Dec 5, 2022 · 56m · capital-allocators
Sachin Khajuria – Two and Twenty, An Insider's Take on Private Equity (Capital Allocators, EP.285)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Former Apollo partner Sachin Khajuria joins Ted Seides to demystify the private equity industry, discussing the operational strengths, scale advantages, and governance practices of top firms while advocating for broader profit sharing, investor education, and retail democratization.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 20.1% of the talking time here. How this is scored →
Ted as informed peer 3.9 Guest teaching 2.1 Guest disagreement 0.0 Ted pushing back 0.1
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 28:27 Pushing back on the concept of proprietary deals
Sachin firmly rejects the industry trope of purely proprietary mega-cap deals, explaining that fiduciary duties require sellers to test the market.
Hardest push from Ted ▶ 10:56 Challenging the standard alignment premiseTed presses Sachin to explain what truly separates top firms when almost all private equity funds share identical 2-and-20 fee structures.
Biggest teaching moment ▶ 16:20 Deconstructing multi-strategy informational leverageSachin educates the audience on how mega-cap firms compound informational advantages across credit, equity, and infrastructure lenses simultaneously.
Ted holds their own ▶ 19:12 Framing mid-market versus mega-cap tradeoffsTed expertly frames the tension between large-scale institutional information advantages and mid-market alpha generation.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Roll Sponsorships: AlphaSense, DealCloud, and Admired Leadership | 0 | 0 | 0 | 0 | Solo host pre-roll segment featuring sponsor reads for AlphaSense, DealCloud, and Admired Leadership. No dialogue or interaction takes place. | |
| Introduction to Sachin Khajuria and Two and Twenty | 4 | 2 | 0 | 0 | Ted introduces Sachin and frames the interview around his background and new book. Sachin explains his motivation to demystify private equity for everyday investors in a polite, conversational manner. | |
| Core Strengths: Alignment, The Library, and Temperament | 4 | 3 | 0 | 0 | Ted prompts Sachin on the positive aspects of private equity. Sachin lays out three key strengths: true principal alignment, the firm library of data, and long-term temperament. | |
| Culture, Execution of Alignment, and Deal Vulnerabilities | 5 | 2 | 0 | 1 | Ted probes into what differentiates firms that get alignment right versus those that fail despite having the same 2-and-20 economic structure. Sachin attributes the difference to day-to-day culture and shares an anonymized example of an investment committee failure. | |
| The Scale Advantage and Multi-Strategy Information Networks | 4 | 3 | 0 | 0 | Ted asks about the link between firm scale and information resources. Sachin details how multi-strategy expansion across credit, buyout, and infrastructure creates unique compounded information advantages. | |
| Mid-Market Dynamics versus Mega-Cap Private Equity | 5 | 2 | 0 | 0 | Ted contrasts mega-cap scale advantages with mid-market investing prospects. Sachin explains that while smaller funds offer attractive returns, mid-market success depends heavily on talent rather than copycat strategies. | |
| Industry Shortcomings, Profit Sharing, and Economic Stewardship | 4 | 2 | 0 | 0 | Ted inquires about areas where private equity needs improvement. Sachin highlights the need for better communication, wider profit sharing across portfolio company employees, and greater societal stewardship. | |
| Demystifying Private Equity for Everyday Investors | 4 | 3 | 0 | 0 | Ted asks what is currently missing from the private equity landscape. Sachin emphasizes the lack of basic financial literacy regarding private markets among retail pension holders as check sizes shrink. | |
| Mid-Roll Sponsorship: Ridgeline AI Platform | 4 | 3 | 0 | 0 | Following a brief mid-roll ad read, Ted explores deal sourcing and exhaustive research. Sachin dispels the myth of purely proprietary large deals, explaining that real edge stems from long-term sector preparation. | |
| Operating Executives, Platform Evolution, and Broad Market Reach | 4 | 2 | 0 | 0 | Ted inquires about operating executive integration and platform evolution into growth equity. Sachin details how firms integrate external talent and organically expand into adjacent market whitespace. | |
| GP versus LP Perspectives and the Democratization of Alternatives | 5 | 3 | 0 | 0 | Ted asks about misconceptions LPs hold about GPs and the democratization of private equity. Sachin argues that retail access will eventually normalize private equity as standard active asset management alongside public equities. | |
| Macroeconomic Shifts, Hybrid Capital, and Family Office Strategy | 5 | 2 | 0 | 0 | Ted asks how macroeconomic shifts like rising rates impact deployment and fund selection. Sachin explains his focus on hybrid capital, distressed opportunities, and selectively executing deals directly at his family office. | |
| Book Reception, Media Potential, and Memorable Insights | 3 | 1 | 0 | 0 | Ted asks about the reception to Two and Twenty, potential screen adaptations, and closing personal reflection questions in a relaxed, friendly wrap-up. |
Statements from this episode (17)
Khajuria: Top private equity firms excel at defending downside risk
“And the best firms, they're almost better on defense than they are on offense.”
Khajuria: Private equity knowledge moats cannot be replicated by hiring talent
“They have an amazing network of data, executives, knowledge, know-how, and this gives them a fantastic edge even before you look at things like size and scale. They have great information, and they're able to capitalize on it. That's not something you can just…”
Khajuria: Private equity cannot be automated or replicated by supercomputers
“There's nothing automated about it. There's nothing that a supercomputer can replicate. There's no ETF version of private equity or private markets more generally. It's a people business, and therefore you have to understand The traits and DNA of those people,…”
Khajuria: Single-strategy private equity firms limit their potential scale
“If you do one strategy, if you're a one trick pony, even if you're amazing at it, you're going to limit yourself in scale until you start to do other things.”
Khajuria: Multi-strategy private equity models create huge information advantages
“And so this, I think, is a huge information advantage because not only does it help you scout for new opportunities, it also helps you, I think, defend your existing investments better if you know what's coming down the road.”
Khajuria: Historically best returns come from smaller, less-mined market segments
“Historically, some of the best returns have been found in smaller pockets of the market that have been less mined than the larger pockets.”
Khajuria's family office targets smaller private equity funds over mega-funds
“In fact, some of the things I'm looking at to invest in for my family office right now are actually a lot smaller. Then the mega funds, simply because the numbers are out of this world. I mean, they're producing incredible numbers.”
Khajuria: Copycat PE funds are more prevalent in the mid-market
“I will say, however, that in the mid market, I think you ought to be more careful, because there are a lot of copycat kind of funds, which do exist in the mid market that you do find at the higher end, but I think is perhaps more prevalent in the mid market.”
Khajuria: Private markets are on track to hit $20T within a decade
“And then equally, if you look at the size and scale of this industry, 12 odd trillion on its way to 20 trillion across private markets in the next decade, this is an important part of the economy, period.”
Khajuria: Blackstone and Carlyle are the big tech equivalents of finance
“You need to, as somebody with a retirement account, know about Blackstone, Cardile, etc. You should, because these are kind of the equivalent of those big tech names that I talked about. It's big finance, or it's what I call, you know, mainstream active asset …”
Khajuria: Private equity minimum investments are dropping to $10,000
“There are 50,000 dollar tickets. There are 20,000 dollar tickets. There are 10,000 dollar tickets coming out. And it's not fully available to retail, but it's coming.”
Khajuria: Truly proprietary private equity deals over $1B do not exist
“As soon as you start to do deals which are like a billion dollars per deal or more, right? It's hard to say that no one else will ever look at that deal Other than you, between the time the idea comes up and you closing the deal. No one's ever going to look at…”
Khajuria: Early PE movers in insurance and banking gained lasting edge
“The firms that looked at insurance, banks, ahead of everybody else have found that most folks at the similar scale have copied them since. And that tells you something. They had an edge. They had an advantage. It was proprietary. They had an idea. At the time …”
Khajuria: Hybrid capital offers top risk-adjusted returns at 15% IRR
“So right now, one of the best risk returns is in what I call hybrid capital, or some firms call it tactical opportunities, or things that have a lower possibility of default, right? The chance of losing money is lower, and perhaps you give up a bit of upside. …”
Khajuria: Many buyouts are being completed with little to no leverage
“And a lot of buyouts these days, as we found in the financial crisis, are being done with less leverage or in some cases no leverage.”