Alan Waxman - Building Sixth Street - [Invest Like the Best, EP.433] | Invest Like the Best with Patrick O'Shaughnessy Brief

Key Takeaways

Sixth Street's 'go anywhere, do anything' mandate allows for flexible investment across asset classes, prioritizing tailored solutions over rigid categories.
The firm's 'unitizing risk and return' framework objectively compares diverse investments, ensuring optimal risk-reward balance regardless of asset type.
Sixth Street's 'face the tiger' culture fosters direct problem-solving and collaboration, prioritizing team solutions over individual ego or avoidance.
Strategic capital pools like TAO enable Sixth Street to deploy significant capital for large-scale opportunities while maintaining tailored fund sizes.
A core focus on hiring ego-free, collaborative individuals and cultivating continuous development underpins their multi-strategy success.

Alan Waxman's formative years at Goldman Sachs' Special Situations Group, which managed a $25 billion balance sheet with a flexible 'go anywhere, do anything' mandate, provided the blueprint for Sixth Street.
A core principle learned was 'unitizing risk and return,' enabling the comparison of diverse investments like real estate or corporate loans by assessing business quality, sector, and cash flow volatility to find optimal risk-reward.
The firm's ability to protect capital during the 2008 Global Financial Crisis by investing in less conventional, protective assets validated their rigorous process and was crucial for successfully raising their first fund.

Sixth Street's 'face the tiger' culture encourages direct, collective confrontation of challenges, focusing on solutions as a unified team rather than assigning blame or avoiding issues. This philosophy influences all aspects of the firm, including hiring.
Recruitment prioritizes individuals who are 'over themselves' and collaborative teammates, fostering an ego-free, silo-less environment essential for multi-strategy, cross-platform collaboration. Independent, 'right brain' thinking is highly valued to prevent groupthink.
The firm operates with an 'investor-first' ethos, passionately engaging in the investment process and developing bespoke, 'whiteboarded' solutions for CEOs and management teams, emphasizing long-term partnerships over short-term arbitrage.

Sixth Street employs innovative capital structures like TAO, a $30 billion capital pool that acts as a 'synthetic Goldman Sachs balance sheet,' enabling them to deploy billion-dollar checks for large-scale opportunities across diverse asset classes while maintaining modest, platform-specific fund sizes.
The firm demonstrated strategic flexibility with investments in Spotify and Airbnb during challenging periods, providing tailored financial instruments like convertible debt with warrants to bridge companies to IPOs or fortify balance sheets.
They have developed significant partnerships in sports and live entertainment, including with Real Madrid and FC Barcelona, structuring joint ventures and capitalizing on the globalization of major sports brands as a key growth area.

Alan Waxman emphasizes deep investment in people development, drawing from his own mentorship experiences, particularly with Stephen Plus, who guided his understanding of finance and risk management at Goldman Sachs.
Sixth Street implements a personal business plan process where employees set ambitious annual goals, fostering continuous development and optimizing their 'return on time' for both professional and personal growth.
The firm's long-term vision centers on being an investor-first entity, not merely a 'deployment factory,' with a paramount focus on cultivating a collaborative culture that ensures team members are ego-free and trustworthy.