My guests today are Scott Davis and Rob Wertheimer. Scott and Rob head up Melius Research and are the authors of a great book called Lessons from the Titans. The book explains what the industrial giants of old can teach the new generation of high-growth businesses about how to survive and deliver shareholder value over multiple decades. Drawing on their experience as industrials analysts, they present case studies on businesses like Danaher, Roper, Honeywell, Boeing and GE to reveal both what does and doesn’t work when it comes to capital allocation and business strategy as a company enters a more mature phase in its lifecycle. Please enjoy my conversation with Scott and Rob.
Listen to Founders Podcast
Founders Episode 136 - Estee Lauder
Founders Episode 288 - Ralph Lauren
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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
(00:03:20) - (First question) - The intersection between the current tech sector drawdown and the historical track record of industrial titans
(00:07:10) - The most common ways they see companies start to fail and the types of errors they commit
(00:11:01) - The best historical examples of companies that have gone from non-operational excellence to operational excellence
(00:15:04) - Teaching the value of a business system and installing one for longevity
(00:24:06) - Questions they’d ask and points of evaluation to uncover the health of a business
(00:31:19) - Thinking about sustainable value creation in a lower growth environment
(00:37:04) - Lessons from operating leverage and the rental industry
(00:39:11) - Ways industrial companies have handled growth CapEx well and badly
(00:43:52) - The line between discovering the future in a lab versus major pivots in reality while trying to solve today’s problems
(00:49:37) - How the best managers nurture a great shareholder base
(00:55:35) - Lessons to learn about business model transitions
(01:00:13) - Further important messages from their book that businesses would benefit from
(01:04:30) - The kindest things anyone has ever done for them
Today’s episode is a little different. Rather than share a new conversation, I have put together a few of my favourites from the past six and a half years of doing this show. I often listen back to these for inspiration, energy, and their timeless ideas on life and investing. Internally, we call these forever episodes because they’ll likely still be as relevant and popular a decade from now as they were when they first aired.
The first conversation you’ll hear is with Sam Hinkie. Sam worked for more than a decade in the NBA, helping pioneer the use of data and analytics, originally with the Houston Rockets and finishing off as the GM of the Philadelphia 76ers. In life after basketball, Sam launched his own venture capital fund, 87 Capital. Sam's approach to everything is about finding great people, and he has taught me more about that topic than just about anybody else.
The second discussion is with Boyd Varty. My original conversation with Boyd, way back in 2017, had a huge impact on me and I’m sure you’ll hear why. He grew up in the South African wilderness, living amongst and tracking wild leopards. He talks about the art of tracking and how the same strategy for pursuing animals in the wild can be applied to all aspects of our lives. Rather than following well-trodden paths, we should all explore and look for original experiences. He might still have the best answer I’ve ever heard on the podcast.
The last conversation you’ll hear is with Charlie Songhurst. Charlie is the former head of strategy at Microsoft, and a prolific investor having personally invested in nearly 500 companies through his career. Within one minute of meeting Charlie, you can tell that his mind is sparkling with ideas and curiosity. It's no wonder he was among the most commonly requested guests. Charlie would always come up when I asked top investors and CEOs who I should have on the show and he often still comes up as people’s favourite guest.
Sam, Boyd, and Charlie are all exceptional in their own way and I hope you enjoy these condensed versions of our conversations. You’ll find links to the full, original episodes in the shownotes. Enjoy and share them with friends and loved ones who you think will benefit from these original thinkers.
Boyd Varty - The Art of Tracking
Charlie Songhurst - Lessons from Investing in 483 Companies
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
-----
Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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
(00:04:40) - (Sam Hinkie) - His focus on quality people and talent as a key driver for success
(00:05:55) - The most amazing thing he’s seen from someone he has worked with, early on in the partnership
(00:07:59) - The different leadership styles he has absorbed through his career
(00:09:51) - His interest in finding “digital breadcrumbs” on his pursuit of knowing a person
(00:13:18) - The impactful story of meeting the assistant GM of the Houston Rockets
(00:17:22) - Strategies he has developed to avoid transactional people
(00:18:19) - The move he made that most factored in to him getting the GM position
(00:19:22) - How he shapes his career and optimizes from an investment perspective
(00:24:06) - The strangest things he has come across in early-stage investing
(00:25:47) - How listeners can use the proverbial bread crumbs to enable serendipity and prosperity
(00:29:47) - (Boyd Varty) - His childhood and his dad’s black mamba story
(00:33:04) - His early experiences with tracking wildlife and how it applies to investing
(00:38:32) - What a full day of tracking looks like, and his Track Your Life retreat program
(00:44:46) - What can be learned about life goals and paths from the experience of tracking
(00:47:59) - The influence of culture on decision-making and goal-setting
(00:50:39) - His concept of “the ordering of chaos on behalf of others” and its impact on life purpose as it relates to the so-called wild self
(00:52:13) - How his theories stand up to common objections from skeptics
(00:54:41) - The importance of moving towards the unknown to start approaching goals
(00:57:15) - His most memorable tracking experience
(01:08:43) - The kindest thing anyone has ever done for him
(01:12:40) - (Charlie Songhurst) - His interest in studying people’s virtues and vices
(01:15:10) - His diverse career highlights
(01:16:29) - His analysis of why startups succeed or fail
(01:21:21) - What founders can learn to enable and maintain productivity in their company
(01:25:21) - Nature versus nurture as it applies to adept founders, and the controversial “alien founder” concept
(01:30:10) - The importance of good recruiting from an early stage
(01:33:32) - How founders can make their companies attractive to prospective talent
(01:35:53) - Why he is interested in investing in highly boring and highly complex ideas