Episode 57: David Gross - Managing Partner of Bain Capital

Amir Fischer (0:00)

This week on Generating Alpha, I sat down with David Gross, managing partner of Bain Capital, one of the world's leading private investment firms, with approximately $215 billion in assets under management. David grew up between Ohio and upstate New York. At Wharton, he became fascinated with Japan, and on a mentor suggestion, landed in Tokyo in 1992 to join NEC, just as the bubble was bursting. After HBS and Bain & Company, he joined Bain Capital in 2000 and opened its Tokyo offices in 2006, when most Western investors had given up on Japan. He stayed 25 years, did 45 deals without a single bankruptcy and built Asia into one multi-asset platform. His defining deal was Kioxia. He beat KKR, Western Digital and Foxconn, survived seven months of Chinese anti-trust review during a trade war and held on as the memory market crashed in a deal set underwater for years. This summer, Bain fully exited with over $15 billion in returns from that deal.

In January, David became the first person to run Bain Capital alone since Mitt Romney. In our conversation, we talked about arriving in Japan as the party was ending, why he stayed when everyone else left, buying the company that gave him his first job, the Kioxia saga, lessons from Bain's founding generation, why performance matters more than AUM and his advice for a 17 year old today. If you enjoy this episode, please follow the podcast and rate it five stars on Spotify, subscribe on YouTube and share it to anyone who you think might find it valuable. I really appreciate you guys tuning in. Thank you.

Thanks David for coming on. I really appreciate it.

David Gross (1:34)

It's great to be here, Amir. Thanks for inviting me.

Amir Fischer (1:37)

Well, I want to start where I always do the beginning.

Tell me a little bit about your childhood, the environment you grew up in. If I'm correct, you grew up between Ohio and upstate New York. Tell me about all of that. What ways was it unique? Yeah, just some context.

David Gross (1:50)

Well, it's funny because I think about my upbringing as one of these fairly typical, call it late 70s, 80s upbringing. Spent a lot of time outdoors and went to public schools and had a lot of good friends and grew up in somewhat suburban rural environments.

I'm tied for the youngest of four because I'm a twin, and I have three sisters. In some ways, I think that probably also shaped me as being a bit of a minority and having to find my way. But no, I had a great family and great family network and was able to live in a lot of interesting small towns with really great people.

Amir Fischer (2:41)

Amazing.

I guess you grow up, you go to Wharton and you're there in the late 80s. And I think at that point, you get really, really interested by Japan. At that point, it was a big economic challenger to the US. And I guess a mentor suggested like go and try it out. Tell me probably about that story and I guess going to Japan, what were you hoping to find?

David Gross (3:03)

Yeah, it is easy to describe. So, Japan was, you remember the, or some remember this book called Japan is Number One, written by a Harvard sociologist around how Japan was economic, but also like a systemic challenge to the West. And so that was an interesting and a fascinating topic for me, just intellectually and academically.

Had some Japanese friends who, the way I'm saying, why don't you go live in Japan for a bit? I said, oh, that sounds like fun. And so I went there and did a homestay program in a very rural part of Japan and started learning Japanese and then went back and did some research there for a Japanese company Mitsubishi the next year. And then ultimately decided I wanted to spend more time there. And I was really focused on looking at things from the inside out, kind of try to do some really primary study of this question. And so I went and worked for a Japanese technology company, NEC Corporation.

They had this program where Japanese companies had grown very rapidly, but they had problems managing their overseas operations. And so the then leader of NEC had this idea, so I'm going to bring these very young non-Japanese folks to the headquarters, and we're going to train them. And they'll stay for about 15, 20 years. That was the Japanese time horizon. And then we'll send them out to run our businesses. And so I was part of that program. I think there were like six people from different countries that did that. I didn't stay for the full long-term part of that vision, but it was a visionary, interesting program, and that's kind of what got me to work.