Mala Gaonkar: Building SurgoCap, Identifying Great Businesses and Learning from Mistakes
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 compelling conversation, Mala Gaonkar, founder of SurgoCap Partners, shares her journey from managing $1.8 billion to $6 billion in assets under management after leaving her role as a founding partner at Lone Pine Capital. (00:55) Gaonkar discusses her investment philosophy centered on identifying truly great businesses with long-duration competitive moats, particularly focusing on how technology intersects with non-tech industries and how old technologies can disrupt in new ways. (02:18) The episode explores her systematic approach to reducing cognitive biases in investment decisions, the importance of maintaining small team sizes for better collaboration, and her integration of data science to support investment thesis tracking. (04:36)
- Core themes include identifying durable competitive advantages, managing cognitive biases in investment decisions, leveraging data science for better analysis, and integrating technology disruption patterns across multiple industry verticals
Speakers
Mala Gaonkar
Mala Gaonkar is the founder of SurgoCap Partners, a hedge fund that has grown from $1.8 billion to $6 billion in assets under management. She previously spent twenty-three years as a founding partner at Lone Pine Capital, one of the most successful hedge funds of all time. Beyond investing, Gaonkar is actively involved in philanthropy through health-focused initiatives and creative pursuits including writing and theater production.
Nicolai Tangen
Nicolai Tangen is the CEO of Norges Bank Investment Management, which oversees the Norwegian Sovereign Wealth Fund. He hosts the "In Good Company" podcast, conducting in-depth interviews with business leaders and investors about their strategies, philosophies, and experiences in building successful organizations.
Key Takeaways
Focus on Technology Integration Across All Industries
Gaonkar emphasizes that every business today is fundamentally a technology business, regardless of industry. (01:58) She explains that whether you're in aerospace, medtech, or financial data, you must be a technology company at your core to deliver at scale with quality. This perspective helps identify competitive advantages in traditional industries that are being transformed by technological capabilities. Her fund specifically looks for non-tech businesses that are leveraging technology stacks effectively, creating opportunities where others might miss the underlying tech disruption occurring in conventional sectors.
Leverage Old Technologies in New Disruptive Ways
One of Gaonkar's key insights involves recognizing how established technologies can create massive disruption when applied in new contexts. (02:23) She cites the example of lithium-ion batteries, invented in 1976, now disrupting the entire automotive industry, and GPUs originally designed for gaming becoming the backbone of AI revolution. This pattern recognition allows investors to identify emerging opportunities before they become obvious to the broader market. The strategy requires looking beyond the original use case of technologies and understanding their potential applications across different industries and time horizons.
Systematically Combat Cognitive Biases with Data Science
Drawing from behavioral economics research by Kahneman and Tversky, Gaonkar has built systematic processes to counter human biases in investment decisions. (10:45) She explains how confirmation bias, availability bias, and sunk cost bias have caused her major investment mistakes in the past. Her solution involves using data science tools to create unbiased tracking systems for investment theses, allowing the team to objectively monitor whether their original assumptions remain valid. This approach transforms investment decision-making from intuitive "System 1" thinking to more methodical "System 2" analysis.
Maintain Small Teams for Enhanced Collaboration
Gaonkar deliberately keeps her investment team small enough to fit around one table for roundtable discussions, following what she calls the "one pizza box" rule. (03:18) This constraint was based on consistent advice from CEOs about the power of small team dynamics. She believes that the most creative ideas come from cross-border thinking - understanding how AI influences medtech or how technology impacts material science in aerospace. Small teams enable this type of collaborative, interdisciplinary analysis that larger organizations often struggle to achieve due to siloed thinking and communication challenges.
Balance Long-Term Vision with Risk Management Through Concentration
Rather than diversifying broadly, Gaonkar concentrates on four specific verticals: enterprise data/tech, financial services, healthcare services, and industrial technologies. (09:08) This focused approach allows deep expertise development while maintaining sufficient opportunities for capital deployment. She combines this concentration with rigorous valuation discipline, always focusing on free cash flow multiples and conservative accounting practices. The strategy balances the need for deep knowledge and conviction investing with risk management through thorough fundamental analysis and systematic thesis tracking.
Statistics & Facts
- SurgoCap Partners has grown from $1.8 billion to $6 billion in assets under management since its founding. (00:14) This represents more than 3x growth, demonstrating the fund's ability to attract capital while generating strong returns.
- There are approximately 300 million surgeries conducted globally each year, and they are just beginning to be penetrated by robotic surgery technologies like those from Intuitive Surgical. (07:52) This statistic highlights the massive addressable market for AI-powered surgical innovation.
- AI-enhanced imaging technologies like MRIs and CT scans are now improving in accuracy and speed at a pace of almost 70% compared to what was available just a few years ago. (07:10) This dramatic improvement rate demonstrates the rapid advancement in medical technology applications.
