employee growth and aligning personal goals with firm objectives fosters a motivated and high-performing team.

Conclusion

Alan Waxman's journey from the mailroom at a bond management firm to leading one of the most dynamic investment companies underscores the impact of curiosity, disciplined frameworks, and a strong cultural ethos. Sixth Street's ability to adapt, innovate, and maintain robust risk management practices positions it as a formidable player in the global investment landscape. This episode offers invaluable insights into building a versatile and resilient investment firm that thrives on collaboration and strategic foresight.

Timestamp Guide:

• 06:03
• 08:17
• 10:08
• 15:18
• 16:15
• 19:48
• 21:59
• 24:10
• 26:33
• 27:45
• 30:43
• 34:32
• 36:23
• 41:04
• 43:23
• 46:50
• 49:18
• 52:10
• 54:04
• 55:08
• 61:40
• 67:02
• 69:09
• 70:14
• 72:20
• 74:24
• 66:45
• 68:05
• 55:30
• 60:48

This summary is based on the provided podcast transcript and is intended to capture the key discussions, insights, and narratives shared by Alan Waxman during his conversation with Patrick O'Shaughnessy.