Gaurav Kapadia on New York City, Investing, and Contemporary Art
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this rare public conversation, Tyler Cowen interviews Gaurav Kapadia, the deliberately publicity-shy founder of investment firm XN who has been called "one of our generation's Warren Buffets." The discussion spans Kapadia's unique background growing up in Queens as a de facto landlord at age 10, his concentrated investing philosophy with only 10-15 positions, and his broader expertise in judging quality across cities, art, and investments. (01:32)
- Main Theme: How exceptional judgment translates across domains - from real estate management in childhood to concentrated investing, contemporary art collecting, and civic engagement in New York City
Speakers
Tyler Cowen
Tyler Cowen is an economics professor at George Mason University, host of the popular Conversations with Tyler podcast, and co-founder of the economics blog Marginal Revolution. He has written numerous books on economics, culture, and policy.
Gaurav Kapadia
Gaurav Kapadia is the founder of XN, a concentrated investment firm, and serves on multiple boards including the Whitney Museum of American Art, the Mellon Foundation, and Governors Island Trust. Despite his success as an investor, he has deliberately avoided publicity throughout his career, making this conversation a rare window into his thinking across investing, art collecting, and urban policy.
Key Takeaways
Develop Cross-Domain Judgment Through Diverse Experiences
Kapadia's unique path from child landlord to consultant to investor illustrates how unconventional experiences build superior judgment. (15:05) Rather than taking the typical finance route after Wharton, he chose BCG despite it paying one-third the salary because he recognized he "didn't really know how the world worked or how businesses work in any reality." This detour taught him organizational dynamics that spreadsheets can't capture, giving him a competitive advantage as an investor who understands how companies actually operate versus how they appear on paper.
Maintain Founder Energy Through Rigorous Hiring and Cultural Standards
To prevent organizational complacency, Kapadia uses a "rigor and kindness" cultural mantra and hires for spark beyond credentials. (24:24) Drawing from chef David Chang's philosophy of "good enough plus something special," XN looks beyond perfect resumes to find extra curiosity, ingenuity, and passion. They maintain high standards across all 50 employees, not just the investment professionals, creating an energy that prevents the cultural decay common in growing firms.
Use Concentrated Positioning as a Forcing Function for Better Decisions
With only 10-15 public market positions, XN's concentrated approach forces exceptional selectivity and deep conviction. (19:30) Kapadia explains they "rarely have more than 10 or 15 investments because there are very few good ideas." This constraint eliminates FOMO and marginal decisions, requiring each investment to meet an extraordinarily high bar for asymmetric risk-reward with bounded downside and potentially unbounded upside.
Develop Personal Taste Through Active Connoisseurship
Kapadia's art collecting philosophy of focusing only on American artists within 20 years of his age demonstrates how constraints can deepen expertise. (42:13) This focused approach forces him to develop genuine personal taste rather than following market trends or expert opinions. The discipline of connoisseurship in art directly enhances his investing judgment by exercising the same muscles needed to identify quality, excellence, and long-term value.
Embrace Optimism as a Competitive Advantage in Leadership
When asked about the most underrated quality for mayoral candidates, Kapadia immediately answered "optimism," noting it's "extraordinarily scarce" in current leadership. (12:50) This insight extends beyond politics - optimism attracts talent, inspires action, and creates the forward momentum necessary for tackling complex challenges. In investing, art, and civic leadership, optimistic leaders who can articulate compelling visions dramatically outperform pessimistic counterparts.
Statistics & Facts
- XN typically maintains only 10-15 public market positions at any given time, with Kapadia noting "there are very few good ideas" requiring extreme concentration. (19:30)
- Only 1% of most museums' archives are ever displayed to the public, which Kapadia calls "a tragedy" and sees as a major opportunity for digital and physical expansion. (38:31)
- The Whitney Museum allows anyone under 25 to visit for free, demonstrating their commitment to community access and artistic freedom. (40:13)
