YouSaid · the spoken record

Victor Khosla

lines on the record: 91
first: 2024-09-19
most recent: 2024-09-19
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I couldn't even have told you 25, 30 years ago, I couldn't even have told you what it would take, right, to kind of be here. And I think it's like, I think you've just got to constantly be ready to learn, to evolve. You can't get stuck. And if anything, if my journey says anything, it is, you know, I've seen the evolution in the firm, sure, but I've seen the evolution in me. And I think if you were to give advice to somebody who goes down this journey, it is to have a lot of people around you who can, not just in your firm, but outside your firm, some people you can trust, you can talk to, who can coach you, who can make you think because you are in an evolutionary journey to grow up, to be a leader in this business.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh my gosh Barry, I was when we got started as a firm in 2001. Somebody asked me and said, Hey, Victor, what would you consider success in five years? And remember, this is when the world was young. Alt was really young, right? And I said, boy, if I could be running for 500 million in five years, wouldn't that be great, right? We went through 500 million in a year and a half, right? But I think what I've learned about investing Because boy, when you do what I've done, you make mistakes. What I've learned about managing and growing people and developing people, right? It's like I have been in this laboratory of learning. So when I think about the person I was 25, 30 years ago, right, running a proprietary desk at Merrill Lynch, right? To kind of the person I am today, right? In so many different ways, I couldn't.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“And I don't mean financially, it's fun. You know, the people you work with, the culture of what you have, it is fun. Yeah, it's financially good too. But to position yourself to be in this world, right? Especially in a world like ours. Look, we're not looking for people who are just kind of, you know, paper investors. We want you to work with our portfolio companies, with our management teams. You've got to have the EQ. You've got to have the presence and the communication skills too, right? You look at kind of the training we need for somebody who can do that at age 30 or age 35, right? It's very much that sort of a growth track you've got to follow.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Two, three years at a private equity firm, right? And then you come work with us. And then the second entry point is you're that 27-year-old. You go to business school, and then you come work with us, right? So those are our two entry points. But when you look at kind of, you know, the people who are kind of coming in. By the time you're that 26, 27 year old, you know, if you were in that class at Dartmouth or Yale or wherever, you are probably already that one in. Maybe one in 500 kind of person to have made it that far. This is a tough. Incredibly demanding profession. Just be ready for that. It is extraordinarily rewarding.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Be ready to work really hard. You know the typical person we hire at SVP is we have two entry points, right? So we'll hire 26, 27 year olds. So, you should have gone to undergraduate school a couple of years at an investment bank with the $800 a week. Right.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“I like historical fiction So there's a guy, there's an English author, a guy called Con Igdelen. I don't know. He's written five, six books about the Roman Empire, the Caesars. He's written about Kublai Khan and the Khan dynasty out of Mongolia, right? I love reading that sort of historical fiction. He just came out with a new book on Nero, the Roman Emperor. And it's a new series, right? Then I'm reading that.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“And it wasn't like I had a quote mentors in the business. But what I found was, and by the way, every time you do something which is new and different and you're one of the first guys on the wave, right? It is you learn as you go.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Starting out at Merrill, right? And at Moore particularly I had a lot of support like that. You know, a mentor, the word mentor means, I think also somebody who helps you grow, who helps you develop, who talks to you every few weeks or a month, officially unofficially, right? You know what I've found is the business I chose to be in. Was such a new emerging business where, you know, I kind of knew.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I've been playing tennis for 50 years. I should be better, right? You just need a good coach. That's all. But watching breakpoint at least for a while transforms it for me.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Is not kind of that wholesale move down in prices. It's much more buying into these businesses through debt, sometimes through equity. Transforming the businesses, operating them. That's the opportunity. It's not a trading opportunity in distress debt, which is what we just don't think it's a trading opportunity now for the next three, four years”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, most people in our industry, in my industry, are really focused on buying debt at 50, 60, 70 cents, trading it, having it kind of appreciate in price and then trading out of it, right?”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“I do think there are good times, but I think I'm talking my book now. They're really good times for somebody like us who can operate businesses, improve businesses.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is not 12. It's not four, but it's not four. So I think what all this kind of means is, look, things will improve slowly, right, as short-term rates kind of come in. But the problems which we've set up are here. You have a slower old world economy. You have maturities kind of coming up. You have to kind of default or you have to do some pretty unusual things to extend your maturities. Those problems with 8.5% rates, not four or five, all in cost for a lender, for a borrower, those problems really now stay with us for a”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Survived to 25. You get three and a half percent 10 year rates Right, you add the usual four or five hundred basis point high yield spread. You're borrowing at 8.5%.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“That era is over. So the fact that rates are going to be higher now over the course of the next three, five years, I think that's the part we should all be just kind of focused on.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, we are now on the other side of the, you know, we are now in the, we're trying to figure out how quickly do rates come down, how much and how quickly. So we're not really now, we're on the other side of the mountain, right? And I think, and you've already seen it with Europe. Europe has already So I think our point of view would be these short-term rates, the five and a quarter, five and a half percent Fed funds rate. It is going to be kind of coming down, and we can all debate is it two cuts, three cuts, fifty basis points, twenty? We can all debate that, but I think the path going forward is there. What is different is just look at the tenure, not so much the short-term Fed fund rate, right? The 10 year rate is 3.85%. It's not the one and a half or two percent. That era.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“In Europe, in Europe. We are one of the acknowledged market leaders in Europe for what we do. And it's a world where there are much fewer people with the skills we have. In the US, there are more people. So you look at a market which is big, which gives you constant opportunity. You look at the marketplace positioning we have. You take that together for us. Europe is much more interesting, which is why it always for us is a bigger piece of our portfolio than the market.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“It is, right? So you take all that kind of together. You know what we find is Europe, when I think about it in the context of 20 years, we find that Europe just gives us more frequent opportunity, right? Just the way it's set up. And the second thing which makes Europe really interesting for us, we are really, I could be. We are really one of the market leaders”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“That's going on. So your frequent crises, you have economic growth which is much slower. Then the United States, right? And by the way, they are suffering from some of the same high rates.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Might run into trouble. And, you know, and every two years there's a crisis there. Right? Like the US is Fortress America. But when you look at Europe, right, whether it is Brexit, whether it is other Italian guys.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Europe is if you just think about the broad market in high yield 75% US, 25% Europe. For somebody like us, Europe is always just a much bigger part. A third, maybe even a half of our book, right?”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not systemic. So, whether it is the corporate world, you know, where I was describing all these maturities in a $5 trillion pool of high yield. Or in the this is not systemic. 2008, the banks were really levered, right? It became systemic So I think look, I tend to economic growth is okay. It's much less than okay in Europe. But in the US, it's kind of okay, right? So I don't think one needs to kind of say, you know, that systemic stuff which causes shocks across the economy, right? Look, we could be wrong, but we don't think that's in the cards. What's in the cards is just this very gnarly. All these kind of credit issues which will keep biting for the next three years and we'll just kind of work our way through them.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going to kind of go broke in this particular cycle. Away from kind of office. If there are other sectors, so if you look at multifamily, Multifamily is generally a very stable asset class. But with these higher rates, people were buying multifamily at a 4% cap rate Today, public reads, multifamily public reads are 6% or so cap rates. That means that prices have fallen 50%. If you just take the four going to kind of six”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's around maturities of the debt. Right, where people are foreclosing title of the property is passing over to lenders, right? So round numbers today, there's $8 trillion of commercial mortgage debt in the US and Europe.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Planes for third parties even away from us, right? So for us, having Ducalion, it's a big piece of kind of what makes our airplane aircraft platform really work.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Really interesting. But this is, but what we find is this business of investing in aircraft, it's a very cyclical business for us because we have a very high rate of return expectation. So it's not an every year business. And what's really helpful for us as we do this, Barry, we own a company called Ducalion. Ducalion has 65 employees and they manage the aircraft for us. So when we take over the planes, if we have to park them in the desert, if we have to fix them, lease them, finance them, DeCalion gives us the arms and legs to kind of do it. You don't want to do this business just as a paper investor. You need those operating skills. And by the way, DeCallion today manages 125 airs.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“We bought the aircraft. By the way, at this point, we've sold most of them. But we also ended up with a claim which became equity. So today we are actually a very significant holder of equity in LATAM and Aeromexico.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“To constantly be tended And so what's interesting to us about the airline business, when it's really active, like in those periods, right, somebody like us, we invested a few billion dollars in buying airplanes in those two, three years.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“They actually bought the debt, we foreclosed on the planes. So now we own the planes. Most of them we leased back to Latam. Some of them were actually four very large A350s Right, which is like a wide body. Large A350s, and we sold them to Lufthansa. We had to fix them. We bought them in the desert. We fixed them and we sold them”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“and flying to the United States. They're the market leader in Latin America. But now they are the people who have given them the planes on these leases. They have leases with all these kind of financial guys, which is how they bought a lot of their airplanes. They're in bankruptcy. They want to redo the lease, recut the lease. And by the way, this is COVID. Lease pricing has collapsed. So now all of a sudden the leases aren't the person who's lent them the money on the lease. It's no longer worth that because lease prices have collapsed and they are being reset right now because of the bankruptcy of LATAM. So for us, you know, we ended up kind of buying 23 of those airplanes. From some of the leaseholders in Latam.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“A couple of really large airlines. There's one called LATAM in Latin America. There's Aeromexico. A couple of large airlines end up kind of filing for bankruptcy. Now, they are in bankruptcy, and they have, like Latam in those days, had a fleet of 300 plus airplanes.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“It is Like, who, how We find that investing in aircraft for us two out of ten years, we really lean in. It's not a steady state, hey, we're going to invest X million every year. It's a very cyclical business. So like take COVID. COVID happens shuts down.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“It is because they produce electricity also. So you can create a data center kind of right next to it. So you can see the transformational work which is going on. It wasn't like, hey, we just bought it. It's great, right? And we subsequently ended up kind of selling it three, four years later after we'd finished doing all that. And it was a very successful investment. But you can buy infrastructure. But if we just bought it and just put it on auto. Nothing would have happened.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, we fixed and sold the two businesses which weren't so great. But at the same time, the core business, we invested in it. We hired a new chairman. We hired a new CEO and a management team. And by the way, the business itself had long-term, you know what makes infrastructure is when you have long-term contracts. They had long-term contracts for about 55% Of their output in Riverside. We increase that to 70%. We started to build a plan to expand the plant, to build a new data center next to the plant, right?”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“They take it to a plant called Riverside, where they burn it and they produce electricity for those same burrows, right? This business, great business, by the way, right? Now what they had done was they also had a landfill business They also had a garbage collection business, and those businesses got them into real trouble. So the company itself got into a pickle, too much debt. And with this one really great core business and two other really troubled and so-so businesses. And what we ended up doing was when we kind of took control of the business.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“It has been, right? But what's kind of interesting also is that waste to energy business in London. When we bought it, they had a really great, I'll tell you this, forgive me, I'll just digress. Go on. I'm fascinated. So this business corey.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Down and finance the night. You know, it was viewed in the old days, it was viewed 15 years ago, it was viewed as such a safe asset class. Not only could, not everybody did it, okay. There were a few real outliers who did a lot of it. And they did it with 85% debt, 80% debt, 90% debt. And by the way. Most of the industry does not do this.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Selling widgets. It's different. And you've got to understand it. And we were one of the first people in our business to really drive into it. And I think we've been the biggest investors in our industry, in infra.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Right? It's valued very differently than how you'd value a company. There's a whole what it takes to operate it is really quite different. You need some really great government skills, by the way, to manage the agency which regulates”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“And if you hit COVID or if you hit a financial recession, it's really hard to dig yourself out of 80-90% debt. So what we saw was a whole class of toll roads, which are supposed to be core infrastructure, safe. A whole class of toll roads, the ferry business I'm kind of talking about, right, a waste to energy business in London we invested in called Cori, right? All these businesses ended up kind of crashing. Now infra for us has never been distressed, right? There's no broad infrastructure distress cycle. But for us, it started about 10 years ago, right? We were one of the first ones who started to take apart infrastructure and say, hey, it's not like corporate.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, what has happened in infrastructure is there were a couple of very aggressive people who bought infrastructure, toll roads with 80, 90% debt. Not 40%, 50%, 80, 90% debt.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“They should be really strong, they should be good growers, and they should be steady eddy. And infrastructure today is bought by sovereign funds, big pension funds, with a view that it is very steady 7, 8, 9% kind of returns, right? That's the prevailing view.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“A single plane or a fleet of planes. Can I tell you? Sure. Can we even start with infrastructure? Sure. Right? Because Barry, the prevailing view would be infrastructure toll roads.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“That have run into a little trouble, but generally very good market shares, right? 40%, 4-0% of what we do are real assets.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, for us, about 60% of what we do is corporate investing. So these industrial businesses, service businesses, right?”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“That's pretty impressive. Yeah, but I think it's so this is not about just cutting, it's about kind of investing and looking to transform these businesses which have been undermanaged and those together is what in our world, in our mind constitute a special situation private equity.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Where you buy it by buying debt at a discount or you buy it bilaterally in a process without a process. The company has enough issues and there's a way to just negotiate a price bilaterally. So I think for us the opportunity set today is to kind of buy it well, but that is just step one. The step two is to go, strengthen the management team, build a new business plan, often to inject more capital into the research.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, we are in the business of trying to buy businesses at a good price. And then we're in the business of trying to improve them, sometimes even transform them operationally, right? Because they have been undermanaged with everything I've described. To us, you know that combination? You can't really, if somebody is having an auction, Of a company, and they have hired Goldman Sachs or Merrill Lynch to sell it. It's very hard to buy something at a really good price. Right, you've got to be able to buy it either you buy it through the debt”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“Our pace of investing. Has picked up substantially our pipeline has almost quadrupled over the last eighteen months. This is happening right now. Barry, don't get the wrong idea. I'm not trying to tell you there's some crash or something. We don't think there is.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source
“COVID and then the rate increase. And now, what is happening is there are maturities coming due. There's a large maturity wall in 25, 26, 27. By the way, by our reckoning, there's almost 2 trillion of that $5 trillion of high yield matures in the next three and a half years.”
2024-09-19 · Masters in Business · Building a Global Private Credit Firm and 'Trading' Planes with Victor Khosla · IDENTIFIED FROM THE TRANSCRIPT · source