1 00:00:00,200 --> 00:00:03,360 Speaker 1: Hey, they're aud Loots listeners. It's Tracy Alloway. 2 00:00:03,040 --> 00:00:04,000 Speaker 2: And Joe Wisenthal. 3 00:00:04,280 --> 00:00:07,720 Speaker 1: We are very excited to announce that Audlots is going 4 00:00:07,800 --> 00:00:09,680 Speaker 1: to Washington That's right. 5 00:00:09,760 --> 00:00:11,560 Speaker 2: For the first time, we are going to do a 6 00:00:11,640 --> 00:00:16,439 Speaker 2: live public odd Lots recording in our nation's capital. That's 7 00:00:16,440 --> 00:00:19,680 Speaker 2: going to be March twelfth in Washington, DC at the 8 00:00:19,760 --> 00:00:23,560 Speaker 2: Miracle Theater and guests will be announced in the coming days, 9 00:00:23,600 --> 00:00:25,960 Speaker 2: but in the meantime you can find a ticket link 10 00:00:26,000 --> 00:00:27,880 Speaker 2: at Bloomberg dot com slash odd. 11 00:00:27,800 --> 00:00:44,360 Speaker 3: Lots, Bloomberg Audio Studios, Podcasts, Radio News. 12 00:00:47,240 --> 00:00:50,520 Speaker 1: Hello and welcome to another episode of the Aught Thoughts podcast. 13 00:00:50,760 --> 00:00:52,240 Speaker 1: I'm Tracy Alloway. 14 00:00:51,880 --> 00:00:53,120 Speaker 2: And I'm Joe Wisenthal. 15 00:00:53,520 --> 00:00:56,520 Speaker 1: Joe, you told me you read a fiction book last year, right, 16 00:00:57,040 --> 00:00:58,240 Speaker 1: just one. 17 00:00:59,240 --> 00:01:02,400 Speaker 2: I read it, so I read too much nonfiction Like 18 00:01:02,440 --> 00:01:05,440 Speaker 2: a lot of dudes. I think it's nonfiction is very 19 00:01:05,480 --> 00:01:08,399 Speaker 2: bro coded. My goal for twenty twenty five was to 20 00:01:08,440 --> 00:01:10,880 Speaker 2: read at least one novel, and I did it. I 21 00:01:10,920 --> 00:01:13,040 Speaker 2: already satisfied my goal. It's not even the end of 22 00:01:13,120 --> 00:01:17,800 Speaker 2: January yet, so back to reading random history and philosophy 23 00:01:17,800 --> 00:01:18,400 Speaker 2: and all that stuff. 24 00:01:18,560 --> 00:01:21,880 Speaker 1: Very very ambitious. You're one fiction book can I make 25 00:01:21,880 --> 00:01:23,720 Speaker 1: a suggestion for another. 26 00:01:23,440 --> 00:01:25,000 Speaker 3: Fiction book you should read, please. 27 00:01:25,120 --> 00:01:28,759 Speaker 1: So there's a book by Margaret Atwood called Orx and Craik, 28 00:01:29,080 --> 00:01:32,040 Speaker 1: and it's sort of a sci fi thing, but I 29 00:01:32,120 --> 00:01:35,520 Speaker 1: think about it quite a lot nowadays because she has 30 00:01:35,560 --> 00:01:40,320 Speaker 1: this vision of society in the future, and in that society, 31 00:01:41,080 --> 00:01:44,679 Speaker 1: companies are the most important part of it. It's not 32 00:01:44,760 --> 00:01:47,840 Speaker 1: about countries anymore. It's all about what company you work for, 33 00:01:48,360 --> 00:01:50,680 Speaker 1: and the companies are kind of the ones providing all 34 00:01:50,680 --> 00:01:54,800 Speaker 1: the social services like healthcare and housing. Basically you're a 35 00:01:54,840 --> 00:01:58,120 Speaker 1: citizen of a company instead of a country. And I 36 00:01:58,200 --> 00:02:00,240 Speaker 1: kind of think about it a lot because I feel 37 00:02:00,360 --> 00:02:03,920 Speaker 1: like we're sort of moving in that direction where companies 38 00:02:03,920 --> 00:02:08,920 Speaker 1: are becoming more powerful, they're becoming more interesting in many 39 00:02:08,960 --> 00:02:11,959 Speaker 1: ways and more important to society than ever. 40 00:02:12,120 --> 00:02:14,720 Speaker 2: I'm looking it up right now, I hadn't heard of it. 41 00:02:14,720 --> 00:02:17,160 Speaker 2: It came out in two thousand and three. Maybe at 42 00:02:17,200 --> 00:02:20,360 Speaker 2: that time it was sort of seen as futuristic, but 43 00:02:20,480 --> 00:02:24,560 Speaker 2: in twenty twenty five it does not even sound futuristic 44 00:02:24,639 --> 00:02:27,440 Speaker 2: or controversial at all. And we could go on about 45 00:02:27,480 --> 00:02:30,160 Speaker 2: what that means, but I just like basically accept the 46 00:02:30,200 --> 00:02:32,320 Speaker 2: premise that that's true now twenty five. 47 00:02:32,400 --> 00:02:35,160 Speaker 1: Okay, great, so you have your second fiction book to read. 48 00:02:35,200 --> 00:02:37,000 Speaker 1: But the reason I bring it up is because I 49 00:02:37,040 --> 00:02:40,120 Speaker 1: think we should do more on these stories of companies 50 00:02:40,520 --> 00:02:43,320 Speaker 1: in general. And so I am very pleased to say 51 00:02:43,360 --> 00:02:45,760 Speaker 1: that we do, in fact have the perfect guests to 52 00:02:45,880 --> 00:02:48,679 Speaker 1: discuss this. I'm very excited about this. I'm a fan 53 00:02:48,720 --> 00:02:52,600 Speaker 1: of their podcast. Lots of people are fans of their podcast. 54 00:02:52,800 --> 00:02:55,760 Speaker 1: We're going to be speaking with Ben Gilbert and David Rosenthal, 55 00:02:56,040 --> 00:02:59,640 Speaker 1: the co hosts of the Acquired podcast. So Ben and David, 56 00:02:59,680 --> 00:03:01,400 Speaker 1: thank you so much for coming on all thoughts. 57 00:03:01,480 --> 00:03:03,040 Speaker 4: Thank you great to be here, Thanks for having us 58 00:03:03,080 --> 00:03:06,800 Speaker 4: all right, may it was so good career. 59 00:03:07,600 --> 00:03:07,880 Speaker 5: Thank you. 60 00:03:08,440 --> 00:03:10,440 Speaker 2: Tracy and I were talking about like who should start 61 00:03:10,480 --> 00:03:12,120 Speaker 2: this one, and I was like, Tracy, you do it, 62 00:03:12,160 --> 00:03:14,400 Speaker 2: and it was much better than what. 63 00:03:14,280 --> 00:03:17,959 Speaker 1: I Well, thank you everyone. That's very nice. Ben and 64 00:03:18,040 --> 00:03:21,200 Speaker 1: David maybe give us the uh, the elevator pitch for 65 00:03:21,280 --> 00:03:23,040 Speaker 1: the podcast just before we begin. 66 00:03:23,400 --> 00:03:23,720 Speaker 4: Well. 67 00:03:24,040 --> 00:03:28,120 Speaker 5: Acquired is a ten year old podcast that started, like 68 00:03:28,200 --> 00:03:32,079 Speaker 5: many company journeys in obscurity, with nobody listening, and slowly 69 00:03:32,400 --> 00:03:37,040 Speaker 5: doubled year over year over year. Now I bet, I bet, 70 00:03:37,600 --> 00:03:39,480 Speaker 5: uh Yeah, we're now fortunate to be one of the 71 00:03:39,520 --> 00:03:42,560 Speaker 5: top few off of the number one tech podcast on 72 00:03:43,360 --> 00:03:46,400 Speaker 5: Apple and Spotify. Which is a little funny because we 73 00:03:46,440 --> 00:03:49,920 Speaker 5: study these companies that are very often not tech companies now, 74 00:03:50,120 --> 00:03:53,440 Speaker 5: but we look at companies like TSMC and Bars, the 75 00:03:53,480 --> 00:03:57,840 Speaker 5: company behind M and M's ikea, Meta ermez Costco, and 76 00:03:57,880 --> 00:04:02,320 Speaker 5: we really try to through conversation David and I tell 77 00:04:02,400 --> 00:04:04,920 Speaker 5: the entire history of the company from founding to today, 78 00:04:05,280 --> 00:04:08,200 Speaker 5: analyze it and really try to answer the question why 79 00:04:08,240 --> 00:04:10,920 Speaker 5: did the company that we are studying work and work 80 00:04:10,920 --> 00:04:12,200 Speaker 5: at such extreme scale? 81 00:04:12,640 --> 00:04:15,000 Speaker 4: And Tracy it's the reason we do it is literally 82 00:04:15,080 --> 00:04:19,360 Speaker 4: just like you said, you know, the institutions that these companies, 83 00:04:19,400 --> 00:04:21,839 Speaker 4: the biggest companies you know around the world have become 84 00:04:21,920 --> 00:04:24,880 Speaker 4: are you know, they're quasi governmental at this point. You know, 85 00:04:24,880 --> 00:04:26,880 Speaker 4: you can make an argument they're more important than government. 86 00:04:26,960 --> 00:04:29,560 Speaker 4: Somebody said to Ben a few months ago when when 87 00:04:29,600 --> 00:04:33,560 Speaker 4: talking about acquired you know, in two hundred years, I 88 00:04:33,600 --> 00:04:35,440 Speaker 4: don't know if people are going to know the name 89 00:04:35,520 --> 00:04:37,159 Speaker 4: Joe Biden, but they're sure as hell going to know 90 00:04:37,160 --> 00:04:41,279 Speaker 4: the name Mark Zuckerberg. We're like, WHOA, that's that's a 91 00:04:41,279 --> 00:04:43,080 Speaker 4: crazy idea but might be true. 92 00:04:43,760 --> 00:04:45,760 Speaker 2: Yeah, I mean I can't. They're a bunch of random 93 00:04:45,839 --> 00:04:48,840 Speaker 2: presidents from one hundred years ago that I certainly I 94 00:04:48,880 --> 00:04:51,960 Speaker 2: couldn't name, or if I could name them, wouldn't know 95 00:04:52,000 --> 00:04:55,920 Speaker 2: anything about them. Going back to Tracy's fantastic intro, you know, 96 00:04:55,960 --> 00:04:59,159 Speaker 2: there's sort of two things I guess about companies, which 97 00:04:59,200 --> 00:05:02,880 Speaker 2: is one is I guess the business model, the product 98 00:05:02,920 --> 00:05:05,159 Speaker 2: that they sell. You know, you build something and then 99 00:05:05,200 --> 00:05:07,000 Speaker 2: you try to sell it for more money that you 100 00:05:07,080 --> 00:05:09,440 Speaker 2: built it for. And then there is this sort of 101 00:05:09,480 --> 00:05:13,799 Speaker 2: like the internal empire, and there's the culture, and there's 102 00:05:14,000 --> 00:05:16,960 Speaker 2: just the way they work. And these are fundamentally sort 103 00:05:16,960 --> 00:05:19,800 Speaker 2: of like different questions. Do you how do you think 104 00:05:19,839 --> 00:05:23,080 Speaker 2: about like what a company is? Because I get they're 105 00:05:23,080 --> 00:05:26,120 Speaker 2: really portrays it's intro. There are multiple ways to describe it, 106 00:05:26,160 --> 00:05:28,320 Speaker 2: like what is a company that is? 107 00:05:28,640 --> 00:05:32,000 Speaker 4: You know, we typically spend four to six hours on 108 00:05:32,080 --> 00:05:34,240 Speaker 4: an episode trying to answer that question. 109 00:05:37,000 --> 00:05:37,200 Speaker 1: You know. 110 00:05:37,520 --> 00:05:44,200 Speaker 4: It's what we've tended to find is the only pattern 111 00:05:44,839 --> 00:05:49,360 Speaker 4: that tends to really exist across these greatest, biggest companies 112 00:05:49,400 --> 00:05:53,960 Speaker 4: in the world is that they are each totally idiosyncratic 113 00:05:54,120 --> 00:05:57,520 Speaker 4: in some really one or multiple really really really important 114 00:05:57,560 --> 00:06:00,200 Speaker 4: to mentions. And so I think I would say, you know, 115 00:06:00,520 --> 00:06:05,119 Speaker 4: for those incredibly successful, you know institutions of our time, 116 00:06:05,640 --> 00:06:09,560 Speaker 4: what they are is they are something unique that no 117 00:06:10,000 --> 00:06:16,039 Speaker 4: other institution, you know, company, corporate, governmental, otherwise can well. 118 00:06:16,240 --> 00:06:19,919 Speaker 4: TSMC that we just covered, we just interviewed the founder 119 00:06:19,960 --> 00:06:22,960 Speaker 4: of Morris Chang in Taiwan, which is an incredible experience. 120 00:06:23,520 --> 00:06:27,560 Speaker 4: You know, they make all the leading edge chips in 121 00:06:27,600 --> 00:06:30,760 Speaker 4: the world, so you know, to the extent that computing 122 00:06:30,880 --> 00:06:34,400 Speaker 4: and compute is important in our world, like all of 123 00:06:34,440 --> 00:06:37,880 Speaker 4: it flows through TSMC. There is nobody else in the 124 00:06:37,880 --> 00:06:41,880 Speaker 4: world that has the capability to make the incredibly powerful 125 00:06:41,920 --> 00:06:43,400 Speaker 4: chips at the leading edge that they do. 126 00:06:43,800 --> 00:06:46,280 Speaker 5: I think our episodes tend to hinge on this question, 127 00:06:46,600 --> 00:06:50,039 Speaker 5: in what way is this company singular? Because nothing gets 128 00:06:50,120 --> 00:06:54,159 Speaker 5: to five hundred billion dollar trillion dollar scale without being 129 00:06:54,560 --> 00:06:58,880 Speaker 5: the only one that can do X. And in TSMC's case, 130 00:06:58,920 --> 00:07:02,839 Speaker 5: they're the only company that doesn't ever compete with their customers. 131 00:07:02,839 --> 00:07:06,240 Speaker 5: They're purely a foundry. They are not also a chip designer, 132 00:07:06,560 --> 00:07:09,120 Speaker 5: and they're the only ones capable of doing what is 133 00:07:09,640 --> 00:07:13,720 Speaker 5: the current technology generation two nanometer process the most sophisticated 134 00:07:13,800 --> 00:07:17,640 Speaker 5: leading edge chips, and almost every big company you look 135 00:07:17,680 --> 00:07:20,320 Speaker 5: at that has been successful over in a long period 136 00:07:20,320 --> 00:07:23,400 Speaker 5: of time or reached outlier status is singular in some 137 00:07:23,560 --> 00:07:24,200 Speaker 5: way like that. 138 00:07:24,360 --> 00:07:27,280 Speaker 4: And TSMC, it's like it's wild because of that, that 139 00:07:27,360 --> 00:07:29,160 Speaker 4: is the only thing that matters there. They are in 140 00:07:29,160 --> 00:07:32,600 Speaker 4: this you know, island nation of you know, depending on 141 00:07:32,600 --> 00:07:36,320 Speaker 4: who you ask, disputed sovereignty. It's insane. There's something like 142 00:07:36,360 --> 00:07:39,560 Speaker 4: six or seven percent of the country's GDP and like 143 00:07:40,760 --> 00:07:43,280 Speaker 4: I think, like fifteen percent of the stock market you know, 144 00:07:43,360 --> 00:07:46,720 Speaker 4: of the equity value of companies in the country. Yet 145 00:07:46,800 --> 00:07:49,160 Speaker 4: it exists, and yet the world order, you know, at 146 00:07:49,240 --> 00:07:52,640 Speaker 4: least thus far, has reorganized itself around it. 147 00:07:53,800 --> 00:07:56,120 Speaker 1: So the way I kind of think of your podcast, 148 00:07:56,240 --> 00:07:59,760 Speaker 1: the analogy that I use is you're the business equivalent 149 00:07:59,840 --> 00:08:04,080 Speaker 1: of Dan Carlin's hardcore history. Like these are long episodes 150 00:08:04,120 --> 00:08:08,000 Speaker 1: where you are digging very deep into the profile of 151 00:08:08,040 --> 00:08:11,080 Speaker 1: a particular company. But as you mentioned, you also do 152 00:08:11,200 --> 00:08:15,560 Speaker 1: interviews or you weave interviews into your company profiles, and 153 00:08:15,600 --> 00:08:18,720 Speaker 1: you just did that one with Morris Chang, the TSMC founder. 154 00:08:19,040 --> 00:08:21,120 Speaker 1: One of the things that really surprised me in that 155 00:08:21,240 --> 00:08:24,720 Speaker 1: interview was he said he never fired people and never 156 00:08:24,800 --> 00:08:27,600 Speaker 1: did performance reviews. What did you guys, think of. 157 00:08:27,520 --> 00:08:31,640 Speaker 5: That, it's really interesting. So David and I got to 158 00:08:31,680 --> 00:08:36,480 Speaker 5: read an unauthorized translation of his Chinese only memoir to prepare, 159 00:08:36,520 --> 00:08:40,040 Speaker 5: and he went into great length in the memoir explaining 160 00:08:40,040 --> 00:08:45,560 Speaker 5: the philosophy, and the idea is that performance reviews are 161 00:08:45,960 --> 00:08:50,880 Speaker 5: entirely separate from the idea of who should get laid 162 00:08:50,880 --> 00:08:54,360 Speaker 5: off if there's a layoff. Performance reviews are specifically about 163 00:08:54,400 --> 00:08:56,480 Speaker 5: coaching you on how to be a better employee for 164 00:08:56,520 --> 00:08:58,640 Speaker 5: the company next year, so both the employee and the 165 00:08:58,640 --> 00:09:01,880 Speaker 5: company benefit if there is a layoff. There should be 166 00:09:01,880 --> 00:09:06,160 Speaker 5: an entirely different way of determining where we need to 167 00:09:06,240 --> 00:09:10,520 Speaker 5: trim to cut budget versus looking at people's performance reviews. 168 00:09:10,559 --> 00:09:12,520 Speaker 5: And Morris goes so far as to believe that in 169 00:09:12,559 --> 00:09:15,840 Speaker 5: his industry, with his business model, you should actually never 170 00:09:16,000 --> 00:09:18,880 Speaker 5: lay people off. And I think that comes from the 171 00:09:18,960 --> 00:09:22,760 Speaker 5: fact that, a if you believe the economy or your 172 00:09:22,800 --> 00:09:25,440 Speaker 5: industry is going to turn around within twelve or eighteen months, 173 00:09:25,960 --> 00:09:28,440 Speaker 5: you know it's not actually worth it to lay people off, 174 00:09:28,480 --> 00:09:31,040 Speaker 5: pay a whole bunch of severance, need to hire people back, 175 00:09:31,160 --> 00:09:33,320 Speaker 5: need to retrain them. But the other big part is 176 00:09:34,240 --> 00:09:36,920 Speaker 5: Moore's law marches on and so. 177 00:09:36,640 --> 00:09:39,200 Speaker 4: If you believe in Moore's law, you will always need more. 178 00:09:39,520 --> 00:09:41,920 Speaker 5: Yes, and you'll need more people, you'll need more machinery, 179 00:09:41,960 --> 00:09:45,760 Speaker 5: you'll need more capacity. And the semiconductor industry is so 180 00:09:45,880 --> 00:09:48,560 Speaker 5: cyclical that part of the way that he believes you 181 00:09:48,559 --> 00:09:51,640 Speaker 5: can kind of avoid these huge gluts and then you 182 00:09:51,640 --> 00:09:56,000 Speaker 5: know bubbles. Basically this boom and bust of the semiconductor 183 00:09:56,000 --> 00:09:59,959 Speaker 5: industry is to sort of behave less in this whiplash 184 00:10:00,160 --> 00:10:02,040 Speaker 5: like fashion where oh no, there's a little bit of 185 00:10:02,080 --> 00:10:04,679 Speaker 5: an asset bubble and you know, stocks are in a 186 00:10:04,760 --> 00:10:06,439 Speaker 5: draw down, so we need to lay off people. 187 00:10:06,440 --> 00:10:07,000 Speaker 4: Oh my god. 188 00:10:07,320 --> 00:10:10,560 Speaker 5: And I think he sort of blames layoff as a 189 00:10:10,679 --> 00:10:14,600 Speaker 5: piece of the massive cyclicality of the industry. 190 00:10:14,720 --> 00:10:17,520 Speaker 4: And he had a really scarring experience around this back 191 00:10:17,520 --> 00:10:19,880 Speaker 4: when he was at TI Texas Instruments. So, I mean, 192 00:10:19,920 --> 00:10:21,920 Speaker 4: the crazy thing about Morris he didn't start TSMC un 193 00:10:21,960 --> 00:10:25,640 Speaker 4: till he was fifty six years old. He's not Taiwanese's. 194 00:10:25,960 --> 00:10:28,640 Speaker 4: He was born in China but then became an American citizen. 195 00:10:28,880 --> 00:10:32,120 Speaker 4: He had a whole incredible career in the semiconductor industry 196 00:10:32,160 --> 00:10:37,760 Speaker 4: in America. Long before starting TSMC, he ran TI's semiconductor 197 00:10:37,880 --> 00:10:40,439 Speaker 4: group and before Intel and. 198 00:10:40,480 --> 00:10:44,840 Speaker 5: Really what you might chuckle about, like TI they make 199 00:10:44,880 --> 00:10:47,160 Speaker 5: those calculators for high school students, right. 200 00:10:47,280 --> 00:10:49,480 Speaker 4: But before Intel and for the first like ten years 201 00:10:49,480 --> 00:10:52,360 Speaker 4: of Intel's existence, they were the pipsqueak and TI was 202 00:10:52,720 --> 00:10:57,360 Speaker 4: the semiconductor giant, and Morris ran the semiconductor division at TI. 203 00:10:58,080 --> 00:11:01,480 Speaker 4: And at some point part of how they really lost 204 00:11:01,520 --> 00:11:05,560 Speaker 4: the crown to Intel was the corporate you know, the 205 00:11:05,600 --> 00:11:09,120 Speaker 4: CEO decided we need to have La off for whatever reason, 206 00:11:09,280 --> 00:11:11,080 Speaker 4: you know, gyrations were going on in the stock market 207 00:11:11,120 --> 00:11:13,439 Speaker 4: or whatever. They ended up as a result of that. 208 00:11:13,440 --> 00:11:15,240 Speaker 4: I don't know if they're directly laid off, but as 209 00:11:15,280 --> 00:11:21,440 Speaker 4: a result, the Moss team mos metal oxide semi conductor 210 00:11:21,440 --> 00:11:25,760 Speaker 4: some of the uh yeah, which was sort of the 211 00:11:25,800 --> 00:11:30,160 Speaker 4: next generation of silicon. That team within TI left the 212 00:11:30,160 --> 00:11:33,959 Speaker 4: company started a new company called Moss Tech. And then 213 00:11:34,120 --> 00:11:36,520 Speaker 4: anybody who knows anything about semi conductors knows, you know, 214 00:11:36,640 --> 00:11:40,400 Speaker 4: Moss was like the key technology that Intel leveraged and 215 00:11:40,480 --> 00:11:43,320 Speaker 4: like you know, really helped expand More's law and t 216 00:11:43,440 --> 00:11:45,960 Speaker 4: I just totally missed out on that because they you know, 217 00:11:46,040 --> 00:11:48,960 Speaker 4: parted ways with this really important group and like, who 218 00:11:48,960 --> 00:11:50,920 Speaker 4: knows what's going to be really important in the future. 219 00:11:51,160 --> 00:11:54,319 Speaker 2: So this actually gets to something that is a very recurrent, 220 00:11:54,640 --> 00:11:57,480 Speaker 2: odd lotch theme. And of course when I described what 221 00:11:58,440 --> 00:12:01,640 Speaker 2: companies are sort of in the theoretical sense, you know, 222 00:12:01,679 --> 00:12:05,559 Speaker 2: one thing I didn't mention is their preservation of collective 223 00:12:05,600 --> 00:12:06,400 Speaker 2: knowledge and memory. 224 00:12:06,440 --> 00:12:06,600 Speaker 5: Right. 225 00:12:06,640 --> 00:12:09,880 Speaker 2: So TSMC may be the best in the world at 226 00:12:09,960 --> 00:12:14,680 Speaker 2: producing chips, but there is no individual at TSMC that 227 00:12:14,800 --> 00:12:17,880 Speaker 2: knows how to build chips, right, It's a collective process 228 00:12:17,920 --> 00:12:19,840 Speaker 2: and there's no one person that stores it all in 229 00:12:19,840 --> 00:12:22,280 Speaker 2: his head and just can walk across. And you see 230 00:12:22,280 --> 00:12:25,520 Speaker 2: this in the failings of certain American manufacturers. They do 231 00:12:25,600 --> 00:12:28,040 Speaker 2: have these layoffs and then they're like out of practice 232 00:12:28,040 --> 00:12:30,160 Speaker 2: and they get rusty. And we talk about it a 233 00:12:30,160 --> 00:12:32,640 Speaker 2: lot in the nuclear industry and the plan industry, et cetera. 234 00:12:32,960 --> 00:12:36,480 Speaker 2: Talk to us maybe TSMC, but also other examples of 235 00:12:36,679 --> 00:12:40,520 Speaker 2: the company as this sort of knowledge preserver. 236 00:12:41,080 --> 00:12:43,800 Speaker 4: Totally. Well, TSMC is so vivid in our minds right 237 00:12:43,800 --> 00:12:47,080 Speaker 4: now because we just were there and we toured the 238 00:12:47,120 --> 00:12:50,880 Speaker 4: science park Kinschy Science Park in Taiwan, where not only TSMC, 239 00:12:50,960 --> 00:12:54,520 Speaker 4: but the whole semiconductor ecosystem is located. Like media texts there, 240 00:12:54,640 --> 00:12:56,559 Speaker 4: arms there, you know, Apple's there, like, you know, it's 241 00:12:56,600 --> 00:13:03,160 Speaker 4: like a it's all all right there, right together. You 242 00:13:03,240 --> 00:13:06,120 Speaker 4: are so incredibly correct that there is no one person. 243 00:13:06,200 --> 00:13:09,080 Speaker 4: There's not even a group of one thousand people who 244 00:13:09,160 --> 00:13:12,120 Speaker 4: know how to make chips or know what TSMC is. 245 00:13:12,160 --> 00:13:14,960 Speaker 4: You can't just like airlift, you could take all the buildings, 246 00:13:15,160 --> 00:13:16,760 Speaker 4: you could take a bunch of people out of there, 247 00:13:16,800 --> 00:13:21,720 Speaker 4: and like, you cannot recreate this. It is a whole 248 00:13:21,760 --> 00:13:24,920 Speaker 4: ecosystem contained in one physical location. 249 00:13:25,480 --> 00:13:27,720 Speaker 5: I think it's fair to say it's the most complex 250 00:13:28,160 --> 00:13:33,200 Speaker 5: process that humankind has created and the most complex product, 251 00:13:33,520 --> 00:13:36,080 Speaker 5: like the science and technology in R and D that 252 00:13:36,200 --> 00:13:40,080 Speaker 5: goes into etching a two nanimeter wafer for use in 253 00:13:40,320 --> 00:13:42,800 Speaker 5: whether it's AI chips from Nvidia or you know, the 254 00:13:42,840 --> 00:13:46,120 Speaker 5: chips in our MacBooks or iPhones from Apple. That is, 255 00:13:47,120 --> 00:13:49,480 Speaker 5: you know, there's a joke in the semiconductor industry that 256 00:13:50,000 --> 00:13:52,400 Speaker 5: this is a technology given to us by aliens. That's 257 00:13:52,400 --> 00:13:54,120 Speaker 5: how sort of insane it is. 258 00:13:54,320 --> 00:13:56,440 Speaker 4: It is the closest thing to magic in the modern world. 259 00:13:56,679 --> 00:13:59,199 Speaker 5: Yes, I think that's exactly right, and so yeah, I 260 00:13:59,240 --> 00:14:02,640 Speaker 5: think lots of indust have examples of what you're talking about, 261 00:14:02,640 --> 00:14:06,240 Speaker 5: This idea that the culture of the company contains this 262 00:14:06,600 --> 00:14:09,320 Speaker 5: sort of fabric of knowledge that not one person can have, 263 00:14:09,360 --> 00:14:13,080 Speaker 5: but is blown out to its extreme in semiconductors. 264 00:14:27,560 --> 00:14:30,840 Speaker 1: So if we agree that companies are sort of collections 265 00:14:30,960 --> 00:14:35,640 Speaker 1: of institutional knowledge, more broadly, I guess I'm wondering how 266 00:14:35,760 --> 00:14:39,360 Speaker 1: much of a role does management play? Then, Like, are 267 00:14:39,400 --> 00:14:43,920 Speaker 1: there instances that you've studied where management has made a real, 268 00:14:44,280 --> 00:14:45,280 Speaker 1: real difference? 269 00:14:46,480 --> 00:14:51,400 Speaker 4: Yes, of laughing, Meta Facebook is like such an extreme 270 00:14:51,480 --> 00:14:54,520 Speaker 4: example of this, Like, yes, Meta, And I'm sure Mark 271 00:14:54,560 --> 00:14:58,720 Speaker 4: would be the first to say, is just like TSMC, 272 00:14:58,880 --> 00:15:02,359 Speaker 4: a collection of all the people and knowledge and processes. 273 00:15:02,400 --> 00:15:04,200 Speaker 4: And if Mark were to go start another company, he 274 00:15:04,200 --> 00:15:09,720 Speaker 4: couldn't recreate you know, Meta and Facebook. But there have 275 00:15:09,880 --> 00:15:12,600 Speaker 4: been so many moments in the history of that company 276 00:15:13,080 --> 00:15:17,480 Speaker 4: where a decision or a set of decisions made solely 277 00:15:17,520 --> 00:15:21,720 Speaker 4: by Mark have completely changed its course and enabled it 278 00:15:21,760 --> 00:15:23,880 Speaker 4: to become what is it, you know, before this most 279 00:15:23,880 --> 00:15:26,680 Speaker 4: recent draw down one and a half trillion dollar market 280 00:15:26,760 --> 00:15:27,400 Speaker 4: cap company. 281 00:15:27,680 --> 00:15:31,040 Speaker 5: I would say I draw a distinction between management and leadership. 282 00:15:31,200 --> 00:15:36,920 Speaker 5: I think management tends to play a role in stabilizing 283 00:15:36,960 --> 00:15:41,280 Speaker 5: companies and creating companies that are maybe one two standard 284 00:15:41,320 --> 00:15:43,480 Speaker 5: deviations away from the mean. On the positive side. You know, 285 00:15:43,560 --> 00:15:46,440 Speaker 5: how to create good companies, and leadership is how to 286 00:15:46,480 --> 00:15:51,280 Speaker 5: create great companies. These founder led companies Jensen and Mark 287 00:15:51,360 --> 00:15:56,480 Speaker 5: Zuckerberg and Forrest Mahers and in the case of the 288 00:15:56,720 --> 00:16:01,000 Speaker 5: Eminem's you know, Snickers Candy Corporation, and Bill Gates in 289 00:16:01,000 --> 00:16:03,360 Speaker 5: the case of Microsoft, Dehak in the case of Visa. 290 00:16:03,440 --> 00:16:08,280 Speaker 5: These are people that are visionary, that have an idea 291 00:16:08,400 --> 00:16:11,120 Speaker 5: of the way the world should work. John Collinson has 292 00:16:11,160 --> 00:16:12,920 Speaker 5: this great quote that when you look around the world 293 00:16:13,000 --> 00:16:15,800 Speaker 5: as a museum of passion projects, and I think it's 294 00:16:15,840 --> 00:16:20,240 Speaker 5: the leadership of these like true visionaries that you know, 295 00:16:20,280 --> 00:16:22,200 Speaker 5: when they first started, you didn't know for sure they 296 00:16:22,240 --> 00:16:25,400 Speaker 5: were going to be right or not. But in hindsight 297 00:16:25,640 --> 00:16:29,960 Speaker 5: it was it was their leadership, their stubbornness, their stick toitiveness, 298 00:16:30,200 --> 00:16:34,040 Speaker 5: and their insistence that their way of arranging the world 299 00:16:34,040 --> 00:16:36,760 Speaker 5: around them was correct that ended up actually shaping the 300 00:16:36,760 --> 00:16:39,200 Speaker 5: world and creating the biggest companies on Earth. 301 00:16:39,240 --> 00:16:41,640 Speaker 2: You know, I have a question since you started off 302 00:16:41,680 --> 00:16:44,680 Speaker 2: by talking about performance reviews, and here's something that I 303 00:16:44,720 --> 00:16:47,440 Speaker 2: think about some time, which is that let's say you 304 00:16:47,520 --> 00:16:51,120 Speaker 2: have like a Mark Zuckerberg starting Facebook in his dorm room, 305 00:16:51,280 --> 00:16:54,920 Speaker 2: or Larry and SERGEI and Google in their garage and 306 00:16:54,960 --> 00:16:58,080 Speaker 2: they have this cool technology and they're growing, and that 307 00:16:58,200 --> 00:17:01,720 Speaker 2: it's eventually they hit a point where someone comes to 308 00:17:01,800 --> 00:17:04,080 Speaker 2: them and says, you know what, we really need to 309 00:17:04,160 --> 00:17:07,199 Speaker 2: like write an HR manual, we really need to like 310 00:17:07,240 --> 00:17:10,399 Speaker 2: come up with all this stuff. And I think about myself, 311 00:17:10,600 --> 00:17:11,919 Speaker 2: that would be the point where, like, you know what, 312 00:17:11,960 --> 00:17:15,040 Speaker 2: I'm selling the company I hate. I hate dealing with. 313 00:17:15,040 --> 00:17:17,400 Speaker 1: Like Joe, I hate paperwork. 314 00:17:18,040 --> 00:17:20,200 Speaker 2: I don't want to like write a manual. I don't 315 00:17:20,200 --> 00:17:22,800 Speaker 2: want to start having performance reviews. I don't want to 316 00:17:22,840 --> 00:17:25,240 Speaker 2: like come up with all these like HR policies. This 317 00:17:25,320 --> 00:17:28,159 Speaker 2: sounds like a headache. I'm curious, though, like, because you 318 00:17:28,280 --> 00:17:32,000 Speaker 2: talk about these visionaries, how do they sort of accept 319 00:17:32,040 --> 00:17:36,320 Speaker 2: the fact that as they get bigger, certain aspects of bureaucracy, 320 00:17:36,400 --> 00:17:40,000 Speaker 2: which they probably find kind of annoying to are sort 321 00:17:40,040 --> 00:17:41,280 Speaker 2: of must haves. 322 00:17:41,320 --> 00:17:44,919 Speaker 5: With scale hm, I would push back that it's must have. 323 00:17:45,160 --> 00:17:47,760 Speaker 5: I think it is most common to have it. But 324 00:17:47,880 --> 00:17:51,840 Speaker 5: I am of the opinion that you can accomplish the 325 00:17:51,880 --> 00:17:55,400 Speaker 5: same set of tasks through process and through culture. 326 00:17:55,960 --> 00:17:58,840 Speaker 2: They all have, right, they all have rules, they all 327 00:17:58,880 --> 00:18:02,640 Speaker 2: have like man, I mean, eventually, like they all have 328 00:18:02,720 --> 00:18:07,440 Speaker 2: a HR department, and they have a specialization all that stuff. 329 00:18:07,480 --> 00:18:10,160 Speaker 5: One hundred x more than others like you. Look at Nvidia, 330 00:18:10,280 --> 00:18:12,880 Speaker 5: and I honestly believe this is true from speaking with Jensen, 331 00:18:13,000 --> 00:18:15,360 Speaker 5: from interviewing him, from speaking with a number of directs, 332 00:18:15,400 --> 00:18:21,120 Speaker 5: from spending time at headquarters. It is a pretty unstructured 333 00:18:21,240 --> 00:18:25,600 Speaker 5: environment with comparatively few people. I think, what's in Nvidia's 334 00:18:25,600 --> 00:18:27,159 Speaker 5: head count, David something and. 335 00:18:27,240 --> 00:18:30,880 Speaker 4: I don't know, compared to the other tech giants. 336 00:18:30,800 --> 00:18:33,280 Speaker 5: Five to ten x less less than the other big 337 00:18:33,280 --> 00:18:37,200 Speaker 5: tech companies, way less process. 338 00:18:37,160 --> 00:18:40,760 Speaker 2: Small, Yeah, according to twenty nine thousand people, twenty nine thousand, 339 00:18:40,800 --> 00:18:42,840 Speaker 2: six hundred, All right, keep going, keep going, And. 340 00:18:42,800 --> 00:18:45,480 Speaker 5: What's Apple somewhere in one hundred thousand, Microsoft's like one 341 00:18:45,560 --> 00:18:49,000 Speaker 5: hundred and sixty seventy thousand. I mean, it's a comparatively 342 00:18:49,040 --> 00:18:52,199 Speaker 5: small headcount company. And I really do think you can 343 00:18:52,240 --> 00:18:58,679 Speaker 5: accomplish tasks through incredibly strong culture or process, and usually 344 00:18:58,680 --> 00:19:00,680 Speaker 5: it's the sum of both. But it's always interesting to 345 00:19:00,680 --> 00:19:03,560 Speaker 5: see which companies are able to lean much more heavily 346 00:19:03,640 --> 00:19:07,160 Speaker 5: on You would just never violate some tenet of our culture, 347 00:19:07,200 --> 00:19:09,639 Speaker 5: and therefore we don't need rigid process around it. 348 00:19:09,920 --> 00:19:12,840 Speaker 4: And it's funny, you know, it's not you can kind 349 00:19:12,840 --> 00:19:14,359 Speaker 4: of go one way or the other or somewhere in 350 00:19:14,400 --> 00:19:17,639 Speaker 4: the spectrum. So with Jensen, and in Nvidia's case, clearly 351 00:19:17,720 --> 00:19:21,040 Speaker 4: that's how he loves to operate. Forest Mars at the 352 00:19:21,040 --> 00:19:23,640 Speaker 4: Bars company was the total opposite end of the spectrum. 353 00:19:23,680 --> 00:19:23,840 Speaker 3: You know. 354 00:19:23,920 --> 00:19:30,720 Speaker 4: Forrest was one of the most idiosyncratic entrepreneurs in American history. 355 00:19:30,760 --> 00:19:33,320 Speaker 4: And because the company is so private and the family 356 00:19:33,359 --> 00:19:35,080 Speaker 4: is so private, it's not as well known. We did 357 00:19:35,080 --> 00:19:36,080 Speaker 4: an episode audit. 358 00:19:36,200 --> 00:19:38,200 Speaker 5: By the way, I said, Candy and Pet company worth 359 00:19:38,280 --> 00:19:41,360 Speaker 5: probably over one hundred billion dollars, totally privately held. 360 00:19:41,119 --> 00:19:44,960 Speaker 4: Totally owned by the family one hundred percent. Forrest was 361 00:19:45,280 --> 00:19:49,040 Speaker 4: so extreme on process, so he just instituted this set 362 00:19:49,080 --> 00:19:51,640 Speaker 4: of rules that were completely crazy to the outside world 363 00:19:51,640 --> 00:19:53,760 Speaker 4: at the time, but like we're how he wanted to 364 00:19:53,880 --> 00:19:57,280 Speaker 4: organize things, and then everybody in the company just fell 365 00:19:57,320 --> 00:20:00,000 Speaker 4: in line with the rules. So stuff like they're no office, 366 00:20:00,359 --> 00:20:02,360 Speaker 4: there's no conference rooms. Well there are a few conference rooms, 367 00:20:02,400 --> 00:20:04,119 Speaker 4: they don't have doors on them, they're made of glass. 368 00:20:04,400 --> 00:20:07,840 Speaker 4: Everybody open floor plan. This is in the nineteen thirties. 369 00:20:08,440 --> 00:20:11,359 Speaker 4: Imagine this, like no executive offices, no perks. 370 00:20:11,960 --> 00:20:15,240 Speaker 5: A large bonus is determined if you are on time 371 00:20:15,280 --> 00:20:16,199 Speaker 5: to meetings or not. 372 00:20:16,520 --> 00:20:19,919 Speaker 4: And everybody punched a time card, including him, the CEO. 373 00:20:20,600 --> 00:20:23,440 Speaker 2: By the way, Tracy, I can think of another privately 374 00:20:23,520 --> 00:20:28,480 Speaker 2: owned company with open floor plans and all glass windowed offices. 375 00:20:28,760 --> 00:20:30,960 Speaker 4: Yeah, do you guys punch a time card? We don't. 376 00:20:32,119 --> 00:20:34,919 Speaker 1: We kind of do, yeah, kind of, kind of. 377 00:20:35,000 --> 00:20:36,679 Speaker 2: Some of this sounds from it. We don't get a 378 00:20:36,680 --> 00:20:40,119 Speaker 2: bonus for showing up at a meeting time. Some of 379 00:20:40,200 --> 00:20:41,719 Speaker 2: this sounds familiar anyway, keep going. 380 00:20:41,800 --> 00:20:44,520 Speaker 4: Sorry, And the way that he did this is you know, 381 00:20:44,600 --> 00:20:47,240 Speaker 4: again these were radical, radical concepts for like you know, 382 00:20:47,520 --> 00:20:51,439 Speaker 4: pre war and post war America and Europe at the time. Uh. 383 00:20:51,920 --> 00:20:54,040 Speaker 4: He just said, like, we are all about performance here. 384 00:20:54,040 --> 00:20:57,240 Speaker 4: We're all about the company's bottom line, and if the 385 00:20:57,280 --> 00:21:00,800 Speaker 4: company performs well, you will make an sane amount of money. 386 00:21:00,840 --> 00:21:03,960 Speaker 4: And so his goal was, like, assuming we outperform our targets, 387 00:21:04,400 --> 00:21:07,400 Speaker 4: everybody you know, on their salarly base should make three 388 00:21:07,440 --> 00:21:10,520 Speaker 4: times what an average salary for their job would be 389 00:21:10,560 --> 00:21:12,640 Speaker 4: elsewhere in the industry. And so like, you just set 390 00:21:12,680 --> 00:21:14,639 Speaker 4: up those incentives and you set up those hard rules, 391 00:21:14,680 --> 00:21:16,960 Speaker 4: and you're going to get people to follow them. 392 00:21:17,400 --> 00:21:19,800 Speaker 1: Wait, so I don't know that much about the Mars 393 00:21:19,840 --> 00:21:22,919 Speaker 1: company other than you know, Eminem's are delicious and all 394 00:21:22,960 --> 00:21:26,520 Speaker 1: of that. But when you're researching a privately held company, 395 00:21:26,680 --> 00:21:30,040 Speaker 1: like that's what's the actual research process for you? Like 396 00:21:30,160 --> 00:21:33,000 Speaker 1: how do you dig up information on a company where 397 00:21:33,119 --> 00:21:37,280 Speaker 1: you know there aren't as many like public publicly available 398 00:21:37,480 --> 00:21:39,560 Speaker 1: documents and financial statements. 399 00:21:40,600 --> 00:21:45,040 Speaker 5: We rely heavily on the or at least historically. We're 400 00:21:45,040 --> 00:21:48,760 Speaker 5: now getting more primary source access, but historically on the 401 00:21:49,000 --> 00:21:52,840 Speaker 5: writing of great journalists and so usually there is a 402 00:21:52,880 --> 00:21:56,320 Speaker 5: canonical book of someone who got close, like in the 403 00:21:56,359 --> 00:22:01,000 Speaker 5: case of Renaissance Technology, the ultra Secretive Asset Man out 404 00:22:01,040 --> 00:22:03,040 Speaker 5: of uh Stocket, New York. 405 00:22:03,119 --> 00:22:04,919 Speaker 4: I think that's right, David. 406 00:22:04,920 --> 00:22:06,840 Speaker 5: There's a great book by Greg Zuckerman called The Man 407 00:22:06,840 --> 00:22:10,520 Speaker 5: Who Solved the Market. Like pretty investigative journalism work, David, 408 00:22:10,520 --> 00:22:11,680 Speaker 5: there's one here in the Yeah. 409 00:22:11,880 --> 00:22:14,639 Speaker 4: For Mars, there's a book written by Joel Glenn Brenner. 410 00:22:15,040 --> 00:22:18,080 Speaker 4: She was a reporter at the Washington Post in the 411 00:22:18,119 --> 00:22:22,000 Speaker 4: eighties and nineties. It's called Emperors of Chocolate. It's so good. 412 00:22:22,520 --> 00:22:26,840 Speaker 4: She got access to Mars by calling them, calling headquarters 413 00:22:26,880 --> 00:22:30,080 Speaker 4: every single day for a year and then finally they 414 00:22:30,119 --> 00:22:33,159 Speaker 4: relented and gave her access. It's the only book ever written. 415 00:22:33,200 --> 00:22:35,320 Speaker 4: It came out in like the late eighties early nineties, 416 00:22:35,640 --> 00:22:37,040 Speaker 4: so we used that and then and then we talked 417 00:22:37,040 --> 00:22:39,080 Speaker 4: to her. So we talked to her from Mars, We 418 00:22:39,119 --> 00:22:42,359 Speaker 4: talked to Greg for Rentech. We talked to these people, 419 00:22:42,400 --> 00:22:44,159 Speaker 4: and we say like, okay, like you know, tell us 420 00:22:44,160 --> 00:22:46,520 Speaker 4: about this, like what was the process of getting access? 421 00:22:46,560 --> 00:22:47,720 Speaker 4: You know, what are you sure about? What are you 422 00:22:47,760 --> 00:22:49,679 Speaker 4: not sure about? What do we really need to highlight 423 00:22:49,720 --> 00:22:53,360 Speaker 4: what's happened since? And also is. 424 00:22:55,440 --> 00:22:58,760 Speaker 5: Even if a company, for example, when we did Envidia 425 00:22:58,960 --> 00:23:01,560 Speaker 5: in early twenty twenty to which gosh, what a ride 426 00:23:01,560 --> 00:23:05,200 Speaker 5: it's been since we covered the company. Back then there 427 00:23:05,280 --> 00:23:07,159 Speaker 5: wasn't a book yet There's about to be two books, 428 00:23:07,440 --> 00:23:10,520 Speaker 5: and so that requires sort of piecing together the story 429 00:23:10,640 --> 00:23:15,040 Speaker 5: over a lot of different ways. David's favorite is finding 430 00:23:15,200 --> 00:23:18,240 Speaker 5: industry talks that have been posted to YouTube, and so 431 00:23:18,359 --> 00:23:21,960 Speaker 5: there's usually some mid level manager that is talking about 432 00:23:22,359 --> 00:23:25,399 Speaker 5: something like in a presentation. They all excited because they 433 00:23:25,400 --> 00:23:27,560 Speaker 5: get to go and present to their peers. There's always 434 00:23:27,640 --> 00:23:30,199 Speaker 5: gold in there, and I don't think it's like investment 435 00:23:30,280 --> 00:23:33,560 Speaker 5: Alpha necessarily, and I'm not sure it's competitive information where 436 00:23:33,600 --> 00:23:35,560 Speaker 5: the company's like, oh, we wish this wasn't presented, but 437 00:23:35,600 --> 00:23:38,080 Speaker 5: it really does. If you're trying to understand the story 438 00:23:38,160 --> 00:23:40,480 Speaker 5: of how the company became successful, really helps you find that. 439 00:23:40,680 --> 00:23:43,120 Speaker 4: And it's often the founders themselves too. I mean, gosh, 440 00:23:43,200 --> 00:23:46,440 Speaker 4: in that Nvidia case, there was a talk that Jensen 441 00:23:46,560 --> 00:23:49,760 Speaker 4: gave at against the State University on the setting of 442 00:23:50,240 --> 00:23:53,800 Speaker 4: OSU and it was recorded I don't know, probably sometime 443 00:23:53,880 --> 00:23:56,720 Speaker 4: in the nineties, early two thousands, and he's, you know, 444 00:23:56,760 --> 00:23:58,919 Speaker 4: it's a totally different Gensen, it's a totally different company, 445 00:23:58,920 --> 00:24:03,200 Speaker 4: and he's completely candid, straightforward talking about his journey. And 446 00:24:03,280 --> 00:24:04,720 Speaker 4: you know, when we found it, it had like I 447 00:24:04,760 --> 00:24:08,119 Speaker 4: don't know, a couple hundreds views on YouTube. This stuff 448 00:24:08,160 --> 00:24:08,640 Speaker 4: is out there. 449 00:24:24,760 --> 00:24:27,439 Speaker 2: There's an obsession among a lot of investors with the 450 00:24:27,480 --> 00:24:31,000 Speaker 2: idea of founder led companies, and that's really exciting someone 451 00:24:31,040 --> 00:24:34,840 Speaker 2: who's still there, who still has that original vision. But 452 00:24:35,000 --> 00:24:37,000 Speaker 2: you know, obviously a lot of companies are just too 453 00:24:37,080 --> 00:24:40,640 Speaker 2: old to still be founder led, or companies thrived through 454 00:24:40,760 --> 00:24:46,080 Speaker 2: multiple CEOs. Regardless, what patterns have you realized is there 455 00:24:46,160 --> 00:24:49,359 Speaker 2: a real difference with founder led companies or is this 456 00:24:49,480 --> 00:24:53,480 Speaker 2: sort of just a survivorship virus. Some founder led companies 457 00:24:53,520 --> 00:24:55,879 Speaker 2: have done really well, and we remember all of those, 458 00:24:55,960 --> 00:24:59,200 Speaker 2: some flame out and no one talks about them, et cetera. 459 00:25:00,160 --> 00:25:03,439 Speaker 2: I'm curious what patterns or anti patterns you observe. 460 00:25:03,840 --> 00:25:06,760 Speaker 5: Okay, well, first of all, it's all survivorship bias. Everything 461 00:25:06,800 --> 00:25:11,159 Speaker 5: we've talked about so far. Actually, I'm glad, yeah, I 462 00:25:11,200 --> 00:25:12,199 Speaker 5: was gonna follow anyway. 463 00:25:13,200 --> 00:25:16,240 Speaker 4: Past performance is not an indicator of future success here. 464 00:25:17,200 --> 00:25:19,360 Speaker 5: We have not brought up a single company on here 465 00:25:19,440 --> 00:25:23,320 Speaker 5: that A has failed or B is a middling success. No, 466 00:25:24,160 --> 00:25:27,440 Speaker 5: ten billion dollar companies have sort of crossed our lips 467 00:25:27,480 --> 00:25:31,560 Speaker 5: this conversation. We have decided on acquired. We love understanding 468 00:25:31,560 --> 00:25:35,040 Speaker 5: what made the extreme outliers work so well. The great 469 00:25:35,080 --> 00:25:38,720 Speaker 5: irony is that is not a playbook that you can repeat. 470 00:25:39,240 --> 00:25:39,439 Speaker 4: You know. 471 00:25:39,480 --> 00:25:41,360 Speaker 5: It's like holding that lottery ticket up in the air 472 00:25:41,400 --> 00:25:45,080 Speaker 5: and professing to everyone. Like the great webcomic x XKCD. 473 00:25:45,680 --> 00:25:48,639 Speaker 5: There's this amazing comic where he's holding the lottery ticket 474 00:25:48,680 --> 00:25:51,880 Speaker 5: on a stage saying I just kept playing and if 475 00:25:51,920 --> 00:25:55,120 Speaker 5: you keep playing too, you too can win the lottery. 476 00:25:55,359 --> 00:25:59,040 Speaker 5: And I think it is you know, we should wave 477 00:25:59,080 --> 00:26:02,160 Speaker 5: our arms around and say, if you run Mark Zuckerberg's 478 00:26:02,160 --> 00:26:06,040 Speaker 5: exact decision process will not create case BRI. I mean 479 00:26:06,040 --> 00:26:08,520 Speaker 5: that it's just you weren't there at that exact time 480 00:26:08,600 --> 00:26:09,480 Speaker 5: and that exact place. 481 00:26:09,760 --> 00:26:12,040 Speaker 2: I always think about those Twitter threads where it's like, 482 00:26:12,119 --> 00:26:14,280 Speaker 2: this is the daily routine of the CEO. He gets 483 00:26:14,320 --> 00:26:16,320 Speaker 2: up at flour am, it takes a cold shower, and 484 00:26:16,359 --> 00:26:19,640 Speaker 2: then meditates for half an hour, and then eats raw 485 00:26:19,720 --> 00:26:22,680 Speaker 2: oats and then takes his kids to school, et cetera. 486 00:26:23,200 --> 00:26:25,800 Speaker 2: You're not going to start a billion dollar company by 487 00:26:25,840 --> 00:26:27,040 Speaker 2: following what you saw on a Twitter. 488 00:26:27,119 --> 00:26:30,720 Speaker 4: Humans are really really bad at distinguishing correlation from causation. 489 00:26:31,280 --> 00:26:34,320 Speaker 1: Yes, that's another now xCD comic, isn't it. 490 00:26:34,400 --> 00:26:34,600 Speaker 4: Yeah? 491 00:26:35,080 --> 00:26:36,200 Speaker 5: Oh yeah, x XKCD. 492 00:26:36,359 --> 00:26:39,120 Speaker 1: Oh sorry XKCD. Dyslexia strikes again. 493 00:26:40,359 --> 00:26:42,960 Speaker 5: It's not the easiest name to remember or pronounce. But 494 00:26:43,600 --> 00:26:47,399 Speaker 5: I will say, though, I think if your goal is 495 00:26:47,400 --> 00:26:49,280 Speaker 5: how do I start a trillion dollar company? How do 496 00:26:49,359 --> 00:26:53,680 Speaker 5: I start one of the thirty forty to fifty most important, largest, 497 00:26:53,720 --> 00:26:59,480 Speaker 5: most successful, durable companies on the planet. Founder lead companies 498 00:26:59,720 --> 00:27:04,240 Speaker 5: have a much higher probability of being that, And as 499 00:27:04,280 --> 00:27:06,399 Speaker 5: you point out, time has a lot to do with that. 500 00:27:06,440 --> 00:27:08,719 Speaker 5: You look at Arimez. This is a you know what 501 00:27:08,800 --> 00:27:11,280 Speaker 5: is one hundred and fifty year old company. The original 502 00:27:11,320 --> 00:27:12,879 Speaker 5: founder is not going to be the person running that, 503 00:27:13,240 --> 00:27:17,720 Speaker 5: but close control is a key to the success of 504 00:27:17,760 --> 00:27:22,080 Speaker 5: that business and so many others where they control their 505 00:27:22,080 --> 00:27:23,879 Speaker 5: own destiny, they don't have to answer to the whims 506 00:27:23,880 --> 00:27:26,440 Speaker 5: of shareholders ike as another great example. Mars is a 507 00:27:26,440 --> 00:27:29,760 Speaker 5: great example. It might be a hired CEO in the 508 00:27:29,760 --> 00:27:32,840 Speaker 5: case of Mars, or it might be a close family 509 00:27:32,840 --> 00:27:35,520 Speaker 5: member in the case of Aermez. That David, you're common 510 00:27:35,520 --> 00:27:37,840 Speaker 5: on the sixth generation family member. But there is a 511 00:27:38,560 --> 00:27:42,159 Speaker 5: flexibility to adhere to the ethos of what makes the 512 00:27:42,200 --> 00:27:46,359 Speaker 5: company special. That either founder control, family control, or just 513 00:27:46,359 --> 00:27:50,919 Speaker 5: sort of tight original shareholder control lets you do in 514 00:27:50,960 --> 00:27:54,400 Speaker 5: a way that if you're publicly traded, eventually the specialness 515 00:27:54,680 --> 00:27:57,520 Speaker 5: gets beat out of you. You start believing that the 516 00:27:57,640 --> 00:28:00,520 Speaker 5: consultants are right when you hire that and they say 517 00:28:00,520 --> 00:28:03,720 Speaker 5: you should be like everyone else, or that the public 518 00:28:03,800 --> 00:28:06,359 Speaker 5: equity investors that are trying to compare you against your 519 00:28:06,440 --> 00:28:09,919 Speaker 5: comps and use the same numbers to compare you, but 520 00:28:10,119 --> 00:28:12,600 Speaker 5: not really understand actually the way my business works you 521 00:28:12,600 --> 00:28:14,720 Speaker 5: should analyze it in a completely different way, because that 522 00:28:14,840 --> 00:28:17,520 Speaker 5: is what makes it special. You just you lose the 523 00:28:17,560 --> 00:28:20,280 Speaker 5: ability to keep your search. 524 00:28:20,560 --> 00:28:25,240 Speaker 4: This amazing story from Ermez's history of Jean Louis Dumat 525 00:28:25,359 --> 00:28:27,639 Speaker 4: who was I think the third either the third or 526 00:28:27,680 --> 00:28:33,520 Speaker 4: fourth generation family member to run the company in the eighties, 527 00:28:34,800 --> 00:28:37,560 Speaker 4: late seventies, early eighties, and Mez it kind of I 528 00:28:37,600 --> 00:28:39,480 Speaker 4: don't want to say fallen on hard times, but they 529 00:28:39,480 --> 00:28:41,760 Speaker 4: were much much smaller relative to their peers in the 530 00:28:41,840 --> 00:28:44,240 Speaker 4: luxury industry, and Gucci was on the rise. You know, 531 00:28:44,280 --> 00:28:46,720 Speaker 4: it was the tom four Days at Gucci and they 532 00:28:46,720 --> 00:28:51,120 Speaker 4: were everywhere, and they brought in some consultants. I don't 533 00:28:51,160 --> 00:28:53,760 Speaker 4: know which firm, you know it recommended like, oh okay, 534 00:28:53,800 --> 00:28:56,960 Speaker 4: I mes should basically throw in the talent, follow the 535 00:28:56,960 --> 00:29:00,520 Speaker 4: Gucci Plight book of like machine production, high volume, lots 536 00:29:00,600 --> 00:29:05,320 Speaker 4: of skews, be everywhere, license your brand, license your brand. Yeah, 537 00:29:05,800 --> 00:29:08,239 Speaker 4: things you could never imagine them as doing today. And 538 00:29:08,600 --> 00:29:11,720 Speaker 4: Jean Leus just said like basically, no, an f you 539 00:29:12,440 --> 00:29:15,160 Speaker 4: and we will never work with consultants ever again, and 540 00:29:15,200 --> 00:29:19,680 Speaker 4: we're going to double down on hand crafted, you know, 541 00:29:20,240 --> 00:29:23,920 Speaker 4: unique history, scarcity, and that's what they did and so 542 00:29:23,960 --> 00:29:26,600 Speaker 4: they built up, you know, over the ensuing decades they 543 00:29:26,600 --> 00:29:30,280 Speaker 4: have seven eight thousand artisans that hand make the majority 544 00:29:30,360 --> 00:29:34,720 Speaker 4: of their items in France. Like what other company is is, 545 00:29:34,880 --> 00:29:37,280 Speaker 4: you know, a one hundred plus billion dollar company where 546 00:29:37,320 --> 00:29:39,160 Speaker 4: everything is handmade by artisans. 547 00:29:39,400 --> 00:29:42,200 Speaker 5: This was a dead craft. They spent thirty years reviving 548 00:29:42,400 --> 00:29:43,960 Speaker 5: the number of craft people, and. 549 00:29:43,920 --> 00:29:47,960 Speaker 4: They started schools, to trade schools to teach people to 550 00:29:48,000 --> 00:29:50,440 Speaker 4: do this because it wasn't getting passed on, you know, 551 00:29:50,520 --> 00:29:53,040 Speaker 4: through generations anymore, because all the other luxury companies had 552 00:29:53,080 --> 00:29:54,040 Speaker 4: moved to machine production. 553 00:29:54,240 --> 00:29:55,920 Speaker 5: I think, when it comes down to it, the lesson 554 00:29:56,040 --> 00:30:01,440 Speaker 5: is the most successful companies are created by leaning into 555 00:30:01,480 --> 00:30:04,959 Speaker 5: the thing that makes them special, not by trying to 556 00:30:05,000 --> 00:30:06,080 Speaker 5: be like everyone else. 557 00:30:07,080 --> 00:30:09,760 Speaker 1: I like the idea that in some alternate reality they 558 00:30:09,800 --> 00:30:12,240 Speaker 1: listen to the consultants and I in fact have a 559 00:30:12,280 --> 00:30:15,560 Speaker 1: burken bag, but I guess, I guess it wouldn't be 560 00:30:15,560 --> 00:30:20,080 Speaker 1: as special, all right. So the other thing that people 561 00:30:20,280 --> 00:30:24,920 Speaker 1: are obsessed with, in addition to founder led companies is 562 00:30:25,040 --> 00:30:28,200 Speaker 1: the idea of disruption, right and disruption is certainly in 563 00:30:28,280 --> 00:30:31,760 Speaker 1: the news right now, given the Deep Seek sell off 564 00:30:31,880 --> 00:30:35,120 Speaker 1: and stuff like that. And Joe and I recorded an 565 00:30:35,120 --> 00:30:38,160 Speaker 1: interview with Howard Marx a little while ago, and one 566 00:30:38,200 --> 00:30:40,080 Speaker 1: of the things he talks about is how there's no 567 00:30:40,200 --> 00:30:43,720 Speaker 1: guarantee that the big or best companies of today are 568 00:30:43,760 --> 00:30:46,320 Speaker 1: going to be around forever. So if you go back 569 00:30:46,320 --> 00:30:49,760 Speaker 1: and look at some businesses that were big in the 570 00:30:49,800 --> 00:30:52,200 Speaker 1: s and p. Five hundred, like back in the sixties, 571 00:30:52,760 --> 00:30:56,720 Speaker 1: they aren't there anymore. So names like Kodak or Avon, 572 00:30:56,920 --> 00:31:01,240 Speaker 1: remember the Avon lady and Simplicity pattern was in the 573 00:31:01,320 --> 00:31:03,600 Speaker 1: s and p. Five hundred. That's a company that made 574 00:31:03,640 --> 00:31:06,280 Speaker 1: patterns so people could make their own clothes. Like it's 575 00:31:06,360 --> 00:31:09,160 Speaker 1: kind of hard. Yeah, it's hard to imagine that now. 576 00:31:09,520 --> 00:31:14,920 Speaker 1: But in the podcast you're discussing successful companies, But how 577 00:31:14,960 --> 00:31:18,000 Speaker 1: do you view, I guess a company's longevity, Like what 578 00:31:18,200 --> 00:31:23,040 Speaker 1: factors determine whether a business is sustainable for decades versus 579 00:31:23,040 --> 00:31:24,600 Speaker 1: being just a flash in the pan. 580 00:31:25,320 --> 00:31:25,840 Speaker 4: It's funny. 581 00:31:25,960 --> 00:31:28,640 Speaker 5: Not only is this a great question, it's actually the 582 00:31:28,680 --> 00:31:35,000 Speaker 5: most important question because if let's say something compounds at 583 00:31:35,000 --> 00:31:37,120 Speaker 5: a fixed rate, and let's even say that rate is low, 584 00:31:37,200 --> 00:31:41,120 Speaker 5: it's a five percent per year growth company, what actually 585 00:31:41,160 --> 00:31:44,720 Speaker 5: matters is your growth in years twenty eight, twenty nine 586 00:31:44,760 --> 00:31:49,160 Speaker 5: and thirty on a thirty dollar horizon. And it's if 587 00:31:49,240 --> 00:31:51,240 Speaker 5: whether or not you're able to grow ten percent this 588 00:31:51,360 --> 00:31:53,800 Speaker 5: year in year two or three or four and wildly 589 00:31:53,800 --> 00:31:58,040 Speaker 5: exceed your targets, that's completely irrelevant, versus can you survive 590 00:31:58,200 --> 00:32:01,400 Speaker 5: till you're twenty eight and do five percent two percent, 591 00:32:01,600 --> 00:32:05,680 Speaker 5: you know, like a modest growth at scale in case. 592 00:32:05,560 --> 00:32:07,840 Speaker 4: One hundred and nine, year one hundred and ninety, you know. 593 00:32:08,120 --> 00:32:09,720 Speaker 5: Yes, yes, and we've experienced this. 594 00:32:09,720 --> 00:32:10,200 Speaker 4: It acquired. 595 00:32:10,240 --> 00:32:13,080 Speaker 5: It's the craziest thing that you know, last year we 596 00:32:13,200 --> 00:32:16,400 Speaker 5: grew from five hundred thousand listeners to a million listeners. Okay, 597 00:32:16,440 --> 00:32:18,960 Speaker 5: it's one hundred percent growth. That is high growth were 598 00:32:18,960 --> 00:32:21,760 Speaker 5: we a public company. It's kind of like middling pathetic 599 00:32:21,800 --> 00:32:25,360 Speaker 5: growth if you are an early stage startup. And yet 600 00:32:25,560 --> 00:32:27,800 Speaker 5: the fact that it happened in our tenth year is 601 00:32:27,840 --> 00:32:30,760 Speaker 5: actually the thing that matters. I wouldn't have cared. I 602 00:32:31,040 --> 00:32:33,840 Speaker 5: would take that over growing at eight, you know, eight 603 00:32:33,960 --> 00:32:37,960 Speaker 5: hundred percent in year two any day. And so i' 604 00:32:38,080 --> 00:32:40,320 Speaker 5: you're getting at the core ethosis of like, what really 605 00:32:40,320 --> 00:32:42,680 Speaker 5: matters when you're creating something very valuable in the world 606 00:32:42,920 --> 00:32:45,880 Speaker 5: is the out years of the compounding. Now to actually 607 00:32:45,920 --> 00:32:47,920 Speaker 5: answer the question. David, you look like you've been thinking 608 00:32:47,920 --> 00:32:48,320 Speaker 5: about it. 609 00:32:49,120 --> 00:32:51,719 Speaker 4: I love what you did there, and then you're like, 610 00:32:51,880 --> 00:32:53,920 Speaker 4: oh so the really hard thing that like if you 611 00:32:54,000 --> 00:32:55,760 Speaker 4: actually knew, you would probably be the greatest. 612 00:32:56,000 --> 00:32:59,480 Speaker 1: I'm going to remember that for this podcast. Like Joe, Joe, 613 00:32:59,560 --> 00:33:01,080 Speaker 1: you look like you have something to say. 614 00:33:01,720 --> 00:33:04,440 Speaker 4: Oh boy, oh boy. I think it's you know, every 615 00:33:04,480 --> 00:33:07,400 Speaker 4: company without fail. I mean, look at this deep seat 616 00:33:07,400 --> 00:33:11,120 Speaker 4: crisis right now is going to face crises on some 617 00:33:11,360 --> 00:33:15,160 Speaker 4: you know, irregular pattern. You know, you don't know when 618 00:33:15,200 --> 00:33:17,720 Speaker 4: they're going to come over X many years, but like, 619 00:33:17,760 --> 00:33:20,120 Speaker 4: if you're in business long enough, you will face crises. 620 00:33:20,160 --> 00:33:22,520 Speaker 4: I mean, we have faced crises with our little two 621 00:33:22,520 --> 00:33:25,120 Speaker 4: person company here, and then it's just you know, can 622 00:33:25,160 --> 00:33:29,320 Speaker 4: you navigate that crisis and emerge on the same or better, 623 00:33:29,560 --> 00:33:32,240 Speaker 4: you know, compounding trajectory that you were before. 624 00:33:32,480 --> 00:33:34,800 Speaker 5: And to your point earlier, David, that this okay, I'll 625 00:33:34,840 --> 00:33:39,000 Speaker 5: try to really answer the question. Every company is special 626 00:33:39,080 --> 00:33:41,480 Speaker 5: in some way, singular in some way, and the thing 627 00:33:41,560 --> 00:33:46,200 Speaker 5: that gives any individual company its durability is different and 628 00:33:46,240 --> 00:33:52,160 Speaker 5: related to its specialness. So for Aermez, it's the uncompromising 629 00:33:52,240 --> 00:33:56,640 Speaker 5: commitment to craftsmanship and the durability of their products and 630 00:33:56,720 --> 00:34:00,200 Speaker 5: protecting their brand and making the hard choice over and 631 00:34:00,240 --> 00:34:03,320 Speaker 5: over and never never making the easy choice, such that 632 00:34:03,360 --> 00:34:07,920 Speaker 5: it is instilled in the psyche of generations of customers, 633 00:34:08,000 --> 00:34:10,720 Speaker 5: like customers who pass things down and word of mouth 634 00:34:11,160 --> 00:34:18,880 Speaker 5: that they have this this extreme premium luxury associated with 635 00:34:18,920 --> 00:34:22,520 Speaker 5: their brand, that you know, if they made little trade 636 00:34:22,560 --> 00:34:25,240 Speaker 5: offs like, oh, let's juice the price. Let's raise burkeinbag 637 00:34:25,280 --> 00:34:28,640 Speaker 5: prices fifty percent this year, or let's have a whole 638 00:34:28,640 --> 00:34:30,759 Speaker 5: bunch of these get made in this machine. They kind 639 00:34:30,800 --> 00:34:33,879 Speaker 5: of look saddlestitch, but isn't saddlestitch? These would trade off 640 00:34:33,920 --> 00:34:39,279 Speaker 5: against their sort of durability over time. But that's not 641 00:34:39,760 --> 00:34:43,280 Speaker 5: the way every company does it, Like Microsoft, for example, 642 00:34:43,400 --> 00:34:47,439 Speaker 5: does it through product bundling. The fact that they now 643 00:34:47,520 --> 00:34:51,160 Speaker 5: have so many pretty good pieces of software that they 644 00:34:51,160 --> 00:34:54,080 Speaker 5: can bundle together and sell in one enterprise agreement to 645 00:34:54,120 --> 00:34:57,239 Speaker 5: a company and have a full solution versus needing to 646 00:34:57,320 --> 00:34:59,800 Speaker 5: have the best individual widget to do the task for 647 00:34:59,800 --> 00:35:03,480 Speaker 5: an given thing. This turned out, over time to be 648 00:35:03,800 --> 00:35:07,520 Speaker 5: an incredibly durable business model that you know, really didn't 649 00:35:07,560 --> 00:35:11,320 Speaker 5: exist before Steve Baumer sort of invented it in the 650 00:35:11,440 --> 00:35:12,160 Speaker 5: late nineties. 651 00:35:12,680 --> 00:35:15,799 Speaker 2: I just have one last question. You know, obviously, if 652 00:35:15,800 --> 00:35:18,560 Speaker 2: you're talking about the great and this is something that 653 00:35:18,960 --> 00:35:21,120 Speaker 2: we talk a lot about on the show, But if 654 00:35:21,160 --> 00:35:24,879 Speaker 2: you're talking about the great companies today, there are great 655 00:35:24,880 --> 00:35:28,920 Speaker 2: companies in luxury, they are great companies in pet food 656 00:35:29,120 --> 00:35:32,560 Speaker 2: and candy, but the vast majority of them are going 657 00:35:32,640 --> 00:35:35,160 Speaker 2: to be big tech giant. Those are the biggest, most 658 00:35:35,160 --> 00:35:38,160 Speaker 2: successful companies in the world. And then to your recent point, 659 00:35:38,239 --> 00:35:41,919 Speaker 2: what's really extraordinary to me and I think to investors 660 00:35:42,200 --> 00:35:45,920 Speaker 2: is how big they still compound in the out years. 661 00:35:45,960 --> 00:35:48,879 Speaker 2: So we're talking about companies that in many cases are 662 00:35:48,920 --> 00:35:53,080 Speaker 2: more than forty years old and yet still growing at 663 00:35:53,320 --> 00:35:58,239 Speaker 2: just extraordinary clips given their size. Is this truly sort 664 00:35:58,280 --> 00:36:01,960 Speaker 2: of a historical like if we looked at like, you know, 665 00:36:01,960 --> 00:36:05,040 Speaker 2: if we looked at the really big companies thirty years 666 00:36:05,080 --> 00:36:07,600 Speaker 2: ago or something, you know, you have like oil companies 667 00:36:07,719 --> 00:36:09,960 Speaker 2: or General Electric, et cetera, And they were big and 668 00:36:10,000 --> 00:36:13,320 Speaker 2: they were doing really well, but they had slowed down 669 00:36:13,719 --> 00:36:16,240 Speaker 2: quite a bit by the time they had like gotten 670 00:36:16,320 --> 00:36:19,600 Speaker 2: to the whatever the equivalent is. And it seems like 671 00:36:19,760 --> 00:36:23,560 Speaker 2: we're really in sort of uncharted territory by the speed 672 00:36:23,640 --> 00:36:27,799 Speaker 2: with which these tech giants specifically could still grow at 673 00:36:27,800 --> 00:36:28,880 Speaker 2: their level of maturity. 674 00:36:30,640 --> 00:36:35,800 Speaker 4: Yes, uh, this is the consequence of Moore's law. Moore's 675 00:36:35,880 --> 00:36:37,799 Speaker 4: law and what we like to refer to as the 676 00:36:38,200 --> 00:36:41,520 Speaker 4: Meritz corollary to Moore's law, which is Michael Meritz, who 677 00:36:41,600 --> 00:36:46,600 Speaker 4: was a longtime partner at Sequoia, invested in Google, YEAHO 678 00:36:46,640 --> 00:36:49,360 Speaker 4: and Striper among others, and a journalist before joining Suoya 679 00:36:50,160 --> 00:36:54,719 Speaker 4: for us, All, yeah, the folks probably know, you know 680 00:36:54,800 --> 00:36:57,160 Speaker 4: Moore's law, but in this case, you know, the relevant 681 00:36:57,640 --> 00:37:01,880 Speaker 4: and interpretation of it is that the both demand and 682 00:37:02,000 --> 00:37:05,480 Speaker 4: supply for computing power you know writ large forgetting a 683 00:37:05,560 --> 00:37:10,120 Speaker 4: specific definition of it, but like the ability to compute 684 00:37:10,239 --> 00:37:13,960 Speaker 4: things will double every eighteen to twenty four months, and 685 00:37:14,000 --> 00:37:18,800 Speaker 4: that spiritually has held true since gosh what nineteen sixty 686 00:37:18,800 --> 00:37:21,960 Speaker 4: eight maybe, and so we're many many years down the 687 00:37:21,960 --> 00:37:24,960 Speaker 4: compounding curve of that, and it is still relatively true. 688 00:37:25,760 --> 00:37:28,600 Speaker 4: The Merits corollary to it is that as long as 689 00:37:28,680 --> 00:37:33,920 Speaker 4: Moore's law holds, the world will find uses for that 690 00:37:34,000 --> 00:37:38,160 Speaker 4: increased compute power and demand for it. And so if 691 00:37:38,239 --> 00:37:43,239 Speaker 4: you believe that the market size for computing technology writ 692 00:37:43,320 --> 00:37:45,719 Speaker 4: large is going to grow, if you look at like 693 00:37:45,760 --> 00:37:49,160 Speaker 4: the entire technology market. It's going to roughly grow at 694 00:37:49,160 --> 00:37:52,120 Speaker 4: the same pace as Moore's law, which is exponential. That's 695 00:37:52,120 --> 00:37:55,319 Speaker 4: the reason it's exponential. And it's sixty plus years into 696 00:37:55,360 --> 00:37:58,200 Speaker 4: compounding at this point, and the world has never seen 697 00:37:58,239 --> 00:37:58,920 Speaker 4: anything like it. 698 00:37:59,280 --> 00:38:02,600 Speaker 5: And so I think if you take big tech writ large, 699 00:38:02,760 --> 00:38:06,960 Speaker 5: it probably is true that big tech will continue to 700 00:38:07,000 --> 00:38:10,799 Speaker 5: get bigger than ever because the market cap of technology 701 00:38:10,840 --> 00:38:16,400 Speaker 5: companies in some will continue to follow the Moors Law curve. However, 702 00:38:16,880 --> 00:38:20,480 Speaker 5: I think it's a little bit disingenuous because every ten 703 00:38:20,560 --> 00:38:23,319 Speaker 5: years or so we have a new entrant to big 704 00:38:23,360 --> 00:38:27,120 Speaker 5: tech who is surfing the wave of the most recent. 705 00:38:27,200 --> 00:38:29,720 Speaker 4: New market created by more exactly. 706 00:38:29,600 --> 00:38:33,880 Speaker 5: Exactly, and so whether it was mainframes or mini computers, 707 00:38:34,000 --> 00:38:37,680 Speaker 5: or the PC or the Internet or emotion or AI, like, 708 00:38:37,719 --> 00:38:39,919 Speaker 5: each one of these brought one or two or three 709 00:38:40,480 --> 00:38:42,960 Speaker 5: brand new entrants and we sort of liked that. We 710 00:38:43,000 --> 00:38:44,719 Speaker 5: called them fang and then we called them Mamma, and 711 00:38:44,719 --> 00:38:46,960 Speaker 5: now we call them the Magnificent Seven. But like, these 712 00:38:46,960 --> 00:38:50,040 Speaker 5: are actually different companies and n Video was not a 713 00:38:50,080 --> 00:38:51,960 Speaker 5: part of the conversation even three years ago. 714 00:38:52,160 --> 00:38:54,600 Speaker 1: Can you give us a scoop and maybe tell us 715 00:38:54,719 --> 00:38:56,239 Speaker 1: what you're working on next. 716 00:38:58,320 --> 00:39:01,520 Speaker 5: Dave, related to our listener, is what was your specific hint? 717 00:39:01,560 --> 00:39:03,440 Speaker 5: A different type of TikTok, not that. 718 00:39:03,480 --> 00:39:06,160 Speaker 4: Kind of TikTok. Yeah, we uh, we do little hints 719 00:39:06,200 --> 00:39:09,520 Speaker 4: on our emails when we release episodes. We do a 720 00:39:09,560 --> 00:39:12,359 Speaker 4: little riddle of what the next episode is going to be. Yes, 721 00:39:12,440 --> 00:39:15,759 Speaker 4: a different type of TikTok is our next episode. But 722 00:39:16,040 --> 00:39:21,360 Speaker 4: we've got some watch yeah guess yeah. 723 00:39:21,440 --> 00:39:24,760 Speaker 1: All right, Well, Ben and David, that was so much fun. 724 00:39:25,280 --> 00:39:28,080 Speaker 1: Thank you so much for coming on Odd Lots and yeah, 725 00:39:28,120 --> 00:39:31,480 Speaker 1: everyone go listen to Acquired and Odd Lots. Listen to 726 00:39:31,520 --> 00:39:32,080 Speaker 1: both of us. 727 00:39:32,920 --> 00:39:36,239 Speaker 5: Oh, we should say, uh, way back four years ago 728 00:39:36,280 --> 00:39:39,560 Speaker 5: when we first did our TSMC episode, there was a 729 00:39:39,600 --> 00:39:42,279 Speaker 5: great Odd Lots that we both listened to that was 730 00:39:43,560 --> 00:39:47,080 Speaker 5: yes with Tim to talk about t SMC and UH 731 00:39:47,160 --> 00:39:50,200 Speaker 5: in particular, I think it was the relationship with Smith 732 00:39:50,280 --> 00:39:53,400 Speaker 5: the Chinese competitor. Oh, thank you lots, Thank you so 733 00:39:53,480 --> 00:39:54,960 Speaker 5: much for having us on and thanks for being a 734 00:39:54,960 --> 00:39:56,320 Speaker 5: part of our research process. 735 00:39:56,840 --> 00:39:58,279 Speaker 1: That was so much fun. Thank you. 736 00:40:11,520 --> 00:40:11,759 Speaker 3: Joe. 737 00:40:11,800 --> 00:40:12,640 Speaker 1: That was really fun. 738 00:40:13,000 --> 00:40:14,640 Speaker 4: Well, I love talking to other podcasters. 739 00:40:14,800 --> 00:40:17,000 Speaker 1: I know it's very easy because you can kind of 740 00:40:17,120 --> 00:40:18,040 Speaker 1: just let them talk. 741 00:40:18,280 --> 00:40:20,799 Speaker 2: I know, they're really getting. That was really fun. I 742 00:40:20,960 --> 00:40:24,359 Speaker 2: like the point, the sort of acknowledgment that like none 743 00:40:24,440 --> 00:40:27,000 Speaker 2: of them. It's fun to listen to these stories of 744 00:40:27,040 --> 00:40:30,160 Speaker 2: amazing outliers, but none of their playbooks are going to 745 00:40:30,280 --> 00:40:31,080 Speaker 2: work for you. 746 00:40:31,160 --> 00:40:32,120 Speaker 4: Probably right. 747 00:40:32,480 --> 00:40:36,000 Speaker 1: Well, here's where I almost think that looking at corporate 748 00:40:36,080 --> 00:40:40,520 Speaker 1: failures like bad businesses is kind of more useful in 749 00:40:40,560 --> 00:40:43,400 Speaker 1: some senses, because if you're trying to identify, you know, 750 00:40:43,800 --> 00:40:48,640 Speaker 1: things like survivorship bias and other heuristics that we might 751 00:40:48,680 --> 00:40:51,120 Speaker 1: all have in our heads, you kind of need to 752 00:40:51,120 --> 00:40:54,400 Speaker 1: look at where people failed as well as where they succeeded. 753 00:40:54,600 --> 00:40:57,160 Speaker 1: But anyway, I did actually learn a lot from that. 754 00:40:57,360 --> 00:41:01,839 Speaker 1: So the point about TSMC and idea of well, when 755 00:41:01,840 --> 00:41:06,720 Speaker 1: you're in an extremely cyclical industry, maybe yeah, don't do layoffs. 756 00:41:06,719 --> 00:41:09,680 Speaker 1: Maybe you don't want to lose a bunch of institutional 757 00:41:09,719 --> 00:41:12,400 Speaker 1: skill and knowledge every like three or four years and 758 00:41:12,440 --> 00:41:13,520 Speaker 1: then have to rebuild it. 759 00:41:13,600 --> 00:41:16,120 Speaker 2: This seems like something that has really plagued a lot 760 00:41:16,160 --> 00:41:19,600 Speaker 2: of big American manufacturers, and I guess that you know, 761 00:41:19,640 --> 00:41:23,479 Speaker 2: obviously TSMC is a publicly traded company, but it does 762 00:41:23,520 --> 00:41:26,799 Speaker 2: seem like this idea of sort of being able to 763 00:41:26,880 --> 00:41:31,640 Speaker 2: ignore outside investors and the importance of close held inness 764 00:41:31,680 --> 00:41:35,839 Speaker 2: within a company. And so obviously there's private companies like 765 00:41:35,880 --> 00:41:39,160 Speaker 2: a Mars, But then there's companies like a lot of 766 00:41:39,200 --> 00:41:43,080 Speaker 2: the American tech giants, where the founders have a different 767 00:41:43,120 --> 00:41:46,360 Speaker 2: class of share structure that gives them like ten times 768 00:41:46,440 --> 00:41:49,360 Speaker 2: more votes than the other public And it does seem 769 00:41:49,480 --> 00:41:52,880 Speaker 2: like to some extent, for better or worse, probably for 770 00:41:52,960 --> 00:41:57,360 Speaker 2: corporate performance. Often the better that the ability of the founders. 771 00:41:57,440 --> 00:41:59,560 Speaker 2: They know, we are really not going to do anything, 772 00:41:59,640 --> 00:42:02,320 Speaker 2: and you're never going to vote us off the board 773 00:42:02,520 --> 00:42:04,400 Speaker 2: or whatever. We are not going to change how we 774 00:42:04,440 --> 00:42:08,440 Speaker 2: do things. In many cases that seems to be an advantage, 775 00:42:08,800 --> 00:42:09,680 Speaker 2: an advantage. 776 00:42:09,960 --> 00:42:14,120 Speaker 1: Never go public, Never do performance reviews, Never write a 777 00:42:14,920 --> 00:42:20,799 Speaker 1: employee manual I have. Yeah, I'm certainly that's true. All right, 778 00:42:20,840 --> 00:42:21,600 Speaker 1: shall we leave it there. 779 00:42:21,680 --> 00:42:22,439 Speaker 2: Let's leave it there. 780 00:42:22,600 --> 00:42:25,680 Speaker 1: This has been another episode of the Oudlots podcast. I'm 781 00:42:25,719 --> 00:42:28,879 Speaker 1: Tracy Alloway. You can follow me at Tracy Alloway and. 782 00:42:28,840 --> 00:42:31,680 Speaker 2: I'm Jill Wisenthal. You can follow me at the Stalwart. 783 00:42:31,800 --> 00:42:35,120 Speaker 2: Follow our guests Ben Gilbert He's at Gilbert and David 784 00:42:35,200 --> 00:42:39,759 Speaker 2: Rosenthal He's at DJ Rosent. Follow our producers Kerman Rodriguez 785 00:42:39,800 --> 00:42:42,520 Speaker 2: at Kerman armand dash O Bennett at Dashbot and kill 786 00:42:42,600 --> 00:42:45,560 Speaker 2: Brooks at Cale Brooks. From our odd Loots content, go 787 00:42:45,600 --> 00:42:48,400 Speaker 2: to Bloomberg dot com slash odd Lots. We have transcripts, 788 00:42:48,400 --> 00:42:51,080 Speaker 2: a blog, and a newsletter, and you can chat about 789 00:42:51,120 --> 00:42:53,239 Speaker 2: all of these topics twenty four to seven in our 790 00:42:53,320 --> 00:42:56,200 Speaker 2: discord discord dot gg slash hoblines. 791 00:42:56,520 --> 00:42:58,839 Speaker 1: And if you enjoy odd Lots, if you like it 792 00:42:58,880 --> 00:43:02,240 Speaker 1: when we talk about what makes companies successful, then please 793 00:43:02,320 --> 00:43:05,640 Speaker 1: leave us a positive review on your favorite podcast platform. 794 00:43:06,120 --> 00:43:08,960 Speaker 1: And remember, if you are a Bloomberg subscriber, you can 795 00:43:09,000 --> 00:43:12,439 Speaker 1: listen to all of our episodes absolutely ad free. All 796 00:43:12,480 --> 00:43:14,560 Speaker 1: you need to do is find the Bloomberg channel on 797 00:43:14,680 --> 00:43:18,440 Speaker 1: Apple Podcasts and follow the instructions there. Thanks for listening.