Josh Kushner - Concentration and Conviction - [Invest Like the Best, EP.459]

Thrive's Josh Kushner on concentrated bets and staying humble

Thrive Capital is a firm built on conviction. It concentrates its capital in a few companies, backs them when outside opinion is negative, and writes whatever cheque the company needs. Kushner says this works because the firm stays small and humble, and focuses on inputs rather than the size of its assets. Thrive is now extending the same bet into owning businesses and remaking them with AI.

Takeaways

• Concentration is right if you pick right. Stan Druckenmiller told Kushner concentration is always the right decision, but you had better pick right. Thrive holds a concentrated portfolio because understanding each business intimately takes meaningful time, and public market value has accrued to fewer than ten companies.
• Large cheques followed company needs, not strategy. Kushner says the big cheques were a consequence of reading where the world was moving and serving companies that needed capital. Stripe had to raise $6bn or go public, and Thrive wrote roughly $1.8bn, its largest ever.
• Thrive buys where outside sentiment is negative. Thrive joined GitHub's 2014 first round with $20m and was the only buyer of early founders' shares. The Stripe deal came at $50bn, a 50% discount to the prior year, and Ramp asked Thrive to lead below its 2021 price.
• Ambition is built on inputs, not assets. Kushner says Thrive's ambition was never about asset scale but about culture, process and the product offered to founders. Insecurity can drive innovation, yet proving something to the world does not work as an end goal, since the world doesn't care.
• A small team works on mutual respect. Every function, including legal, finance and engineering, has exceptional people, so Thrive stays small. Kushner says this works when everyone respects each other and conversations aim at the right answer. He ranks humility and self-awareness as the most important traits in any organization.
• Thrive Holdings applies AI inside acquired businesses. After OpenAI's API reached $50m of revenue and pitches to private equity failed, Thrive began buying businesses and using AI to make them more efficient. Alex Taubman of Long Lake helped design the permanent capital vehicle.
• AI could democratize intelligence but invites losses. Kushner expects tremendous transformation from AI in robotics and coding, and an oligopoly at the hyperscaler level. He says many will chase enterprise value and lose capital, so being either exuberant or negative is very dangerous.