Martin Escobari - Inside General Atlantic

“Guess what our loss ratio is? 4%. On capital. In venture and growth equity, loss ratios of 20 to 40% are common. But there's something about the way we deal with risk that allows us to capture reasonably good returns at a surprisingly low risk ratio. We don't take binary risk. For us, in the scenario planning, a worst-case scenario is a company grows into the valuation we paid for it. And that limits what you do. It limits the timing of where you go into a new industry.”— Martin Escobari

Strategy & Decision Making · Economics & Markets

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4% loss ratio via worst-case: grow into valuation

“Danny Kahneman, Think Fast, Think Slow, Checklist Manifesto, built on work he did for the Israeli Defense Forces to create the checklist for elite agents. The checklists work, but in applying the IDF checklist, there were these super interviewers that got even better results consistently than the average interviewer. There was something beyond the checklist that was statistically significant.”— Martin Escobari

Strategy & Decision Making · Psychology & Behavior

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Checklist then close eyes: educated intuition

“I've done business in 19 countries. So much of the assessment of the company and of the partnership is about chemistry. It was very hard for me to build chemistry with the Chinese entrepreneurs. An entrepreneur who was an anthropology PhD said to me: these generation of entrepreneurs, people in their 30s and 40s, they're all children of the Cultural Revolution. Everything was taken away from these families.”— Martin Escobari

Psychology & Behavior · History & Geopolitics · Culture & Society

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Generational trauma drives entrepreneurial intensity

“They're great spear fishermen. You don't chase the fish, you wait, you decide where you're gonna anchor, you drop down with no equipment other than the spear, and you hold your breath for 1 minute, for 2 minutes. You let little fish go by because you're not there to hunt little fish. You're waiting for the big fish. And then when you're almost running outta oxygen, you got 2 or 3 seconds to get the big fish. The step number one of spear fishing is deciding where you're gonna anchor.”— Martin Escobari

Strategy & Decision Making · Business & Entrepreneurship · Operations & Execution

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Decide anchor point, wait for big fish, hold breath

“The reason we do well in Latin America is we don't have a Latin America fund. Because if we had a Latin America fund, we're gonna put money in Latin America. We're gonna buy at the top and sell at the bottom. And you know what? If you wanna make money, you do the opposite. You buy at the bottom, you sell at the top.”— Martin Escobari

Strategy & Decision Making · Economics & Markets

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No regional fund prevents forced deployment at tops

“We're all products of our traumas, our adventures, and our dreams. On my mother's side, Jewish family had to flee the Russian Empire through Romania, then Argentina, then Bolivia. From my father's side, wealthy landed oligarchy of Bolivia. In 1952, there's a revolution, they lose everything, house and farms get burned down, they almost die. On both sides, there's a sense of loss and escape. In my personal life, I have a genetic disorder. I bruise very easily.”— Martin Escobari

Psychology & Behavior · Leadership & Management

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Trauma creates lens; daily risk pricing trains judgment

“When you're going to do a reference on a hire, you call the person and you say, hey, we're considering David for this role. This role involves the following 5 challenges. This is a very important decision for my company because we can't get this wrong. It's also a very big decision for David because he's happy at his job. And if he gets this wrong, if we get this wrong, we've wasted time and he's out of a job. Help me assess if this is a good risk for me and David.”— Martin Escobari

Leadership & Management · Psychology & Behavior

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Frame reference as mutual risk assessment

“One of the problems with the industry is the 5-year fundraising cycle. To be able to raise your next fund, you have to deploy at a certain speed and you need to return capital at a certain cadence. Otherwise, you don't get to do the next fund. And if there's a winter of risk like we've had for the last 3 years, you're out of dry powder exactly at the time that things are on sale. The traditional fundraising 5-year cycle creates lots of distortions and pain.”— Martin Escobari

Business & Entrepreneurship · Strategy & Decision Making

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Evergreen prevents forced selling, forced buying

“Persuasion equals desire minus fear. Most humans go from FOMO to fear. You can only fundraise when things are very expensive because that's when everyone's on FOMO. There's always someone in the world that has excess capital, even in a time of fear, and you go there. What percent of your net worth you have in Brazil? The number's typically between 90 and 95%. Close your eyes. Imagine you're not Brazilian, you're a citizen of the world. What percent of your wealth would you put in Brazil? 3%.”— Martin Escobari

Psychology & Behavior · Economics & Markets

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Reframe home bias: what if you weren't from here?

“Every 4 or 5 years there's a once in a generation opportunity that you have to be ready and be willing to move quickly to capture. And if you do, you can create disproportionate value for your company, for your investors, for your employees. By month 3, I was working for the 3G founders. They said, Martin, take $500 million, invest in 20 companies, you got 18 months, go. By month 3 I left the fund and raised $80 million to launch Submarino.com.”— Martin Escobari

Business & Entrepreneurship · Strategy & Decision Making · Operations & Execution

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Once-per-decade opportunities compress 7 years into 1

“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. Our approach this time has been to be incredibly aggressive at deploying AI in the portfolio. We have 100 people in our portfolio support team. This year we'll do 500 projects with the portfolio. A third of them are AI projects.”— Martin Escobari

Strategy & Decision Making · Technology & Engineering · Business & Entrepreneurship

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Test across portfolio, wait for proven ROI

“We have a communist system of compensation, which is you all get a percent of the total performance, not your individual performance. I was like, are you kidding me? I'm a spearfisherman. This communism didn't work in the Soviet Union. Why is that gonna work? The level of collaboration is fantastic. The way you prevent the Soviet Union from happening is if you're not pulling your weight, you're not on the boat.”— Martin Escobari

Leadership & Management · Economics & Markets

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Pool comp avoids Soviet problem via ejection threat

“The premium for US exceptionalism has never been higher. US public equities are trading at 26 times earnings for a 4% forecasted growth, which is at the 97th percentile of the last 25 years. US dollar is pretty much 2 standard deviations away from the neutral state. Total debt to GDP is 125%, the highest of the OECD, higher than it was after World War II. Current plans in place, within 5 years we're going to be at 145% of GDP, higher than Greece and Italy.”— Martin Escobari

Economics & Markets · Strategy & Decision Making

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US at 97th percentile valuation vs. emerging at discount

“Based on public information, Anthropic revenues on cog went from $200 million to $4 billion in 12 months. In B2B, that kind of growth has not happened ever. Human programmers are hyperproductive and they're working alongside agentic programmers who have no moral north star and do not sleep. How do you get them to work together to a common output, which is super sensitive to you, the client who's running on the software? Super exciting.”— Martin Escobari

Technology & Engineering · Business & Entrepreneurship

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$200M to $4B in 12 months in B2B

“Chuck Feeney's answer resonated really well with me. The purpose of wealth is to improve the human condition now. Not tomorrow, now, because present value of happier life for more people now is very valuable. So he wants to give it all away. His dream is my last check will bounce. I want to die a poor man and I want to give it all. But before I give it all, I believe you can create additional wealth by investing in innovation, by backing great entrepreneurs, globally.”— Martin Escobari

Philosophy & Reasoning · Business & Entrepreneurship

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Purpose of wealth: improve human condition NOW

“The partnership ethos is fundamental. When you look at 45 years of references of 500 people, thousands of people we've partnered with, and you say, what do you think of GA? They're good partners. They're good guys. They do what they say they're going to do. They put the company's interests first. Sometimes we're accused of being dolphins in a sea of sharks, and I'd love to be a dolphin. Who wants to be a shark? Dolphins have a much better life.”— Martin Escobari

Leadership & Management · Culture & Society

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Dolphins in sea of sharks: good partners win