Investing Like a Super-Flexible Problem Solver
The Main Idea in a Nutshell
- To be a truly great investor, you need to be super flexible and creative, ready to solve any kind of problem for a company, rather than just being good at one single type of investing.
The Key Takeaways
- Be Flexible, Not Boxed In: Sixth Street doesn't just do one thing, like buy stocks or real estate. They have a "go anywhere, do anything" mindset, which lets them jump on the best opportunities, no matter what they look like—from helping Spotify to partnering with the Real Madrid soccer team.
- Teamwork Makes the Dream Work: The company's culture is built on hiring smart, nice people with no egos. They look for people who are "over themselves," meaning they care more about the team's success than their own spotlight.
- It's Not Just About the Reward, It's About the Risk: Instead of just chasing the highest possible profit, they carefully measure the risk of every single deal. They compare completely different things (like a loan to a small company vs. buying part of a stadium) to find the smartest bet with the best balance of risk and reward.
- Solve Problems Creatively: When companies like Airbnb and Spotify were in a tough spot and others were scared to help, Sixth Street came in with custom-made solutions. They got on a whiteboard and designed a deal that helped the company survive and ended up being a great investment.
- Fun Facts & Key Numbers:
- Fact: The firm looks at 450-500 potential deals every single month to find the few that are truly great.
- Fact: A good investment idea or "theme" usually only has a shelf life of 1 to 3 years before too many people copy it and it's no longer a great opportunity.
- Fact: The company manages over $110 billion and has a special $30 billion fund called "Tao" that gives them the flexibility to make huge, creative deals.
- Fact: In its entire history, Sixth Street has never lost a partner (one of the top bosses), which shows how strong their team culture is.
Important Quotes, Explained
- Quote: > "We have a saying at Sixth Street... Something we learned from the San Antonio Spurs is we want people that are over themselves."
- What it Means: They want to hire humble people who are great team players, not people with big egos who only care about themselves. Just like in a sport, you need everyone to pass the ball and work together to win.
Why it Matters: This is the secret sauce to their "go anywhere" strategy. Because they don't have people hoarding information or competing with each other, ideas can flow freely between all their different expert teams. This allows them to connect the dots and come up with creative solutions that other firms might miss.
Quote:
"My dad... always taught me growing up, you got to learn how to face the tiger."
- What it Means: When a problem or a crisis happens, you don't run away, freeze, or blame others. You run straight towards the problem and work together as a team to tackle it head-on.
- Why it Matters: This mindset is what allowed them to make smart investments during scary times, like the beginning of the COVID pandemic. When everyone else was panicking and selling, they were calmly looking for great companies that were in temporary trouble and needed a partner. When you enter their office, the first thing you see is a giant tiger statue to remind everyone of this rule.
The Main Arguments (The 'Why')
- First, the author argues that the world of business is always changing, so investors have to be able to change, too. Sticking to only one strategy is a recipe for failure because what works today might not work tomorrow.
- Next, he provides evidence from his early career, where he saw different investing teams at the same company fail because they didn't talk to each other. This taught him that breaking down walls and encouraging teamwork is crucial for making smart decisions.
- Finally, he points out that their biggest successes (like with Airbnb and Spotify) came from being creative partners. They didn't just offer money; they worked with the company's leaders to design a unique solution that solved their specific problem.
Questions to Make You Think
- Q: What does he really mean by "unitizing risk and return"?
A: Think of it like comparing video game characters. One might have a high attack power (high return), but very low health (high risk). Another might have medium attack but tons of health. Instead of just looking at the attack number, you look at all the stats together to see which character is the best overall. Sixth Street does this with investments—they break down every deal into its basic "stats" for risk and potential reward so they can compare very different opportunities and find the truly best one.
Q: Why did they create a giant $30 billion fund called "Tao"?
A: The text explains that most investment funds are designed for a specific purpose, which can be limiting. They created Tao to be a massive, super-flexible pool of money, like a "synthetic Goldman Sachs balance sheet." This lets them keep their specialized funds small and nimble while also having the power to write billion-dollar checks for huge, unique opportunities that don't fit in any normal bucket.
Q: What is the "future self" idea he talks about at the end?
- A: It's the idea of investing in yourself now to have a better life later. He realized early in his career that if he worked incredibly hard to build his skills (his "toolkit") before he had a family, his future self would be so much more efficient at his job. This would allow him to be a great investor and have plenty of time to be present with his kids, just like his parents were for him.
Why This Matters & What's Next
- Why You Should Care: This isn't just for Wall Street pros. The ideas Alan Waxman talks about are amazing life lessons. Being a flexible thinker, a great teammate who is "over yourself," and brave enough to "face the tiger" can help you in school projects, on your sports team, and in any job you ever have. Thinking about your "future self" is a powerful way to stay motivated to learn and grow right now.
- Learn More: Alan Waxman was inspired by the culture of the San Antonio Spurs basketball team. Check out a short documentary or article on their coach, Gregg Popovich, and how he built one of the most successful and respected teams in sports history by focusing on teamwork and character over superstar egos.