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At a Glance
Alan Waxman, co-founder and CEO of Sixth Street, manages over $110 billion in assets as an "invest-in-everything" investment firm. The core of this interview is to reveal his unique investment philosophy: Waxman believes that the key to successful multi-strategy investing lies not in predicting markets, but in establishing a unified framework that can compare "units of risk" and "units of return" across assets, geographies, and cycles, supplemented by a collaborative culture of "facing the tiger."
Topic Section
1. Core Engine: A “Unitized” Framework for Risk and Return
Alan Waxman argues that the core challenge of investing lies in comparing investment opportunities across different asset classes and risk profiles on a common dimension, which requires building a quantitative framework of “risk units” and “return units.” This framework originated from his experience in Goldman Sachs’ Special Situations Group, which unified ten previously siloed “fiefdoms” of investing, thereby avoiding the massive losses of 2001–2002 caused by information silos (e.g., one group shorting fiber optics while another was heavily long).
Supporting Arguments:
- Mechanism Breakdown: The framework consists of three core elements. First, industry and business quality; second, attachment point (i.e., your priority in the company’s capital structure); third, legal documents and protective covenants.
- Application Examples: Waxman illustrates its operation by comparing two cases:
- A consumer goods company acquired by private equity, 70% leveraged buyout, with an expected return of 20%.
- A hyperscale data center with 15-year “take-or-pay” contracts from investment-grade counterparties, requiring a lower expected return.
- Even for the same company, investing in Australia versus Ukraine demands vastly different required returns.
- Data & Strategy: The portfolio’s return ranges from 10%–12% to 20%–25% (2–3x principal). Sixth Street evaluates approximately 450–500 deals per month while maintaining 15–25 investment themes, each typically lasting 12–36 months before diminishing returns due to market crowding, forcing the team to continuously migrate to new themes.
2. Cultural Cornerstone: “Face the Tiger” and “People Over Themselves”
Waxman emphasizes that a true multi-strategy investment firm must deeply integrate its culture with its corporate strategy, with the core values being “People Over Themselves” and “Face the Tiger.” The former is inspired by the culture of the San Antonio Spurs, while the latter stems from his father’s teachings and is reinforced by a giant tiger sculpture at the company’s entrance.
Supporting Arguments:
- “Face the Tiger”: When an investment goes wrong, the natural instinct is to shift blame or avoid responsibility. Sixth Street’s culture is to “face the tiger together.” Waxman cites the firm’s worst investment (a European plastic bottle company hit by fraud, ultimately recovering only $0.50 per dollar). Instead of pointing fingers, all departments (a team of 5 quickly expanded to 12) immediately divided tasks and collaborated, recovering far more value than expected.
- “People Over Themselves”: This is key to avoiding “fiefdoms” and information silos. Waxman notes that if an investment manager only loves their own “territory” (“My Baby’s the Prettiest”), the entire system for comparing risk and return breaks down. The first hiring criterion is cultural fit, followed by intelligence, and the candidate must be able to “play tennis” (i.e., comfortably compare risk–return across different asset types).
- Data Evidence: During the market irrational exuberance of 2006–2007, the firm, using this framework, judged that risk/return was misaligned and began actively shrinking. Waxman believes that during the 2008 Global Financial Crisis, they were likely the only major investment group that did not lose money on significant capital, which laid the credibility foundation for founding Sixth Street.
3. Key Cases: The “Blank Slate” Investments in Spotify and Airbnb
Waxman uses the investments in Spotify and Airbnb to demonstrate how Sixth Street approaches specific CEO problems with a “blank slate” mindset, leveraging its flexibility for contrarian investing during market panics.
Supporting Arguments:
- Spotify (2016):
- Background: The company faced competitive threats from Amazon and Apple, as well as market volatility, and was reluctant to issue common equity at a low valuation.
- Solution: Waxman’s team held a “blank slate” discussion with CFO Barry McCarthy, ultimately designing a convertible bond. The instrument included a $25 billion valuation cap and a current income component, designed to help the company weather the storm until its IPO. This $1 billion financing ultimately succeeded, generating excess returns after the company went public.
- Airbnb (Early COVID, 2020):
- Background: Sixth Street had taken a defensive posture in 2018–2019 due to market overheating, so it was well-positioned to “attack” when COVID struck. They quickly identified the theme of “high-quality business models hit hardest by the pandemic.”
- Solution: Waxman’s team completed due diligence in 7 days and jointly provided $1 billion in loans (with warrants) to Airbnb, alongside Silver Lake. Their core judgment was not merely about the business model but a liquidity analysis bet: they calculated that this capital would give the company a 4–5-year liquidity runway, enough to wait for the “cure” (vaccine or recovery). Waxman emphasizes that they had to explicitly recognize and accept the implicit risk that “a cure would exist,” and considered this critical to the investment’s success.
4. Sports & Live Entertainment: Extending the Theme from “Local” to “Global”
Starting from the insight that COVID spurred a “craving for experiences,” Waxman extends the investment theme to sports and live entertainment, arguing that technology is transforming historically “local” brands (e.g., Real Madrid, FC Barcelona) into global commercial assets.
Supporting Arguments:
- Core Logic: Because of mobile phones and streaming technology, an Australian can become a fan of the Dallas Cowboys, and a Chinese person can become a fan of Real Madrid. This opens the door to global monetization for clubs.
- Transaction Structure: The partnership with Real Madrid was not a simple loan; it was a joint venture that co-owns the renovated Bernabéu Stadium assets (e.g., VIP boxes, concessions, museum). Sixth Street’s portfolio company Legends provides operational services to enhance pricing power. The partnership with FC Barcelona involved providing capital when its finances were hit by COVID, helping the club retain its core player roster and maintain competitiveness.
- Flexible Pricing: Waxman stresses that each transaction’s structure is a “blank slate” process, ranging from debt, equity, convertible, to joint venture, with the core being to find a solution that addresses the counterparty’s needs while offering a reasonable risk/return profile for Sixth Street.
5. Talent & Development: Personal Business Plans and the “Future Self”
Waxman treats talent development as a core function on par with investing, with the specific tool being the “Personal Business Plan” (PBP), and the ultimate goal serving the “Future Self”—i.e., using an efficient toolkit built now to earn time with family later.
Supporting Arguments:
- Tool: The firm has a five-year strategic plan that is 18 months in the making and 200 pages long. Each employee creates their own Personal Business Plan (3–5 improvement goals per year), whose sum must equal the firm’s strategic plan. The expectation is to achieve 70% of goals; unfinished items are carried over to the next year.
- “Future Self”: When Waxman was young, he used a “yellow notebook” to record 10 daily questions, investing heavily in intensity. His motivation was “to invest time for my future children and wife who did not yet exist,” by improving investment efficiency and decision-making to earn quality time with his family later.
- Cultural Test: Waxman’s biggest fear is the dilution of the firm’s culture. He has set two tests: first, whether he encounters any “jerk” at the annual meeting; second, whether, when he is 80 years old and sits in on an investment committee meeting, he would still identify with the people and culture and be willing to introduce them to his family. The firm has not lost a single partner to date, which Waxman considers a powerful testament to its cultural success.
Entities Mentioned
| Entity |
Guest Sentiment |
Key Data |
| Spotify |
Favored success case |
In 2016, provided $1 billion in convertible debt financing, with a valuation cap of $25 billion, leading to an IPO |
| Airbnb |
Favored success case |
At the onset of COVID-19 in 2020, provided $1 billion in loans + warrants, giving a 4–5 year liquidity runway |
| Real Madrid |
Long-term strategic partner |
Established a joint venture to co-invest in the renovation of the Bernabéu stadium, investing billions of dollars |
| FC Barcelona |
Long-term strategic partner |
Amount not disclosed, used to help retain core players and maintain competitiveness |
| AirTrunk |
Successful startup case |
Company founded from scratch, eventually sold to Blackstone for approximately $16 billion |
| Affirm (Max Levchin company) |
Partner |
Established a joint venture to help it acquire more assets and improve operating leverage, with a total amount of $20 billion |
| Legends |
Portfolio company |
Provides operational services for Real Madrid's Bernabéu stadium, enhancing its VIP experience |
| San Francisco Giants |
Partner |
Holds a partnership relationship |
| Dallas Cowboys |
Partner |
Holds a partnership relationship |
| New York Yankees |
Partner |
Holds a partnership relationship |
Judgments Worth Remembering
1. （Alan Waxman） The core of investing is not predicting the future, but building a cross-asset framework that can compare "risk units" and "return units" in real time, thereby continuously migrating to the best opportunities.
- Support: 450–500 transactions per month, 15–25 real-time themes, each with a "shelf life" of only 12–36 months.
2. （Alan Waxman） The "face the tiger" culture is Sixth Street's moat. When problems arise, the team's response is "all hands on deck" rather than blaming each other.
- Support: In the defrauded "plastic bottle company" investment, 12 employees from various departments quickly assembled and ultimately recovered 50 cents per dollar, far exceeding the expectation of 2 cents.
3. （Alan Waxman） Investing in Airbnb during the early COVID period was essentially a bet on "liquidity runway," not merely a judgment on the business model. They clarified the implicit risk that "there will be a cure."
- Support: The team completed due diligence in 7 days and judged that $1 billion could provide 4–5 years of liquidity, enough to survive until the market recovers.
4. （Alan Waxman） For a true multi-strategy investment firm, the enemies are "fiefdoms" and "information silos." The first criterion in hiring is "people over themselves," not professional competence.
- Support: Values learned from the San Antonio Spurs; the company has not lost a single partner to date.
5. （Alan Waxman） The core logic of sports investing is "from local to global." Technology enables fans to transcend geographic constraints, turning local brands into global commercial assets.
- Support: Formed a joint venture with Real Madrid, co-owning the renovated Bernabéu Stadium assets, with Legends providing operations to boost revenue.
6. （Alan Waxman） Investment transactions are a creative process on a "blank slate," not standardized products taken off the shelf. Each transaction's structure is unique, stemming from deep listening and questioning of the CEO's needs.
- Support: Spotify's $1 billion convertible bond and the Real Madrid partnership as a joint venture — each structure is different.
7. （Alan Waxman） Through the concepts of "personal business plan" and "future self," long-term strategies are decomposed into individual annual goals. The ultimate purpose is to exchange efficient investment now for more time with family in the future.
- Support: The company has an 18-month, 200-page five-year plan; individual plans must align with it, aiming to complete 70% of key improvement items.
8. （Alan Waxman） During the 2008 global financial crisis, Sixth Street's predecessor (Goldman Sachs Special Assets Group) was one of the few teams that did not lose money on a large amount of capital. This stemmed from its early identification of risk-return imbalances in 2006–2007 and proactive contraction.
- Support: This success provided key credibility for later founding Sixth Street and raising its first fund.