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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast Well strap yourself in for

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Speaker 2: yet another fantastic conversation. Martine Escobari has an amazing background

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Speaker 2: that ultimately led him to be co president, head of

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Speaker 2: Global Growth Equity and head of the investment Committee at

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Speaker 2: private equity giant General Atlantic. They run over one hundred

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Speaker 2: billion dollars. The background in the story is fascinating, from

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Speaker 2: duty free shops to the Atlantic Philanthropies. Those were set

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Speaker 2: up in nineteen sixty nineteen eighty, respectively, and over the

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Speaker 2: ensuing forty five years, they just have carved their own

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Speaker 2: path and created their own expertise. They're kind of unique

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Speaker 2: amongst the global private equity or even domestic private equity players,

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Speaker 2: and that half of their people, half of their capital

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Speaker 2: has invested overseas, kind of unusual in that space. Martin

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Speaker 2: has just an amazing background. Born in Bolivia, built a

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Speaker 2: company in Brazil, educated in the United States. Just really,

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Speaker 2: there are a few people better situated to describe what

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Speaker 2: it's like being a growth equity investor, meaning you're not

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Speaker 2: investing in startups you're investing in companies that have started

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Speaker 2: to develop some scale and perhaps are turning profitable and

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Speaker 2: taking them to the next level. I thought the conversation

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Speaker 2: was fascinating, and I think you will also with no

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Speaker 2: further ado my conversation with General Atlantics Martin Escobodi.

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Speaker 3: Perry. It is an honor and a privilege to be

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Speaker 3: here with you.

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Speaker 2: Well, thank you so much for coming. I've been looking

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Speaker 2: forward to this in part because what you do is

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Speaker 2: so interesting, but also because your background is a little different.

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Speaker 2: You're born and raised in Bolivia. Tell us a little

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Speaker 2: bit about your upbringing and your experiences.

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Speaker 3: The odds of me being here with you today are

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Speaker 3: about one in a million, right, I mean, I was

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Speaker 3: born in a town of ten thousand people. My parents

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Speaker 3: were communists and had disdain for capitalism. They spent their

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Speaker 3: life saving children's lives in public hospitals, and to them,

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Speaker 3: business people were so less, meaningless lives, and they expected

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Speaker 3: something very different from me. So that's sort of the

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Speaker 3: first set of unusual circumstances.

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Speaker 2: I have to ask what was their response when you said, mom, Dad,

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Speaker 2: I'm going to Harvard.

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Speaker 3: What is Harvard.

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Speaker 2: Still? God and I been talking about the Business School knowledge. Yeah,

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Speaker 2: didn't register with them.

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Speaker 3: And the accident that led me to Harvard is interesting.

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Speaker 3: I had a neighbor who was a school teacher at

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Speaker 3: the American School who became my mom's lifetime best friend.

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Speaker 3: I talked her into putting me in the American School,

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Speaker 3: and by chance, there was a very good American school

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Speaker 3: because some oil companies were funding great education for the kids.

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Speaker 3: And I got a great education. And then I got

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Speaker 3: a scholarship to Harvard and that is where I sort

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Speaker 3: of entered Hogwarts Academy of Wizardy and the doors of

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Speaker 3: the universe opened to me, and I was the first

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Speaker 3: Bolivian in three hundred and fifty years. Is that go

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Speaker 3: to Harvard College?

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Speaker 2: Yeah, oh my god, that's amazing. So economics BA, and

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Speaker 2: then you get the NBA from the business school. What

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Speaker 2: was the career plan?

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Speaker 3: So listen, I've up until recently been very disciplined about

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Speaker 3: setting up five year plans for myself and I keep them.

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Speaker 3: And if you looked at my five year plan when

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Speaker 3: I was in college, I was destined to go work

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Speaker 3: at the World Bank, help solve big problems in emerging markets.

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Speaker 3: One day get called back to my country to be

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Speaker 3: finance minister and then if I did a good job,

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Speaker 3: maybe have a shot at running Bolivia. That was the

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Speaker 3: plan coming out of college. I stumbled into business, I

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Speaker 3: fell in love, and that's how business school came about.

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Speaker 3: And then that's what I've been doing for thirty years.

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Speaker 2: Finance Minister of Bolivia is fairly ambitious. But before we

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Speaker 2: get to that, you co found Submarino or Submarna. How

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Speaker 2: do you pronounce that? Submarino Submarno really one of the

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Speaker 2: earliest online retailers in Brazil. Tell us a little bit

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Speaker 2: about your experience there and what it was like being

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Speaker 2: an entrepreneur in Brazil in the nineteen nineties.

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Speaker 3: So I believe each generation will have one giant wave,

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Speaker 3: one giant disruption that will catch us in our twenties

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Speaker 3: or thirties. For me, it was the Internet. Later, it

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Speaker 3: was the mobile Internet, the cloud. Now it's AI and

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Speaker 3: biotech revolution.

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Speaker 2: But that sounds like four waves.

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Speaker 3: That hit me in my twenties was the Internet, and

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Speaker 3: I had this realization that this is my one shot.

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Speaker 3: I don't know if you listened to the Hamilton musical,

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Speaker 3: there's my shot, the scrappy immigrant that's waiting for the

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Speaker 3: revolution where it's a level playing field and you're all

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Speaker 3: trying to catch this giant wave and the internet felt

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Speaker 3: at this amazing life changing opportunity, and I said, I

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Speaker 3: can't miss this adventure. And to me, together with two

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Speaker 3: other colleagues from the private equity group I was working

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Speaker 3: on out of business school, from the three g guys

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Speaker 3: said we're in the wrong side of this revolution. We

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Speaker 3: shouldn't be financing the startups, we should be creating the startups.

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Speaker 3: And we set out to build the Ali Baba or

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Speaker 3: the Amazon dot Com of Brazil. And it was seven

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Speaker 3: incredible years because it started great. We raised more money

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Speaker 3: than we could ever dream We almost went public, the

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Speaker 3: market shutdown, we almost went bankrupt. We had to sell

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Speaker 3: the pieces, we had to get the profitability, and then

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Speaker 3: we came back. So it was a compressed, you know,

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Speaker 3: thirty years of life into seven. But I felt I

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Speaker 3: did not miss the revolution of my generation.

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Speaker 2: So New York City, in my recollection during the nineteen

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Speaker 2: nineties was just. There was a fire hose of cash

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Speaker 2: and capital over everything. It was a party. Apartment prices

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Speaker 2: were going up, restaurants, clubs, everything was just. It was

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Speaker 2: the Roaring twenties. All over again. You launched this in

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Speaker 2: Brazil in nineteen ninety nine, What was the economy like,

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Speaker 2: what was your experience like?

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Speaker 3: So listen, the macro was horrible, but the technology was overwhelming,

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Speaker 3: and the sources of capital recognized that this was a

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Speaker 3: global opportunity. So we raised two hundred and fifty million

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Speaker 3: dollars as a private company, So before the correction of

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Speaker 3: March of two thousand, money was raiding. There was no infrastructure.

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Speaker 3: You had to build everything from zero. Everything was one

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Speaker 3: hundred times more difficult. But the advantage of Brazil is

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Speaker 3: we had not developed the brick and mortar retail infrastructure.

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Speaker 3: There were no superstores. The Brazilian consumer was starved variety

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Speaker 3: because all the supermarkets carried very limited assortment. So the

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Speaker 3: opportunity of e commerce, we believed, was ten times bigger

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Speaker 3: than in the US or Western Europe because we were

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Speaker 3: leapfrogging a whole stage of evolution of the retail format.

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Speaker 3: And it came to be. E Commerce in Brazil now

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Speaker 3: twenty five years later is close to twenty percent of

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Speaker 3: all trade. It is a vibrant, dynamic industry and there

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Speaker 3: are no category killers. We skipped that whole toys, r

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Speaker 3: us and babies are us and bad and bond phase

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Speaker 3: and that's good for the environment. So I was part

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Speaker 3: of a transformational moment together with my co founders, and

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Speaker 3: it was exciting, it was scary, and ultimately when we

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Speaker 3: sold it producing good returns for the investors, it was

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Speaker 3: very fulfilling.

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Speaker 2: So what did that experience as an entrepreneur duty how

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Speaker 2: did that impact you years later as an investor? What

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Speaker 2: do you carry forward from that?

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Speaker 3: So I've been an investor for twenty odd years. The

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Speaker 3: main lesson is the profound realization that the heroes of

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Speaker 3: the journey are not the investors, are the people that

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Speaker 3: are in the front lines and the trench lines. It

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Speaker 3: is so hard to create out of nothing something that thrives.

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Speaker 3: It is in human level of sacrifice that these people

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Speaker 3: go through. And I have so much respect for the

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Speaker 3: heroes of the journey, and I remind my colleagues we're

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Speaker 3: just the supply lines.

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Speaker 2: They're on the front lines. You're just supriy and you're

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Speaker 2: just supplying the AMMO and the material to do what

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Speaker 2: they have to do. That's really interesting. So let's discuss

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Speaker 2: some of the things you've talked about. When you discuss

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Speaker 2: investing in entrepreneurship. One of the themes that keeps coming

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Speaker 2: up that I've read in some of your notes is

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Speaker 2: the unpredictability of the world. How do you think about

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Speaker 2: making investments for five or ten years out when the

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Speaker 2: world is just so unpredictable.

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Speaker 3: So I grew up in Bolivia in the eighties. It

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Speaker 3: was chaos, chaos that it's hard to internalize. So in

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Speaker 3: my teenage years ten years, there were nine presidents. In

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Speaker 3: my teenage years, there was thirty five thousand percent inflation.

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Speaker 3: What that meant is halfway through my teenage years, we

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Speaker 3: changed currencies from the peso Boliviano to justin Boliviano by

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Speaker 3: chopping off six zeros. Wow, one million US dollars becomes

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Speaker 3: one American. That happened when I was fifteen, So I

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Speaker 3: get I grew up with chaos, and I got comfortable

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Speaker 3: with chaos. And what the main lesson of chaos is

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Speaker 3: it's never as bad as it seems, and it's always

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Speaker 3: dark right before the sun is going to come out,

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Speaker 3: and you have to believe the sun is going to

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Speaker 3: come out and plan for the sun. And as it

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Speaker 3: relates to a world that's highly unpredictable. Remember, the sign

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Speaker 3: is going to come out and stay through to first

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Speaker 3: principles and what makes great businesses, and who are great

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Speaker 3: entrepreneurs and who's solving real world problems and lean in

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Speaker 3: when everyone else is scared.

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Speaker 2: So I want to talk a little bit more about

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Speaker 2: your upbringing, but I want listeners to understand the genesis

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Speaker 2: of General Atlantic and where it comes from. So let's

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Speaker 2: talk a little bit about Chuck Feeney, which I had

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Speaker 2: no idea about when I started doing my homework here.

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Speaker 2: So in nineteen sixty in Hong Kong, he founds the

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Speaker 2: first duty fee shop in the airport in Hong Kong.

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Speaker 2: Right now, to the US travelers, duties aren't a big deal.

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Speaker 2: Buy makeup, we buy it, booze, whatever it is, it's

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Speaker 2: more or less the same price at home. But if

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Speaker 2: you go to Europe, if you go to parts of Asia,

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Speaker 2: there are like substantial taxes, and buying these things at

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Speaker 2: the airport duty free real substantial savings in money. So

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Speaker 2: he launches duty free Shops dfs in nineteen sixty. By

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Speaker 2: nineteen eighty, it's so successful that they have to set

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Speaker 2: up General Lannik to manage the philanthropy that he's now doing.

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Speaker 2: Tell us a little bit about Chuck Feeney and how

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Speaker 2: GA was established.

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Speaker 3: Chuck is one of the most impressive people I've ever

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Speaker 3: got a chance to meet. He stumbled into the duty

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Speaker 3: free idea as a soldier because he was mesmerized by

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Speaker 3: the vibrant trade that happened in the American bases in

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Speaker 3: the Pacific. So you could buy cigars, liquor appliances half

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Speaker 3: off because it wasn't America, and it wasn't the Philippines.

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Speaker 3: Was no man's land in this area, and the taxes

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Speaker 3: were very high in those regions, so there was a loophole.

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Speaker 3: He created the world due to free business, which thrived

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Speaker 3: to a major business. He landed upon a level of

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Speaker 3: wealth he was not ready for, to say the least,

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Speaker 3: and he questioned, what is the purpose of my wealth?

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Speaker 3: And he thought about it for a long time. And

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Speaker 3: I've heard him tell the story. He's now diseased two

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Speaker 3: years ago, and he says, the purpose of my wealth

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Speaker 3: is to improve the human condition today, not tomorrow, not

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Speaker 3: one hundred years from not through foundation today. And he

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Speaker 3: created General Atlantic as his family office, or the vehicle

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Speaker 3: to manage his family wealth. He wanted us to invest

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Speaker 3: in innovation and entrepreneurship globally, and he wanted all the

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Speaker 3: proceeds of our investment activity to go finance the great

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Speaker 3: causes anonymously. He was the originator of the giving pledge,

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Speaker 3: except it wasn't fifty percent, it was one hundred percent.

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Speaker 3: He famously said, I want my last check to bounce.

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Speaker 3: Almost succeeded it when he died. He donated nine billion

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Speaker 3: dollars over his lifetime, most of it anonymously, and at

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Speaker 3: the later stages of his life he says, I actually

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Speaker 3: need to tell my story because it maybe it motivates

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Speaker 3: other people to follow this incredibly rewarding path, which is

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Speaker 3: to spend my life giving away my wealth. And that

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Speaker 3: he did, and he set us off on this incredible

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Speaker 3: forty five year journey of backing innovators wherever they may

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Speaker 3: be in the world. And that's what we are today,

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Speaker 3: and that's what we've been doing for forty five years.

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Speaker 2: And to fill in some of the blanks that some

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Speaker 2: people may not be aware of. Duty Free Shoppers Limited

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Speaker 2: is now owned by Luxury Giant LVMH and General Lannik

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Speaker 2: evolved from his family office to manage money for the

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Speaker 2: philanthropies to a leading growth and innovation investor with now

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Speaker 2: more than one hundred billion dollars in assets under management.

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Speaker 2: Tell us a little bit about what General at Atlantic

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Speaker 2: has been doing for the past forty five years to

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Speaker 2: build up those returns to that degree. I'm assuming there

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Speaker 2: are lots of distributions along the way as well.

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Speaker 3: Yes, yes, So we started investing in technology in the

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Speaker 3: United States and soon discovered that technology is not just

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Speaker 3: changing the technology sector, but it's changing the healthcare sector

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Speaker 3: and the financial services. Then we discovered that this is

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Speaker 3: a global opportunity. We opened up Europe thirty years ago,

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Speaker 3: we opened up the emerging markets twenty two years ago,

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Speaker 3: and now we've built what we think is the most experienced,

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Speaker 3: scaled growth equity investor in the world. Now, growth equity

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Speaker 3: has become incredibly competitive. It's now a two trillion dollar

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Speaker 3: asset class. Why is it so large because there are

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Speaker 3: more companies that are growing thirty forty percent. Why because

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Speaker 3: they're embracing technology to change their business and that allows

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Speaker 3: for faster growth at cost efficient metrics. How do we

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Speaker 3: compete in this highly competitive world? We have more experience

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Speaker 3: forty five years of track record, great brand, five hundred

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Speaker 3: investments over the last forty five years. We have scale.

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Speaker 3: We have two hundred and fifty investment professionals. We have

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Speaker 3: ninety operators in the Operators group. We have tech enabled sourcing.

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Speaker 3: We meet seven thousand entrepreneurs every year to pick the

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Speaker 3: best twenty five. So this is a scale game. We

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Speaker 3: have this scale, and then we also have specialization. There

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Speaker 3: are sixteen strategies we call them the GA Power Alleys,

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Speaker 3: where we've developed ten and twenty year track record. That's

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Speaker 3: a huge source of competitive advantage. And then we have

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Speaker 3: nineteen local offices throughout the world. In every local market,

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Speaker 3: we are more local than the local players, and we

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Speaker 3: have the advantage that we are plugged into this global

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Speaker 3: network of knowledge and accumulated experience that the GA infrastructure

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Speaker 3: provides thro all our local partners.

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Speaker 2: So let's start out why we're even having this conversation.

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Speaker 2: Not only did Chuck Feeni make most of his donations

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Speaker 2: anonymously and gave away billions and billions of dollars with

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Speaker 2: no name attached, but GA has historically been kind of

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Speaker 2: a low profile shop, so I think listeners may not

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Speaker 2: really know some of the details of how the firm

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Speaker 2: invests and the key areas you focus on. So let's

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Speaker 2: start out talking about those five sectors, which are technology,

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Speaker 2: consumer services, financial services, healthcare, and life sciences. And I

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Speaker 2: know you get into a lot of specific details, and

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Speaker 2: each of those five sectors have tons of subsectors. Tell

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Speaker 2: us a little bit about the areas GA focuses on.

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Speaker 3: Listen, the sectors of how we are organized internally. What's

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Speaker 3: more interesting is what are the trends changing our world today.

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Speaker 3: There are four mega trends that define the opportunity set

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Speaker 3: for growth equity. First is the digital transition. Ninety percent

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Speaker 3: of the world's transactions are going digital. Four trillion dollars

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Speaker 3: of capitalists invested every year in this digital transition, in

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Speaker 3: the invest in AI in cloud computing. This is a

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Speaker 3: trend that's twenty years in the making. It's been accelerated

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Speaker 3: by AI massive wave. The second one is health care innovation.

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Speaker 3: Huge challenges in the West. Healthcare is too expensive and ineffective.

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Speaker 3: The only way to address that is through technology to

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Speaker 3: drive better health outcomes. In parallel, there's a new generation

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Speaker 3: of health care innovation that is using the advances of

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Speaker 3: it to apply it to the cell and creating the

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Speaker 3: next generation of life sciences therapeuties which will dramatically change

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Speaker 3: our health span. So that's another mega wave that's very relevant.

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Speaker 2: By the way, I love the phrase health span as

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Speaker 2: opposed to lifespan. Of course, the idea is to not

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Speaker 2: just live long, but be healthy for as long as

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Speaker 2: you possibly can.

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Speaker 3: I'll give you one scary statistic. Ninety five percent of

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Speaker 3: Americans die in hospitals. Only three percent of American doctors

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Speaker 3: die in hospitals.

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Speaker 2: Huh.

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Speaker 3: It's not about the quality of your death, it's the

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Speaker 3: quality of your life and your health span. As you said, Okay,

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Speaker 3: so healthcare innovation huge area, our biggest, one of our

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Speaker 3: biggest sectors energy transition. To get to our decop organization targets,

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Speaker 3: we will need to spend north of six trillion dollars

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Speaker 3: a year. That's a huge opportunity. The whole ecosystem around

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Speaker 3: this trend to net zero. And the fourth major mega

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Speaker 3: trend is the rise of the new consumer. The sort

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Speaker 3: of younger middle class rising and purchasing power in the

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Speaker 3: rest of the world will mean six trillion dollars of

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Speaker 3: extra consumption by twenty thirty. In this emerging new middle class,

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Speaker 3: these four mega trends define the growth equity opportunity set.

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Speaker 2: I find it interesting that you're discussing mega trends that

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Speaker 2: are global, in large part because I think this is

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Speaker 2: an accurate statistic. Is General Atlantic the only private equity

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Speaker 2: growth shop that has half of its assets and half

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Speaker 2: of its people abroad? Like, only half of your capital

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Speaker 2: and people are in the.

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Speaker 3: Are you the only one among the top ten in

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Speaker 3: the world. Yes, we are more global than anyone else.

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Speaker 3: Why are we more global than anyone else? I'll give

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Speaker 3: you two statistics. Half the unicorns, the sort of billion

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Speaker 3: dollar companies in the world, are born outside the United States.

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Speaker 3: More interestingly, half the unicorns in the United States are

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Speaker 3: founded by immigrants from other parts of the world. So

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Speaker 3: seventy five percent of value creation is for people that

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Speaker 3: were in this world, people not born in US. Talent

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Speaker 3: is sprinkled around the eight billion souls that inhabit the earth.

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Speaker 3: We got to go where the talent is, and in

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Speaker 3: our case, it means half of what we do is

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Speaker 3: in the US and half is outside the US. And

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Speaker 3: our activities outside the US have been a creative to returns.

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Speaker 2: So let's talk about some of the other areas that

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Speaker 2: are outside you come from South America. But let's talk

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Speaker 2: generally emerging markets. Where do you look around the world

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Speaker 2: for this talent.

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Speaker 3: Listen, we have presence all over the world. We have

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Speaker 3: three offices in China, we have offices in India, we

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Speaker 3: have offices in Singapore, two in Latin America. We opened

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Speaker 3: offices in two of three offices in the Middle East.

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Speaker 3: What's exciting right now? And India. We've been in India

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Speaker 3: for twenty two years, and India did not have its

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Speaker 3: moment in the sun. Digital India wasn't ready. India infrastructure

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Speaker 3: wasn't ready. It has been ready for the last five years.

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Speaker 3: The business models, the digital business models that we saw

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Speaker 3: transform industries in China and Brazil in Mexico had not

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Speaker 3: yet done that in India. Over the last five years,

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Speaker 3: India did a couple of reforms. First demonetization taking currency

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Speaker 3: away and simplification of the tax code. Meant the informal

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Speaker 3: economy went from fifty percent to twenty five percent.

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Speaker 2: When you say informal economy, we not black market, we

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Speaker 2: just not paying taxes. Just cash economy.

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Speaker 3: Gosh economy, you don't have a credit, you don't it

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Speaker 3: doesn't count.

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Speaker 2: Kind of reminds me of the study they did in

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Speaker 2: Greece where you have to pay tax on the pools

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Speaker 2: and satellite images show there's something like twenty x number

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Speaker 2: of pools. Then there are people paying taxes exact. So

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Speaker 2: that was a modi change.

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Speaker 3: That was a modi change. Second change is the transformation

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Speaker 3: of digital India, which is Internet access was expensive and

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Speaker 3: not very available. The telecom sector restructure around GEO, which

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Speaker 3: is a great telco company, and now sixty percent of

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Speaker 3: Indias have low cost wireless broadband. In parallel, the government

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Speaker 3: created a national biometric identity database that enabled fraud free

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Speaker 3: digital transactions from your phone, and now sixty percent of

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Speaker 3: all transactions are in India are digital. All of a sudden,

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Speaker 3: you have one of the most digital economies in the world.

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Speaker 3: The final missing link their own capital markets, domestic saving

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Speaker 3: gone up. They have certain restrictions around foreign domestic savings

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Speaker 3: for individuals investing abroad, so they're investing in their local markets.

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Speaker 3: The best IPO market of the last two years in

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Speaker 3: the world has been India. So now you have the

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Speaker 3: confluence of three factors that create what we think will

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Speaker 3: be a virtuous next ten years for India, which is

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Speaker 3: about time. Latin America is seven hundred million inhabitants, rising

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Speaker 3: middle class, trading at all time low multiples. You can

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Speaker 3: buy the entire country of Brazil at ten times earnings. Mexico,

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Speaker 3: there is no better candidate or beneficiary of the trend

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Speaker 3: to French shoring than the Mexican economy. The Chinese per

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Speaker 3: hour worker is thirty percent cheaper than the Chinese worker

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Speaker 3: and their next door.

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Speaker 2: The Mexican workers. The Mexican cheaper than China.

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Speaker 3: Than China today and their next door and they're your friends.

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Speaker 3: They're not a geopolitical challenger to the US. So I

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Speaker 3: see another great decade for Latin America in the next

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Speaker 3: in the next years ahead.

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Speaker 2: So you mentioned the IPO market in India doing so well.

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Speaker 2: I got to ask, We've seen in two going on

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Speaker 2: three years of pretty mediocre IPO offerings and very few

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Speaker 2: IPOs actually come in to market. How do you look

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Speaker 2: at this environment? What do you think happens with the

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Speaker 2: IPO pipeline here?

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Speaker 3: So, the growth equity opportunity set is the cheapest it's

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Speaker 3: been in twenty five years. The price for growth that

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Speaker 3: we're being asked to at to pay is the cheapest

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Speaker 3: I've ever seen in my career, and I've been around.

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Speaker 3: Why is it to cheap? Exactly for what you just said, Berry,

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Speaker 3: We've gone three and a half years without a vibrant

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Speaker 3: IPO market in the United States. That is really long.

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Speaker 3: This is the longest period in recorded history. The second

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Speaker 3: longest this century was eighteen months starting in March of

403
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Speaker 3: two thousand. We estimate there's about three thousand companies waiting

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Speaker 3: to go public. This is about eight hundred globally. Globally right,

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Speaker 3: more than half in the US. But it is a

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Speaker 3: backlog of eight hundred billion dollars of stock that hasn't

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Speaker 3: been able to move. And that's why we're seeing such

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Speaker 3: attractive pricing in the growth equity space. It's mostly hunting

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Speaker 3: in these tired cap tables, pressure gps that need to

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Speaker 3: show DPI and companies that aren't able to go public. Now,

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Speaker 3: what does it take for the IPO market to open up?

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Speaker 3: Historically you need three things. One is you need positive

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Speaker 3: S and P five hundred performance for the trailing two years.

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Speaker 2: So we have that.

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Speaker 3: We have that. We need low and stable, relatively low

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Speaker 3: and stable VIX check.

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Speaker 2: Well, not so much this quarter this quarter.

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Speaker 3: A little up. Maybe maybe some headroom there when some headwinds.

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Speaker 3: The third one is you need six IPOs that pop.

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Speaker 3: We haven't had that, but I think you know, conditions

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Speaker 3: are set for the market to open at some point

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Speaker 3: in this year, and when they do, it will unlock

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Speaker 3: a lot of value. Now, this location is going to

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Speaker 3: take a while to flow through because a good IPO

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Speaker 3: market moves about two hundred billion dollars of stock. I said,

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Speaker 3: there's eight hundred billion dollars of backlog. It will take

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Speaker 3: two to three years to for pricing conditions to normalize.

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Speaker 2: And you mentioned the third thing you mentioned that we

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Speaker 2: need is six IPOs to pop. What happens does it

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Speaker 2: just shift the psychology and suddenly people.

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Speaker 3: Aren't Fomo replaces fear.

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Speaker 2: Hmm, that's really interesting, Fomo replaces fear. What about the

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Speaker 2: current political climate is it conducive? You know, the current

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Speaker 2: president got elected, the expectation was, hey, we'll have some

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Speaker 2: tax cuts, there'll be some capital gain tax cuts, there'll

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Speaker 2: be some deregulation. That feels like it was sort of

437
00:25:36,440 --> 00:25:40,040
Speaker 2: put on the back burner while we're dealing with tariffs

438
00:25:40,040 --> 00:25:43,879
Speaker 2: and doze and everything else. And mister market hasn't been

439
00:25:43,960 --> 00:25:48,359
Speaker 2: especially happy about that. Is this just a temporary setback?

440
00:25:48,400 --> 00:25:50,080
Speaker 2: What do we have to do to get to that

441
00:25:50,640 --> 00:25:52,680
Speaker 2: IPO pipeline that awaits us?

442
00:25:53,320 --> 00:25:57,560
Speaker 3: Listen, there's more uncertainty in the world than usual, and

443
00:25:57,680 --> 00:26:06,560
Speaker 3: predicting that macro is hard. When faced with uncertainty, Diversify globally,

444
00:26:06,600 --> 00:26:10,480
Speaker 3: diversify and focus on the highest quality companies, and the

445
00:26:10,600 --> 00:26:15,040
Speaker 3: uncertainly becomes less determinant to your faith. Predicting the US

446
00:26:15,080 --> 00:26:17,800
Speaker 3: politics for the next four weeks is impossible. For the

447
00:26:17,840 --> 00:26:21,760
Speaker 3: next six months is virtually even harder. So please don't

448
00:26:21,760 --> 00:26:26,160
Speaker 3: take me there. The solution to the uncertainty is diversification.

449
00:26:25,440 --> 00:26:29,280
Speaker 2: And quality makes a lot of sense. You have described

450
00:26:29,480 --> 00:26:33,280
Speaker 2: your favorite business model to invest in as we like

451
00:26:33,600 --> 00:26:38,080
Speaker 2: beautiful business models. What makes a business model beautiful?

452
00:26:38,840 --> 00:26:43,240
Speaker 3: Yeah, you have to capture gross margin. You have to

453
00:26:43,320 --> 00:26:46,879
Speaker 3: sell the unit you produce at a markup to what

454
00:26:46,920 --> 00:26:49,720
Speaker 3: the cost of production is. The bigger the margin, the

455
00:26:49,720 --> 00:26:53,119
Speaker 3: more beautiful you are. Now the beauty that's a picture

456
00:26:53,160 --> 00:26:56,800
Speaker 3: of beauty. What's really relevant about beauty is is lifetime beauty?

457
00:26:57,320 --> 00:27:02,600
Speaker 3: Is that gross margin pencible or will it be eroded

458
00:27:02,640 --> 00:27:06,040
Speaker 3: away by the competitors that see your beautiful gross margins.

459
00:27:06,080 --> 00:27:08,840
Speaker 3: And the real question about it is the durability of

460
00:27:08,880 --> 00:27:11,320
Speaker 3: the beauty. And you get durability when you have moat,

461
00:27:11,440 --> 00:27:13,399
Speaker 3: and you get moat when you have economies of scale,

462
00:27:13,400 --> 00:27:18,640
Speaker 3: economies of scope, learning externalities, network effects, agility. What are

463
00:27:18,680 --> 00:27:22,159
Speaker 3: the conditions that this team has to create gross margin

464
00:27:22,200 --> 00:27:25,560
Speaker 3: and have and build a humongous, beautiful moat that allows

465
00:27:25,600 --> 00:27:28,240
Speaker 3: us to be a lifetime gross margin hopefully an increase

466
00:27:28,280 --> 00:27:28,960
Speaker 3: in gross margin?

467
00:27:30,160 --> 00:27:33,080
Speaker 2: How do you evaluate those things? A lot of those

468
00:27:34,080 --> 00:27:37,479
Speaker 2: items you checked off don't show up in a balance sheet?

469
00:27:37,920 --> 00:27:43,200
Speaker 2: How do you figure out what managers or models are agile?

470
00:27:44,040 --> 00:27:46,840
Speaker 3: It helps when you're specialized in a business model. So

471
00:27:46,880 --> 00:27:50,160
Speaker 3: one of our power allys is investment management. And I'll

472
00:27:50,200 --> 00:27:52,359
Speaker 3: tell you one long story to bring a power alley

473
00:27:52,400 --> 00:27:55,199
Speaker 3: to life. In the late in the mid nineties, we

474
00:27:55,240 --> 00:27:57,840
Speaker 3: looked at the wealth management industry in the United States

475
00:27:58,080 --> 00:28:01,120
Speaker 3: and it was eighty percent concentrated retail banks. The guy

476
00:28:01,160 --> 00:28:03,320
Speaker 3: that was selling you the mortgage the checking account was

477
00:28:03,320 --> 00:28:05,520
Speaker 3: also selling your four oh one a K and your brokerage,

478
00:28:05,800 --> 00:28:07,640
Speaker 3: and the fees were high and the service was poor.

479
00:28:08,040 --> 00:28:11,600
Speaker 3: We took the bat that eighty percent would come down

480
00:28:12,000 --> 00:28:14,760
Speaker 3: and Sure enough, of the following decade, eighty percent came

481
00:28:14,800 --> 00:28:18,399
Speaker 3: down to ten percent. They were disrupted by Schwab a Merritrade,

482
00:28:18,440 --> 00:28:22,080
Speaker 3: e Trade, Fidelity Vanguard. We invested in e Trade twenty

483
00:28:22,080 --> 00:28:24,960
Speaker 3: seven times multiple within seven.

484
00:28:24,800 --> 00:28:27,640
Speaker 2: Years, sold to Morgan Stanley, eventually.

485
00:28:27,400 --> 00:28:31,080
Speaker 3: Sold tomorrow after long after we were gone twelve. In

486
00:28:31,119 --> 00:28:34,399
Speaker 3: twenty twelve, when I started ATJA, we looked at the

487
00:28:34,440 --> 00:28:38,800
Speaker 3: Brazilian market and the four retail banks had ninety nine

488
00:28:38,880 --> 00:28:43,920
Speaker 3: percent share, and we said, this smells like something we've

489
00:28:43,920 --> 00:28:48,160
Speaker 3: seen before. We backed one of the disruptors. Ninety nine

490
00:28:48,200 --> 00:28:51,440
Speaker 3: percent dropped to seventy eight percent. This company multiplied itself

491
00:28:51,480 --> 00:28:53,880
Speaker 3: that one hundred times. We've done the same thing in

492
00:28:53,880 --> 00:28:56,120
Speaker 3: India with IFL Wealth, in China with food Too. We're

493
00:28:56,120 --> 00:28:59,560
Speaker 3: doing it again in Mexico with clar So. A lot

494
00:28:59,600 --> 00:29:03,000
Speaker 3: of this future telling is pattern recognition, and the more

495
00:29:03,080 --> 00:29:05,880
Speaker 3: you have done in a power alley, the easier it

496
00:29:06,040 --> 00:29:08,600
Speaker 3: is to recognize these patterns.

497
00:29:08,960 --> 00:29:13,680
Speaker 2: So I'm fascinated by not only general ATLANTICX global footprint,

498
00:29:14,200 --> 00:29:20,480
Speaker 2: but your international experience. How did your upbringing in Bolivia

499
00:29:20,520 --> 00:29:25,880
Speaker 2: and your entrepreneurship in Brazil influence this career path you've taken.

500
00:29:26,640 --> 00:29:31,200
Speaker 3: Bolivia taught me about chaos. Brazil taught me about profiting

501
00:29:31,240 --> 00:29:35,960
Speaker 3: from chaos. So one of the interesting experiences is at

502
00:29:36,000 --> 00:29:38,280
Speaker 3: the darkest moment of the night, when so Money was

503
00:29:38,320 --> 00:29:42,720
Speaker 3: almost bankrupt, I decided I had almost lost hope at

504
00:29:42,800 --> 00:29:45,960
Speaker 3: emerging markets investing, and I decided, like I typically do,

505
00:29:46,080 --> 00:29:48,800
Speaker 3: to treat it like a research project. And I convinced

506
00:29:48,840 --> 00:29:50,960
Speaker 3: a professor from Harvard to do a project with me

507
00:29:51,520 --> 00:29:56,640
Speaker 3: where we studied ten incredible Brazilian companies that had thrived

508
00:29:56,920 --> 00:30:00,360
Speaker 3: in the nineties and become multi billion dollar corporations and

509
00:30:00,440 --> 00:30:03,600
Speaker 3: compare them to ten competitors of theirs that didn't thrive.

510
00:30:04,000 --> 00:30:06,080
Speaker 3: And we took it. We did five hundred interviews, We

511
00:30:06,080 --> 00:30:07,800
Speaker 3: wrote this book, which I gave you a copy of,

512
00:30:07,880 --> 00:30:10,920
Speaker 3: and I hope you'll enjoy it. And the big inside

513
00:30:11,560 --> 00:30:13,960
Speaker 3: is that in moments of chaos, there is a once

514
00:30:14,000 --> 00:30:16,760
Speaker 3: in a generation opportunity to do a transformational change to

515
00:30:16,800 --> 00:30:20,000
Speaker 3: your business. And the masters of this, and there's ten

516
00:30:20,000 --> 00:30:21,840
Speaker 3: examples in the book, but the masters of this is

517
00:30:21,840 --> 00:30:24,520
Speaker 3: the Three G guys. And what the Three G guys

518
00:30:24,560 --> 00:30:28,240
Speaker 3: set out to do is what I call spearfishing, and

519
00:30:28,280 --> 00:30:31,880
Speaker 3: they actually physically are spearfishers. They go on the weekend.

520
00:30:31,960 --> 00:30:35,640
Speaker 3: And the beauty of spearfishing I've done since is you

521
00:30:35,640 --> 00:30:39,480
Speaker 3: don't swim towards the fish. You choose an area full

522
00:30:39,560 --> 00:30:42,280
Speaker 3: of fish. You dive down without a tank, just you

523
00:30:42,360 --> 00:30:45,360
Speaker 3: under your spear, and you hold your breath for three

524
00:30:45,400 --> 00:30:48,640
Speaker 3: to five minutes waiting for the fat fish, and then

525
00:30:48,680 --> 00:30:51,680
Speaker 3: when he appears, you have two seconds to make the kill.

526
00:30:52,200 --> 00:30:56,280
Speaker 3: And that's what they do. And their journey was so

527
00:30:56,280 --> 00:30:58,840
Speaker 3: they're investment bankers. They had the number one investment bank

528
00:30:58,840 --> 00:31:01,560
Speaker 3: in Brazil. Too much cash. They wanted real assets. They

529
00:31:01,560 --> 00:31:06,960
Speaker 3: were hunting for a large asset that had characteristics of

530
00:31:07,000 --> 00:31:09,360
Speaker 3: an industry that would benefit once inflation stopped. That was

531
00:31:09,400 --> 00:31:12,240
Speaker 3: their bed and they the weight it. And a week

532
00:31:12,280 --> 00:31:15,760
Speaker 3: before a momentous election, the Swiss owners of the number

533
00:31:15,800 --> 00:31:18,680
Speaker 3: two beer company panicked and they sold their business in

534
00:31:18,720 --> 00:31:22,080
Speaker 3: two days. They bought it Big Fish. Then they waited

535
00:31:22,080 --> 00:31:25,200
Speaker 3: ten years. They made that business really profitable, really efficient,

536
00:31:25,600 --> 00:31:28,479
Speaker 3: and then another crisis, when the number one beer company

537
00:31:28,600 --> 00:31:31,600
Speaker 3: was in difficulties, they pounced again. And they did it

538
00:31:31,640 --> 00:31:34,840
Speaker 3: again twenty years later when Anheuser Bush was in the

539
00:31:34,840 --> 00:31:38,080
Speaker 3: Great Crisis of the Great Financial Crisis, and they struck

540
00:31:38,320 --> 00:31:43,120
Speaker 3: globally creating the So this idea that in moments of chaos,

541
00:31:43,400 --> 00:31:46,200
Speaker 3: there's opportunities to do once in a generation ten x

542
00:31:46,320 --> 00:31:50,440
Speaker 3: bets is an insight that has allowed me to navigate

543
00:31:50,440 --> 00:31:54,360
Speaker 3: the volatility in all the emerging markets, because chaos visits

544
00:31:54,400 --> 00:31:56,160
Speaker 3: more frequently the emerging markets.

545
00:31:56,480 --> 00:31:59,400
Speaker 2: So we've seen some growth in emerging markets over the

546
00:31:59,440 --> 00:32:03,720
Speaker 2: past few years. What are the areas. I know you're

547
00:32:03,800 --> 00:32:07,320
Speaker 2: focused on some of the mega trends, but what parts

548
00:32:07,360 --> 00:32:11,760
Speaker 2: of the world are you looking at? What's attractive outside

549
00:32:11,760 --> 00:32:14,520
Speaker 2: of the United States for the half of general nic

550
00:32:15,000 --> 00:32:16,680
Speaker 2: that's not domestic.

551
00:32:16,960 --> 00:32:19,320
Speaker 3: Yeah, listen, what we've tried to do in the emerging

552
00:32:19,400 --> 00:32:23,480
Speaker 3: markets is to focus on the big problems. Turns out

553
00:32:23,480 --> 00:32:26,480
Speaker 3: there are bigger problems in the emergent markets, and if

554
00:32:26,520 --> 00:32:29,560
Speaker 3: you can find a digital solution to a big problem,

555
00:32:29,760 --> 00:32:32,040
Speaker 3: you're likely going to be able to build a beautiful

556
00:32:32,200 --> 00:32:37,200
Speaker 3: business with gross margin that has a mote. So renting

557
00:32:37,200 --> 00:32:39,840
Speaker 3: an apartment we were just talking before about the rental market.

558
00:32:39,920 --> 00:32:43,680
Speaker 3: It's hard in the US. In Brazil, it's almost impossible

559
00:32:43,680 --> 00:32:46,600
Speaker 3: because eighty percent of the listings are fake. They're they're

560
00:32:46,800 --> 00:32:48,760
Speaker 3: just a broker trying to get you. Oh that one

561
00:32:48,880 --> 00:32:50,880
Speaker 3: just sold, but let me show you three other ones

562
00:32:50,920 --> 00:32:54,640
Speaker 3: that I have. Buying a used car is hard in

563
00:32:54,680 --> 00:32:57,200
Speaker 3: the United States. In Mexico, you may discover what you

564
00:32:57,240 --> 00:32:59,480
Speaker 3: bought is not actually a car. So if you create

565
00:32:59,520 --> 00:33:04,880
Speaker 3: a platform that creates a transactional platform education, huge problems

566
00:33:04,920 --> 00:33:07,640
Speaker 3: in education. If you create a supplier that provides a

567
00:33:07,680 --> 00:33:10,200
Speaker 3: digital curriculum, we now have a company in Brazil that

568
00:33:10,240 --> 00:33:12,920
Speaker 3: teaches three million kids a day or with a digital

569
00:33:12,960 --> 00:33:15,880
Speaker 3: curriculum that's self learning using AI blah blah blah. So

570
00:33:16,040 --> 00:33:19,720
Speaker 3: big problem, big solution. Another one, for example, turns out

571
00:33:19,720 --> 00:33:21,880
Speaker 3: Brazil and Mexico and number one and number two in

572
00:33:21,920 --> 00:33:24,880
Speaker 3: the world and fraud an identity fraud. We are absolutely

573
00:33:24,880 --> 00:33:27,880
Speaker 3: world class fraudsters. In my neck of the woods, we

574
00:33:28,000 --> 00:33:30,640
Speaker 3: have two companies, one focused in Mexico, one focused in

575
00:33:30,680 --> 00:33:34,800
Speaker 3: Brazil that use biometrics to zero out all fraud with

576
00:33:34,920 --> 00:33:39,040
Speaker 3: tremendous impact on financial inclusions. So our north star for

577
00:33:39,200 --> 00:33:42,080
Speaker 3: most of what we do in the emerging markets is

578
00:33:42,120 --> 00:33:45,920
Speaker 3: to find digital solutions to these big problems and hopefully

579
00:33:46,320 --> 00:33:47,080
Speaker 3: profit that way.

580
00:33:47,520 --> 00:33:50,840
Speaker 2: I'm fascinated by the concept of biometrics of fraud and

581
00:33:50,880 --> 00:33:53,640
Speaker 2: digital solution and I want to roll back to what

582
00:33:53,680 --> 00:33:59,120
Speaker 2: you said previously about India, and it sounds like the

583
00:33:59,160 --> 00:34:04,080
Speaker 2: government putting in a set of biometric standards and then

584
00:34:04,480 --> 00:34:09,640
Speaker 2: building out a digital mobile solution. Not only does it

585
00:34:10,680 --> 00:34:15,239
Speaker 2: put some power in the hand of the consumers, at

586
00:34:15,239 --> 00:34:18,920
Speaker 2: the same time that's very trackable and they could collect

587
00:34:19,000 --> 00:34:23,480
Speaker 2: taxes on whatever's going on. Is that the model for

588
00:34:23,520 --> 00:34:26,200
Speaker 2: what you're seeing in Mexico and Brazil or are they

589
00:34:26,640 --> 00:34:28,920
Speaker 2: you know, very different issues.

590
00:34:29,280 --> 00:34:32,759
Speaker 3: Same issue. Private solution, not a public solution, but it

591
00:34:32,800 --> 00:34:35,960
Speaker 3: addresses to one of the core beliefs I have, which

592
00:34:36,000 --> 00:34:40,400
Speaker 3: is a lot of the inefficiency and poverty outside the

593
00:34:40,600 --> 00:34:48,320
Speaker 3: US is there is no meritocracy. Biometrics allows for a meritocracy.

594
00:34:48,960 --> 00:34:52,880
Speaker 3: You can have a track record, you pay your taxes,

595
00:34:52,960 --> 00:34:56,000
Speaker 3: you show your formal you can borrow against it. If

596
00:34:56,040 --> 00:34:59,080
Speaker 3: you pay your loans, it is trackable, your interest rate

597
00:34:59,120 --> 00:35:02,280
Speaker 3: comes down. If your interest rate comes down, you can borrow,

598
00:35:02,320 --> 00:35:04,360
Speaker 3: and you can send your kid to a better college.

599
00:35:04,600 --> 00:35:06,880
Speaker 3: So this idea of you know, taking friction away and

600
00:35:06,920 --> 00:35:12,480
Speaker 3: bringing meritocracy forward is so mission critical and so unlocking

601
00:35:12,520 --> 00:35:14,600
Speaker 3: of value that it's very exciting to be able to

602
00:35:14,680 --> 00:35:16,840
Speaker 3: back the rails of that. And India has been a

603
00:35:16,920 --> 00:35:17,560
Speaker 3: role model on this.

604
00:35:17,760 --> 00:35:20,480
Speaker 2: All right, So we've talked about India, We've talked about Mexico,

605
00:35:20,520 --> 00:35:23,640
Speaker 2: We've talked about Brazil. What other parts of the world

606
00:35:23,840 --> 00:35:26,080
Speaker 2: look interesting? Do you do stuff in Asia? What do

607
00:35:26,120 --> 00:35:27,120
Speaker 2: you do in Africa?

608
00:35:27,280 --> 00:35:30,520
Speaker 3: Listen, Africa is the next frontier. We've done two initial

609
00:35:30,520 --> 00:35:33,520
Speaker 3: investments in Africa. It's still ten years away from growth, equity,

610
00:35:33,880 --> 00:35:36,719
Speaker 3: the rule of law still needs to work. We just

611
00:35:36,800 --> 00:35:40,640
Speaker 3: open offices. In the Middle East, the golf economy is vibrant,

612
00:35:40,880 --> 00:35:45,399
Speaker 3: entrepreneurship is thriving. Southeast Asia is having a pickup. We're

613
00:35:45,440 --> 00:35:48,439
Speaker 3: beginning to do more work in Japan. Japan, the next

614
00:35:48,440 --> 00:35:52,759
Speaker 3: generation of Japan is rediscovering its innovation routes that it

615
00:35:52,840 --> 00:35:55,560
Speaker 3: had in the nineties but lost for thirty years. So

616
00:35:55,640 --> 00:35:58,319
Speaker 3: all these places are very exciting. Now. The US is

617
00:35:58,360 --> 00:36:02,720
Speaker 3: incredibly exciting. It's half of what we do. It is transformational.

618
00:36:02,800 --> 00:36:08,920
Speaker 3: It's leading the AI revolution. AI is the defining, incredible

619
00:36:08,920 --> 00:36:12,000
Speaker 3: revolution of this generation of twenty five year olds, and

620
00:36:12,040 --> 00:36:14,120
Speaker 3: that's also very exciting. It's probably one of the most

621
00:36:14,160 --> 00:36:16,719
Speaker 3: exciting new power allies is what we see going on

622
00:36:16,760 --> 00:36:17,120
Speaker 3: in Ai.

623
00:36:17,400 --> 00:36:20,640
Speaker 2: It makes sense that Africa is still not quite where

624
00:36:20,640 --> 00:36:23,719
Speaker 2: it needs to be, but I'm kind of intrigued by

625
00:36:23,960 --> 00:36:29,960
Speaker 2: other parts of Asia and Japan. Japan just feels like

626
00:36:30,760 --> 00:36:33,160
Speaker 2: it's years ahead of everybody. It just feels like the

627
00:36:33,200 --> 00:36:36,520
Speaker 2: future has arrived in Japan before it makes it to

628
00:36:36,640 --> 00:36:40,680
Speaker 2: everywhere else. What sort of opportunities are you seeing in Japan.

629
00:36:40,800 --> 00:36:47,080
Speaker 2: They feel like a prettymature, Western style, democratic brand of capitalism.

630
00:36:47,440 --> 00:36:51,200
Speaker 3: Yeah, somehow Japan lost its innovation edge it had in

631
00:36:51,239 --> 00:36:53,760
Speaker 3: the nineties, and it had to do with a generation

632
00:36:53,880 --> 00:36:57,400
Speaker 3: that was not embracing of rapid change. And there's a

633
00:36:57,440 --> 00:37:03,359
Speaker 3: new generation of managers that are embracing rapid change. They

634
00:37:03,600 --> 00:37:07,359
Speaker 3: don't yet have a growth equity industry, but the great

635
00:37:07,400 --> 00:37:10,640
Speaker 3: in software, they're great in financial services, they're great in gaming.

636
00:37:11,520 --> 00:37:15,040
Speaker 3: So I think it's early, but I do see a

637
00:37:15,080 --> 00:37:17,360
Speaker 3: lot of innovation out of Japan and Southeast Asia. Vietnam

638
00:37:17,440 --> 00:37:21,399
Speaker 3: is super exciting. It's a net beneficiary of supply chain

639
00:37:21,400 --> 00:37:27,279
Speaker 3: diversification away from China. It is incredibly entrepreneurial, it's incredibly young.

640
00:37:27,600 --> 00:37:30,520
Speaker 3: We've made investments in the financial services sector where right

641
00:37:30,560 --> 00:37:32,879
Speaker 3: now looking at something in the healthcare sector that's also

642
00:37:32,960 --> 00:37:33,520
Speaker 3: very exciting.

643
00:37:33,840 --> 00:37:37,200
Speaker 2: So for a long time, every time Japan comes up

644
00:37:37,280 --> 00:37:41,040
Speaker 2: someone always brings up they have big demographic problems they

645
00:37:41,080 --> 00:37:43,280
Speaker 2: can't get out of the way, And I'm hearing similar

646
00:37:43,320 --> 00:37:47,040
Speaker 2: things about China. How do you look at those issues

647
00:37:47,560 --> 00:37:50,759
Speaker 2: which are large and macro and somewhat intractable.

648
00:37:52,520 --> 00:37:56,600
Speaker 3: That's a tough one. I think the aging of the West,

649
00:37:57,120 --> 00:38:00,239
Speaker 3: it creates a number of opportunities for healthcare services the

650
00:38:00,840 --> 00:38:03,080
Speaker 3: mission critical, and I think we have to invest in

651
00:38:03,120 --> 00:38:06,479
Speaker 3: making sure we work on the health spent issue. How

652
00:38:06,520 --> 00:38:10,520
Speaker 3: they solve those issues. My crystal ball is not perfect.

653
00:38:10,760 --> 00:38:13,560
Speaker 3: I am a big believer in immigration. The reason the

654
00:38:13,680 --> 00:38:16,920
Speaker 3: United States is not suffering from the same issues is

655
00:38:16,960 --> 00:38:20,719
Speaker 3: we've had very healthy legal immigration for the last thirty

656
00:38:20,800 --> 00:38:25,200
Speaker 3: years and that's refreshed and populated half the unicorns. So

657
00:38:25,680 --> 00:38:28,680
Speaker 3: I suspect part of the answer of the sort of

658
00:38:28,719 --> 00:38:32,240
Speaker 3: West that's aging is flexibilizing immigration.

659
00:38:32,880 --> 00:38:36,759
Speaker 2: Right We've been pretty receptive to it. It looks like

660
00:38:37,560 --> 00:38:42,680
Speaker 2: we know Japan has almost no permanent resident immigrants, the

661
00:38:42,760 --> 00:38:45,680
Speaker 2: UK is turning away from it. Is this going to

662
00:38:45,800 --> 00:38:48,319
Speaker 2: just be an opportunity for countries that open up their

663
00:38:48,440 --> 00:38:51,279
Speaker 2: doors to the best and the brightest, or is this

664
00:38:51,840 --> 00:38:58,560
Speaker 2: an ongoing source of political fodder for left versus right.

665
00:38:58,960 --> 00:39:01,040
Speaker 3: So this is a topic my sister cares really a

666
00:39:01,080 --> 00:39:03,160
Speaker 3: lot about. She dedicated her life to it. She was

667
00:39:03,200 --> 00:39:07,680
Speaker 3: most recently at the National Security Council focused on immigration. Yes,

668
00:39:08,320 --> 00:39:10,880
Speaker 3: I was just in Dubai two weeks ago. It's a

669
00:39:10,880 --> 00:39:14,600
Speaker 3: different Dubai. Some of the brightest minds of Europe have

670
00:39:14,719 --> 00:39:18,400
Speaker 3: moved to Dubai, attracted by the vibron metropolis that's setting

671
00:39:18,480 --> 00:39:22,520
Speaker 3: up there. They're low tax jurisdictions, low bureaucracy, whereas the

672
00:39:22,520 --> 00:39:25,680
Speaker 3: rest of Europe is taxing and making immigration harder and

673
00:39:25,800 --> 00:39:29,239
Speaker 3: ending than on THEMB Some countries like Dubai, like Singapore,

674
00:39:29,600 --> 00:39:31,560
Speaker 3: are opening up to the world and attracting the world's

675
00:39:31,600 --> 00:39:34,399
Speaker 3: best talent. Soon enough, we'll wake up and say, hey,

676
00:39:35,040 --> 00:39:37,919
Speaker 3: the United States can't lose this edge. I hope it does.

677
00:39:38,520 --> 00:39:41,520
Speaker 2: I'm kind of fascinated by the transition that's taking place,

678
00:39:42,160 --> 00:39:45,560
Speaker 2: not just in Dubai but through large parts of the

679
00:39:45,600 --> 00:39:50,000
Speaker 2: Middle East that seemed to be shifting from you know,

680
00:39:50,920 --> 00:39:57,200
Speaker 2: oil regimes and plutocracies to much more I don't want

681
00:39:57,200 --> 00:40:01,400
Speaker 2: to say open societies, but certainly economic, freer societies than

682
00:40:01,440 --> 00:40:05,640
Speaker 2: they've been in the past. What is going on in

683
00:40:06,360 --> 00:40:08,600
Speaker 2: the Middle East to drive these changes.

684
00:40:09,080 --> 00:40:12,600
Speaker 3: Brilliant governance, and the advantage of some having seen so

685
00:40:12,760 --> 00:40:18,480
Speaker 3: many natural resource rich countries squander it away with Dutch disease.

686
00:40:19,160 --> 00:40:23,240
Speaker 3: I think they've they got religious disease. Remember they got religion.

687
00:40:23,239 --> 00:40:25,520
Speaker 3: And they're making the right levels of investments and there's

688
00:40:25,520 --> 00:40:28,200
Speaker 3: so much innovation. We just invest in a company called Kayali.

689
00:40:28,760 --> 00:40:32,880
Speaker 3: It's a it's a perfume brand. It's a beautiful entrepreneur

690
00:40:32,920 --> 00:40:35,799
Speaker 3: who's created this concept which was new to me. It

691
00:40:35,840 --> 00:40:39,280
Speaker 3: turns out the gen z likes to do layering of perfumes,

692
00:40:39,600 --> 00:40:42,600
Speaker 3: which is to combine three, four five perfumes and create

693
00:40:42,640 --> 00:40:45,160
Speaker 3: your own blend. And this has built her whole brand

694
00:40:45,200 --> 00:40:48,640
Speaker 3: around this. That's and it's a global brand born in

695
00:40:48,640 --> 00:40:51,359
Speaker 3: the Middle East. How exciting is that? So I think

696
00:40:51,400 --> 00:40:53,879
Speaker 3: we're going to see more and more innovation in out

697
00:40:53,880 --> 00:40:55,120
Speaker 3: of the Middle East. And I think they're doing a

698
00:40:55,160 --> 00:40:55,759
Speaker 3: lot of things right.

699
00:40:56,200 --> 00:40:59,120
Speaker 2: Some of the investments you've made over the years almost

700
00:40:59,160 --> 00:41:03,040
Speaker 2: sound like venture capital investments as opposed to private equity.

701
00:41:03,520 --> 00:41:09,080
Speaker 2: So social media, perfume, consumer goods, Like what is the

702
00:41:09,120 --> 00:41:13,320
Speaker 2: line between VC and growth equity?

703
00:41:13,800 --> 00:41:18,960
Speaker 3: Yeah, we come in when you're profitable and scaled and

704
00:41:19,040 --> 00:41:21,560
Speaker 3: the risk we're taking is not whether you have product

705
00:41:21,560 --> 00:41:24,319
Speaker 3: market fit, but whether you can really scale to your

706
00:41:24,560 --> 00:41:27,239
Speaker 3: full potential. Our loss ratios, the sort of percent of

707
00:41:27,239 --> 00:41:29,080
Speaker 3: the time in which we lose money is three to

708
00:41:29,120 --> 00:41:29,960
Speaker 3: four percent.

709
00:41:29,719 --> 00:41:31,280
Speaker 2: For the last so it's the opposite.

710
00:41:31,480 --> 00:41:34,560
Speaker 3: The adventure is thirty forty percent, So I.

711
00:41:34,480 --> 00:41:36,160
Speaker 2: Think it's even higher than this, even higher.

712
00:41:36,239 --> 00:41:38,880
Speaker 3: So we come in when you are a late teenager,

713
00:41:39,120 --> 00:41:41,879
Speaker 3: not when you are a thriving young kid.

714
00:41:42,040 --> 00:41:46,600
Speaker 2: A wizard kid, gotcha. So it sounds like, given that

715
00:41:46,719 --> 00:41:49,720
Speaker 2: half of your investing is outside of the United States,

716
00:41:50,280 --> 00:41:54,040
Speaker 2: you think there are tailwinds for growth markets, for emerging markets.

717
00:41:54,600 --> 00:41:58,080
Speaker 2: What are going to be the big drivers for gains

718
00:41:58,120 --> 00:42:02,440
Speaker 2: in these companies receives and in emerging markets?

719
00:42:02,880 --> 00:42:06,920
Speaker 3: Listen, I think AI is the revolution that we were

720
00:42:06,960 --> 00:42:12,000
Speaker 3: talking about. Unlike the Internet or the mobile internet or

721
00:42:12,000 --> 00:42:15,279
Speaker 3: the cloud, this one is truly transformational because they will

722
00:42:15,320 --> 00:42:18,359
Speaker 3: touch about eighty percent of GDP. The previous waves touched

723
00:42:18,360 --> 00:42:20,440
Speaker 3: between ten and twenty percent. This is a four x

724
00:42:20,840 --> 00:42:26,800
Speaker 3: bigger wave. Every process we throw AI too, gets thirty

725
00:42:26,840 --> 00:42:30,279
Speaker 3: to forty percent more efficient in today's version of AI,

726
00:42:30,400 --> 00:42:34,600
Speaker 3: which will be outdated in about three weeks, so programmers

727
00:42:34,600 --> 00:42:38,640
Speaker 3: are more effective online marketing teams spend thirty percent less

728
00:42:38,840 --> 00:42:42,759
Speaker 3: call centers don't need any humans. Decision making enhanced with

729
00:42:42,840 --> 00:42:47,080
Speaker 3: a bot is better. So the proof points are already there,

730
00:42:47,640 --> 00:42:53,000
Speaker 3: and we're asking all our businesses, how will AI fundamentally

731
00:42:53,120 --> 00:42:57,320
Speaker 3: change your business model and get ahead of it investing AI,

732
00:42:57,920 --> 00:43:01,400
Speaker 3: which is one of the things we're doing. We stayed

733
00:43:01,400 --> 00:43:04,920
Speaker 3: away from the infrastructure layer sort of data in the

734
00:43:04,920 --> 00:43:09,520
Speaker 3: growth equity program, data centers, large language models, chips, capital intensive,

735
00:43:09,840 --> 00:43:13,600
Speaker 3: some technology risk that's hard to price. We've been focused

736
00:43:13,680 --> 00:43:17,319
Speaker 3: on the application layer sort of software companies that are

737
00:43:17,400 --> 00:43:21,640
Speaker 3: using proprietary data and AI to provide a new service.

738
00:43:22,440 --> 00:43:24,440
Speaker 3: And for the last four years we met eight hundred

739
00:43:24,480 --> 00:43:28,000
Speaker 3: companies and it was venture stage and evaluations were growth

740
00:43:28,000 --> 00:43:32,200
Speaker 3: equity stage, so bad combination. Finally, in the last six

741
00:43:32,280 --> 00:43:34,879
Speaker 3: months their growth equity stage. And we've just done three

742
00:43:34,960 --> 00:43:38,880
Speaker 3: major investments on AI, and I think we'll do dozens.

743
00:43:39,719 --> 00:43:42,080
Speaker 2: Give us what are the three investments you've just made

744
00:43:42,120 --> 00:43:42,520
Speaker 2: in AI?

745
00:43:42,880 --> 00:43:45,080
Speaker 3: So let me tell you about this company called Insider.

746
00:43:45,360 --> 00:43:49,720
Speaker 3: It's a software company enterprise marketing software companies. It helps

747
00:43:49,760 --> 00:43:52,480
Speaker 3: companies deliver the right message to the right person at

748
00:43:52,480 --> 00:43:55,320
Speaker 3: the right time, in the right media. This company was

749
00:43:55,360 --> 00:43:58,279
Speaker 3: founded in Turkey. Turkey has two things going for it.

750
00:43:58,680 --> 00:44:03,360
Speaker 3: Number one, huge gaming community and huge gaming programmer community,

751
00:44:03,440 --> 00:44:06,279
Speaker 3: so there's lots of programming talent. And because it's kind

752
00:44:06,320 --> 00:44:09,200
Speaker 3: of in Asia, but it's also in Europe, its population

753
00:44:09,400 --> 00:44:12,600
Speaker 3: uses we chat and what's Up. So they developed great

754
00:44:12,680 --> 00:44:16,440
Speaker 3: software that really worked with instant messaging for both the

755
00:44:16,440 --> 00:44:18,799
Speaker 3: West and the East, and they use this edge to

756
00:44:18,840 --> 00:44:23,319
Speaker 3: develop clients in Europe and in Asia. It's now one

757
00:44:23,400 --> 00:44:26,279
Speaker 3: hundred and thirty million dollar business is growing very fast, profitable,

758
00:44:26,680 --> 00:44:30,080
Speaker 3: the huge opportunities the US market. Turns out, the US

759
00:44:30,120 --> 00:44:33,800
Speaker 3: market is only now discovering instant messaging. We still send

760
00:44:33,800 --> 00:44:36,560
Speaker 3: emails to companies to inquire about our orders. The rest

761
00:44:36,560 --> 00:44:38,360
Speaker 3: of the world does not remember what it's like to

762
00:44:38,440 --> 00:44:39,360
Speaker 3: email a company.

763
00:44:39,400 --> 00:44:39,720
Speaker 2: Really.

764
00:44:39,760 --> 00:44:42,080
Speaker 3: That's so we all use we chat or what's Up.

765
00:44:42,880 --> 00:44:46,280
Speaker 3: Now there's an we think a window to bring insider

766
00:44:46,320 --> 00:44:48,840
Speaker 3: to the United States. US is half the market, but

767
00:44:48,920 --> 00:44:51,640
Speaker 3: only seven percent of insider sales. We're really strong in

768
00:44:51,640 --> 00:44:53,520
Speaker 3: the United States. We're going to help them grow. So

769
00:44:53,560 --> 00:44:58,400
Speaker 3: that's Insider. Another company's via Labs using AI for behavioral interventions,

770
00:44:58,560 --> 00:45:01,960
Speaker 3: helping the diabetics state of their medication, helping gym goers

771
00:45:02,080 --> 00:45:05,279
Speaker 3: go to the gym, reducing churn, all using AI to

772
00:45:05,320 --> 00:45:09,560
Speaker 3: provide behavioral nudges. Is ready entrepreneur in the US, building

773
00:45:09,560 --> 00:45:13,160
Speaker 3: in the US. And the fourth one is a Chilean

774
00:45:13,800 --> 00:45:17,000
Speaker 3: founder scholarship kid to n y U is created a

775
00:45:17,040 --> 00:45:22,200
Speaker 3: text to video program. You describe a scene, it produces

776
00:45:22,200 --> 00:45:26,000
Speaker 3: the video. He unlike JGBT, he trained it with permission,

777
00:45:26,040 --> 00:45:29,520
Speaker 3: so he has copyright right, which turns out if you're

778
00:45:29,520 --> 00:45:32,920
Speaker 3: in the image business, kind of important taking off like

779
00:45:33,640 --> 00:45:39,160
Speaker 3: fire and a super friendly, energized community builder of a team.

780
00:45:39,600 --> 00:45:41,680
Speaker 3: And it's a company called Runway dot Ai, which I

781
00:45:41,719 --> 00:45:43,360
Speaker 3: think will change the industry.

782
00:45:44,120 --> 00:45:48,200
Speaker 2: Runway dot ai. All right, So those are three pretty

783
00:45:48,200 --> 00:45:55,000
Speaker 2: big investments, it sounds like. And you've specifically said, you're

784
00:45:55,000 --> 00:45:57,719
Speaker 2: not doing chips, you're not doing data centers, you're not

785
00:45:57,840 --> 00:46:01,640
Speaker 2: doing all the capital intensive things. You know. I've been

786
00:46:01,680 --> 00:46:05,040
Speaker 2: fond of saying it's not the Magnificent seven, it's the

787
00:46:05,200 --> 00:46:07,600
Speaker 2: other four hundred and ninety three companies in the SMP

788
00:46:07,760 --> 00:46:10,520
Speaker 2: five hundred that are going to see benefits from this.

789
00:46:11,520 --> 00:46:14,400
Speaker 2: So far, it seems like it's kind of few and

790
00:46:14,440 --> 00:46:19,160
Speaker 2: far between. How long does an innovation like AI take

791
00:46:19,920 --> 00:46:23,240
Speaker 2: to make its way out into the broader economy. The hope,

792
00:46:23,280 --> 00:46:27,640
Speaker 2: the wishful thinking is hey, everybody becomes more productive, more efficient,

793
00:46:28,120 --> 00:46:33,640
Speaker 2: more profitable, supports higher stock prices. What is the timeline like?

794
00:46:34,920 --> 00:46:36,719
Speaker 2: And I know you don't have a crystal ball, but

795
00:46:36,880 --> 00:46:39,600
Speaker 2: you're immersed in this. How do you see this unfolding?

796
00:46:40,040 --> 00:46:43,279
Speaker 3: It's rapid, it's accelerating. But it's human nature to be

797
00:46:43,360 --> 00:46:47,479
Speaker 3: disappointed by the short term trajectory and wowed by how

798
00:46:48,000 --> 00:46:51,319
Speaker 3: deep it is five years from now. Like any exponential

799
00:46:51,840 --> 00:46:54,480
Speaker 3: we lose, we have a hard time imagining the power

800
00:46:54,520 --> 00:46:58,040
Speaker 3: of exponentials in five years it is going to be

801
00:46:58,120 --> 00:47:01,719
Speaker 3: massive and penetrated. Where the next twelve months disappoint, I

802
00:47:01,760 --> 00:47:03,000
Speaker 3: am sure they will disappoint.

803
00:47:04,480 --> 00:47:08,799
Speaker 2: That's really interesting when you're thinking about a disruptive technology

804
00:47:08,880 --> 00:47:15,080
Speaker 2: like AI and making investments. Is it about the addressable market?

805
00:47:15,160 --> 00:47:18,080
Speaker 2: Is it about how global it can be? What's on

806
00:47:18,120 --> 00:47:18,880
Speaker 2: your checklist?

807
00:47:19,719 --> 00:47:21,880
Speaker 3: Funny you mentioned checklist. So we do have a checklist,

808
00:47:21,960 --> 00:47:23,880
Speaker 3: But let me tell you a story of the GA checklist.

809
00:47:24,840 --> 00:47:27,359
Speaker 3: So when I became chairman of the Investment Committee seven

810
00:47:27,440 --> 00:47:32,200
Speaker 3: years ago, I felt grossly unqualified because my experience is

811
00:47:32,239 --> 00:47:35,560
Speaker 3: primarily emerging markets, and you know most of half of

812
00:47:35,640 --> 00:47:37,600
Speaker 3: what we do is develop markets. So I went to

813
00:47:37,640 --> 00:47:41,640
Speaker 3: the co founders of the firm, Steve Denning and Dave Hodson.

814
00:47:42,200 --> 00:47:44,680
Speaker 3: Incredible minds. These guys ran the firm for the first

815
00:47:44,719 --> 00:47:48,760
Speaker 3: twenty five years, incredible returns, geniuses. And I went to Steve,

816
00:47:48,800 --> 00:47:51,360
Speaker 3: and Steve was CEO for twenty five years. He's a

817
00:47:51,800 --> 00:47:58,280
Speaker 3: former Navy captain, McKinsey train, very very structured, and he says, Martin,

818
00:48:00,160 --> 00:48:03,279
Speaker 3: to build a checklist. Look at our deals, our best

819
00:48:03,320 --> 00:48:06,359
Speaker 3: performing deals. I'll share the three ms, and we'll talk

820
00:48:06,400 --> 00:48:09,399
Speaker 3: about the three ms and other characteristics, and then look

821
00:48:09,400 --> 00:48:13,640
Speaker 3: at the money losers and create a negative checklist. And

822
00:48:13,719 --> 00:48:17,800
Speaker 3: for God's sake, please produce the GA checklist. It was okay, checklist.

823
00:48:18,520 --> 00:48:21,480
Speaker 3: Same day I go to Dave Hodson. Dave Hodson PI

824
00:48:21,520 --> 00:48:26,400
Speaker 3: Beta Kappa dar Mud Stanford programmer, genius two hundred a

825
00:48:26,440 --> 00:48:28,640
Speaker 3: Q plus. Every time he speaks, I have to shut

826
00:48:28,680 --> 00:48:30,880
Speaker 3: my eyes and try to make sure I capture what

827
00:48:30,920 --> 00:48:34,520
Speaker 3: he's saying. And the first thing he says is resist

828
00:48:34,680 --> 00:48:37,560
Speaker 3: the temptation to have a checklist. If it was as

829
00:48:37,560 --> 00:48:40,400
Speaker 3: simple as a checklist, we wouldn't be paid two and

830
00:48:40,520 --> 00:48:44,279
Speaker 3: twenty to make the application of the checklist. And I

831
00:48:44,320 --> 00:48:46,239
Speaker 3: was like, oh my god, the two guys around the

832
00:48:46,280 --> 00:48:48,360
Speaker 3: firm for twenty five years can't agree on how to

833
00:48:48,360 --> 00:48:51,000
Speaker 3: make an investmentation through this. And I did some research

834
00:48:51,040 --> 00:48:54,279
Speaker 3: on this. You know, thinking fast, Sinking slow is the

835
00:48:54,360 --> 00:48:58,640
Speaker 3: checklist manifesto. But even the author of Shinking Fast and

836
00:48:59,120 --> 00:49:03,520
Speaker 3: Danny Callman, he came up. He stumbled into the checklist,

837
00:49:04,040 --> 00:49:07,279
Speaker 3: creating the checklist for interviewers for these really the French

838
00:49:07,320 --> 00:49:11,280
Speaker 3: Force elite units, and he used the checklist. But after

839
00:49:11,560 --> 00:49:13,560
Speaker 3: I found out and it was not in the book purposely,

840
00:49:13,960 --> 00:49:18,359
Speaker 3: there were these super interviewers that applied the checklist and

841
00:49:18,440 --> 00:49:21,120
Speaker 3: had not only eighty five percent accurateate, but a ninety

842
00:49:21,200 --> 00:49:23,600
Speaker 3: nine percent accurate. It turns out that's a big difference.

843
00:49:24,200 --> 00:49:27,040
Speaker 3: And it's best captured by this woman who was sort

844
00:49:27,040 --> 00:49:30,520
Speaker 3: of the master prognosticator. And what she would say is listen,

845
00:49:30,640 --> 00:49:34,160
Speaker 3: I do the work, I do the checklist, and before

846
00:49:34,160 --> 00:49:36,719
Speaker 3: I make a decision, I closed a notebook and see

847
00:49:36,760 --> 00:49:42,720
Speaker 3: how I feel in my gut. So the educated gut

848
00:49:44,120 --> 00:49:46,120
Speaker 3: is the way to make complex decisions.

849
00:49:47,280 --> 00:49:49,880
Speaker 2: So you and I have talked about this in the past,

850
00:49:49,920 --> 00:49:54,240
Speaker 2: but let's bring that up. You know people talk about

851
00:49:54,280 --> 00:49:58,880
Speaker 2: investing as part art, part science. What you've said is

852
00:49:58,960 --> 00:50:01,839
Speaker 2: it's a combination of the gut and the brain, which

853
00:50:01,880 --> 00:50:05,719
Speaker 2: I think is roughly the same. How do you know

854
00:50:06,680 --> 00:50:09,520
Speaker 2: when you're using your brain and when you have to

855
00:50:09,560 --> 00:50:14,120
Speaker 2: defer to your gut. We talked about George Soros's back

856
00:50:14,200 --> 00:50:18,880
Speaker 2: pains as effectively his gut overrunning his brain. How do

857
00:50:18,920 --> 00:50:19,680
Speaker 2: you balance the two?

858
00:50:20,280 --> 00:50:24,560
Speaker 3: Listen, You have to ignore the gut until you do

859
00:50:24,640 --> 00:50:28,239
Speaker 3: your homework. Do the work, do the analysis, do the

860
00:50:28,280 --> 00:50:31,759
Speaker 3: customer segmentation, the financial duets, do the market survey, do

861
00:50:31,840 --> 00:50:35,320
Speaker 3: this competitor service, do the cost analysis. After you fed

862
00:50:35,400 --> 00:50:39,520
Speaker 3: the gut with all that data, then you listen to

863
00:50:40,000 --> 00:50:44,239
Speaker 3: the system one gut, which is three million years old,

864
00:50:44,360 --> 00:50:46,360
Speaker 3: because it's likely to lead you in the right direction.

865
00:50:47,719 --> 00:50:49,960
Speaker 3: The gut is wise if you give it the right inputs.

866
00:50:50,800 --> 00:50:53,120
Speaker 3: If you let the gut guide you before you do

867
00:50:53,200 --> 00:50:55,880
Speaker 3: the work, you're likely to make mistakes.

868
00:50:56,520 --> 00:50:58,720
Speaker 2: So let me throw you a couple of curve balls

869
00:50:58,760 --> 00:51:03,480
Speaker 2: before we get to our favor for questions. What drew

870
00:51:03,520 --> 00:51:06,840
Speaker 2: you to Lincoln Center? How do you contribute to its mission?

871
00:51:06,960 --> 00:51:11,440
Speaker 2: You also work with Primary Chance and with the endeavor

872
00:51:11,880 --> 00:51:15,760
Speaker 2: mentorship tell us a little bit about those sort of interests.

873
00:51:16,360 --> 00:51:19,720
Speaker 3: So listen. I believe wealth is a unit of energy,

874
00:51:19,960 --> 00:51:23,840
Speaker 3: and if you just hoard it, you feel stuffy, slow,

875
00:51:24,440 --> 00:51:25,560
Speaker 3: and it's not good energy.

876
00:51:25,560 --> 00:51:26,799
Speaker 2: It's got to be in motion.

877
00:51:26,960 --> 00:51:28,799
Speaker 3: It's got to be in motion. So I run a

878
00:51:29,200 --> 00:51:32,040
Speaker 3: concentrated book. In my philanthropy, I put my time and

879
00:51:32,160 --> 00:51:35,680
Speaker 3: my wealth on a couple of things. I care deeply

880
00:51:35,680 --> 00:51:40,640
Speaker 3: about education, scholarships. I care deeply about entrepreneurship, and I

881
00:51:40,680 --> 00:51:43,000
Speaker 3: care deeply about music. Why do I care about music.

882
00:51:43,320 --> 00:51:49,000
Speaker 3: The cancer of our generation is tribalism in society, and

883
00:51:49,239 --> 00:51:52,480
Speaker 3: combat tribalism. I don't believe we should censor hate speech,

884
00:51:52,560 --> 00:51:55,439
Speaker 3: but we should promote love speech. And the best form

885
00:51:55,480 --> 00:51:58,360
Speaker 3: of love speech is live music. We're in a room

886
00:51:58,960 --> 00:52:02,360
Speaker 3: vibing to the same tune, breathing the same air, listening

887
00:52:02,400 --> 00:52:04,560
Speaker 3: to the o's, the ads, and the singing to the

888
00:52:04,600 --> 00:52:07,200
Speaker 3: same artists. We're all together. There's no racial there's no

889
00:52:07,239 --> 00:52:10,600
Speaker 3: income differential, there's no country differential. We're all vibing to

890
00:52:10,640 --> 00:52:13,520
Speaker 3: the same music. So mid Lincoln Center is about music

891
00:52:13,760 --> 00:52:19,480
Speaker 3: with endeavor, It's about promoting entrepreneurship across the globe. By

892
00:52:19,480 --> 00:52:21,960
Speaker 3: creating role models and mentorships. And I've been doing that

893
00:52:22,000 --> 00:52:24,439
Speaker 3: for twenty two years. I'm now in the global board

894
00:52:24,600 --> 00:52:27,239
Speaker 3: trying to make take this into even more countries and

895
00:52:27,280 --> 00:52:31,880
Speaker 3: then scholarships, premier chance and I do it also with Harvard.

896
00:52:31,960 --> 00:52:34,040
Speaker 3: I do it also with my high school in Bolivia.

897
00:52:34,920 --> 00:52:38,319
Speaker 3: Talent is sprinkled globally find those perils wherever they are.

898
00:52:38,360 --> 00:52:41,400
Speaker 3: Premier chans is quite interesting. It turns out the Bolivion,

899
00:52:41,760 --> 00:52:45,560
Speaker 3: the Brazilian public education system, test kids in the math

900
00:52:45,600 --> 00:52:49,480
Speaker 3: Olympics when they're thirteen, and they only use this data

901
00:52:49,560 --> 00:52:51,640
Speaker 3: to provide five kids to come meet the president and

902
00:52:51,640 --> 00:52:55,359
Speaker 3: they all get met live. Yeah, they choose five. There's

903
00:52:55,360 --> 00:52:57,759
Speaker 3: a lot of data about some other kids. So what

904
00:52:57,840 --> 00:53:01,160
Speaker 3: Primitra Chansi does is it goes to rule Northeast. This

905
00:53:01,200 --> 00:53:04,160
Speaker 3: is the poorest area of Brazil, the most unfair in

906
00:53:04,200 --> 00:53:08,280
Speaker 3: the world, finds these thirteen year old geniuses and helps

907
00:53:08,320 --> 00:53:11,239
Speaker 3: them get into good high schools in major cities and

908
00:53:11,719 --> 00:53:14,480
Speaker 3: eventually get into great colleges. So that's one of the

909
00:53:14,520 --> 00:53:16,160
Speaker 3: interventions on the education sector.

910
00:53:16,360 --> 00:53:22,120
Speaker 2: Huh. My last curveball question had something has to do

911
00:53:22,160 --> 00:53:26,240
Speaker 2: with something you said about when you were an undergraduate

912
00:53:27,320 --> 00:53:32,840
Speaker 2: picking up some extra cash bartending, and you actually bartended

913
00:53:33,360 --> 00:53:36,640
Speaker 2: at a Harvard Business School reunion. Tell us a little

914
00:53:36,680 --> 00:53:40,440
Speaker 2: bit about that experience. I kind of really like that story.

915
00:53:40,640 --> 00:53:45,640
Speaker 3: So I was eighteen years old. I bartended at all

916
00:53:45,680 --> 00:53:48,520
Speaker 3: sorts of reunions, and the most interesting reunions were the

917
00:53:48,560 --> 00:53:50,799
Speaker 3: twenty fifth and thirtieth reunion from both the college and

918
00:53:50,840 --> 00:53:54,360
Speaker 3: the Business School, because in both I used to have

919
00:53:54,400 --> 00:53:56,480
Speaker 3: a name tag and it said my name Bolivia and

920
00:53:56,520 --> 00:53:58,960
Speaker 3: how old I was. I think there were like thirty

921
00:53:59,000 --> 00:54:02,440
Speaker 3: people that came up. Some of them drunk look at me.

922
00:54:02,760 --> 00:54:05,360
Speaker 3: Some of them touched my cheek. I said, you're so young,

923
00:54:05,800 --> 00:54:09,279
Speaker 3: please enjoy it. Soon you'll be me, and it will

924
00:54:09,320 --> 00:54:11,960
Speaker 3: be a flicker of a turn of an eyelid. It

925
00:54:11,960 --> 00:54:14,279
Speaker 3: will be a second and you'll be me. And I

926
00:54:14,320 --> 00:54:17,279
Speaker 3: had forgotten this story. It was odd at the time.

927
00:54:17,320 --> 00:54:20,359
Speaker 3: I thought it was a little awkward. I was at

928
00:54:20,360 --> 00:54:23,600
Speaker 3: my thirtieth reunion and there was this young woman from

929
00:54:23,640 --> 00:54:25,840
Speaker 3: Finland who was seventeen years old, and I went up

930
00:54:25,880 --> 00:54:28,800
Speaker 3: to her and said, oh, please do enjoy your life

931
00:54:28,840 --> 00:54:31,920
Speaker 3: because it flows by in a second. And then I

932
00:54:32,000 --> 00:54:36,280
Speaker 3: remembered I was heir a second ago. The big insight,

933
00:54:36,920 --> 00:54:39,120
Speaker 3: and it takes us to get to the old age

934
00:54:39,160 --> 00:54:43,280
Speaker 3: to fully appreciate it. If you take stock, what percent

935
00:54:43,400 --> 00:54:46,759
Speaker 3: of your mental time are you in the past and

936
00:54:46,840 --> 00:54:49,759
Speaker 3: are you in the future. And for a lot of

937
00:54:49,760 --> 00:54:53,000
Speaker 3: young people, seventy percent of their time is not in

938
00:54:53,080 --> 00:54:56,480
Speaker 3: the present. And if you want to savor life and

939
00:54:56,680 --> 00:54:59,839
Speaker 3: breathe and savor the air you're breathing, you need eighty

940
00:55:00,080 --> 00:55:04,600
Speaker 3: percent of your mental time to be here now, today

941
00:55:04,760 --> 00:55:07,680
Speaker 3: with you and the sooner you get there. I mean

942
00:55:07,680 --> 00:55:10,319
Speaker 3: Confusion says this a great line. He says, every man

943
00:55:10,760 --> 00:55:14,160
Speaker 3: has two lives. The second one starts when you recognize

944
00:55:14,200 --> 00:55:17,080
Speaker 3: you only have one. And I just wish people get

945
00:55:17,080 --> 00:55:20,440
Speaker 3: to that realization in their thirties, not in their fifties,

946
00:55:20,480 --> 00:55:22,040
Speaker 3: when they're going to their thirtieth three union.

947
00:55:22,239 --> 00:55:25,719
Speaker 2: Huh. Really interesting that the days are long but the

948
00:55:25,800 --> 00:55:28,880
Speaker 2: decades are short, exactly. I've always been a fan of that.

949
00:55:29,120 --> 00:55:31,520
Speaker 2: All right, So let's jump to our favorite questions that

950
00:55:31,560 --> 00:55:35,120
Speaker 2: we ask, starting with what's keeping you entertained these days?

951
00:55:35,160 --> 00:55:36,560
Speaker 2: What are you watching or listening to?

952
00:55:37,600 --> 00:55:41,440
Speaker 3: White Lotus is a household favorite. I love Mike White.

953
00:55:41,480 --> 00:55:43,799
Speaker 3: He is a sophisticated storyteller.

954
00:55:44,040 --> 00:55:48,040
Speaker 2: This so far seems to be the best season of

955
00:55:48,160 --> 00:55:50,680
Speaker 2: the three. I don't know what your experience was. I

956
00:55:50,719 --> 00:55:52,240
Speaker 2: know people love the first season.

957
00:55:52,440 --> 00:55:55,000
Speaker 3: I love the second season. I got the Latin flair

958
00:55:55,000 --> 00:55:58,319
Speaker 3: going for me right, But this one is keeping up.

959
00:55:59,120 --> 00:56:03,840
Speaker 2: This one just feels to be no spoilers. I hated

960
00:56:03,880 --> 00:56:07,279
Speaker 2: the ending of the second season, not the outcome, just

961
00:56:07,280 --> 00:56:09,600
Speaker 2: the way they did it. They could have reached the

962
00:56:09,640 --> 00:56:15,000
Speaker 2: same conclusion in a less annoying fashion. But especially Thailand

963
00:56:15,080 --> 00:56:18,080
Speaker 2: is so fascinating the way this is unfolding. But it's

964
00:56:18,120 --> 00:56:19,840
Speaker 2: been really interesting.

965
00:56:19,880 --> 00:56:22,280
Speaker 3: It's gorgeous, and I'm a big fan of Mike White.

966
00:56:23,440 --> 00:56:25,920
Speaker 3: A great way I connect with my teenage daughter is

967
00:56:25,960 --> 00:56:29,520
Speaker 3: watching Saturday Night Live, not just the current but the old.

968
00:56:30,840 --> 00:56:34,920
Speaker 3: Lorne Michaels is a genius. He stayed fresh for fifty years.

969
00:56:35,560 --> 00:56:39,319
Speaker 3: And a great way to cross the intergenerational gap is

970
00:56:39,360 --> 00:56:42,120
Speaker 3: to show that us old people were once young and

971
00:56:42,160 --> 00:56:45,000
Speaker 3: our humor was actually kind of edgy. We're not just

972
00:56:45,080 --> 00:56:46,920
Speaker 3: these old parts that were to be grown to be.

973
00:56:47,360 --> 00:56:50,080
Speaker 3: Once upon a time, our generation had its shot. So

974
00:56:50,120 --> 00:56:52,000
Speaker 3: that's something else I spend time.

975
00:56:52,120 --> 00:56:55,600
Speaker 2: Every generation thinks that people came before them didn't have

976
00:56:55,640 --> 00:56:59,680
Speaker 2: a childhood, and then suddenly it's like, oh, I get it.

977
00:57:00,040 --> 00:57:03,040
Speaker 2: You have to kind of live it to realize. Oh okay,

978
00:57:03,080 --> 00:57:05,400
Speaker 2: I was a little quick to judge back then exactly.

979
00:57:06,360 --> 00:57:10,000
Speaker 2: Let's talk about mentors who helped influence and shape your career.

980
00:57:10,880 --> 00:57:13,960
Speaker 3: Listen, I've had the pleasure of working with six great investors,

981
00:57:14,800 --> 00:57:18,439
Speaker 3: the guys at three G, some people at Advan, Steve Dave,

982
00:57:18,520 --> 00:57:22,920
Speaker 3: and Bill Ford at GA, and having sat in three

983
00:57:22,960 --> 00:57:25,600
Speaker 3: different investment committees. There's a game I used to play,

984
00:57:26,160 --> 00:57:29,880
Speaker 3: which is every unique investor has a perspective that frames

985
00:57:29,920 --> 00:57:34,400
Speaker 3: their worldview. I would try to learn and predict what

986
00:57:34,440 --> 00:57:37,360
Speaker 3: they're going to say in the investment committee. And the

987
00:57:37,440 --> 00:57:41,000
Speaker 3: moment I got to eighty percent accuracies, Okay, I get it.

988
00:57:41,200 --> 00:57:43,640
Speaker 3: I got it. I get it how Steve Denning thinks,

989
00:57:43,840 --> 00:57:47,000
Speaker 3: I get it, how Bill Ford thinks. And my investment

990
00:57:47,040 --> 00:57:50,360
Speaker 3: style is a mixture of all these six great investors

991
00:57:50,360 --> 00:57:53,720
Speaker 3: that had the honor of working with. And I hope

992
00:57:54,120 --> 00:57:57,600
Speaker 3: I am utterly unpredictable when someone tries to do this

993
00:57:57,680 --> 00:58:01,160
Speaker 3: to me, because I hope my worldviews fluid enough that

994
00:58:01,240 --> 00:58:04,080
Speaker 3: it doesn't cannot be predicted at the eighty percent accuracy

995
00:58:04,160 --> 00:58:06,680
Speaker 3: level that that I was able to do.

996
00:58:07,200 --> 00:58:10,240
Speaker 2: So let's talk about books. What are some of your favorites?

997
00:58:10,280 --> 00:58:11,640
Speaker 2: What are you reading right now?

998
00:58:12,600 --> 00:58:15,040
Speaker 3: So there are three books that change my life as

999
00:58:15,080 --> 00:58:18,280
Speaker 3: a twenty year old. I read Tony Robins Awakened the

1000
00:58:18,320 --> 00:58:21,160
Speaker 3: Giant Within. I know it's cheesy, I know it's help.

1001
00:58:21,560 --> 00:58:25,720
Speaker 3: It is a fabulous people love it. It is fabulous.

1002
00:58:25,800 --> 00:58:28,640
Speaker 3: It's about controlling your emotion and charting your own destiny

1003
00:58:28,760 --> 00:58:32,280
Speaker 3: as a hungry twenty year old. It calmed the hell

1004
00:58:32,320 --> 00:58:35,280
Speaker 3: out of me, really that it was life changing, and

1005
00:58:35,320 --> 00:58:38,360
Speaker 3: I am forever grateful for to Tony, and I am

1006
00:58:38,400 --> 00:58:41,439
Speaker 3: a big proponent and he's an incredible human being.

1007
00:58:41,960 --> 00:58:46,400
Speaker 2: I am reluctant to call things cheesy where there is

1008
00:58:46,480 --> 00:58:52,160
Speaker 2: a ground swell of support and just endless testimonials like

1009
00:58:52,240 --> 00:58:55,120
Speaker 2: you just gave that said, hey, you may not love this,

1010
00:58:55,480 --> 00:58:59,040
Speaker 2: but this really helped me through this challenge and I'm

1011
00:58:59,040 --> 00:59:01,600
Speaker 2: better for it. So I don't know, I think it's

1012
00:59:01,680 --> 00:59:05,760
Speaker 2: a little too blase, too glib to just say, oh,

1013
00:59:05,800 --> 00:59:08,160
Speaker 2: it's cheesy. What did that book sell? Like ten million?

1014
00:59:08,480 --> 00:59:11,040
Speaker 3: A million copies? And if you've never met him, see

1015
00:59:11,160 --> 00:59:13,440
Speaker 3: I'm not your guru. At Netflix, and you'll get a

1016
00:59:13,520 --> 00:59:15,840
Speaker 3: chance to feel his energy. Oh really, he's amazing. You

1017
00:59:15,840 --> 00:59:16,640
Speaker 3: should totally see that.

1018
00:59:16,680 --> 00:59:18,560
Speaker 2: I'm not your guru. Al Right, I'm going to put

1019
00:59:18,600 --> 00:59:20,240
Speaker 2: that on my list. What are the other two?

1020
00:59:20,520 --> 00:59:23,480
Speaker 3: So Victor Frankel meant in search of purpose? I read

1021
00:59:23,520 --> 00:59:26,080
Speaker 3: it five times in my list. My purpose keeps changing.

1022
00:59:27,040 --> 00:59:29,360
Speaker 3: And then we talked about this. I really am a

1023
00:59:29,360 --> 00:59:31,960
Speaker 3: fan of Gentis kanon The Making of the Modern World.

1024
00:59:32,360 --> 00:59:37,440
Speaker 3: It was a super interesting book because it defied the

1025
00:59:37,480 --> 00:59:41,080
Speaker 3: stereotype that this was a savage, ruthless conquer He was

1026
00:59:41,120 --> 00:59:45,440
Speaker 3: an incredibly sophisticated man that built the largest empire, built

1027
00:59:45,720 --> 00:59:48,280
Speaker 3: in bigger than the Roman, bigger than the Roman, bigger

1028
00:59:48,320 --> 00:59:50,640
Speaker 3: than the Ottoman. Only the British had a bigger empire,

1029
00:59:51,120 --> 00:59:55,040
Speaker 3: and he had rule of law. He was married toocratic

1030
00:59:55,320 --> 00:59:59,880
Speaker 3: He embraced diversity, He invested in the arts, he was portrayed.

1031
01:00:00,200 --> 01:00:04,800
Speaker 3: He was pro interchange of ideas and built something unheard

1032
01:00:04,840 --> 01:00:09,120
Speaker 3: of at the time before technology. It was seventeen percent

1033
01:00:09,160 --> 01:00:12,959
Speaker 3: of the world's land under one empire. That a single man,

1034
01:00:13,080 --> 01:00:17,200
Speaker 3: an orphan, a nomad built in the twelve hundreds.

1035
01:00:17,400 --> 01:00:24,960
Speaker 2: Beautiful, arguably not just a military genius, but a governmental

1036
01:00:25,080 --> 01:00:31,000
Speaker 2: societal genius, able to not just conquer, but keep the

1037
01:00:31,040 --> 01:00:34,960
Speaker 2: empire together, which is always the challenge. The Romans spread

1038
01:00:35,000 --> 01:00:38,000
Speaker 2: themselves too thin. You could say the same about the

1039
01:00:38,000 --> 01:00:41,360
Speaker 2: Spanish Empire or the British Empire. He managed to maintain

1040
01:00:41,400 --> 01:00:43,400
Speaker 2: this throughout his entire life.

1041
01:00:43,360 --> 01:00:45,520
Speaker 3: And lived through the right page of sixty five twice

1042
01:00:45,520 --> 01:00:47,560
Speaker 3: the life expectancy of his era.

1043
01:00:48,000 --> 01:00:52,680
Speaker 2: Which is pretty impressive. Our final two questions, what sort

1044
01:00:52,680 --> 01:00:55,400
Speaker 2: of advice would you give to a recent college grad

1045
01:00:55,560 --> 01:00:59,800
Speaker 2: interested in a career in either growth, equity or investing,

1046
01:01:00,120 --> 01:01:02,080
Speaker 2: or anything along those lines.

1047
01:01:02,840 --> 01:01:05,840
Speaker 3: As I think of the twelve junctures where I had

1048
01:01:05,880 --> 01:01:10,720
Speaker 3: to make life changing career choices, I always took the

1049
01:01:10,760 --> 01:01:17,040
Speaker 3: most adventurous route, choose the most adventurous route, and don't

1050
01:01:17,040 --> 01:01:17,560
Speaker 3: do it alone.

1051
01:01:17,600 --> 01:01:19,000
Speaker 2: Bring someone, don't play it safe.

1052
01:01:19,040 --> 01:01:22,120
Speaker 3: Don't play it safe. At the end of the day,

1053
01:01:22,600 --> 01:01:25,200
Speaker 3: he who has the best stories wins.

1054
01:01:26,040 --> 01:01:28,560
Speaker 2: And you were before I interrupted, you were about to say,

1055
01:01:28,600 --> 01:01:29,720
Speaker 2: bring someone along with you.

1056
01:01:29,880 --> 01:01:33,120
Speaker 3: Bring someone along, And that's what There's two points like

1057
01:01:33,200 --> 01:01:36,800
Speaker 3: Robert Frost and Walt Wildman. Roberts Frost's journey, the road

1058
01:01:36,880 --> 01:01:40,600
Speaker 3: less travel is a lonely journey. Walt Whitman's is about

1059
01:01:41,240 --> 01:01:45,760
Speaker 3: opening the road you know and bringing, extend out a

1060
01:01:45,840 --> 01:01:48,200
Speaker 3: hand and give you my he says, I give you

1061
01:01:48,240 --> 01:01:51,960
Speaker 3: my love. Bring someone you love along. And the most

1062
01:01:51,960 --> 01:01:54,160
Speaker 3: important decision of a man's life or a woman's life

1063
01:01:54,200 --> 01:01:57,000
Speaker 3: is who your life partner is. Bring someone along on

1064
01:01:57,040 --> 01:01:59,680
Speaker 3: this adventure because it's twice as fun if you can

1065
01:01:59,720 --> 01:02:03,080
Speaker 3: reminess in your old age about all the great twists

1066
01:02:03,080 --> 01:02:04,640
Speaker 3: and turns that life throws me in.

1067
01:02:04,720 --> 01:02:07,600
Speaker 2: You And our final question, what do you know about

1068
01:02:07,640 --> 01:02:11,360
Speaker 2: the world of investing today? You wish you knew thirty

1069
01:02:11,440 --> 01:02:17,840
Speaker 2: or so years ago when you were first getting started.

1070
01:02:15,960 --> 01:02:19,280
Speaker 3: From Warren Buffett. You only have tw twenty slots in

1071
01:02:19,320 --> 01:02:21,840
Speaker 3: your life? Was your investor wait for the big fish,

1072
01:02:22,480 --> 01:02:26,120
Speaker 3: don't waste them on marginal opportunities. You don't eat mark

1073
01:02:26,200 --> 01:02:31,000
Speaker 3: to market, only cash on cash counts. And the final one.

1074
01:02:31,640 --> 01:02:35,800
Speaker 3: If you think like the crowd, you're destined to mediocrity.

1075
01:02:36,240 --> 01:02:38,120
Speaker 2: You're destined to perform like the crowd.

1076
01:02:38,520 --> 01:02:39,040
Speaker 3: Exactly.

1077
01:02:39,280 --> 01:02:42,880
Speaker 2: Huh really interesting? Thanks Martin for being so generous with

1078
01:02:43,080 --> 01:02:47,200
Speaker 2: your time. We have been speaking with Martin Escobari. He

1079
01:02:47,480 --> 01:02:51,280
Speaker 2: is co president and head of Global Growth Equity at

1080
01:02:51,360 --> 01:02:55,400
Speaker 2: General Atlantic. The firm manages over one hundred billion dollars

1081
01:02:55,920 --> 01:02:59,960
Speaker 2: in assets If you enjoy this conversation, we'll be sure

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Speaker 2: and check out any of the past five hundred and

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Speaker 2: fifty we've had over the previous ten and a half years.

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Speaker 2: You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever

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Speaker 2: you find your favorite podcasts. And be sure and check

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Speaker 2: out my new book, How Not to Invest The Ideas,

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Speaker 2: numbers and behavior that destroys well out now wherever you

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Speaker 2: find your favorite books. I would be remiss if I

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Speaker 2: did not thank the Crack team that helps with these

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Speaker 2: conversations together each week. Steve Gonzalez is my audio engineer.

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Speaker 2: Sean Russo is my head of research. Anna Luke is

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Speaker 2: my producer. I'm Barry Retults. You've been listening to Masters

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Speaker 2: in Business on Bloomberg Radio.