Invest Like the Best with Patrick O'Shaughnessy
· Martín Escobari
[00:00:00] S1: So much. I've worked with Bill for 15 years, actually pitched Bill, my startup, this is 1998, came in through New York and I had heard a lot about General Atlantic and how they're different and they think long-term and they're good partners and Chuck Feeney... it's really hard to get the meeting. We give them the meeting. Bill and I really hit it off. I made the pitch and he's like, "Ah, we're not ready for Brazil. I'm really sorry." I was heartbroken because I really wanted GA and Bill was an amazing guy. Ten years later after I sold my business, I was working at another fund, he called me and he's like, "Remember me?" I said, "Yeah, I remember you." He's like, "Can we try this again?" I said, "Yeah, we can try this again. But just for you, you would've made 18 times your money or you had said yes, like what." He said, "Yeah, yeah, I know, I know, I know, so come." Bill has an incredible ability to see around corners and be visionary in making bets before they're obvious. So, going into Europe, going to the emerging markets, going into consumer, going into life sciences, pushing me now to go into robotics and human noise is an incredible ability to look around corners. Here, also in managing the partnership and US has heart, not for investment, but in keeping our culture the meritocracy of the firm also with heart has helped me develop as a leader of GA and letting speaking more a little bit from the heart and is an incredible moneymaker. So, his mind is just fantastic.
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: That helps too, that helps too. That's detailed. As you've progressed in your investing-specific career, what changes the most as you become more senior? How does it feel the most different doing it today versus doing it when you're a lots to prove young analyst? [00:00:00] S1: The hardest thing when you're young is developing patience and the conviction that you can wait a little longer for the big fish. You're young... [00:00:00] S0: You want to get going. [00:00:00] S1: You want to get going, you want to get deal experience. You want to get notches on your belt and that's the completely wrong instinct. When you're older, you have a lot more reigns, you've seen a lot more and you've got patience. You're like, "Ha, ha." Nothing scares me and I know what big fish will come, come down. No pressure. You are less in the front lines and more as a coach player, training young partners to do what you used to do and initially that can be very demotivating because Tom Brady likes to be in the field not coaching or opining on Fox... [00:00:00] S0: Commentating, yeah.
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: Commentating, yeah. [00:00:00] S1: Yeah, maybe not so fun, until you reimagine the game and you live vicariously through the people you're training and you enjoy their wins almost as much as you enjoyed your wins. That's been the mental flip that I had to do to enjoy this face because of course scoring goals is better than coaching, unless you make the mental shift that live vicariously through them. The hard thing, and that's why there's not that many venture and growth equity investors over the age of 50, it's not just that we call in rich or we get tired or we develop new interest. I think our brain ages and stops being plastic. One of the great learnings from beautiful mind, Dave Hodgson, whose age beautifully is in his late 60s and is very sharp and very much on top of the new trends, he defies the convention. And I said, "What is the secret?" And he said, "Three things. The most important one is I refuse to think like an old man. My mind still plays. I still wonder. I'm still in awe and I don't fall into the trap of thinking I have the answer to everything. I'm always learning, experimenting, and play." And that's the hardest part because we have this illusion as we get older that there's no room for play. There's no room for play, there's always room for play. [00:00:00] S0: How do you inject that into your life?
· Patrick O'Shaughnessy, Martín Escobari
[00:00:00] S0: How do you inject that into your life? [00:00:00] S1: You just don't take yourself too seriously. I'm always laughing about everything, making fun of everything. Even when confronted with worst, perfect storm where something happens, I start laughing and I say, "What are the odds so many bad things could happen all at once." This has never happened before. Seven things at the same time, let's work through it. That attitude I think makes life full up. [00:00:00] S0: What do you make of this current bubble that we're inside, outside, depending on the person? You mentioned humanoids, you mentioned bio a little bit. There's all this exciting stuff happening, probably all of which in the long run will be amazing for people, be a lot of consumer surplus in all this. You want to make money through this process for yourself and your partners. How does it feel to you?
· Martín Escobari, Patrick O'Shaughnessy
[00:00:00] S1: This is more meaningful, because it will touch a higher percentage of GDP. The internet was the other very meaningful one, but it changed how we interact with each other. This will change much more than that. An ambiguous recommendation. If you're in your 20s or early 30s, go work at AI because you're going to live through dog years. Meaning, we're talking about.com, seven years of activity in one year, and regardless of whether the company does well or you make money, you're going to have compressed learning. That only happens once every 20 years. So, don't miss that opportunity. And when I say that age group, I mean that mental age group, you could be in your 50s and be in that mentor after. Would you ready to take risks? Just go do it. If you have a young mind today, go work in AI because it's going to be so much fun. I think investing is risky. Our approach, which may prove to be too conservative was to take it slow, because it's not clear yet where the value is going to be created. It's not clear yet how much more powerful the large language models are versus others that are more efficient, or how much of the value will be captured by the models versus the applications. So, it's exciting to watch. I know we're going to have a moment where we're all going to wake up and say we've invested too much. I don't know if it's three years away or 18 months. [00:00:00] S0: It already happened, yeah. [00:00:00] S1: I don't think it's happened. For sure, it hasn't happened yet.
· Martín Escobari, Patrick O'Shaughnessy
[00:00:00] S1: I don't think it's happened. For sure, it hasn't happened yet. [00:00:00] S0: You don't think so? You don't think there's a chance that we're in that moment already? [00:00:00] S1: No. [00:00:00] S0: Why not? [00:00:00] S1: It's not crazy enough. I was looking at some stats comparing the AI wave, let's not call it a bubble, wave to the dot-com and to the railroads and it's looking at the ratio of CapEx to revenue and what percent of GDP was involved in this and how was this CapEx funded? CapEx to revenue is still not crazy. New revenue streams are managing and the biggest difference relative to railroads and dot-com is the funds are coming from really rich companies. The magnificent six who are printing money out of their dominant positions are reinvesting a lot of this money into the CapEx that's powering all this innovation. So, it's very healthy. It's not junk bond speculators, or thin margin telecom companies that are levering up the wazoo with retail money to fund this wave of innovation. It's really profitable companies. So, I think it's got more legs. Will it be bumpy? Yes, but the thing about predicting the future is it's really hard. Slaying the past is a lot easier. [00:00:00] S0: So, what do you think happens from here in markets? Predicting the future is impossible, but fun.