Gaurav Kapadia on New York City, Investing, and Contemporary Art
Gaurav Kapadia — founder of the low-profile investment firm XN, art collector, and museum trustee — talks with Tyler Cowen about the governance and geography of New York City, concentrated long-horizon investing, why he collects living American artists his own age, and how a single skill (judging quality) travels across cities, hires, artworks, and companies.
Key ideas
- One sensibility across four domains. Kapadia treats judging quality as a single transferable skill applied to cities, hires, artworks, and investments; the through-line is developing your own taste rather than borrowing another’s, and concentrating on the very few things that clear a high bar.
- Concentration over diversification. XN holds only 10–15 public positions and even fewer private ones, adding just one to three ideas a year, because genuinely good ideas are rare — and it excludes whole sectors (healthcare above all) it cannot be best at.
- Asymmetry is the core test. A good investment has bounded downside and large, forecastable upside; his Figma purchase after the blocked Adobe deal — roughly half the intended price, net cash, a founder-mode leader — is the archetype.
- Density and optimism for New York. The single most valuable civic act almost everywhere is building more housing; the quality he screens mayoral candidates for is optimism, ‘extraordinarily scarce’ against pervasive doomerism.
- Art as intellectual exercise, not asset class. Kapadia rejects art as an asset class outright; collecting is a right-brain discipline that sharpens the taste and judgment investing also demands.
Content
New York City: density, borders, and Robert Moses
Kapadia grew up in Flushing, Queens, where his immigrant parents ‘house-hacked’ a small two-family home into a four-family one — living in the basement, renting the rest, and eventually housing some fifteen people in a building zoned for two. He read the outer-borough boom as the logical outgrowth of a thriving New York plus development clustering around existing transit like the 7 train, and names building more housing as the most valuable intervention almost everywhere in the city. On borders he finds the Queens–Long Island line unnatural but the five-borough whole more coherent than sprawling cities; on scale he argues, unexpectedly, that the best outcome for America is a proportionally smaller New York achieved by strengthening the middle of the country rather than by shrinking the city. Pressed on Robert Moses, he calls him both hero and villain but would push people to like him less: a master class in wielding power whose absence of due process now shows up, decades later, as an inability to build.
Who runs New York, and why talent avoids the mayoralty
Asked which mayor is most underrated, Kapadia answers Mike Bloomberg ‘by a country mile’ — low popular ratings against very high long-term impact that people wrongly assume would have arrived anyway. He diagnoses the shortage of strong mayoral candidates as partly psychological (able people assume they cannot win so large a city, though recent results show anyone can) and partly structural: an off-year election with a low-turnout third-week-of-June primary lets a candidate win the city with tens of thousands of votes. His fixes are an on-cycle even-year election, a normalised primary date, and possibly an open primary. The non-obvious quality he screens for is optimism — ‘extraordinarily scarce’ against pervasive doomerism, and the thing that inspires. He also defends New York as no single group’s ‘company town’, which makes its tax base more stable than cities dependent on one or two payers.
Building an investing career: mentors, BCG, and a deliberate detour
Kapadia dates his investor’s instinct to childhood, when he was de facto landlord of the family’s rental units — collecting rent and negotiating late payments at ten or eleven, which taught ‘a great sense of humanity’. On mentors he inverts the usual advice: they were less chosen than attracted, drawn by genuine curiosity and visible passion — ‘I was very lucky that the mentors picked me.’ The signature decision of his early career was choosing Boston Consulting Group over Goldman and Blackstone at one-third the pay, a choice he says almost no Wharton student would make, precisely to learn how corporations and leadership actually work — because investors carry a handicap, assuming ‘what’s on a spreadsheet is how organizations work’. A Goldman contact warned him it was ‘the worst mistake of your career’; the consulting lens, he argues, accelerated his competitive advantage instead. He met Rishi Sunak around 2005–06, both analysts covering the same companies in the first railroad renaissance.
XN’s philosophy: concentration, sector-transparency, and asymmetry
XN does two things: concentrated public-markets investing that ‘rhymes with what Buffett has done’, and opportunistic best-in-class private investing at about a third of capital. The public book rarely exceeds 10–15 positions because good ideas are scarce, and the firm excludes whole sectors — healthcare above all, for its regulatory-and-scientific-research demands — on the principle that the goal in everything is to be the best. A sector is ‘transparent’ when business analysis, logic, and valuation combine into differentiated, high-fidelity conclusions; the best investments are ‘obvious in retrospect’ but hard at the time, ones where you can ‘write the narrative in advance’ (more power for data centres; a chronic housing shortfall). His Figma investment illustrates the asymmetry test: after antitrust blocked the Adobe acquisition, he could buy a best-in-class asset with a founder-mode leader for roughly half the intended price, backed by a net-cash balance sheet and high confidence in growth and leadership — bounded downside, large forecastable upside. Investing, he stresses, produces more mistakes than wins; he loses sleep only over passive misses (being close but failing to engage), never over deals that soared for reasons he could not have predicted.
Founder mode, hiring, and culture
Founder energy, Kapadia argues, applies to investment firms as much as to startups: the best (Sequoia, Andreessen Horowitz, Blackstone) are intensely entrepreneurial, while low barriers to entry leave many firms mediocre and complacent. Complacency starts at the top — ‘the top gets lazy, so that culture seeps all the way through’ — so he keeps the rope tight, lives a mantra of ‘rigor and kindness’, and surrounds himself with people who will tell him the truth if he slows down. On hiring he borrows chef David Chang‘s test: a candidate must be ‘good enough’ on credentials and then have ‘something special’, an extra gear of curiosity or ingenuity — and XN applies this to every role, refusing to lower the bar for its non-investment staff. He defends the open-plan office as newly essential in a world where software, power, and semiconductors must be analysed together. His ‘retirement’ was really a retreat from managing outside capital: running XN as a family office on the same philosophy restored the intellectual purity of investing he had lost late at his previous firm, Soroban.
AI, and the finance cultures of London and the UAE
Kapadia credits Cowen as his ‘coach’ in embracing the maximal case for AI. He expects two proximate effects: faster, deeper initial company analysis that frees partners to apply judgment and taste to the facts, and large gains in the legal, compliance, operations, and tax machinery of running a regulated firm. Custom tooling, he predicts, will within a year transform an analyst’s desktop that Julian Robertson would still recognise as ‘Bloomberg, Excel’. He is sceptical of headline AI spend — reacting to J.P. Morgan’s reported ‘$2 billion to get $2 billion in savings’ with ‘nothing’, drawing a line between the ‘headline-generating business’ and the ‘results-generating business’. On geography, he finds London finance more buttoned-up and banker-like, New York more ‘swashbuckling’, and UAE finance evolving fast on the back of a no-income-tax, no-capital-gains regime pulling in talent and capital.
Museums, collecting, and the shape of the canon
Kapadia frames museums as ‘a public good that’s largely financed by private capital’, almost all running at operating deficits, and names the cardinal sin as letting fundraising override mission — letting donors, himself included, over-influence programming. He calls it a tragedy that roughly 1 percent of a museum’s archive is ever displayed, praising the V&A’s public-storage site, and sees AI enabling personalised, any-language museum tours. On his own collecting he rejects the finance-guy-into-art cliché: he loved art before investing, and at 29 set a deliberate rule to collect American artists of his own generation (his age plus or minus twenty). He explains why particular works by Kara Walker, Rashid Johnson, and Salman Toor hold him — meticulous craft, intellectual complexity, technical virtuosity from memory — and insists collecting makes him a better investor ‘100 percent’, not as an asset class but as exercise in developing his own taste. His future-canon guesses (offered as guesses) include Dana Schutz, Rudolf Stingel, and Christopher Wool. Buying and evaluating art, like investing, comes down to narrowing a funnel by criteria and then asking ‘do I get it, do I love it, can I live with it’.
Totei and a positive inflection point
Kapadia’s new venture, Totei, is a digital-and-physical magazine celebrating craft and craftsmanship broadly conceived — from quilt-making to stand-up comedy to design — on the premise that almost everyone respects dedication even where they do not respect contemporary art, and that few resources explore ‘the art of getting really good at something’. Against widespread pessimism (COVID aftereffects, economic division, global turbulence) he reads the moment as a ‘positive inflection point’, with AI’s proximate effects — more knowledge, fewer joyless tasks — pointing toward optimism. What he most wants to learn next is the practical ‘lost art of making things work’ in local, state, and federal government, so a concerned citizen can push the ball forward — a deliberate callback to the Robert Moses conversation that opened the hour.
See also
- Gaurav Kapadia — speaker
- Tyler Cowen — host
- Value Investing — the concentrated, conviction-led approach XN’s public book rhymes with