Alan Waxman - Building Sixth Street - [Invest Like the Best, EP.433]

Episode Summary

Executive Summary: Patrick O'Shaughnessy interviews Alan Waxman, co-founder and CEO of Sixth Street, about building a go-anywhere, multi-strategy investing firm. Waxman explains how Goldman’s Special Situations Group shaped Sixth Street’s risk framework, culture, and whiteboard-driven dealmaking, and how the firm uses flexibility, collaboration, and long-term strategic planning to win in public and private markets.

Main Topics: Goldman SSG as the template (Priority: 5/5): Waxman says Goldman’s Special Situations Group taught him to unitize risk and return across asset classes. Risk units over nominal returns (Priority: 5/5): He argues investors overfocus on headline returns instead of leverage, structure, geography, and attachment points. Culture and team design (Priority: 5/5): Sixth Street prizes curiosity, low ego, and cross-platform collaboration to prevent silos and bad decisions. Tao and capital architecture (Priority: 5/5): Tao gives Sixth Street a flexible balance sheet to write very large checks while keeping fund sizes disciplined. Whiteboard partnerships (Priority: 4/5): The firm solves bespoke problems with CEOs and management teams using structured, creative capital solutions. Case studies: Spotify and Airbnb (Priority: 4/5): These deals show how Sixth Street backed strong businesses during uncertainty with tailored financing. Long-term planning and development (Priority: 4/5): Five-year plans and personal business plans are used to align the firm and develop future leaders.

Key Arguments: Risk must be measured in units, not just IRR; structure, sector, and geography matter. Multi-strategy works only if people share information and avoid fiefdoms. Sixth Street wins by migrating to themes with 12-36 month shelf lives. Tao lets the firm match fund size to opportunity and still do billion-dollar-plus checks. Whiteboard solutions fit complex capital needs better than off-the-shelf products. The firm’s edge is being investor-first, not a deployment factory.

Data Points: Sixth Street AUM: over $110 billion - Size of the firm described in the introduction AI automation of expense reviews: 85% - From the Ramp sponsor message at the top of the transcript AI expense review accuracy: 99% - From the Ramp sponsor message at the top of the transcript Company savings from Ramp: 5% - From the Ramp sponsor message at the top of the transcript Goldman SSG balance sheet peak: $25 billion - Waxman says the group at its peak used about this much of Goldman’s balance sheet Deals coming into Sixth Street monthly: 450 to 500 deals - Volume of opportunities the firm reviews each month Active themes at Sixth Street: 15 to 25 themes - Core set of live investment themes at any time Theme shelf life: 12 months to 36 months - Waxman’s estimate for how long a theme stays attractive Tao size: $30 billion - Flexible vehicle sitting over Sixth Street’s platforms Returns on some Tao capital: 10% to 12% - Lower-return profile capital described by Waxman Returns on some deals: 20%, 25%, two to three times your money - Examples of higher-return profiles Sixth Street pursues Fundraising / strategic plan cycle: five-year strategic plans - The firm runs recurring long-range planning cycles Current strategic plan process length: 18 months - Time spent building the latest strategic plan Strategic plan length: 200 pages - Waxman describes the latest plan as this long Ideas narrowed: 80 ideas to 40 subplanks - How the firm refines its strategic plan San Antonio Spurs mindset test: 16 and 0 - Waxman says he has not found an a-hole at the annual offsite Spotify financing: $1 billion - Convertible financing Sixth Street provided Spotify Airbnb financing: $1 billion - Loan with warrants used to fortify Airbnb’s balance sheet Risky deal outcome: 50 cents on the dollar - Recovery on a fraud-related investment that was expected to return much less Expected recovery in that fraud case: 2 cents - Waxman says the deal should have been far worse Direct lending opportunity size: $50 billion - Waxman says Goldman’s middle-market direct lending business grew to this scale Private share of companies above $100 million revenue: 93% - Stat mentioned in discussion about the growth of private markets

Pivotal Quotes: "are you over yourself yet?" — Alan Waxman: He uses Popovich’s phrase as a culture screen for teamwork and humility "we want to be the largest startup in the industry" — Alan Waxman: Describing Sixth Street’s founding ambition and entrepreneurial mindset "Let's face the tiger together." — Alan Waxman: His shorthand for confronting problems directly as a firm

Implications: The unresolved question is how private markets, wealth capital, and AI-driven change reshape access, risk, and returns; listeners should watch for discipline amid growing capital flows.