Brad Gerstner, the Founder and CEO of Altimeter Capital, shares insights on how his firm shifted the landscape of investing by successfully combining hedge fund and venture capital strategies. He discusses the evolution of Altimeter from a modest $3M fund to managing nearly $15B and its investments in tech giants like Snowflake and Facebook. Gerstner reflects on the changing dynamics of entrepreneurship, the importance of mentorship, and the role of AI in modern investing. His perspective on the future of venture capital and democratizing investment opportunities is both enlightening and thought-provoking.
Altimeter Capital pioneered crossover investing by focusing on investing in both public and private companies, recognizing the changing landscape of the internet and the industrialization of venture capital.
Altimeter had a strong belief in the potential of cloud computing and purpose-built infrastructure for the enablement of the cloud, resulting in successful investments in companies like Snowflake and a broader focus on the future of data analytics.
Recognizing the shift towards online transactions, Altimeter made successful investments in companies like Expedia, Priceline, and Amazon, capitalizing on the power of these platforms as drivers of commerce.
Altimeter Capital seeks out multi-trillion-dollar markets to diversify its portfolio and capitalize on emerging trends, aiming to generate strong returns by focusing on long-term trends and innovative companies.
Deep dives
Launch of Altimeter Capital and Navigating the Financial Crisis
In 2008, despite the challenging financial climate, the founder of Altimeter Capital launched the firm with a humble amount of money. The vision was to build a better version of the venture capital and hedge fund model by focusing on crossover investing. Altimeter aimed to invest in both public and private companies, recognizing the changing landscape of the internet and the industrialization of venture capital. The firm navigated through the financial crisis and raised its first dedicated pool of capital in 2012.
Identifying Early Trends in Cloud Computing and Data
Altimeter had a strong belief in the potential of cloud computing and the increasing importance of data. The firm recognized that not all software was created equal and saw an opportunity in the development of purpose-built infrastructure for the cloud. Altimeter focused on the enablement of the cloud and the vast amounts of data being generated. This early trend led to successful investments in companies like Snowflake, as well as a broader focus on the future of data analytics and decision-making.
Recognizing the Power of E-commerce and Internet-driven Transactions
From the early days, Altimeter understood the potential of e-commerce and internet-driven transactions. The firm saw the consumer behavior shift towards online transactions and identified companies that capitalized on this trend. Altimeter made successful investments in companies like Expedia, Priceline, and Amazon, recognizing the power of these platforms as drivers of online transactions and commerce.
Diversifying Investments in Emerging Opportunities
Altimeter Capital looked beyond traditional investment sectors and explored emerging opportunities and themes. The firm sought out multi-trillion-dollar markets where it could make several bets and diversify its portfolio. By identifying long-term trends and focusing on innovative companies, Altimeter aimed to capitalize on emerging trends and generate strong returns for its investors.
The Evolution of the Venture Growth Business Model
The venture growth business model has matured and consolidated around a few global platforms, leading to more efficient markets and increased competition. Altameter Capital has embraced this model, aiming to find and partner with the best companies in the world. They are passionate about increasing the probability of success for their portfolio companies and reducing risk through their expertise in early-stage business building.
The Power of Capital Markets
Altameter Capital recognizes the importance of capital markets in driving innovation and growth. They have deep experience and insights into the IPO and direct listing processes, offering founders guidance and support in transitioning to the public markets. By de-mystifying the process and providing valuable insights, Altameter Capital aims to help founders navigate the complexities of going public, ensuring successful outcomes for both the company and its shareholders.
Invest America: Democratizing Ownership
Brad Gerstner, the founder of Altameter Capital, proposes the Invest America initiative, which aims to give every child born in the United States an Invest America account. This account would provide a small ownership stake in the stock market, ensuring that every individual has the opportunity to participate in and benefit from the system. This initiative seeks to create a sense of belonging and inclusivity, fostering a stronger connection between individuals and the economy.
The Future of Altameter Capital
Altameter Capital intends to deliver excellent returns for its partners and maintain a strong reputation among founders. They are focused on being a valuable partner in the venture growth space, building the best product and supporting founders in building successful businesses. Altameter Capital also aims to drive positive change through initiatives like Invest America and make a lasting impact on society.
We hear a lot these days about hedge funds becoming venture firms, and venture firms becoming hedge funds. But a decade before either of those approaches became mainstream, a tiny $3m fund in Boston named Altimeter Capital set out simply to invest in a concentrated portfolio of America’s very best technology companies, regardless if they were public or private. Today that tiny firm has grown to nearly $15B under management and become a premier “capital partner” to founders at all but the very earliest stages — companies like Snowflake, Facebook, Roblox, Plaid, Grab and Acquired fan-favorite Modern Treasury. We sit down with founder & CEO Brad Gerstner to dive into the story behind Altimeter’s meteoric rise.
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Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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