https://www.bloomberg.com/news/articles/2023-08-1…
Any thoughts on BXG's future?
Also whether the recent turmoil presents a good opportunity at a mid-senior level to join and be a part of the turnaround, or if being a part of a struggling vertical within BX would be more of a setback reputationally?
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BX has been uber successful in buying outside firms (SP, GSO) and more or less did this with BXG except they didn't buy a track record, they bought Korngold. Guy is super smart but appears oblivious to valuation and BX has gotten smacked because of it. Oatly was such a horrible investment just don't get how that one got through an investment committee. Obviously doesn't hurt GE has had issues outside of BX but I think a lot of their internal issues won't get flushed out.
You think that'd involve replacing Korngold?
From what I understand, he's listed as key person in the LP fund docs
Would be pretty shocking if they did. As you mention he's without a doubt a key person. I'm fairly removed but I do believe the junior team has had a fair bit of turnover since inception which I'm sure doesn't help. Jon was rumored to be the most expensive external hire in BX history in regards to what they had to pay him up front to leave GA so the leash will be very long. SS is smart enough where he probably talked to Jon and said something along the lines of "I'm going to say this publicly and is all for PR given sluggish start to the strategy." SS isn't going to bash a strategy publicly unless there's a PR component IMO. That being said I'm pretty sure Fund I has sucked wind.
Would you be able to expand on Oatly? Just curious why was it a bad investment
Massively overpaid for a company with a massively overstated TAM (IMO) in what is a highly competitive/low margin industry. This isn't an EV company changing the world, it's a substitute to cow milk that is being proven to be terrible for you since it's mostly synthetic crap vs. nut/animal milks. Public stock price reflects it's a poor company as stock is down 95% since going public.
Super smart and oblivious to valuation eh? I would take average intelligence but livious to valuation I guess
When you have to tell your LPs we made great investments but at a bad time that usually means you made bad investments… even GeoComply, they can’t sell 99.99% of the revs are from gambling companies
Agreed, there's a big difference between making a good investment and buying a good business.
Well known fact that Korngold is a golden boy who’s primary gift is making people believe he is a golden boy. So not surprising he’s been relegated and repurposed for fundraising/investor retaliations. He’s a very expensive piece of IR equipment at this point. SS/JG made the mistake of parading him around so publicly that’s it’s now hard to walk back. What they should have done was acquire a quality growth equity platform or incubate a GE JV with the likes of Sequoia.
The BXG strategy fell victim to being somewhat ill conceived and ill timed. Latter is just bad luck. Former is bad vision and execution.
If you look at the senior folks they’ve hired it’s all low risk pedigree hires (HBS/GSB + top PE funds), but they’re MD level folks who have made the rounds through 3-4 different shops before landing at BXG — typically not something you do if things are going well.
Seemingly nice enough guys, with impeccable pedigree, who show well and talk a good game with investment judgement/track record TBD. Not that dissimilar to Korngold.
Best decision BX could make is to wind it down and start over from scratch. That’s hard to do for someone like SS.
Most expensive guy who still needs BX support to raise real AUM in a strategy where BX brand doesn’t actually mean much is not an undervalued talent market niche, it appears. Not first time they made that mistake and pivoted fast and hard.
what prior mistakes are you referring to?
any updates on thoughts?
Yeah still shit
They just bought a coffee shop franchise. Growth equity
True tech innovation.
They have negative IRR per their filings. The only BU at BX to do so
and those negative irrs are likely optimistic
curious if any updates. heard the team is going back on market for associates??
Saw Jon Korngold is leaving BX. What happened to him?
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