Annotations (14)
“When promoted to chairman of GA's investment committee, Escobari received contradictory advice from the two co-founders. Steve Denning said: develop a checklist that captures the characteristics of a winning GA deal, go back and look at 25 years of history. Same day, Dave Hodgson said: avoid the temptation to use a checklist; if it was as simple as a checklist, we would not get paid millions of dollars. Escobari resolved the paradox through Kahneman's work on the Israeli Defense Forces.”
Mind, Heart, and Gut
Psychology & Behavior · Strategy & Decision Making · Philosophy & Reasoning
DUR_ENDURING
Checklist feeds the gut; intuition completes it
“GA takes on a lot of macro risk, technology risk, investing across 18 power alleys cutting across five sectors. Our loss ratio is 4%. In venture and growth equity, loss ratios of 20 to 40% are common. There is something about the way we deal with risk. We do not take binary risk. When we do scenario planning, our worst case scenario is that a company grows into the valuation we paid for it. That limits what you do. It limits the timing of where you go into a new industry.”— Martin Escobari
Investing Through Bubbles
Strategy & Decision Making · Economics & Markets
DUR_ENDURING
4% loss ratio by refusing binary bets entirely
“In looking to buy their beer company, the 3G founders started thinking about it five years before. They were owners of the number one investment bank in Brazil, making money from volatility and inflation, but they knew inflation would end one day. They said, 'We want to buy a company that will benefit from low inflation rising consumption.' Beer is one such company. They waited five years for Brahma to come for sale.”— Martin Escobari
The Art of Spearfishing
Strategy & Decision Making · Economics & Markets
DUR_ENDURING
$80M to $60B through patient sequential deals
“We are all products of our traumas, adventures, and dreams. A Chinese anthropology PhD from the University of Arkansas explained: this generation of Chinese entrepreneurs are all children of the Cultural Revolution. Everything was taken from their families and they are scarred. They have something to prove because they think something was stolen and they will get it back. There is a level of drive that probably matches the refugees of World War II who came to the States.”— Martin Escobari
Managing Risk Through 35,000% Inflation
Psychology & Behavior · Leadership & Management
DUR_ENDURING
Trauma as engine; channeling determines outcome
“For hiring references, call the person and say: we are considering David for this role involving these five challenges. This is a very important decision for my company because we cannot get this wrong. It is also a big decision for David because he is happy at his job, and if we get this wrong, we have wasted his time and he is out of a job. Help me assess if this is a good risk for me and for David.”— Martin Escobari
Hacking Hiring
Leadership & Management · Psychology & Behavior
DUR_ENDURING
Frame reference as protecting the candidate too
“One of the tricks I used: I have been in three investment committees in my career. I would read the memo and predict what each IC member would ask. George Rapallo is going to ask this. Bill Ford is going to ask this. I would also predict their votes. By the end of a year, I was up to 80 to 90% accuracy. It forced me not only to have my own opinion about a deal, but to look at it from the perspective of someone who is really good at making these decisions.”— Martin Escobari
Hacking Hiring
Psychology & Behavior · Strategy & Decision Making
DUR_ENDURING
Predict IC votes to learn 30 frameworks at once
“The 3G founders are great spear fishermen. You do not chase the fish; you wait. You decide where you are going to anchor. You drop down with no equipment other than the spear and you hold your breath for one minute, for two minutes. You let little fish go by because you are not there to hunt little fish. You are waiting for the big fish. Every four or five years there is a once-in-a-generational opportunity that you have to be ready and be willing to move quickly to capture.”— Martin Escobari
The Art of Spearfishing
Strategy & Decision Making · Psychology & Behavior
DUR_ENDURING
Patience as weapon; anchor first, then wait
“The reason we do well in Latin America is we do not have a Latin America fund. If we had a Latin America fund, we would buy at the top and sell at the bottom. If you want to make money, you do the opposite: buy at the bottom, sell at the top. It turns out having a team in Latin America, China, India, or Southeast Asia compete for attention and money through one global investment committee is incredibly hard to do, unless your culture is about partnership.”— Martin Escobari
The Accidental Billionaire's Vision
Strategy & Decision Making · Economics & Markets
DUR_ENDURING
Regional funds guarantee procyclical behavior
“We have a communist system of compensation: you all get a percent of the total performance, not your individual performance. I hated it initially. Communism did not work in the Soviet Union, why would it work here? Then I saw how it changed everything. The level of collaboration is fantastic. The way you prevent the Soviet Union outcome is, if you are not pulling your weight, you are not on the boat.”— Martin Escobari
The Accidental Billionaire's Vision
Leadership & Management · Psychology & Behavior
DUR_ENDURING
Pooled comp works if non-performers get removed
“One of the problems with the industry is the five-year fundraising cycle. To raise your next fund, you have to deploy at a certain speed and return capital at a certain cadence. If there is a winter of risk, you are out of dry powder exactly at the time that things are on sale. We have a hybrid evergreen fundraising cycle. Every two to three years we have a normal fund.”— Martin Escobari
The Accidental Billionaire's Vision
Business & Entrepreneurship · Economics & Markets
DUR_ENDURING
Structure determines behavior at the moment of truth
“You can do seven years of work in one year. In the dot-com, it felt like the world was on steroids. At Submarino, we raised eighty million dollars within the first three months. Within one year, I was in charge of international. We opened Submarino in six countries with warehouses and customers and teams, done in one year. If you had told me how long it would take a normal person, I would say three to four years going fast.”— Martin Escobari
Seven Years of Work in One Year
Business & Entrepreneurship · Operations & Execution
DUR_ENDURING
Transformative eras compress timelines 7:1
“This is like my fourth or fifth bubble and all bubbles are born out of a truly transformative technology. In all the previous bubbles, the promise was spectacular. The short term was disappointing and the long term delivered more than expected. But in that process, a lot of fortunes were made and destroyed. As a firm that has been around for 45 years, we try to make different mistakes in each bubble.”— Martin Escobari
Investing Through Bubbles
Economics & Markets · Strategy & Decision Making
DUR_CONTEXTUAL
Bubbles: short term disappoints, long term overdelivers
“This is the best window into growth equity since 2009. Everything is on sale. There is so much pressure on GPs to post DPI that we are getting 40% growers at 15 times EBITDA, a 30 to 40% discount to public comps. This is not normal. It has to do with four years of no IPOs, four years with no strategic exits. The engines of growth are undisturbed while the valuations are at a 40% discount. It feels as attractive as the post-GFC window.”— Martin Escobari
The Best Window for Growth Since 2009
Economics & Markets · Strategy & Decision Making
DUR_CONTEXTUAL
DPI pressure forces sellers; buyers get 30-40% discount
“Chuck Feeney is the accidental billionaire. He built duty-free shops, sold to Louis Vuitton, and was confronted with the question: what is the purpose of wealth? His answer: the purpose of wealth is to improve the human condition now. Not tomorrow, now. Because the present value of a happier life for more people now is very valuable. He wants to give it all away. His dream is his last check will bounce.”— Martin Escobari
The Accidental Billionaire's Vision
Philosophy & Reasoning · Business & Entrepreneurship
DUR_ENDURING
Wealth as channel, not reservoir; give it now
Frameworks (2)
The Spearfishing Investment Framework
Patient Capital Deployment Through Asymmetric Waiting
Derived from 3G Capital's multi-decade acquisition strategy, this framework structures the process of waiting for and capturing once-in-a-generation investment opportunities. The core insight is that the highest returns come not from frequency of action but from the quality of a single strike after years of disciplined waiting. The framework has four phases: Anchor (choose your domain years before acting), Wait (let small opportunities pass while holding capacity), Strike (execute with extreme speed when the asymmetric opportunity appears), and Compound (use operational improvement to make the acquisition platform for the next, larger deal).
Components
- Anchor: Choose Your Hunting Ground
- Wait: Let Small Fish Pass
- Strike: Move With Extreme Speed
- Compound: Build the Platform for the Next Strike
Prerequisites
- Patient capital structure that tolerates multi-year inactivity
- Deep domain expertise in the target sector
- Operational capability to improve assets post-acquisition
Success Indicators
- Declining deal frequency with increasing deal size
- Exits that become platforms for larger acquisitions
- Returns concentrated in a small number of large bets
Failure Modes
- Impatience leading to deployment on B-tier opportunities
- Inability to execute quickly when the moment arrives
- Lack of operational capability to compound after the strike
The Checklist Plus Educated Intuition Decision Framework
Synthesizing Analytical Rigor With Pattern-Trained Instinct
Derived from Escobari's resolution of contradictory advice from GA co-founders Denning (pro-checklist) and Hodgson (anti-checklist), validated by Kahneman's research on IDF elite agent selection. The framework uses a structured checklist to process analytical factors, then layers educated intuition on top. The key insight is that the checklist does not replace judgment; it prepares the subconscious to make a higher-quality intuitive assessment by ensuring all relevant data has been consciously processed.
Components
- Build the Checklist From Historical Patterns
- Apply the Checklist Rigorously
- Close the Checklist and Consult Educated Intuition
- Add the Personal Filter
Prerequisites
- Sufficient deal history to identify success patterns
- Willingness to keep score and audit predictions
Success Indicators
- Increasing accuracy of pre-committee outcome predictions
- Decreasing time to conviction on high-quality deals
- Declining loss ratio
Failure Modes
- Treating the checklist as sufficient without the intuition layer
- Relying on intuition without the checklist foundation
- Never updating the checklist as market conditions evolve
Mental Models (2)
Perspective-Taking as Decision Training
Decision MakingThe practice of predicting how multiple decision-makers will evaluate the same opportunity, then comparing predictions to actual outcomes. By predicting not just what IC members will ask but how they will vote, the practitioner internalizes multiple expert frameworks simultaneously. Escobari achieved 80-90% prediction accuracy within one year, demonstrating that expert decision patterns are learnable through deliberate observation.
In Practice: Escobari describes predicting IC member questions and votes across three investment committees throughout his career.
Demonstrated by Leg-me-001
Tail Risk Analysis in Investment Decisions
Probability & StatisticsThe practice of focusing disproportionate analytical attention on the distribution tails of potential outcomes.
In Practice: Escobari describes always pushing deal teams on the tails
Demonstrated by Leg-me-001
Connective Tissue (3)
Spearfishing as a discipline: the underwater hunter must choose an anchor point, descend without equipment, resist the temptation of small catches, wait until oxygen is nearly depleted, and then execute a single lethal strike in two to three seconds before surfacing.
The spearfishing metaphor maps precisely onto patient capital allocation. The anchor point corresponds to sector selection years before deployment. Descending without equipment parallels the investor's vulnerability during periods of inaction when competitors are deploying. Letting small fish pass is the discipline of refusing mediocre deals. The oxygen constraint creates the urgency that forces action when the right opportunity appears: you cannot wait forever, but you must wait long enough. The two-to-three-second strike window mirrors the days-not-months execution required when distressed sellers appear. The metaphor captures what portfolio theory cannot: the physical, visceral discipline required to do nothing until the moment demands everything.
Escobari describes the 3G founders as 'great spear fishermen' and maps the entire spearfishing process onto the Brahma acquisition sequence.
Soviet communism as a compensation analogy: pooled collective output with individual meritocratic selection pressure, the combination that failed in the USSR when the exit mechanism broke down.
Escobari initially rejected GA's single P&L compensation structure by comparing it to Soviet communism: if collective rewards did not work for the USSR, why would they work for an investment firm? The resolution reveals why the analogy is instructive rather than damning. The Soviet system failed because non-performers could not be removed; there was no exit mechanism. GA's system works because non-performers are expelled from the partnership. The pooled compensation creates collaboration; the meritocratic culling prevents free-riding. The CT illuminates a broader principle: collective reward systems require individual accountability mechanisms to function. Remove either half and the system collapses.
Escobari explicitly invokes the Soviet comparison when describing GA's compensation structure and then explains why the analogy breaks down.
Korean War naval base duty-free commerce: the observation that goods could be sold tax-free on military installations, transposed into a global retail business model that created billions in wealth.
Chuck Feeney's foundational business insight came from observing naval base commerce during the Korean War. Military installations operated as tax-free zones where goods could be sold without the friction of customs and duties. Feeney recognized that this exemption, which existed for military logistical reasons, could be replicated in civilian contexts at international transit points. The resulting duty-free shop empire became the wealth engine that funded both General Atlantic and Feeney's 'Giving While Living' philanthropy. The CT illustrates how serendipitous observation of institutional structures in one domain (military logistics) can generate entirely new business categories in another (retail). The duty-free model is itself a form of regulatory arbitrage, spotting a gap in the tax architecture and building a legitimate business in the gap.
Escobari describes Feeney as having 'got the idea of duty-frees by looking at naval bases where commerce was free in the Pacific during the Korean War.'
Key Figures (6)
Jorge Paulo Lemann
5 mentionsCo-founder of 3G Capital; architect of the Brahma-to-AB InBev acquisition cascade
One of the three 3G Capital founders who shaped Escobari's early investing philosophy. The spearfishing framework that defines Escobari's approach to patient capital deployment originated from observing Lemann's multi-decade beer industry consolidation strategy.
- Waited five years to buy Brahma, then closed in one week when Swiss owners panicked before a Brazilian election. Eighty million initial investment became sixty billion plus over three decades of compounding acquisitions.
- The 3G founders recognized that high-inflation banking profits would end and pre-positioned for a consumer economy by studying beer for five years before acting.
Bill Ford
5 mentionsChairman and CEO of General Atlantic
Alex Behring
4 mentionsPartner at 3G Capital; now running 3G's operations
Chuck Feeney
4 mentionsFounder of General Atlantic; creator of the duty-free shop business model
Dave Hodgson
3 mentionsCo-founder of General Atlantic
Steve Denning
2 mentionsCEO of General Atlantic for the first 20 years; Army and McKinsey background
Glossary (5)
power alleys
DOMAIN_JARGONSpecialized investment verticals where it concentrates deep sector expertise
“We are investing across what we call 18 power alleys.”
dry powder
DOMAIN_JARGONUncommitted capital available for investment
“If there's a winter of risk, you're out of dry powder exactly at the time that things are on sale.”
managed account
DOMAIN_JARGONIndividually negotiated investment vehicle where capital is deployed alongside a fund's portfolio
“If you're a large institution and are willing to do a standard managed account, you can come at anytime.”
dog years
VOCABULARYMetaphor for compressed time; experiencing years of development in months
“Go work at AI because you're going to live through dog years.”
DPI
DOMAIN_JARGONDistributions to Paid-In; ratio of cash returned to investors versus cash invested
“There's so much pressure on GPs to post DPI that we're getting 40% growers at 15 times EBITDA.”
Key People (4)
Marcel Telles
(1950–)Brazilian billionaire; co-founder of 3G Capital
Beto Sicupira
(1948–)Brazilian billionaire; co-founder of 3G Capital
Daniel Kahneman
(1934–2024)Israeli-American psychologist, Nobel laureate
Linda Rottenberg
(1968–)Co-founder and CEO of Endeavor
Concepts (7)
growth equity
CL_FINANCIALPrivate investment in established, growing companies, typically minority stakes
permanent capital
CL_FINANCIALInvestment capital with no fixed redemption date, allowing indefinite holding periods
loss ratio
CL_FINANCIALPercentage of invested capital lost across a portfolio
binary risk
CL_FINANCIALInvestment exposure where outcomes cluster at extreme endpoints with little middle ground
evergreen fund structure
CL_FINANCIALInvestment vehicle with no fixed term that continuously reinvests proceeds
educated intuition
CL_PSYCHOLOGYPattern recognition trained through structured analytical practice, operating below conscious awareness after deliberate preparation
apprenticeship model
CL_STRATEGYProfessional development through observation and graduated responsibility under experienced practitioners
Synthesis
Synthesis
Migrated from Scholia