00:00:00 · Peter Singlehurst, Guillaume Moubeche
[00:00:00] S0: Get the shareholders you deserve. I strongly believe that. What you know about Elon Musk is that every couple of years, he will bet the house. He will put everything on black in his company. To grow the value of a company five times, you have to do the business that's willing to take risk. And so history tells us that any narrative that says China can't do x is wrong. [00:00:19] S1: Today on BILLIONS, I'm sitting down with the man who built the most patient capital in Silicon Valley, Peter Singlehurst. He's built a private companies team from scratch at Baillie Gifford and deployed billions into more than 100 companies. His portfolio reads like a list of the most important private companies on the planet. Right now, he's arguing that public market have largely lost their monopoly on liquidity and that the biggest companies in the world may never need to IPO at all. Peter, thanks a lot for being here. [00:00:51] S0: Thank you for having me. [00:00:52] S1: I'm curious. Like, how does a philosopher like yourself end up in private markets?
00:00:59 · Peter Singlehurst
[00:00:59] S0: Well, generous of you to call me a philosopher. So so I I studied philosophy at undergraduate, and I did a master's in philosophy. And I sort of came within a hair's breadth of staying on and doing a PhD, but sort of swerved out at the last minute and sort of left me wondering what I should do. I didn't really know. But I heard about this company called Baillie Gifford and this thing called Investment Management. And I thought, well, maybe that sort of sounds interesting. And it turns out that I was lucky enough to have stumbled across this firm that was specifically looking to hire people to be investors who sort of barely knew what investing was, who didn't have a background in finance. And the reason for that wasn't just because Baillie Gifford was trying to be obtuse and different. It's because they were trying to hire people who had maybe a different perspective, who hadn't been taught the same things as everybody else in finance. And so I I was lucky enough to get a a job within the firm. We we hire graduates every single year. Most of the time, they don't have finance backgrounds. That's a a a training scheme and a recruitment program that's been going for decades. And most of the partners within the firm, such as myself, started on this kind of graduate training scheme right back at the start of their careers and then stay within the firm their entire career. So that's kinda how I stumbled into Baillie Gifford and how I stumbled into this industry. Now at that time, Baillie Gifford was not doing private market investing. Investing. At We were solely a public market growth equity investor, and there was a very simple reason for that. It's that if you're doing growth equity investing, you could do that in the public markets. You didn't need to do it in the private markets because companies went public when they were pretty young, you know, pretty small. Amazon went public a few years after being founded in 1997. It had a market cap of $450,000,000, and then all that growth happened in the public markets. So BG was just doing public market investing. A few years into my time at Baillie Gifford, I was on one of our large public market growth teams, and we started to see that, there were these really big private companies. And they were called unicorns, and they were businesses like Airbnb, Spotify.
00:03:07 · Peter Singlehurst
And we thought, hang This is a bit strange. Like, what's going on here? It seems like these companies are staying private for longer. And at the same time, like, we were getting to know these companies. They were sort of approaching us, and we were kind of building our understanding of them. And we were thinking these are the kinds of businesses we've always invested in. Why haven't we invested in yet? And I was lucky enough to be on a a team where the senior investors were all taken up doing really important things like managing large public market portfolios. So I was given some rope to go off and, sort of probably hang myself looking at these companies. And we started to realize that there was this really profound structural change that was happening in companies staying private longer, and that it was beholden on us to be investing in these companies for our clients if we wanted to continue to give them exposure to the world's best growth stage companies. So I was coming the right time at the right place and at sort of ground zero of this change, which has come to dominate private markets of companies staying for private private for longer. So I kinda started doing our early sourcing of these businesses. I started helping to build out the infrastructure that we would need for investing in these companies. I founded the dedicated team in 2017. We launched our first fund in 2019. We we really wanted to make sure we were good at doing this before we created dedicated funds around it. Since then, we've launched three funds. We've continued to scale up the team. We've been fortunate enough to find some really amazing companies, many of which are well known, such as the ones that you you mentioned, the girl SpaceX's, you know, by dancers of this world, but a bunch of lesser known as well. But, really, we're just trying to create these portfolios of the world's best growth stage companies, which is which is consistent with what we've done as an organization for for over a hundred years. It's just today, if you wanna do growth equity investing, you've gotta do it in the private
00:05:03 · Guillaume Moubeche, Peter Singlehurst
[00:05:03] S1: public markets. So now I'm curious to understand because by trade, you started focusing, as you said, on public markets. Now you're getting, like, in earlier stage in private. So you're getting potentially, like, higher upside, but also, like, potentially higher risk. So how do you balance, the the two in term of the of the portfolio, like, and the global AUM that you that you have? [00:05:30] S0: Yeah. So the slight point in your question that I would push back on is this notion that we're doing earlier stage companies. We're doing companies at the same stage that we've always done. Okay. It's just that they're [00:05:40] S1: private The scale got bigger.
00:05:42 · Peter Singlehurst
[00:05:42] S0: Rather than going public. Look. Let let me let me bring it to life with an example. So we were we were fortunate enough to invest in Tesla in 2013 when it was a $3,000,000,000 market cap company. It had gone public earlier. $2,000,000,000. And because we were able to invest in it at $3,000,000,000, the growth and the value that subsequently accrued up to, you know, north of $1,000,000,000,000, we were able to capture that for our... For all of our clients in the public markets. All all of those clients that had it in their portfolios, which was a lot of them. SpaceX... No. We... We've been able to capture the upside in that for our private clients, but so far, our public clients have not been able to capture it. Now we actually invested in SpaceX later than we invested in Tesla. We invested in SpaceX for $30,000,000,000 valuation, compared to three and Tesla. And so I guess the point I'm trying make is actually it's the same kinds of companies. It's just that, these companies are private rather than public. Now there are some clients that we have that can only do public market investing, and that's actually the bulk of our clients, within institutional asset allocators that are often quite hard and fast delineations between the public team and the private team. And so most of our business and our business that we've been building for a hundred and eighteen years is in the public markets. But we've had a handful of clients that have been able to kinda come on this journey with us, investing in these these high growth private companies, And they sit in a range of different kinds of funds. We have some blended public private funds. These are investment trust structures predominantly based here in The UK. And then we have some dedicated pools of private capital. Now one of those is an investment company structure. It's called the Schiehallion Fund. And then we have, a few more traditionally structured private company funds, that would look and feel a little bit more like what you would see in a in a sort of traditional private equity or growth equity managed fund. Ultimately, the journey we've been on is trying to convince our clients that, hey. If you want exposure to the world's best growth companies, you're gonna have to do this in the public... In the private markets as well as the public markets.
00:07:51 · Peter Singlehurst
And we've kind of built up this capability over the last fourteen years to do that. You know, we've been in private markets for as as long as... Well, private growth equity markets for as long as they've been around. And so now we're really starting to see more and more for... More of our clients saying they just can't afford to not be investing in high growth private markets. And because we have these long standing trusted relationships in the public markets, it's kind of translating quite naturally into working with them on the private side as well.