Table of Contents
Sixth Street CEO Alan Waxman reveals how Goldman's "Navy SEALs of finance" shaped a $75+ billion investment empire built on flexible capital and uncompromising culture.
Key Takeaways
- Sixth Street operates as one of the few firms globally that can consistently write billion-dollar-plus checks across all asset classes with complete flexibility
- The firm's "units of risk" framework allows direct comparison of investments across sectors, geographies, and asset classes on a risk-adjusted basis
- Waxman's team has never lost a partner in the firm's history, maintaining culture through a "face the tiger together" mentality during crises
- Their TAL vehicle functions as a $30+ billion "synthetic Goldman Sachs balance sheet" that can invest anywhere without traditional fund constraints
- The firm maintains 15-25 active investment themes at any time, with each theme having a shelf life of 12-36 months before migration to new opportunities
- Sixth Street's investment philosophy centers on being "over yourself" - eliminating ego and silos to enable cross-platform collaboration at scale
- Major investments include billion-dollar financings for Spotify and Airbnb during challenging periods, plus strategic partnerships with Real Madrid and FC Barcelona
- The company operates on consecutive five-year strategic plans involving 18 months of partner debate and 200-page comprehensive blueprints
- Waxman emphasizes developing "future self" thinking, building toolkits early in careers to optimize return on time for family presence later
The Goldman Sachs Origins: Building the Navy SEALs of Finance
Alan Waxman's path to creating one of the world's most flexible investment firms began with a chance airplane encounter. Fresh out of Penn with an international relations degree and no finance background, Waxman found himself in Goldman Sachs' mailroom after 35 failed job interviews. His curiosity-driven conversation with a fellow passenger named Jody Lenass, who was processing research reports "at a thousand miles per hour," opened doors to Goldman's Special Situations Group.
The SSG represented something unprecedented on Wall Street. With $25 billion of Goldman's balance sheet and a mandate that literally allowed them to "do anything," the group operated as the firm's most elite principal investing unit. Their only constraint was simple but absolute: they couldn't lose money. This created a laboratory for developing what would become Sixth Street's signature approach to investment analysis.
The group's culture earned them the Wall Street Journal's nickname as the "Navy SEALs of finance." Waxman describes the recruiting philosophy that shaped this elite unit. Beyond raw intelligence, they sought people who were "over themselves" - individuals willing to subordinate ego for collective success. This wasn't merely cultural preference but operational necessity, as their business model required seamless information sharing across different investment strategies and geographies.
The SSG's approach to risk management proved prescient during the 2006-2007 market exuberance. While other Goldman principal investing groups suffered significant losses during the Global Financial Crisis, SSG protected capital by recognizing fundamental disconnects in risk-return relationships. Waxman recalls seeing "over 100% loan-to-value loans to houses" and mortgage originators "pumping with no consideration for credit quality." Their disciplined framework allowed them to step back from increasingly irrational markets.
The Units of Risk Revolution: Quantifying Investment Across Everything
Sixth Street's core innovation lies in what Waxman calls "unitizing risk and return" - a framework that allows direct comparison of investments across dramatically different asset classes, sectors, and geographies. This methodology emerged from Goldman's painful lesson when 10 separate principal investing businesses operated in silos, leading to contradictory positions and significant losses.
The risk units framework considers three primary variables: business and sector quality, capital structure positioning (attachment points), and legal documentation strength. Return units, while simpler to calculate through internal rates of return, gain meaning only when properly risk-adjusted. This allows Sixth Street to compare a consumer goods buyout leveraged at 70% targeting 20% returns against a hyperscale data center with 15-year investment-grade contracts requiring lower returns.
Geographic considerations add another layer to risk analysis. Waxman provides the example of identical companies in identical sectors where geographic location dramatically affects required returns - a 15% structured equity investment in Australia versus Ukraine would demand vastly different risk premiums. Similarly, minority equity positions with strong versus weak protections represent entirely different risk profiles regardless of headline return targets.
The framework's power lies in dynamic application across economic cycles. Sixth Street maintains 15-25 active themes simultaneously, with each theme typically lasting 12-36 months before market dynamics shift returns below acceptable thresholds. The firm processes 450-500 potential deals monthly, constantly evaluating where their flexible capital can achieve the best risk-adjusted returns.
Human behavioral patterns often create opportunities within this framework. Waxman observes that investors become trapped in "tunnels," continuing strategies based on past success rather than current market conditions. Direct lending, for example, oscillates between highly attractive and less favorable periods based primarily on capital flows rather than fundamental business changes.
Building Culture Through Crisis: The Face the Tiger Philosophy
Sixth Street's cultural foundation rests on what Waxman learned from his father about "facing the tiger." This philosophy became central to the firm's identity, literally embodied by a five-foot tiger sculpture greeting visitors at every elevator. The concept addresses a fundamental challenge in high-stakes investing: how teams respond when things go wrong.
Waxman identifies typical crisis responses across the industry: running away, pointing fingers, freezing, or making rash decisions. Sixth Street's approach deliberately inverts these patterns. When problems arise, the team's response is "Good, let's go. Let's face the tiger together." This isn't merely motivational rhetoric but operational doctrine that has prevented partner departures throughout the firm's history.
The philosophy proved itself during Sixth Street's worst investment - a European plastic bottle company that defrauded multiple investors. Rather than distancing themselves or assigning blame, Waxman gathered his team at PJ Clarke's in New York and immediately organized a 12-person response team across different firm divisions. Their coordinated approach recovered 50 cents on the dollar from what could have been a total loss.
The San Antonio Spurs organization provided additional cultural insight that shaped Sixth Street's recruiting and management approach. Spurs executives RC Buford and Gregg Popovich introduced Waxman to the phrase "Are you over yourself yet?" - their ultimate test for whether someone can be an effective teammate. This principle directly addresses the "my baby's the prettiest" syndrome that plagues many investors who become emotionally attached to specific sectors or strategies.
Cultural maintenance requires constant vigilance as the firm scales. Waxman describes running two annual tests: walking around their Austin offsite asking whether he's encountered any "a-holes," and imagining himself returning at 80 years old to determine whether he'd introduce current team members to his grandchildren. These seemingly simple metrics reflect deeper questions about character and values that ultimately determine business success.
The TAL Architecture: Unleashing Unconstrained Capital
Sixth Street's TAL vehicle represents a revolutionary approach to private markets architecture, functioning as what Waxman calls a "synthetic Goldman Sachs balance sheet." This $30+ billion fund sits above the firm's 10 specialized investment platforms, enabling billion-dollar commitments while maintaining focused fund sizes matched to specific opportunity sets.
Traditional private equity and credit firms face a fundamental constraint: as successful strategies attract capital, fund sizes often grow beyond optimal levels for their target markets. Sixth Street's architecture solves this problem by keeping individual platform funds at "modest sizes" matched to available opportunities while providing overflow capacity through TAL for larger deals that exceed platform capabilities.
The structure's flexibility extends across multiple dimensions. TAL can invest in any asset class - real estate, infrastructure, private credit, growth equity, and even public markets when appropriate. Duration flexibility ranges from two-year investments to partnerships extending beyond a decade, such as their strategic relationships with Real Madrid and FC Barcelona. Geographic constraints don't exist, allowing rapid deployment wherever opportunities emerge.
This architectural innovation proved crucial during major investments like Spotify's $1 billion convertible financing. While their growth platform alone couldn't accommodate such scale, TAL's presence enabled Sixth Street to compete for the largest deals in every market they serve. The structure also accommodates investments that don't fit neatly within any single platform, maintaining the firm's "do anything" flexibility that originated at Goldman Sachs.
TAL's investor base differs significantly from traditional limited partner structures. Rather than separate allocations to different strategies, TAL investors gain exposure to Sixth Street's entire opportunity set across all asset classes and geographies. This mirrors the unconstrained mandate that made Goldman's Special Situations Group so successful, allowing migration toward the best risk-adjusted opportunities regardless of traditional categorization.
Case Study Excellence: Spotify and Airbnb During Crisis
Sixth Street's investment approach crystallizes in their major deals during challenging periods. The Spotify investment in 2016 exemplifies their contrarian positioning and solution engineering capabilities. Despite great product and unit economics, competitive threats from Amazon and Apple created market uncertainty and valuation pressure that made traditional equity financing unattractive.
The solution emerged through collaborative whiteboarding with CFO Barry McCarthy. Rather than accepting standard financing options, they engineered a convertible debt instrument with specific parameters: a $25 billion valuation cap, current yield component, and pre-IPO bridging structure. This addressed Spotify's reluctance to raise common equity at depressed valuations while providing Sixth Street with meaningful upside participation through the cap that was ultimately exceeded.
The Airbnb investment during COVID demonstrated Sixth Street's ability to move at unprecedented speed during crisis periods. Recognizing great business models most impacted by external shocks, they mobilized teams across Asia, the US, and Europe in coordinated handoffs to complete a $1 billion financing in seven days. This required simultaneous fundamental business analysis, management team evaluation, and liquidity runway calculations under extreme time pressure.
The Airbnb deal's risk framework centered on three critical assumptions: the business model's fundamental strength, management team quality under pressure, and duration analysis for pandemic recovery. By providing four to five years of liquidity runway, they enabled CEO Brian Chesky to play offense rather than defense during the crisis. The implicit risk they assumed - that humans wouldn't remain locked in their houses forever - reflected their willingness to make judgment calls beyond traditional spreadsheet analysis.
Both investments demonstrate Sixth Street's core competency: getting on whiteboards with exceptional management teams to engineer bespoke solutions. Rather than offering predetermined investment products, they listen to specific challenges and construct financing that addresses those needs while achieving their risk-return objectives. This consultative approach requires deep capital markets expertise combined with entrepreneurial flexibility.
Sports and Entertainment: Global Brands in Transformation
Sixth Street's sports and entertainment strategy reflects their thematic approach to identifying secular trends before they become widely recognized. The COVID pandemic created unprecedented access to institutional partnerships with historically family-owned sports franchises as revenues collapsed from zero attendance while fixed costs remained.
Their thesis centers on global brand transformation enabled by technology. Historically local franchises like Real Madrid and FC Barcelona can now monetize global fan bases through digital platforms, creating what Waxman describes as "local to global" opportunities. A Dallas Cowboys fan in Australia or Real Madrid supporter in China can now engage directly with their preferred teams regardless of geographic distance.
The Real Madrid partnership exemplifies Sixth Street's solution engineering approach applied to sports. Rather than traditional debt or equity structures, they formed a joint venture around stadium renovation for the Bernabéu. This required multiple whiteboard sessions to design a structure that provided Real Madrid with needed capital while giving Sixth Street exposure to premium assets including VIP suites, food and beverage operations, and the stadium's museum.
FC Barcelona presented different challenges during their financial crisis. President Joan Laporta needed to "pull levers" to maintain their competitive roster without traditional financing options. Sixth Street's solution involved structured partnerships that provided immediate liquidity while preserving the club's long-term competitive position. The success of both deals has led other sports organizations to attempt similar structures.
The sports strategy extends beyond individual club relationships to broader ecosystem investments. Their portfolio company Legends provides premium services that enhance venue experiences, creating operational synergies with their sports investments. This integrated approach allows Sixth Street to underwrite operational improvements alongside financial commitments, reducing execution risk while enhancing returns.
Leadership Philosophy: Toggle Like a Hawk While Protecting Culture
As Sixth Street has scaled to over 600 employees across 10 investment platforms, Waxman has evolved his leadership approach from hands-on deal involvement to what he calls "toggling like a hawk." This philosophy involves maintaining oversight across the entire organization while knowing when to dive deep on specific situations versus staying at 30,000 feet for broader perspective.
The firm's investment committee dynamics reflect this evolution. Early in Sixth Street's history, Waxman occupied 20-30% of meeting conversations. Now, he often sits through entire committee sessions without speaking as his partners demonstrate the analytical capabilities and cultural alignment that eliminate the need for his direct intervention. When he does engage, it typically involves unique insights or experiences that others lack.
Cultural protection remains Waxman's primary obsession as the firm scales. He maintains zero tolerance for behaviors that contradict their collaborative model: hoarding relationships, failing to return calls to other divisions, or displaying ego-driven decision making. These behaviors aren't merely cultural problems but operational threats to their business model, which depends entirely on cross-platform information sharing and relationship leverage.
The firm's reporting systems enable this oversight approach without creating bureaucratic overhead. Waxman speaks with 20-30 people daily in conversations averaging two to three minutes, providing continuous pulse checks across all activities. This communication density allows rapid identification of issues requiring deeper attention while maintaining trust and autonomy for platform leaders.
Personal development receives systematic attention through annual personal business plans aligned with five-year strategic objectives. Every employee creates specific improvement goals with 70% target achievement rates, carrying forward unfinished objectives to subsequent years. This deliberate skill-building approach reflects Waxman's belief that investing in people early creates long-term leverage for both individual success and family time optimization.
Future Self Optimization: Building Toolkits for Life Integration
Waxman's approach to career development centers on "future self" thinking - making present sacrifices to create future options. This philosophy emerged from his parents' consistent presence at his sporting events despite modest means, inspiring his commitment to similar availability for his own children while building a demanding investment career.
The framework treats skill development as compound interest, with early intensive learning creating exponential advantages over time. Those yellow notepads filled with daily questions for mentor Steven Plus represent this philosophy in action - systematic capability building during periods of maximum learning capacity and minimum family obligations.
Personal business plans serve as the tactical implementation of future self thinking. Rather than abstract goal-setting, these documents specify measurable improvements across three to five areas annually. The 70% achievement target acknowledges ambitious goal-setting while ensuring steady progress. Incomplete objectives roll forward to subsequent years, creating cumulative skill advancement over decades.
The philosophy extends beyond individual development to organizational design. Sixth Street's architecture aims to optimize collective return on time by eliminating inefficiencies that plague traditional investment firms. Cross-platform collaboration reduces duplicated effort while shared relationships provide multiple entry points to opportunities that might otherwise require separate business development.
Waxman's current schedule reflects this optimization in practice. Despite leading a firm managing over $75 billion across global markets, he maintains presence at his children's sporting events and family commitments. This integration results from decades of systematic toolkit building that created operational leverage unavailable to those who prioritized short-term gratification over long-term capability development.
The future self framework challenges conventional career advice that emphasizes work-life balance as a static allocation problem. Instead, it proposes dynamic life design where intensive early investment creates sustainable integration possibilities that increase with experience and responsibility. The approach requires delayed gratification but promises compound returns across multiple life dimensions.
Sixth Street's extraordinary track record - never losing a partner, maintaining culture through rapid scaling, and delivering consistent returns across market cycles - validates this approach to both individual development and organizational design. The firm stands as proof that systematic thinking about units of risk, collaborative culture, and long-term capability building can create sustainable competitive advantages in highly competitive markets.
