They were early on Nvidia, Tesla and Amazon. Here’s what they’re backing now

"When you look back at our research when we first bought Amazon (NASDAQ: AMZN) in 2003, Tesla (NASDAQ: TSLA) in 2013 and Nvidia (NASDAQ: NVDA) in 2016, the thing we got most wrong was we underestimated how fabulous they could be. It was a lack of optimism on our part, so we are trying to correct for that."

"When we first bought Nvidia, we were really excited about their gaming chips, but with the best will in the world, did we actually see that they would become a US$4.5-5 trillion company? No."

Reframing the discussion around what is possible as opposed to what is likely gives you a better sense of the true growth opportunities. Campbell points to the example of Tesla, where Baillie Gifford saw huge potential at a time when the wider narrative saw the opposite. 

"The market was obsessed about when is this company going to go bust? It was one of the most-shorted companies on the planet, but the thesis for us was more actually about battery technology."

For Campbell, optimism was the guiding framework - understanding the risks but also the opportunity. 

"We are really lucky that we have access to some of the management teams of these companies and they give us a window into what is actually possible."

"I think it's incredibly important that we bring that level of optimism to what they're telling us and then decide for ourselves what the probability of those scenarios playing out might be."

Instead, investors find themselves too easily swayed for short-term noise and therefore missing the forest for the trees on genuine growth. 

"I'm often quite surprised with the obsession about what the Fed rate is going to be, says Campbell. "This is not ultimately what drives markets. What drives markets is the transformational businesses that are innovating and creating new strategies and new products."

"If you focus on that, then you're going to do far better than obsessing about what the Fed rate's going to be in the next quarter or the next year."

Anthropic and the growing opportunity in private markets 

As growth companies stay private longer, there's been a corresponding shift in where Baillie Gifford is looking for the best opportunities, says Campbell. 

"We see our role as providing clients with access to the world's greatest growth companies. What we're trying to do is trying to capture the steepest part of that growth curve."

"Whether we like it or not, more and more of that acceleration in growth is happening in private markets rather than public markets."

AI company Anthropic is the most notable recent example of a private company Baillie Gifford has invested in, and it's an opportunity that came about as the result of the firm's reputation for backing what Campbell calls "transformational growth companies". 

It means they can sit in the room with Dario Amodei, Anthropic CEO, and truly buy into the vision those types of companies are presenting. 

"This is a company that made zero revenue in 2023, and its run rate is now US$14 billion," says Campbell. "The acceleration we're seeing from here is quite incredible."

The 30-minute rule

One strategy employed by the Baillie Gifford Long Term Global Growth Fund is what they call the "30-minute rule", in which investment meetings are again framed around the fund's favourite mantra - optimism. 

"It's very easy to go into discussing a company and to come up with a myriad of things that might go wrong. I think it's incredibly important that you give yourself the opportunity to think about what might go really, really right."

"And to be clear, it's quite difficult for a Scottish firm. We're genetically miserable."

He cites Anthropic as an example of how leaning into this type of blue sky thinking gives Baillie Gifford a true edge. 

"What if they did go into every single commercial vertical that we're already seeing? They're going into finance, they're going into healthcare, they're going into cybersecurity." 

"That revenue opportunity has then gone from being billions of dollars to trillions of dollars. Let's think about what that might actually look like."

"Just thinking in that open-minded, optimistic way differentiates yourself from most market participants."