Art by Haejin Park
Feb. 1, 2022 9:00 AM PST

The invention of the growth-equity business began with a phone call. A young analyst named Scott Shleifer had recently joined Tiger Global, a small New York hedge fund. In the summer of 2002, a friend got in touch.

“My work is going very poorly,” Shleifer told him. His mission was to scope out hedge-fund investments in semiconductors and hardware. In the wake of the Nasdaq technology bust, he could find nothing exciting.

His friend was in worse shape. His tech-focused fund had collapsed. But he agreed to help Shleifer by sending him a spreadsheet. Among other prospects, this highlighted three Chinese web portals: Sina, Sohu, and NetEase.

Shleifer did his homework. The three portals were losing money, but revenues were growing faster than costs. A simple projection told him that all three were buys.

After staying up all night to make calls to China, Shliefer walked into the office of his boss, Tiger Global founder Chase Coleman.

“Okay, Sina, Sohu, and NetEase,” he announced.

“Let’s dance,” he added.

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