WEBVTT - Trends in Emerging Markets with Martín Escobari 0:00:02.520 --> 0:00:11.879 Bloomberg Audio Studios, Podcasts, radio News. This is Masters in 0:00:11.960 --> 0:00:16.120 Business with Barry Ritholts on Bloomberg Radio. 0:00:16.640 --> 0:00:20.079 This week on the podcast Well strap yourself in for 0:00:20.200 --> 0:00:26.840 yet another fantastic conversation. Martine Escobari has an amazing background 0:00:26.880 --> 0:00:31.280 that ultimately led him to be co president, head of 0:00:31.360 --> 0:00:35.440 Global Growth Equity and head of the investment Committee at 0:00:35.640 --> 0:00:40.120 private equity giant General Atlantic. They run over one hundred 0:00:40.200 --> 0:00:45.120 billion dollars. The background in the story is fascinating, from 0:00:45.520 --> 0:00:49.680 duty free shops to the Atlantic Philanthropies. Those were set 0:00:49.760 --> 0:00:53.159 up in nineteen sixty nineteen eighty, respectively, and over the 0:00:53.240 --> 0:00:57.560 ensuing forty five years, they just have carved their own 0:00:57.600 --> 0:01:01.720 path and created their own expertise. They're kind of unique 0:01:01.760 --> 0:01:06.600 amongst the global private equity or even domestic private equity players, 0:01:06.600 --> 0:01:09.440 and that half of their people, half of their capital 0:01:09.480 --> 0:01:14.840 has invested overseas, kind of unusual in that space. Martin 0:01:15.000 --> 0:01:19.240 has just an amazing background. Born in Bolivia, built a 0:01:19.280 --> 0:01:24.080 company in Brazil, educated in the United States. Just really, 0:01:24.160 --> 0:01:29.160 there are a few people better situated to describe what 0:01:29.319 --> 0:01:34.560 it's like being a growth equity investor, meaning you're not 0:01:34.680 --> 0:01:39.440 investing in startups you're investing in companies that have started 0:01:39.480 --> 0:01:44.640 to develop some scale and perhaps are turning profitable and 0:01:44.840 --> 0:01:47.840 taking them to the next level. I thought the conversation 0:01:48.080 --> 0:01:51.960 was fascinating, and I think you will also with no 0:01:52.040 --> 0:01:57.880 further ado my conversation with General Atlantics Martin Escobodi. 0:01:59.040 --> 0:02:01.000 Perry. It is an honor and a privilege to be 0:02:01.080 --> 0:02:01.560 here with you. 0:02:01.560 --> 0:02:03.680 Well, thank you so much for coming. I've been looking 0:02:03.720 --> 0:02:06.680 forward to this in part because what you do is 0:02:06.760 --> 0:02:10.960 so interesting, but also because your background is a little different. 0:02:11.480 --> 0:02:14.359 You're born and raised in Bolivia. Tell us a little 0:02:14.400 --> 0:02:17.239 bit about your upbringing and your experiences. 0:02:17.639 --> 0:02:19.680 The odds of me being here with you today are 0:02:19.600 --> 0:02:22.000 about one in a million, right, I mean, I was 0:02:22.040 --> 0:02:24.840 born in a town of ten thousand people. My parents 0:02:24.880 --> 0:02:29.840 were communists and had disdain for capitalism. They spent their 0:02:29.840 --> 0:02:33.440 life saving children's lives in public hospitals, and to them, 0:02:33.600 --> 0:02:38.440 business people were so less, meaningless lives, and they expected 0:02:38.560 --> 0:02:40.640 something very different from me. So that's sort of the 0:02:40.680 --> 0:02:43.560 first set of unusual circumstances. 0:02:43.880 --> 0:02:47.280 I have to ask what was their response when you said, mom, Dad, 0:02:47.320 --> 0:02:48.360 I'm going to Harvard. 0:02:48.600 --> 0:02:49.840 What is Harvard. 0:02:51.000 --> 0:02:54.639 Still? God and I been talking about the Business School knowledge. Yeah, 0:02:55.360 --> 0:02:56.560 didn't register with them. 0:02:56.880 --> 0:02:59.480 And the accident that led me to Harvard is interesting. 0:03:00.200 --> 0:03:02.360 I had a neighbor who was a school teacher at 0:03:02.360 --> 0:03:05.840 the American School who became my mom's lifetime best friend. 0:03:06.520 --> 0:03:10.040 I talked her into putting me in the American School, 0:03:10.600 --> 0:03:13.400 and by chance, there was a very good American school 0:03:13.440 --> 0:03:16.360 because some oil companies were funding great education for the kids. 0:03:16.400 --> 0:03:18.440 And I got a great education. And then I got 0:03:18.480 --> 0:03:21.480 a scholarship to Harvard and that is where I sort 0:03:21.480 --> 0:03:24.680 of entered Hogwarts Academy of Wizardy and the doors of 0:03:24.760 --> 0:03:27.200 the universe opened to me, and I was the first 0:03:27.280 --> 0:03:29.520 Bolivian in three hundred and fifty years. Is that go 0:03:29.560 --> 0:03:30.359 to Harvard College? 0:03:30.440 --> 0:03:34.400 Yeah, oh my god, that's amazing. So economics BA, and 0:03:34.440 --> 0:03:38.080 then you get the NBA from the business school. What 0:03:38.200 --> 0:03:39.280 was the career plan? 0:03:40.200 --> 0:03:44.800 So listen, I've up until recently been very disciplined about 0:03:45.080 --> 0:03:48.560 setting up five year plans for myself and I keep them. 0:03:48.840 --> 0:03:51.080 And if you looked at my five year plan when 0:03:51.080 --> 0:03:53.600 I was in college, I was destined to go work 0:03:53.640 --> 0:03:58.000 at the World Bank, help solve big problems in emerging markets. 0:03:58.240 --> 0:04:00.280 One day get called back to my country to be 0:04:00.360 --> 0:04:02.360 finance minister and then if I did a good job, 0:04:02.720 --> 0:04:05.200 maybe have a shot at running Bolivia. That was the 0:04:05.240 --> 0:04:09.680 plan coming out of college. I stumbled into business, I 0:04:09.680 --> 0:04:12.680 fell in love, and that's how business school came about. 0:04:12.760 --> 0:04:15.440 And then that's what I've been doing for thirty years. 0:04:15.680 --> 0:04:20.719 Finance Minister of Bolivia is fairly ambitious. But before we 0:04:20.760 --> 0:04:25.240 get to that, you co found Submarino or Submarna. How 0:04:25.279 --> 0:04:28.880 do you pronounce that? Submarino Submarno really one of the 0:04:28.920 --> 0:04:33.880 earliest online retailers in Brazil. Tell us a little bit 0:04:33.920 --> 0:04:37.800 about your experience there and what it was like being 0:04:37.800 --> 0:04:41.200 an entrepreneur in Brazil in the nineteen nineties. 0:04:41.720 --> 0:04:46.679 So I believe each generation will have one giant wave, 0:04:47.320 --> 0:04:51.080 one giant disruption that will catch us in our twenties 0:04:51.200 --> 0:04:54.000 or thirties. For me, it was the Internet. Later, it 0:04:54.000 --> 0:04:56.440 was the mobile Internet, the cloud. Now it's AI and 0:04:56.480 --> 0:04:57.480 biotech revolution. 0:04:57.600 --> 0:04:59.320 But that sounds like four waves. 0:05:00.040 --> 0:05:02.760 That hit me in my twenties was the Internet, and 0:05:03.480 --> 0:05:07.200 I had this realization that this is my one shot. 0:05:07.360 --> 0:05:09.520 I don't know if you listened to the Hamilton musical, 0:05:09.880 --> 0:05:13.680 there's my shot, the scrappy immigrant that's waiting for the 0:05:13.760 --> 0:05:17.120 revolution where it's a level playing field and you're all 0:05:17.160 --> 0:05:20.720 trying to catch this giant wave and the internet felt 0:05:20.760 --> 0:05:24.560 at this amazing life changing opportunity, and I said, I 0:05:24.600 --> 0:05:28.479 can't miss this adventure. And to me, together with two 0:05:28.480 --> 0:05:31.200 other colleagues from the private equity group I was working 0:05:31.200 --> 0:05:33.760 on out of business school, from the three g guys 0:05:34.279 --> 0:05:36.839 said we're in the wrong side of this revolution. We 0:05:36.839 --> 0:05:40.200 shouldn't be financing the startups, we should be creating the startups. 0:05:40.600 --> 0:05:42.640 And we set out to build the Ali Baba or 0:05:42.680 --> 0:05:45.760 the Amazon dot Com of Brazil. And it was seven 0:05:45.839 --> 0:05:49.000 incredible years because it started great. We raised more money 0:05:49.000 --> 0:05:51.920 than we could ever dream We almost went public, the 0:05:52.040 --> 0:05:55.000 market shutdown, we almost went bankrupt. We had to sell 0:05:55.040 --> 0:05:57.120 the pieces, we had to get the profitability, and then 0:05:57.160 --> 0:06:01.160 we came back. So it was a compressed, you know, 0:06:01.200 --> 0:06:04.480 thirty years of life into seven. But I felt I 0:06:04.560 --> 0:06:06.840 did not miss the revolution of my generation. 0:06:07.240 --> 0:06:11.480 So New York City, in my recollection during the nineteen 0:06:11.600 --> 0:06:16.320 nineties was just. There was a fire hose of cash 0:06:16.880 --> 0:06:21.520 and capital over everything. It was a party. Apartment prices 0:06:21.560 --> 0:06:27.320 were going up, restaurants, clubs, everything was just. It was 0:06:27.440 --> 0:06:31.040 the Roaring twenties. All over again. You launched this in 0:06:31.080 --> 0:06:34.520 Brazil in nineteen ninety nine, What was the economy like, 0:06:34.600 --> 0:06:35.760 what was your experience like? 0:06:36.000 --> 0:06:39.640 So listen, the macro was horrible, but the technology was overwhelming, 0:06:39.680 --> 0:06:42.120 and the sources of capital recognized that this was a 0:06:42.160 --> 0:06:45.400 global opportunity. So we raised two hundred and fifty million 0:06:45.400 --> 0:06:48.479 dollars as a private company, So before the correction of 0:06:48.520 --> 0:06:53.680 March of two thousand, money was raiding. There was no infrastructure. 0:06:53.720 --> 0:06:56.320 You had to build everything from zero. Everything was one 0:06:56.360 --> 0:07:01.520 hundred times more difficult. But the advantage of Brazil is 0:07:01.600 --> 0:07:05.400 we had not developed the brick and mortar retail infrastructure. 0:07:05.440 --> 0:07:10.040 There were no superstores. The Brazilian consumer was starved variety 0:07:10.200 --> 0:07:13.360 because all the supermarkets carried very limited assortment. So the 0:07:13.400 --> 0:07:16.720 opportunity of e commerce, we believed, was ten times bigger 0:07:16.760 --> 0:07:19.920 than in the US or Western Europe because we were 0:07:20.240 --> 0:07:23.960 leapfrogging a whole stage of evolution of the retail format. 0:07:24.240 --> 0:07:26.880 And it came to be. E Commerce in Brazil now 0:07:26.920 --> 0:07:29.160 twenty five years later is close to twenty percent of 0:07:29.160 --> 0:07:33.000 all trade. It is a vibrant, dynamic industry and there 0:07:33.000 --> 0:07:35.920 are no category killers. We skipped that whole toys, r 0:07:36.040 --> 0:07:39.880 us and babies are us and bad and bond phase 0:07:40.280 --> 0:07:43.120 and that's good for the environment. So I was part 0:07:43.160 --> 0:07:46.160 of a transformational moment together with my co founders, and 0:07:46.680 --> 0:07:50.760 it was exciting, it was scary, and ultimately when we 0:07:50.800 --> 0:07:54.040 sold it producing good returns for the investors, it was 0:07:54.080 --> 0:07:54.680 very fulfilling. 0:07:54.880 --> 0:08:00.400 So what did that experience as an entrepreneur duty how 0:08:00.400 --> 0:08:04.280 did that impact you years later as an investor? What 0:08:04.600 --> 0:08:05.920 do you carry forward from that? 0:08:06.680 --> 0:08:09.680 So I've been an investor for twenty odd years. The 0:08:09.720 --> 0:08:15.280 main lesson is the profound realization that the heroes of 0:08:15.320 --> 0:08:19.400 the journey are not the investors, are the people that 0:08:19.440 --> 0:08:22.000 are in the front lines and the trench lines. It 0:08:22.120 --> 0:08:26.880 is so hard to create out of nothing something that thrives. 0:08:27.560 --> 0:08:31.760 It is in human level of sacrifice that these people 0:08:31.800 --> 0:08:34.440 go through. And I have so much respect for the 0:08:34.480 --> 0:08:37.520 heroes of the journey, and I remind my colleagues we're 0:08:37.559 --> 0:08:38.560 just the supply lines. 0:08:39.840 --> 0:08:42.240 They're on the front lines. You're just supriy and you're 0:08:42.280 --> 0:08:45.040 just supplying the AMMO and the material to do what 0:08:45.080 --> 0:08:48.840 they have to do. That's really interesting. So let's discuss 0:08:49.920 --> 0:08:52.880 some of the things you've talked about. When you discuss 0:08:53.000 --> 0:08:57.560 investing in entrepreneurship. One of the themes that keeps coming 0:08:57.720 --> 0:09:00.720 up that I've read in some of your notes is 0:09:01.160 --> 0:09:05.280 the unpredictability of the world. How do you think about 0:09:05.320 --> 0:09:09.080 making investments for five or ten years out when the 0:09:09.120 --> 0:09:11.160 world is just so unpredictable. 0:09:12.600 --> 0:09:18.080 So I grew up in Bolivia in the eighties. It 0:09:18.120 --> 0:09:23.800 was chaos, chaos that it's hard to internalize. So in 0:09:23.840 --> 0:09:27.760 my teenage years ten years, there were nine presidents. In 0:09:27.800 --> 0:09:31.920 my teenage years, there was thirty five thousand percent inflation. 0:09:33.000 --> 0:09:35.400 What that meant is halfway through my teenage years, we 0:09:35.480 --> 0:09:39.520 changed currencies from the peso Boliviano to justin Boliviano by 0:09:39.600 --> 0:09:43.640 chopping off six zeros. Wow, one million US dollars becomes 0:09:43.760 --> 0:09:48.440 one American. That happened when I was fifteen, So I 0:09:48.480 --> 0:09:51.679 get I grew up with chaos, and I got comfortable 0:09:51.679 --> 0:09:55.800 with chaos. And what the main lesson of chaos is 0:09:56.520 --> 0:09:59.720 it's never as bad as it seems, and it's always 0:09:59.800 --> 0:10:02.320 dark right before the sun is going to come out, 0:10:02.520 --> 0:10:04.319 and you have to believe the sun is going to 0:10:04.400 --> 0:10:08.280 come out and plan for the sun. And as it 0:10:08.320 --> 0:10:11.760 relates to a world that's highly unpredictable. Remember, the sign 0:10:11.880 --> 0:10:13.440 is going to come out and stay through to first 0:10:13.440 --> 0:10:15.880 principles and what makes great businesses, and who are great 0:10:15.960 --> 0:10:19.640 entrepreneurs and who's solving real world problems and lean in 0:10:19.960 --> 0:10:21.160 when everyone else is scared. 0:10:21.840 --> 0:10:24.360 So I want to talk a little bit more about 0:10:24.760 --> 0:10:30.240 your upbringing, but I want listeners to understand the genesis 0:10:30.240 --> 0:10:33.600 of General Atlantic and where it comes from. So let's 0:10:33.600 --> 0:10:36.760 talk a little bit about Chuck Feeney, which I had 0:10:36.760 --> 0:10:40.000 no idea about when I started doing my homework here. 0:10:40.520 --> 0:10:46.040 So in nineteen sixty in Hong Kong, he founds the 0:10:46.080 --> 0:10:50.120 first duty fee shop in the airport in Hong Kong. 0:10:50.480 --> 0:10:55.040 Right now, to the US travelers, duties aren't a big deal. 0:10:55.520 --> 0:10:58.920 Buy makeup, we buy it, booze, whatever it is, it's 0:10:58.960 --> 0:11:02.680 more or less the same price at home. But if 0:11:02.720 --> 0:11:05.400 you go to Europe, if you go to parts of Asia, 0:11:05.559 --> 0:11:10.960 there are like substantial taxes, and buying these things at 0:11:10.960 --> 0:11:16.480 the airport duty free real substantial savings in money. So 0:11:17.160 --> 0:11:22.679 he launches duty free Shops dfs in nineteen sixty. By 0:11:22.800 --> 0:11:27.600 nineteen eighty, it's so successful that they have to set 0:11:27.679 --> 0:11:33.040 up General Lannik to manage the philanthropy that he's now doing. 0:11:33.440 --> 0:11:36.200 Tell us a little bit about Chuck Feeney and how 0:11:36.400 --> 0:11:38.560 GA was established. 0:11:39.280 --> 0:11:42.280 Chuck is one of the most impressive people I've ever 0:11:42.360 --> 0:11:45.480 got a chance to meet. He stumbled into the duty 0:11:45.480 --> 0:11:48.760 free idea as a soldier because he was mesmerized by 0:11:48.840 --> 0:11:52.040 the vibrant trade that happened in the American bases in 0:11:52.080 --> 0:11:56.760 the Pacific. So you could buy cigars, liquor appliances half 0:11:56.760 --> 0:11:59.920 off because it wasn't America, and it wasn't the Philippines. 0:12:00.120 --> 0:12:03.520 Was no man's land in this area, and the taxes 0:12:03.520 --> 0:12:05.800 were very high in those regions, so there was a loophole. 0:12:06.280 --> 0:12:08.800 He created the world due to free business, which thrived 0:12:08.840 --> 0:12:12.520 to a major business. He landed upon a level of 0:12:12.559 --> 0:12:16.360 wealth he was not ready for, to say the least, 0:12:16.760 --> 0:12:21.040 and he questioned, what is the purpose of my wealth? 0:12:21.120 --> 0:12:22.760 And he thought about it for a long time. And 0:12:22.760 --> 0:12:25.400 I've heard him tell the story. He's now diseased two 0:12:25.480 --> 0:12:28.280 years ago, and he says, the purpose of my wealth 0:12:28.440 --> 0:12:32.080 is to improve the human condition today, not tomorrow, not 0:12:32.240 --> 0:12:35.679 one hundred years from not through foundation today. And he 0:12:35.720 --> 0:12:38.640 created General Atlantic as his family office, or the vehicle 0:12:38.679 --> 0:12:41.400 to manage his family wealth. He wanted us to invest 0:12:41.480 --> 0:12:45.360 in innovation and entrepreneurship globally, and he wanted all the 0:12:45.400 --> 0:12:49.600 proceeds of our investment activity to go finance the great 0:12:49.720 --> 0:12:54.440 causes anonymously. He was the originator of the giving pledge, 0:12:54.440 --> 0:12:56.520 except it wasn't fifty percent, it was one hundred percent. 0:12:56.800 --> 0:12:59.439 He famously said, I want my last check to bounce. 0:13:00.080 --> 0:13:03.160 Almost succeeded it when he died. He donated nine billion 0:13:03.280 --> 0:13:06.920 dollars over his lifetime, most of it anonymously, and at 0:13:06.920 --> 0:13:09.199 the later stages of his life he says, I actually 0:13:09.240 --> 0:13:12.120 need to tell my story because it maybe it motivates 0:13:12.120 --> 0:13:14.880 other people to follow this incredibly rewarding path, which is 0:13:14.880 --> 0:13:17.280 to spend my life giving away my wealth. And that 0:13:17.640 --> 0:13:20.600 he did, and he set us off on this incredible 0:13:20.679 --> 0:13:24.800 forty five year journey of backing innovators wherever they may 0:13:24.800 --> 0:13:26.720 be in the world. And that's what we are today, 0:13:26.760 --> 0:13:28.840 and that's what we've been doing for forty five years. 0:13:29.200 --> 0:13:31.640 And to fill in some of the blanks that some 0:13:31.679 --> 0:13:35.000 people may not be aware of. Duty Free Shoppers Limited 0:13:35.120 --> 0:13:40.920 is now owned by Luxury Giant LVMH and General Lannik 0:13:41.160 --> 0:13:46.000 evolved from his family office to manage money for the 0:13:46.000 --> 0:13:51.840 philanthropies to a leading growth and innovation investor with now 0:13:52.040 --> 0:13:55.880 more than one hundred billion dollars in assets under management. 0:13:56.360 --> 0:14:00.559 Tell us a little bit about what General at Atlantic 0:14:01.040 --> 0:14:03.440 has been doing for the past forty five years to 0:14:03.600 --> 0:14:07.040 build up those returns to that degree. I'm assuming there 0:14:07.040 --> 0:14:09.280 are lots of distributions along the way as well. 0:14:09.360 --> 0:14:13.080 Yes, yes, So we started investing in technology in the 0:14:13.200 --> 0:14:16.440 United States and soon discovered that technology is not just 0:14:16.559 --> 0:14:19.640 changing the technology sector, but it's changing the healthcare sector 0:14:19.760 --> 0:14:22.560 and the financial services. Then we discovered that this is 0:14:22.560 --> 0:14:25.640 a global opportunity. We opened up Europe thirty years ago, 0:14:25.720 --> 0:14:28.280 we opened up the emerging markets twenty two years ago, 0:14:28.640 --> 0:14:32.480 and now we've built what we think is the most experienced, 0:14:32.560 --> 0:14:36.720 scaled growth equity investor in the world. Now, growth equity 0:14:36.920 --> 0:14:39.880 has become incredibly competitive. It's now a two trillion dollar 0:14:39.960 --> 0:14:42.280 asset class. Why is it so large because there are 0:14:42.320 --> 0:14:44.560 more companies that are growing thirty forty percent. Why because 0:14:44.560 --> 0:14:47.480 they're embracing technology to change their business and that allows 0:14:47.480 --> 0:14:50.680 for faster growth at cost efficient metrics. How do we 0:14:50.760 --> 0:14:54.920 compete in this highly competitive world? We have more experience 0:14:55.200 --> 0:14:59.040 forty five years of track record, great brand, five hundred 0:14:59.040 --> 0:15:02.240 investments over the last forty five years. We have scale. 0:15:02.960 --> 0:15:05.440 We have two hundred and fifty investment professionals. We have 0:15:05.520 --> 0:15:09.520 ninety operators in the Operators group. We have tech enabled sourcing. 0:15:09.560 --> 0:15:13.120 We meet seven thousand entrepreneurs every year to pick the 0:15:13.160 --> 0:15:15.960 best twenty five. So this is a scale game. We 0:15:16.040 --> 0:15:20.120 have this scale, and then we also have specialization. There 0:15:20.120 --> 0:15:23.120 are sixteen strategies we call them the GA Power Alleys, 0:15:23.440 --> 0:15:26.560 where we've developed ten and twenty year track record. That's 0:15:26.600 --> 0:15:29.080 a huge source of competitive advantage. And then we have 0:15:29.200 --> 0:15:34.520 nineteen local offices throughout the world. In every local market, 0:15:34.720 --> 0:15:37.200 we are more local than the local players, and we 0:15:37.240 --> 0:15:40.200 have the advantage that we are plugged into this global 0:15:40.240 --> 0:15:44.280 network of knowledge and accumulated experience that the GA infrastructure 0:15:44.320 --> 0:15:46.080 provides thro all our local partners. 0:15:46.320 --> 0:15:50.080 So let's start out why we're even having this conversation. 0:15:50.840 --> 0:15:54.480 Not only did Chuck Feeni make most of his donations 0:15:54.520 --> 0:15:58.360 anonymously and gave away billions and billions of dollars with 0:15:58.480 --> 0:16:02.200 no name attached, but GA has historically been kind of 0:16:02.200 --> 0:16:07.320 a low profile shop, so I think listeners may not 0:16:07.480 --> 0:16:10.960 really know some of the details of how the firm 0:16:11.000 --> 0:16:14.720 invests and the key areas you focus on. So let's 0:16:14.800 --> 0:16:19.400 start out talking about those five sectors, which are technology, 0:16:19.640 --> 0:16:24.560 consumer services, financial services, healthcare, and life sciences. And I 0:16:24.680 --> 0:16:29.120 know you get into a lot of specific details, and 0:16:29.200 --> 0:16:33.200 each of those five sectors have tons of subsectors. Tell 0:16:33.280 --> 0:16:35.760 us a little bit about the areas GA focuses on. 0:16:36.440 --> 0:16:39.440 Listen, the sectors of how we are organized internally. What's 0:16:39.480 --> 0:16:43.560 more interesting is what are the trends changing our world today. 0:16:44.120 --> 0:16:46.800 There are four mega trends that define the opportunity set 0:16:46.840 --> 0:16:51.080 for growth equity. First is the digital transition. Ninety percent 0:16:51.120 --> 0:16:55.400 of the world's transactions are going digital. Four trillion dollars 0:16:55.880 --> 0:16:59.600 of capitalists invested every year in this digital transition, in 0:16:59.640 --> 0:17:02.520 the invest in AI in cloud computing. This is a 0:17:02.560 --> 0:17:05.200 trend that's twenty years in the making. It's been accelerated 0:17:05.480 --> 0:17:10.440 by AI massive wave. The second one is health care innovation. 0:17:11.200 --> 0:17:15.359 Huge challenges in the West. Healthcare is too expensive and ineffective. 0:17:15.560 --> 0:17:18.240 The only way to address that is through technology to 0:17:18.280 --> 0:17:21.960 drive better health outcomes. In parallel, there's a new generation 0:17:22.000 --> 0:17:25.040 of health care innovation that is using the advances of 0:17:25.160 --> 0:17:28.280 it to apply it to the cell and creating the 0:17:28.320 --> 0:17:32.040 next generation of life sciences therapeuties which will dramatically change 0:17:32.200 --> 0:17:35.719 our health span. So that's another mega wave that's very relevant. 0:17:35.920 --> 0:17:38.479 By the way, I love the phrase health span as 0:17:38.520 --> 0:17:41.240 opposed to lifespan. Of course, the idea is to not 0:17:41.400 --> 0:17:43.800 just live long, but be healthy for as long as 0:17:43.800 --> 0:17:44.520 you possibly can. 0:17:44.600 --> 0:17:47.119 I'll give you one scary statistic. Ninety five percent of 0:17:47.160 --> 0:17:51.520 Americans die in hospitals. Only three percent of American doctors 0:17:51.560 --> 0:17:52.359 die in hospitals. 0:17:52.800 --> 0:17:53.080 Huh. 0:17:53.280 --> 0:17:55.760 It's not about the quality of your death, it's the 0:17:55.840 --> 0:17:58.600 quality of your life and your health span. As you said, Okay, 0:17:58.720 --> 0:18:01.760 so healthcare innovation huge area, our biggest, one of our 0:18:01.760 --> 0:18:07.120 biggest sectors energy transition. To get to our decop organization targets, 0:18:07.119 --> 0:18:09.560 we will need to spend north of six trillion dollars 0:18:09.560 --> 0:18:12.399 a year. That's a huge opportunity. The whole ecosystem around 0:18:12.440 --> 0:18:16.159 this trend to net zero. And the fourth major mega 0:18:16.240 --> 0:18:19.160 trend is the rise of the new consumer. The sort 0:18:19.160 --> 0:18:23.359 of younger middle class rising and purchasing power in the 0:18:23.359 --> 0:18:26.600 rest of the world will mean six trillion dollars of 0:18:26.640 --> 0:18:30.520 extra consumption by twenty thirty. In this emerging new middle class, 0:18:30.760 --> 0:18:34.320 these four mega trends define the growth equity opportunity set. 0:18:35.160 --> 0:18:39.439 I find it interesting that you're discussing mega trends that 0:18:39.520 --> 0:18:44.520 are global, in large part because I think this is 0:18:44.560 --> 0:18:49.760 an accurate statistic. Is General Atlantic the only private equity 0:18:49.800 --> 0:18:52.680 growth shop that has half of its assets and half 0:18:52.680 --> 0:18:59.000 of its people abroad? Like, only half of your capital 0:18:59.040 --> 0:19:00.280 and people are in the. 0:19:01.560 --> 0:19:04.399 Are you the only one among the top ten in 0:19:04.440 --> 0:19:07.480 the world. Yes, we are more global than anyone else. 0:19:07.520 --> 0:19:09.480 Why are we more global than anyone else? I'll give 0:19:09.480 --> 0:19:13.879 you two statistics. Half the unicorns, the sort of billion 0:19:13.920 --> 0:19:17.800 dollar companies in the world, are born outside the United States. 0:19:18.680 --> 0:19:23.320 More interestingly, half the unicorns in the United States are 0:19:23.359 --> 0:19:26.760 founded by immigrants from other parts of the world. So 0:19:26.800 --> 0:19:30.199 seventy five percent of value creation is for people that 0:19:30.240 --> 0:19:33.800 were in this world, people not born in US. Talent 0:19:34.200 --> 0:19:37.960 is sprinkled around the eight billion souls that inhabit the earth. 0:19:38.160 --> 0:19:40.359 We got to go where the talent is, and in 0:19:40.400 --> 0:19:42.320 our case, it means half of what we do is 0:19:42.320 --> 0:19:45.119 in the US and half is outside the US. And 0:19:45.160 --> 0:19:47.480 our activities outside the US have been a creative to returns. 0:19:48.480 --> 0:19:51.840 So let's talk about some of the other areas that 0:19:51.920 --> 0:19:57.920 are outside you come from South America. But let's talk 0:19:58.000 --> 0:20:01.480 generally emerging markets. Where do you look around the world 0:20:01.640 --> 0:20:02.720 for this talent. 0:20:03.480 --> 0:20:05.679 Listen, we have presence all over the world. We have 0:20:05.720 --> 0:20:07.800 three offices in China, we have offices in India, we 0:20:07.840 --> 0:20:11.440 have offices in Singapore, two in Latin America. We opened 0:20:11.480 --> 0:20:14.479 offices in two of three offices in the Middle East. 0:20:15.280 --> 0:20:20.560 What's exciting right now? And India. We've been in India 0:20:20.600 --> 0:20:23.240 for twenty two years, and India did not have its 0:20:23.280 --> 0:20:27.720 moment in the sun. Digital India wasn't ready. India infrastructure 0:20:27.840 --> 0:20:30.720 wasn't ready. It has been ready for the last five years. 0:20:31.840 --> 0:20:34.800 The business models, the digital business models that we saw 0:20:35.119 --> 0:20:39.240 transform industries in China and Brazil in Mexico had not 0:20:39.440 --> 0:20:42.159 yet done that in India. Over the last five years, 0:20:42.280 --> 0:20:46.840 India did a couple of reforms. First demonetization taking currency 0:20:46.880 --> 0:20:50.080 away and simplification of the tax code. Meant the informal 0:20:50.160 --> 0:20:53.439 economy went from fifty percent to twenty five percent. 0:20:53.480 --> 0:20:57.240 When you say informal economy, we not black market, we 0:20:57.359 --> 0:20:59.520 just not paying taxes. Just cash economy. 0:20:59.560 --> 0:21:02.359 Gosh economy, you don't have a credit, you don't it 0:21:02.400 --> 0:21:02.960 doesn't count. 0:21:03.440 --> 0:21:06.240 Kind of reminds me of the study they did in 0:21:06.320 --> 0:21:08.520 Greece where you have to pay tax on the pools 0:21:09.040 --> 0:21:12.320 and satellite images show there's something like twenty x number 0:21:12.320 --> 0:21:16.280 of pools. Then there are people paying taxes exact. So 0:21:16.359 --> 0:21:17.920 that was a modi change. 0:21:18.040 --> 0:21:21.560 That was a modi change. Second change is the transformation 0:21:21.640 --> 0:21:25.520 of digital India, which is Internet access was expensive and 0:21:25.560 --> 0:21:28.520 not very available. The telecom sector restructure around GEO, which 0:21:28.560 --> 0:21:31.320 is a great telco company, and now sixty percent of 0:21:31.320 --> 0:21:35.040 Indias have low cost wireless broadband. In parallel, the government 0:21:35.119 --> 0:21:39.840 created a national biometric identity database that enabled fraud free 0:21:39.960 --> 0:21:43.040 digital transactions from your phone, and now sixty percent of 0:21:43.040 --> 0:21:45.800 all transactions are in India are digital. All of a sudden, 0:21:45.800 --> 0:21:48.080 you have one of the most digital economies in the world. 0:21:48.320 --> 0:21:52.520 The final missing link their own capital markets, domestic saving 0:21:52.680 --> 0:21:56.080 gone up. They have certain restrictions around foreign domestic savings 0:21:56.119 --> 0:21:59.560 for individuals investing abroad, so they're investing in their local markets. 0:22:00.000 --> 0:22:02.240 The best IPO market of the last two years in 0:22:02.280 --> 0:22:04.439 the world has been India. So now you have the 0:22:04.440 --> 0:22:08.680 confluence of three factors that create what we think will 0:22:08.680 --> 0:22:12.280 be a virtuous next ten years for India, which is 0:22:12.320 --> 0:22:18.080 about time. Latin America is seven hundred million inhabitants, rising 0:22:18.160 --> 0:22:22.359 middle class, trading at all time low multiples. You can 0:22:22.400 --> 0:22:26.800 buy the entire country of Brazil at ten times earnings. Mexico, 0:22:27.200 --> 0:22:30.560 there is no better candidate or beneficiary of the trend 0:22:30.600 --> 0:22:34.480 to French shoring than the Mexican economy. The Chinese per 0:22:34.480 --> 0:22:37.399 hour worker is thirty percent cheaper than the Chinese worker 0:22:37.600 --> 0:22:38.680 and their next door. 0:22:38.960 --> 0:22:41.600 The Mexican workers. The Mexican cheaper than China. 0:22:41.400 --> 0:22:43.920 Than China today and their next door and they're your friends. 0:22:43.920 --> 0:22:47.159 They're not a geopolitical challenger to the US. So I 0:22:47.240 --> 0:22:52.160 see another great decade for Latin America in the next 0:22:52.320 --> 0:22:53.480 in the next years ahead. 0:22:53.520 --> 0:22:57.679 So you mentioned the IPO market in India doing so well. 0:22:57.840 --> 0:23:01.280 I got to ask, We've seen in two going on 0:23:01.400 --> 0:23:07.840 three years of pretty mediocre IPO offerings and very few 0:23:07.960 --> 0:23:11.320 IPOs actually come in to market. How do you look 0:23:11.320 --> 0:23:14.679 at this environment? What do you think happens with the 0:23:14.720 --> 0:23:15.880 IPO pipeline here? 0:23:16.520 --> 0:23:21.760 So, the growth equity opportunity set is the cheapest it's 0:23:21.800 --> 0:23:25.119 been in twenty five years. The price for growth that 0:23:25.160 --> 0:23:27.679 we're being asked to at to pay is the cheapest 0:23:27.680 --> 0:23:30.240 I've ever seen in my career, and I've been around. 0:23:30.440 --> 0:23:33.000 Why is it to cheap? Exactly for what you just said, Berry, 0:23:33.280 --> 0:23:36.120 We've gone three and a half years without a vibrant 0:23:36.119 --> 0:23:38.880 IPO market in the United States. That is really long. 0:23:39.440 --> 0:23:42.240