Podcast appearances and mentions of will thorndike

Today's episode is the first in a series of three on Asurion, the world's leading tech care company with more than 300 million customers. In an interview with Co-Founder and Chairman Kevin Taweel, we explore Asurion's scrappy origins in roadside assistance, acquisitive entry into handset insurance, contentious capital allocation decisions, and much more.     50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources. Learn more and dive into our research at 50xpodcast.com   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. —- This episode is brought to you by⁠ Ramp⁠. Ramp's mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to⁠ Ramp.com/invest⁠ to sign up for free and get a $250 welcome bonus. — This episode is brought to you by ⁠System Six⁠, a searcher-owned outsourced bookkeeping and accounting services firm that has been a great partner to us at Compounding Labs.  With the right modern tools and a strong team, System Six will eliminate headaches for you and give you time back so you can focus on growing your business. Whether you're a CEO or CFO stuck in the weeds, or an investor trying to support your CEOs and portfolio companies, reach out to hello@systemsix.com and mention the podcast for your first month of ongoing bookkeeping free. —- 50X is a property of Colossus, LLC. For more episodes of 50X, visit joincolossus.com/episodes. Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Follow us on Twitter: @50Xpodcast | @joincolossus Show Notes (00:00:00) Welcome to 50X (00:01:19) Sponsorship: Ramp (00:02:36) Sponsorship: System Six (00:03:44) Introduction to Kevin and Asurion (00:05:15) Kevin's Background Pre-Asurion (00:12:51) Origin of Kevin's Search Fund (00:19:11) Acquiring Road Rescue (00:27:23) Operating Road Rescue (00:38:41) Early Success: Hold or Sell — a Critical Early Decision? (00:44:11) Entry into Handset Insurance: Acquiring the Merrimac Group (00:51:51) Vertical Integration (00:57:51) Capital Allocation in the Search Fund Period (01:01:51) TA Investment

50X is back for Season 2! This season centers on Asurion, the world's leading tech care company with over 300 million customers. Hosted by Will Thorndike, author of The Outsiders and a co-founder at Compounding Labs, 50X aims to dissect the anatomy of investments that have appreciated at least 50-fold. We track the often circuitous route to exceptional long-term returns, exploring the foundations of value creation and how that rarest of investment commodities—conviction—is created, maintained, threatened, and sometimes lost. Episode One with Co-Founder and Chairman of Asurion, Kevin Taweel drops next Wednesday.

Rob does a mountainside chat with Will Thorndike, private equity investor and author of "The Outsiders", at RV Capital's Annual Gathering in Engelberg on 12 January 2025.

Will Thorndike is the co-founder of Housatonic Partners and host of the 50X podcast. In this episode, we discuss Will's masterpiece “The Outsiders” and the lessons he brings from writing it. The book covers eight CEOs who excelled at capital allocation and describes the strategies underlying their success. "The Outsiders" was published ten years ago, and recommended by Warren Buffett in his 2012 annual shareholder letter.We welcome all suggestions of interesting authors, books, investors, and voracious readers. For more info about the podcast, go to the episode page and follow us on Twitter. This episode was recorded on August 17, 2022.—————————————Episode Chapters (00:00) Intro by Eddie & Niklas(03:16) How Will's passion for investing started(08:13) Common traits of the outsiders(19:49) Holding on to high-quality companies(26:06) The importance of corporate culture(34:49) When M&A becomes value-destroying(38:53) How to think about share issues(41:41) How to find outsider CEOs(50:19) The outsiders of tomorrow(56:03) Thoughts on valuation(1:02:39) Book recommendations—————————————Books Mentioned Money Masters of Our Time - John Train Sam Walton: Made in America - Sam WaltonShoe Dog - Phil Knight Fortune's Formula - William Poundstone Buffett: The Making of an American Capitalist - Roger Lowenstein The Snowball - Alice SchroederYou Can Be a Stock Market Genius - Joel GreenblattThe Warren Buffett Portfolio - Robert HagstromElusive - Frank Close —————————————Companies MentionedCapital Cities BroadcastingTeledyneGeneral Dynamics TCI The Washington PostRalston Purina General CinemaBerkshire HathawayDanaherProsus Arch Reinsurance RCI Hospitality Constellation Software Brookfield Asset ManagementLifco—————————————More on Will Thorndike 50X Podcast - Will's podcast where he discusses and dissects extraordinary investments—————————————About the PodcastIntro episode: https://www.redeye.se/podcast/investing-by-the-books/817383/0-intro-to-investing-by-the-books—————————————What is Investing by the Books?Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis. Visit the website: http://www.investingbythebooks.com/Follow on Twitter: https://twitter.com/Investbythebook—————————————What is Redeye?Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality. Visit the website: https://www.redeye.se/Follow on Twitter: https://twitter.com/Redeye_—————————————DisclaimerNotice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se

This is our final episode in a series of four on TransDigm. In this discussion, we contrast TransDigm with traditional private equity portfolio companies, examine the company's approach to capital allocation, and dissect Berkshire's and Stockbridge's position management over time. Our guest is Rob Small, a Managing Director at Berkshire Partners and Stockbridge, as well as a Director at TransDigm. Under Rob's direction, Stockbridge has maintained a concentrated position in TransDigm and demonstrated remarkable conviction to add (and occasionally trim) at opportune times.    For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.    -----   50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.   Learn more and dive into our research at 50xpodcast.com   Follow us on Twitter: @50Xpodcast and @joincolossus   Show Notes [00:00:00] – 50X Introduction [00:02:04] – Sponsorship: Tegus [00:07:18] – [First Question] - Management Team [00:10:05] – Culture, Decentralization, & Compensation [00:19:04] – Evaluating Nick Howley as CEO [00:21:57] – Rob's Service on the Board of Directors [00:27:47] – Approach to Capital Allocation [00:31:29] – Returning Capital to Shareholders [00:33:53] – Operating under Private vs. Public Ownership [00:36:41] – Sale Decisions for Private vs. Public Equity [00:40:41] – Stockbridge's Major Buy/Sell Decisions [00:48:46] – TransDigm's Influence on Rob's Investment Philosophy [00:53:39] – Examining Stockbridge's Approach to Selling [00:58:14] – TransDigm's Future

My guest today is Will Thorndike. I first spoke to Will in 2017 about his excellent book The Outsiders and his career in private equity. I titled that conversation: How Skilled Capital Allocators Compound Capital. In many ways this conversation continues where that one left off. Through the lens of his new project, a podcast called 50X, we explore the power of multi-decade holding periods and the shared characteristics of businesses that are able to compound returns at high rates for abnormally long periods of time. Please enjoy this discussion with my friend, Will Thorndike, and if you haven't subscribed to 50X, I highly recommend doing so.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. Tegus streamlines the investment research process so you can get up to speed and find answers to critical questions on companies faster and more efficiently. The Tegus platform surfaces the hard-to-get qualitative insights, gives instant access to critical public financial data through BamSEC, and helps you set up customized expert calls. It's all done on a single, modern SaaS platform that offers 360-degree insight into any public or private company. As a listener, you can take Tegus for a free test drive by visiting tegus.co/patrick. And until 2023 every Tegus license comes with complimentary access to BamSec by Tegus.   -----   Today's episode is brought to you by Brex. Brex is the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest-growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best.   -----   Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.  Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus   Show Notes [00:02:45] - [First question] - How working on The Outsiders project shaped his thinking [00:06:29] - His interest in long-term holding periods and dealing with multi-decade time horizons [00:09:42] - Shared characteristics among compounding machines [00:11:23] - Defining capital efficiency and the return on tangible capital metric  [00:13:02] - An example of an attractive business that requires a lot maintenance CapEx [00:14:22] - Thoughts on the measurement of intangibles and whether or not he'd avoid great businesses that are intangible heavy  [00:15:25] - Tangible ways capital efficiency rolls into compounding capacity  [00:17:45] - Being patient early on and things that reveal themselves after doing thorough year long research in a company like TransDigm [00:20:32] - Lessons learned about good game selection for companies  [00:22:47] - Common features of customers that tend to be served by the businesses he invests in  [00:23:43] - Evaluating culture and its ability to propagate forward in the public equity markets  [00:25:09] - An example of a decentralized structure and why it works so well [00:27:53] - Successful decentralized companies regularly assemble general managers and compare their results and share ideas [00:28:46] - Thoughts about software as a business model and lessons learned about this industry across his career [00:30:00] - What the best serial acquirers do for long-term holders [00:31:46] - Advantages of using debt for financing and acquisitions   [00:33:39] - How different the future might be for young CEOs with capital allocator mindsets [00:35:40] - Other forms of recurring revenue he's seen and things that are one the line between recurring and non-recurring revenue [00:37:42] - The biggest changes for him moving from outside client capital to just managing his own [00:39:09] - 3 companies that Housatonic Partners has owned for more than 25 years [00:40:29] - What made Karen Moriarty so good for so long  [00:42:36] - The crossover between public and private investing and the virtues of each sector [00:45:35] - How he thinks about the function of Compounding Labs and what he wants it to become  [00:47:10] - What is at the top of his wish list of the companies he wants to explore  [00:49:15] - Which companies he'd still be fascinated to learn about that don't fit the criteria he's laid out today  [00:50:25] - The development of investor conviction over time and what he's learned about it [00:52:19] - Lessons learned about producing great media [00:53:43] - What he can teach us about deep research on companies with analysts [00:55:10] - Adjusting his thinking and investing in a high variance world

This episode is a first for Acquired: we're joined by a sitting US Congressman (from Ben's home state of Ohio!), Republican House Representative Anthony Gonzalez. Anthony serves on the House Financial Services Committee and is deeply involved in crypto and Web3 regulation, as well as on the Climate and Science, Space & Technology Committee where he oversees NASA among many other agencies. His also has an absolutely incredible story — his family immigrated from Cuba to Ohio, he played in the NFL, he was COO of an Investment Group of Santa Barbara backed startup, and he was one of a small number of Republican congresspeople who voted to impeach former President Donald Trump after the events January 6th. If you want more Acquired, you can follow our public LP Show feed here in the podcast player of your choice (including Spotify!). Links: Schoolhouse Rock “I'm Just a Bill”  Nick Howley and TransDigm on Will Thorndike's new podcast 50x Sponsors: Thanks to Vanta for being our presenting sponsor for this special episode. Vanta is the leader in automated security compliance – making SOC 2, HIPAA, GDPR, and more a breeze for startups and organizations of all sizes. You might say they're like the “AWS of security and compliance”! Everyone in the Acquired community can get 10% off using this link. Thank you as well to Brex and to Tiny.  ‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

This is our third episode in a series of four on TransDigm. In this discussion, we study TransDigm's evolution while under public ownership. Since 2006, the company has outperformed the S&P by 15-fold and its peer group by 9-fold. We unpack its approach to special dividends and leverage, examine meaningful acquisitions alongside disruptive crises, reflect on the prior three decades, and consider TransDigm's future beyond $50 billion of Enterprise Value. Our guest is Nick Howley, the Founder and Executive Chairman of TransDigm.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.    -----   50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.   Learn more and dive into our research at 50xpodcast.com   Follow us on Twitter: @50Xpodcast and @joincolossus   Show Notes [00:00:00] – 50X Introduction [00:01:56] – Sponsorship: Tegus [00:05:58] – CEO Time Allocation Post-IPO [00:09:08] – Attracting Long-Term Shareholders [00:10:00] – Evolution of Board Post-IPO [00:11:06] – Approach to Leverage and Protecting Downside [00:15:16] – Navigating the Great Financial Crisis [00:18:43] – Approach to Special Dividends [00:22:04] – Stock Repurchases as Alternative [00:23:00] – Kirkhill Acquisition [00:27:00] – Esterline Acquisition for $4 Billion [00:33:17] – Investing in Product, Quality, and Innovation [00:34:40] – Remaining M&A Runway [00:36:32] – Short Seller Assault in 2017 [00:42:26] – Navigating COVID-19 [00:46:59] – Approach to Managing through Crises [00:47:50] – Nick's Transition from CEO to Chairman [00:56:30] – Managing Personal Liquidity [00:59:23] – The Howley Foundation [01:02:57] – Snapshot of TransDigm Today [01:05:11] – Lightening Round [01:10:18] – TransDigm's Influence on Nick's Life and Investment Philosophy

This is our second episode in a series of four on TransDigm, an aerospace components manufacturer that has returned over 1,750X since its inception nearly three decades earlier. If you haven't listened to the first episode with TransDigm's founder Nick Howley, we recommend starting there. Today, we are joined by Rob Small. Rob is a Managing Director at Berkshire Partners and has led Stockbridge, Berkshire's public equities business, since its inception in 2007. Rob conducted diligence on TransDigm in its 2003 auction before investing personally following the IPO, building an anchor position with Stockbridge in 2007, and joining the Board of Directors in 2010.  In this discussion, we cover the core elements composing TransDigm's business quality, Berkshire's and Stockbridge's initial investments, and the trajectory of Rob's conviction.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.    -----   50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.   Learn more and dive into our research at 50xpodcast.com   Follow us on Twitter: @50Xpodcast and @joincolossus   Show Notes [00:00:00] – 50X Introduction [00:01:51] – Sponsorship: Tegus [00:07:19] – Introduction to the Episode and Rob Small [00:08:57] – Berkshire Partners' Initial Exposure to TransDigm [00:10:57] – Auction in 2003 by Odyssey Investment Partners [00:14:35] – Contrast TransDigm with Hexcel [00:15:55] – Re-engaging with TransDigm post-IPO [00:18:33] – Origins of Stockbridge [00:24:53] – Core Elements of TransDigm's Business Quality [00:29:52] – Investment Trajectory for Stockbridge and Berkshire Partners [00:33:31] – Rob's Appointment to TransDigm's Board of Directors [00:36:42] – Rob's Trajectory of Conviction [00:42:59] – Translating Conviction to Position Size [00:43:50] – Persistent Undervaluation: Acquisition Pace and Exit Multiples

Today we are dropping a special episode in the Invest Like the Best feed. You will hear the first episode of 50X – a new series from Will Thorndike and the team at Compounding Labs, in partnership with Colossus. Will's book, The Outsiders, is one of the best business and investing books you will find. Now you will hear him continuing his work in the hosting chair as he looks in detail at investments that have appreciated at least 50-fold. First up is TransDigm, an aerospace components manufacturer that has returned over 1,750X since its inception nearly three decades earlier. In this episode, Will is joined by Nick Howley, TransDigm's long-time CEO and Chairman. Make sure to subscribe to 50X in your preferred podcast player.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.    -----   50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.   Learn more and dive into our research at 50xpodcast.com   Follow us on Twitter: @50Xpodcast and @joincolossus   Show Notes [00:00:00] – 50X Introduction  [00:02:00] – Sponsorship: Tegus [00:07:04] – Episode Introduction  [00:09:05] – Nick's Background pre-TransDigm [00:11:56] – Original Acquisition from Imo Industries in 1993 [00:15:33] – Thesis and Performance under Kelso & Co.'s Ownership [00:18:42] – Genesis of Three Key Value Drivers: Price, Productivity, and New Business [00:21:07] – Building the Management Team [00:24:05] – Early Lessons on Value Drivers [00:27:53] – Capital Allocation under Kelso & Co. [00:28:51] – Sale to Odyssey Investment Partners in 1998 [00:30:26] – Strategy under Odyssey's Ownership [00:31:51] – Early Acquisitions and Integration Playbook [00:37:26] – Early External Crises [00:41:13] – Snapshot at Conclusion of Odyssey's Ownership in 2003 [00:43:19] – Building a Decentralized Culture   [00:46:23] – Differentiated Approach to Compensation [00:52:12] – Sale to Warburg Pincus in 2003 [00:55:51] – Shift to Inorganic Growth under Warburg's Ownership [00:58:08] – Evolution of M&A Process [01:05:37] – Post-Acquisition Expectations and Post-Mortem Process [01:09:48] – Divesting Acquired Assets to Maintain Focus [01:11:29] – Embedding Value-Generative Culture via Hiring and Training [01:13:54] – Quarterly Product Line Reviews [01:20:43] – Recap of Private Investment Returns and Snapshot pre-IPO

Today's episode is the first in a series of four on TransDigm, an aerospace components manufacturer that has appreciated over 1,750X since its inception nearly three decades earlier. In today's episode we are joined by Nick Howley, TransDigm's founder, long-time CEO and Executive Chairman. We explore TransDigm's foundations under private ownership, digging into its core value drivers, decentralized culture, differentiated compensation program, and early M&A motion.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.    -----   50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.   In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.   Learn more and dive into our research at 50xpodcast.com   Follow us on Twitter: @50Xpodcast and @joincolossus   Show Notes [00:00:00] – 50X Introduction  [00:01:48] – Sponsorship: Tegus [00:06:52] – Introduction to Nick and TransDigm [00:08:50] – Nick's Background pre-TransDigm [00:11:56] – Original Acquisition from Imo Industries in 1993 [00:15:33] – Thesis and Performance under Kelso & Co.'s Ownership [00:18:42] – Genesis of Three Key Value Drivers: Price, Productivity, and New Business [00:21:07] – Building the Management Team [00:24:05] – Early Lessons on Value Drivers [00:27:53] – Capital Allocation under Kelso & Co. [00:28:51] – Sale to Odyssey Investment Partners in 1998 [00:30:26] – Strategy under Odyssey's Ownership [00:31:51] – Early Acquisitions and Integration Playbook [00:37:26] – Early External Crises [00:41:13] – Snapshot at Conclusion of Odyssey's Ownership in 2003 [00:43:19] – Building a Decentralized Culture   [00:46:23] – Differentiated Approach to Compensation [00:52:12] – Sale to Warburg Pincus in 2003 [00:55:51] – Shift to Inorganic Growth under Warburg's Ownership [00:58:08] – Evolution of M&A Process [01:05:37] – Post-Acquisition Expectations and Post-Mortem Process [01:09:48] – Divesting Acquired Assets to Maintain Focus [01:11:29] – Embedding Value-Generative Culture via Hiring and Training [01:13:54] – Quarterly Product Line Reviews [01:20:31] – Recap of Private Investment Returns and Snapshot pre-IPO

Welcome to 50X. Hosted by Will Thorndike, author of The Outsiders and a co-founder at Compounding Labs, 50X aims to dissect the anatomy of investments that have appreciated at least 50-fold. We track the often circuitous route to exceptional long-term returns, exploring the foundations of value creation and how that rarest of investment commodities—conviction—is created, maintained, threatened, and sometimes lost. Learn more at 50Xpodcast.com.

Hello LPs! Posting the audio recording of our Book Club Zoom session with Will Thorndike from The Outsiders in digestible podcast form. Big thank you to Will and to all of you who made this a really special experience. For those of you who weren't able to attend, we hope you get as much out of the recording as we did live! Thanks as always for being on this journey with us, - Ben & David   LP GDrive link: https://drive.google.com/drive/folders/1PX_6bUsHJRN3eZsCH5K8m-9OfHTOuFXH Book notes public post: https://medium.com/@AcquiredFM/book-club-notes-the-outsiders-569175957ab4 GDoc version of book notes: https://docs.google.com/document/d/1gipiBGB_xnuQkPFVJVZ-XxSVjy6DSxwEloEN3qnloyA/edit   Outsiders Book Notes Summary Thoughts: This fantastic book consists of eight case studies of “Outsider” CEOs who, borrowing the words of Warren Buffett's quote on the cover, “excelled at capital allocation” and created enormous shareholder returns during their tenures. Btw, how crazy is it that Warren Buffett gave the cover quote? That rivals Reed Hastings writing the forward for 7 Powers.

We go deep behind the "epic" story of a plucky game developer from Cary, North Carolina (by way of Potomac, Maryland) which, after bootstrapping for its first 22 years, has quietly morphed into an $18b juggernaut that may become the most important technology company for the next evolution of the internet. And oh yeah, its founder, CEO and controlling shareholder? He cares more about land conservation than he does about money, he's beholden to no one and has the firepower of China's biggest internet giant behind him, and he's willing to stare down Apple, Google and anyone else who doesn't support his vision of an open and equal-opportunity internet future in a fight to the death. You'll want to buckle your seats for this one!! If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show, the LP community on Slack and Zoom, and our new Book Club live sessions with authors like Hamilton Helmer of 7 Powers and Will Thorndike of The Outsiders. Join here at: https://acquired.fm/lp/    New! We're codifying our own Playbook notes and takeaways from each episode, and posting them here in the show notes and on our website. You can read them below or at: www.acquired.fm/episodes/epic-games   Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook: Good companies find gold in a rush. Great companies sell jeans and pickaxes to everyone who pans. The best companies sell jeans, pickaxes AND find more gold than anyone else. Epic's two-part business model of the Unreal Engine plus Fortnite (and other games and experiences) is like AWS plus Amazon's consumer facing businesses: not only do they create and sell the infrastructure that powers a whole industry, but as their own "first and best" customers they can use its features most effectively and inform their own future roadmap of what to build. "Games as a Service" (embodied by titles like Fortnite, Roblox, Minecraft, League of Legends and Honor of Kings, etc) is a revolution that's unlocking value on the same order of magnitude that SaaS did for software. Much like SaaS apps, GaaS experiences can be built by small teams with a creative insight, in a capital-light fashion on open, best-in-class infrastructure that's cheap to rent (Unreal Engine or Unity). They can be designed to address initially small or niche-seeming use cases and desires (e.g. Battle Royale), but then adapt and scale elastically when they strike a rich vein. And perhaps most importantly they monetize via ongoing subscription and virtual economy revenue that aligns with actual user engagement, vs one-time upfront fees on boxed software. Zero (or low) marginal cost businesses are special opportunities. Anytime you can sell something for a significant price that costs you little/nothing to create incremental copies of — e.g. Fortnite skins — you have the potentially to do very, very well. People sometimes forget, but this dynamic also existed before the internet: the media business (both content and distribution) was perhaps the best and most consistent industry of the 20th century from a Return on Capital perspective. There's a reason Warren Buffet called Tom Murphy and Dan Burke of Capital Cities the best capital allocation team of all-time — they were playing on a field tilted in their advantage. That said, the internet has brought this dynamic to MANY more sectors of the economy, and its next iteration (the metaverse) will extend it to even more. Capital scarcity creates a forcing function for disciplined and effective capital allocation. Capital abundance often leads to undisciplined and ineffective capital allocation. Epic created immense value during its 22 years as a bootstrapped company. While its first $330m capital raise from Tencent in 2012 has ultimately led to even more value creation, the first ~4-5 years post-investment saw the company almost lose its way with multiple long, costly and undisciplined game projects for which actual market demand was unclear. When the company ultimately re-captured its mojo with Fortnite, it was by going back to its roots with a fast-follow project built by a small team in response to clear market demand — with a unique twist that made it special. Retaining "control" — over your distribution, your margins, your product decisions and ultimately your company — allows you to build the biggest possible platform in the long run. The old saying that "you can't build a really big company on someone else's platform" is usually true. Multiple times along its journey, Epic and Tim chose to go the harder, longer, and riskier "independent" route vs. relying on publishers, retailers or (now) app stores. Iteration is the in-practice implementation of compounding. Iteration is a standard dogma in startups and engineering (e.g. "agile", etc.), and compounding is a standard dogma in (value) investing. In practice they're two sides of the same coin: the small iterations that Epic does year in and year out — on both the Unreal Engine and Fortnite + other GaaS experiences — compound to create extraordinary value. Or put another way, within operating businesses like Epic, dollars don't just compound on their own. Retained earnings need to be re-deployed every day to build that next feature or service that future developers (and non-developers!) can build on top of.   Links: MTV Cribs, "Tim Sweeney Edition": https://www.youtube.com/watch?v=lRGUKMKadJ8 Carve Outs: Ben's "3 part carve out": https://www.youtube.com/watch?v=bErPsq5kPzE - original video demo of Unreal Engine for filmmaking https://www.youtube.com/watch?v=gUnxzVOs3rk - Feb 2020, video on "The Volume" https://ascmag.com/articles/the-mandalorian David Asimov's Foundation Series: https://www.amazon.com/Complete-Asimovs-Foundation-Foundations-Prelude/dp/B01EFDEMS8   Sources: (also available on Journal at https://usejournal.com/app/space/journal:space:project/7efa6d43-a601-4784-8e36-1edda2b1b451 ) https://en.wikipedia.org/wiki/Cliff_Bleszinski https://en.wikipedia.org/wiki/Epic_Games https://en.wikipedia.org/wiki/List_of_Unreal_Engine_games#Unreal_Engine_4 https://en.wikipedia.org/wiki/Tim_Sweeney_(game_developer) https://en.wikipedia.org/wiki/ZZT https://forums.unrealengine.com/community/general-discussion/40293-does-epic-make-more-money-from-games-or-game-engines https://gamasutra.com/view/feature/132426/from_the_past_to_the_future_tim_.php https://kotaku.com/the-quiet-tinkerer-who-makes-games-beautiful-finally-ge-5865951 https://open.spotify.com/episode/0c8KkHc3lrHgGVyRVCo5B3 (Wizard & the Bruiser episode on Epic) https://overcast.fm/+aLde2gbYE https://overcast.fm/+JNncEontw https://techcrunch.com/2018/12/27/epic-fortnite-3-billion-profit/ https://twitter.com/sarahjeong/status/1298031302357082112?s=10 https://variety.com/2018/gaming/news/fortnite-epic-games-billion-dollar-decision-1202884194/ https://venturebeat.com/2018/04/26/superdata-fortnite-is-now-the-biggest-free-to-play-console-game-ever/ https://web.archive.org/web/20010519154729/http://www.gamespot.com/features/makeunreal/ https://www.appannie.com/en/apps/ios/top/united-states/games/iphone/ https://www.bloomberg.com/news/articles/2020-08-19/epic-games-fortnite-battle-with-apple-and-google-can-be-traced-to-nintendo-tax https://www.businessinsider.com/apple-made-360-million-from-fortnite- in-app-purchases-2020-8 https://www.cnbc.com/2018/06/12/epic-games-company-behind-fortnite-was-founded-by-a-college-kid.html https://www.cnbc.com/2018/12/14/the-reason-epic-landed-a-15-billion-valuation-is-not-fortnite-success.html https://www.cnbc.com/2020/01/07/apple-app-store-had-estimated-gross-sales-of-50-billion-in-2019.html https://www.gamasutra.com/view/feature/132426/from_the_past_to_the_f uture_tim_.php?print=1 https://www.gamesindustry.biz/articles/2013-03-22-tencent-paid-usd330m-for-48-percent-share-in-epic-games https://www.gamespot.com/articles/chinese-internet-company-owns-40-percent-of-epic-games/1100-6405749/ https://www.gamesradar.com/the-epic-tradition/ https://www.ign.com/articles/1999/02/04/epic-sets-up-shop https://www.matthewball.vc/all/epicgamesprimermaster https://www.newsobserver.com/news/business/article238221784.html https://www.nytimes.com/2020/08/25/technology/fortnite-creator-tim-sweeney-apple-google.html?referringSource=articleShare https://www.pcgamesn.com/steam-revenue-cut-tim-sweeney https://www.polygon.com/2012/10/1/3438196/better-with-age-a-history-of-epic-games https://www.polygon.com/2013/11/21/5128872/epic-classics-ships-last-copy-of-zzt https://www.polygon.com/a/epic-4-0 https://www.polygon.com/a/epic-4-0/the-four-lives-of-epic-games https://www.theverge.com/2020/1/2/21046920/fortnite-revenue-drop-superdata-nielsen-2019-earnings https://www.theverge.com/2020/8/17/21369460/apple-fortnite-app-store-services-business-model-epic-games https://www.wsj.com/articles/the-man-behind-fortnite-11560571201

We're joined by two very special guests, Eventbrite CEO Julia Hartz and her cofounder, spouse and Eventbrite Chairman Kevin Hartz, to tell their story of building Eventbrite together (along with their lives and family) from the PayPal diaspora to bootstrapped business, unicorn status, IPO and now starting all over again in the wake of COVID with both a tragedy and a huge new opportunity in front of them as public company. If you want more more Acquired and the tools + resources to become the best founder, operator or investor you can be, join our LP Program for access to our LP Show (including the episode with Kevin on SPACs), the LP community on Slack and Zoom, and our new Book Club live sessions with authors like Hamilton Helmer of 7 Powers and Will Thorndike of The Outsiders. Join here at: https://acquired.fm/lp/   New! We're codifying our own Playbook notes and takeaways from each episode, and posting them here in the show notes and on our website. You can read them below or at: www.acquired.fm/episodes/eventbrite   Sponsors: Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at: https://growwithbamboo.com https://www.perkinscoie.com/   Playbook Seeing the next technology wave before others do is rare. It provides a roadmap for what to build and invest in if you're willing to bet on that knowledge. Kevin worked at Silicon Graphics in the mid 90's. This led him to realize that internet services like PayPal, YouTube, and many others would be possible long before others (similar to Don Valentine realizing computers would penetrate every industry from his time at Fairchild). PayPal and its subsequent "mafia" was successful in part because of rapid experimentation. They observed what got used by customers and then doubled down. PayPal's "core" use case on eBay started as an experiment. International money transfer (Xoom) and event ticketing (Eventbrite) also initially started as experiments on the PayPal API before the eBay acquisition — and went on to become large companies. Julia, Kevin, and their cofounder Renaud had a prototype of Eventbrite running and serving customers even before starting the company — which gave them the confidence to do what seemed crazy on paper, but was actually "de-risked": start a company as an engaged couple, have a remote technical cofounder, bootstrap for 2 years after being turned down by VCs, etc. When a company is experiencing explosive growth, they often need to leave other huge opportunities on the table. PayPal knew international remittances could be huge, but didn't build it internally because of the need to focus on eBay merchants. The TAM for bringing an offline behavior offline is often WAY bigger than anything you can calculate beforehand. The range and size of what were previously niche or impossible use cases will often expand dramatically with easy-to-use online tools. This is especially true in long-tail use cases that can only be aggregated by self-serve internet-based software. One early encouraging sign for Eventbrite was its use to host speed dating events in New York. Before Eventbrite, it was nearly impossible to organize, promote, and charge for something like that. Now, organizers could suddenly become entrepreneurs and make real money hosting events like this. Most VCs ignored or were confused by this data (~"Call us when you attack Ticketmaster."), but they missed that it unlocked a massive new market which previously operated only through word-of-mouth and cash transactions (if at all). All three major dislocations of the 21st century — the tech bubble bursting in 2001, the financial crisis in 2008, and now COVID in 2020 — have only accelerated offline behaviors to online. COVID is unlocking a new wave of online event entrepreneurs for Eventbrite in the same way the financial crisis unlocked a wave of in-person event entrepreneurs in 2008-10. Starting with just one niche can be incredibly powerful; often your customers will then lead you to more. Before the speed-dating in New York (which was fully inbound), Eventbrite was used to organize tech meetups in the then-smaller tech community in SF. It was even used for the first TechCrunch Disrupt! Too much capital (and too little accountability) can hurt a company much more than help it. Capital covers up problems, distracts focus from customers, and leads to poor resource allocation. Kevin: "The periods where we had raised the most money privately were the hardest and most difficult for me, because we were really fighting this gravity of overspending and creating inefficiency. And it took us away from our roots as a capital-efficient, highly-effective perpetual motion machine [that we'd had as a bootstrapped company]." Being a public company not only instills more capital allocation discipline, but can ALSO afford a degree of financial flexibility that just isn't possible as a private company. Within weeks of COVID hitting, Eventbrite dramatically shrunk the size and scope of the company AND raised $375m in new capital from new and longterm shareholders. Both actions would have been difficult to impossible as a private company with a static valuation (and associated anti-dilution, ratchet terms, etc) that no longer reflected the reality of the current situation.

Will Thorndike is an investor and author of The Outsiders, a study of eight unconventional CEOs who did an exceptional job of allocating capital in their businesses. In this presentation from Tugboat Institute Summit 2019, Will shares the essential lessons of the CEOs he profiled in his book, as well as updated insights.

My guest this week is Pat Dorsey, who was the longtime director of equity research at Morningstar, where he specialized in economic moats: sources of sustained competitive advantage that allow a few companies to deliver huge returns over time. Several years ago he left Morningstar to form his own asset management firm, Dorsey asset management, and build a portfolio of companies with wide moats like those he studied at Morningstar. And while moats are critical, equally important is how companies allocate the capital generated--or made possible--by the existence of the moat.   A special thank you to Brian Bares who introduced me to Pat, and to Will Thorndike--an earlier guest on the show. In the vast majority of conversations you hear on this show, I'm meeting the guest for the first time. I mention this to encourage you to connect me with anyone whose story or way of looking at the world might resonate. Always feel free to contact me with ideas.   Pat and I begin our discussion with the key differences between the sell side and the buy side, and then discuss all aspects of moats and capital allocation.    For comprehensive show notes on this episode go to http://investorfieldguide.com/dorsey For more episodes go to InvestorFieldGuide.com/podcast. To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 2:23 – (First question) – Transition from the sell side to the buy side and the biggest surprise  3:40 – What is a moat  5:16 – What part of the stock market universe has a moat  6:57 – Pat’s framework for identifying moat, starting with intangibles  8:32 – The power of brands  9:44 – what chance does an upstart have to come in and usurp a well-established brand    12:24 – Switching costs as part of the framework for identifying a moat  14:55 – The third component of identifying a moat, network effects, and what businesses should do to effectively build one  17:29 – Last component, cost advantages/economies of scale  19:29 – How do you analyze these four components into an investing framework that can be built into an actual strategy  21:13 – How does Pat think about this from a mis-pricing standpoint  23:37  – How does Pat incorporate current price of a company in consideration for future returns when pricing a moat  25:39 – How should a company with a moat operate to protect that characteristic, especially when it comes to their capital allocation  26:51 – Which characteristic of a moat does Pat find most intriguing  30:35 – What makes for good and smart capital allocation  35:58 – What is Pat’s process for identifying the best investment opportunities  38:38 – What are good economics when looking at a company  41:03 – If Pat could take any business, but have to swap leadership, what would he choose.  44:13 – Back to his process of finding investment opportunities  46:05 – Kindest thing anyone has ever done for Pat   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag Read more at https://investlikethebest.libsyn.com/pat-dorsey-buying-companies-with-economic-moats-invest-like-the-best-ep51#oBGdOp1br4EMtORd.99

CEO and Head of Research Ross Glotzbach and Vice-Chairman Staley Cates interview Will Thorndike, author of The Outsiders – Eight Unconventional CEOs and Their Radically Rational Blueprint for Success and Chairman of CNX Resources. They discuss progress at CNX, whether energy companies can be considered “good businesses”, the importance of a capital allocation mindset in commodity businesses, frothiness in the private equity world and the characteristics and long-lasting benefits of “Outsiders” in the US and overseas.

This week’s guest is Will Thorndike, an author and investor whose book The Outsiders is an all-time favorite of mine. Our conversation is in two parts. First, we dive deep into the lessons of his 8-year research project studying CEOs who were master capital allocators. These CEOs include Henry Singleton, John Malone, Tom Murphy, Katherine Graham, and Warren Buffett. We discuss how these CEOs tended to be contrarians on topics like dividends, buybacks, acquisitions, and the use of debt. As we go through each of the tools in the capital allocators toolkit, you’ll hear several useful lessons for running or evaluating a business. In the second part, we cover Will’s career in private equity. Will founded and continues to run Housatonic Partners, investing in buyouts, recaps, and search funds. Will has been one of the most active search fund investors for decades, and given how much time I’ve spent in past episodes on the searchers or operators in the micro-cap, permanent equity space, it was great to get the perspective of an experienced LP. As always, we also take time to survey the dangers and opportunities in today’s private equity market. For comprehensive show notes on this episode go to http://investorfieldguide.com/thorndike For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag

My guest this week is Pat Dorsey, who was the longtime director of equity research at Morningstar, where he specialized in economic moats: sources of sustained competitive advantage that allow a few companies to deliver huge returns over time. Several years ago he left Morningstar to form his own asset management firm, Dorsey asset management, and build a portfolio of companies with wide moats like those he studied at Morningstar. And while moats are critical, equally important is how companies allocate the capital generated--or made possible--by the existence of the moat.   A special thank you to Brian Bares who introduced me to Pat, and to Will Thorndike--an earlier guest on the show. In the vast majority of conversations you hear on this show, I'm meeting the guest for the first time. I mention this to encourage you to connect me with anyone whose story or way of looking at the world might resonate. Always feel free to contact me with ideas.   Pat and I begin our discussion with the key differences between the sell side and the buy side, and then discuss all aspects of moats and capital allocation.    For comprehensive show notes on this episode go to http://investorfieldguide.com/dorsey For more episodes go to InvestorFieldGuide.com/podcast. To get involved with Project Frontier, head to InvestorFieldGuide.com/frontier. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 2:23 – (First question) – Transition from the sell side to the buy side and the biggest surprise  3:40 – What is a moat  5:16 – What part of the stock market universe has a moat  6:57 – Pat’s framework for identifying moat, starting with intangibles  8:32 – The power of brands  9:44 – what chance does an upstart have to come in and usurp a well-established brand    12:24 – Switching costs as part of the framework for identifying a moat  14:55 – The third component of identifying a moat, network effects, and what businesses should do to effectively build one  17:29 – Last component, cost advantages/economies of scale  19:29 – How do you analyze these four components into an investing framework that can be built into an actual strategy  21:13 – How does Pat think about this from a mis-pricing standpoint  23:37  – How does Pat incorporate current price of a company in consideration for future returns when pricing a moat  25:39 – How should a company with a moat operate to protect that characteristic, especially when it comes to their capital allocation  26:51 – Which characteristic of a moat does Pat find most intriguing  30:35 – What makes for good and smart capital allocation  35:58 – What is Pat’s process for identifying the best investment opportunities  38:38 – What are good economics when looking at a company  41:03 – If Pat could take any business, but have to swap leadership, what would he choose.  44:13 – Back to his process of finding investment opportunities  46:05 – Kindest thing anyone has ever done for Pat   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

A future guest just told me, every band has a song about being in a band, so today I give you my version. I won’t do this often, and only do it this week in case listenership drops due to the holiday—I didn’t want any guest to have a smaller than normal audience. I have now been doing this for almost one year, and have learned a tremendous amount. Since the whole idea behind the show is to learn in public, I am going to share a few of the lessons I’ve learned with you today. I’ll shape it as a top ten list, which ends with a fun story about my recent dinner with Warren Buffett. You’ll notice that many of these are just good business and life lessons applied to something specific: a podcast. I hope you can pull the essence of one or more of these and change how you do things, especially if you create any sort of content as part of your job. (1:35) Conversation is my new favorite way to learn. I love books, and always will, but conversations are even more efficient and engaging. Talking with people who know their field deeply is the most fun thing in the world, and it is an underused method of learning. Lectures are too one-sided. Books often don’t flow the direction you want them to. Conversations are alive and interactive. I have been doing this very publicly on the podcast, but I’ve also been doing it more in private after realizing how powerful it can be. If you can commit to having conversations with new people where you tell them as little about yourself as possible, you’ll be off to a good start. I don’t mean that talking about yourself is bad—not at all--only that in each conversation, the time you spend talking about you is time that you aren’t learning something new. The less your ego gets involved, the more you will learn—and I should know because I used to have a big ego. This means asking dumb questions, sometimes more than once. It means probing on the simplest parts of a person’s field or knowledge. As everyone knows, it is fun to explain something you love to people that don’t know as much about the topic in question, but are eager to learn. So it logically follows that you should want to be the less knowledgeable person in most conversations. If everyone took this tact, things would be a mess, but I wouldn’t worry too much about that! One side effect of learning to ask good and interesting questions is that you realize how rarely anyone asks you good or interesting questions. An example of why it pays to remove ego: A month ago I didn’t even know what a cryptocurrency token was. Now I can have a fairly in-depth conversation on the topic because I made small incremental improvement improvements across ten different conversations. In each of those, I was the moron, trying to get up to speed. The more times you are willing to be the idiot, the faster you will learn. It is a pretty cool formula: ten times the idiot, one time the (relative) expert. They should teach you how to have a good conversation in elementary school. (3:31) Preparation and careful listening are everything. The best editing for the podcast is done before the conversation starts and during the conversation itself. Most of the episodes you hear are very lightly edited, if at all. A majority aren’t touched. The ones that I have edited a bit were my fault: I didn’t prepare well enough to be nimble and attentive in the conversation. What I’ve found is that the role of the person asking the questions is to create and sustain momentum. I have this visual of a rush of water running down a maze of tubes which have hatches that open and close. If the water hits a closed hatch, everything stops. My job is to anticipate by listening very carefully and get ahead of the water to open doors to keep the momentum going. The clues to what each person loves most are usually buried in another answer. I’ve gotten much better at picking up on those cues. One example: every time someone says “we can talk about that later,” it means “I want to talk about it now and if you ask me, I’ll give a great answer.” The way I prepare for this ahead of time is to read everything I possibly can and try to be able to discuss it as if I were answering my own questions. This way, I can sense when there is a deviation between how I’d answer my own question and how they do. That deviation is often the door to something very interesting: an opinion or idea not already discussed by the guest in some other medium. An example: Scott Norton mentioned in passing that he’d read up on the history of ketchup as part of his early research, so I asked him to tell me that history and it was one of my favorite answers. I moved it to the front of the podcast. (5:07) Finding the next guest is all about the quality of other guests and the quality of my questions. The first few guests on the show were people I knew well, or well enough to invite onto a non-existent platform to chat about investing. But in the majority of the conversations, I was meeting the person for the first time-- 39 of the 47 guests to be precise. That means that almost all of these wonderful conversations started because someone else introduced me to the guest and their ideas. They introduce me because they either 1) liked being a guest themselves or 2) like listening to the show. At the end of each episode, I ask the guest who I should talk to next, which allows the conversation to thread from person to person organically. But it isn’t just the guests, it is all of you. I am grateful to everyone who devotes their time to listening to this show and for all the thrilling and often random connections it has created in the investing world. One tiny example: Brian Bares of Bares Capital Management emailed me offering to connect me with Will Thorndike. Will is the author of one of my favorite books, and was near the top of my wish list. But I had no connection to him whatsoever, and then one just appeared. Brian has also connected me with another guest who you’ll hear from soon. Because of Brian’s kind outreach, I know more today. This has happened many times. If you are listening, and know someone fascinating, please send them my way. Sidebar: If you are someone whose job it is to book podcast guests, please stop emailing me (not that you are listening, anyhow). The network effect is what drives this shows success, I just happen to sit at the central node in this particular network. The more listeners, the more connections, the more connections, the more great conversations you’ll hear. It is a virtuous cycle. So please, send me guest ideas, send me topic ideas—things you want to understand but don’t. Send me anything, I read it all. I’ll do my very best to keep the quality up, and then depend on you. (7:01) Give your audience credit. There have been a few conversations—the recent one with Michael Mauboussin comes to mind—that have been pretty complicated. But these episodes often generate the most positive feedback. The accepted rules for content are that simple and short are good, but I’ve found the exact opposite. There is a strong positive correlation between the length of an episode and the number of listeners, and between the complexity or newness of the ideas explored and the number of listeners. I get emails from people all the time, and they are often a lot smarter than me. I’ve had countless coffees and lunches all over the country with listeners who have written incredibly thoughtful emails which help me understand fields like private equity and venture capital at a much deeper level. Because I push myself to the very limit of my brain’s abilities, I have been lucky to attract a ridiculously interested, smart, and kind audience. They say you get the investors you deserve, but its clear you also get the listeners you deserve. The biggest compliment I am paid is by the army of smart people who just give me their time. I think the real rule for content should be: just operate at your own level—don’t try to move simpler or more generic. The beauty of the internet is the power of the niche—find one and own it. (8:15) Avoid colonized topics. I have a lot to say about smart beta strategies, but it is a topic that has been so thoroughly picked over by the investing community that it is no fun anymore. It is a very good rule that if I’m bored of some topic, everyone else will be too. Instead, I search for aspects of the investing world that I don’t know much about, because if I don’t know, it’s a decent indicator that some chunk of the audience won’t know. I think this lesson is key. It is so easy to explore the same stuff as everyone else, because it’s less work. But as many guests have pointed out: the key to their personal success was that they wrote the playbook instead of reading someone else’s. If the playbook is already out there, look for a different question to explore. (8:59) Consider the user experience. An upcoming guest observed that most bank customers aren’t customers at all, but suppliers. They give banks the capital they need to do business, and are therefore treated like suppliers, not customers. I think it’d be easy to view podcast guests as suppliers—in this case suppliers of content—so I am very careful to remind myself that the opposite is true. The guests are my customer just as much as you are. I try to make the experience of coming on the show easy and fun, before, during, and after taping. I am careful to provide lots of feedback to each guest once the episode launches. I like Airbnb founder Brian Chesky’s notion of an 11-star experience. He suggests any business go through the thought experiment of explaining what an 1 through 11 star experiences would be for the product or service. When you do this, star levels 7 through 11 are ridiculous, but it helps you calibrate and re-orients you to your customer. I like to think I provide a 4-5 star experience now, but in the coming weeks I’ll sketch out what an 11-star experience might be and see how I can make it better. In fact, this is something I’d love to discuss with you: how to make both the guests and the listeners’ experience better. I’ll explain how to be a part of that conversation at the end of this episode. (10:16) Find great partners. The show sounds so clean because of my excellent producer Mathew Passy. If you want to start a podcast, he is your guy. He has already started working with others that I know and my plan is to fill his entire schedule. He is one example of a key partner. The show also works because I don’t have to spend much time on finding guests. This is because of the great network, but a few nodes in that network stand out. Khe Hy, Jeff Gramm, Brent Beshore, Morgan Housel, Josh Brown, and Ted Seides, among others, have been instrumental in introducing to some of the best guests on the show and for that I am deeply grateful. People often ask how I have time to do this show, but the secret is it doesn’t take that much time! This is only possible because of the great partners I’ve found in the last year. The person whose voice or face is attached to something always gets way too much of the credit. Partners drive everything, and I’m thankful to have such great ones. (11:11) A generalist mindset can be a huge advantage. It is easy to pay homage to Charlie Munger’s latticework of mental models, but when you live it, you see why he is right. Knowing the key drivers and major ideas in a variety of fields is a huge source of leverage. It is difficult to study broadly and deeply, but the two aren’t mutually exclusive. I could talk to you about quantitative equity strategies until you pass out, but a key to the podcast’s success is that I can usually fake it in other fields like history, psychology, science, philosophy, travel, books, food, economics, mythology, sports and so on. Having these in one’s repertoire is like having a set of keys to getting the best out of other people. Different keys unlock different people. I think that a lot of being a good investor is asking good questions. If you know a little about many different fields, it makes that task much easier, and increases the odds that you’ll get the goods from whomever you at talking to. If these seems too daunting, I’ve found food, travel, and sports to be the most widely accepted keys. (12:17) Amplify what works. The most downloaded guest on the podcast so far is Brent Beshore. He has been on three times, and you can bet he will be on again. The second most downloaded is Michael Mauboussin, also a repeat guest. Andy Rachleff told me that one of his best business lessons is that you learn far more from success than from failure, and that you should use success as a compass. Drive hard in the direction of what works rather than trying to shore up weaknesses. If something is working, more of that thing, or a better version is likely to work too. A better version of a failure is likely still going to fail. A lesson within this lesson: this is all even more true for unexpected Brent is now a close friend, but I didn’t expect him to be the most popular episode. This has been a recurrent theme in my conversations on venture capital: it is usually the thing you didn’t expect which yields the biggest payoff. When something is expected or obvious to you, it is expected and obvious to others. That means competition. If Brent had been on 10 other podcasts before mine, the results would have been very different. Instead, Brent my eyes (and about 100 thousand other sets of eyes) to a fascinating new area of investing. (13:29) Don’t expect anything in return. People always ask me what my goal is with the podcast. The answer is simple: none. I don’t expect to get anything out of this other than the conversations themselves. The means and the end are the same. This is so important to me. When the process itself is the goal, magical things happen. When I have a guest on the show, it is like buying a call option. Actually its better, because I’m not even paying for the option: instead the option is “purchased” through a conversation: it is free, and highly enjoyable. The beautiful thing about call options is that the potential upside is enormous and the downside is limited, or in this case close to zero. Investors everywhere hunt for asymmetric outcomes: low downside, huge upside. And that is exactly what I’ve found this podcast to be. The second-best compliment I get is from guests who often tell me that the podcast generated a bizarre amount of inbound feedback, or even opportunities that they never expected. I don’t expect anything in particular to happen, but now I know that crazy things just will Its hard to escape the most obvious example—so let me tell this story in closing. The entire podcast began because of a rule of mine: when I read an interesting book, I email the author and ask them to lunch. I emailed Jeff Gramm after I read Dear Chairman, we got lunch, and we hit it off. We hatched a plan to record a conversation, and that was the beginning of the podcast. Very simple. 6 weeks later, the same strategy paid off again, and I met and recorded an episode with Ted Seides on hedge funds. We give Ted endless grief for his losing bet with Buffett, but I have learned so much from him about all corners of the investing world. He quickly became a friend and confidant. Ted also happens to be friends with the best investor of all time—something I didn’t know when I first met him. Fast forward to this past week. Ted, Brent Beshore and I flew to Omaha to have dinner with Warren Buffett—street value of almost $3 million dollars, my dad reminded me. I’ll get back to Warren in a second, but first a key observation here: not in a million years would I have thought a podcast would turn into a three-hour private dinner with Warren Buffett. If I had had the temerity to set that as a goal, it would have probably been impossible. If I’d been angling to get a private dinner with him, it most likely would never have happened—because everyone hates that guy. I think that because I am never angling for anything, the outcomes are far more interesting and improbable than if I was trying to achieve some specific goal. Another thing: the best thing about the dinner wasn’t that it was with Warren, but that it was with Brent and Ted, who have become such close friends. And the chance to meet Todd Combs, who was fantastic. Back to Warren. He is incredible. Kind, sharp, funny as hell, and relaxed. Early on he said to us “do you know what it says on Wilt Chamberlain’s tombstone? It says, finally I sleep alone.” We spent the first hour talking about college football. He could be a football color commentator. The amount of facts and dates and people he was throwing at me was staggering, and I know a lot about college football. I went to Notre Dame, and he had 5 Notre Dame specific stories that were some of the best I’d ever heard. He told me he once got through to an ND captain by calling his dorm room. He’d heard that the player was a big Buffett fan, and when he called the kid was awestruck. The reason for his call was an offer: two stock picks in exchange for Notre Dame’s playbook for the upcoming game against Nebraska. I don’t idolize people, and I never will, because idols are just people like anyone else. What was most refreshing about this dinner was realizing that Warren is just a person too—an exceptional one, but still a normal person. One that wants to shoot the breeze, tell stories, tell jokes, and learn about you. Knowing that even the greatest investor of all time is just a person is so reassuring. It makes anything seem possible. I’ll keep most of the details of the dinner to myself, but suffice it to say it was something I’ll never forget. But, and this may be more important, it was something I never expected. If you can find some way to give back to other people which they enjoy, and do so without any expectation of a return, you’ll be so happy, and great things will result. It has worked for me and I’m sure it will work for you. So those are ten of many observations and lessons learned so far, and here is a bonus: there is room for a lot more. In the coming year, I plan on experimenting with lots of ways of bringing this community together, digitally or in person. If you are interested in being more involved in the podcast in general, stop by investorfieldguide.com/frontier to learn more and get involved. Thank you for listening, and have a happy fourth of July.   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag

This week’s guest is Will Thorndike, an author and investor whose book The Outsiders is an all-time favorite of mine. Our conversation is in two parts. First, we dive deep into the lessons of his 8-year research project studying CEOs who were master capital allocators. These CEOs include Henry Singleton, John Malone, Tom Murphy, Katherine Graham, and Warren Buffett. We discuss how these CEOs tended to be contrarians on topics like dividends, buybacks, acquisitions, and the use of debt. As we go through each of the tools in the capital allocators toolkit, you’ll hear several useful lessons for running or evaluating a business. In the second part, we cover Will’s career in private equity. Will founded and continues to run Housatonic Partners, investing in buyouts, recaps, and search funds. Will has been one of the most active search fund investors for decades, and given how much time I’ve spent in past episodes on the searchers or operators in the micro-cap, permanent equity space, it was great to get the perspective of an experienced LP. As always, we also take time to survey the dangers and opportunities in today’s private equity market. For comprehensive show notes on this episode go to http://investorfieldguide.com/thorndike For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag

This week Peter speaks with Will Thorndike, private equity investor and author of the #1 book on Warren Buffett’s Recommended Reading List for 2012, “The Outsiders”. Will discusses his methodology used in writing the book and for evaluating CEOs and their companies. They discuss a number of CEOs and companies, and Will shares his top CEO of the last 50 years. Will compares the role of the CEO in the private equity space to the role in public companies, and they conclude with a discussion on capital allocation in Asia and in the US.

  We are continuing our week of special interviews in honor of Memorial Day. Today we have part 1 of an interview with Will Thorndike, author of The Outsiders. We hope you enjoy and will return to normal programing on Monday June 2nd. 

Microsoft hits a 14-year high.  Wal-Mart goes after GameStop.  And Starbucks bets on wine and beer.  Our analysts discuss those stories.  Plus, best-selling author Will Thorndike shares some investing insights from his book, The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.

My guests on this episode are Jay Davis and Jason Pananos. Jay and Jason acquired Vector Disease Control, which provides vector borne disease prevention and lake management services, in 2011. About 4 years after acquisition, they realized serial acquisitions complementary companies could be a powerful growth lever. And 14 acquisitions later, they sold the company in 2017 for a very successful outcome. Following the sale, they founded the Nashton Company where they've been mainstay search investors and the last few years holding company investors.They're also co-founders of Compounding Labs, a partnership between Jay and Jason, Kent Weaver and Will Thorndike to invest in long-term holding companies. Our conversation covers their investing in holding companies, how they approached serial acquisition at Vector and how they advise other searchers in the strategy, sources of capital and deal pacing, and building deal teams and when to start that process within your serial acquisition or holding company cycle.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Jay on LinkedInJason on LinkedInNashton CompanyCompounding LabsStanford Search Fund Harvard Business Study 2022Topics:(3:17) - If you look at Vector as a play for acquisitions, how did it fit into your strategy?(6:41) - What actions did you take to prepare yourself for rolling up other businesses and acquisitions?(10:56) - What key roles need to be in tip-top shape before you begin acquisitions?(14:39) - What were some best practices you developed over the process of 12 acquisitions?(16:14) - How have your roles evolved over time?(20:53) - Have you noticed folks things being easier for serial entrepreneurs if they have a partner?(22:29) - What other types of investments have high returns in the early days outside of team-building?(25:24) - Are there any misallocations of time entrepreneurs have in the early innings of a serial acquisition strategy?(29:49) - Does the presence of Private Equity in a certain industry make it more attractive to you?(33:10) - What are some factors you weigh when looking at industries to potentially invest in?(35:27) - What characteristics do you look for in entrepreneurs?(37:46) - How does pace increase factor into your path as the team grows?(39:38) - How does the source of capital shift over time?(42:38) - What are your thoughts on Long-term holding companies and their increased popularity?(47:27) - How do you sus out whether an entrepreneur knows they're in this for the long haul?(50:51) - How do these long-term hold companies shift over time?(54:02) - How do holding companies shift your role when investing compared to a traditional search fund?(56:59) - What strongly held belief have you changed your mind on?(58:43) - What's the best business you've ever seen?