Episode 41: Antonio Gracias - Founder and CEO of Valor Equity Partners

**Amir Fischer** (0:01)
This week on Generating Alpha, I sat down with Antonio Gracias, founder of Valor Equity Partners, one of the most distinctive and influential investment firms and technology. Valor has backed many of the defining companies of the past two decades, built an operating model trusted by founders tackling the world's hardest problems. Antonio is one of the few true first principles thinkers in investing. A lifelong student of physics in the human brain, he's developed a systems-driven approach to decision-making, becoming an early investor and board member at Tesla, SpaceX, SolarCity, and The Boring Company, while also guiding companies like Warby Parker, GoPuff, and Guild Education through rapid scale. In our conversation, he breaks down the evolution of Valor, the physics-based frameworks that guide his investing, how he evaluates founders over long arcs, and the biggest lessons from two decades working closely with Elon Musk. If you enjoyed this episode, please follow the podcast and rate it five stars on Spotify. Subscribe to the YouTube and share it to anyone who might find it valuable. I really enjoyed recording this episode and I hope you guys enjoy listening. Thank you. Thank you, Antonio, for making the time. I really appreciate it.

**Antonio Gracias** (1:11)
It's nice to see you.

**Amir Fischer** (1:12)
I'd love to start where I always start, the beginning. Tell me a little about your childhood and the environment you grew up in, and in what ways do you think it was unique from your average American childhood?

**Antonio Gracias** (1:23)
First, I'm the child of immigrants. I was the only one in my family born here. My parents are from Coindia, I'm from Spain, Madrid, Spain. I was born in Detroit, grew up in Greta, I was in Michigan.
I was the only Spanish-speaking kid in my high school, which was a little unique, I think, from most Americans at that time, this is in the 70s and 80s. That made it unique. In other ways, it was a very much a very relaxed childhood. We had enough resources that we could do almost anything, but not so much we could do nothing. We really had to work and my parents were super focused on values and on working really hard. That we were given a lot of gifts, a lot of intellectual gifts, and that we had a responsibility to do some of those gifts to get back to society. I have two brothers who are doctors, two sisters who are both dentists, and I'm a lone black sheep of family that end up in the best business.

**Amir Fischer** (2:20)
You go off to Georgetown, if I'm correct, to the school of foreign service, the renowned school of foreign service. During your time there, you do something which I think of as relatively unique, which is studying Japanese pretty intensely.
You credit learning Japanese on top of both English and Spanish of shaping your thinking. So I'm interested if you could kind of like explain how you think learning Japanese shaped your thinking, and what's different about kind of if a person were to learn English as their first language and then Japanese or something else as their first language. And I'd love for you to use examples specifically Japanese.

**Antonio Gracias** (2:50)
Yeah. So look, what I know now, what I didn't know then, but how I think about now is the language is how we program the brain, right? So memory starts to form on the same time we form language. And so it is the language you learn, the logic pattern of the language you learn, is actually how you construct the logic pattern of your brain. And Japanese has a different logic pattern than English. So English is a language that has a very linear logic pattern. And Japanese language, it has a topic of particle markers that mark things like the object in this section of sense, etc. And you can move them around a little bit, right? And so you get a bit of a nonlinear logic pattern. It's still very solid logic, so you could think that way, but it is different. And so when you have these communication problems between people speaking Japanese and English, it's often because the translation doesn't translate meaning, because the language itself in translation doesn't convey the meaning. And the best example of this is the Japanese hi, right? So hi means yes in Japanese. And you've probably heard the joke, right? You could hear someone Japanese say hi hi, but it really means like I hear you, not like yes. But if you're hearing it in English, you're hearing the word yes, but it has a different meaning. And then if you scale it up in the overall language, it does have a different logic structure. And so you get a different logic pattern than you might get in English. And it made me think, if you peel back someone's skin, and their skulls, and they were just a brain in a vat sitting there, we're all the same. Like we're all literally the same. It doesn't matter where on earth a human is born, we're all the same. The brain is about 3.5 pounds, it uses 20 watts of power. What matters is how it's programmed. And the language that you program it in makes a big difference now, thanks.