Shownotes Transcript
Then when we teach this episode in the email about the jenson episode that we just released, the guesses that we were getting from folks were amazing.
Maybe people are like, it's charly, it's warn or it's Taylor swift and lot of people are right. Hey.
tailor how to find us a quiet F M A D mail outcome.
If you are looking to get more publicity or open.
have to have us getting.
Alright, let's .
do IT busy. You wait, you wait. You who? See you see me down. Welcome to this episode of acquired .
the podcast about great technology companies and the stories and playbook behind them. I bang k. Gilbert, David rosen all, and we are your hosts.
This episode is a very unique one for David and I, good friend of the show and reMarks organized a little dinner for us with charlie monger and a few other folks at charlie home in los Angeles. You can hear Andrew a few times in the background asking charlie questions. We are pretty sure that this is the only podcast that charlie has ever done.
Charlie, aside from being one of the most prolific investors of all time alongside his partner warn buffet, is ninety nine years old. He will turn one hundred on january first. Of course, our conversation was interesting because he's freaking charly monger, but also because IT was interesting to get the perspective of someone who has seen the last ninety nine years of human history. We talked with charly, of course, about costco, his history investing in retailers over the last fifty years. We also got to hear his views on what IT takes to build a great partnership, what's gone wrong in the global security markets these days, the concept of investing versus gambling and where investment opportunities remain in the world today.
Yeah, then this was such a special life experience for you and me, and you and me together to do this, and fact that we got to record IT and now share with the world for posterity, just icing on the cake. And the whole thing was unbelievable. Yeah, listeners.
we knew we were going to have dinner. We were not sure whether we were going to be able to record IT. And now we get to share IT with all of you.
With that, join the slack. There is awesome discussion of every epsom and the news of the day at acquire dt. M slash. slack. If you sign up for acquired emails, you will get episode corrections and follow up from previous episodes, lus hints at what the next episode will be, that acquired data m slash email. And we have only one sponsor for this interview.
Yes, a special conversation deserves a special sponsorship. And longer listeners will know there is only one company in the acquired universe that is truly appropriate, because everything they do is modeled after charlie and Warren.
And that's tiny. Yep, tiny is the burger healthy way of the internet. literally. They are such huge fans that they started a company that makes bronze busts of buffer and monger themselves.
But more on that in a minute. yeah. So burchill, as we know, as a textile mill in massachusets, nearly two hundred years ago and almost twenty years ago, tiny founders Andrew wilkinson and his partner, Chris, took their version of an internet tex style mill, the premier design agency, metal lab, which designed the us.
For slack, uber, tinder, headspace, coin base and others. And they asked themselves, what would charlie warn do if they were us? And that lead to the realization that, just like burker discovered in the physical world, the internet also has wonderful niche businesses with great cash fliers. In fact, they tend to be even Better than the old days of these Candy in bu chip stamps because they requires zero capital reinvestment, have software margins and can build global brands much faster than the, what, fifty some ideas that took sees to expand around the world.
yep. So entry and Chris took the extra cash flow from a middle lab and their other businesses and created tiny, the world's first and best permanent holding company for wonderful internet businesses. And boy did IT work .
yeah fast for d to today. And thanks to tiny is success. This opportunity is no longer a secret. Many people have got on to the idea that this can really work. But just like burger itself, no one else has the combination of experience, temperament, access to capital and Frankly, reputation that Andrea crews have built over the past two decades where investors in tiny ourselves, alongside bill, armin and Howard Marks, and just like that to at them, tiny is really the long term buyer of toys in their niche. Anyone who's looking for a permanent home for their profitable internet business, or who needs a capital partner for a cofounder or V, C, C buyout, would be lucky to .
work with tiny yp. For instance, they just bought the premiere social network for film buffs, letter boxed, which has been the founders baby for twelve years. And we'll stay up within tiny. And this really reflects chinese whole ethos. Work with only the best internet businesses, commit to simple diligence, thirty day deals, and leave the business alone, either for you to Operate or bring a new long term orient management up to you.
So thanks to tiny, this is the only sponsor is ben said that you will hear on this episode. And just like burger, it'll be here in perpetuity. Tiny just became a public company earlier this year, and they can now do deals ranging anywhere from one million all the way up to two hundred and fifty million. So if you wanted get in touch, just shoot them a note at high at tiny dot com and just tell them that then. And David sent you.
oh, and one more thing, the bronze charlie busts the perfect daily reminder in your workspace to ask, what would charly do? Just head on over to burker nerds dt store to buy your own. And they also have plenty of some guy named Warren, too.
okay. Now without further to do, this is not investment advice, and I may have investments in the companies we discuss. And the show is for informational and entertainment purposes only.
And onto charlie monger charly. I was watching the nfl games last weekend, then IT seems like every advertisement now is a sports spreeing advertisement. Is this good for america?
No, course not. Are the dog tracks and rich tracks of america? Are the casinos good for america? Of course not. That is very possible that .
I weren't god to start there right .
at the race track well, but where I never gamble, italy is a payment of a one, one of the ads and hits favorite as somebody else, right? It's just so simple of your warn, you have the house. You will be the house, not the powder listeners.
The next topic that came up was retail stock trading and the idea that for many americans, this is a kin to gambling.
What so it's origin and they don't really know anything about the companies or anything that just camel aren't going up and out in Price. If I were running the world, I would have attacks on short term gains, but no offset for loan anything. And I would just drive this whole world of every world business.
What do you think about the algorithms like renison and stuff like.
well, of course, ris first, the first to algorithm with so simple, they shifted always day for the best. And what did they decide up, up for sure, to closing brazed and down, down, we're more common than down, up and up, down. What's they realized that the way IT was, for very reason, the deep of the psychology of man, is that man is a natural trend follower.
You figure a gaming short term, and they just his program, the computers to automate, be mobi and one thing at the first up day and sell before the end of the second day. And you did a day every day, every day. And you every day, my machine, when you know is the version agent, say your checked day is eight million and five, one hundred thousand check tomorrow is nine million a thousand.
Well what happens is, is that the ones the easiest trade is different. Run what you know what the average, but the index ones have to buy. And you know what that is exactly.
They all know that. And the way they get their returns year after year is taking the leverage, the midday leverage of higher and higher, higher, higher. So making smaller and smaller profits of more, more volume, which gives them this big peak leverage risk, which I would not run myself. And that's the only way to make these day returns is to have this huge leverage. IT would make you crazy if you're already rich.
I D A good fortune speaking with someone you know, well, Richard galanti costa and spending a few hours.
It's crazy. I mean.
that seems like that everyone.
they ve .
all been.
I'm curious, how did you first come across kasha or or a Price club at the time?
D heels, someone who surprised. And what was being said, you have to do not made him him is said so I drove down low winter storm the soul and her son was a very so was an ordinary lawyer in the thirty nine years of age and without informed government .
employees count come .
on IT he was no longer with that go and he saw that goal to the german flight .
to the ah hugon huger man yes yeah yeah. And did you get to invest in Price club before emerged with costco?
Yes, I did. But I just about my thought of the market, I wasn't not at any favorite.
And so how did you eventually meet jim and ago?
Well, I go ask more that we come. Director of gospel, you is looking for somebody with food or reputation .
as an independent.
yes. And what would do is about, do you get hard to do IT? I want shorter. Playing right to do is made easy. So a so that's how that happened.
And did bircher ever try to become a shareholder or acquire?
I tried to get warned by house of french when they left careful and wouldn't do IT one does my great help was .
IT just that he doesn't like retail or what .
was the big thing? Everything that was one and really has got rob is gone on the big of gone. You know, it's just too dim. Difficult is concern and .
little bad experience with diversify retail.
right? No, we made money. We didn't exactly make IT retAiling, but we made a lot of money.
And with diversified, most of the money was not on the retAiling Operation.
You made a lot of that money through. We bought this little percent development to train and body. More big mistake to the is the eg.
Dried on the closing papers. We realized we be a terrible mistake, so we decided just to rise and take to the hits to look fully rather than go broke. Just told I get us out of this by that time. We already finance, have government free day, and there are always extra cash and our own stocks to get down to silan, enormous that we just in the middle of those things we bought 我我我 and money were back to those stocks and course， we trapped just by setting .
on our life .
and that LED to blue show part of wow.
And so you know .
imagine warn does not like yeah company that maybe twenty about indulge. And when we left that thing, we had taken out of our local twenty adjustment over two million dollars in markable securities, which went in in rest insurance, the companies as part of their bedrock capital. So we we had some wonderful early years, and that's what I really need, just wonderful years. wow.
So in our cosy o episode we started with the joke, one of the product beatings spelling ten years ago, warn told the joke about you were on a plane being hydrated, and the hy jackers gave you one final request, and he said, you'd like to give your .
speech on the virtues.
Yeah, yeah. And he said, shoot me first. We were hoping, could you give us your speech on the virtues of gas? Co.
no. IT one is give me for being or repetitive on the subject, but there aren't many times in a lifetime when you know you're right and you know you have one was 绝对 跟着 玩玩， maybe four, five, six times a lifetime, you get to do IT. And people do two, three times early broke. Because this is easy. This fact is very hard and rare.
What wasn't about costco that made you realized this is one of those few moments in a lifetime?
Well, they really did sell cheaper anybody else in america, and they did in big, efficient stores. And all the parking, these bases were ten feet wide, so eight feet nine or early Normal year. And you know, they did a lot, right?
yeah.
And they a lot of parking spaces and they kept of their stores, at least you will didn't do big volumes to see. And they gave special benefits to the people, come to the stars in the way of or red points.
the .
executive membership, yeah all work.
And the capital lake business bottle. I mean, when we were .
studying at the difference they make, the suppliers wait until they invade and they're scheduled pay only after their schedule.
So i've got nine hundred warehouses around the world full of the high quality merchandise, none of which they have sitting on their .
books is great.
Yeah, our understanding is that Price club went public initially before the merger. They just listed. They didn't raise any capital. They didn't need any capital.
Who note so kind I would like this is kind of a difference here. You like deals. You like this is like this world state.
Yeah IT doesn't sense. You don't want you get enterprises big as because you don't have around, you're writing other people a clog up. We are barking out permanently and stuff is not to pay you very much, right? You know what was the answer?
Have you ever seen another business that takes advantage of the virtue of the low you count the way that costco does?
Wow, I be there. Lots of them. That little groceries are chain here in los Angels, girl son, brothers.
They wanted to hysteron ops and low, capable, and they never made the least effort to earning money. You have, you want to show their parking out with anybody. 嗯。
as you reflect back on, you know, one of these few great companies in a lifetime that you should bet big on, what advice would you have for David and I as Young partners, looking for a few days in our lifetime things to look out for .
what when you find what you you may find IT, five years after you bought IT, you know, these things may work and do either you may your underground standing may get Better, but when you know you have an edge, you should bet heavily. 嗯， you know, you're right. And most people, he said, business school, it's insane. You have bad heavily on your best bet.
And how do you develop that level of conviction to .
know you work out? You really am thinking and really i'm here.
So we want to ask you, you you've had this beautiful partnership with one for half a century.
We're indicated our fruit in the early days of our Operation. You don't have any unloving fruit. Easy to read.
You mean an investment opportunity?
Ah that's right. But your .
relationship with .
morning like how are you some kind some we were both wanted give our family savings, take new offer investors and so on. We have similar yeah did IT change .
over the decades. So we want .
still cares more about the safety of that, cares about anything SE. If we use IT a little bit more leverage throughout, we have three times as much now. And I wouldn't bit that much more rise either. And we just do we never wanted to give them at least chance, 不是 scoring of our basic shelter position。
If you had used more leverage, do you think they're some .
chance that we were one 622？
Do you think there are some chance that IT wouldn't exist at all, that IT would have caused you the franchises?
No or wrong. That is the situation lend itself to if you were intel gent, that is making IT out when .
you left them. So curious on after we did our tomato ally.
leverage you a new story with no capital, of course, this leverage, who wouldn't want a business? No events. Aries, right?
I take good point by the virtue of you or a whole bunch of people money on day one for these goods .
that which which turn hours.
right? It's interest. I mean, that's leverages. It's not debt leverage. How do you think about debt after we did our version series?
A lot of a who when you actually something that is terribly strong and they're just forcing a suppliers, the cariole isn't like we're the only ones to do IT.
Back to the point on partnership, David and I are coming up on ten years as partners in this podcast. We do together different than the investing business, but a compounding one after a fifty year partnership with war. And what advice would you have for us inner personally to make for a an enduring partnership?
Well, IT helps if you like grandmother and enjoy. We do. Yeah, but I don't give anyone formula a lot of partnerships that work for a long time, even because one to go one thing, one to go to another, they just actually divided and each one likes, what are you doing now? And cost goes to the head.
Jf brought one who was very smart. But now that retailer and James and I, they do I up. And the originally read the problem would be the chairman and C, E, O, because he was this idea, he found the whole thing. But so was, I know I have to be this, you so the big, unfortunate forbid you ever big in her struggle and brought mood.
was that after you joined the board.
no before do you think .
you and warned not living in the same city helped to your partnership last so long.
but I may have helped that warn has very close relations with all those people that have lunch every saturday at burger headquarters. Is my I didn't have a little quarter of people there who are kind of files and ground up. Do you think IT .
helps that when you do spend the time together, it's special rather than being common?
Well, of course, we used to spend a lot of time, every very Young, as we know how much they do. Now we ve got more to do and then but then it's just the other in a year of life. So it's different.
Yeah.
it's fly. I feel like we have a lot to do now .
because you is you're difficult to invest money well. And I think it's almost impossible to do time every time every time your table.
yeah, we really wanted to ask, thought that so hot.
have the sides so quickly? Yeah, year old, just sort .
of gambling. Do you think the role of venture capital is being properly accomplished in society?
No, I think it's very really done.
Charly elaborated on this point with a few things that we can't air, but the topic did turn to bitcoin.
I've heard many comments you've made on bitcoin. I'm curious if you have a thought of this particular angle. An easy way to transfer money in between countries, especially when those countries don't have a stable store of value within that country, is IT good to have an independent .
store of value. That is not the world as a whole to have having some guarantee the way that was solved as for a long time, and the bridge bound was the national guarantee of the investment world, then he did a dollar and is still a dollar. And people like china have these observes of dollars is the money we make way, think money we will give. We always just print of this piece of paper. yeah.
And what about the common person in some of these less fortunate countries who don't have access to U. S. dollars?
So they do a, there any money? The door is very function. You ied by women anywhere. I've cares .
back to this point of, uh, the role of venture capital in a society. If you could design a perfect .
system to funding your business, if you do IT right, if you want to give the right people about, nurtures them, help them. And you know a lot about the tricks of the games, we going to help them around their business yet not the interfere with them so much ate you, by and large, having bumped in a lot of people in the businesses with battery capital financing, I would say the ordinary rule is in business doing the world.
They more than other hate adventure, helpless. They don't feel so if their partner are trying to help them, we're coming. You're going to care themselves.
And so and I like, how could IT .
work differently? Yeah well, the best central you see arby away, they know were not. Try to discard them to the highest bid. See if someone has all of us. Market offers us twenty times learnings are some house business. We also if this problem business never able to fix, but but it's a happy and business we never say, and that gives us the reputation of staying with things. Would you have .
us and do you think that by and hold, not only mentality, but demonstration is the key thing that alliance investors with .
managers well, it's rare you see everybody else has a different way doing things. The lawyers have their standard forms, and the area, region is the same standard forms, and they get the same standard result, subject of the institute in thousand life you don't want to make money by in your investors. And that what a lot of venture capitals do.
The world is full of X G eight god s exporters that formed the private fund. Imagine billion dollars or something like. And they charge two points of the top process will be and that there was able to make very handsome loves to themselves. But the endo isn't. I get a return.
And do you think it's specifically the the aspect of each way.
the way to work? And of course, you really shouldn't be in the business of charging extra. But if you really arguing, achieve very unusual results and IT grows this more easy, pretend that you can get good also, this actually get them.
And so IT attracts the wrong people, less capable of mind. And the deal will make the most money at eventual capable are a lot like investment bankers just adding which hot new area they are going to eat in there. Not great. What do you think?
And dominance and large pools of capital should do then?
Well, I starting to do at the interest has started to say is all people judge three and thirty or one really try they they will pay you three and thirty. We're going to be twice as much money and the next you get nothing on IT where you going right? Very best, you and 不要 so the b is good on about here for that'll take a lot of the fun out of bit。
Fees down, beauty person. And that's happening all over america. They feel hand misled, irritated. They look foolish to on rest days.
One of the issues, I think, in investing right now, you mention about venture capital and think is everywhere is like there's just so much capital and so much competition. We're so far removed from the cigar baya. We're in the opposite of the cigarette these days are there? Oh.
tell somebody will find a few thing, but IT gets harder and other I would argue one of the easiest ones was when they decided a little group around homely, they would cover the costal metal in home improvements that was basically a good idea and think the money they .
may doing yeah many markets.
Yeah there was a great copy of costco.
Do you think there are more opportunities .
to a copy costco? There was another one across go friend 个 is the current immediate or and it's just this in final， what immuring final flowing. They are running a gogo model and they give adding muslim is stuff to .
a to it's the missile anian .
stuff that will eventually kill you though well, be similar .
is all for yeah doesn't tly the vertical home depo worked so well.
But I don't know .
that I was totally obvious like part of the appeal of costco was IT was horizontal IT was everything. Consumers could come. They could make a trip, bring their big bag .
and bring their big check. The they covered everything. And famously.
brain markets came out to visit.
So before I started, yeah, came they covered everything.
Saw was like happy to share the playbook with everybody, right?
How do you feel so was a not crazy here. He was dominant, so on, but he was also over and tell. But there are many opportunity is like home lib one many. Why do you think walmart .
hasn't been successful once they saw costco in competing?
They were too wide by the ideas. They already had that very really trouble. This can't accept new idea because the Price space is like in my idea.
They got my habit of getting the day pray to give me nothing that you, any little towns or nothing was valuable. So there are always the accuracy cause to like this world. And they know about to make big divisions stores.
That was their formula, so IT offended them. To go against the rich suburbs, have to pay the good locations and cost, go just specialized in the good ocasio. Whether we and what I just like to do here after year was a terrible one day.
Did you know sam? Mom.
no, everybody. I know the son, one of the sons, and they do. I did up, you know, about six parts very early.
What enterprises.
so never played much, give taxes.
ring the topic, then turned to the automatic ers and the future of the car industry.
Look, my heart would be going the other business and have something killing so he's going to win, who knows? All things has been thrown away up in the air while is like the cars as big new capital requirements, different ways of ceiling cars and plus they get these tougher unions say, I don't look at the low industry.
do they get more investible today than IT was fifty years ago because of the disruptive innovation of electric?
Well, for maybe for one or two, I like the cards are really good at maybe certain .
what A.
B Y B U I D A was a miracle, but that I work seventy hours a week. And as a very high I Q, you think you can do you look at somebody else out a part, figure how we got them. You can do that. You see how you vested a hunt. Yes, but that ever do.
How was that .
investment for you? That loves money? Not much. Because I was stubbed, I held out and I got back almost.
There have been a lot of discussion about vertus investments in .
the japan's training houses. Well, but that is an no brain, something like that, the smarter warn buffet, maybe two, three times a century yet, idea like that, the interest rates that but anywhere, half a person per year for ten years. And the trading companies were really entrance all companies, and they had always cheap cover minds and rubber populations.
And so you can bar over ten years ahead of the body, you could buy the stocks and is actually eight, five percent evident. So the huge flower cash with no best one, no thought, no anything, how I can do that, you're be lucky if you can want to a century, we give you that nobody else could IT looked attractive that ever IT. You couldn't get IT but burger with this credit cut.
And but on where you can get that would be very patient. Just take away as a little piece. 对， took forever to get ten thousand dollars invested. But I was like having god's opening her chest and just pouring money into IT is awful easy money. It's interesting that it's paradoxically.
you need vertus credit. But at burtis scale, it's actually hard to put enough money to work.
That's trouble. Why should I be hard to make money? Why should I be easy?
Japanese training companies reminds me we studied another company recently. Nike, that is.
was surprising. Yes, did you? Of course I look, I looked, but I don't like style company.
To fad .
driven I ppos company.
Oh, that's a good pic.
To the simple point. Another one that they covered with L V H. What I R now has done has been amazing. So what you make of that company.
well, if is going, they are, they've done, you have a life time to do IT in our life. I really, you are more like times to do IT in you. great. Another.
but is not easy mis on the generation. I think now the family running IT.
it's not a bit easy. They have meetings every day when they make policy decisions, and they choose the locations. One of the time and work.
definitely work. What do you think the durable value is in the S, U, A style companies of the very best one in the world, the s, or the L, V, H. What makes them in doing?
Why do I just got a brand? People trust so much? 嗯。 IT took on century. Our conversation then .
turned to comparing current lin signature as a brand to air mez .
country is a brand, the way tie is a brand, and her mates of different kind of brand .
yeah for ari doesn't make lot deterrent.
no.
And we've spent a lot of time studying these brands. How do you .
look at the value of a brand? Well, it's hard for us, not the love brands since we were lucky enough about this is Candy for twenty major dollars as our first acquisition. And we found out fairly quickly that we could raise the prize every year.
My tempers out and nobody cared. We didn't make the five go alperin like that, just made the private to go up. So we were raising the Price by cameras on the year after only forty years.
So now it's been a very sad. We going to renew very little new cable. We've had two big kitchens and a bunch rental stores when we bought IT, and now it's got do big kitchen about the rebel stores.
Well, judge, he was a playboy and he is rather than the government. He is older rather, and dominated IT completely. But when he died, Charles made his brother is executive, and now he needs a lot of money to pay dealt taxes.
He doesn't have IT. And do you know eight months, something later in. And so they really want to ourselves so they could pay the death taxes.
And seem was only making for my protect. We bought IT. And so that .
buying opportunity only came about because the family .
need a liquidity to be. We only found out about that because galaxy was others cruise to why you or something with this guy was a kind of medicine counts also worked for those gip stamps, the company that was. And anyway, that's how we found out about.
We paid that. Can I find three even? Never made one sense, of course, but you don't want to have everything for paying finally there in the world we buying your day on.
So what do you think? So there are categories like seas or like our miss brands lead to pricing power.
I think your chances are buying one of them. So no, I wouldn't even look. I won't believe looking things that I might find you're not gonna get a chance about. no. Yeah.
but why do you think there are extremely well known brands and other category .
maybe package for you or in they buy nothing with branded goods and the one they usually start with this nesty and and failure they done to three points Better than average, but it's not a banana.
After that, our conversation turned to craft hines and why hines is able to have pricing power while craft .
is not there. There's something about the flavor catch up on I got from we all really well to change brands over. They want height and so we could raise the Price of hand pretty much a, but you try to raise the craft cheese and everything goes about you, the final customer, the housewife.
Now why do you think that? Is that .
some of the source labor, it's happened elsewhere in korea. One guy and change rose. All sources, every single major sources rose, not at least nine, if I present them.
And it's because sources have such a particular flavor that no one can imitate the trade secret yeah huh. And that .
gives pricing. Is that coca cola as well? Yes, sure.
charly. I'm curious at age ninety nine, what is something that you believe today that seventy year old charlie would have disagreed with?
I think I I knew what I was seventy. That was you hard. That is just so hard.
I know how hard did is now and all with feeble for getting a two, twenty two and thirty years. They all talk is always easy. And they get believing in their own board ship. And of course, is not a big easy. It's very hard.
If you were back thirty or forty years old again today, would you decide to go into the investment business again?
Oh, probably because this suits my nature, but I didn't really enjoy the three and three business. Once I had enough of money in my own, i'd rather just over with my own money. That is a much Better way of doing that then because .
of the before we .
be forced to deal with investment bankers, be forced to deal with investment consultants, we forced to deal with venture camera, who knew us that you don't need other people finding, which is you don't have to need, you don't have you able charly. If you started with warm today in your four, thirty years old, do you think you guys would build anything close to what is today? 两个 no， where we had everybody that has an unusually good result.
Everything has three things. They're very intelligent. They worked very hard. They're very lucky and takes all three to get them on this list is successful.
How can you arrange to have to? The end is a good luck. The answer you can start early and keep trying a long time and maybe you get want to do.
If you were starting in today, you think insurance.
but still be the vehicle IT depends on your insurance would be ideal for a certain kind of a temperature and IT takes a very patient person. 那个 takes forever， get anything and and get takes forever to portion. Everybody is side. It's very hard to make money.
I've heard you say as soon as you're wealthy enough to self ensure you should.
Is there any insurance? Think of all the combs were always going too much and valued claims. The insurance company, get on fire. Someone, why would you wanna pay IT? You are share their stupidity.
not to mention the overhead. Of course, the insurance company needs to pay .
all the people that work there. Yeah, yeah, it's crazy.
Is there any insurance that you Carry today?
I Carry no fire insurance anywhere.
Do you Carry auto insurance?
Yeah, I have to lally.
Yeah, yeah.
I don't know. Charly could no.
I after what I do.
i'm curious being that since these guys are very tech focus, i'm curious not being a tech person, how did you think about the apple on what gave you the conviction to be so big?
Learn is that everybody needs some preference of asian and the twelve companies to do Better than their radios, and you need to a three other list. I end, if you have a mindset, apple was logical candidate to be, I was you for what you're going to like your companies. And it's not very hard to come with idea IT may be okay.
Making the list doesn't sound too hard. In fact, there are these acronyms, fang or mama, microsoft, apple, google, facebook, but selecting the one and putting hundreds of billions .
of dollars into IT 这里 边 to create .
hundreds of billions of value。 That to me sounds hard to pick the one.
How did you guys pick the one?
One else was evaluation or yeah.
we got cheap, got about ten more.
Twenty fifteen, I believe was the first. It's fascinating in this concept of if you look at distress that or you look at, I think learn in the last version letter pointed out it's been a handful of really good decisions or you look at venture capital that's classically power law distributed. Any of these asset classes comes down to a few really good decisions with .
high conviction over an entire career. Yeah.
it's not smooth. There's no asset class where you .
can repeatedly just do for the area. It's not gone, but it's very small.
You mentioned this idea that when when we're talking about apple, there's a few companies that is just really important to be in. Do you think these big tech companies being the winners where all of the pensions and bircher and university and dominance and know everyone's four one case being concentrated in these companies, do you think that was the natural outcome that we have end up this one?
Yeah, that was natural. That's what that happened. Was this.
What causes .
that? Well, that's what human nature and competition as well.
the causes. Will we eventually have one?
Eventually, this craziness of of the good, stupid, that's a natural outcome.
Will we have one? Twenty trillion dollar companies?
And then I know. And if we did, he said they just happen. Would you continue investing in china? What's your position with that? Well, my position in china has been the chinese economy has Better future prospects over the next to twenty years that almost any other big economy, that's number one.
Number two, the leading companies of china are stronger, Better than practical other lady governments anywhere. And there are real little with cheaper Price. So naturally, I mean, to have some china risk in the on your board volume, how much china is? Well, that's not a scientist subject, but I don't mind whatever is eighteen percent or something, whatever which worked out the bugger family. So okay with me.
what about other geopolitical considerations? Like would you hold D. S. M. C at this point?
Well, I don't like as well. I like something more real on a brand of its own light table.
I'm curious what major companies that haven't been mentioned do you think people would do well to study the virtues of.
like, study the virtues of costco? Well, I only study two kids of companies. I'm gram follower with something is really cheap people to grab the company.
And I also buy IT while anyway and I do that occasions and i've done that with great because of time or two, but my art Marks wants IT twice at my life, big games, and that's IT. It's not like I I have what was the one hundred times. So IT isn't very easy. And how of times so easy, money is almost not existing.
One type of company is the sugarbeet. What's the other type of company? The companies that people would do .
well until study to the get on the right Price whole track is getting on the review where occasions and they really cheap, but bank cost got its present Price. IT may work out alright, but that's again getting hard yeah for getting the prospects.
the stock catty. Think about the next ten years for the business.
I go look very well.
One more question for you in this area. What is your favorite advice to give to Young people?
I don't give advice, just any Young people. I give some, I paid my spot. I don't want to be more about girl, the people here. It's getting hard out there and is always bullshit and craziness. Of course, it's gonna be hard.
Where are the attractive opportunities hang out anymore? IT sounds like everything in the whole world is over Price.
This could that be possible? Only possible. It's likely it's actually happen.
How did the world get so rich if we have all this capable for so few opportunities?
It's the nature of things. Look at biotic producers, a very advanced creature like us. We consider around the talk telga all these subjects. But he doesn't, by killing everybody, often very competition, one of the other for hundred, hundred thousand years. Other words, the system that nature uses, the and smart, it's kind of pleasant to the people who are losing.
So over the last hundred years, we've brutally shifted all this value from labor to capital. And now capitals are competing to get into a very small set of opportunities.
Well, cable never had that. You would. He wasn't. He was all easy. You back about that IT just was that easier?
And if you continues to get harder, the natural .
endings that you have, yes, with some kind, and god knows what happens after the unpleasant blow up with our modern acies, you will get to your life. Idea is quite. This one is IT too .
pessimistic of a view to say that the world seems to be out of good ideas to match the amount of capital out there are looking for good ideas.
IT was never easy, if early understood. IT was never easy, and it's harder now. Those the two IT and you pay attention, not your hand. The people you do with you want a good reputation when you're all another bad man.
And I don't think you're saying there are no opportunities whatsomever, I think are saying no expectations and fewer benzes.
And the beauty of IT is you only have to get rich want you know this before time, just everyone was well that all of .
your philosophy on both sides as you got to be patient for the great opportunities, but you to recognize them when they come in and pounds. We turned off the mikes to have dinner and then recorded a little bit more later in the evening about costco and some life advice from charlie.
So one costco question that i've been wanting to ask you is all the puzzle pieces of the low skew count and the high inventory turned over, and there's just so many things that fit together so beautifully.
pretty obvious. So but how come .
no one else can pull that off if they're so obvious?
Takes a lot good execution to do IT. You really have to set out to do and then do IT with an analysis on every day, every week, every year for forty years is not so happy, easy.
So you think the success is the magic of the business model and culture?
yes. And yes, culture replace monitor as absolutely and very reliable, hard working, determined execution before the years.
I mean, they talk about the story of the catch up, that you could increase the press of catch up by three percent, and nobody would notice, but that would destroy everything if you did that right?
I was like that the central norm was, don't raise smart, get low and give you there forever.
Which brings us to the hot dog is IT true. The story that when crag took over A C. E. O, he did try to raise the Price of the hot dogs.
I don't know. I had no conversation that .
and forbid him.
Well, I sure jam would have forfeited. I absolutely.
There was no board level discussion.
no of fact. Don't know. no. Those who would not thought that was a board matter to discuss the place hard.
The one thing that fascinates me about costco is they seem to only be able to grow ten percent per year because they're not capital constrained. No amount of money, if they were to access .
IT for free, can not IT is hard. The open too many stories a year, no store, no manager, no this no about economic. It's hard. Plus a lot of we learned and thought and button boys. And so they want to do more than they get comfortable handle.
The story of he imation china earlier was twelve to twenty years that costco had the license .
to Operate in china, the first store they tried to open in china, the first store somebody wants the thirty thousand dollars 吧， no chinese culture. And that this would be IT. And that makes us a Better version on games. And go you talk about thirty years after.
so what change? Why finally go in?
But finally, the board started working in of noises.
You started out.
Yeah, who on the board can be excited about the chinese market?
Yeah, can. Who knows?
H is so great.
One thing I found fascinating about costco was the fact that even though there the lowest possible Prices, their audience skills wealthy. Was that an accident that they figured out over time? Or did they know that .
figured out to a note all the .
way back in the Price club day?
Yes, yeah he wanted to the rich man trying to say money.
But and it's not just that the the wealthier customers there smart wealthy customers yeah, they're Peggy.
wealthy customers on some topics that are outside of costco. You mentioned in the daily journal annual meeting this year that a Young man knows the rules and an old man knows the exceptions.
Yes, I was that .
a peer of man? yeah. What are some of the exceptions that you ve found the most useful in life?
Well, they take those kind cost of hot dogs. That's an exception. And any body also will the race a Price a hot day long time ago? They just don't do they not have famous?
You make your kids and they have not. They they know galling going there is where they just wanted to. They don't understand.
I think that i've never fully understood. I know you're a big fan of the company, byd, that of course makes the the chinese company that makes batteries and electric vehicles .
and maybe a big fan. But i'm so hey, I hat well, he large around the track and they make me nervous, is so aggressive.
Is that dangerous in a company?
So do you think that companies .
should try to grow at a lower rate than they are capable in order to be more durable?
Well, IT, could you do that safer and easier? So what but I would like you, costco, where we've done some of these things, are stream like the thought a lot. There was smart to not to change their ways on one item two.
And IT seems like there's a spectrum where on the one side, there's costco that is just not a fast growing company because it's very difficult to and on B, I, D, like you're saying, they grew like crazy.
I mean, you to. This year, also, at least two have many in cars. Most of electric unhurt. When ever heard there, there are way more than most eighties .
for more than tela, right?
yeah. More than body. yeah. Lots of troubles and losses and a terrible trouble.
They are wrong going. They made lot of mistakes. They were lucky to be on cutting edge of this election. Car business IT swim more acceleration than those people. 你们 lively car there a lot of things， but like I like a car really works in some ways that is Better. And making a ninety ty eight right after the party place, just move as we turn the wheels nine degrees and go in yeah now 问 你 在 不 站在 give your car goes flat， you can run one hundred miles on the field wheels something.
And do they have Better economics as they don't have nearly .
as many parts good support?
Have you ever had an investment like that before? I think you've invested something like two hundred and seventy million that's now worth something like eight billion. And byd.
well, very good people have an investment of that. A venture capable of any investment happened. The V, S.
And me traded public company. We want. So venture. I come with their company. There was a venture cap of type play, and they just went put the the right of our burden plated hard.
had they .
manufacture both and and we how you take out going in the car business, then buy a bank of car business going the car. I said that, and he paid attention. Isn't rather had you .
invested already when he told you this .
place and IT worked fairly, they will, after a huge mistakes that they were almost been broke over for early dealership 标准 system almost went broke。
What capitated to you about?
That was a genius. S, he was A P. H.
D. And engineering. And he could look at the great party.
He could make that part, you know, look at that morning and look at this. Finites can make IT, I never seen, but like that. He could do anything.
He is a natural engineer, 认为 get down type production inc。 And its a big thing. It's a big lot of talent to have. One, 不好意思 and very useful， takes up all these problems on these elephant cars and the voters and celery breaking.
How would you compare him and byd to elon and tesla?
He's a to actually make things good sense. So you have to these closer around zero on the words the guy at the ready is Better at actually making things.
Charlie, you turn one hundred, which is an unbelievable statement on january first of next year. Do you have .
any plans on good body?
Where is the party going to be?
Kill when I go, but I totally macks out the room I can ease.
What captivate you these days, what's fun.
what special everything is even possible is that is kind of interesting .
when you look back at your you're warns time together.
When did you have the most fun through wearing fun now?
Is there a particular era that you remember the most friendly that feels like the good old days?
Well, remember, we were in baLance of those good old days.
Oh, I mean something.
brother. Yeah.
a lot of close. This is we get out with big problem is all, but we couldn't have a big loss.
We could have have more problems than just a loss with Solomon, right?
Well, actually on on our what we examined version health way on our podcast hard take away was that the whole franchise was at risk during Solomon d brothers, the entire bircher half away name in future. Would you agree with that?
Not so much. I think you would survive the .
if you would let the whole investment in .
salomon go to zero, and would if I went to zero, we will often gone and done pretty well. What do you .
consider IT to be your finest hour?
Ww, we like to remember the close messes are very good, getting a real terrible problems. They are terrible problem about the news.
Buffo evening news.
yes. Yeah, there to know. There was in that town. And we started under addition, and that started the holy one. I one broke you bad people still over that.
and you were, you were both prey, Young and enterprising at that point. And then you worth the warm and charity of.
no, what? I was very aggressive warning the have a good sunday addition, anyone on the paper for fifty years, and no sunday addition. And here you had one.
What made the newspaper business so attractive .
at that point in history? The golden that's attract total go man.
What in the play in particularly with the buffalo evening news on the sunday edition, playing for the local monopoly, right, to be a game, the game in town with newspapers. You could do that 是， i mean, newspapers for decades had ebt margins in the fifty, sixty percent, right?
Not only the little ones.
only the .
little ones. Yeah, the back last thirty four years, twenty I I .
said even repot marins actually.
do you still feel as that he does A A criminal all the way that you've .
demo ized IT in the past? Yeah, I do. I like company in take the appreciation out of the drugs, out of the earning here with lying about the earning.
I mean, you witnessed rise with malloy and T. C. I.
And liberty. Like when eva was invented as a concept. Like, what were you thinking?
Well, i've never like them along the extreme manipulations. I don't want to be known as the great manipulation. Like juma women, he paid less any of practice on anybody, just pushed everything to the driver out of train.
In many ways, eat. That was the community adjusted earnings of its era. Are you familiar with the community .
adjustment for. Maybe the final question to wrap up. What are the set of companies that you think are the greatest that you've ever seen, either that you've owner, that you've not oed.
but there are a lot of great companies. The maze is a great company. Is he day general models is a great company. IT just gradually want to have one contract.
What do you think about the predictability of there were a number of companies back when you start where you could have set this business will be the same in ten years. You think that numbers same today? Or do you think it's much hard?
Most places have a lot of change. Thread of my issue.
Do you think most places had a lot of change and threaten their future even fifty years ago?
And this story is over. There is a different sometimes I is specialized dust of them. We have a lot of companies are required insulated from really tough competition. Just because they spent so long years ago what they do and has good derivation and high value and want .
some what companies can you see today where you can confidently say future aside, costco aside, you can confidently say the business be as good as IT is today, ten years?
Well, I think about the companies pretty good, but you can only say it's going to have and because you may get some guy like arguing and just wants to push everything and do the right post relations. So no matter how the business is, a we california.
Charly, I have a personal question for you. David has a two year old, and i'm going to have my first child in a month. What advice do you have for us about building families?
Well, of course, you gotta get a wrong with everybody. You got to help them to the tough times and they help you. And so of what? Yeah, but I say, guess not, this heart is okay. I can have of marriages in amErica were prety well and work just as well. I both had to marry somebody else, by the way.
Well, you've said that the best way to have a great spouses to deserve one yeah now as long as both parties feel that way, then it's a recipe for success.
Course IT is and you got a trust with your spouse. And I just seems like education of the children 说话。
yeah I love that will truly thank you yeah thank you.
Truly good like this been, uh.
a lot of people are going to bench a lot from hearing this and you're you're wisdom and they are going to learn so much well.
you know, this thing well is pretty hard. IT doesn't look so damply easy just to go up. If you go to the ordinary person trying to promote himself and investment advisers OK, he just thinks he knows everything about everything and how of our reserves should be run and sort. We don't feel that way.
I will say, with the people we get to talk to you who've built great things, every single one of them says IT was so hard. That's so hard. You can build something great without of being so hard.
so much for doing this .
with the you'll be an interesting like you're lady youll do very well well but it's not going to be that then easy.
David. Total life experience and complete boom duggle believe .
we ve got to do this. I still painting myself. It's now a couple weeks after IT actually happened .
I know with autograph copies of porter lies all and .
act to prove IT as if the broadcast wasn't IT up. And actually for those of you who haven't listen back, what in twenty twenty one, so two years, years ago, we did a whole three part series just us covering the whole history of birth hathaway. Part one is on more and part two is on charly, part three is on berkshire, ted and tight all the way up through to today. I assume many of you have listening that, but they're probably are a bunch of folks who haven't. So if you want another nine or ten hours of acquired content on burger, I really think it's some of, if not our best work, go check this out with that.
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