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Speaker 1: This is Mesters in Business with Very Results on Bluebird Radio.

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Speaker 1: Here this week on the podcast, I have an extra

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Speaker 1: special guest. His name is Tom Gayner, and he has

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Speaker 1: a fascinating position in the world of investing in finance.

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Speaker 1: He is the chief Investment Officer and co CEO of

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Speaker 1: Marquel Corporation, which he describes as a publicly traded family office.

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Speaker 1: They have an insurance arm that's the genesis and history

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Speaker 1: of the company, but he also has been running the

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Speaker 1: investment portfolio for quite a while. That's their second arm.

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Speaker 1: And they have, for lack of a bitter word, of

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Speaker 1: venture or private equity group that purchases companies, really a

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Speaker 1: fascinating history, a tremendous track record, and really a very

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Speaker 1: interesting gentleman. I found this conversation to be fascinating and

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Speaker 1: I think you will also so with no further ado,

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Speaker 1: my discussion with Marquel Corporations is mesters in Business with

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Speaker 1: Very Results on Bloomberg Radio. My extra special guest this

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Speaker 1: week is Tom Gainer. He is the c i O

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Speaker 1: and co CEO of Marquel, a diversified financial holding company.

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Speaker 1: He has been dubbed the next Warren Buffett by no

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Speaker 1: less an expert than Jason's wide of the Wall Street Journal.

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Speaker 1: From two thousand to Gainer's stocks have averaged a return

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Speaker 1: of eleven point three percent annually, while the SMP five

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Speaker 1: hundred returned a mere four point two percent counting dividends.

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Speaker 1: Tom Gainer, Welcome to Bloomberg. Thanks so much for having me.

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Speaker 1: So I've been looking forward to having this conversation. You're

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Speaker 1: kind of an interesting guy working in kind of an

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Speaker 1: interesting company. I don't think a lot of folks know

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Speaker 1: what Marquel is and does. Why don't we start by

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Speaker 1: just give us the short version? What is Marquel? Sure?

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Speaker 1: And in fact, not only do a lot of people

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Speaker 1: not know what Marquelle does, a lot of people don't

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Speaker 1: know how to pronounce it. So uh, it's an easy

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Speaker 1: screening uh technique. When somebody asked for Markel, they probably

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Speaker 1: don't know who they're talking to. So yes, Marquelle to

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Speaker 1: some degree. I think the shorthand way of describing it

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Speaker 1: in the usage of today's words is, we're a family

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Speaker 1: office that happens to be publicly traded. Now, the way

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Speaker 1: that business started was in the nineteen thirties as a

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Speaker 1: specialty insurance company. It's kind of an interesting history in

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Speaker 1: that Sam Marquel was in Norfolk, Virginia and he was

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Speaker 1: on the city council there, and Norfolk, Virginia was a

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Speaker 1: place where a lot of veterans would be getting off

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Speaker 1: the boat from World War One, some of whom decided

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Speaker 1: to stay. And it was the early days of the

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Speaker 1: automobile and trucking industry. So Sam Marquel had been an

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Speaker 1: insurance agent. Uh, there were veterans getting off the boat.

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Speaker 1: They were they were providing cab rides which were unregulated,

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Speaker 1: unlicensed Nicola Ride Jitney's was the name of the term.

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Speaker 1: Of course, accidents ensued, as would be the case and

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Speaker 1: anything like that, and Sam Marquel got a law passed

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Speaker 1: that said, if you're going to operate one of these jydneys,

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Speaker 1: you had to have insurance and just the people would

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Speaker 1: provide it. And well, no insurance company would was willing

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Speaker 1: to take that sort of risk. So Sam markl said, well,

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Speaker 1: I'll started an insurance company to take that risk. I

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Speaker 1: don't know what the chicken and egg was, whether Sam

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Speaker 1: had the chess moves all laid out before you proposed

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Speaker 1: the proposal of the ordinance. I would not be surprised

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Speaker 1: if he did. But that was really the start in

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Speaker 1: the genesis of the company, and they caught a mega

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Speaker 1: wave in the sense that the automobile trucks, the highway system,

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Speaker 1: the internate interstate highway system for thirty or forty years,

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Speaker 1: you really had this tail wind of epic growth in

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Speaker 1: the underlying business that that they would ensure. Um. We

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Speaker 1: could go on and on with this conversation, but I

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Speaker 1: think the hallmark that still matters today is you look

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Speaker 1: at problems, you look at something that somebody needs, You

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Speaker 1: try to be creative. You try to figure out a

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Speaker 1: way to solve it. And that's what Marquell does historically,

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Speaker 1: largely through insurance products and ensuring things that a lot

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Speaker 1: of other companies choose not to do for a variety

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Speaker 1: of legitimate reasons. But then also we've expanded into a

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Speaker 1: lot of different products and services, industrial products and services

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Speaker 1: over the last fifteen years with the growth of mark

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Speaker 1: El Venture. So we we can we can do anything

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Speaker 1: and everything, and if we can figure out a way

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Speaker 1: to make the customers and the employees better off by

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Speaker 1: doing so, we'll do it. So the interesting thing about

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Speaker 1: the insurance side is insurers taken cash against the future

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Speaker 1: potential liability, but between when the policy is sold and

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Speaker 1: want to pay out has to be made. Hey, we

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Speaker 1: have to do something with all this capital, which brings

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Speaker 1: us to your job, your essentially c i O of

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Speaker 1: of market al assets. How do we describe your title?

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Speaker 1: And we'll get to the co CEO thing in a bit,

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Speaker 1: but technically what is your job description? Well, the c

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Speaker 1: i O in terms of chief investment officers post chief

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Speaker 1: information officer. That is exactly the job I had prior

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Speaker 1: to becoming the co CEO, and effectively it is still

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Speaker 1: a job that's embedded in my role. Now, again, if

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Speaker 1: you're a business historian and you have a sophisticated listening base,

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Speaker 1: if you think about insurance, first off, set it up.

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Speaker 1: Your your initial point is correct in that an insurance

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Speaker 1: company collects premiums today and they're gonna make a payment

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Speaker 1: to for a claim sometime in the future. So embedded

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Speaker 1: in every single insurance company is an investment operation. And

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Speaker 1: historically it's not been unusual for insurance companies to make

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Speaker 1: the vast majority, if not the totality, of their earnings

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Speaker 1: from what they make on the investments while they're holding

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Speaker 1: that pool of money. That that's the case. If you

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Speaker 1: can if you can run the the insurance side as

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Speaker 1: a break even and then just be free to do

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Speaker 1: what you want with that capital over until those potential

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Speaker 1: liabilities come home to roost. That's not a bad source

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Speaker 1: of capital. It's very cheap, exactly, and a lot of

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Speaker 1: minds have figured that out and and and known about that.

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Speaker 1: There's some interesting sort of financial history episodes. If you

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Speaker 1: go back to the nineteen sixties or seventies when conglomerates

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Speaker 1: were sort of the hot money things of the day,

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Speaker 1: many of those had an insurance company as the financial

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Speaker 1: core of the business. In the Gulf and Western teleedi

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Speaker 1: and things like that. Now, I think there's an interesting

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Speaker 1: cultural circumstances that's at play there in that if you

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Speaker 1: look at insurance companies that are run by investment people,

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Speaker 1: oftentimes that that movie didn't end that well, uh, because

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Speaker 1: you know, investment people have a certain mindset, a certain culture,

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Speaker 1: certain way of doing things, a certain lifesty, sort of

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Speaker 1: lifestyle they'd like to to lead. Insurance people probably not

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Speaker 1: wired that way. And most insurance companies are run by

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Speaker 1: people who came up through the discipline of insurance, so

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Speaker 1: they were claims people. They were at stuaries, they were

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Speaker 1: salespeople whatever, But the realm of insurance is what they're

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Speaker 1: wired to do and how they understand life. Uh, they

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Speaker 1: may or may not understand capital allocation and investments quite

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Speaker 1: so much. Similarly, and and as such, since they don't

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Speaker 1: understand it, I don't think they appreciate it and the

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Speaker 1: discipline and what's required to be really top league in

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Speaker 1: that requirement. Similarly, investment people when when they run an

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Speaker 1: insurance based organization and they came up through the realm

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Speaker 1: of investments, I think sometimes there's a tendency not to

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Speaker 1: appreciate the detail work and the daily discipline of what

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Speaker 1: it takes to to run a very good insurance operation.

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Speaker 1: So if you look at organizations that have successfully been

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Speaker 1: able to balance that tension and have both sides of

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Speaker 1: the house not have one overwhelmed the other side, that

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Speaker 1: list is very very short. Yep, And we're gonna talk.

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Speaker 1: Let's talk a little bit about that list, um. And

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Speaker 1: part of the reason you're implying is, Hey, some groups

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Speaker 1: are a little too safety first and to risk averse

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Speaker 1: if they're overly waited on the insurance side. Other groups

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Speaker 1: are too aggressive and risk embracing you need that balance,

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Speaker 1: which leads us to the comparison that I have to ask,

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Speaker 1: when did you start first hearing yourself described as the

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Speaker 1: next one Buffett, a mini one Buffett. He used Geico

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Speaker 1: as a giant source of inexpensive capital, and obviously did

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Speaker 1: okay with it, right, did pretty well with it, better

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Speaker 1: than pretty well. Um, when did you first start hearing

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Speaker 1: these noises? Because you've been with Marquel now for twenties something. Wow,

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Speaker 1: she's thirty one years. So how long was it before

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Speaker 1: these silly comparisons began? Well, I guess the first time

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Speaker 1: I really heard it was when I said it to

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Speaker 1: myself looking in the mirror, and and and frankly, that

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Speaker 1: would have happened even before I joined Marquelle. Really, the

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Speaker 1: way that started was the first time I became aware

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Speaker 1: of of Buffett and Berkshire was in eighty four with

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Speaker 1: the seminal Carol Loomis article in Fortune. And I can

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Speaker 1: remember I worked for a firm called Davenport and Company

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Speaker 1: of Virginia. Wonderful firm. Um still there today, been in

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Speaker 1: Richmond since eighteen sixty three. So uh, not going anywhere.

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Speaker 1: I'm going anywhere. The head of the department was a

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Speaker 1: gentleman named Joe Antram, and I read this article and

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Speaker 1: here's how naive and stupid I was. So it was

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Speaker 1: in eighty four. I was twenty two years old, and

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Speaker 1: I went into Joe's office and I said, hey, Joe,

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Speaker 1: have you ever heard of this guy named Warren Buffet?

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Speaker 1: Had Joe was sort of a crusty fella, and he says,

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Speaker 1: it's Buffet, you idiot, and threw me out. Well, I

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Speaker 1: went to the cutting edge technology of the day, which

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Speaker 1: was the standard and Poor's tear sheet and I and

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Speaker 1: I looked at the Berkshire Hathaway page. And my training

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Speaker 1: is as an accountant. I started out as a CPA

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Speaker 1: with Price Waterhouse Coopers, and I looked at those numbers

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Speaker 1: and I could tell, without resorting to four decimal point calculations,

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Speaker 1: they were good. So I became a Berkshire. I became

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Speaker 1: aware of Berkshire at that point. When did you first

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Speaker 1: become a Berkshire investor? Not until which also points out

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Speaker 1: how stupid one can be. Because when I first saw

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Speaker 1: he was right when he when he said get out

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Speaker 1: of here as exactly, he was right. So as a kid,

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Speaker 1: and the stupid things you do as a kid. Now, i'll, i'll,

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Speaker 1: i'll defer to the notion that at age two you're

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Speaker 1: still a kid. So I asked for grace, and in

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Speaker 1: that sense, so I looked at it. I could tell

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Speaker 1: the numbers were good, and I made the Syrian mistake.

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Speaker 1: I think the stock was dolls or something like that,

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Speaker 1: so expensive exactly, and I said, no stock could possibly

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Speaker 1: be worked that much. So I made the great mistake

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Speaker 1: of oh mission, and sat there and watched it go

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Speaker 1: from that to the first share we bought was five thousand,

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Speaker 1: seven and fifty dollars. And by the way, that's still

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Speaker 1: a pretty goodbye. But there's immense lessons to be learned

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Speaker 1: from that. So the per share value as opposed to

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Speaker 1: the per share price, it's do your math or do

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Speaker 1: your homeworking about that. And by the way, getting back

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Speaker 1: to Teleedin, which is one of those companies that was

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Speaker 1: on the list of balancing out the insurance in the

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Speaker 1: industrial sides of the business under the leadership Henry Singleton.

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Speaker 1: Uh Phayus Seraphim is a famous money manager who made

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Speaker 1: a lot of his reputation and returns by being right

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Speaker 1: about tele dine in the early days, and people used

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Speaker 1: to ask Sarahim what's the next tele dine and his

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Speaker 1: famous response was the next tele digne is teleed. So

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Speaker 1: when you got something right and you're gonna have exactly

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Speaker 1: dance with a girl you brang with and keep dancing.

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Speaker 1: But so answering your question about how the Berkshire comparison

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Speaker 1: started to take place, So six Marquet went public and

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Speaker 1: luck of the draw, I was the analyst at Davenport

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Speaker 1: who was assigned to cover it. So I started covering

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Speaker 1: Marquelle from the day of the I p O. And

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Speaker 1: what I observed was here was an insurance company that

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Speaker 1: made an underwriting profit. And at that time, in an

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Speaker 1: era of meaningfully fire rates, you didn't really need to

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Speaker 1: be disciplined about your insurance so much because you make

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Speaker 1: so much from interesting income that you you could engage

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Speaker 1: in cash flow underwriting. You just wanted to get cash

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Speaker 1: in the door and we'll worry about the claims. Well

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Speaker 1: a nominal basis, not necessarily real basis, but still, but

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Speaker 1: this was an unusual discipline to stick to the idea

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Speaker 1: of making an underwriting profit, even amidst the ability to

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Speaker 1: earn epic investment returns. So what I saw and by

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Speaker 1: this time, I'm twenty five or so from the I

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Speaker 1: p O is that here's here's an insurance based organization

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Speaker 1: which is going to make a dedicated to making an

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Speaker 1: underrated profit. And Steve Marquell, who was the vice chairman

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Speaker 1: at the time, was open minded and had already started

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Speaker 1: making some equity investments with those pennies of underwriting profit

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Speaker 1: out of each dollar. So they had a long term

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Speaker 1: mentality from day one. So I saw that instantly. It

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Speaker 1: was it was it was a lightbulb kind of realization,

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Speaker 1: and I wanted to own some of that stock and

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Speaker 1: be connected to the company. So from eight six through

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Speaker 1: ninety four years Steve Marquelle became up friend, a client,

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Speaker 1: a business associate, and he might tell the story differently.

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Speaker 1: I might tell it differently depending on the point of view.

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Speaker 1: But I sort of begged him for a job for

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Speaker 1: four years because I just wanted to be part of that.

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Speaker 1: In Marquelle did one of their famous double the size

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Speaker 1: of the company deals or they bought they bought another

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Speaker 1: company that was as large as what they were. Steve

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Speaker 1: had been managing investments by himself. I thought he might

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Speaker 1: like a wingman, and UH offered me the job at

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Speaker 1: that time. I got to call it at that and

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Speaker 1: I assume you jumped right at it exactly. And and

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Speaker 1: let's let me just stay with Marquelle for a moment.

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Speaker 1: They famously they don't hold analyst days. They don't give

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Speaker 1: earnings guides or things like that. At least that was

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Speaker 1: the reputation back then. Tell us a little bit about that.

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Speaker 1: What was the thinking behind if you're going to cover

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Speaker 1: us you figure it out? Well, there's a lot of

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Speaker 1: layers to that, but but I think it makes sense

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Speaker 1: think about it this way. If you if you really

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Speaker 1: are as you said, the first definition of Marquel the

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Speaker 1: family office, which is a very popular term these days,

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Speaker 1: that was not a term so much when I joined.

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Speaker 1: If you really want shareholders who are going to be

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Speaker 1: there for a long period of time and have a

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Speaker 1: sense of ownership and have a sense of partnership and

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Speaker 1: really wish to be multigenerational investors, Well, I run a

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Speaker 1: business and setting aside the investment side, but the markl

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Speaker 1: ventures sides of things in the businesses that we run,

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Speaker 1: which are long term established businesses, I don't think and

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Speaker 1: the people who run those businesses do not think about

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Speaker 1: their customers in a quarterly timeframe. We think about our customers.

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Speaker 1: Once you're a customer of ours, in whatever business we have,

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Speaker 1: we want to be doing a good enough job for

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Speaker 1: you and delivering enough value and delighting you in such

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Speaker 1: a way that you want to keep doing business with us.

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Speaker 1: So cutting that into quarterly time frames and setting expectations

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Speaker 1: that are tied to that, I just see it's like

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Speaker 1: a bad idea and and contradictory to to how we

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Speaker 1: would really run a business. So we didn't have to

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Speaker 1: think up all these things ourselves. We got to observe

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Speaker 1: the way Buffett did things. And we've been going to

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Speaker 1: the Berkshire Annual Meeting since UH since nine, which had

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Speaker 1: been the first year, the first year I joined, because

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Speaker 1: what he said to Steve at that point was, in

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Speaker 1: terms of investors that we wanted to get at Marquelle,

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Speaker 1: the people who are most likely to understand what we're

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Speaker 1: doing are people who already own Berkshire. So rather than

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Speaker 1: try to get them to come to UH Richmond and engage, so, well,

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Speaker 1: if you own Berkshire, you're already you're already qualified, So

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Speaker 1: let's go there and start meeting people. So that very

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Speaker 1: first year that we were there just because I've been

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Speaker 1: in the investor business for a couple of years. There

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Speaker 1: were there were six people that were willing to sit

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Speaker 1: down and drink coffee and eat bagels with Steve Markette

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Speaker 1: and I And we didn't have formal presentation or anything.

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Speaker 1: We just talked and answered their questions and then went

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Speaker 1: on for maybe two and a half three hours or

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Speaker 1: something like that in that room, six people. Uh. Chuck

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Speaker 1: Achery was one who's a legendary investor. I don't know

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Speaker 1: whether he's been on your your your podcast or not.

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Speaker 1: Wonderful guy and an introduction. Uh, he would be a

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Speaker 1: well worthy person who's talking to and he's a meaningful

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Speaker 1: teacher to me. I do indeed. Uh. Michael Lowenstein, whose

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Speaker 1: father was Louis Lowenstein, the professor at Columbia Business School

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Speaker 1: exactly Um, and one of his cousins I can't remember who,

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Speaker 1: but one wonderful family and sort of the right kind

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Speaker 1: of people, goteamed Peter Caman from Boston. Jonathan Brandt at

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Speaker 1: Ruwayne Kinnef is one of the panelists that asks Buffett

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Speaker 1: questions at the meeting, whose father was a roommate and

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Speaker 1: buddy of a Buffett and Bill Rwayne. So we started

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Speaker 1: off with just an absolutely wonderful set of people and

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Speaker 1: and all Steve and I said at the end of

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Speaker 1: that meeting was you know, we'll be back again next

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Speaker 1: year and if you know anyone who would be interested,

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Speaker 1: please let him know and we'll get together. So we

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Speaker 1: started doing that, and that became an annual tradition, and

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Speaker 1: we did that year after year after year. What started

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Speaker 1: with six people. By the time you got to the

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Speaker 1: year before last, which was the last in person meeting

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Speaker 1: that Berkshire had, we had something on the order of

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Speaker 1: people at that meeting, and again the same format. We

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Speaker 1: open it up, we say thank you for being here,

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Speaker 1: great to see you, what questions can we answer for you?

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Speaker 1: And and there are more Marqueue shareholders in that room

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Speaker 1: then typically come to our annual meeting. So it really

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Speaker 1: is cultivating of the community that that's out there. And

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Speaker 1: this year, uh, unfortunately, because the Berkshire meeting was virtual

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Speaker 1: and and that the crowd wasn't there, I said, well,

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Speaker 1: we have the opportunity to try to create some center

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Speaker 1: of gravity in Richmond, Virginia, because that convening, that worldwide

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Speaker 1: convening of people who are searching for certain values in

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Speaker 1: certain ways of running a business. The world is hungry

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Speaker 1: for that. So let's give him a forum and the

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Speaker 1: venue to do so. So we found a concert arena

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Speaker 1: and Richmond, Virginia that had a roof but open air

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Speaker 1: to to try to, you know, meet people halfway that

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Speaker 1: the pandemics are coming. We're getting better. We had a

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Speaker 1: meeting we had My goal was to get a hundred

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Speaker 1: and a hundred out of town professional investors to attend.

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Speaker 1: We ended up with about a hundred and fifty professional

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Speaker 1: investors and then between employees, associates, local people. We had

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Speaker 1: five hundred people at that meeting and we tried to

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Speaker 1: make it fun. We had we had food trucks, we

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Speaker 1: had beer trucks, we had a band. And that makes

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Speaker 1: seem minor, but it speaks to the culture of trying

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Speaker 1: to connect with people in ways that you just cannot

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Speaker 1: do in any other way than than be with them,

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Speaker 1: and and to cultivate this long term sense of ownership

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Speaker 1: where your time horizons are infinite, eternal, rather than than

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Speaker 1: than cut into two quarterly things. It's it's just an

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Speaker 1: entirely different way of approaching things and thinking about things,

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Speaker 1: So it doesn't really comport a match up with the

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Speaker 1: typical way that that major finance has done. Not right

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Speaker 1: or wrong, just different. I like it. I love the

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Speaker 1: idea of burning Man for finance exact it of oh great,

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Speaker 1: another boring hotel conference room. I mean, the one good

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Speaker 1: takeaway from the pandemic is those sorts of financial you know,

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Speaker 1: just deadly meetings. They seem to be attenuating quite quite

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Speaker 1: a bit. And I think people are maximizing their multitasking

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Speaker 1: skills when they're listening to something like that on a

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Speaker 1: on a zoom. God, I don't out have the patience

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Speaker 1: for the endurance to do that with the without fidgeting

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Speaker 1: and looking at something else too. I'm with you on it.

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Speaker 1: Let's talk a little bit about your background, which has

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Speaker 1: some really interesting things about it. You've described yourself as

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Speaker 1: knowing that you're just good and not great. Explain that

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Speaker 1: who who goes out and says I'm not great? I'm

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Speaker 1: good and I'm aware of that. Well. I was in

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Speaker 1: a discussion last night with an absolutely fascinating person, absolutely

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Speaker 1: high end quality on every measure you could you could

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Speaker 1: think about, and and that excellence shown through and the

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Speaker 1: discussion took this twist and turn where the distinction between

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Speaker 1: an optimizer and a satisfier came up. And and I

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Speaker 1: think there is a tendency among type A people, extraordinarily

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Speaker 1: high accomplishment people, high achievers, to really latch onto the

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Speaker 1: idea of optimization. And there's nothing wrong with that, But

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Speaker 1: sometimes there can be a hidden, intangible, unquantifiable cost to

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Speaker 1: focusing entirely on optimizations all the time. Einstein says that

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Speaker 1: you know, not everything that counts can be counted, and

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Speaker 1: not everything that counts. Einstein smarter to me. Here's a

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Speaker 1: perfect example of how you can remember not not everything

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Speaker 1: that counts can be counted, and not everything that can

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Speaker 1: be counted counts. There you go, my special guest, Very Riddles,

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Speaker 1: thanks for the pickup. And the was that Einstein? I

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Speaker 1: thought that was I thought that was some management consultants.

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Speaker 1: I'm gonna go with line stuff, but I'll defer to

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Speaker 1: I'll defer to the fact checking experts on that. But

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Speaker 1: but the point is there there's an element of intuition

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Speaker 1: of of the the intangible sense of spirit and culture

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Speaker 1: that I find extraordinarily different difficult to matter that sometimes

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Speaker 1: you got you gotta to let people have some room

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Speaker 1: to make some mistakes and look at outcomes that are

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Speaker 1: not optimized and what you get in design thinking and

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Speaker 1: in systems approach, if you're dealing with the right kind

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Speaker 1: of systems, there there's there's a bit of an evolutionary

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Speaker 1: process where um mistakes that you make start drifting away,

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Speaker 1: and things that you did right start compounding and and

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Speaker 1: and and magnifying themselves. And and as such, if you

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Speaker 1: just if you just leave a little slack in the

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Speaker 1: system and you don't try to press it to the

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Speaker 1: last red line of what's there, you allow time and

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Speaker 1: space and muscle and rest and energy to create things

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Speaker 1: that you you couldn't have thought of beforehand, and that

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Speaker 1: happened somewhat through serendipity. So I think, I think humility. Uh,

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Speaker 1: And it's it's an epic challenge. I'm fifty nine years

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Speaker 1: old now, and fortunately things have worked out well, and

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Speaker 1: I have credibility because my record is pretty good. I

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Speaker 1: have a lot of empathy and and understanding of the

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Speaker 1: challenge that would face year old or twenty five year

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Speaker 1: old or me at two trying to get on the

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Speaker 1: ladder and get the career and get the leeway and

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Speaker 1: latitude that I enjoy right now, because if you think

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Speaker 1: about it, say you're twenty two or and you're trying

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Speaker 1: to pitch somebody to demandage money for them or being

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Speaker 1: given discretion. Typically if you just say the kinds of

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Speaker 1: things that I do for a long time, and we're

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Speaker 1: gonna be patient, we're gonna look at this and sifting,

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Speaker 1: so you don't really stand out enough to get people

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Speaker 1: to to write you a chack, especially exactly so you're

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Speaker 1: you're forced, almost almost bullied by the system to make

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Speaker 1: hyperbolic statements and and claim precision and flame efforts that

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Speaker 1: are that are super human just to get people to

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Speaker 1: to give you the job and give you the money

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Speaker 1: to manage. And I think markets are are are quantum systems.

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Speaker 1: They defy understanding, and you can do a lot of

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Speaker 1: work and you can keep trying to get to the

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Speaker 1: next decimal point of understanding. But there's a certain irreducible

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Speaker 1: quantity to human psyche and greed and fear and all

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Speaker 1: those sort of things that really do matter and markets,

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Speaker 1: And I just think it's helpful to be humble to

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Speaker 1: acknowledge that, don't pretend you can know it. And but

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Speaker 1: virtue of not pretending that you can know it. I

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Speaker 1: think you're more open to ideas, people, different ways of thinking.

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Speaker 1: Um that you can start out with the premise that

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Speaker 1: this person I'm talking to is probably smarter than I am.

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Speaker 1: They're demonstrably smarter than I am. So I think I

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Speaker 1: should listen and learn something. And if you just go

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00:23:54,040 --> 00:23:57,320
Speaker 1: about your daily life that way, you do learn things,

431
00:23:57,359 --> 00:23:59,440
Speaker 1: and you do get exposed to things, and the people

432
00:23:59,440 --> 00:24:02,320
Speaker 1: that were right they start to occupy a greater and

433
00:24:02,359 --> 00:24:04,720
Speaker 1: greater share of your mind share, and the people who

434
00:24:04,720 --> 00:24:06,400
Speaker 1: are wrong kind of kind of kind of drift away

435
00:24:06,440 --> 00:24:09,120
Speaker 1: into a smaller and smaller little thing. So the math

436
00:24:09,160 --> 00:24:13,080
Speaker 1: of compounding really accentuates the positive, and it it makes

437
00:24:13,119 --> 00:24:16,560
Speaker 1: the it makes the mistakes drift away into irrelevance over time.

438
00:24:16,800 --> 00:24:20,520
Speaker 1: I do like the idea of of not being a

439
00:24:20,560 --> 00:24:24,720
Speaker 1: maximalist optimizer to give you a little breathing space to

440
00:24:24,800 --> 00:24:29,160
Speaker 1: allow um. Creativity and collaboration are the things to bubble up.

441
00:24:29,840 --> 00:24:32,480
Speaker 1: I don't remember whose quote I'm about to steal, but

442
00:24:33,119 --> 00:24:36,359
Speaker 1: the line is jazz is the space between the notes,

443
00:24:36,440 --> 00:24:39,200
Speaker 1: and it's that same You need a little breathing room

444
00:24:39,240 --> 00:24:42,560
Speaker 1: in order to allow some creativity to take exactly. So,

445
00:24:42,560 --> 00:24:47,760
Speaker 1: so let's talk about a horrible, terrible, ridiculous mistake you've

446
00:24:47,800 --> 00:24:52,399
Speaker 1: made um or at least everyone else who does this,

447
00:24:52,560 --> 00:24:55,520
Speaker 1: it's a horrible mistake. Co C E O S is

448
00:24:55,640 --> 00:24:59,280
Speaker 1: usually a disaster. Somehow, you guys seem to have made

449
00:24:59,320 --> 00:25:01,920
Speaker 1: that work. Yeah, I think you're correct to point out

450
00:25:02,160 --> 00:25:04,679
Speaker 1: that that's that's not the odds way to bet. And

451
00:25:04,720 --> 00:25:06,919
Speaker 1: I think it gets back to some of the history

452
00:25:06,920 --> 00:25:09,520
Speaker 1: and culture of Marquel that makes it work in the

453
00:25:09,600 --> 00:25:11,560
Speaker 1: sense that, all right, you had Sam Marquell, who was

454
00:25:11,560 --> 00:25:14,400
Speaker 1: the original founder of the company. He ran it from

455
00:25:14,440 --> 00:25:17,800
Speaker 1: its inception up until I think the mid fifties, late

456
00:25:17,880 --> 00:25:21,080
Speaker 1: fifties something like that. Sam had four sons who were

457
00:25:21,080 --> 00:25:25,960
Speaker 1: two sets of twins, and when he unfortunately died, the

458
00:25:25,960 --> 00:25:29,320
Speaker 1: business then was taken over by the by the four sons,

459
00:25:29,800 --> 00:25:32,720
Speaker 1: and and they ran it essentially by unanimous consent. I

460
00:25:32,760 --> 00:25:36,480
Speaker 1: believe they had lunch every day, if not almost every day,

461
00:25:36,520 --> 00:25:39,480
Speaker 1: and for any kind of strategic or or more than

462
00:25:39,520 --> 00:25:42,600
Speaker 1: just little decision, there had to be unanimity among the

463
00:25:42,640 --> 00:25:45,159
Speaker 1: four And I think you can sort of picture how

464
00:25:45,200 --> 00:25:48,760
Speaker 1: this unspoils everyone has veto power exactly, and the company

465
00:25:48,840 --> 00:25:52,680
Speaker 1: did not grow that much during their era. That they

466
00:25:52,760 --> 00:25:55,680
Speaker 1: ran it. But then what happened, But so he went

467
00:25:55,720 --> 00:25:59,119
Speaker 1: from one CEO to effectively four despite what the titles

468
00:25:59,160 --> 00:26:03,320
Speaker 1: might have been. So then the second generation started to

469
00:26:04,520 --> 00:26:07,040
Speaker 1: go the way of all flesh, and the third generation

470
00:26:07,080 --> 00:26:09,760
Speaker 1: comes along. And at this point there are twelve cousins

471
00:26:09,840 --> 00:26:13,200
Speaker 1: that that are in existence, some of whom worked for MARKL,

472
00:26:13,320 --> 00:26:17,400
Speaker 1: some of whom did not, And the generational transfer succession

473
00:26:17,400 --> 00:26:20,520
Speaker 1: issues started to be become paramount and become important. A

474
00:26:20,560 --> 00:26:23,240
Speaker 1: lot of sifting and sorting about that. The public offering

475
00:26:23,400 --> 00:26:27,399
Speaker 1: offering in Night six was one of the tools used

476
00:26:27,400 --> 00:26:30,000
Speaker 1: to bring about some some finality that. But at the

477
00:26:30,080 --> 00:26:33,119
Speaker 1: end of all that sifting and sorting, three of the

478
00:26:33,119 --> 00:26:37,600
Speaker 1: twelve cousins said we're in, and in effect they did

479
00:26:37,600 --> 00:26:40,160
Speaker 1: a leverage buyout of the second generation where they gave

480
00:26:40,240 --> 00:26:43,479
Speaker 1: them a note with a coupon to provide income and

481
00:26:43,920 --> 00:26:47,080
Speaker 1: sale process to the to the second generation, but gave

482
00:26:47,119 --> 00:26:49,400
Speaker 1: them the stub equity underneath of it, so that as

483
00:26:49,440 --> 00:26:51,840
Speaker 1: they built, the value of the business had attributed to

484
00:26:51,880 --> 00:26:54,400
Speaker 1: the equity as opposed to the debt that was there

485
00:26:54,400 --> 00:26:56,640
Speaker 1: for the second generation. The the I p O did

486
00:26:56,640 --> 00:26:58,680
Speaker 1: two things. It paid off that debt, It gave the

487
00:26:58,720 --> 00:27:01,840
Speaker 1: company a little bit of a capital bay and culturally

488
00:27:02,320 --> 00:27:04,280
Speaker 1: it said, you know, you don't need to be a

489
00:27:04,320 --> 00:27:07,000
Speaker 1: member of the Marco family to own equity interest. And

490
00:27:07,320 --> 00:27:10,160
Speaker 1: I'm a perfect example of that. I'm not a Marquelle

491
00:27:10,160 --> 00:27:12,880
Speaker 1: family member, not married to Mark, I haven't no Markel blood.

492
00:27:13,280 --> 00:27:14,959
Speaker 1: I mean, but I've been there thirty some years. I've

493
00:27:14,960 --> 00:27:16,680
Speaker 1: been there since I was a kid, So I feel

494
00:27:16,720 --> 00:27:19,120
Speaker 1: like a member of the Marco family. And I owned

495
00:27:19,119 --> 00:27:21,199
Speaker 1: some equity in the company from the I p O

496
00:27:21,680 --> 00:27:25,320
Speaker 1: from day one and had always sort of been accumulating

497
00:27:25,320 --> 00:27:29,399
Speaker 1: more stock as uh as as time goes by. So um,

498
00:27:29,440 --> 00:27:33,440
Speaker 1: there's that element of how the transition is taken place.

499
00:27:33,480 --> 00:27:36,359
Speaker 1: So the four went down to three and and really

500
00:27:36,400 --> 00:27:39,679
Speaker 1: a triumvirate of Steve Markel, twenty, Mark Ellen, Alan Kirshner,

501
00:27:39,920 --> 00:27:42,760
Speaker 1: who was a cousin in law. H ran the business

502
00:27:42,880 --> 00:27:47,159
Speaker 1: for decades and as as they started to to to

503
00:27:47,240 --> 00:27:51,560
Speaker 1: move on, um Alan retired from the board year and

504
00:27:51,560 --> 00:27:54,040
Speaker 1: after years or so ago, Steven Tony are still in

505
00:27:54,080 --> 00:27:57,920
Speaker 1: the board but not active in day to day management. UM.

506
00:27:57,960 --> 00:28:01,040
Speaker 1: You know that that went to read it too, so

507
00:28:01,160 --> 00:28:04,720
Speaker 1: Richie and myself. And it's also connected to the evolution

508
00:28:04,760 --> 00:28:09,359
Speaker 1: of the business itself in that historically the insurance business

509
00:28:09,440 --> 00:28:14,000
Speaker 1: was the largest single piece of the company. Investments are there,

510
00:28:14,160 --> 00:28:17,320
Speaker 1: but um, you know, it's just the investment operation that's

511
00:28:17,320 --> 00:28:20,440
Speaker 1: embedded in an insurance company. So while we emphasize investments

512
00:28:20,480 --> 00:28:23,760
Speaker 1: more than most, every insurance company has an investment operation,

513
00:28:23,840 --> 00:28:26,920
Speaker 1: so that that wasn't weird. As Marquel Ventures has grown

514
00:28:26,960 --> 00:28:29,360
Speaker 1: to become substantial part of the company, you have two

515
00:28:29,440 --> 00:28:33,119
Speaker 1: very distinct pieces of the company. So in in reality,

516
00:28:33,160 --> 00:28:35,520
Speaker 1: the way it works between Richie and myself is that

517
00:28:36,040 --> 00:28:38,640
Speaker 1: and this is really the way it worked with Allantoni

518
00:28:38,720 --> 00:28:42,880
Speaker 1: and Steve as well. Um, in the era of the Triumvirate,

519
00:28:43,280 --> 00:28:47,160
Speaker 1: everything on the income statement reported to Tony Marquel. So

520
00:28:47,200 --> 00:28:50,680
Speaker 1: what branches did we have, how many salespeople, what were

521
00:28:50,720 --> 00:28:53,640
Speaker 1: the locations, all the all the sort of things that

522
00:28:53,640 --> 00:28:57,680
Speaker 1: would the managing the reals, all that would Tony would

523
00:28:57,680 --> 00:29:00,680
Speaker 1: be the ultimate authority and really the ultimate EO of that.

524
00:29:01,040 --> 00:29:03,560
Speaker 1: And I was in the room sometimes when when Alan

525
00:29:03,600 --> 00:29:06,239
Speaker 1: and Steve would disagree with him, but they would always say,

526
00:29:06,320 --> 00:29:09,080
Speaker 1: at the end of that meeting, if that is your decision,

527
00:29:09,120 --> 00:29:11,560
Speaker 1: that is your area, so we support you, and they

528
00:29:11,560 --> 00:29:13,800
Speaker 1: walk out of the room, the doors closed, and there's

529
00:29:14,440 --> 00:29:17,640
Speaker 1: the team speaks with one voice. Similarly, Steve was in

530
00:29:17,720 --> 00:29:20,960
Speaker 1: charge of the balance sheet of the organization and anything

531
00:29:21,200 --> 00:29:24,120
Speaker 1: the lost reserve, setting, the m and a activity strategy,

532
00:29:24,200 --> 00:29:26,880
Speaker 1: stuff like that. Steve was the ultimate authority on that

533
00:29:26,960 --> 00:29:29,080
Speaker 1: sort of stuff, and Alan joked he was the world's

534
00:29:29,120 --> 00:29:32,160
Speaker 1: highest paid referee because he would adjudicate disputes between the

535
00:29:32,160 --> 00:29:34,640
Speaker 1: two of them to make sure that's how it worked.

536
00:29:34,880 --> 00:29:37,880
Speaker 1: So with Richie Eye, it's a slightly different gearing. He's

537
00:29:38,000 --> 00:29:41,200
Speaker 1: in charge of the insurance operations of the business. I'm

538
00:29:41,200 --> 00:29:43,959
Speaker 1: in charge of the investments and the ventures operations and

539
00:29:44,760 --> 00:29:48,720
Speaker 1: um Our. Our normal working relationship is if something meaningful,

540
00:29:48,920 --> 00:29:51,720
Speaker 1: substantive comes up in one of our areas, the first

541
00:29:51,760 --> 00:29:54,720
Speaker 1: person that I will talk to about an upcoming deal

542
00:29:54,800 --> 00:29:57,720
Speaker 1: or a capital a big capital allocation decision, I'll talk

543
00:29:57,760 --> 00:30:00,520
Speaker 1: to Richie and make sure he and I get on

544
00:30:00,560 --> 00:30:02,320
Speaker 1: the same page. We we don't see the world Eye

545
00:30:02,360 --> 00:30:05,520
Speaker 1: die on everything, but we we functioned and work it out.

546
00:30:05,760 --> 00:30:08,800
Speaker 1: And similarly, um on an insurance thing, he would come

547
00:30:08,840 --> 00:30:11,640
Speaker 1: to me first and we worked that out. So on

548
00:30:12,080 --> 00:30:15,360
Speaker 1: major capital allocation decisions, it's very important that he and

549
00:30:15,360 --> 00:30:18,840
Speaker 1: I managed to find agreement and we have on day on,

550
00:30:18,960 --> 00:30:21,920
Speaker 1: day to day matters. The tactical execution of the business itself.

551
00:30:22,240 --> 00:30:26,600
Speaker 1: We both operate as soul CEOs. In the realm of

552
00:30:26,640 --> 00:30:29,479
Speaker 1: the business was as we run. So you mentioned so

553
00:30:29,600 --> 00:30:32,000
Speaker 1: we have insurance, we have asset management, and you mentioned

554
00:30:32,480 --> 00:30:36,480
Speaker 1: the third arm Marquale Ventures. That's kind of unusual for

555
00:30:36,520 --> 00:30:39,960
Speaker 1: an insurance company. Let's talk a little bit about, UM,

556
00:30:40,160 --> 00:30:45,000
Speaker 1: what what brought this division about and what sort of

557
00:30:45,000 --> 00:30:47,680
Speaker 1: things you look at? What do you focus on? Sure? Well, again,

558
00:30:47,840 --> 00:30:49,960
Speaker 1: the way it came about was being aware of the

559
00:30:50,000 --> 00:30:54,920
Speaker 1: Berkshire example where you saw Buffett and Buffett would give

560
00:30:54,960 --> 00:30:57,520
Speaker 1: a lot of credit to Henry Singleton and Telen and

561
00:30:57,800 --> 00:31:01,280
Speaker 1: seeing that model and how that how that worked. UM,

562
00:31:01,320 --> 00:31:05,760
Speaker 1: we'd always bought equity securities, and there's a there's a

563
00:31:05,800 --> 00:31:08,880
Speaker 1: construct and a way we think about what we buy

564
00:31:09,160 --> 00:31:11,600
Speaker 1: and and really it's the same thing we hope Marquel

565
00:31:11,680 --> 00:31:14,960
Speaker 1: shareholders think about us when when they when they buy

566
00:31:14,960 --> 00:31:18,080
Speaker 1: Markel stock. So we look for profitable businesses with good

567
00:31:18,080 --> 00:31:20,120
Speaker 1: returns on capital that don't use too much debt to

568
00:31:20,120 --> 00:31:22,719
Speaker 1: do it. We look for management teams with equal measures

569
00:31:22,720 --> 00:31:25,520
Speaker 1: of talent and integrity. We look for businesses that have

570
00:31:25,680 --> 00:31:29,920
Speaker 1: reinvestment opportunities or great capital discipline, and we look for

571
00:31:29,960 --> 00:31:32,160
Speaker 1: that at a reasonable price. That's that's the quick and

572
00:31:32,160 --> 00:31:35,280
Speaker 1: dirty way of describing what we look for when we're

573
00:31:35,400 --> 00:31:38,320
Speaker 1: buying a public security. Well, from my point of view,

574
00:31:38,960 --> 00:31:41,720
Speaker 1: whether that's buying a hundred shares or something, a thousand

575
00:31:41,760 --> 00:31:45,280
Speaker 1: shares of something, or the entire company, the thought process

576
00:31:45,320 --> 00:31:48,880
Speaker 1: is exactly the same. So we'd seen the example from

577
00:31:48,880 --> 00:31:51,440
Speaker 1: Berkshire and Televign of what it meant to go from

578
00:31:51,920 --> 00:31:58,440
Speaker 1: passive minority shareholders to actually controlling shareholders in diverse businesses,

579
00:31:58,840 --> 00:32:01,440
Speaker 1: and and that's really the way it happened. Really from

580
00:32:01,440 --> 00:32:04,360
Speaker 1: the first minute that I went to Markel in ninety

581
00:32:04,600 --> 00:32:06,440
Speaker 1: always had it in the back of my mind that

582
00:32:06,480 --> 00:32:10,240
Speaker 1: this would be a future leg of growth and sustainability

583
00:32:10,400 --> 00:32:13,040
Speaker 1: for the company. It wasn't until two thousand and five

584
00:32:13,160 --> 00:32:16,720
Speaker 1: that the stars aligned in a particular deal because it

585
00:32:16,800 --> 00:32:18,800
Speaker 1: happened to be in Richmond, Virginia, because I happened to

586
00:32:18,840 --> 00:32:23,160
Speaker 1: personally know the CEO. We were not in the traditional

587
00:32:23,200 --> 00:32:27,280
Speaker 1: investment banking channels deal flow channels. It just happened through

588
00:32:27,280 --> 00:32:30,600
Speaker 1: serendipitous circumstances. Some of that time and space that we

589
00:32:30,640 --> 00:32:33,800
Speaker 1: talked about. Found a company called m F. Bakery Equipment,

590
00:32:34,200 --> 00:32:37,920
Speaker 1: which if you if you get McDonald's hamburger or hot dog,

591
00:32:39,120 --> 00:32:41,920
Speaker 1: very good odds that there's buns and rolls were baked

592
00:32:41,920 --> 00:32:44,760
Speaker 1: on a m F. Baker Equipment, the leading company at

593
00:32:44,800 --> 00:32:47,840
Speaker 1: what they do, and that in that world. So happened

594
00:32:47,840 --> 00:32:50,280
Speaker 1: to be headquartered in Richard, Virginia, happened to know the CEO,

595
00:32:50,640 --> 00:32:52,720
Speaker 1: happened to know it was for sale, a knew the seller,

596
00:32:53,000 --> 00:32:54,960
Speaker 1: and we were able to do a deal. And doing

597
00:32:54,960 --> 00:32:57,480
Speaker 1: that one deal raises a flag and then all of

598
00:32:57,560 --> 00:33:00,960
Speaker 1: a sudden, my phone starts to ring and I didn't

599
00:33:00,960 --> 00:33:03,360
Speaker 1: know you guys would do that? And how about this business?

600
00:33:03,400 --> 00:33:06,920
Speaker 1: How about that business? And it really has cascaded from that.

601
00:33:07,200 --> 00:33:11,760
Speaker 1: So so Berkshire is kind of known for when when

602
00:33:11,800 --> 00:33:15,240
Speaker 1: Buffet and Monger find a company I like that meets

603
00:33:15,240 --> 00:33:21,600
Speaker 1: similar qualifications, including very very strong leadership, talent management of

604
00:33:21,640 --> 00:33:25,719
Speaker 1: the company, they basically put them into the Berkshire family

605
00:33:25,840 --> 00:33:29,719
Speaker 1: and let them run the business continue running the business

606
00:33:29,760 --> 00:33:33,640
Speaker 1: so successfully. I'm assuming you bring a similar approach that

607
00:33:33,760 --> 00:33:35,280
Speaker 1: is correct and for instance, one of the ways to

608
00:33:35,360 --> 00:33:37,920
Speaker 1: validate that and look at what people do not what

609
00:33:37,960 --> 00:33:41,760
Speaker 1: they say. The CEO of a MF Bakery, who we

610
00:33:41,840 --> 00:33:45,040
Speaker 1: bought that business with in two thousand and five is

611
00:33:45,080 --> 00:33:47,560
Speaker 1: still the CEO of that business sixteen years later. Correct.

612
00:33:47,920 --> 00:33:50,960
Speaker 1: Of the twenty or so businesses that we have bought

613
00:33:51,320 --> 00:33:56,160
Speaker 1: over the last sixteen seventeen years, probably fifteen or sixteen

614
00:33:56,160 --> 00:33:58,400
Speaker 1: of them are still run by the CEO who's there

615
00:33:59,040 --> 00:34:01,760
Speaker 1: the day we show it up. So we're very much

616
00:34:01,760 --> 00:34:04,720
Speaker 1: hopeful that the management team, the leadership team that is

617
00:34:04,760 --> 00:34:07,040
Speaker 1: in place, well, we'll stay with us and become part

618
00:34:07,080 --> 00:34:10,120
Speaker 1: of the Marquelle family and grow and flourish because we

619
00:34:10,120 --> 00:34:12,800
Speaker 1: will take the worry about capital off the table from them.

620
00:34:12,840 --> 00:34:14,920
Speaker 1: We'll take and and I'll tell this story about a

621
00:34:15,040 --> 00:34:18,960
Speaker 1: MF for example. So UM, you know, it was owned

622
00:34:19,280 --> 00:34:22,960
Speaker 1: by a local set of of business people in Richmond,

623
00:34:23,200 --> 00:34:24,840
Speaker 1: and it was what I would call a club private

624
00:34:24,840 --> 00:34:27,319
Speaker 1: equity deal. So it's not levered to the extent that

625
00:34:27,880 --> 00:34:30,279
Speaker 1: many private equity circumstances would be, but it had some

626
00:34:30,400 --> 00:34:33,600
Speaker 1: leverage attached to it. And the CEO of the business

627
00:34:33,640 --> 00:34:37,120
Speaker 1: when I showed up Um and Marquelle bought things. I said,

628
00:34:37,160 --> 00:34:39,439
Speaker 1: you know, in the in the old days, Ken when

629
00:34:39,480 --> 00:34:41,759
Speaker 1: a when a machine broke. That was a really bad

630
00:34:41,840 --> 00:34:46,040
Speaker 1: day for you because you had an unhappy customer and

631
00:34:46,120 --> 00:34:48,319
Speaker 1: you had an interest built to pay at the same time,

632
00:34:48,480 --> 00:34:53,640
Speaker 1: and that creates tension. I said, um, these days and

633
00:34:53,840 --> 00:34:57,160
Speaker 1: forever going forward, I'm not rooting for machines to break,

634
00:34:57,200 --> 00:34:59,080
Speaker 1: but I know in the real world world they do.

635
00:34:59,440 --> 00:35:01,640
Speaker 1: And on that day, instead of that being a bad day,

636
00:35:01,920 --> 00:35:03,920
Speaker 1: I now want that to be a good day. I

637
00:35:03,920 --> 00:35:06,080
Speaker 1: want you to show up. I want you to fix it.

638
00:35:06,160 --> 00:35:07,719
Speaker 1: I want you to make it right. I want you

639
00:35:07,760 --> 00:35:10,120
Speaker 1: to make your customer happy. And if you do that,

640
00:35:10,239 --> 00:35:13,879
Speaker 1: and you do that repeatedly, dependently, and never waver from that,

641
00:35:14,200 --> 00:35:16,319
Speaker 1: what will happen over the course of the next three, five,

642
00:35:16,440 --> 00:35:20,399
Speaker 1: seven years is your reputation for being that person will

643
00:35:20,440 --> 00:35:22,480
Speaker 1: grow and grow and grow, and you'll get paid fairly

644
00:35:22,520 --> 00:35:26,799
Speaker 1: for doing that. So by removing the financial constraint of

645
00:35:26,840 --> 00:35:30,040
Speaker 1: an interest bill and adding the dimension of that time

646
00:35:30,080 --> 00:35:33,080
Speaker 1: horizon where look, I'm not gonna worry about this quarter

647
00:35:33,120 --> 00:35:35,000
Speaker 1: because I know this is the right thing to do.

648
00:35:35,120 --> 00:35:37,080
Speaker 1: So we're just gonna do it, and then the accounts

649
00:35:37,120 --> 00:35:38,960
Speaker 1: will tally up with the results of that. But I'm

650
00:35:39,000 --> 00:35:41,239
Speaker 1: just I'm willing to bet that will be good, and

651
00:35:41,280 --> 00:35:43,719
Speaker 1: that is a business that in a no growth industry.

652
00:35:44,040 --> 00:35:46,319
Speaker 1: They've done a couple of tucking deals since that time,

653
00:35:46,600 --> 00:35:49,800
Speaker 1: but there's six times the size that they were the

654
00:35:50,080 --> 00:35:54,000
Speaker 1: day we showed up, and they're every bit as as profitable,

655
00:35:54,000 --> 00:35:56,839
Speaker 1: if if not more so. And I think the mentality

656
00:35:56,920 --> 00:36:01,640
Speaker 1: with which the businesses run has been helped by the

657
00:36:01,640 --> 00:36:07,080
Speaker 1: market capital umbrella. We really give somebody the room to

658
00:36:07,160 --> 00:36:10,600
Speaker 1: do what they want to do anyway. So, so bakery

659
00:36:10,640 --> 00:36:15,480
Speaker 1: equipment is the first acquisition you do, what are the

660
00:36:15,520 --> 00:36:18,800
Speaker 1: next couple of acquisitions and what Because from what I've read,

661
00:36:20,400 --> 00:36:22,120
Speaker 1: there's not a whole lot of rhyme or reason. It

662
00:36:22,200 --> 00:36:25,880
Speaker 1: just seems as long as it meets those four metrics

663
00:36:25,920 --> 00:36:30,480
Speaker 1: that you described in terms of UM profitability and return

664
00:36:30,520 --> 00:36:34,640
Speaker 1: on capital, talent, integrity, etcetera. UM, you guys seem to

665
00:36:34,640 --> 00:36:38,120
Speaker 1: be pretty open minded as to the sort of acquisitions

666
00:36:38,160 --> 00:36:40,080
Speaker 1: that makes sense for you. Well, that's exactly right, and

667
00:36:40,120 --> 00:36:43,520
Speaker 1: those four things are indeed the selection criteria. Now, if

668
00:36:43,520 --> 00:36:46,320
Speaker 1: I wanted to speak in an academic setting, and I

669
00:36:46,360 --> 00:36:49,440
Speaker 1: wanted to convince the consultants and the academics that I

670
00:36:49,480 --> 00:36:52,560
Speaker 1: did indeed have some sort of rational strategy, I could

671
00:36:52,680 --> 00:36:54,640
Speaker 1: frame it in such a way where I said, Um,

672
00:36:54,680 --> 00:36:58,400
Speaker 1: what we are looking for is large companies within small industries,

673
00:36:58,920 --> 00:37:00,960
Speaker 1: because if you look at a mark get leader in

674
00:37:01,000 --> 00:37:03,560
Speaker 1: a small industry, what you have is a situation where

675
00:37:03,600 --> 00:37:05,640
Speaker 1: you are the go to vendor, you are the go

676
00:37:05,760 --> 00:37:09,360
Speaker 1: to supplier, you have some advantages of incumbency, and unless

677
00:37:09,400 --> 00:37:12,319
Speaker 1: you mistreat your customer or do something wrong or don't

678
00:37:12,400 --> 00:37:15,560
Speaker 1: keep up, um, you are highly likely to get the

679
00:37:15,640 --> 00:37:18,080
Speaker 1: next order. So if you if you look at all

680
00:37:18,080 --> 00:37:21,600
Speaker 1: our businesses, it is often the case that these companies

681
00:37:21,640 --> 00:37:25,279
Speaker 1: are actually pretty well known and and very good and

682
00:37:25,480 --> 00:37:28,440
Speaker 1: very dominant at the little niche there in. And because

683
00:37:28,440 --> 00:37:32,040
Speaker 1: it's a small industry that is not as attractive to bigger,

684
00:37:32,040 --> 00:37:34,400
Speaker 1: bigger companies that are gonna come after it, And because

685
00:37:34,400 --> 00:37:36,879
Speaker 1: it is so well established and so dependent upon by

686
00:37:36,920 --> 00:37:40,160
Speaker 1: their customers, it's harder to start up a competitor into garage.

687
00:37:40,600 --> 00:37:44,520
Speaker 1: And I don't think uh, you know, the young geniuses

688
00:37:44,520 --> 00:37:46,920
Speaker 1: at the Stanford Business School are trying to figure out

689
00:37:47,000 --> 00:37:51,400
Speaker 1: breakthrough to disruptive ways to break brand. Uh So these

690
00:37:51,440 --> 00:37:53,360
Speaker 1: are these are not the sort of things that people

691
00:37:53,440 --> 00:37:55,839
Speaker 1: are talking about our our interests, but we can build

692
00:37:55,840 --> 00:37:59,440
Speaker 1: a fine business, uh By by collecting these these wonderful

693
00:37:59,440 --> 00:38:01,760
Speaker 1: things and grow. Give us another one. Tell us another

694
00:38:01,800 --> 00:38:06,719
Speaker 1: example of a business that UM the average person might

695
00:38:06,800 --> 00:38:10,279
Speaker 1: not think of as a long term profitable business, but

696
00:38:10,320 --> 00:38:14,920
Speaker 1: you guys have managed to put into your UM balance

697
00:38:14,920 --> 00:38:17,600
Speaker 1: sheet and have been very happy. Well, I mean the

698
00:38:17,960 --> 00:38:20,800
Speaker 1: most recent company that we we bought as a company

699
00:38:20,800 --> 00:38:24,400
Speaker 1: called Buckner Cranes and and and this is an interesting

700
00:38:25,160 --> 00:38:27,600
Speaker 1: case studies well and why we get these these things?

701
00:38:28,480 --> 00:38:32,600
Speaker 1: UM fourth generation family. So if a family business has

702
00:38:32,640 --> 00:38:36,120
Speaker 1: made it to the fourth generation, they know what they're doing.

703
00:38:36,160 --> 00:38:39,839
Speaker 1: And there's something that's just fundamentally right about a circumstance

704
00:38:39,920 --> 00:38:42,520
Speaker 1: like this. This was an inbound call. Somebody called us

705
00:38:42,560 --> 00:38:47,080
Speaker 1: and said, laid out the snippet thumbnail case of what

706
00:38:47,120 --> 00:38:49,520
Speaker 1: this company was, what they do UM. And they had

707
00:38:49,520 --> 00:38:52,480
Speaker 1: started out in a steel erection business, and they rented

708
00:38:52,560 --> 00:38:56,959
Speaker 1: cranes and the crane size kept growing and it kept

709
00:38:57,280 --> 00:38:59,920
Speaker 1: becoming more and more sophisticated over time. So they're kind

710
00:39:00,040 --> 00:39:03,719
Speaker 1: cranes lift things from three hundred to a thousand tons.

711
00:39:03,760 --> 00:39:07,040
Speaker 1: And in addition to the crane itself, and it's it's

712
00:39:07,080 --> 00:39:10,920
Speaker 1: a German manufacturer that supplies Buckner with its cranes and

713
00:39:10,960 --> 00:39:14,560
Speaker 1: Buckner in turn leases them out to the companies that

714
00:39:14,600 --> 00:39:17,879
Speaker 1: are erecting wind turbans are very large structures or new

715
00:39:17,920 --> 00:39:21,600
Speaker 1: football stadiums, things of that nature. Um And and you

716
00:39:21,640 --> 00:39:23,920
Speaker 1: can't just show up like at the at the hert

717
00:39:24,200 --> 00:39:26,239
Speaker 1: lot and rent one of these things. You have to

718
00:39:26,239 --> 00:39:27,520
Speaker 1: know what you're doing. And if you don't know what

719
00:39:27,560 --> 00:39:30,200
Speaker 1: you're doing, oftentimes Buckner will provide the crew or the

720
00:39:30,239 --> 00:39:34,200
Speaker 1: technical expertise right right. So it's a real value add

721
00:39:34,440 --> 00:39:37,160
Speaker 1: kind of business with a good, good, um you know,

722
00:39:37,239 --> 00:39:41,000
Speaker 1: physical base there. But the family and the family values

723
00:39:41,239 --> 00:39:44,239
Speaker 1: really mattered to the family as they were looking to

724
00:39:44,280 --> 00:39:48,719
Speaker 1: sell their business and create liquidity for the third generation

725
00:39:48,840 --> 00:39:51,520
Speaker 1: but set the fourth generation up for success to run

726
00:39:51,560 --> 00:39:55,040
Speaker 1: the business going forward. So they called. We went down

727
00:39:55,120 --> 00:39:58,560
Speaker 1: to to visit them. Immediately, we struck up a warm

728
00:39:58,560 --> 00:40:02,120
Speaker 1: and friendly relationship and did a did a home and

729
00:40:02,200 --> 00:40:05,319
Speaker 1: home and and and came to came to terms and

730
00:40:05,360 --> 00:40:08,359
Speaker 1: it came on board. So that's how some things like

731
00:40:08,440 --> 00:40:12,120
Speaker 1: this happened. Um And at that three hundred tons to

732
00:40:12,160 --> 00:40:17,200
Speaker 1: a thousand tons crane, I mean thousand tons lifts. You

733
00:40:17,239 --> 00:40:19,640
Speaker 1: can't do that over the internet. You can't do that

734
00:40:19,719 --> 00:40:22,920
Speaker 1: from a foreign country. There's certain there's certain underwriting criteria

735
00:40:23,000 --> 00:40:25,279
Speaker 1: that if if you really go through the traps of

736
00:40:25,280 --> 00:40:28,960
Speaker 1: what you're looking at, that speaks to the likely durability

737
00:40:29,440 --> 00:40:31,319
Speaker 1: and and need for that business. If you need to

738
00:40:31,320 --> 00:40:33,879
Speaker 1: lift something there's a thousand tons, there are not many

739
00:40:33,880 --> 00:40:35,640
Speaker 1: people in the world who know how to do that.

740
00:40:36,120 --> 00:40:38,160
Speaker 1: And again, I don't think that's the kind of thing

741
00:40:38,200 --> 00:40:40,480
Speaker 1: that kids in business score trying to figure out how

742
00:40:40,480 --> 00:40:42,560
Speaker 1: to how to disrupt that. You can't. It's not that

743
00:40:42,640 --> 00:40:44,960
Speaker 1: you gotta lift it. It's too small to be worth

744
00:40:44,960 --> 00:40:47,680
Speaker 1: their time and effort, but it's large enough that there's

745
00:40:47,680 --> 00:40:50,640
Speaker 1: a real business exactly we have. We have These stories

746
00:40:50,680 --> 00:40:52,800
Speaker 1: could just go on and on, and we're the largest

747
00:40:52,800 --> 00:40:55,200
Speaker 1: grow of indoor house plants in the world through our

748
00:40:55,280 --> 00:40:58,320
Speaker 1: cost of Farms business. If you go in indoor house plans,

749
00:40:59,520 --> 00:41:06,200
Speaker 1: So when I go to the local whatever home depot, Walmart, Ikea, Kroger,

750
00:41:06,320 --> 00:41:09,200
Speaker 1: all those kinds of films, Marquel is the company that's

751
00:41:09,200 --> 00:41:13,520
Speaker 1: providing the cost fight and Costa Farms gives the name

752
00:41:13,560 --> 00:41:15,920
Speaker 1: of that company, and even within Costa there would be

753
00:41:15,960 --> 00:41:18,879
Speaker 1: sub brands within that, so you don't exactly know when

754
00:41:18,880 --> 00:41:21,400
Speaker 1: you're looking at the label who the ultimate, uh, folks.

755
00:41:21,440 --> 00:41:24,280
Speaker 1: Folks are but but that would be us very interesting.

756
00:41:24,320 --> 00:41:26,239
Speaker 1: So so there are two data points I'm kind of

757
00:41:26,239 --> 00:41:31,680
Speaker 1: fascinated about. One is in your public investments, your ten

758
00:41:31,840 --> 00:41:37,319
Speaker 1: largest holdings, they're almost half your portfolio. They're about that's

759
00:41:37,360 --> 00:41:40,080
Speaker 1: pretty unusual. When I look at the average let's look

760
00:41:40,080 --> 00:41:43,200
Speaker 1: at a stock mutual fund, the top ten holdling is

761
00:41:43,280 --> 00:41:47,160
Speaker 1: usually way below thirty. Tell us why you approach this

762
00:41:47,239 --> 00:41:53,319
Speaker 1: with such a concentrated bet on those top ten stocks. Well,

763
00:41:53,360 --> 00:41:55,360
Speaker 1: I think there are a couple of things that come together.

764
00:41:55,560 --> 00:41:59,920
Speaker 1: And and one of my great investment teachers was my grandmother,

765
00:42:00,640 --> 00:42:03,839
Speaker 1: So let me get to her in just a minute now. Obviously,

766
00:42:03,920 --> 00:42:06,640
Speaker 1: those ten have worked, and those have been circumstances where

767
00:42:06,640 --> 00:42:09,120
Speaker 1: we're basically right, and I had a high degree of

768
00:42:09,160 --> 00:42:13,359
Speaker 1: confidence in order to make some substantial bets to put

769
00:42:13,400 --> 00:42:15,880
Speaker 1: them in the portfolio at that size. But then time

770
00:42:16,320 --> 00:42:18,560
Speaker 1: and being right about your fundamental under right into the

771
00:42:18,600 --> 00:42:21,399
Speaker 1: business kind of is your friend. As Charlie Munger says,

772
00:42:21,440 --> 00:42:23,080
Speaker 1: you know, the time is the friend of a wonderful

773
00:42:23,120 --> 00:42:26,279
Speaker 1: business and the enemy of a mediocre business. So here's

774
00:42:26,320 --> 00:42:28,600
Speaker 1: here's my grandmother's story. So when I was a kid,

775
00:42:29,080 --> 00:42:33,360
Speaker 1: um and a and a nerd at that on Friday nights. Unfortunately,

776
00:42:33,560 --> 00:42:35,680
Speaker 1: instead of being able to get a date, sometimes I

777
00:42:35,680 --> 00:42:37,359
Speaker 1: would I would sit with my grandmother and we would

778
00:42:37,360 --> 00:42:41,840
Speaker 1: watch Wall Street Week with Lewis rock Eiser and my grandmother, Um,

779
00:42:41,920 --> 00:42:45,240
Speaker 1: she was widowed at a my my grandfather had died

780
00:42:45,719 --> 00:42:47,560
Speaker 1: and she was one of the types of widows that

781
00:42:47,600 --> 00:42:52,480
Speaker 1: basically never made any substantive decisions after that, so she

782
00:42:52,560 --> 00:42:55,640
Speaker 1: remained in the same house. His suits hung from the

783
00:42:55,680 --> 00:42:57,640
Speaker 1: rack in the closet, his shoes were on the floor.

784
00:42:57,760 --> 00:43:00,239
Speaker 1: And being a just a small town, local business man

785
00:43:00,239 --> 00:43:03,880
Speaker 1: in the nineteen sixties, they would have been the type that, uh,

786
00:43:03,920 --> 00:43:05,960
Speaker 1: you know, they drank coffee at the diner together and

787
00:43:06,000 --> 00:43:08,160
Speaker 1: they would talk about their stock portfolio and that sort

788
00:43:08,200 --> 00:43:11,160
Speaker 1: of thing. That's what small town business people did. And

789
00:43:11,360 --> 00:43:14,600
Speaker 1: he had a twelve fifteen stock little portfolio. These are

790
00:43:14,680 --> 00:43:18,920
Speaker 1: these not massive sons sums of money. And those twelve

791
00:43:19,520 --> 00:43:23,200
Speaker 1: fourteen stocks that my grandfather had when he died, my

792
00:43:23,239 --> 00:43:28,000
Speaker 1: grandmother held those until she died. Now within those that

793
00:43:28,000 --> 00:43:32,160
Speaker 1: that little portfolio there was Lockheed, Martin and Pepsi. Now

794
00:43:32,200 --> 00:43:34,760
Speaker 1: the fact of the matter is the other ten holdings

795
00:43:34,800 --> 00:43:37,600
Speaker 1: could have gone to zero and it wouldn't have mattered

796
00:43:37,840 --> 00:43:40,480
Speaker 1: the total. I bet my grandmother was the ninety five

797
00:43:40,560 --> 00:43:46,040
Speaker 1: percentile in investment returns basically because she caught two mega

798
00:43:46,400 --> 00:43:48,439
Speaker 1: winners that she was able to hold for thirty years

799
00:43:48,719 --> 00:43:52,080
Speaker 1: in terms of the growing dividends and and funding her

800
00:43:52,960 --> 00:43:57,560
Speaker 1: pleasant but modest lifestyle. It did that and observed that basically,

801
00:43:57,560 --> 00:44:00,879
Speaker 1: when when you're right about something, uh, don't don't get

802
00:44:00,880 --> 00:44:04,680
Speaker 1: off the train's if that train is gonna gonna keep rolling. Uh.

803
00:44:04,880 --> 00:44:07,840
Speaker 1: I think we're both searching for who we should attribute

804
00:44:07,840 --> 00:44:09,719
Speaker 1: these quotes too, but I think it might have been

805
00:44:09,719 --> 00:44:12,440
Speaker 1: Peter Lynch talked about that tempt, that human tendency to

806
00:44:12,520 --> 00:44:16,480
Speaker 1: want to, you know, sell your winners. Exactly. Well, that's

807
00:44:16,560 --> 00:44:20,960
Speaker 1: that's a that's pulling the flowers and watering the weeds.

808
00:44:19,000 --> 00:44:23,120
Speaker 1: That exactly. Sorry, I'm not the smartest guy in the

809
00:44:23,160 --> 00:44:24,560
Speaker 1: roby trying to have to be the dumbest. If I

810
00:44:24,560 --> 00:44:27,400
Speaker 1: got a flower, this is blooming, let it grow. And

811
00:44:27,400 --> 00:44:31,239
Speaker 1: and another data point that's kind of mind blowing. Uh. So,

812
00:44:31,320 --> 00:44:34,760
Speaker 1: your your capital portfolio is about twenty seven billion dollars.

813
00:44:35,440 --> 00:44:40,160
Speaker 1: Your costs are just incredibly low, less than point oh one,

814
00:44:40,600 --> 00:44:44,480
Speaker 1: about one seventy the cost of the typical U S

815
00:44:44,480 --> 00:44:47,239
Speaker 1: stock mutual funds. How do you manage to keep your

816
00:44:47,280 --> 00:44:51,200
Speaker 1: cost structure that low. Well, we don't have a lot

817
00:44:51,200 --> 00:44:55,560
Speaker 1: of people, so it's it's myself. I have had um

818
00:44:56,040 --> 00:44:57,880
Speaker 1: gentleman named Dan Gartner who works on the on the

819
00:44:57,960 --> 00:45:00,399
Speaker 1: on the equity side, that's been there ten or twelve

820
00:45:00,480 --> 00:45:03,160
Speaker 1: years for the For the first seventeen years that I

821
00:45:03,239 --> 00:45:05,719
Speaker 1: was at Marcale, after Steve hired me, we managed the

822
00:45:05,760 --> 00:45:09,920
Speaker 1: portfolio in house and I did that solo. After seventeen

823
00:45:10,000 --> 00:45:12,600
Speaker 1: years of doing that, I decided to add one person

824
00:45:13,239 --> 00:45:15,680
Speaker 1: and and that was Dan Um And then a couple

825
00:45:15,680 --> 00:45:19,040
Speaker 1: of years ago added one more person. So um, we

826
00:45:19,080 --> 00:45:23,200
Speaker 1: have that group of people thinking about the equity investment portfolio.

827
00:45:23,680 --> 00:45:25,960
Speaker 1: We have three people working on the on the fixed

828
00:45:25,960 --> 00:45:28,960
Speaker 1: income side, which is also a treasury function of managing

829
00:45:29,000 --> 00:45:31,400
Speaker 1: just the cash balances of the coming So we have

830
00:45:31,440 --> 00:45:35,359
Speaker 1: an extraordinarily small number of people doing it by Wall

831
00:45:35,400 --> 00:45:38,120
Speaker 1: Street standards, our compensation is very modest, so that keeps

832
00:45:38,160 --> 00:45:41,880
Speaker 1: the keeps the keeps the costs down. And here's here's

833
00:45:41,920 --> 00:45:46,240
Speaker 1: the implicit cost savings that cannot even be measured or quantified.

834
00:45:46,280 --> 00:45:49,239
Speaker 1: But make the numbers you cited even better is our

835
00:45:49,280 --> 00:45:52,439
Speaker 1: turnovers extraordinarily love. We tend to be able to buy

836
00:45:52,440 --> 00:45:54,359
Speaker 1: things and hold them for a long period of time,

837
00:45:54,600 --> 00:45:58,239
Speaker 1: which means we're not occurring the tax costs of realizing

838
00:45:58,280 --> 00:46:01,760
Speaker 1: gains and paying the tax at point. So the growth

839
00:46:01,760 --> 00:46:07,240
Speaker 1: in the deferred tax liability, which is just compounding over time,

840
00:46:08,440 --> 00:46:11,240
Speaker 1: that isn't an easily quantifiable cost, and it's not captured

841
00:46:11,239 --> 00:46:14,120
Speaker 1: in that in that basis point of management figure talking about.

842
00:46:14,239 --> 00:46:16,080
Speaker 1: But in terms of dollars, that's bigger than all the

843
00:46:16,080 --> 00:46:21,840
Speaker 1: others by multiples. Quite quite interesting. So so we talked

844
00:46:21,880 --> 00:46:25,840
Speaker 1: a little bit about markul Ventures earlier. You're not doing

845
00:46:26,280 --> 00:46:29,240
Speaker 1: what I think of his venture capital is early seed stage.

846
00:46:29,280 --> 00:46:34,120
Speaker 1: You're buying mature companies. And you mentioned you've done fifteen

847
00:46:34,160 --> 00:46:38,279
Speaker 1: of these deals since two thousand. We talked about the

848
00:46:38,320 --> 00:46:42,760
Speaker 1: crane company, We talked about UM, the bakery machinery company.

849
00:46:42,800 --> 00:46:46,600
Speaker 1: Give us another example of the sort of transaction that

850
00:46:46,640 --> 00:46:52,200
Speaker 1: attracts your attention, well, a couple of the other examples. UM,

851
00:46:52,280 --> 00:46:55,879
Speaker 1: if we have a company called the Catrell and if

852
00:46:55,880 --> 00:46:57,960
Speaker 1: you're driving up and down the highway and you see

853
00:46:57,960 --> 00:47:01,640
Speaker 1: a trailer hauling seven, eight or nine cars, were the

854
00:47:01,680 --> 00:47:06,839
Speaker 1: dominant company that makes those trailers, and we've owned that again,

855
00:47:06,880 --> 00:47:08,880
Speaker 1: I lose track of times, five, eight year or something

856
00:47:08,960 --> 00:47:12,359
Speaker 1: like that. Spectacular business and the gentleman who runs at

857
00:47:12,400 --> 00:47:16,880
Speaker 1: Danny's Inc. Just a first rate individual. Um, they open

858
00:47:17,000 --> 00:47:20,080
Speaker 1: carriers is like like when they pull up to a

859
00:47:20,120 --> 00:47:23,120
Speaker 1: car dealership and twenty new cars. It's one of those

860
00:47:23,160 --> 00:47:26,400
Speaker 1: that's exactly wrong. Um. So they've just done a spectacular

861
00:47:26,480 --> 00:47:30,520
Speaker 1: job over many, many years of taking care of their

862
00:47:30,560 --> 00:47:33,480
Speaker 1: customers and incrementally, uh, sort of getting more and more

863
00:47:33,480 --> 00:47:35,520
Speaker 1: of the flow and and the wonderful thing about that

864
00:47:35,560 --> 00:47:38,799
Speaker 1: particular business and a variety of reasons that we were

865
00:47:38,840 --> 00:47:43,320
Speaker 1: able to to buy it. Uh, it's cyclical. So for instance,

866
00:47:43,320 --> 00:47:46,799
Speaker 1: when car sales are going up and there is incremental

867
00:47:46,840 --> 00:47:49,879
Speaker 1: demand for the trailers to move the cars around, it's

868
00:47:50,000 --> 00:47:52,920
Speaker 1: it's a it's a nicely profitable business and that they're

869
00:47:52,920 --> 00:47:54,960
Speaker 1: going to earn good returns if they if they run

870
00:47:54,960 --> 00:47:58,080
Speaker 1: their internal operations reasonably well. If car sales are flat

871
00:47:58,200 --> 00:48:01,839
Speaker 1: or going down, they're gonna ruggle to break even and

872
00:48:01,880 --> 00:48:04,400
Speaker 1: there's nothing they can do about that. You can't you

873
00:48:04,440 --> 00:48:07,440
Speaker 1: can't reduce your prices by ten percent to induce demand.

874
00:48:07,800 --> 00:48:10,040
Speaker 1: People either need it right now, or they don't need

875
00:48:10,120 --> 00:48:13,160
Speaker 1: it at all. Now, that makes that business a little

876
00:48:13,200 --> 00:48:16,040
Speaker 1: hard to finance if you're using a lot of debt

877
00:48:16,160 --> 00:48:17,960
Speaker 1: to buy it. So by virtue of the fact that

878
00:48:18,000 --> 00:48:21,200
Speaker 1: we're not using debt to do that, our underrating decisions

879
00:48:21,200 --> 00:48:23,239
Speaker 1: gets to be a lot easier and you don't need

880
00:48:23,280 --> 00:48:25,359
Speaker 1: to have an MBA to sort of figure this out.

881
00:48:25,640 --> 00:48:28,200
Speaker 1: My math was, if I buy that today, I'm pretty

882
00:48:28,200 --> 00:48:30,200
Speaker 1: sure that within the course of the next five years,

883
00:48:30,600 --> 00:48:33,160
Speaker 1: I'm gonna get out all my money and and then

884
00:48:33,160 --> 00:48:35,680
Speaker 1: still known the business was probably better and bigger in

885
00:48:35,760 --> 00:48:38,000
Speaker 1: five years, especially with the culture they have and the

886
00:48:38,000 --> 00:48:39,880
Speaker 1: people that are running it. And I really have some

887
00:48:40,000 --> 00:48:43,160
Speaker 1: indifference about whether I'm make zero in year one and

888
00:48:43,880 --> 00:48:46,080
Speaker 1: of it in year two, and ten percent of it

889
00:48:46,120 --> 00:48:48,640
Speaker 1: in year three and zero again in year four, and

890
00:48:48,680 --> 00:48:51,160
Speaker 1: whatever the residual is in year five. That that pattern

891
00:48:51,200 --> 00:48:54,160
Speaker 1: doesn't matter to me because I'm not trying to pit

892
00:48:54,400 --> 00:48:58,880
Speaker 1: quarterly quarterly goals and as such, um we're able to

893
00:48:58,920 --> 00:49:03,080
Speaker 1: be competitive to buy businesses like that because we're not

894
00:49:03,120 --> 00:49:07,840
Speaker 1: competing with people who are using leverage finance to do so.

895
00:49:08,000 --> 00:49:11,920
Speaker 1: So that's just another small example, and it's it's been cars,

896
00:49:12,080 --> 00:49:14,800
Speaker 1: uh I was about to make the mistake of saying

897
00:49:14,920 --> 00:49:17,920
Speaker 1: cars can't drive themselves. Uh, but you know, well we'll

898
00:49:17,920 --> 00:49:21,080
Speaker 1: get Arguably they still can and believe they'll get their eventus.

899
00:49:21,120 --> 00:49:22,600
Speaker 1: That was one of the things we thought about. And

900
00:49:22,640 --> 00:49:24,480
Speaker 1: even if you have a car that can drive itself,

901
00:49:24,560 --> 00:49:26,560
Speaker 1: if you don't want to say you want a brand

902
00:49:26,600 --> 00:49:28,319
Speaker 1: new car to come on, do you want to have

903
00:49:28,360 --> 00:49:30,640
Speaker 1: twelve miles on it? Not seven hundred. So so let

904
00:49:30,640 --> 00:49:33,839
Speaker 1: me ask you a little bit of a twist question, Um,

905
00:49:33,840 --> 00:49:36,279
Speaker 1: how do you know if one of your acquisitions is

906
00:49:36,320 --> 00:49:38,800
Speaker 1: not working out? I mean, there's some pretty clear metrics

907
00:49:38,840 --> 00:49:42,400
Speaker 1: for hey, we're seeing revenues increase, we seeing profitabilities increase.

908
00:49:42,960 --> 00:49:46,120
Speaker 1: How do you measure when hey, maybe we made a mistake,

909
00:49:46,200 --> 00:49:50,319
Speaker 1: this one isn't working sure. Well, Mike Keaton, who is

910
00:49:50,400 --> 00:49:52,920
Speaker 1: my partner in mark l Ventures and he's the president

911
00:49:52,920 --> 00:49:55,800
Speaker 1: of Marc le Ventures day to day execution of the

912
00:49:55,800 --> 00:49:58,719
Speaker 1: mark le Ventures business, he has a great saying. He says,

913
00:49:59,440 --> 00:50:00,759
Speaker 1: you know what it feel it's like when you're making

914
00:50:00,800 --> 00:50:07,040
Speaker 1: a mistake. It feels great because it didn't feel good.

915
00:50:08,600 --> 00:50:11,880
Speaker 1: So we we make mistakes, We do that, but we

916
00:50:11,920 --> 00:50:16,439
Speaker 1: do have financial reporting. And again I started out life

917
00:50:16,440 --> 00:50:19,359
Speaker 1: as an accountant and the accounting profession where we could

918
00:50:19,360 --> 00:50:21,920
Speaker 1: do hours and hours on the path of the accounting profession.

919
00:50:22,160 --> 00:50:25,719
Speaker 1: But a good accountant, a true account an accountant who

920
00:50:25,800 --> 00:50:29,960
Speaker 1: is honoring his craft, is giving you a feedback loop

921
00:50:30,760 --> 00:50:34,400
Speaker 1: that this worked or didn't work. So when we make mistakes,

922
00:50:34,520 --> 00:50:37,399
Speaker 1: in the fullness of time, they show up. So what

923
00:50:37,440 --> 00:50:39,680
Speaker 1: we do is we stop doing that um and we

924
00:50:40,040 --> 00:50:42,120
Speaker 1: do more of the things that work, and we do

925
00:50:42,200 --> 00:50:44,479
Speaker 1: less of the things that didn't work, and over time,

926
00:50:44,640 --> 00:50:48,080
Speaker 1: the weighted average of that really works in your favor.

927
00:50:48,160 --> 00:50:52,360
Speaker 1: And again I use that language very precisely, the weighted average,

928
00:50:52,360 --> 00:50:55,960
Speaker 1: because the things that worked mathematically become larger and larger

929
00:50:56,160 --> 00:50:58,680
Speaker 1: as a percentage of the total, whereas the things that

930
00:50:58,680 --> 00:51:02,480
Speaker 1: didn't work become less and less a percentage of the total.

931
00:51:02,800 --> 00:51:07,960
Speaker 1: So the mistakes get deluded into the the overall solution,

932
00:51:08,000 --> 00:51:10,360
Speaker 1: which which in aggregate worked out just fine. It's my

933
00:51:10,360 --> 00:51:13,919
Speaker 1: grandmother's lesson. I really don't know the names of those

934
00:51:13,920 --> 00:51:18,440
Speaker 1: other ten stocks she out, but it doesn't matter. So

935
00:51:18,440 --> 00:51:23,799
Speaker 1: so you pride yourself on investing with management groups that

936
00:51:23,920 --> 00:51:27,960
Speaker 1: not only have been successful, but have integrity and have

937
00:51:28,120 --> 00:51:33,640
Speaker 1: built a corporate culture of both quality and success raises

938
00:51:33,680 --> 00:51:37,600
Speaker 1: an interesting question during COVID. You have twenty thousand employees,

939
00:51:38,160 --> 00:51:40,719
Speaker 1: How did you maintain that corporate culture? How did you

940
00:51:40,800 --> 00:51:45,440
Speaker 1: keep everybody involved, integrated and all moving in the same direction. Well,

941
00:51:45,520 --> 00:51:49,640
Speaker 1: it's a I mean I roding last year's annual report.

942
00:51:49,680 --> 00:51:53,560
Speaker 1: There's been an unprecedented use of the word unprecedented, and

943
00:51:53,760 --> 00:51:55,920
Speaker 1: that's an accurate statement to make. None of us had

944
00:51:55,960 --> 00:51:58,880
Speaker 1: a playbook for how to do this and how to proceed.

945
00:51:59,480 --> 00:52:03,279
Speaker 1: And of those twenty people, fifteen thousand of them are

946
00:52:03,640 --> 00:52:05,880
Speaker 1: within ventures, and a lot of them are in the

947
00:52:05,880 --> 00:52:10,120
Speaker 1: category of frontline workers um as as are. One of

948
00:52:10,120 --> 00:52:12,400
Speaker 1: our business is called half Co and it makes the

949
00:52:12,480 --> 00:52:17,239
Speaker 1: flooring for trailers of tractor trailers and it's wood. And

950
00:52:17,280 --> 00:52:19,680
Speaker 1: as the president of that business, guy named Bruce Bader, said,

951
00:52:20,239 --> 00:52:23,680
Speaker 1: you can't make wood floors from home. So we had

952
00:52:23,719 --> 00:52:25,760
Speaker 1: to keep a factory running, and we had to figure

953
00:52:25,800 --> 00:52:30,880
Speaker 1: out how to operate cleaning procedure, sanitation procedures, not wildly

954
00:52:30,960 --> 00:52:33,920
Speaker 1: unlike the procedures that existed to get into this building

955
00:52:33,920 --> 00:52:35,759
Speaker 1: this morning. You got to figure all of that out

956
00:52:35,840 --> 00:52:38,400
Speaker 1: on the fly, and and we did so. And I

957
00:52:38,440 --> 00:52:41,960
Speaker 1: am so amazed and so grateful for the ways in

958
00:52:42,040 --> 00:52:44,319
Speaker 1: which the leaders of those companies, and by that I

959
00:52:44,320 --> 00:52:46,680
Speaker 1: mean not just the CEOs, but the people who work

960
00:52:46,760 --> 00:52:49,439
Speaker 1: for them, and the front line supervisors and and all

961
00:52:49,440 --> 00:52:52,719
Speaker 1: of the associates who they went to work among other

962
00:52:52,960 --> 00:52:57,359
Speaker 1: other reasons because they needed to work. And so it's

963
00:52:57,400 --> 00:52:59,840
Speaker 1: our job to figure out. Look, if you want to work,

964
00:53:00,000 --> 00:53:02,040
Speaker 1: and you can work, and by the way, our society

965
00:53:02,120 --> 00:53:06,839
Speaker 1: needs you, we must find a way to figure out

966
00:53:06,880 --> 00:53:09,800
Speaker 1: how to do that as safely and as effectively and

967
00:53:09,840 --> 00:53:12,680
Speaker 1: as sufficiently as possible. That's our job. So that's really

968
00:53:12,680 --> 00:53:15,720
Speaker 1: what we have been about, um and the very act

969
00:53:15,760 --> 00:53:18,600
Speaker 1: of doing that, it's it's almost like exercising. So if

970
00:53:18,640 --> 00:53:21,040
Speaker 1: you want to lift a lot away, I would suggest

971
00:53:21,280 --> 00:53:23,120
Speaker 1: and and that weight is just too much for you

972
00:53:23,239 --> 00:53:25,879
Speaker 1: right now, but it's within the realm of theoretical possibility.

973
00:53:26,160 --> 00:53:28,879
Speaker 1: I would suggest to you, Well, let's let's let's lift

974
00:53:28,880 --> 00:53:31,759
Speaker 1: a little bit. Let's that now, let's do it a

975
00:53:31,760 --> 00:53:33,799
Speaker 1: couple of times. And then when we can do that

976
00:53:33,840 --> 00:53:35,800
Speaker 1: and do it a couple of times, well, let's lift

977
00:53:36,440 --> 00:53:40,359
Speaker 1: of that. You build muscle by doing this is not

978
00:53:40,440 --> 00:53:43,640
Speaker 1: theoretical exercises, So there's some theories that guide you but

979
00:53:43,719 --> 00:53:47,360
Speaker 1: the very act of doing itself is what creates the

980
00:53:47,440 --> 00:53:50,960
Speaker 1: learning of of how to do it. So there's been

981
00:53:51,000 --> 00:53:53,600
Speaker 1: a lot of that going on, where we've been learning

982
00:53:53,600 --> 00:53:56,360
Speaker 1: how to move differently and lift different ways of what

983
00:53:56,480 --> 00:53:59,640
Speaker 1: we had, and in and of itself, that act has

984
00:53:59,719 --> 00:54:03,279
Speaker 1: really forced culture where you could choose, and I believe

985
00:54:03,320 --> 00:54:05,760
Speaker 1: there is a great choosing going on, not just in Marquel,

986
00:54:05,840 --> 00:54:08,440
Speaker 1: but really sort of society really large, whether you really

987
00:54:08,440 --> 00:54:10,319
Speaker 1: want to do that or not. And there are some

988
00:54:10,360 --> 00:54:12,640
Speaker 1: professions in some circumstances where you don't have to quite

989
00:54:12,680 --> 00:54:15,840
Speaker 1: do that so much. In our business, you do both.

990
00:54:15,920 --> 00:54:19,200
Speaker 1: In the fifteen thousand frontline workers, and I would argue

991
00:54:19,200 --> 00:54:21,520
Speaker 1: in a second arrive it of sense even the white

992
00:54:21,520 --> 00:54:26,240
Speaker 1: collar workforce that can work remotely. There's something about being

993
00:54:26,320 --> 00:54:31,600
Speaker 1: together in person, the the water cooler conversations, the coffee

994
00:54:31,600 --> 00:54:35,959
Speaker 1: cup conversations, the quips that the use of humor and

995
00:54:36,760 --> 00:54:39,560
Speaker 1: laughing and joking and going back and forth. It's really

996
00:54:39,600 --> 00:54:43,359
Speaker 1: hard to do in a in a virtual world. Of that,

997
00:54:43,400 --> 00:54:47,680
Speaker 1: I think there's a place for everything in this world.

998
00:54:47,880 --> 00:54:50,319
Speaker 1: It's not right or wrong, it is just different. So

999
00:54:50,360 --> 00:54:54,600
Speaker 1: we run the gamut of where it's just the physical reality,

1000
00:54:54,640 --> 00:54:57,000
Speaker 1: whether we're making wood floors or lifting a thousand tons,

1001
00:54:57,280 --> 00:54:59,480
Speaker 1: you've got to be present to win, so you got

1002
00:54:59,480 --> 00:55:02,160
Speaker 1: to do that in and that creates some aspects of

1003
00:55:02,160 --> 00:55:05,000
Speaker 1: the culture by itself of doing. So there's some that

1004
00:55:05,000 --> 00:55:07,640
Speaker 1: that's creative. So you may not think of us as

1005
00:55:07,680 --> 00:55:10,920
Speaker 1: a creative business and insurance operation or white collar work,

1006
00:55:11,320 --> 00:55:15,160
Speaker 1: but it's something. It's it's almost like an advertising agency.

1007
00:55:15,520 --> 00:55:17,040
Speaker 1: So there are some parts of our business which are

1008
00:55:17,080 --> 00:55:21,279
Speaker 1: actuarial and and formula and mathematically driven, but there's a

1009
00:55:21,320 --> 00:55:25,319
Speaker 1: lot of our insurance business which is more like an

1010
00:55:25,360 --> 00:55:29,479
Speaker 1: advertising agency than it is a big insurance company. Because

1011
00:55:29,640 --> 00:55:31,279
Speaker 1: you've got to be creative and you gotta figure out

1012
00:55:31,280 --> 00:55:33,600
Speaker 1: how to solve this problem with some risk that's not

1013
00:55:33,640 --> 00:55:35,279
Speaker 1: going to be put the words out of my mouth.

1014
00:55:35,360 --> 00:55:41,239
Speaker 1: All problem solving, unless you're doing basic arithmetic, involves creativity. Hey,

1015
00:55:41,280 --> 00:55:44,640
Speaker 1: maybe this will work. Sometimes not every solution is ideal

1016
00:55:44,760 --> 00:55:47,279
Speaker 1: for this problem. Let's see what else we can come with.

1017
00:55:47,520 --> 00:55:50,239
Speaker 1: Come up with and that doesn't really work. Great over

1018
00:55:50,320 --> 00:55:52,880
Speaker 1: a zoom um, let's talk a little bit about some

1019
00:55:52,960 --> 00:55:56,879
Speaker 1: of your favorite companies. You have some holdings, and when

1020
00:55:56,880 --> 00:55:59,000
Speaker 1: I look at some of your top five or top ten,

1021
00:56:00,320 --> 00:56:02,960
Speaker 1: they're almost nothing like each other. There there's just a

1022
00:56:03,000 --> 00:56:08,160
Speaker 1: mix of companies Carmacks, Disney Berkshire, Amazon, Regeneran, and then

1023
00:56:08,200 --> 00:56:11,359
Speaker 1: a whole bunch of investing firms Blackrock, Federated, oak Tree,

1024
00:56:11,719 --> 00:56:15,280
Speaker 1: trow Uh. I have I named anything that you've jettison

1025
00:56:15,400 --> 00:56:18,840
Speaker 1: since or actually you know, oak Tree is no longer

1026
00:56:18,880 --> 00:56:21,239
Speaker 1: with us. That's part of Brookfield Asset Management, which is

1027
00:56:21,360 --> 00:56:24,040
Speaker 1: our second largest holding that we have, And we are

1028
00:56:24,080 --> 00:56:27,479
Speaker 1: no longer owners of Carmacks. Oh, you sold Carmacks, which

1029
00:56:27,520 --> 00:56:32,040
Speaker 1: had a huge run up given the craziness with supply chain,

1030
00:56:32,160 --> 00:56:34,880
Speaker 1: and I think at a certain point that just became

1031
00:56:34,920 --> 00:56:37,440
Speaker 1: fully valued. Well, I guess no, and I would I

1032
00:56:37,440 --> 00:56:41,040
Speaker 1: would um admit an error on my part in this,

1033
00:56:41,160 --> 00:56:43,840
Speaker 1: and in fact that the gentleman who runs Carmacks, the CEO,

1034
00:56:44,120 --> 00:56:45,440
Speaker 1: I mean, we'd owned it for a long time and

1035
00:56:45,520 --> 00:56:48,560
Speaker 1: have been absolutely great holding. When we sold it, I

1036
00:56:48,560 --> 00:56:51,719
Speaker 1: called him and I said, Bill that that was our circumstance,

1037
00:56:51,800 --> 00:56:54,279
Speaker 1: not yours. Carmacks is a great company. It's very well run.

1038
00:56:54,520 --> 00:56:57,000
Speaker 1: Have epic respect for what you do. We enjoyed being

1039
00:56:57,040 --> 00:56:59,560
Speaker 1: a shareholder for for a long long time. When we

1040
00:56:59,600 --> 00:57:02,680
Speaker 1: go back to the initial days of the pandemic and

1041
00:57:02,800 --> 00:57:08,000
Speaker 1: the shock losses from event cancelation insurance business interruption, which

1042
00:57:08,040 --> 00:57:12,319
Speaker 1: was uncertain in the first quarter of twenty loose track

1043
00:57:12,360 --> 00:57:16,160
Speaker 1: of years in time. These days, UM we reported a

1044
00:57:16,200 --> 00:57:20,120
Speaker 1: combined ratio of one eighteen, so as compared to our

1045
00:57:20,160 --> 00:57:24,360
Speaker 1: historical record of underwriting profitability, where that combined ratio number

1046
00:57:24,360 --> 00:57:27,640
Speaker 1: would always be below a hundred one eighteen, that is

1047
00:57:27,680 --> 00:57:31,840
Speaker 1: the worst period market corporation is endured in ninety years

1048
00:57:31,840 --> 00:57:35,680
Speaker 1: of existence. It was not a great quarter UM And

1049
00:57:36,000 --> 00:57:40,240
Speaker 1: the model where we're using the profits from the insurance

1050
00:57:40,280 --> 00:57:45,480
Speaker 1: company to create the flow to to create the exactly

1051
00:57:45,560 --> 00:57:49,120
Speaker 1: so jet engines don't fly in reverse. That jet engine

1052
00:57:49,160 --> 00:57:52,760
Speaker 1: was flying in reverse during the first quarter of as such.

1053
00:57:53,440 --> 00:57:56,160
Speaker 1: And I think even independent of that, there were kind

1054
00:57:56,160 --> 00:57:58,720
Speaker 1: of a combined set of forces at work where look,

1055
00:57:58,720 --> 00:58:01,120
Speaker 1: we gotta we gotta make sure or that the insurance

1056
00:58:01,160 --> 00:58:05,040
Speaker 1: businesses on firm capital footings. It's a regulated business and

1057
00:58:05,080 --> 00:58:07,120
Speaker 1: we always want margin of safety and margin of air

1058
00:58:07,320 --> 00:58:10,240
Speaker 1: that humility. Look, let's let's not pretend we're the smartest.

1059
00:58:10,480 --> 00:58:12,160
Speaker 1: So if we were the dumbest, what do we need

1060
00:58:12,160 --> 00:58:14,760
Speaker 1: to do to protect ourselves from us to make sure

1061
00:58:14,760 --> 00:58:18,400
Speaker 1: we keep going So we would have re underwritten in

1062
00:58:18,400 --> 00:58:21,720
Speaker 1: this years. What we did. We re underwrote every single

1063
00:58:21,960 --> 00:58:25,360
Speaker 1: security we wrote, and by the way, in that environment,

1064
00:58:25,400 --> 00:58:29,600
Speaker 1: we also re underwrote our thinking on every insurance policy

1065
00:58:29,960 --> 00:58:32,520
Speaker 1: we wrote. Because it was clear that this was a

1066
00:58:33,840 --> 00:58:38,360
Speaker 1: fundamental change that that had overtaken all of us. So

1067
00:58:38,440 --> 00:58:41,040
Speaker 1: let's make sure that we're adoptable and thinking that we're

1068
00:58:41,480 --> 00:58:43,200
Speaker 1: able to answer the bell for the next round of

1069
00:58:43,240 --> 00:58:46,560
Speaker 1: the fight. So in looking at each and every security

1070
00:58:46,600 --> 00:58:48,920
Speaker 1: that we owned and recognize and look, I want to

1071
00:58:48,920 --> 00:58:50,720
Speaker 1: take a little bunny on the table off the table,

1072
00:58:50,960 --> 00:58:53,400
Speaker 1: and I wish to make sure that the capital footings

1073
00:58:53,440 --> 00:58:59,240
Speaker 1: are um impeccably sound and unquestionable um looking at each

1074
00:58:59,280 --> 00:59:02,680
Speaker 1: and everyone. Among the decisions that we decided to sell

1075
00:59:03,000 --> 00:59:05,720
Speaker 1: was was CarMax um and I thought, you know, at

1076
00:59:05,720 --> 00:59:08,920
Speaker 1: that point in time, locations were closed. Who needs a

1077
00:59:08,920 --> 00:59:10,959
Speaker 1: new car? Who needs a used car? Well, it turns

1078
00:59:10,960 --> 00:59:14,040
Speaker 1: out everybody did. But I did not foresee that coming.

1079
00:59:14,400 --> 00:59:16,480
Speaker 1: And you just given the time and facts of the

1080
00:59:16,680 --> 00:59:19,480
Speaker 1: of the circumstances, there were there were several things we

1081
00:59:19,520 --> 00:59:21,800
Speaker 1: sold at that point in retrospect, they all went up,

1082
00:59:21,840 --> 00:59:24,240
Speaker 1: and they all went up a watch since since that sale.

1083
00:59:24,360 --> 00:59:27,240
Speaker 1: But at the same time, our capital basis has never

1084
00:59:27,280 --> 00:59:30,080
Speaker 1: been questioned. The integrity of the business is there. And

1085
00:59:30,240 --> 00:59:32,280
Speaker 1: we kept eighty percent of what we owned it at

1086
00:59:32,320 --> 00:59:35,640
Speaker 1: that point across the board in aggregate, and that's done great,

1087
00:59:35,760 --> 00:59:38,320
Speaker 1: so you know we're in good shape. You would have

1088
00:59:38,400 --> 00:59:42,760
Speaker 1: had to anticipate not only a surge of movement to

1089
00:59:43,400 --> 00:59:46,360
Speaker 1: the suburbs that would require more cars, but you would

1090
00:59:46,360 --> 00:59:50,000
Speaker 1: have had to anticipate all of the supply chain on

1091
00:59:50,040 --> 00:59:55,600
Speaker 1: the semiconductor, all that whole interruption and supply issues that

1092
00:59:55,640 --> 00:59:58,320
Speaker 1: have led to just a surge and used car prices

1093
00:59:58,440 --> 01:00:03,640
Speaker 1: and unavailability new cars. Kind of hard to foresee coming

1094
01:00:04,320 --> 01:00:07,160
Speaker 1: um in the first quarter. As I wrote in last

1095
01:00:07,200 --> 01:00:10,520
Speaker 1: year's annual report on the whole discussion of the pandemic stuff,

1096
01:00:11,080 --> 01:00:13,560
Speaker 1: we did not see that coming. So it's a long

1097
01:00:13,640 --> 01:00:15,360
Speaker 1: list of stuff we did not see coming. To add

1098
01:00:15,360 --> 01:00:17,400
Speaker 1: those to the list, so let's talk about some of

1099
01:00:17,440 --> 01:00:21,479
Speaker 1: the companies you kept, because well, not not a bunch

1100
01:00:21,480 --> 01:00:24,360
Speaker 1: of stiffs or some pretty good companies. I want to

1101
01:00:24,400 --> 01:00:27,640
Speaker 1: get a sense of the thought process as to what

1102
01:00:27,840 --> 01:00:31,760
Speaker 1: leads you to find a company like I guess in

1103
01:00:31,800 --> 01:00:35,440
Speaker 1: some ways Disney and Amazon are somewhat similar, but in

1104
01:00:35,440 --> 01:00:38,120
Speaker 1: so many ways. They're so different. What led you to

1105
01:00:38,160 --> 01:00:41,440
Speaker 1: each of them and what led you to stay with

1106
01:00:41,560 --> 01:00:44,680
Speaker 1: them over the long haul? Well, let me take each

1107
01:00:44,720 --> 01:00:47,960
Speaker 1: of those two because they think they yes, they are

1108
01:00:48,000 --> 01:00:50,920
Speaker 1: instructives to take Amazon as as a as an example.

1109
01:00:51,240 --> 01:00:54,440
Speaker 1: I talked earlier about the importance of the shareholders of

1110
01:00:54,480 --> 01:00:57,560
Speaker 1: Marquel and the desire that we have at Marquel to

1111
01:00:57,640 --> 01:01:01,680
Speaker 1: have great shareholders who are thoughtful and intelligent and and

1112
01:01:01,720 --> 01:01:07,120
Speaker 1: really contribute ideas and thoughts to me and to mark

1113
01:01:07,160 --> 01:01:10,040
Speaker 1: Hell that make us better, and specifically with Amazon. I

1114
01:01:10,040 --> 01:01:12,919
Speaker 1: have a friend named Josh Tarasov who runs his own

1115
01:01:13,320 --> 01:01:17,000
Speaker 1: UM investment management firm, and he's he's done extraordinarily well,

1116
01:01:17,200 --> 01:01:20,920
Speaker 1: so mark El shareholder friend Um and and so we

1117
01:01:20,920 --> 01:01:24,600
Speaker 1: had a relationship. We talked back and forth, and Josh

1118
01:01:24,840 --> 01:01:28,479
Speaker 1: noticed that if you went back and I can't again

1119
01:01:28,480 --> 01:01:31,640
Speaker 1: a lose track of time a decade or more or whatever,

1120
01:01:32,120 --> 01:01:36,640
Speaker 1: our holdings in the world of technology were pretty slim

1121
01:01:36,840 --> 01:01:39,920
Speaker 1: call it. Let's round it to zero, not much. And

1122
01:01:39,920 --> 01:01:42,760
Speaker 1: and Josh and is is kind and helpful and gentle

1123
01:01:42,800 --> 01:01:45,920
Speaker 1: way was helping me realize I might be making a

1124
01:01:45,960 --> 01:01:48,960
Speaker 1: mistake about this. And when you say kind and gentle,

1125
01:01:49,360 --> 01:01:52,040
Speaker 1: was he like, Tom, what the hell are you doing here?

1126
01:01:52,040 --> 01:01:54,520
Speaker 1: You're missing the boat? Or was he you know, how

1127
01:01:54,600 --> 01:01:56,800
Speaker 1: kind and how gentle? He really was kind of gentle.

1128
01:01:56,880 --> 01:02:00,280
Speaker 1: So just despite I mean, I love New Yorkers because

1129
01:02:00,320 --> 01:02:02,080
Speaker 1: they are they are by the way, that was kind

1130
01:02:02,200 --> 01:02:04,760
Speaker 1: and gentle. Just so you know, I understand that completely.

1131
01:02:05,120 --> 01:02:08,280
Speaker 1: Um And and there's no mystery or subterviews about that.

1132
01:02:08,320 --> 01:02:11,200
Speaker 1: You know, what is warm with you? I get that,

1133
01:02:11,920 --> 01:02:14,160
Speaker 1: So I can absorb that and not take it personally.

1134
01:02:14,160 --> 01:02:16,880
Speaker 1: But by the way, Josh is a kind and gentle person.

1135
01:02:16,920 --> 01:02:21,000
Speaker 1: But it really walked me through thinking about Amazon and

1136
01:02:21,120 --> 01:02:23,960
Speaker 1: helping me to come to understanding in a in a

1137
01:02:24,040 --> 01:02:26,520
Speaker 1: much more productive way than that that I had in

1138
01:02:26,520 --> 01:02:28,880
Speaker 1: the past. So that's point number one. So that trade

1139
01:02:29,080 --> 01:02:32,120
Speaker 1: worked out, I'm guessing yeah, it's more more more green

1140
01:02:32,120 --> 01:02:33,920
Speaker 1: than red on that one. And here's the other thing

1141
01:02:33,960 --> 01:02:37,040
Speaker 1: that that really matters. So one of my hiccups or

1142
01:02:37,120 --> 01:02:39,320
Speaker 1: concerns about Amazon would have been the idea of the

1143
01:02:39,400 --> 01:02:42,400
Speaker 1: valuation at that instant. You know, what, what what is

1144
01:02:42,440 --> 01:02:46,680
Speaker 1: it if I if I pencil out numbers? Um And

1145
01:02:46,800 --> 01:02:51,960
Speaker 1: because Marquel has been a profitable insurance underwriting an organization

1146
01:02:52,000 --> 01:02:55,840
Speaker 1: for so long, what that creates is regular periodic cash

1147
01:02:55,880 --> 01:02:58,960
Speaker 1: flow and the ability to do dollar cost averaging. So

1148
01:02:58,960 --> 01:03:01,360
Speaker 1: I've been to Marquel a little for thirty years, well

1149
01:03:01,760 --> 01:03:05,040
Speaker 1: times four for a quarter, that's a hundred and twenty quarters.

1150
01:03:05,880 --> 01:03:08,080
Speaker 1: And I would say of those hundred and twenty quarters

1151
01:03:08,080 --> 01:03:11,600
Speaker 1: that I've been there, the insurance operations and now the

1152
01:03:11,680 --> 01:03:18,160
Speaker 1: venturous operations as well, have deposited cash into the investment account,

1153
01:03:18,560 --> 01:03:20,320
Speaker 1: maybe a hundred and sixteen out of those under in

1154
01:03:20,400 --> 01:03:23,680
Speaker 1: twenty quarters. So you have money to put to work, exactly.

1155
01:03:23,880 --> 01:03:26,960
Speaker 1: And if I make a mistakes, Among the mistakes you

1156
01:03:26,960 --> 01:03:30,000
Speaker 1: can make are you can make a mistake about valuation,

1157
01:03:30,360 --> 01:03:32,520
Speaker 1: where look, this is a great company, but it's just

1158
01:03:32,640 --> 01:03:36,360
Speaker 1: really high priced and so you paid too much for it.

1159
01:03:36,520 --> 01:03:38,400
Speaker 1: Or you can make a mistake about the business itself

1160
01:03:38,400 --> 01:03:41,040
Speaker 1: it's not as good a business as you thought it was. Well,

1161
01:03:41,200 --> 01:03:43,280
Speaker 1: if I'm right about the second thing, that this is

1162
01:03:43,320 --> 01:03:46,960
Speaker 1: really a good business, I get to solve for the

1163
01:03:47,040 --> 01:03:51,600
Speaker 1: valuation problem a little bit by dollar crost averages, nibble, nible, nimble, nimble, nimblemble,

1164
01:03:51,640 --> 01:03:55,520
Speaker 1: dooble over time, and and again. The ultimate return that

1165
01:03:55,560 --> 01:03:58,320
Speaker 1: you earn if you really have a long term horizon

1166
01:03:59,000 --> 01:04:02,800
Speaker 1: is the intrinsic return that the business itself earns, not

1167
01:04:02,920 --> 01:04:05,720
Speaker 1: the trading returns from the more volatile stock farns. It's

1168
01:04:05,760 --> 01:04:08,680
Speaker 1: the underlying returns on capital that the business and self farns.

1169
01:04:08,680 --> 01:04:13,640
Speaker 1: So dollar cost averaging and flow and time. It enables

1170
01:04:13,720 --> 01:04:17,360
Speaker 1: you to get to the point where, um, you can

1171
01:04:17,600 --> 01:04:20,880
Speaker 1: you can. You can power your way through evaluation error,

1172
01:04:21,080 --> 01:04:24,520
Speaker 1: especially if the growth is exactly exactly. I mean, that

1173
01:04:24,600 --> 01:04:26,280
Speaker 1: needs to be true for you to be able to

1174
01:04:26,320 --> 01:04:28,840
Speaker 1: power through the valuation. But if the growth doesn't happen,

1175
01:04:28,920 --> 01:04:30,840
Speaker 1: then you've got a problem on your aunts. What about

1176
01:04:30,880 --> 01:04:35,600
Speaker 1: a company like Regeneraan, which seems to be so industry specific. Yeah,

1177
01:04:35,680 --> 01:04:37,520
Speaker 1: and I'm going to give credit to my colleague Dan

1178
01:04:37,520 --> 01:04:40,040
Speaker 1: Gartner for that particular stock that is that is his

1179
01:04:40,080 --> 01:04:43,120
Speaker 1: pick and the way our system works, Um, he has

1180
01:04:43,160 --> 01:04:45,760
Speaker 1: a sleeve of money that he manages. He gets a

1181
01:04:45,880 --> 01:04:48,640
Speaker 1: portion of that of that flow as well. And part

1182
01:04:48,680 --> 01:04:52,560
Speaker 1: of his job for me is to signal through his

1183
01:04:52,640 --> 01:04:56,080
Speaker 1: purchases what he has conviction about. And Regeneraan is his

1184
01:04:56,160 --> 01:04:59,160
Speaker 1: idea and something that he has conviction about. And again,

1185
01:04:59,360 --> 01:05:02,760
Speaker 1: if you look Regeneration's performance over the last five ten years,

1186
01:05:02,880 --> 01:05:04,960
Speaker 1: I mean it's especially the past two years have been

1187
01:05:05,280 --> 01:05:07,520
Speaker 1: pretty good, but even more than that. And and again,

1188
01:05:07,560 --> 01:05:10,120
Speaker 1: while Dan is the expert on that, not me, you

1189
01:05:10,160 --> 01:05:13,200
Speaker 1: have founder leaders here, they were in place. You have

1190
01:05:13,200 --> 01:05:17,760
Speaker 1: a culture of scientific discovery that seems to be embedded

1191
01:05:17,760 --> 01:05:20,840
Speaker 1: in that organization. And talk about sort of the comfort

1192
01:05:20,920 --> 01:05:23,760
Speaker 1: level that you get from investing people that are making

1193
01:05:23,760 --> 01:05:25,720
Speaker 1: the world a better place rather than the worst place.

1194
01:05:26,200 --> 01:05:29,440
Speaker 1: Regeneration is solving some thorny problems. And and I as

1195
01:05:29,480 --> 01:05:32,080
Speaker 1: a human being, I'm grateful for what for what they

1196
01:05:32,120 --> 01:05:35,320
Speaker 1: do and what they've come come up with a sort

1197
01:05:35,360 --> 01:05:37,280
Speaker 1: of rooting for them. So it wins on a lot

1198
01:05:37,280 --> 01:05:39,680
Speaker 1: of different counts. So I saw you give a speech

1199
01:05:39,720 --> 01:05:42,160
Speaker 1: some years ago where you said, hey, when you walk

1200
01:05:42,200 --> 01:05:45,600
Speaker 1: into the bar, you want to be the bartender or

1201
01:05:45,680 --> 01:05:49,760
Speaker 1: not the people at paying for drinks. And hence the

1202
01:05:49,800 --> 01:05:53,520
Speaker 1: parallel or things like black Rock and and t ro Price.

1203
01:05:53,960 --> 01:05:57,520
Speaker 1: Tell us about the thoughts about investing in the world

1204
01:05:57,520 --> 01:06:01,600
Speaker 1: of financial services. Yes, I think it's fundamentally historically been

1205
01:06:01,760 --> 01:06:04,480
Speaker 1: a very good business for a long time. I think

1206
01:06:04,480 --> 01:06:07,160
Speaker 1: that will continue to be the case. So now a

1207
01:06:07,160 --> 01:06:09,440
Speaker 1: lot of people look at this space. I'm sorry to interrupt,

1208
01:06:09,520 --> 01:06:11,680
Speaker 1: but a lot of people look at the space and say, hey,

1209
01:06:11,720 --> 01:06:16,400
Speaker 1: there's fee pressure, and there's competition from crypto and from

1210
01:06:16,440 --> 01:06:19,440
Speaker 1: private equity and from all this other stuff. How do

1211
01:06:19,480 --> 01:06:21,640
Speaker 1: you respond to that. I think there's always been competition.

1212
01:06:22,080 --> 01:06:24,800
Speaker 1: Competition is just the nature of things. That's all to

1213
01:06:24,800 --> 01:06:27,640
Speaker 1: to bring in a different topic, the idea of theology

1214
01:06:27,680 --> 01:06:31,000
Speaker 1: that said Martin Luther's Great Gift to the world was

1215
01:06:31,000 --> 01:06:33,480
Speaker 1: not the theology of Lutherism, it was it was competition.

1216
01:06:33,880 --> 01:06:36,640
Speaker 1: So the Catholic Church had some competition. It's been going

1217
01:06:36,640 --> 01:06:38,960
Speaker 1: on for a long time. It is the nature of

1218
01:06:38,960 --> 01:06:41,640
Speaker 1: of creativity and freedom that uh. And this is a

1219
01:06:41,640 --> 01:06:44,960
Speaker 1: wonderful thing that you hope somebody somewhere saying, you know,

1220
01:06:44,960 --> 01:06:47,400
Speaker 1: I could do that better than that. Our rural progresses

1221
01:06:47,400 --> 01:06:50,520
Speaker 1: on account of that. But and here's the other advantage

1222
01:06:50,560 --> 01:06:53,840
Speaker 1: in financial services, Um, there's not a lot of sunk

1223
01:06:54,160 --> 01:06:58,200
Speaker 1: costs when when you have a financial operation. So if

1224
01:06:58,240 --> 01:07:02,200
Speaker 1: something is not profitable, you don't have a planet that

1225
01:07:02,240 --> 01:07:05,480
Speaker 1: you need to deject exactly, So fire that group and

1226
01:07:05,520 --> 01:07:09,800
Speaker 1: move on. Right. It's all human capital. It's not it's

1227
01:07:09,880 --> 01:07:13,640
Speaker 1: not big factories or cranes or any of that stuff.

1228
01:07:13,720 --> 01:07:16,560
Speaker 1: It's your people are your assets. And you know you're

1229
01:07:16,600 --> 01:07:20,440
Speaker 1: constantly they're all competing with one another to show their ability. Right.

1230
01:07:20,600 --> 01:07:22,320
Speaker 1: So if you look at sort of anything in the

1231
01:07:22,320 --> 01:07:26,160
Speaker 1: financial services businesses, by and large, it's like our body

1232
01:07:26,160 --> 01:07:28,320
Speaker 1: temperature that we have to check before we got into

1233
01:07:28,600 --> 01:07:31,640
Speaker 1: come into the building today, ninety eight point six, and look,

1234
01:07:31,680 --> 01:07:33,760
Speaker 1: if you're one on one point six, I'm bet they

1235
01:07:33,800 --> 01:07:36,040
Speaker 1: wouldn't have let me in here today for sure. Pretty

1236
01:07:36,120 --> 01:07:40,600
Speaker 1: quick feedback loops, So financial services groups and and this

1237
01:07:40,640 --> 01:07:43,640
Speaker 1: is a really important notion, the idea of feedback loops

1238
01:07:43,840 --> 01:07:46,360
Speaker 1: and and awareness and tying that to humility and just

1239
01:07:46,400 --> 01:07:49,280
Speaker 1: always been willing to listen to other people. Where people

1240
01:07:49,280 --> 01:07:52,520
Speaker 1: get themselves in trouble is where they where they don't

1241
01:07:52,520 --> 01:07:55,080
Speaker 1: pay attention to feedback loops. And there are some things

1242
01:07:55,440 --> 01:07:58,520
Speaker 1: that I put in the category these are mistakes that

1243
01:07:58,600 --> 01:08:02,920
Speaker 1: only experts can make because people are so sure themselves.

1244
01:08:02,920 --> 01:08:05,479
Speaker 1: And I read a wonderful book recently called The Long

1245
01:08:05,520 --> 01:08:08,680
Speaker 1: Gray Line, and it's by a gentleman named Rick Atkinson.

1246
01:08:08,960 --> 01:08:11,840
Speaker 1: It is about the West Point class of nineteen sixty six.

1247
01:08:12,360 --> 01:08:14,320
Speaker 1: This is a really good book. And if you think

1248
01:08:14,360 --> 01:08:16,839
Speaker 1: about that, just picture it in your mind for a second.

1249
01:08:17,320 --> 01:08:21,559
Speaker 1: So those kids, and they were kids when they started

1250
01:08:21,960 --> 01:08:25,720
Speaker 1: would have been the entering West Point in ninetto the

1251
01:08:25,800 --> 01:08:29,200
Speaker 1: height of idealism and JFK and Moon Race and all

1252
01:08:29,200 --> 01:08:31,400
Speaker 1: that sort of stuff. And the author does this great

1253
01:08:31,479 --> 01:08:34,600
Speaker 1: job of connecting you to this kid from Wisconsin and

1254
01:08:34,640 --> 01:08:36,439
Speaker 1: this kid from Tennessee, and this kid from upstate in

1255
01:08:36,479 --> 01:08:38,680
Speaker 1: New York, and there were girlfriends and their family and

1256
01:08:38,680 --> 01:08:40,880
Speaker 1: their situations, and you really felt like you got to

1257
01:08:40,880 --> 01:08:43,120
Speaker 1: know them. And then you got to follow them through

1258
01:08:43,160 --> 01:08:45,120
Speaker 1: their four years at West Point and who was the

1259
01:08:45,200 --> 01:08:47,799
Speaker 1: rule follower and who was the rule breaker, and and

1260
01:08:47,800 --> 01:08:51,760
Speaker 1: and the branches of the army that they decided to

1261
01:08:51,760 --> 01:08:53,800
Speaker 1: go to so on and over, and then they finished

1262
01:08:53,840 --> 01:08:58,240
Speaker 1: in nineteen sixty six and they had dumped into Vietnam,

1263
01:08:58,280 --> 01:09:02,919
Speaker 1: and you hear their story race and and the tragic

1264
01:09:03,000 --> 01:09:05,800
Speaker 1: circumstances of what was involved. And if the people who

1265
01:09:05,880 --> 01:09:09,760
Speaker 1: were in charge had listened to the people who were

1266
01:09:09,800 --> 01:09:12,880
Speaker 1: on the ground, we would have done things differently. And

1267
01:09:12,920 --> 01:09:17,080
Speaker 1: when you see that so vividly explain there, it puts

1268
01:09:17,120 --> 01:09:20,240
Speaker 1: me in this situation where we have twenty some thousand

1269
01:09:20,240 --> 01:09:23,800
Speaker 1: people working from Marquel. I feel responsible for them, and

1270
01:09:23,840 --> 01:09:27,360
Speaker 1: I feel responsible for the decisions that I make that

1271
01:09:27,439 --> 01:09:32,680
Speaker 1: affect them with no control or ability to influence their

1272
01:09:32,720 --> 01:09:36,519
Speaker 1: fate by themselves sometimes, so I always went to personally

1273
01:09:36,520 --> 01:09:40,439
Speaker 1: guard against being that expert who thinks he knows. I

1274
01:09:40,439 --> 01:09:42,120
Speaker 1: want to listen, I want to hear it. I want

1275
01:09:42,160 --> 01:09:43,880
Speaker 1: to I want to get that sense of what the

1276
01:09:43,880 --> 01:09:46,160
Speaker 1: people with boots on the ground who were there doing

1277
01:09:46,200 --> 01:09:49,040
Speaker 1: it have, um and that that feedback loop of just

1278
01:09:49,040 --> 01:09:53,800
Speaker 1: staying connected to that is a fundamentally important philosophy and

1279
01:09:53,840 --> 01:09:56,760
Speaker 1: way of doing things. I liked that a whole lot. Uh.

1280
01:09:57,000 --> 01:09:59,280
Speaker 1: Last company, I want to ask you before we get

1281
01:09:59,320 --> 01:10:04,040
Speaker 1: to our favorite questions. You have been a marriage shareholder

1282
01:10:04,200 --> 01:10:06,360
Speaker 1: for a long time. Are you still a share holder?

1283
01:10:06,640 --> 01:10:11,040
Speaker 1: Unfortunately now? And again that was also exactly I mean

1284
01:10:11,040 --> 01:10:14,720
Speaker 1: they still haven't recovered. Yeah. And and my goodness, if

1285
01:10:14,760 --> 01:10:18,360
Speaker 1: you um, I mean Arnie Sorenson, who did a spectacular

1286
01:10:18,439 --> 01:10:21,280
Speaker 1: job as the leader there. If you saw the video

1287
01:10:21,680 --> 01:10:23,920
Speaker 1: that he put out in the early days of the

1288
01:10:23,920 --> 01:10:28,840
Speaker 1: pandemic and the emotions that were there. And I'm sure,

1289
01:10:28,840 --> 01:10:30,959
Speaker 1: but I don't know whether the cancer had been disclosed

1290
01:10:30,960 --> 01:10:33,679
Speaker 1: at that point or not. Uh, that was the first

1291
01:10:33,720 --> 01:10:37,200
Speaker 1: class individual doing first class things. I still have every

1292
01:10:37,240 --> 01:10:41,320
Speaker 1: epic regard for the business but given their circumstances, in

1293
01:10:41,439 --> 01:10:44,839
Speaker 1: our circumstances, I needed to make the painful but difficult

1294
01:10:44,880 --> 01:10:49,880
Speaker 1: decision to to eliminate that portfolio. And technically, you could say,

1295
01:10:50,040 --> 01:10:53,040
Speaker 1: and I'll admit made a mistake that that stock price

1296
01:10:53,080 --> 01:10:55,280
Speaker 1: is higher today than it was when we sold it,

1297
01:10:55,400 --> 01:10:58,080
Speaker 1: But we sold it for different reasons than just what

1298
01:10:58,120 --> 01:11:01,400
Speaker 1: the stock price was at that POINTE fascinating, Tom. I

1299
01:11:01,439 --> 01:11:03,320
Speaker 1: know I only have you for a couple of minutes,

1300
01:11:03,320 --> 01:11:05,400
Speaker 1: and I have to thank you for being so generous

1301
01:11:05,520 --> 01:11:08,280
Speaker 1: with your time. But let's jump to all of our

1302
01:11:08,320 --> 01:11:11,479
Speaker 1: favorite questions we ask all of our guests. See if

1303
01:11:11,520 --> 01:11:13,720
Speaker 1: we can get a little insight into a little more

1304
01:11:13,760 --> 01:11:16,439
Speaker 1: insight into who you are and what makes you tick.

1305
01:11:16,680 --> 01:11:21,519
Speaker 1: Starting with tell us what has kept you entertains? Uh

1306
01:11:21,600 --> 01:11:23,960
Speaker 1: during the past eighteen months? What are you watching on

1307
01:11:24,040 --> 01:11:28,479
Speaker 1: either Netflix or Amazon Prime? Uh? Well, during this period

1308
01:11:28,479 --> 01:11:31,320
Speaker 1: when we've all been stuck at home. Well, sure, I

1309
01:11:31,320 --> 01:11:34,320
Speaker 1: am completely grateful for the return of live sports and

1310
01:11:34,320 --> 01:11:37,320
Speaker 1: live music because those are both things that I just

1311
01:11:37,439 --> 01:11:42,559
Speaker 1: love h immensely. And uh, it's football season and I

1312
01:11:42,720 --> 01:11:44,600
Speaker 1: have a college football guy. But to be able to

1313
01:11:44,680 --> 01:11:46,719
Speaker 1: go back to u v A and be in person

1314
01:11:46,760 --> 01:11:50,080
Speaker 1: for those games, and over the last forty years i've

1315
01:11:50,080 --> 01:11:52,320
Speaker 1: been I've missed no more than five home football games

1316
01:11:52,320 --> 01:11:54,280
Speaker 1: at v A. And it's what my family does. So

1317
01:11:54,280 --> 01:11:55,680
Speaker 1: so I went to v A, my wife went to

1318
01:11:55,720 --> 01:11:57,479
Speaker 1: u v A. I have three children who went to

1319
01:11:57,760 --> 01:12:01,479
Speaker 1: address everybody up in the guard the stadium. Fortunately, my

1320
01:12:01,520 --> 01:12:03,120
Speaker 1: children are old enough that I don't have to dress

1321
01:12:03,160 --> 01:12:05,559
Speaker 1: them anymore, and when they were young enough to have

1322
01:12:05,640 --> 01:12:07,639
Speaker 1: to be dressed pretty much my wife did that. So

1323
01:12:08,160 --> 01:12:11,400
Speaker 1: I'm not much what I mean, you're wearing a sweat show,

1324
01:12:11,840 --> 01:12:13,800
Speaker 1: We're there. We're good for that. So it's it's fun

1325
01:12:13,840 --> 01:12:16,479
Speaker 1: to be back at live sporting events and live music

1326
01:12:16,880 --> 01:12:20,280
Speaker 1: in terms of podcasts and streaming. I'll tell you one

1327
01:12:20,280 --> 01:12:24,360
Speaker 1: that has really captured me is Broken Record with Rick Rubin.

1328
01:12:24,720 --> 01:12:27,600
Speaker 1: I don't know if you know Rick music producer with

1329
01:12:27,720 --> 01:12:31,639
Speaker 1: complete diversified portfolio, everybody from Jay Z to Johnny Cash.

1330
01:12:31,880 --> 01:12:37,120
Speaker 1: Did he record a Springsteen albums? I don't know, but

1331
01:12:37,160 --> 01:12:39,400
Speaker 1: I certainly wouldn't rule it out. Who didn't he record

1332
01:12:39,439 --> 01:12:42,240
Speaker 1: and who didn't he do over the last thirty years.

1333
01:12:42,560 --> 01:12:47,880
Speaker 1: So it's a fabulous way of learning history when you

1334
01:12:47,920 --> 01:12:51,120
Speaker 1: have somebody as knowledgeable as as what Rick Rubin is

1335
01:12:51,160 --> 01:12:53,680
Speaker 1: and has been connected to so much music. I mean

1336
01:12:54,520 --> 01:12:57,920
Speaker 1: music reflects the zeitgeist of the times, and whether it's

1337
01:12:58,560 --> 01:13:02,120
Speaker 1: reflecting it or cause and it it's it's it's right there.

1338
01:13:02,560 --> 01:13:05,639
Speaker 1: So uh for these artists to talk about their craft

1339
01:13:05,680 --> 01:13:09,240
Speaker 1: and talk about their art with I find those conversations

1340
01:13:09,600 --> 01:13:12,200
Speaker 1: to be things that I really learned from and have

1341
01:13:12,280 --> 01:13:15,479
Speaker 1: been UM just sort of as I go out and

1342
01:13:15,479 --> 01:13:18,080
Speaker 1: walk listening to that podcast quite a bit. It's my

1343
01:13:18,120 --> 01:13:20,240
Speaker 1: favorite one. I'm gonna check that out. I'm a big

1344
01:13:20,320 --> 01:13:23,920
Speaker 1: music fan. Um. Since you mentioned going to live shows,

1345
01:13:23,960 --> 01:13:27,559
Speaker 1: what live acts have you seen since the world has

1346
01:13:27,640 --> 01:13:30,960
Speaker 1: begun to reopen? Well, there's a there's a particular artist

1347
01:13:31,040 --> 01:13:33,439
Speaker 1: in in Virginia. I'll give him a plug here. His

1348
01:13:33,520 --> 01:13:37,680
Speaker 1: name is Scott Miller. He's from Swoop, Virginia, which is

1349
01:13:37,680 --> 01:13:40,840
Speaker 1: outside Stanton. And neither one of them sounds the way

1350
01:13:40,880 --> 01:13:44,480
Speaker 1: it's spelled. And I'll let your viewers google that that

1351
01:13:44,680 --> 01:13:48,160
Speaker 1: map and figure out what I'm saying there. But Scott

1352
01:13:48,200 --> 01:13:49,840
Speaker 1: I would describe as someone who has sort of a

1353
01:13:49,840 --> 01:13:54,360
Speaker 1: definitive Virginia voice. So listen to his music. It's a singer,

1354
01:13:54,400 --> 01:13:57,160
Speaker 1: songwrite or folks stuff. And I think I've heard him

1355
01:13:57,200 --> 01:14:01,160
Speaker 1: about four or five times since the uh since the

1356
01:14:01,160 --> 01:14:05,080
Speaker 1: pandemic is that it first when first live shows started,

1357
01:14:05,479 --> 01:14:07,720
Speaker 1: he had one in Staten, Virginia and then one up

1358
01:14:07,720 --> 01:14:11,080
Speaker 1: in a natural Chimneys which is near Harrisonburg, Virginia. So

1359
01:14:11,160 --> 01:14:13,760
Speaker 1: you've done two shows in two weeks, and I had

1360
01:14:13,800 --> 01:14:15,800
Speaker 1: been to both shows. I was telling people I had

1361
01:14:15,840 --> 01:14:19,120
Speaker 1: been to on of the Scott Miller concerts that had

1362
01:14:19,160 --> 01:14:21,400
Speaker 1: been since the pandemic. And I'm not still a little

1363
01:14:21,479 --> 01:14:23,519
Speaker 1: hundred percent, but anytime I get the chance to to

1364
01:14:23,640 --> 01:14:26,320
Speaker 1: hear him, I looked to do. So. One of the

1365
01:14:26,400 --> 01:14:29,320
Speaker 1: artists that threw the during the pandemics that he's not

1366
01:14:29,360 --> 01:14:32,160
Speaker 1: touring anymore is Aaron Neville. He's probably a little more

1367
01:14:32,200 --> 01:14:35,320
Speaker 1: well known than than than Scott Miller up until the pandemic.

1368
01:14:35,479 --> 01:14:37,360
Speaker 1: That's the artist who had seen the most times and

1369
01:14:37,680 --> 01:14:41,680
Speaker 1: absolutely love his his music and just just being in

1370
01:14:41,680 --> 01:14:44,760
Speaker 1: a room where Aaron Neville is saying that's a good thing. Yeah,

1371
01:14:44,800 --> 01:14:47,240
Speaker 1: to say the least. The Neville brothers also the whole

1372
01:14:47,280 --> 01:14:50,479
Speaker 1: the whole family's supertown. Correct. Um. Let's talk about your

1373
01:14:50,520 --> 01:14:54,599
Speaker 1: early mentors who helped shape or guide your career. Well,

1374
01:14:54,640 --> 01:14:58,680
Speaker 1: clearly my father probably occupies a singular spot in that um.

1375
01:14:58,720 --> 01:15:01,439
Speaker 1: He was a cp A in Salem County, New Jersey.

1376
01:15:01,520 --> 01:15:04,599
Speaker 1: In Salem County, compared to most parts of New Jersey's

1377
01:15:04,720 --> 01:15:08,240
Speaker 1: very rural um, he would have started his c p

1378
01:15:08,360 --> 01:15:12,759
Speaker 1: A practice in Salem County probably in the early nineteen fifties,

1379
01:15:12,760 --> 01:15:15,320
Speaker 1: after serving in World War Two and finishing up his

1380
01:15:15,520 --> 01:15:18,200
Speaker 1: UH education at Temple on the on the G I

1381
01:15:18,280 --> 01:15:21,360
Speaker 1: bill just to give some insight into my father and

1382
01:15:21,400 --> 01:15:24,519
Speaker 1: the way he did things. So he became a reasonably

1383
01:15:24,560 --> 01:15:28,000
Speaker 1: successful businessman over over time. And when people would ask

1384
01:15:28,080 --> 01:15:31,960
Speaker 1: him where he went to school, he would say Temple, oh.

1385
01:15:32,080 --> 01:15:33,920
Speaker 1: And I observed my father doing that all the time,

1386
01:15:33,960 --> 01:15:36,160
Speaker 1: and I kind of one time I asked him, Dad,

1387
01:15:36,160 --> 01:15:38,360
Speaker 1: when when people ask you where you good school, you

1388
01:15:38,439 --> 01:15:40,479
Speaker 1: say Temple? Oh? Why? Why why do you do that?

1389
01:15:40,960 --> 01:15:44,479
Speaker 1: He said, Well, when I say Temple, people say oh,

1390
01:15:44,520 --> 01:15:49,040
Speaker 1: So I figured i'd save him the time. That's very flat,

1391
01:15:49,520 --> 01:15:51,479
Speaker 1: but that's an insight into the way he did things.

1392
01:15:51,520 --> 01:15:54,639
Speaker 1: And I don't know if you remember the show Green Acres, well,

1393
01:15:54,840 --> 01:15:59,120
Speaker 1: there was Mr Douglas and Mr Haney as the polar opposites,

1394
01:15:59,280 --> 01:16:01,880
Speaker 1: and my father was somewhere between the two so he

1395
01:16:01,920 --> 01:16:05,120
Speaker 1: had practiced with the predecessor firm of Deloitte in Philadelphia,

1396
01:16:05,360 --> 01:16:07,920
Speaker 1: but left the big city to return to where he

1397
01:16:07,960 --> 01:16:11,000
Speaker 1: was born, in Salem County, and became an accountant there.

1398
01:16:11,200 --> 01:16:14,360
Speaker 1: And he had a very interesting practice. So he would

1399
01:16:14,360 --> 01:16:17,120
Speaker 1: do people's tax work. He did business consulting, He owned

1400
01:16:17,160 --> 01:16:19,840
Speaker 1: a liquor store, among other things. He would put together

1401
01:16:19,920 --> 01:16:22,160
Speaker 1: deals and as opposed to taking a fee, would take

1402
01:16:22,160 --> 01:16:24,360
Speaker 1: a percentage interest in the in the business of a

1403
01:16:24,360 --> 01:16:26,600
Speaker 1: little bit of carri Avengers. And his office was in

1404
01:16:26,680 --> 01:16:28,920
Speaker 1: our home and in the house where I grew up,

1405
01:16:28,920 --> 01:16:31,320
Speaker 1: among other things. In addition to just during my father

1406
01:16:31,400 --> 01:16:34,240
Speaker 1: and liking him and hanging out with him. Um in

1407
01:16:34,280 --> 01:16:36,519
Speaker 1: the farmhouse we grew up we grew up in, there

1408
01:16:36,520 --> 01:16:38,840
Speaker 1: were only two rooms that were air conditioned. One was

1409
01:16:38,880 --> 01:16:41,360
Speaker 1: my parents bedroom and the other was his office. So

1410
01:16:41,439 --> 01:16:43,559
Speaker 1: for all kinds of reasons, I hung out at his office.

1411
01:16:44,000 --> 01:16:45,639
Speaker 1: And he read the Wall Street Journal, So I read

1412
01:16:45,680 --> 01:16:48,599
Speaker 1: the Wall Stree Journal. And and as a kid doing

1413
01:16:48,600 --> 01:16:51,040
Speaker 1: my homework or just sitting in his office coloring books

1414
01:16:51,120 --> 01:16:54,280
Speaker 1: or reading whatever, I would hear him as he was

1415
01:16:54,320 --> 01:16:56,280
Speaker 1: talking to people on the phone, or people would be

1416
01:16:56,280 --> 01:16:58,479
Speaker 1: in and out, and and he was kind enough. I

1417
01:16:58,520 --> 01:17:00,599
Speaker 1: came along a little bit later in his life where

1418
01:17:00,880 --> 01:17:03,840
Speaker 1: I was just allowed to be an observer and through

1419
01:17:03,840 --> 01:17:08,760
Speaker 1: osmosis pick up the idea of business without formal instruction.

1420
01:17:08,800 --> 01:17:10,280
Speaker 1: But that was that was the case from a from

1421
01:17:10,280 --> 01:17:13,240
Speaker 1: an early age. So so many things I learned about

1422
01:17:13,240 --> 01:17:15,960
Speaker 1: life and business was just hanging around with my dad

1423
01:17:16,040 --> 01:17:20,120
Speaker 1: through the early years of my life. Interesting, you mentioned

1424
01:17:20,200 --> 01:17:22,360
Speaker 1: the long gray line. What are some of your other

1425
01:17:22,400 --> 01:17:25,240
Speaker 1: favorite books? What have you been reading lately and what

1426
01:17:25,280 --> 01:17:27,639
Speaker 1: are some of your favorites? Well, it's funny you should

1427
01:17:27,640 --> 01:17:30,599
Speaker 1: ask that, And um, I read all the time. That's

1428
01:17:30,600 --> 01:17:32,679
Speaker 1: what I do in spare moments. And I love traveling

1429
01:17:32,680 --> 01:17:34,559
Speaker 1: for so many reasons, not the least of which it's

1430
01:17:34,600 --> 01:17:36,559
Speaker 1: always have a book in my hand and a bag

1431
01:17:36,560 --> 01:17:39,519
Speaker 1: of stuff to read. And it's like asking me, what

1432
01:17:39,520 --> 01:17:42,600
Speaker 1: what did I eat last Tuesday? I don't know, but

1433
01:17:42,640 --> 01:17:45,400
Speaker 1: I'm sure I ate something. So I always draw the

1434
01:17:45,439 --> 01:17:47,000
Speaker 1: blank when people ask me that questions. I know what

1435
01:17:47,040 --> 01:17:50,799
Speaker 1: I'm reading right now. It's The Lincoln Highway by Amor Tolls.

1436
01:17:51,400 --> 01:17:54,320
Speaker 1: And I thought his book Gentleman in Moscow was a

1437
01:17:54,400 --> 01:17:58,559
Speaker 1: spectacular book, so I eagerly awaited his his next book

1438
01:17:58,560 --> 01:18:00,640
Speaker 1: that has come out recently. I think it might be

1439
01:18:00,680 --> 01:18:03,519
Speaker 1: even better written than Gentleman in Moscow. So it's it's

1440
01:18:03,600 --> 01:18:05,680
Speaker 1: it's a wonderful book. And I will say one thing

1441
01:18:05,680 --> 01:18:09,040
Speaker 1: about reading, uh, I mean obviously connects to role models.

1442
01:18:09,200 --> 01:18:11,160
Speaker 1: Charlie Munger is about as good as they get. At

1443
01:18:11,160 --> 01:18:13,719
Speaker 1: the top of the list, Monger talks about not reading

1444
01:18:13,760 --> 01:18:16,320
Speaker 1: fiction and he thinks it's a waste of time. That's

1445
01:18:16,320 --> 01:18:18,559
Speaker 1: something that I would disagree with. And I think one

1446
01:18:18,600 --> 01:18:22,800
Speaker 1: of the reasons I enjoy fiction is fiction by definition,

1447
01:18:23,000 --> 01:18:27,320
Speaker 1: creates muscles of empathy. To read a good work of fiction,

1448
01:18:27,360 --> 01:18:30,720
Speaker 1: what's gonna happen is you're going to find yourself sort

1449
01:18:30,760 --> 01:18:33,920
Speaker 1: of inhabiting the character, and you're gonna find yourself in

1450
01:18:34,000 --> 01:18:36,519
Speaker 1: that setting and in that circumstances. And what you're doing

1451
01:18:36,560 --> 01:18:40,000
Speaker 1: without even realizing is you're figuring out and learning how

1452
01:18:40,000 --> 01:18:43,240
Speaker 1: to put yourself in someone else's shoes. And I think

1453
01:18:43,560 --> 01:18:47,679
Speaker 1: that is a very underappreciated skill in today's world where

1454
01:18:47,680 --> 01:18:50,240
Speaker 1: we it's it's so easy to just get inside your

1455
01:18:50,240 --> 01:18:52,280
Speaker 1: own head and living your own world, to live and

1456
01:18:52,320 --> 01:18:54,800
Speaker 1: work remotely, to have your groceries delivered, you kind of

1457
01:18:54,800 --> 01:18:57,679
Speaker 1: forget what it means to be part of a broader

1458
01:18:57,720 --> 01:19:00,320
Speaker 1: society and to be able to see things from somebody

1459
01:19:00,320 --> 01:19:03,080
Speaker 1: else's point of view. I can't think of anything that's

1460
01:19:03,120 --> 01:19:06,320
Speaker 1: really more powerful than that. So I think the tool

1461
01:19:06,360 --> 01:19:09,240
Speaker 1: of reading fiction, just to just to teach yourself how

1462
01:19:09,280 --> 01:19:12,519
Speaker 1: to do that, is a really good way of of

1463
01:19:12,560 --> 01:19:15,600
Speaker 1: doing things. I'm gonna share something amusing with you. We

1464
01:19:15,640 --> 01:19:20,360
Speaker 1: were having a conversation about uh. Isaac Asimov's Foundation is

1465
01:19:20,400 --> 01:19:24,839
Speaker 1: now a show on Apple Plus and Dune. Frank Herbert's

1466
01:19:24,880 --> 01:19:27,640
Speaker 1: June not only is in the theaters, but it's on

1467
01:19:27,800 --> 01:19:31,679
Speaker 1: HBO Max. And the conversation we had amongst a group

1468
01:19:31,720 --> 01:19:36,840
Speaker 1: of investors are the kids like me who were big

1469
01:19:36,880 --> 01:19:41,959
Speaker 1: sci fi nerds not coincidentally, tend to be more inclined

1470
01:19:42,000 --> 01:19:46,240
Speaker 1: to invest in technology and some out their concepts than

1471
01:19:46,280 --> 01:19:48,519
Speaker 1: the people who always thought sci fi was wacky. And

1472
01:19:48,560 --> 01:19:51,680
Speaker 1: I'm I'm I would be fascinated to find out if

1473
01:19:51,720 --> 01:19:54,240
Speaker 1: anybody has ever done a study on that, because if

1474
01:19:54,240 --> 01:19:57,799
Speaker 1: it makes sense, Hey, half the stuff we read about

1475
01:19:57,880 --> 01:20:02,799
Speaker 1: in sci fi self dry in cars, robots, Uh, magic

1476
01:20:02,920 --> 01:20:06,320
Speaker 1: shots of your own DNA that make diseases go away.

1477
01:20:07,200 --> 01:20:11,639
Speaker 1: That's eight years old, and here it is a portable

1478
01:20:11,680 --> 01:20:15,799
Speaker 1: computers that allow you to do video talking in your pocket.

1479
01:20:15,960 --> 01:20:18,599
Speaker 1: All this stuff is straight out of sci fi. So

1480
01:20:18,720 --> 01:20:21,719
Speaker 1: who better to be investors in that than the people

1481
01:20:21,720 --> 01:20:24,360
Speaker 1: who it was formative for them as as a child.

1482
01:20:24,439 --> 01:20:26,360
Speaker 1: I can remember as a kid, I spent a lot

1483
01:20:26,400 --> 01:20:29,320
Speaker 1: of saturdays in my youth at the Franklin Institute in Philadelphia,

1484
01:20:29,360 --> 01:20:32,840
Speaker 1: which is their science museum, And I can remember the

1485
01:20:32,960 --> 01:20:36,519
Speaker 1: um first telephone that had video attached to it, and

1486
01:20:36,560 --> 01:20:38,120
Speaker 1: you would stand in one room and your friend would

1487
01:20:38,120 --> 01:20:39,519
Speaker 1: stand in the other room, and you would talk to

1488
01:20:39,560 --> 01:20:42,639
Speaker 1: yourself over this amazing thing. Of course, it died because

1489
01:20:42,960 --> 01:20:45,840
Speaker 1: network effect. At that time, it was so expensive that

1490
01:20:46,840 --> 01:20:48,439
Speaker 1: all right, you got one, Well are you gonna call?

1491
01:20:48,560 --> 01:20:51,560
Speaker 1: There's nobody else who has one. But it has become pervasive.

1492
01:20:51,560 --> 01:20:54,280
Speaker 1: In your point, your point is well taken. What sort

1493
01:20:54,320 --> 01:20:57,120
Speaker 1: of advice would you give to a recent college grad

1494
01:20:57,200 --> 01:21:01,479
Speaker 1: who was interested in a career in either venture private

1495
01:21:01,479 --> 01:21:08,080
Speaker 1: equity investing or traditional finance investing? Well, um, there's a

1496
01:21:08,080 --> 01:21:10,599
Speaker 1: guy even here's a book I read Robert Hagstrom, who

1497
01:21:10,680 --> 01:21:13,240
Speaker 1: has written a lot of books about Buffett. I think

1498
01:21:13,240 --> 01:21:15,720
Speaker 1: you wrote a book, if I'm remembering the title exactly right,

1499
01:21:16,240 --> 01:21:21,160
Speaker 1: called Investing the Last liberal art. And it really is

1500
01:21:21,600 --> 01:21:24,760
Speaker 1: the concept and the notion of using both the right

1501
01:21:25,000 --> 01:21:27,960
Speaker 1: and left side of your brains, both of them too.

1502
01:21:28,479 --> 01:21:32,080
Speaker 1: Analyze and be disciplined and and do your work, but

1503
01:21:32,160 --> 01:21:39,600
Speaker 1: at the same time, never lose your sense of imagination, creativity, curiosity,

1504
01:21:39,800 --> 01:21:42,439
Speaker 1: wonder about what else might be true, what's the other

1505
01:21:42,479 --> 01:21:46,120
Speaker 1: side of the argument. Um have one friend, shad Row

1506
01:21:46,439 --> 01:21:49,240
Speaker 1: from from Texas, who has Texas ways of saying things,

1507
01:21:49,720 --> 01:21:51,840
Speaker 1: And one of his statements that I always remember is

1508
01:21:51,920 --> 01:21:55,559
Speaker 1: that you must remember that any pancake, no matter how thin,

1509
01:21:55,960 --> 01:21:59,160
Speaker 1: has two sides. So I think the number one thing

1510
01:21:59,200 --> 01:22:02,320
Speaker 1: is as you're coming up, is just always be developing

1511
01:22:02,400 --> 01:22:06,639
Speaker 1: your mind, be developing your creativity, and be developing those

1512
01:22:06,640 --> 01:22:09,479
Speaker 1: feedback loops and and don't ever think you've arrived at

1513
01:22:09,520 --> 01:22:11,200
Speaker 1: the answer. This is not a problem to be solved.

1514
01:22:11,320 --> 01:22:13,559
Speaker 1: It's a problem to be worked at, and it's fun

1515
01:22:13,600 --> 01:22:16,760
Speaker 1: to work at it. It's it's it's exercise in your mind.

1516
01:22:16,800 --> 01:22:18,800
Speaker 1: It's it's it's free, and it's it's it's like that

1517
01:22:18,880 --> 01:22:21,840
Speaker 1: scene from Chariots of Fire where the you know, the

1518
01:22:21,880 --> 01:22:25,120
Speaker 1: sister is telling the runner, you know, he shouldn't run

1519
01:22:25,120 --> 01:22:27,280
Speaker 1: on Sundays, And there was a person of deep faith,

1520
01:22:27,720 --> 01:22:30,280
Speaker 1: and he responded to his sister that, well, yes, the

1521
01:22:30,280 --> 01:22:32,759
Speaker 1: Lord giving me faith, but he also made me fast.

1522
01:22:33,880 --> 01:22:36,600
Speaker 1: So the run is how he feels his grace. That

1523
01:22:36,720 --> 01:22:39,519
Speaker 1: was what he was made to do. So I think

1524
01:22:39,720 --> 01:22:43,000
Speaker 1: if you're if you really are fascinated by finance and investments,

1525
01:22:43,000 --> 01:22:44,720
Speaker 1: and I know as a kid, I always have been

1526
01:22:45,240 --> 01:22:49,919
Speaker 1: um doing it every day, reading something, talking to somebody,

1527
01:22:50,960 --> 01:22:54,800
Speaker 1: arguing a case back and forth, both sides. In fact,

1528
01:22:54,880 --> 01:22:57,000
Speaker 1: one of the things that I joked with Steve Marquelle

1529
01:22:57,000 --> 01:23:02,479
Speaker 1: about had this sort radminical style about him where at

1530
01:23:02,520 --> 01:23:04,640
Speaker 1: any given point in time, his office was next to

1531
01:23:04,680 --> 01:23:06,799
Speaker 1: mine for many years, and if I had an idea,

1532
01:23:07,120 --> 01:23:08,519
Speaker 1: I would go into his office and I would tell

1533
01:23:08,560 --> 01:23:11,280
Speaker 1: Steve this idea and he would say, and that's just

1534
01:23:11,320 --> 01:23:13,599
Speaker 1: the dumbest thing I ever heard. And we would argue

1535
01:23:13,600 --> 01:23:16,160
Speaker 1: it and I would go away, and then I would

1536
01:23:16,200 --> 01:23:17,960
Speaker 1: come back a couple of days later or something that

1537
01:23:18,000 --> 01:23:19,880
Speaker 1: I said, you know, Steve, I think actually you were

1538
01:23:19,960 --> 01:23:22,439
Speaker 1: right about that, and he and he would say, no,

1539
01:23:22,520 --> 01:23:24,040
Speaker 1: I think you were right about that, and then we

1540
01:23:24,040 --> 01:23:26,599
Speaker 1: would argue with the other way. And that was just

1541
01:23:27,000 --> 01:23:32,280
Speaker 1: the technique to get more robust understanding of what might

1542
01:23:32,320 --> 01:23:34,840
Speaker 1: in fact be the case, and usually it's not the

1543
01:23:34,920 --> 01:23:38,360
Speaker 1: polar extreme. In either case, the answer is to be

1544
01:23:38,360 --> 01:23:41,200
Speaker 1: found somewhere in the middle. And as one of my

1545
01:23:41,320 --> 01:23:44,880
Speaker 1: one of my digitally cool friends says, people have forgotten

1546
01:23:44,920 --> 01:23:47,280
Speaker 1: the fact that there are some numbers that exist between

1547
01:23:47,360 --> 01:23:50,400
Speaker 1: zero and a hundred. You know, the genius of law

1548
01:23:50,439 --> 01:23:54,880
Speaker 1: school is that mood court forces you to not pick

1549
01:23:54,960 --> 01:23:57,760
Speaker 1: usaw and argue it. You have to be prepared not

1550
01:23:57,880 --> 01:24:01,360
Speaker 1: only to argue both sides, but at at a moment's

1551
01:24:01,360 --> 01:24:04,720
Speaker 1: known as switched positions, and suddenly you know alonely the

1552
01:24:04,760 --> 01:24:06,680
Speaker 1: plane if you're now the defendant, and you have to

1553
01:24:06,720 --> 01:24:09,920
Speaker 1: make that case. And there's something to be said for

1554
01:24:10,479 --> 01:24:13,600
Speaker 1: you shouldn't be long anything unless you understand you know,

1555
01:24:13,600 --> 01:24:15,800
Speaker 1: you shouldn't be bullish on anything unless you understand the

1556
01:24:15,840 --> 01:24:20,479
Speaker 1: bear case, and vice versa, because listen, someone's for every buyer,

1557
01:24:20,479 --> 01:24:23,439
Speaker 1: there's a seller. There's two sides to you know that pancake.

1558
01:24:23,600 --> 01:24:25,679
Speaker 1: You have to be able to be on to see

1559
01:24:25,720 --> 01:24:29,120
Speaker 1: at least both sides of that argument. So our final question,

1560
01:24:29,800 --> 01:24:32,160
Speaker 1: what do you know about the world of investing today?

1561
01:24:32,280 --> 01:24:34,840
Speaker 1: You wish you knew thirty seven years ago or so

1562
01:24:34,960 --> 01:24:38,240
Speaker 1: when you were first getting started. If I look at

1563
01:24:38,280 --> 01:24:40,080
Speaker 1: the mistakes that I've made, the ones that have been

1564
01:24:40,120 --> 01:24:43,479
Speaker 1: most costly have been those of admission. So to look

1565
01:24:43,479 --> 01:24:46,280
Speaker 1: at Berkshire when I was twenty two years old and

1566
01:24:46,400 --> 01:24:49,040
Speaker 1: have it so obvious to me as an accountant that

1567
01:24:49,120 --> 01:24:53,320
Speaker 1: this is good, and yet not by it that's stupid. UM,

1568
01:24:53,400 --> 01:24:55,200
Speaker 1: And I think I make that mistake less than I

1569
01:24:55,280 --> 01:24:58,320
Speaker 1: used to. Um. When you find something that's really good.

1570
01:24:58,320 --> 01:25:00,639
Speaker 1: I mean, here's another thing that Buffets said that has

1571
01:25:00,840 --> 01:25:03,760
Speaker 1: has profoundly changed for me over time. He says, you know,

1572
01:25:03,800 --> 01:25:06,679
Speaker 1: being an investor made him a better businessman, and being

1573
01:25:06,680 --> 01:25:09,599
Speaker 1: a businessman made him a better investor. I can tell

1574
01:25:09,680 --> 01:25:14,519
Speaker 1: you through the responsibility of what's involved in mark a

1575
01:25:14,640 --> 01:25:19,439
Speaker 1: ventures and operating real businesses. I know from firsthand experience

1576
01:25:19,720 --> 01:25:22,760
Speaker 1: that operating a real business and doing well at it

1577
01:25:22,840 --> 01:25:28,080
Speaker 1: is hard. It's hard, and people who are good at it, Uh,

1578
01:25:28,280 --> 01:25:31,240
Speaker 1: don't be so quick to abandon them when they go

1579
01:25:31,320 --> 01:25:34,559
Speaker 1: through a rough spot. Uh. Again, going back to Shadow,

1580
01:25:34,680 --> 01:25:37,519
Speaker 1: he has a saints is in the investment business. Uh,

1581
01:25:37,760 --> 01:25:43,439
Speaker 1: You're You're never smart. People generally speaking don't become stupid,

1582
01:25:43,960 --> 01:25:47,280
Speaker 1: and stupid people almost never become smart. So if you

1583
01:25:47,439 --> 01:25:53,559
Speaker 1: find smart, hard working, intelligent, creative, dedicated people, stick with

1584
01:25:53,680 --> 01:25:56,559
Speaker 1: them because they're going to accomplish things over time that

1585
01:25:56,640 --> 01:25:59,240
Speaker 1: will amaze you, and and give them the leeway, give

1586
01:25:59,320 --> 01:26:02,880
Speaker 1: them the grace to make mistakes when there are mistakes

1587
01:26:02,760 --> 01:26:05,600
Speaker 1: of learning UH and non fatal that you can you

1588
01:26:05,600 --> 01:26:08,920
Speaker 1: can recover and learn from. And just having grace for

1589
01:26:09,000 --> 01:26:12,280
Speaker 1: that is something that's easier when you're older than it

1590
01:26:12,360 --> 01:26:14,320
Speaker 1: is when you're younger. So those are things I wish

1591
01:26:14,360 --> 01:26:16,280
Speaker 1: I knew was a twenty nine year old instead of

1592
01:26:16,280 --> 01:26:20,160
Speaker 1: having to them. That's a lovely point to end on.

1593
01:26:20,840 --> 01:26:23,240
Speaker 1: Thank you so much, Tom for being so generous with

1594
01:26:23,320 --> 01:26:26,880
Speaker 1: your time. We have been speaking with Tom Gainer. He

1595
01:26:27,280 --> 01:26:31,840
Speaker 1: is the c i O and co CEO of Marquel Corporation. UH.

1596
01:26:31,880 --> 01:26:34,400
Speaker 1: If you enjoy this conversation, we'll be sure and check

1597
01:26:34,439 --> 01:26:38,439
Speaker 1: out any of the previous four hundred such discussions we've had.

1598
01:26:38,880 --> 01:26:44,560
Speaker 1: You can find those on Apple, iTunes, I Heart Radio, app, Spotify,

1599
01:26:44,720 --> 01:26:48,360
Speaker 1: wherever you get your podcast from. We love your comments,

1600
01:26:48,360 --> 01:26:52,679
Speaker 1: feedback and suggestions right to us at m IB podcast

1601
01:26:52,760 --> 01:26:55,680
Speaker 1: at Bloomberg dot net. You can sign up from my

1602
01:26:55,760 --> 01:26:58,559
Speaker 1: Daily Reads at rit Halts dot com. Follow me on

1603
01:26:58,600 --> 01:27:01,640
Speaker 1: Twitter at rit Halts. I would be remiss if I

1604
01:27:01,680 --> 01:27:03,559
Speaker 1: did not thank the crack team that helps put these

1605
01:27:03,560 --> 01:27:08,000
Speaker 1: conversations together each week. Paris Wald is my producer, Mohammed

1606
01:27:08,080 --> 01:27:12,040
Speaker 1: is my audio engineer. Michael Batnick is my head of research.

1607
01:27:12,080 --> 01:27:16,600
Speaker 1: Atika val Bron is our project manager. I'm Barry Retolts.

1608
01:27:16,840 --> 01:27:20,400
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.