Alan Waxman - Private Credit and the Modern Financial System - [Invest Like the Best, EP.466]
My guest today is Alan Waxman, co-founder and CEO of Sixth Street, a $130B global investment firm.
Private credit is one of the most discussed topics in markets right now, and there is a lot to make sense of. The current discourse is almost entirely focused on symptoms. Alan Waxman has spent the time diagnosing the root cause.
Alan thinks about the financial system the way a historian would, studying the incentives, guardrails, and market structure that determine how things play out.
In this conversation, he traces the evolution of American finance from the 1929 crash through Glass-Steagall, the GFC, and Basel III to explain how we arrived at what he calls the factory model, the industrialization of liability-gathering and asset deployment that he believes is the root cause of everything happening in private markets today.
This is my second conversation with Alan, our first one is one of my favorites from last year.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to ramp.com/invest to sign up for free and get a $250 welcome bonus.
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This episode is brought to you by Vanta. Trusted by thousands of businesses, Vanta continuously monitors your security posture and streamlines audits so you can win enterprise deals and build customer trust without the traditional overhead. Visit vanta.com/invest.
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Rogo is the AI platform for finance. They're building agents for Wall Street that are trained to understand how bankers and investors actually do work: from diligence and modeling, to turning analysis into deliverables. To learn more, visit rogo.ai/invest.
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This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Visit ridgelineapps.com.
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Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Timestamps
(00:00:00) Welcome to Invest Like The Best
(00:02:43) Intro: Alan Waxman
(00:04:35) Financial System Guardrails & Incentives
(00:05:56) System 1: Pre-1933 to 1999
(00:07:39) Glass-Steagall Legislation
(00:10:46) Deregulation & Rise of System 2
(00:12:27) Leverage, GFC, and System 2's Collapse
(00:14:25) Basel III, Dodd-Frank, and System 3
(00:15:32) Why System 3 Could Be the Best Ever
(00:19:04) Behavioral Shifts Starting in 2018
(00:19:52) The Factory Model
(00:24:33) Acceleration of Factory Model
(00:28:25) FRE Multiples and GP Incentives
(00:34:59) Wealth Channel & Asset-Liability Mismatches
(00:36:15) Why This Won’t be the Next GFC
(00:45:31) AI, Creative Destruction & Opportunity
(00:49:35) Alan’s One-Sheet Brain System
(00:55:01) Lessons by Decade: Hui
(00:59:28) Face the Tiger
Alan Waxman - Building Sixth Street - [Invest Like the Best, EP.433]
My guest today is Alan Waxman. Alan is the co-founder and CEO of Sixth Street, one of the most unique investment firms with a "go anywhere, do anything" mandate across asset classes, geographies, and time horizons, and over $110 billion in AUM. He describes his journey from CIO of Goldman Sachs’ Special Situations Group and the frameworks he brought with him to lay the foundation for Sixth Street. Alan details their famous investments like Spotify and Airbnb during challenging periods, their innovative sports partnerships with Real Madrid and FC Barcelona, and their $30 billion "TAO" vehicle that allows them to write billion-dollar checks while keeping individual fund sizes matched to opportunities. We discuss hiring people without egos, enabling a truly multi-strategy approach, and Sixth Street’s "face the tiger" philosophy. Please enjoy this great conversation with Alan Waxman.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus.
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This episode is brought to you by AlphaSense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster.
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This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to ridgelineapps.com to learn more about the platform.
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Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Show Notes:
(00:00:00) Welcome to Invest Like the Best
(00:04:57) Introducing Alan Waxman and Sixth Street
(00:05:58) The Formative Goldman Sachs Years
(00:10:21) Unitizing Risk and Return
(00:14:23) Facing the Tiger: Sixth Street's Culture and Values
(00:34:51) Spotify and Airbnb: Case Studies in Investment
(00:39:20) Ambitious Investment Strategies
(00:40:40) Strategic Partnerships in Sports
(00:41:23) Navigating COVID with Airbnb
(00:43:36) Risk and Return Analysis
(00:46:56) Investing in Sports and Live Entertainment
(00:52:23) Developing Investment Themes
(00:55:29) Balancing Leadership and Investment
(00:57:30) The Importance of Culture
(01:10:33) Future Self and Long-Term Vision
(01:15:09) The Kindest Thing Anyone Has Ever Done For Alan
Finding a Single Source of AI Truth With Marty Chavez From Sixth Street
a16z General Partner David Haber talks with Marty Chavez, vice chairman and partner at Sixth Street Partners, about the foundational role he’s had in merging technology and finance throughout his career, and the magical promises and regulatory pitfalls of AI.
This episode is taken from “In the Vault”, a new audio podcast series by the a16z Fintech team. Each episode features the most influential figures in financial services to explore key trends impacting the industry and the pressing innovations that will shape our future.
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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How Software Ate Finance — with Martin Chavez
Marty Chavez, a senior advisor to Sixth Street Partners and the former CIO and CFO of Goldman Sachs, shares his ideas around regulating big tech like big banks, and discusses the trends playing out in our financial ecosystem. Marty breaks down the crypto space, fintech, and what’s at stake when the meme stocks surge. Follow Marty on Twitter, @RMartinChavez
Scott opens with his thoughts on WeWork going public via a SPAC merger.
Algebra of Happiness: addressing income inequality.
Marty’s Stanford Course: Money and Digital Currency Innovation
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