The Generalist - Tiger Global: How to Win

Hey friends,

Today’s piece is on venture capital’s most controversial firm: Tiger Global.

If you’ve tracked the space, particularly over the past year, you’ll know that the near-$100 billion crossover fund is investing at a pace we’ve never seen before, and is winning deals by paying premium prices.

This is a story that starts in 1980s Wall Street but travels to Egypt, India, China, and beyond. One that touches on absurd highs — 25x returns and 259,000% increases — and dot-com crashes. It is a tale of strategy, adaptation, and the strength of a winning culture.

Jump right in by clicking the button below, or keep reading.

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Actionable insights

If you only have a couple of minutes to spare, here’s what investors, operators, and founders can learn about Tiger Global.

• We may be earlier than we thought. Tiger’s current private market thesis is simple: we are still in the opening stages of the digital revolution. For those who began evangelizing the “software opportunity” decades ago, that we have yet to reach maturation may come as a surprise. If Tiger’s right, we should expect many more unicorns to be minted and for returns to be larger than anticipated.
• There are different ways to win in venture capital. Just as a16z did a decade ago, Tiger has disrupted the venture market, showing a new way to win. Its approach is predicated on rapid capital deployment, reducing founder friction, and accepting a lower return profile.
• Outsourcing due diligence has benefits. How does Tiger invest across geographies at a rate of roughly a deal a day? By delegating elements of deal sourcing and evaluation to consultancies like Bain. By doing so, Tiger is able to move much faster with broader coverage. This maneuver also turns a fixed cost into a variable one.
• Founders may be sick of “hands-on” investors. Part of Tiger’s pitch is that it will be an unobtrusive capital partner. That approach runs counter to industry norms as most firms compete to demonstrate a willingness to roll up their sleeves and help. The fact that so many founders find Tiger’s laissez-faire attitude attractive exemplifies the lack of trust many have in VC’s value propositions.
• Hedge fund managers can bring novel perspectives to startups. Though perhaps less visionary than their venture capital counterparts, some founders find the detail and rigor of hedge fund managers’ thinking refreshing. That might make crossover funds like Tiger increasingly attractive partners.

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More than ever, venture capital is a game of speed.

Though private equity funders in previous eras had the luxury of establishing deep relationships and carefully selecting investments, as competition has increased, timelines have tightened. As a result, what once looked like a standard chess game — all careful strategy and deliberation — has quickened into blitz chess. That variation requires players to make their move in 10 minutes or less, favoring rapid decision-making and acting on instinct.

It is, in truth, a different game. Even one of the greatest players of all time, Hikaru Nakamura, has said "[Blitz] is just getting positions where you can move fast. I mean, it's not chess."

Tiger Global is the best blitz chess player in the world of venture capital today. The near-$100 billion crossover fund moves at a pace that no other firm can compete with, allocating around the world, on virtually a daily basis. To the casual observer, Tiger seems to run on a dark blend of hedge fund bravado, inflated valuations, and fast-twitch hunches. Perhaps that is why it's easy to imagine Nakamura's off-hand comment adjusted to apply to the fund:

Sure, Tiger invests in a lot of startups. But, I mean, it's not a venture firm.

This is a sentiment one often hears voiced about Tiger. As excellently encapsulated by investor Everett Randle, the inference of such gripes is that the fund is not playing the game the way one is supposed to, that it uses too much amygdala and not enough frontal lobe. Though narratively tempting, writing Tiger off in this way misses almost everything that makes it special. This is not some unthinking gavage-capitalist spamming the "buy" button, but a twenty-one-year-old fund with a distinctive culture, a storied partnership, roaring returns, and a history of adapting its mandate to fit the macroeconomic environment.

That Tiger can move faster and invest more than any other fund is not an accident, but the consequence of a thoughtful strategy put in motion. While Nakamura has his doubts, even blitz chess requires real cerebral power.

In today's piece, we'll enter the Tiger's cage and ask him how he earned his stripes. In particular, we'll outline:

• Tiger's origins. The fund of today wouldn't exist without the famed "Wizard of Wall Street."
• The fund's cultural influences. Tiger Global's leader, Chase Coleman, began professional life at a fund that prioritized flexible thinking and a meritocratic structure. Both influenced what came next.
• The leadership of Coleman. As a 25-year old, Coleman saw opportunity in the tech sector. To capitalize on it, he had to adjust his fund's mandate multiple times over.
• How Tiger wins. No other fund operates the same playbook as Tiger — perhaps because no one else can.

Let's get started.

IN A MEME

For the pictorially inclined, here's the whole piece — all 9,300 words of it — in a single meme.

PUZZLER

All guesses welcome and clues given to anyone that would like one. Just respond to this email for a hint.

Jithamithra T unearthed last week's family drama, correctly deducing the response in record time. He was joined by a slew of other creative genealogists including Grant G, Vinish G, Bernard V, Gianpaolo E, Jordan R, Krishna N, Josh E, Luke C, Vajresh B, Chris G, Madonna Y, Alex L, Fahim S, Tanay N, John F, Sienna H, Ankit J,Kelly O, Atul M, Jessica P, Gianni F, Georgina F, Marc B, Stephen C, Nicholas T, Maxine V, Hardik T, SN, Araminta R, Sudarshan P, Jose L, Vidisha H, Massimiliano B, Peter F, Nnanna I, Joshua K, Hari Ananth, Jake M, John G, Austin V, Ed C, David Z, OJG, Terence F, Lorenzo C, and Kunal G.

All sensed the trickery in our previous puzzler.

The answer? The trio are a grandfather, father, and son.

It's a wintry day in Brooklyn with a relatively fast wind whipping off the water. I think I'll go for a short, brisk walk and then have a coffee. I hope you're having a relaxing Sunday, wherever in the world you are.

Until next time,

Mario