Martín Escobari - Inside General Atlantic - [Invest Like the Best, EP.449]

Summary

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Invest Like the Best with Patrick O'Shaughnessy

“Inside General Atlantic” with Martín Escobari (EP. 449) – November 25, 2025

Overview

This episode features Martín Escobari, co-President and Head of Global Growth Equity at General Atlantic, in a dynamic conversation with Patrick O'Shaughnessy. The discussion explores General Atlantic’s unique history and approach, global investment perspectives (particularly outside the U.S.), lessons learned from investing through market cycles and bubbles, and Martín’s personal story—from turbulent Bolivia to leading one of the world's premier growth equity firms. The episode is packed with insights on investing frameworks, building enduring organizations, the power of partnership, and the importance of curiosity, mentorship, and “educated intuition”.

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1. Martín’s Origin Story & Lessons from 3G ([05:13]–[11:57])

• Break-Into-Brazil Story:

  • Martín narrates how persistence (and boldness) got him a job at the top Brazilian private equity firm 3G, despite not speaking Portuguese and initial rejection. He met his future wife (his Portuguese teacher) through this process.
  • Quote: "That night, I show up to the dinner... I just want to listen to you because I find you interesting." – Martín ([05:55])

• Early Lessons from 3G Founders:

  • Spear-fishing Analogy: Successful investing is about waiting for the big, generational opportunities—"every four or five years there's a once-in-a-generation opportunity that you have to be ready and willing to move quickly to capture." ([11:57])
  • Details value creation at Brahma, emphasizes patience and targeted aggression.

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2. Pattern Recognition & Operating at Light Speed ([14:30]–[17:32])

• Experience as an Operator:
  • In dotcom, Martín realized that “you can do seven years of work in one year” in times of distortion and bubbles. Moving with urgency during rare windows is critical. ([14:56])
  • Quote: "Elon Musk says, do your 10 year plan and try to get it done in one year… In the dotcom [era], it felt like the world was on steroids." – Martín ([14:32])

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3. The Present Bubble, AI, and General Atlantic's Approach ([16:01]–[19:04])

• AI’s Unique Cycle:

  • Martín compares current technological hype with past cycles, noting that the transformative potential is real, but fortunes can be both made and lost.
  • General Atlantic has been “incredibly aggressive at deploying AI in the portfolio” with 1/3 of 500 annual projects being AI-related. ([17:32])
  • Highlights rapid B2B adoption: “Anthropic revenues and Cogent went from $200 million to $4 billion in 12 months. In B2B, that kind of growth has not happened ever." ([17:32])

• Risk Management & Loss Ratios:

  • General Atlantic’s risk management results in a 4% loss ratio on capital, compared to industry norms of 20–40%.
  • “I have 95% of my net worth in that product and I sleep well at night.” – Martín ([20:08])

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4. General Atlantic’s Unique DNA & Founding Ethos ([20:08]–[27:26])

• Chuck Feeney’s Legacy & Purpose:

  • “The purpose of wealth is to improve the human condition now, not tomorrow, now… My dream is my last check will bounce. I want to die a poor man.” ([20:21])
  • All proceeds were allocated to philanthropic causes; this spirit shapes General Atlantic to this day.

• Firm Structure & Culture:

  • Partnership ethos: “Sometimes we’re accused of being dolphins in a sea of sharks. And I’d love to be a dolphin. Who wants to be a shark?” ([23:11])
  • No region-locked funds: Global single P&L prevents forced deployments in unattractive markets.
  • Evergreen hybrid structure: Allows institutional investors to enter any time, smoothing fundraising cycles ([24:10]).
  • Compensation is fully pooled and shared—promoting true partnership and collaboration: “It’s a meritocracy in that to be in this community… we all have to be effective…” ([25:56])

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5. Fundraising, Geography, and Diversification ([28:21]–[33:13])

• Fundraising Lessons:

  • Fundraising is perpetual; onboarding is lengthy and complex versus the industry’s binge/sprint model.
  • Persuasion equals desire minus fear: “Most humans go from FOMO to fear… you can only fundraise when things are very expensive, because that's when everyone’s on FOMO.” ([28:35])
  • Uses local families as LPs for both capital and granular market insight ([28:56]).

• Case for Global Diversification:

  • U.S. equities at extreme valuation premium; risks are historically high: “The US has never been this expensive… Total debt to GDP is 125%... higher than it was after WW2.” ([31:30])
  • Emerging and international markets offer far cheaper entry points and strong growth.

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6. Insights on China & Entrepreneurial Drive ([33:13]–[36:50])

• China’s Innovation:
  • Martín remains optimistic about China, highlighting a new uptick in deal-making and the entrepreneurial drive stemming from generational trauma (Cultural Revolution). ([33:16])
  • Memorable quote: “There’s a level of drive and work ethic that probably matches the refugees of World War II... but this applies to 98% of the entrepreneurs.” ([34:13])

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7. Personal History, Trauma, and Risk ([35:29]–[39:12])

• How Trauma Shapes Investors:
  • Martín’s family history (Jewish refugees, Bolivian revolution, hyperinflation) deeply influences his risk-calibration and resilience.
  • “I grew up in Bolivia in the 80s and that was chaos… 35,000% inflation.” ([36:52])
  • Links the drive of top entrepreneurs and investors to foundational traumas (“Pain is pain. And if you understand the trauma, you can relate and empathize… it is such a wonderful engine of transformation.” [38:22])
  • On managing emotion and stress: “Managing one's emotions productively requires either therapy, writing a journal, or meditating. You should do two of the three.” ([38:54])

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8. Investment Framework: Gut, Checklist, and Heart ([39:12]–[44:42])

• Intuition vs. Checklist:

  • Martín describes his investment decision process blending a rigorous checklist with “educated intuition.”
  • “Turns out the checklists work... But after I do the appraisal, I close it and I close my eyes and see how I feel and I go with my gut. The framework I use... is the combination....” ([41:13])
  • “In matters of the heart, forget the checklist. But I don’t think the three of them come together in the investment profession.” ([44:25])

• Investment Examples:

  • Invested in XP (now Brazil’s premier investing platform), EdTech in the Brazilian northeast, and online fraud prevention, all with massive real-world impact.

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9. General Atlantic Leadership: Learning from Bill Ford ([44:42]–[46:17])

• Bill Ford’s Influence:
  • Bill Ford “has an incredible ability to see around corners and be visionary in making bets before they’re obvious.”
  • Recognized for helping maintain the firm’s heart and culture.

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10. On Seniority, Plasticity & Mentorship ([46:17]–[48:53])

• Evolving Role:
  • As you progress, “the hardest thing when you’re young is developing patience… when you’re older, you have more range…”
  • On brain plasticity: “I refuse to think like an old man. My mind still plays, I still wonder, I'm still in awe.” ([47:33])
  • Maintaining humor and perspective: "Even when confronted with worst perfect storm... I start laughing and say, what are the odds..." ([48:29])

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11. The Current AI/Tech Bubble & Advice for Young Investors ([48:53]–[51:43])

• Bubble Analysis:
  • AI’s capex-to-revenue and funding sources differ from past bubbles; “It’s really profitable companies [funding innovation]… I think it’s got more legs... It’s not junk bond speculators or thin margin telecom companies.” ([50:38])
  • Advice: “If you’re in your 20s or early 30s, go work at AI because you’re going to live through dog years… compressed learning… it only happens once every 20 years. So don’t miss that opportunity.” ([49:16])

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12. Market Outlook and Political Drift ([51:43]–[53:19])

• Near-Term Optimism:
  • “I do think the IPO markets are opening up... Emerging markets which were dead for the last four years are lighting up… I’m generally optimistic.” ([51:48])
  • But “the real issue... is that prosperity needed to be shared for it to be electable... now we’re forced to choose between nationalist leaders and socialists... We need a center position of shared prosperity.” ([52:52])

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13. Risk, Uncertainty & Spear Fishing ([53:19]–[54:16])

• Distinguishes quantitative risk from “pure uncertainty.”
  • “What you can’t do is just shut down and say, this is too rash, too unpredictable. You just have to engage... until you see something before others and you strike for the fish.” ([54:16])

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14. Learning, Competition, and “Power Alleys” ([54:16]–[57:00])

• Learning Modus:
  • “Talk to young people, surf TikTok, try different apps, go to places where there are no old people and you don’t care…” ([54:29])
• Industry Competition:
  • “Unfortunately we compete against 19,000 GPs... There’s more GPs than McDonald’s in the U.S.... The industry is consolidating.” ([55:06])
  • GA’s edge: brand, operational support, sector specialization (“16 power alleys,” e.g., AI apps, digital payments, etc.).

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15. Investing Outside the U.S.: Risks & References ([57:00]–[59:43])

• Unique Challenges:
  • “There’s a lot more volatility. The frequency of surprises is much higher. We’re also low trust cultures...” ([57:16])
  • How to reference check: Use local LP families for candid assessments; be specific about fit and role when hiring.

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16. Developing Investors & Firm Culture ([59:43]–[62:39])

• Apprenticeship Model:

  • “Pairing [junior investors] up with different people, different skills, different styles is super important.” ([60:06])
  • Predicting IC questions to mentally “learn by osmosis.”

• Open Investment Committees:

  • GA’s ICs are open to all investment professionals – "every Tuesday, 190 people sign up... just questions and it's beautiful." ([61:39])
  • “IC robot” votes on all deals, outperforming humans on backtests, but “someone who's been trained in the past is very good at the past.” ([62:18])

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17. Key Diligence Questions & Option Value ([62:47]–[64:23])

• Martín’s Go-To Diligence Focus:
  • Founder motivations, true competitive advantage, exploring positive and negative "tails," and right-tail (option) value:
    • "If you look at the distribution of our returns, 10% of our best deals ... produce 50% of the return ... all are better than the upside case in our memos because good things happened we did not see coming." ([63:58])

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18. Growth Equity Today: A Golden Window ([64:58]–[66:02])

• Current Opportunity:
  • “Best window into growth equity since 2009... everything's on sale... valuations are half or 40% discount. It feels incredibly attractive.” ([65:25])

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19. Unfinished Business, Mentoring & Giving Back ([66:02]–[69:18])

• Mentorship Approach:

  • "My strategy... I have to hurt them... for the mentoring to be impactful... it's like crash therapy... But it works.” ([68:02])
  • On getting to the root of someone's needs: "The most powerful way to start a conversation... is silence. You tell me, what do you want to talk about?" ([69:18])
  • What question to ask: “What’s the most important question you need the answer to from the universe?”

• Future Ambitions:

  • Mentoring, fixing higher education, particularly in the U.S. ("I want to help in higher education in the US... I think we lost our way...")

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20. Memorable Closing Thought ([69:39])

• Kindest Act:
  • “Daniela taught me how to love… Being loved by her and learning how to love back and then learning from her how to love our daughters… She’s so smart. And loving me can sometimes be very hard.” ([69:39])

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Notable Quotes & Moments

• “Every four or five years there’s a once in a generation opportunity that you have to be ready and be willing to move quickly to capture.” – Martín ([11:57])
• “Don’t miss that opportunity... compressed learning that only happens once every 20 years… If you have a young mind today, go work in AI because it’s going to be so much fun.” – Martín ([49:16])
• “Sometimes we’re accused of being dolphins in a sea of sharks… Dolphins have a much better life.” – Martín ([23:11])
• “If you want to make money, you do the opposite. You buy at the bottom, you sell at the top.” – Martín ([24:12])
• “There’s more GPs than McDonald’s in the United States…” ([55:06])
• “The purpose of wealth is to improve the human condition now, not tomorrow, now.” – Martín quoting Chuck Feeney ([20:21])

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Timestamps for Key Segments

• [05:13] – Martín’s “break into Brazil” and lessons from 3G.
• [14:30] – “Seven years in one”: operating tempo during bubbles.
• [16:01] – Approach to the current AI bubble.
• [20:08] – The legacy and DNA of General Atlantic.
• [28:21] – Fundraising perpetual motion and dealing with FOMO/fear.
• [31:30] – U.S. exceptionalism valuations and global opportunity.
• [33:13] – Views on China’s entrepreneurs.
• [36:50] – Family trauma, risk calibration, and emotional tools.
• [41:13] – The interplay of gut and checklist.
• [49:16] – Advice: work in AI now—“compressed learning.”
• [54:16] – Embracing unpredictability and “engaging with the fog.”
• [62:18] – GA’s open IC and the “IC robot.”
• [65:25] – Growth equity: “best window since 2009.”
• [68:02] – Crash therapy as mentoring.
• [69:39] – The kindest act: learning how to love.

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Summary

This episode is both a masterclass in global growth investing and a deeply personal journey. Martín Escobari blends hard-won investing wisdom (power of patience, scenario planning, understanding real risk, capturing right-tail options) with unique insights on firm-building, partnership, and culture. The conversation is laced with memorable stories, sharp quips, and actionable principles related to capital allocation, mentorship, and the ongoing AI investment wave.

Whether you’re an investor, entrepreneur, or strategist, Martín’s nuanced advice on navigating cycles, “waiting for the big fish,” investing with both head and gut, and balancing ambition with perspective delivers a rich and engaging listen—and a practical roadmap for building lasting value.

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Transcript

[A]

The best operators have a relentless focus on leverage, finding ways to multiply their impact rather than just working harder. But here's what I see happening in finance teams everywhere. Brilliant people getting buried in expense management. Busy work. If you think about it, you become a finance leader because you love strategic work. Modeling scenarios, optimizing capital allocation, finding the insights that actually move the business forward. But instead you're chasing receipts and categorizing transactions. It's the opposite of leverage. This is exactly why I'm so bullish on what the team at Ramp has built. Kareem and Eric understood that every minute spent on manual expense management is a minute stolen from high leverage work. So they automated all of it. Automatic categorization, receipt matching, spending controls that actually work. I love the network effect that this creates. When finance teams at companies like Shopify and Stripe automate the mundane stuff, they free up cycles to think bigger, to ask bigger questions, spot patterns others miss and make the kind of strategic bets that separate great companies from good ones. The math is simple. Get your time back, focus on what matters. Check out ramp.com invest and see what happens when you eliminate the busy work cards issued by Sutton bank member fdic. Terms and conditions apply. One of the hardest parts of investing is seeing what's shifting before everyone else does. AlphaSense is helping investors do exactly that. You may already know AlphaSense as the market intelligence platform trusted by 75% of the world's top hedge funds, providing access to over 500 million premium sources from company filings and broker research to news trade journals and over 200,000 expert transcript calls. What you might not know is that they've recently launched something game changing AI powered channel checks. Channel checks give you a real time expert driven perspective on public companies weeks before they show in earnings or consensus revisions. AlphaSense uses an AI interviewer to run thousands of expert calls with real human experts every month, asking consistent questions across experts so the signals are clean, comparable and useful. You get live updates as interviews come in, full transcript access and coverage across every major sector. Instantly compare insights across experts and analyze quarter over quarter trends in sentiment and key performance indicators for investors trying to stay ahead of the fast moving markets. It's already table stakes to me. Ridgeline isn't just a software provider. It's a true partner in innovation. They're redefining what's possible in asset management technology, helping firms scale faster, operate smarter and stay ahead of the curve. I want to share a real world example of how they're making a difference. Let me introduce you to Brian. Brian, please introduce yourself and tell us a bit about your role.

[B]

My name is Brian Strang. I'm the Technical Operations Lead and I work at Congress Asset Management.

[A]

How would you describe your experience working with Ridgeline?

[B]

Ridgeline is a technology partner, not a software vendor and the people really care. I get sales calls all the time.

[A]

And I ignore them.

[B]

Ridgeline sold me very quickly. We went from $7 billion to $23 billion and the goal is $50 billion. Ridgeline was the clear frontrunner to help.

[A]

Us scale in your view what most distinguishes Ridgeline?

[B]

They reimagined how this industry should work because obviously they were operating on another level.

[A]

It's worth reaching out to Ridgeline to see what the unlock can be for your firm. Visit ridgelineapps.com to schedule a demo hello and welcome everyone. I'm Patrick o' Shaughnessy and this is Invest like the Best. This show is an open ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in depth profiles of the people shaping business and investing. You can find Colossus Review along with all of our [e-mail] Patrick O' Shaughnessy.

[B]

Is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit Psum vc.

[A]

My guest today is Martin Escobarri. Martin is co President and Head of Global Growth Equity at General Atlantic. We talk about General Atlantic's unique founding story and how its long term structure, including permanent capital, a single P and L and partnership culture allows it to invest differently than other growth equity firms. We discussed the firm's global perspective and particularly why the premium on US equities is creating compelling opportunities across international and emerging markets. Martin has spent his career investing through bubbles, market cycles and technological shifts. He shares his investing framework for balancing intuition with analysis, his approach to spearfishing for once in a decade opportunities, and why he believes this is the best window for growth equity since 2009. Martine also reflects on his incredible personal story. He talks about growing up in turbulent Bolivia and the role of curiosity and optimism in sustaining a long investing career. Martin's infectious energy and genuine love for investing made this conversation, both insightful and a lot of fun. Please enjoy my great conversation with Martin Escobarri. Alex, who introduced us from 3G, told me this incredible story about you getting a job after him telling you no and what you did to get it. Can you tell? I loved when he told it.

[B]

Coming out of business school, I needed to say, where did lit? Cause I'm from Bolivia. Bolivia's too small. I was finishing eight years in the U.S. u.S. Felt too competitive. So I had to think somewhere else that had to be big, not too competitive, and have beautiful people, because I was single at the time. So that was the criteria.

[A]

So Brazil.

[B]

Brazil. N of 1 Brazil. So I look at the most exciting jobs in Brazil, and. And at the time, the 3G founders had a private equity shop, which at the time was the largest private equity shop in the emerging markets. This is 1997, and one of the partners has recently graduated from the same school, was coming to town to interview Brazilians to hire one person. So I was like, this is destiny. This is for me. So I reached out to Alex Bering, who is now running 3G, and he's become a great friend. And I introduced myself as this Bolivian, super smart. I really want to make it in Brazil. I hear you're doing a dinner. I'd love to come by, if you'll have me. And Alex was super smart and tough. He's like, martin, we're only hiring one person, and it's not going to be a guy from Bolivia that doesn't speak Portuguese. So, no, you can't come to my dinner. I was like, bummer. So that night, I show up to the dinner, introduced myself as Martin, and I say, don't worry, I'm not even going to eat. I just want to listen to you because I find you interesting. And I think he was taken back by my boldness. They did interview me, and they did hire me, but they made one condition. I had to take some Portuguese lessons before I showed up three months later. And I said, I'm happy to do it, as long as you pay for them. And that's how I met my wife.

[A]

She was your teacher?

[B]

She was my teacher. I mean, she was technically a teacher. The way it really worked is I called my Brazilian friends and I said, can you find a very smart, very attractive Brazilian PhD master somewhere in the Boston area? And I have someone that will pay her to talk to me. Seb's still married 25 years later.

[A]

What an amazing origin story. What have you learned from Alex and from his team?

[B]

The founders of 3G. The original three founders are incredible people whom I worked with in the beginning of my career. I once wrote a book. This is 2003. The company I have co founded was going through trouble. I took some time off and I wanted to answer the question of how does one make money in countries with so much turbulence? Brazil in the 90s and in the first decade of the century was incredibly turbulent. Crisis after crisis after crisis. Very hard to make. To create wealth, to build companies with so little, it's like navigating through the fog. You move very slowly and there's things that can come at you from different ways. I partnered with this professor, this mentor of mine from Harvard College, and he was teaching at Harvard Business School, Don Soul. And what we did was paired company analysis. Look at 10 very successful companies in Brazil that had made tremendous wealth creation in the crazy 90s. But look at their actions in contrast to 10 much less successful companies during the same period of time. And the test was these were pairs of companies that looked similar in size and value at the beginning of the 90s, but by the end of the 90s, one was at least 5x more valuable than the other. So that was the control group. And that's how we studied. And when one of the companies is the beer company Brahma, Giorgio Paulo Lehman and Marcel Telles and Betoscopier had bought in 1989 that was competing against the other bean company called Antarctica, that was owned by the Germans at a foundation who in 1989 was a better, more profitable, more valuable company. But by a decade later, when these two merged, the Brahma shareholders kept 95% of the equity value. So it was 10x value creation relative to the comparison twin. How did they do it? They're great spear fishermen. You don't chase the fish. You wait. You decide where you're going to anchor. You drop down with no equipment other than the spear, and you hold your breath for one minute. For two minutes, you let little fish go by because you're not there to hunt little fish. You're waiting for the big fish. And then when you're almost running out of oxygen, you got two or three seconds to get the big fish and then go up. As you're both feeling the sort of lack of oxygen, he feeling a spear through his chest. But it's an exercise of waiting. Why do they say these are great spear fishermen? The step number one of spear fishing is deciding where you're going to anchor. In looking to buy their beer company, they started to think about it. Five years before, they were owners of the number one investment bank in Brazil, Banco Guarantia. They were making tons of money out of volatility and inflation because in high inflation periods you can make a lot of money if you are smart with math and finance. But they knew inflation would end one day. And they said, we want to buy a company that will benefit from a low inflation, rising consumption. Beer is one such company. But they waited five years for this company to come for sale. And it came for sale two weeks before an election when the Swiss owners got scared that a socialist was going to become president. Lula first time government and he was from the Workers Party. And they called him and they says, can you do a deal in a week? We'd like to get out of town. We don't want to take the risk of a socialist president. And Georgia had been waiting for that big fish.

[A]

Five years.

[B]

For five years, closed the deal in a week. And then he waited 10 years till Antarctica was in trouble in a big devaluation and closed the deal in three months. And then he waited another seven years to do a deal with Interbrew. And then the biggest of all deals, waited a following decade to do a deal with Anheuser Busch. And basically over this period, $80 million initial investment in Bramah became a $60 billion plus, excluding dividends. But they're great fishermen and they wait for the big fish. And as a concept, that is something I've learned from them, which is every four or five years there's a once in a generation opportunity that you have to be ready and be willing to move quickly to capture. And if you do, you can create disproportionate value for your company, for your investors, for your employees.

[A]

Do you have a story of your own that is the closest to a great spear phishing outing as an entrepreneur?

[B]

I wasn't an entrepreneur. I was set out by these three guys to go and find great entrepreneurial companies and invest $500 million in 20 companies. You got 18 months go in month three.

[A]

That was your mission.

[B]

That was my mission. That mission number one out of business school. Now that I was speaking Portuguese, I could, I could go. And by month three, I remember talking to a buddy of mine because we were benchmarking different models and a buddy of mine had taken a job in the US company that went public in the dot com era. Clearly a bubble, being valued at 20 times revenue, which sounds quaint by today's standards, by 1998 standards. And I said, dennis, it's a bubble. How does it feel to be in a bubble. And he said to me, he grabbed my hand and said martin, it feels better than being outside the bubble. And I was like, he's absolutely right. I have to go into this bubble. I'm in the wrong side of the table. So very quickly left the fund and within I think three months we had raised $80 million to launch Subarino.com, which was the e commerce Amazon.com merge with Alibaba to take on Brazil. And that happened very, very quickly. A second time after we sold my business during the gfc, I was working for another fund briefly and looking to buy the sort of a fixed income exchange in Brazil. It's a dominant platform, 80% EBITDA margin business, a lot of competition. And then all of a sudden the GFC happened and everyone dropped out. Everyone. And I was like no, double down. And we were able to buy a market dominant high margin business that's six times EBITDA and we did it in two months. And people are like what do you mean you're doing something with the gfc? And I said if we're not willing to buy a dominant platform at 6 times EBITDA, we should shut down the world. Means the world is ending and we should. The world's not ending. A dominant platform will always be bought more than six times even that. And there's been, you know, every, every three or four years there's one such unique distortion that you have to move very quickly. That's perhaps one of the learnings of being an entrepreneur in the dot. Com. Like I'm a rare investor that has been an operator. It's not just I had been an operator what the.com taught me. And I just realized this recently. You can do seven years of work in one year.

[A]

Say more about what you mean.

[B]

Elon Musk says, you know, do your 10 year plan and try to get it done in one year. Yeah, you're like he's crazy. Look what he's built in the dot com. It felt like the world was on steroids in submarine. Not only have we raised $80 million within the first three months, within one year I was in charge of international. We opened submarino in six countries with warehouses and customers and registrations and teams. It was done in one year. If you had told me how long it would take a normal person to do that, I would say three to four years going fast. And we were like no, we have to do it first mover will be incredibly valuable. We did it in one year. So it's this ability to move very, very fast, to capture opportunities which are fleeting, which seem humanly impossible, are actually not.

[A]

This seems like a moment of that is happening again, maybe on mega steroids. Think of a company like Cognition as a recent example that I know well where the pace of growth of the business is. This sort of hard to believe that it's possible serving developers, maybe previously a company like Stripe, which is one of the great companies in the US and the technology world, is a certain size. It's grown that size over 15 years. And these things are growing at a pace that it's sort of hard to wrap one's head around. And so I'm curious how you think about that in the current moment right now, but also what lessons you learned about what it takes to go to put a 10 year plan into one year. What is different about the behavior in that compressed one year period that makes that possible.

[B]

So this is like my fourth or fifth bubble and all bubbles are born out of a truly transformative technology. In all the previous bubbles the promise was spectacular. The short term was disappointing and the long term delivered more than expected. But in that process a lot of fortunes were made and destroyed. So I think as a firm, John Athletics has been around for 45 years. We try to make different mistakes in each bubble and I'm sure we're getting.

[A]

Your own this time.

[B]

Yeah. Our approach this time, different from the Internet, has been to be incredibly aggressive at deploying AI in the portfolio. The promise of AI is clear to everyone. Let's see what's working in the real world and let's share BRICS practices. And we have incredible scale with over 200 portfolio companies. We have a hundred people in our portfolio support portfolio operations team. This year we'll do 500 projects with the portfolio. A third of them are AI projects. So we're seeing what works in the front lines. And as soon as we see a use case with real ROI and real revenue to the provider of the service, and you can sort of model what the economics and the cost to serve and what the long term profitability maybe is of this exciting new market, then we pounce. The first one where we felt that has happened is cogeneration.

[A]

Yeah, cognition and cursor.

[B]

And it just happened right now in the last 12 months.

[A]

It's crazy.

[B]

I mean, based on public information, anthropic revenues and Cogent went from 200 million to 4 billion in 12 months. In B2B, that kind of growth has not happened ever. And it's so exciting and it's working in real life and programmers are happy and then all of a sudden you've got this new reality where human programmers are hyper productive and they're working alongside agentic programmers who have no moral North Star and do not sleep. And how you get them to work together to a common output which is super sensitive to you, the client who's running on the software, super exciting. That's one area marketing optimization obviously it's machine learning on steroids where investors in liftoff which very much on this. We're investors in a software company called Insider that does enterprise marketing optimization data companies turbocharged with AI. Investors in an Israeli company called Virgin. There's so much. It's super exciting, it's super risky. We're probably going to look back and say we weren't bold enough in going for the killer app soon enough, but we've been bold enough before and it didn't pay to go very early. And I think what's really interesting about GA, we've been around for 45 years, through all these technological cycles and we've been international for 30 years. We've been in the emerging markets for 25 years. We take on a lot of risk, macro risk, we take on a lot of technology risk because we are investing across what we call 18 power alleys that cut across five sectors. Guess what our loss ratio is? Tell me. 4%.

[A]

On capital or on.

[B]

On capital? On capital, on capital. In venture and growth equity, loss ratios of 20 to 40% are common. But there's something about the way we deal with risk that allows us to capture what we think are reasonably good returns at a surprisingly low risk ratio. And it has to do, I think, with an appetite for risk. We don't take binary risk. For us, when we do this sort of the scenario planning of three to 1,000 scenarios, one dozen in mind, in one mind like you do when you think of an investment for us, a worst case scenario, a company grows into the valuation we paid for it and that limits what you do. It limits the timing of where you go into a new industry. You probably leave some money on the table, but you also leave a lot of risk on the table. And that product of reasonable returns with bold risk, it's a great product. I have 95% of my net worth in that product and I sleep well at night. I have a vastly undiversified portfolio of two assets, GA and Treasuries.

[A]

The 45 years ago. The sort of origin story of GA itself is so interesting. Chuck Feeney such an interesting Character. How does his spirit loom in the business and in your personal consciousness?

[B]

He's the accidental billionaire. Got the idea of duty frees by looking at naval bases where commerce was free in the Pacific during the Korea war, starts building these duty free shops, becomes a billionaire, sells to Louis Vuitton, and he's confronted with the question, what is the purpose of wealth? What do I do this wealth? And his answer resonated really well with me. The purpose of wealth is to improve the human condition now, not tomorrow, now. Because present value of happier life for more people now is very valuable. So he wants to give it all away. Forget giving half away. He's like, my dream is my last check will bounce. I want to die a poor man and I want to give it all. But before I give it all, I believe you can create additional wealth by investing in innovation by backing great entrepreneurs globally. And he said, you a GA head to the original founding team at ga, go back the world's best entrepreneurs, be a good partner and know that all the proceeds of our work will go to great causes. And we've been doing that for 45 years, backing great innovators everywhere. We've invested in over 500 companies over the last 45 years. Half of our investments have been outside of the United States. And we've seen the power of innovation to create wealth globally. This is not a privilege just to the us. It's not a privilege just to the European. And this concept of what is the purpose of wealth is also meaningful. Personally, I think when I think of the wealth I'm creating and the people that I work with are creating, we're all incredibly thoughtful of how we allocate our time and wealth to make the world better in the ways that are meaningful to us. And there's no right and wrong, but I find that accumulating wealth is. It makes you gloated and slow. Using your body and your life as a channel of, you know, wealth that comes but goes to places that can be made better. But it's a beautiful way to approach life. And particularly if you're in the profession of allocating other people's wealth. And to great innovators, it all makes sense. It all fits in internally consistent. And that's why we've been around for 45 years. They're not that many, you can count them in both hands of the number of firms that are investors in tech and innovation that have been around and have been successful this long. And I think it has to do with the internally consistent vision, mission and plan that Chuck had for gx.

[A]

That's not a normal origin story for a firm like this. Usually it's really just purely commercial enterprise. Some young investors set off and build a firm. This was different. What else about that founding DNA makes the setup of the firm unique. How does his original vision and setup allow you to act differently than others do today?

[B]

There's this phrase written into our founding documents, which is, we're good partners to each other, to our founders and to our clients. The partnership ethos is fundamental. And when you look at 45 years of references of 500 people, we've 500 companies, thousands of people we've partnered with and you say, what do you think of ga? They're good partners. They're good guys. They're good people. They do what they say they're going to do. They put the company's interests first. Sometimes we're accused of being dolphins in a sea of sharks. And I'd love to be a dolphin who wants to be a shark. Dolphins have a much better life. I think that's a big part of the firm's DNA. So I'll give you an example. I, I ran our General Athletics Latin America program for the first seven, eight years of my career at General Athletic. And in all the due diligence sessions, they ask, how did you do it? How did you make money in the one neighborhood that no one makes money? I say, the reason we do well in Latin America is we don't have a Latin America fund. Because if we had a Latin America.

[A]

Fund, we're going to put money into Latin America.

[B]

We're going to buy at the top and sell at the bottom. And you know what? If you want to make money, you do the opposite. You buy at the bottom, you sell the top. And they're like, oh, interesting. Why don't other people do it? It turns out it's really hard to do. To have a team in Latin America or in China or in India or in Southeast Asia, compete for attention and money through one global IC is so hard to do unless your culture is about partnership. The culture demands good partnership and the culture expels behavior that's not consistent with being a good partner. We're structured in a way that first, we are the largest investor in our own product by design. Right now we have about the employees of General Atlantic have 8% of the funds we administer. It's over $5 billion of our own capital. This does not feel like managing other people's money. This feels my day to day. I'm managing My family wealth first and foremost. And I'm doing it with care and with intention and purpose. The way we fundraise is different. Also. One of the problems with the industry is the five year fundraising cycle. To be able to raise your next fund, you have to deploy at a certain speed and you need to return capital a certain cadence, otherwise you don't get to do the next fund. And if there's a winter of risk like we've had for the last three years, you're out of dry powder exactly at the time that things are on sale. So the traditional fundraising five year cycle creates lots of distortions and pain for our industry. We have an evergreen, a hybrid evergreen fundraising cycle. Meaning yes, every two to three years we have a normal fund. So if you want a normal fund, come to GA every two or three years, perfect. But if you're a large institution and are willing to do a standard managed account, you can come in anytime and the two structures invest that same portfolio from the here forward. There's never conflict of buying the legacy. But the advantage of that is there's no fundraising cliffs. We're always fundraising, it's always steady, there's no big jumps, there's no pressure to liquidate something to meet some artificial target that makes our lives so much easier. And then the third component that I think is distinctive, which I hated initially because we have a communist system of compensation, which is you all get a percent of the total performance, not your individual performance. I said, are you kidding me? I'm a spear fisherman, I'm a spear fisherman, I got some big fish left in me. I mean this communism didn't work in the Soviet Union. It's like a. And then I saw how it changed everything in that the level of collaboration is fantastic. And the way you prevent the Soviet Union from happening is if you're not pulling your weight, you're not on the boat. So it's a meritocracy in that to be in this community where we all win together and lose together, we all have to be effective and bringing as much into the partners that we're taking away from it. And that's what keeps the health and meritocracy of the system. But there isn't a hyper incentive to be hyper productive. Because if I'm hyper productive, I'll make more wins than I get. No, it's much more about winning as a team as opposed to winning as an individual.

[A]

That dual structure, which is unusual, not common, what are the negatives or trade offs associated with that?

[B]

There's two Very serious trade offs. First of all, it takes forever to explain.

[A]

We'll do it at scale right here.

[B]

They'Ll never have to do it again. And they're like, why do you have two series? Which one is better, which one is worse? I can get it why this is good for you, but how is it good for me? So the sort of. The onboarding experience is a painful experience. The other downside is fundraising is a perpetual activity. Whereas for a lot of my competitors, every five years it's a six month sprint that all they do is fundraise and then they can not fundraise for another four and a half years. It's kind of like binge dieting. You only do it once every six years. And for us it's a no brainer. That's structure that leads to more productive deployment or cap.

[A]

My friend John Kim, who is a very well known fundraiser at General Catalyst, has this simple equation, which is that persuasion equals desire minus fear. What have you learned about fundraising given that you've had to do it as a firm on a constant basis?

[B]

I think most humans go from FOMO to fear. And one of the traps of our industry is you can only fundraise when things are very expensive, because that's when everyone's on fomo.

[A]

Have you been able to invert that fear to FOMO problem so that you can, if you have been able to raise some money in the harder times, what is the key to doing that?

[B]

Well, there's always someone in the world that has excess capital, even in a time of fear. And you go there. There's another. You'd be surprised. I do this like in Brazil. One other of our tricks. Our tricks, our strategies to navigate global complexity is in every geography we're in, we have the best families. The most entrepreneurial families become investors. And we cultivate them not necessarily for their money, but for their insights around the country and around the entrepreneurs with which we partner. And it takes them a really long time. And a lot of those families are typically entrepreneurial. And they're like, no, no, I don't invest in funds. I invest directly because I created a business and I'm so good and I'm good at getting the big fish. And I'm like, I asked him a very simple question. I say, hey, what percent of your net worth you have in Brazil? And they're like, like liquid net worth? No, no, no, no. Total net worth. And they're like, the number is typically between 90 and 95%. I said, that's very interesting. And I said, close your eyes. Imagine you're not Brazilian, you're a citizen of the world. What percent of your wealth would you put in Brazil? And they're like, oh, 3%. Well, yeah, how about I help you get a little closer to three than the 95 year in? So I find that argument to be genuinely effective because it's genuinely in their best interest. And I think people have a natural tendency to overinvest in that in which they understand, and of course those families understand what it is to invest in Brazil. But in doing that, they're massively undiversified and the world has become really, really risky. And there's only one free lunch in finance. Do you remember that from diversification? Diversification is the only free lunch. So thinking strategically over how to diversify with whom to diversify is hard but super valuable if you want that free lunch.

[A]

Speaking of diversification, maybe the most interesting dimension of that today is geographic. We were talking before we hit record about the incredibly wide gulf between the pristine US equity assets and basically everywhere else in the world. There was a time when you saw this chart between like The S&P 500 and the ACWI World XC rest or something, and it was kind of back and forth and back and forth. And then the line has just gone like this for 20 years where the US has just so completely dominated everybody else in enterprise value creation or some measure like that. How do you interpret that shift? Is it secular? Is it going to be cyclical and go back towards the international markets? How do you think about that crazy bifurcation?

[B]

The premium for US exceptionalism has never been higher. US public equities are trading at 26 times earnings for a 4% forecasted growth, which is at the 97th percentile of the last 25 years. And the US dollar, despite a 10% depreciation this year is pretty much two standard deviations away from the neutral state. So the US has never been this expensive. I love the US it's still the number one economy. I still have half my assets in the US but not 90% of my assets in the US. Not only is it very expensive, total debt to GDP is 125% of GDP. That is the highest of the OECD. It's higher than it was after World War II when America levered to defeat the axis of evil. Current plans in place. Within five years we're going to be at 145% of GDP, which is higher than Greece and Italy. And the US has not had a recession since 2009. Are you sure you want to have 95% of your assets in the United States of America? I don't. If you look up the rest of the world, you can buy Europe at 14 times earnings, you can buy Brazil at 9 times earnings, you can buy Mexico at 10 times earnings. We're finding 40, 50% growers at 12 times EBITDA, 14 times EBITDA, as many of them serving dollarized clients. So the case for global diversification, the price for global earnings, the case has never been strongest. The price has never been lower on a relative basis. So I do think that in the next 10 years, those who achieve some level of diversification will be rewarded because I do think there's a little bit of froth in the US market and the opposite in a lot of the emerging markets.

[A]

What have you learned on any recent trips to China?

[B]

China is fascinating. I've been going to China for 25 years and I've seen the development. It's the fastest change in terms of per capita GDP in modern history or any country at scale. It's an incredibly complex society. Tremendous amount of innovation, and we were lucky. Having been early in China as GA, we've been investing there for 25 years. I am highly optimistic that tensions have stabilized and that market conditions are improving and we've been underweight China for the last five years. We just did two deals. We're going to pick it up a little bit. There's always binary risk around the geopolitics. There's just so much innovation, there's so much entrepreneurial zeal. The one thing I learned, I actually learned over drinks with a Chinese entrepreneur. So I've done business in 19 countries and I love to connect on a human level with the entrepreneurs so much, even at growth stage. So much of the assessment of the company and of the partnership is about chemistry. And it was very hard for me to build chemistry with the Chinese entrepreneurs. One night I'm having a long dinner with lots of good food and alcohol with an entrepreneur who was an anthropology PhD at University of Arkansas. And I said, if someone can explain me the Chinese mentality, it's this man. He said to me, like any oversimplification, it's unfair, but there's a grain of truth. And he said, what you have to understand about the entrepreneurs you're dealing with. He said, these generation of entrepreneurs, people who are in their 30s and 40s, they're all children of the Cultural Revolution. Everything was taken away from these families, everything. And they are scarred and they have something to prove because they think something was stolen and they will get it back. So there's a level of drive and ethic, work ethic that probably matches the refugees of World War II that came to the States and these great businesses after World War II or other people that have had hardship in their life. But this applies to 98% of the entrepreneurs. They side with their parents. So that's the other condition you should take into account.

[A]

How do your ancestors show up in your life and values?

[B]

We're all products of our traumas and our adventures and our dreams is my worldview. So what are my traumas? Some are personal and some are generational. Generational traumas. On my mother's side, Jewish family had to flee the Russian empire through Romania, then Argentina, then Bolivia. So fleeing, leaving everything behind. From my father's side, very wealthy, landed oligarchy of Bolivia. In 1952, there's a revolution, they lose everything and their house and farms get burned down and they almost die when my father was a teenager. So on both sides there's a sense of loss and scape that is very present and decide to become communists and doctors. They're both doctors in public hospitals and a little town in Bolivia. So that's their trauma, which I relate to the culture of. They are religious, not atheist. In my personal life, trauma comes from two places for me. One is I grew up in Bolivia in the 80s and that was chaos. Bolivia in the 80s. Seven presidents in 10 years, including four coup d'. Etats. We had inflation, you had 5% inflation, we had 35,000% inflation.

[A]

35, 35.

[B]

Time value of money. I understand. Okay, like, like the only time my mom ever punished me was one time she sent me to exchange her salary for dollars when she got it. And I took a one hour break to visit a friend. And in the hour and it lost half its value in that hours. I was grounded for. Because of that one hour break of the exchange. So anyways, and there was also a lot of violence, ethnic violence in Bolivia. So it was rough, it felt unsafe, it felt turbulent. And then I, I have a genetic disorder. I bruise very easily, Very, very easily. So getting out of bed, deciding what activity to do is a risk reward, trade off since the age of five. And that is a way of seeing the world that most wires you for risk. Like I know how to price risk. I'm like, not worth it. My friends are like, why are you always thinking of the downside? Well, I have my reasons. So anyways, I find when trying to understand a person I do it with entrepreneurs. Seeing what their trauma was is super useful because I find a lot of the most driven people are driven because of foundational traumas. It doesn't need to be racked to riches. It doesn't need to be a big disease. It could be. One of my fiercest competitors, he was mowing the lawns of his buddies who were with the cute girls. And his entire life he wanted to show them. I don't judge. That's a real trauma. Pain is pain. Yeah. And if you understand them and you traumatize yourself, you can relate and empathize, but you also understand the intensity that drives them and whether they can manage it and channel it productively. But if you can, it is such a wonderful engine of transformation and it's curative, it's healing to channel it in a positive way.

[A]

How did you learn to harness it? Because the other end of the spectrum could be unharnessed and just chaos. How do you learn to harness or channel it to something productive?

[B]

I believe managing one's emotions productive requires either therapy, writing a journal or meditating. You should do two of the three. I do two of the three. Trying to do the third one, but.

[A]

It'S really hard with meditation.

[B]

Yes. Yeah, we're on the same page. Yeah.

[A]

If I asked a bunch of people that knew you and the investments that you've made across your career, what is a you investment? Like, what are the characteristics where they see that company? Like, oh, you know, he must have done that. How would they describe it?

[B]

This is a funny story. When I got promoted to chairman of the investment committee, so elevated from a Latin American role in my life to head of the investment committee of General Atlantic, this iconic global. I was lost. So I go to the two founders. Steve Danning was the CEO for the first 20 years. Army man, McKinsey man, Stanford MBA, structured. I say, Steve, how do I make decisions across so many geographies and business models? What's the framework you think I should apply to add value to my partners? And he said, you should develop a checklist that captures the characteristics of a winning GA deal. So go back and look at our 25 years of history. Our best deals all share a couple characteristics. I give you the three M's, but they're probably five P's as well. Create a checklist. And I was like, yeah, checklist. Same day I go to the co founder, Dave Hodgson. He's just super glued, but just the smartest guy in the room always. And I asked him the same question. And the first thing he says, avoid the temptation to use a checklist. If it was as simple as a checklist, we wouldn't get paid millions of dollars to do what we do. And I would say checklist. Okay. So whenever there is a paradox, there's an elegant unparadoxing of the paradox. So Danny Callan and thinking fast, thinking slow. Checklist manifesto built on work he did for the Israeli Defense Forces to create the checklist for the elite agents. Turns out the checklists work. But in applying the IDF checklist, there were these super interviewers that got even better results consistently than just the average interviewer. So there was something beyond the checklist. That was the city certificate. And there's one interview of the super interviewer where she says, I do the checklist because I have to. But after I do the appraisal, I close it and I close my eyes and see how I feel and I go with my gut. And she has perfect scores. So the framework I use for what's the perfect Martin or Ga deal is the combination of a checklist with my gut, which I call the educated intuition. What's in the checklist of things? We like huge tams business models that create economic value and have moat teams with the right go forward capabilities. Situations where there's inorganic growth to get and there's tremendous amount of strategic value, meaning someone will overpay to have this capability if we are successful. So those are the things that the checklist buys me personally in the deals I've led. They have to make the world better. I am so proud that I invested in the number one investing platform in Brazil when there were only 80,000 people that own stocks in Brazil and now 10 million people own stocks.

[A]

What's it called?

[B]

XP. It's publicly traded, $10 billion market cap. I invested when they were nothing. I am so proud that I went against every convention and invested on an EdTech company. EdTech was a dark alley. We have power alleys. There are some places we don't touch. And I was like, no, no, no, this is different. This is different. This little company in the northeast of Brazil which was creating K through 12 learning systems, instead of using textbooks, you package everything in a sort of hybrid notebook with Digital. Da da da went from 80,000 students to 8 million students. 8 million kids every day today use this platform and it's world class. It's really good content and it's an amazing entrepreneur, son of a teacher and we made money. We have a platform that 97% of financial institutions use for digital onboarding. Turns out Brazil is the world capital of online fraud, and this is the one company that catches it. And I am so proud that I started mentoring this kid when his company was nothing. And I did it through endeavor and it took me eight years before I had like became investable for J. And then we invested and now they're dominant and it makes the world better. I. You see me, it's beyond money, it's energy.

[A]

If the checklist is mind and the instinct is gut, have you met a great investor who's mostly heart?

[B]

No. I think heart is super important if you want to be a leader of a large organization, because you have to move the hearts of hundreds, thousands of people to row in the same direction with purpose and with effectiveness. And that is crucial. And the heart is so powerful, it overrides God and brain. And to do it at scale, you see these people that are super good leaders, the energy is captivating and they are wizards of the trade. It's really hard to do all three. And part of being a good investor is to not fall in love because at the end of the day, you have a fiduciary duty to produce returns and you have to make some tough calls. Love is a treacherous, though funny story. So the one time that I didn't follow the checklist was for love. So obviously I had a checklist for the woman I'm going to marry. And when I met Daniela, my Portuguese teacher, she didn't score very high on the checklist.

[A]

Where was she deficient?

[B]

I won't say, but there's things that are absolutely irrelevant to the task at hands. I had the wrong framework and she was perfect in every way and she's been perfect in every way. So in matters of the heart, forget the checklist. But I don't think the three of them come together in the investment profession.

[A]

You mentioned the two founders. What about Bill Ford? What have you learned from him?

[B]

So much. I've worked with Bill for 15 years, actually pitched Bill my startup, this is 1998, came in through New York and I had heard a lot about General Authentic and how they're different and they think long term and they're good partners. And Chuck Feeney, it's really hard to get the meeting. We give them the meeting. Bill and I really hit it off. I made the pitch and he's like, we're not ready for Brazil. I'm really sorry. I was heartbroken because I really wanted GA and Bill was an amazing guy. Ten years later, after I sold my business, was working at another fund he called me and I was like, remember me? I was like, yeah, I remember you. He's like, can we try this again? I said, yeah, we can try this again. But just for you know, you would have made 18 times your money if you had said yes. Yeah, I know, I know, I know. So come. Bill has an incredible ability to see around corners and be visionary in making bets before they're obvious. So going into Europe, going to the emerging markets, going into consumer, going into life sciences, pushing me now to go into robotics and humanoids. He's an incredible ability to look around corners. He also in managing the partnership and us, has heart not for investment decision making, but in keeping our culture. The meritocracy of the firm also with heart, has helped me develop as a leader of GA and letting speaking more a little bit from the heart and is an incredible moneymaker. So his mind is just fantastic. Helps too. That's detail.

[A]

As you've progressed in your investing specific career, what changes the most as you become more senior? How does it feel the most different doing it today versus doing it when you're a lots to prove young analyst?

[B]

The hardest thing when you're young is developing patience and the conviction that you can wait a little longer for the big fish. You're young, you want to get gone, you want to get gone, you want to get deal experience, you want to get notches on your belt. And that's the completely wrong, wrong instinct. When you're older, you have a lot more range, you've seen a lot more and you got patience. You're like, nothing scares me and I know a big fish will come. Calm down, no pressure. You are less in the front lines and more as a coach player training young partners to do what you used to do. And initially that can be very demotivating because Tom Brady likes to be on the field, not coaching or opinion. Fox maybe not so fun until you reimagine the game and you live vicariously through the people you're training and you enjoy their wins almost as much as you enjoyed your wins. That's been the mental flip that I had to do to enjoy this phase because of course, scoring goals is better than coaching unless you make the mental shift that live vicariously through them, the hard thing. And that's why there's not that many venture and growth equity investors over the age of 50. It's not just that we call in rich or we get tired or we develop new interest. I think our brain ages and stops being plastic. One of the great learnings from beautiful Mind. Dave Hodgson, who's aged beautifully, he's in his late 60s and is very sharp and very much on top of the new trends. He defies the convention. And I said, what is the secret? And he said three things. The most important one is I refuse to think like an old man. My mind still plays, I still wonder, I'm still in awe. And I don't fall into the trap of thinking I have the answer to everything. I'm always learning, experimenting and play. And that's the hardest part, because we have this illusion as we get older that there's no room for play. There's no room for play. There's always room for play.

[A]

How do you inject that into your life?

[B]

You just don't take yourself too seriously. I'm always laughing about everything, making fun of everything. Even when confronted with worst perfect storm where something happens, I start laughing and I say, what are the odds so many bad things could happen all at once? This has never happened before. Seven things at the same time. Let's work through it. That attitude, I think, makes life full upon.

[A]

What do you make of this current bubble that we're inside, outside, depending on the person. You mentioned humanoids, you mentioned bio. A little bit like there's all this exciting stuff happening, probably. All of which in the long run will be amazing for people. Be a lot of consumer surplus and all this. You want to make money through this process for yourself and your partners. How does it feel to you?

[B]

This is more meaningful because it will touch a higher percentage of gdp. The Internet was the other very meaningful one, but it changes how we interact with each other. This will change much more than that unambiguous recommendation. If you're in your 20s or early 30s, go work at AI because you're going to live through dog years. Meaning when we're talking about dot com, seven years of activity in one year. And regardless of whether the company does well or you make money, you're going to have compressed learning. That only happens once every 20 years. So don't miss that opportunity. And when I say that age group, I mean that mental age group. You could be in your 50s and be in that mental after. Would you're ready to take risks? Just go do it. If you have a young mind today, go work in AI because it's going to be so much fun. I think investing is risky. Our approach, which may prove to be too conservative, was to take it slow because it's not clear yet where the value is going to be created. It's not clear yet how Much more powerful the large language models are versus others that are more efficient or how much of the value will be captured by the models versus the applications. So it's exciting to watch. I know we're going to have a moment where we're all going to wake up and say we've invested too much. I don't know if it's three years away or it already happened. I don't think it's happened for sure. It hasn't happened yet.

[A]

You don't think so? You don't think there's a chance that we're in that moment already?

[B]

No.

[A]

Why not?

[B]

It's not crazy enough. I was looking at some stats comparing the AI wave, let's not call it a bubble waves to the dot com and to the railroads and it's looking at the ratio of capex to revenue and what percent of GDP was involved in this and how was this capex funded. Capex to revenue still not crazy. New revenue streams are managing and the biggest difference relative to railroads and.com, is the funds are coming from really rich companies. The magnificent six who are printing money out of their dominant positions are reinvesting a lot of this money into the capex that's powering all this innovation. So that's very healthy. It's not junk bond speculators or thin margin telecom companies that are levering up the wazoo with retail money to fund this wave of innovation. It's really profitable companies. So I think it's got more legs. Will it be bumpy? Yes. But the thing about predicting the future is it's really hard. Explaining the past is a lot easier.

[A]

So what do you think happens from here? In markets, predicting the future is impossible but fun.

[B]

I do think the IPO markets are opening up. The corporate M and A market is opening up. Emerging markets which were dead for the last four years are lighting up. So barring a black swan or an orange swan event or some other geopolitical surprise, I do think the next 18 months will be constructive. And it's a much needed shot of liquidity for our industry and a little more attention to the rest of the world, I'm generally optimistic. I do worry a little bit about the fiscal situation in the US as the reserve currency of the world that you have so much time and so much permission to make mistakes. I think the real issue that we face that I think a lot about, I think politically, globally we're kind of screwed because neoliberal and centrist ideology can't get elected. We missed the main concept that prosperity needed to be shared for it to be electable. So now we're not just in the U.S. but across the globe forced to choose between nationalist leaders who are like we against the world, or socialists who are. Which is, oh, we're all together and we're going to share and take away from the rich to give to the poor. Both are very suboptimal. And we need to find ways to create a center position that's neither socialist nor nationalist, but is one of shared prosperity. I worry that there are not that many people that are focused on that or investing in that, but the world needs that, not just the US we need it in Brazil, we need it in Mexico, we need it across Europe.

[A]

I'm always interested in this difference between risk, which I think of as sometimes quantifiable or imaginable, and pure uncertainty. We literally just don't know what's going to happen. And if you think about where you've made money, how much do you think came from? The willingness to like, embrace uncertainty versus taking really calculated risks.

[B]

You never invest a lot of money without a visibility. What you're doing there is fog and different layers of fog. And what the fog does is it slows you down. But if you look pierce through, you see clarity, you see a monopolist at six times ebitda, you see an opportunity to. It's not a shot in the dark and hope for the best. What you can't do is just shut down and say, this is too rast, too unpredictable. You just have to engage with the unpredictability until you see something before others and you strike for the fish.

[A]

In an era like this, when it's all changing so fast and understanding the core technologies is important, how do you personally learn what is your preferred method to stay abreast of what is going on and like, stay in touch with reality?

[B]

Talk to young people, surf TikTok, try different apps, try crazy things. Go to places where there are no old people and you don't care. I don't care. Someone calls me old, I'm. I'm just playing. Keep it fresh. Value is in the new. Be in the new always. Even if it turns out to be a dead end. Most of what we do is dead ends, but it doesn't mean it was invaluable to try it. That's the hardest thing.

[A]

There's been this wild transformation of our industry in the time that you've been a professional in it. What does the competitive dynamic feel like to you today?

[B]

The universe is amazing. Companies that expanded the number of a hundred million revenue. Business growing 40, 50% has grown 10x because more technology, more people taking risk in more places. Unfortunately we compete against 19,000 GPS. There was not a very nice thing to say but one of my competitors said there's more GPS than McDonald's in the United States, which is one of those GPS that are smaller. They didn't feel like you compared to McDonald's, but it's really too many GPs. And the industry is consolidating. It's become incredibly competitive. You have to have more clarity. What is your competitive edge? How have we thought about our edge brand? We've built this brand about being good partners. This brand means something. People get value from GA inside attracts, helps them recruit talent, get clients, go public scale to have muscles that small shops don't have. We have a hundred people in operations. They can help you with pricing, salesforce effectiveness, AI for what? Customer service. Whatever you need, we got a team, it's there for free. We got an in house human talent team that has taps into a database of 15,000 vetted executives. You need a CTO who'll send you a list tomorrow of eight guys in the area who we've worked with and I think fit that scenario. And then you have to be a specialist. Can't be a generalist anymore. So we've chosen what we call the GA power allies. There are 16 power allies. Things like AI applications, value based care, digital payments, 16 power rallies. Check the website in those power alleys. We think we're among the best in the world and we show up with 32 case studies. We've done this 32 times. And yes, you can copy things that work, but guess what? You don't know the things that didn't work that we tried that we're going to prevent you from trying. It's made it harder to compete. But I do think scale and experience helps, provided you are deliberate at learning from the experience and focused on how you build capabilities with scale in areas that really matter, not just look good on a website.

[A]

If you're teaching a seminar about or for young investors who are only allowed to go invest in non US companies. So everything but the us what are the most important things for that crew to know about doing that well, that's distinct from what it would take to.

[B]

Do well in the US There's a lot more volatility. The frequency of surprises is much higher. So agility is super important. We're also low trust cultures, even though most of them are religious. Doesn't mean you can trust. So a higher percentage of the time, you may find yourself with a crook across the table. So the value of referencing is much more important. And how to do a good reference is super important because people don't say bad things about other people easily. So that's another one, the third one, which is a positive one, which is the one great advantage of being outside the US Is there's so many things that don't work well.

[A]

Lower hanging fruit.

[B]

Humongous. Lower hanging fruit. And if you provide a great service, you capture a lot of value for a really long time.

[A]

How do you do a good reference for an investment?

[B]

You do it with the family that has given you money to make investments. And you say, joan, we're about to invest $200 million in this entrepreneur. You know his father, you know his grandfather. Do you think we should take this risk? And he's like, oh, no fucking way. He's a Krug, son of a Krug. Because he has money with you, he tells you the truth. If he didn't have money with you, he'd say, at the, I don't know, there's some noise. I would do my homework. Or they're fine for hiring. There's another hack, which I learned, which is so important. So much of life is getting the right people on the bus. And when you're going to do a reference on a hire, you call the person and you say, hey, we're considering David for this role. This role involves the following five challenges. This is a very important decision from my company because we can't get this wrong. It's also a very big decision for David because he's happy at his job. And if he gets this wrong, if we get this wrong, we've wasted time and he's out of a job. Help me assess if this is a good risk for me and David. And if you can have an honest discussion. If you don't feel comfortable engaging like this, let's not talk about it. But that's what I need the reference for. You'd be surprised. People are like, well, for that risk, David, leave him there. He's fine. But that is a genuine way to answer it, because what I described is actually true. If this is a bad fit, David should not be taking this job reference. Calls are like, are not. Tell me about David. Is he a good guy? That's a waste of time. People say, yeah, he's a great guy.

[A]

Very good guy.

[B]

He's a great guy, very competent.

[A]

What have you learned about managing? Help manage the career. Success of investors, which is a very distinctive job from a career ladder in a company or something. Incentives matter a lot, I'm sure. I'm curious what you've learned about incentives. What mistakes have you made? You think about you being responsible for other investors and you wanting them to thrive. What's the good, the bad and the ugly that you've learned?

[B]

It's an apprenticeship business. Pairing them up with different people, different skills, different styles is super important. Helping them from a very young age to make recommendations. Don't just do the task. Answer this a lot and ultimately say, what's my level of conviction in doing this? Investment. Don't rely just on this. More senior people. One of the tricks I used to do, I've been in three investment committees in my career on 3G advent, and I would try to understand the mind of each investment committee member and predict what they're going to ask. So I would read the memo and say, Georgia Paulo is going to ask this. Bill Ford is going to ask this. Juan Carlos Torres is going to ask this and also predict their votes. By the end of a year of doing this, I was up to 80, 90%. And what was really interesting, it forced me not only to have my own opinion about a deal because I'd read the materials, but look at it from the perspective of someone who's really good at making these kind of decisions. And my ambition was to one day be completely unpredictable when someone tried to do this with me in when I became a senior person because I was capturing learnings from 30 perspectives. It's not true. I'm. I'm actually pretty predictable by now. It's learning vicariously by forcing yourself to have opinions and also putting yourselves in the minds of people who are proven investors is a way of the apprenticeship on steroids. And one of the things that we do at ga, which I'm really proud of because it was culturally very hard to do. Our investment committees are open to everyone.

[A]

The whole firm.

[B]

The whole firm, investment professionals. So every Tuesday, 190 people sign up and there's no presenting. We come in directly to Shark Tank, just questions and it's beautiful.

[A]

Talk me through how that meeting works. So one person, like a sponsor, is proposing a deal.

[B]

So there's a deal team. The deal team is typically a combination of sector and a GEO put together. They're standardized materials with the checklist. It gets distributed by Friday. Tuesday we come in. There's no presenting the deal lead. There's always a deal lead. The main sponsor is there to answer questions. We have five investment committee members and the IC robe which also opines and we just ask you questions.

[A]

What's the IC robot?

[B]

We've been training the sixth member of the IC based on 45 years of data. So she votes on all our deals. We've been having her do this for the last three years.

[A]

Is she any good?

[B]

So we've back tested her and she's much better than humans. But it turns out someone who's been trained in the past is very good at the past. We only have three years of computer sample data.

[A]

Yeah.

[B]

So we need to wait another four or five years. I'm hoping that by the time we retire. I retire about 10 years. Should be better than him.

[A]

If I could somehow do that exercise with you where I could predict the sorts of questions that you tend to ask about companies. What are they like, what are the big ones that you find yourself constantly asking? Sponsors who are promoting a deal getting.

[B]

In the mind of the founder, his or her motivations, why this is so special and the trajectory that got to this. I try to meet the founders outside the investment committee process as a sponsor basis of competition, sort of true distinct competitive advantage and durability of the competitive advantage. And then I try to push people on the tails, both positive and negative. Six bad things happen. How bad is it and how likely is it? Or if this amazing development happens, which could be amazing, how unlikely is and who else would benefit? I always find the tails to be the most interesting because if you look at the distribution of our returns, 10% of our best deals and we get lucky and they produce 50% of the return so we lose money very little and then 10% we get 5x plus and these are really important and these all of them are better than the upside case in our memos because good things happened that we did not see coming. But God bless and thank God. So I always find like where are the lottery tickets?

[A]

How do you assess this? Seems like. Well first of all incredibly important, like all the data we know how important the right tail is for investing outcomes. Well worn truth at this point. How does one get better at assessing the option value embedded in a given business? That just seems so crucial. There's no book about that, there's no podcast about that. You've got 10 investments. How do you know which of the 10 has more embedded right tail option value?

[B]

Pattern recognition from having seen winning lottery tickets gives you some help. Right. If you've seen more of these, you begin to see where you how you can get lucky as important in all Those lucky scenarios. There was a spear fisherman at the top to capture an opportunity that was available to many, but they sieged it. So it's a lot more about capital.

[A]

Allocator at the top.

[B]

The CEO is. He's someone that can spearfish. And some people, it takes one to go in. Some people are really good at it. Some people are not spear fishermen.

[A]

My final investing question is to wonder how growth as a part of the complex feels relative to other styles today. I'm US centric investor but curious Globally, I'm sure at different points in your history, growth versus say venture or early stage or pre IPO or publix has felt distinctive. Cheaper, more expensive, whatever. More opportune, less opportune. How does growth specifically today feel versus the other segments?

[B]

Best window into growth equity since 2009 and why everything's on sale. There's so much pressure on gps to post DPI that we're getting 40% growers at 15 times EBITDA. It's 30 to 40% discount to the public comps. This is not normal. And it has to do with four years of no IPOs. It has to do with four years with no strategic exits. So the engines of growth are undisturbed. The valuations are half or 40% discount. It feels incredibly attractive. As attractive as the post GFC was.

[A]

What is your unfinished business professionally?

[B]

So listen, I could not think of a better activity than working in growth equity at Jeddah Al Dente for the next 10 years. Global growth equity in the middle of the AI revolution. With the seniority that I have and the dry powder.

[A]

Could it be punched?

[B]

Pinch me, pinch me because I hope I don't die on a plane crash because it's going to be great. After that I think you have to start thinking. I've been active mentoring entrepreneurs through Endeavor, which is an offer profit. I'm on the board and I've been doing this for 25 years. I actually started mentoring, which is an interesting tidbit when my business was running out of cash.com sounds exciting, but there was a death. You know, the dark valley of death. And Linda Rotenberg, the founder of Endeavor, she's like, it is precisely at your darkest moment that you mentor because it's a sign of you have something to give in the darkest moment of the night, which is interesting. The whole aa, like I have friends who are in aa. The body system is so valuable because even at your darkest moment you have enough light to help someone and that gives you the strength to make it through. So I huge Believer in mentoring. That's something I will do for the rest of my life. The unfinished business I think as I get older, I want to help in higher education in the U.S. i think we've lost our way. And I saw the impact scholarship to Harvard did to a young kid from Bolivia. I love that institution. I love education. And I think it's in a moment that it's lost its way and we can find it back.

[A]

Can you teach me mentoring? How does one mentor?

[B]

Well, my strategy, there's many ways to do it. I don't have time to be someone's mentor for six years or to see them. Maybe as part of endeavor, I'll see them twice. So I have to hurt them. For the mentoring to be impactful, I have to make it so obvious that it's so stupid. They haven't yet focused on this, that they're like, I'll show him. And then they act on it. My mentoring sessions are very uncomfortable. I do it in a With a smile on my face.

[A]

Yeah, of course.

[B]

But it works. It's like crash therapy. Like three years of therapy, one hour. No time for bull. We're going directly for the sensitive points. And I've learned to do it in a way that's not damaging or disrespectful in any way, but it is very scathing. And saying, this is clearly an opportunity. Come on, wake up, smell the coffee. And sure enough. And now I have a couple billionaire friends who are like, you really hurt me, but thank you.

[A]

I'm always curious about, like, literal process. If you're meeting someone for the first time is the format. You ask them a bunch of questions and then you quickly do the aggressive. Why aren't you doing this thing?

[B]

I'm married to a shrink. Psychoanalyst. So as a condition to our marriage, I have to do psychoanalysis. And it's a wonderful thing. I recogn. It's one of the things I heard. Therapy and meditation. And one of my favorite. He's now diseased, but he was a philosopher, writer, an incredible Italian, Brazilian guy, very famous in Brazil. You would go to this one hour weekly session and he would look at you in silence. And if didn't say anything, after a while, you just say in town. In town is translating. So I let you take it. The most powerful way to start a conversation with someone you're trying to get to know is silence. You tell me, what do you want to talk about? What do you want?

[A]

Simple.

[B]

I'll give you another one. I asked, what's the most important question you need the answer to from the universe. The answer to that question is so powerful because vocalizing that which you most want the answer to is liberating.

[A]

My traditional closing question for everyone is the same what is the kindest thing that anyone's ever done for you?

[B]

Daniela taught me how to love. As we established, my heart's not very developed, my gut and my brain are very developed. And she's such a loving, wonderful woman. Being loved by her and learning from her how to love back and then learning from her how to love our daughters and the way that they need to be loved. And she's so smart. And loving me can sometimes be very hard.

[A]

A beautiful place to close. Thank you for the reminder to laugh a lot in these conversations. Thanks for your time. If you enjoyed this episode, visit join colossus.com where you'll find every episode of this podcast, complete with hand edited transcripts. You can also subscribe to Colossus Review, our quarterly print, digital and private audio publication featuring in depth profiles of the founders, investors and companies that we admire most. Learn [e-mail] Subscribe.

[B]

Sam.