Chit Chat Stocks - 4 Best Founder Led Stocks (How They Beat The Market) -- SPOT, META, NVDA, WISE

Episode Date: June 25, 2025

On this episode of Chit Chat Stocks, we dive into four stocks led by founders, and why these companies are so successful in creating value for shareholders. We discuss: (02:57) Spotify: A Case Study in Founder Leadership (14:51) Meta Platforms: The Evolution of a Founder-Led Giant (31:51) Nvidia: A Founder’s Vision and Strategy (47:04) Wise: The Future of International Transfers This episode is brought to you by the Inside Owner Index: https://www.youtube.com/watch?v=MSD8Msi7qcY&t=1s INSIDER OWNER WEBSITE: https://insideownership.com/ ***************************************************** JOIN OUR NEWSLETTER AND FREE CHAT COMMUNITY: https://chitchatstocks.substack.com/  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

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and can endure through good and bad times, we use IBKR here at Chitchat Stocks because it is a phenomenal platform for international investing, and you can use them too by heading on over to IBKR.com. Interactive Brokers is a member of SIPC. Welcome to Chitchat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chitchat Stocks is a CCM Media Group podcast. Anything discussed on Chitchat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now please enjoy this episode.

Welcome into the Chitchat Stocks podcast. My name is Brett Schaefer and joined as always by Ryan Henderson. We have a fun episode today. We are talking four top founder-led stocks. We are going to try to learn in this special episode why founder-led stocks do well, what is the magic behind founder-led stocks that can turn into 10 beggars, 100 beggars, and all of that good stuff. But I'm going to kick it over to Ryan, and he's going to describe and introduce this

episode before we get into the different companies, why they're successful, and what makes them tick. Yeah. And there's kind of got to distinguish between, I guess, two things here. There's founder-led and owner-operator. I think generally the two have similar incentives. But when I think about founder-led, I wanted to talk about why we're doing this episode. So you see this all the time. And for anyone that's not, I guess, familiar with why founder-led businesses are important, I think for me, what I see is that organizations perform at their highest level when there is one ultimate decision maker. And obviously, you want that person to be capable, rational, highly competent, and willing to let other people make important decisions also. But when every decision needs votes or some committee to decide on it, I think it really slows things down. As employees, you start spending time thinking about getting people on your side, how to make your idea seem like the best when all you should really care about is the merits of the actual idea. And the thinking at the executive level needs to be which idea will result in the best long-term outcome for the business and not which idea or which person is going to help me keep my job.

When 99% of your wealth is tied to the equity of a business, which is often the case with founder-led companies, the natural focus becomes the long-term potential of the stock. So whatever the idea is, whatever decision you're weighing, the underlying motivator never changes. It's the long-term potential of the business. For shareholders, that is the alignment you want, and that is typically the alignment you get with founder-led companies as opposed to the fifth or 20th CEO in a long line of mercenary CEOs. And I've kind of felt myself leaning and gravitating more and more towards these founder-led companies over time. So, Brett, you've picked two. I've picked two. We're going to go through the performance of these companies, some case studies, and what makes them so exceptional.

Let's start with your first stock. What do you have? Okay. I would have chosen a stock from my personal portfolio. I do have a few founder-led companies, Coupang, Remitly, Airbnb, Interactive Brokers, to an extent. Those are examples that I would have used, but we've talked about those before. Now, a company we've followed for many years that's founder-led that we haven't talked about for a long time, this is my first stock, it is Spotify, an application you may be using to listen to this episode right now.

Since its IPO in 2018, it has produced a 24% compound annual growth rate for shareholders. Close, but I don't think at a 10-bagger yet. I think it's probably at about a 5-bagger since debuting, but it's still a fairly new company to public markets. We'll go through what the company is. I think most people are aware, but we'll just get down to the basics. Spotify is a music and audio streaming platform founded in 2006 by Daniel Ek and Martin Lorentzen. today. Ek owns 6% of the stock. Lorenzen owns close to 10%. As a side note, is Lorenzen a future Steve Ballmer candidate holding more of the stock, even though he's not actually part

of the operations today versus the guy actually running the company? Possible. I think he's kind of a never sell guy, similar in that vein. Ek remains the CEO to this day. So he led the company in 2006 as we sit here approaching 2026 20 years later he is still running the company you have the alignment with the founder ceo and ownership group of the company and when ryan talks about the alignment financially i think you also want to look for founders that are aligned culturally or mission mission focused where there are some founders that seem to be building and looking to sell. Nothing wrong with that. That's part of the business world. You get a nice offer. You might want to do that and ride to the sunset. But there are some founders out there

I'm reminded of, Zuckerberg, Bezos, or the Google guys that seem to have a drive to want to build the best products, just dominate an industry, win at all costs. And I see that with Eck in music streaming, in audio streaming, where even though he's been a billionaire for many, many years, he still wants to, and he seems to have a grievance against some of the platforms like Apple, Google, what have you. And he wants to show that an upstart like Spotify can come and win the industry with innovation. So why has Spotify been successful since its IPO? For one, and you can find all these charts at the newly named fiscal.ai, we can look at the growth of the business. Since 2016, Spotify's total monthly active users have grown at a 24% annual rate from

$91 million to $678 million. If you look at the newsletter we're going to have along with this episode, we have a chart from Fiscal AI, which again is the rename for FinChat.io. 91 million monthly active users in 2016, $678 million in the last 12 months are the latest update. Total revenue has actually grown quicker at a 26.6% annual rate since 2016, going from $2.1 billion to $18.6 billion. And I think that's translating the euros at the latest USD rate. So again, they report in euros, so there's a little bit of foreign exchange that can impact that in the short term. So the growth has been phenomenal, but you have to ask, okay, well, why has the company grown so quickly i believe there's a couple reasons one and this these all relate

to the founder being there is riding the wave this first one is pretty simple they created the music streaming industry they aggressively tried to attack the podcast industry and both are taking share from linear legacy radio there's a rising tide lifting every player in the space spotify can take advantage of it and they were have the ability to have an intense focus on this core category this is another one with the founder-led uh management not management leadership unlike competitors and big tech who have services that compete with spotify their sole goal is to win in audio streaming apple amazon and google's of the world. They have the right to win because they have distribution. They have all sorts of scale.

They have a much larger balance sheet. And yet they don't because they don't really care about making the perfect product. Spotify, its founder, Ek, and the founding team or the team that has been there close to or since the beginning, they care about making the perfect product for audio streaming and increasing consumption on the platform. That brings us to our third one is the ability to focus on the long term. Spotify has a North Star of increasing consumption hours on its platform. It can just keep and stay dedicated to this North Star without management getting bogged down in short term bonus targets, short term revenue stuff, because the founder is still leading the company and he understands this is what's going to create long term value and

allow them to grow their revenue and earnings at a high rate. Now, maybe we'll stop there before we get into the stock performance ryan any thoughts on spotify and ec and the founding or not the founding and just the founder-led nature of this operation yeah it reminds me a bit of netflix which could have been a contender for one of the stocks in this episode had uh reid hastens not stepped away from the day-to-day operations recently but there's things that spotify does there's things that in the same way as netflix where you are focused on improving engagement and consumption and not purely some sort of financial metric and because you know that over time that's going to make a difference and it'll

ultimately help pricing power and reduce churn and stuff like that. But if all you cared about was the financial metrics, you might not be able to invest time and money into that because those are kind of long-term type focused bets. You see that with Spotify. Now, I like what you said about basically focus. It's one of those things that's hard to put your finger on in financial markets broadly because you look at something and it's like well why can't uh i don't know why can't apple copy it why can't apple just do it they have endless resources yeah blah blah blah and you see it time and time again where the company company that has sheer focus on that singular product wins as it's all those little things that you talk about you get more uh the

The entire organization is dedicated to one thing as opposed to being a fraction of Apple where maybe you're not getting the best engineers at Apple dedicated to your product. You're not getting as much time from executives. You're not getting as much thought or as much resources as you might like. And it's just the company that's more focused ends up winning out. And you see that with Spotify, and it definitely helps to have a founder that can prioritize the long term in order to build the best-in-class product. Yeah. And another example of this is when the stock suffers. So Spotify stock, they went in an 80% drawdown 2022. Investors really, well, this is my opinion as a shareholder at the time, they didn't understand the business. Activists and consultants and all of the vultures may have started circling, looking to switch things up. But with Eck and Lorenzen in voting control, they were able to keep their gaze focused on the long term. Now, why is Spotify stock winning today as we kind of wrap things up here into the future? I mean, look, discussions around the stock can feel intense.

The company was once going out of business in 2022. I would say it never was, but that's what people were talking about at the time. And it is now a profit machine, as that seems to be the narrative, although margins have just switched a little bit. In reality, nothing really changed about the underlying business besides Ek's discipline in hiring and then research and development. The union economics of the music and audio business remained the same. It's steadily improved over time as they've added more promotional tools, but we don't need to get into the nitty gritty today. Ek realized they had too many people working on their size of a company. And instead of going through endless meetings on the matter and all this type of stuff you might get at a bureaucratic organization, he was really, I think, inspired by his friend Mark Zuckerberg, able to take action, cut off all the unnecessary level of workers that they hired in 2020 and 2021 where they, again, you feel bad for people that get fired, but they hired too many people for the size of the business.

and they had to get rid of them on unprofitable moonshots such as the car hardware streaming device that they canceled. And on top of that, they started raising prices on music streaming subscriptions after years of waiting. So they didn't raise prices at all in the United States since launching. They finally did so. And I think, again, this shows the long term thinking of the founder that could have easily raised prices years ago, but that would have put them at risk of having less of a competitive edge in gaining customers versus Apple Music. Now, he wanted to wait to get to scale first, and he cannot with Spotify's users locked in with people, you know, with the business for over a decade.

I'm someone who's used them for over a decade. They're not going to want to switch now with so many features on the platform. And at the same time, with price increases, you know, greater amounts of gross profits flowing down to the bottom line and reduction in operating expenses. We saw operating margin go from negative 12%. What would that have been in January 2016? Well, it actually fell to about negative 10% in December of 2022 to positive 11% over the last 12 months. And then people realized that the business was actually viable and the stock went up by about 10 times.

That's about it. Yeah. But X operation, they haven't changed their mindset. They still have the same long-term goal and that ability to focus on the long-term is still intact, even with the stock already up 10 times.

Yeah, this is the beauty of a founder being in control. You can simply move faster and that means you can move faster on the innovation front, but it also means you can move faster when you need to reduce your workforce. You don't have to be paranoid about losing your job. Same with when a stock drops, how many people, it's so common that you see executives, the stock drops 80%, an executive gets removed from a company when it might be totally out of their control.

And I would say, hindsight, Spotify shareholders are better off having Ek still there making the decisions to reduce the workforce and get profitable and get lean than for them to have hired some mercenary CEO. And I think you probably would have had a lot of activist pressure had, like you said, Ek and Lorenzen not having full control. Okay, let's get to your first stock, Ryan. it's a company we've already mentioned a friend of spotify's daniel ek meta platforms company everyone may be too familiar with today and an interesting business a stock that has recovered quite nicely over the last few years take us through their founder-led journey and why you think the stock has well you'll give the numbers done quite well since it's ipo this is probably one of the first companies that comes to mind when you think of founder-led businesses today.

Meta, formerly known as Facebook, was founded in 2004, I think by four co-founders. There might be a fifth now that gets added in here as well. But the four were Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes. None of the founders, except for Zuckerberg, still work at the company. This is a story that's been told many times. There was a movie made about it which zuckerberg says kind of has some mistruths if you want to call it that um but doesn't make him look great yeah absolutely not but the company was originally called the facebook.com and the concept was simple it was a website where college students could post information about themselves exchange messages and befriend one another online zuckerberg was in school when

he started the company and it has been fascinating to see how he has evolved over the years because you look at him today and i don't know if he's just had like the best three-year press tour of all time but people think he's like such a great ceo now and such a visionary when three four or five years ago people were saying he should be fired and you think about kind of the last decade Everyone was like, what is this? We've got a kid in the CEO role. I mean, for the first two years of the company, he wasn't even legally able to drink. I imagine he's one of the only CEOs that's ever been in that spot. Now, I'll talk about some of the controversies over the years because there certainly has been some. And I would say some of the reputational damage that has been done to Zuckerberg or was done 10 years ago was probably self-inflicted. And we could talk about what that was. But let's talk about the numbers real quick. Facebook went public in May of 2012.

Now, when I think Facebook or Meta, my instant thought is this has been a phenomenal investment. It has, but it's worth keeping in mind this was one of the biggest IPOs in market history. And the company actually hit a market cap of $104 billion in the early days of trading. Went out at about 25 times sales. Yeah, quite expensive. Right. And look, they've done really well since that point in time, but you probably think this is like a 50 bagger or a hundred bagger since it's IPO. Like if someone said I invested in Meta and it's IPO, my thought is, wow, you must be rich. It's a 18 bagger. So it's done all right.

I mean, 25% compounded annual return is exceptional, especially considering the premium they got at IPO. I think oftentimes you see companies that it's kind of the kiss of death when you have an extreme valuation at IPO because you kind of know there's going to be some pain in the short term. And even Facebook slash Meta had that. I think the first year and a half of them trading, anyone that bought at IPO was underwater. But they've gone through and were more than able to fulfill that valuation. And it's actually, I went back through the S1 and it was fun to look at because some of the numbers were mind blowing. I think they went from 153 million in revenue in 2007 to 3.7 billion in 2011. That was pre IPO. Obviously they're generating

much more now, but it was just rapid growth and you saw huge operating leverage as well. but while the results were good looking back now and i think it stocks at basically all-time highs close to it the journey certainly had its controversies and and drawdowns much like spotify um and i in fact if it weren't for zuckerberg's ownership in the business you could probably argue that he wouldn't even be the ceo today so let me remind you of something I mean, I'll go to the controversies, but before we do, I do want to remind everyone because this always seems to blow my mind. Mark Zuckerberg is 41 years old. He is younger than Brian Chesky. He's younger than Daniel Ek. The list goes on and on. There probably are not a lot of CEOs today of big public companies that are younger than Mark Zuckerberg. He started Facebook when he was 19. So naturally, when you have someone that young leading the company, there are going to be some issues. So let's talk about some of those. The first one, FaceMash. So this technically had nothing to do with Facebook, but during his sophomore year in college, Zuckerberg started a prank website called FaceMash that allowed men to do sort of a bracket-style tournament on the most attractive women on campus.

And as you might expect, this tainted his reputation in the eyes of many people and probably had a lot of people viewing him in not such a positive light. And then second sort of controversy was unconsented user tests. So in 2012, Facebook ran psychological tests on 70,000 unconsenting participants by removing certain words from users' news feeds to test how that affected their reactions to posts. obviously this made people a lot of quite angry and this was i imagine this was kind of the beginning of the distrust for facebook that was pretty pervasive for i'd say the better part of the last decade um it's probably died down a bit now but it was quite an issue from basically 2012 to 2023 the conspiracy theory fiasco in 2016 facebook made changes to its algorithm that deprioritized journalist posts and instead prioritized the posts of family and friends that had a bit of an unintended consequence in that it kind of led to conspiracy theories

catching major traction and even eventually resulted in pizzagate um now i'm gonna go I think that might be worse now, but, you know. Yeah, it could be. Zuckerberg had like a whole apology video that he posted online for this as well. And I think you can go back and watch it. Now, probably the biggest issue or the biggest controversy was Cambridge Analytica. This was a political consulting firm that was able to access the data of up to 87 million Facebook users and reportedly influenced many people's political votes. Actually, many people credit this data breach, if you will, to helping Trump get elected in his first term.

Facebook apparently failed to protect the user data and was fined $5 billion. This was, I would say, sort of the peak of distrust for Facebook. And then the last one here, which is – I don't know if I necessarily pin this on Zuckerberg, but content moderation. So Zuckerberg and Facebook exempted certain noteworthy figures, cough, cough, Trump from content removal, even if it violated their terms of service. This was obviously very controversial, but it's been sort of addressed over the last, I'd say three years. It also kind of coincided with COVID and just an extreme political environment to begin with. Anyways, that's all to say investors have certainly had their doubts about Zuckerberg over the last decade or two. However, Zuckerberg owns 13% of Meta's total equity, 61% of the voting power thanks to their dual-class share structure. And I'd argue this has made him somewhat untouchable from any sort of removal given the power he has.

And I remember there was a long period where Scott Galloway was calling for Zuckerberg to be removed. There was a lot of people calling for it. Shareholders, I think, would be looking back. They're probably pretty happy to have him. Like I said, I went back through the S1. And in 2007, Facebook had $153 million in revenue. All of that, I believe, was advertising revenue unless they had some other stream back then. 18 years later, Meta now generates $166 billion in advertising revenue. Yeah, it's wild. 100x

in advertising revenue. And that's not off that small of a base. 153 million in revenue to start is wild. Anyway, suffice to say, it's been a nice ride for investors. So I've been talking somewhat pessimistically about zuckerberg over the last 10 years but what obviously the results have been stellar so what has made meta slash zuckerberg special what has led to sort of that perfect i guess founder-led formula that's led to great growth and it's much the same way with danielek i think zuckerberg's time at meta has been a great example of how fast an organization can move when the founder is still leading the company, even in this case at this extreme size. Not everything works out, cough, cough, metaverse, but the company is able to experiment with long

term upside projects because you have someone who isn't reliant on short term results. Think about, remember him saying like, I think, I can't remember the exact quote, but I think this is going to be of historic importance was I think the quote when he was talking about the metaverse spending and he could be vindicated over the next 10 years you never know those meta ray bank glasses are getting some traction but yeah again spending 50 billion dollars and not seeing much in results so far a lot of investors would see that as a waste of money yeah how many mercenary ceos or people let's maybe mercenaries a mean term someone coming in that is not a founder would have experimented to that depth they would not just give a lot

a lip service to it yeah they would not go to that length or that depth on investing in projects i think the acquisition of instagram is probably a good example in 2012 facebook bought instagram for one billion dollars that sounded obviously that seems crazy now crazy cheap but at the time the company had 13 employees it was 13 employees probably like no revenue and it seemed outrageous But for him, I think he knew what he could build with it and what he wanted to build with it and the potential, I guess, synergies in terms of the advertising stack with Facebook at the time. And he was willing to bet big on it, and he has the majority of the voting power. So those decisions ultimately are made by him. Long story short, I'll kind of sum things up here.

it's hard to know what makes zuckerberg special today because obviously in the early days he was a technical founder so he was able to build awesome products and features and that's kind of what resonated and probably what made him stand out but i doubt he's still writing code today maybe he's what they call vibe coding every once in a while testing products yeah he's not he's not the product officer anymore so what makes him special i thought these words from susan lee met a cfo were very insightful she says mark is really good at giving feedback like really world-class at it it's very timely it's very direct and it's very respectful it's never mean it's never belaboring some point but you cannot be mistaken after you have received the feedback

i thought that was an interesting quote because at this size i think the at this size i mean one point a trillion dollar market cap company the primary role of a ceo is setting the strategic direction of the company setting the tempo speed urgency and i think in order to do that you you have to be an effective communicator and it's hard to be as effective of a communicator as you want to be if you're just trying to get people to like you or get people to be on your side or you want a board that loves you because you're afraid of losing your job or you know subordinates that love you so they talk highly of you and kind of praise you and and you know you maintain your spot he can give as candid a feedback as he wants to help the business grow because

ultimately he knows that a his job is safe but all he cares about is sort of the merits of the idea and getting to an organization that's bigger, generates more cash. And I think you can add that he can set the priorities from spending or time spent among employees and what your priorities projects are going to be. For example, for him, he has the mission of building the next hardware platform, the next operating system for computers, you know, the one after the smartphone, if there's going to be one, who knows if they're going to win, but he has that goal and then now his second goal is to this one i i don't know if they're winning but his goal is to win an ai and i think at all costs given some of the recent stuff we've seen

around them aqua hiring people trying to get as much talent under their organization as possible and this is a primary primary priority for maybe the number one priority for them right now is, I think, to catch up to Alphabet and OpenAI in AI. And yeah, I think if you were someone like, now, I know people love this company, Apple, you have a little slower response to the AI revolution. Where someone like Spotify, who's done a lot of AI tools, Meta, who's trying to become another one of the big players in the space

and doesn't seem to have lost yet while apple is maybe lost entirely you have zuckerberg able to drive that boat and hopefully create some keep that momentum going and create some value for shareholders yeah it's crazy to think that he could have a good 30 to 40 years in front of him as the ceo uh as assuming he continues to love doing the work you think so yeah 30 30 yeah that does seem like a long time what has it been about 20 years so far i don't know if anyone can be for that long it just drains you maybe he'll step back from from something like that do a more mark leonard role eventually but i doubt some anyone can be the head of a company for that long you're just you're just too tired

It's like being a president. Yeah, especially under that specific company. There's a lot of pressure that comes with it. I want to talk about a new sponsor, Sound the Alarms. Be you, be you. We have a new sponsor alert. This is actually the perfect episode to be mentioning them because today's episode is brought to you by the Inside Owner Index.

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and is still being run by founder Jensen Huang today. Just goes by Jensen. So I'm just going to call him his first name. I'm not trying to disrespect him or anything. That's just what people call him as. If you invested $10,000 in NVIDIA at the IPO, it would be worth $38.3 million right now not bad although i don't think anyone held except for jensen himself now throughout the entire journey nvidia has been run by jensen of the big technology players founded in the 1990s i guess he was a little bit later you know well actually they went public in 99 but were founded in 1993. Of this crop of Amazons, Googles, NVIDIAs, he is the only founder still running his company today. I'd say Zuckerberg is close, but that was a little bit later into the 2000s.

Now, NVIDIA may be the best example so far of a founder having a vision of the future, sticking with a strategy, even though it looks financially stupid for over a decade, and eventually being handsomely rewarded. And I want to talk through that story. We're not going to dive into NVIDIA's full history, but I can recommend the book called The NVIDIA Way. I'll link to it in our newsletter. You can also just search it on Google, and it goes through the full story. But NVIDIA began its journey as a computer chip designer by working in the video game

market. It built a chip, coined the Graphics Processing Unit, or GPU, which separated it from the terminology of the Central Processing Unit, or CPU. It kind of gave them a distinction when talking about the brand. and it processes tasks in parallel instead of in sequence like a traditional cpu at its most simplest for anyone that's not technical with this stuff it allowed graphics to process faster on video games now the video game market is lucrative but limited in size especially if you're just making the graphic the gpus for that you're just capturing a small part of that entire

supply chain jensen and the team though believe that gpus and parallel processing could be applied to more computing processes, and they wanted to make the best and most advanced GPUs, computer chips out there. Now, to begin, they invented CUDA in 2006. Now, note there that this was 2006, a long time ago, that they started this journey to where they boom today. Now, CUDA at its most basic is just a software program that helps developers optimize the usage of a GPU for any Terminology, we go through any listener. I'm not going to get technical. And if I said something that is slightly incorrect, don't worry about it.

This is what NVIDIA has to say about CUDA today. We're constantly innovating. Thousands of GPU accelerated applications are built on the NVIDIA CUDA parallel computing platform. The flexibility and programmability of CUDA have made it the platform of choice for researching and deploying new deep learning and parallel computing models. And again, they started this journey in 2006. This brings up machine learning, artificial intelligence, parallel computing. In the early 2010s, NVIDIA noticed that researchers were utilizing CUDA for AI. There were also green shoots, you know, showing new advances in AI, such as image detection, self-driving vehicle technology.

Google was buying DeepMind in 2014. I think that may have also been around the time when the DeepMind team beat a human in the game called Go. And then at this junction of the company, Jensen decided from, I think I read the NVIDIA way earlier this year, but this is my best recollection that they needed to push AI as the next leg of growth for the company. And this is back in the early 2010s. Now, we look at a quote from the book. I thought this was very insightful into Jensen's strategy. Quote, former marketing executive Kevin Krul recalls meeting Jensen on the street outside of the Neural PS conference in Barcelona, Spain in 2016. Neural PS is an academic conference held in December where machine learning and neuroscience experts represent their latest findings. Krul knew Jensen wasn't scheduled to speak and asked him what he was doing at the conference.

Jensen replied, quote, I'm here to learn. NVIDIA's CEO had not assigned someone to attend and take notes on his behalf. He had shown up himself so he could observe the recent developments in artificial intelligence. I think this story highlights why Jensen is a winning founder. You have intelligence, insatiable drive to win, and playing the right game, sticking in the right field, which eventually we'll see, was AI. I also think it's funny that he was wondering why a busy CEO was at this conference. And then Jensen just goes, obviously, I just want to learn. It's like he has nothing better to do.

But again, this is the CEO of the company going to a random conference in AI to try to learn and become the most knowledgeable player in the space and to see what products NVIDIA should build for these customers. I remember anecdotes from the story from the book about Jensen being on vacation and basically being on the phone with a bunch of people watching his kids at the pool. However, if you were an investor in NVIDIA at the time, and maybe Ryan can show this chart, if not, it's in the newsletters from fiscal.ai, their revenue from 2007 to 2015 didn't really budge. It was investing heavily in its AI ecosystem, trying to expand beyond gaming, but the results were really not showing up. Earnings weren't much higher than 2007 either. So revenue earnings

2007 to 2015, you kind of go, well, this is just an average semiconductor company losing to Intel. Now we're going to break in and make it to the mainstream. Now moving a few years later, sales did start to pick up. Revenue more than doubled from 2015 to 2018, but that was because of a different reason. One of the first cryptocurrency bubbles or booms, if you're a very good fan of the industry, don't hate me. Cryptocurrency miners saw that NVIDIA GPUs

were the best way to mine things like Bitcoin. NVIDIA, I don't think planned on this happening, but hey, people wanted to buy their products and they did. Investors were nervous at the time. The company was seeing, you know, a one-time boost in this highly cyclical market and it may have had minimal long-term viability. And you saw a little bit of a boom and bust there.

Now, if we go back to the segment and KPIs from 2019, the majority of NVIDIA's revenue was still from gaming, which is where this cryptocurrency revenue was showing up. And yet, 2019, the company kept investing behind the AI vision because they knew eventually or they had high conviction that they should stick with this plan. Jensen believed that machine learning and other forms of AI were the future of computing and he didn't deviate. And long story short, I think people know where this story ends. As we sit here today, NVIDIA is the top three most valuable company in the world by market cap, worth $3.5 trillion. And it was the bet on AI that finally paid off in the last five years. In 2014, NVIDIA's data center revenue, which you can think of as cloud and AI sales,

was $317 million. Intel still dominated the cloud. NVIDIA had invested for years in this segment, with little financial success, but they didn't throw in the towel. In 2020, data center revenue hit $6.7 billion. In 2025, NVIDIA generated 132, or sorry, over the last 12 months to the beginning of 2025, NVIDIA generated $132 billion in data center revenue. The bet worked fantastically, and NVIDIA's dominance in AI computerships today began close to 20 years ago with the start of CUDA. They spent over a decade building the software and hardware infrastructure to dominate the advanced computership market, which is getting used heavily in the AI and cloud computing services. You cannot have done so if you had a rotating committee of mercenary executives worried about

short-term earnings targets, executive compensation, and how Wall Street would react to all this spending. Let's take Intel as a comparison. Even just a decade ago, Intel was significantly larger than NVIDIA. It dominated the personal computing market, had a large cloud computing business with its CPUs, had more money, more scale, better known brand, better customer relationships, built its own computer chips, which may have turned into a disadvantage today, but that's another story. Intel had $53 billion in revenue in 2012 versus $4.3 billion for NVIDIA. Today, Intel is still generating $53 billion in revenue. NVIDIA's has soared to $148.5 billion.

I think that shows the difference between rule by committee, no strategic direction versus founder-led. To sum it up, what was Jensen's vision? He believed that the most advanced computer ships with parallel processing, and again, there's probably more to it, I just don't know much about it, for intelligence computing would win. I'm not so sure I could have understood whether it was a good bet in 2010, but anyone within the semiconductor space within their circle of competence probably could. And then it just takes patient capital and understanding you're betting on a good horse here.

Now, Ryan, that was a lot. Discussion questions that maybe if you have any follow-ups to reaction to it, would you have been able to hold NVIDIA? When do you think about holding a founder-led company versus dumping a loser? How do you balance that after looking at this? This episode of Chit Chat Stocks is brought to you by Blue Chippers Club. The club was started by two friends of ours with the goal of building a tight-knit community of stock-focused investors. You can break down your portfolios, pitch stocks, receive feedback, talk to other people about their stock ideas, get insights for your own portfolio, and participate in weekly calls with other investors.

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want to see Amazon's revenue from advertising? FinChat's got it. How about Netflix's subscribers by region? Yep, they've got that too. And they just added Morningstar research reports for all subscribers. So if you are subscribed, you can now get all the latest Morningstar high quality research reports on more than 1500 stocks globally. If you're interested, head on over to finchat.io slash chitchat. All new users automatically get two weeks of FinChat Pro for free. But if you want to extend to any paid plans, our link will get you 15% off. That is finchat.io slash chitchat. The link will be in the show notes. To answer your first question, What I've been able to hold on video and know, the thing with all these other founder-led companies is you saw they were investing for the long term, but you were seeing the progress for the most part in the short term.

There might have been little clips here and there. At least revenue growth. Yes. You go look at Meta's total revenue over the last 20 years, it's going to be generally up and to the right pretty much the whole time. But NVIDIA, from 2007, I think, to 2013, there was no revenue growth. And it was all pretty much centered on gaming at that point. I think you were right. You said Jensen Huang out of the list of founders that are still leading companies today had the clearest vision and probably the most stubborn vision of the CEOs out there because it would have been hard not to get shaken out or discouraged on that thesis if you saw seven years of revenue going nowhere.

now obviously he looks like a genius today and he is but yes i think the intel example versus nvidia is like the that's the perfect dichotomy where intel had if you invested ten thousand dollars in intel in the dot com at right 25 years ago i think you have like you'd have five thousand dollars today and their ceos have been getting paid handsomely along the way obviously if you invested alongside jensen huang he's gotten paid handsomely along the way too but you would have made i think it's been the best performing one of the best performing stocks the last 25 years right and intel back in the day was founder-led they kind of have a complicated story but essentially they were founder-led for a long time and they dominated the market they had

a strategic vision they had they you know wanted to make moore's law possible for multiple decades and now they have a vision that seems to change constantly where nvidia's has stayed consistent we want to make the best processing chips for gaming cloud data centers ai do you think intel's fate would have been different had they had a founder for the last 25 years do you think they would have shifted to this gpu focus earlier maybe but it's hard to tell eventually company gets so old like there's no one alive from that time so i think that's a tough question because if they were founded 25 years ago they wouldn't have started out in the position dominating the industry as one of the largest companies in the world but i think it would have helped if you had

a technical founder that understood the semiconductor market better and what was going And I think a lot of people at Intel understood this. They just didn't have the long-term mindset. Yeah, or they didn't have the control to make long-term bets like that. To your second question, when do you keep holding a founder-led company versus dump a loser? I think it's really tough because you could just say, well, when there's no progress after five years, maybe you should ditch it. But you could have done that for NVIDIA and you would have lost a lot of money opportunity cost-wise. the ideally you found you find some other kpi maybe it isn't total revenue whether it's

engagement whether it's active users whatever the the valuable kpi is for that business you track that nvidia would have been pretty tough i think to find like that that singular kpi that would have predicted this ai uh revolution i guess at least 10 years ago data center revenue yeah but earlier now hey you still would have made a lot of money investing 10 years ago true i don't know but here's the thing is i think if you take 10 founder led call them early stage whether obviously early stage you can only get so early in the public markets typically But 10 founder-led early-stage companies, you do not need everyone to perform well. So I think when to hold versus dump a loser, I would default to just consistently holding.

Now, if you just get to the point where you just don't trust the founder slash CEO, that's a different problem. But don't let that be because of financial metrics. Right, and eventually it'll be small enough. Yeah, you don't just keep doubling down on a company. All right, we're going a little long, so let's try to get to the final stock here, Ryan. This is one that is potentially a founder-led company in the stages of, you know, Ryan owns it. This is one that you might like today as instead of a case study.

Hopefully, this one can be a bit more of a real-time analysis for the listeners. Ryan, what is the stock and why do you like it? Yeah, so I wanted to do two different types of stocks. for this episode. I wanted to do one that was a great case study, which I think Meta is, and that still might have a lot of promising prospects. But I also wanted to do one that I think could become a great case study in the future. In other words, a stock that is founder led, but I also think is attractive at today's price. The company is Wise. Wise was founded formerly TransferWise, but it's been Wise for a while. They were founded in 2011 by

Christo Kármán and Tavet Henrikus, both older than Mark Zuckerberg, funny enough, founded seven years after. But the genesis for the company was actually born out of, it's kind of, I don't know, one of those almost fake sounding stories, which was like, we just noticed this problem and we found a granular solution that could be scaled up, but that's exactly what it was. So here's a quote from the website. They are both from Estonia. Tavet, who was the first employee at Skype, lived in London but got paid in euros. Christo worked for Deloitte, also lived in London, got paid in pounds, but he had a mortgage in euros back in Estonia.

So basically to summarize, both Tavet and Christo were paying transfer fees independently because they were transferring it with their banks. So they had an idea. Every month, Henrikus put euros into Carmen's Estonian account, and Carmen put pounds into Henrikus' English account. Both got the currency they needed almost instantly and neither paid a penny more for exchange rates or other fees. This is pretty much how the business still operates today, but on a much larger scale. So by having local banking licenses, WISE has built liquidity pools across many global currency corridors. This enables them to avoid foreign exchange markets altogether for most transactions processed on its platform. There are a couple really important benefits from this. So first one, they can transfer money at a lower cost than competitors. As of the latest quarter, WISE charged customers 53 basis points on cross-border transactions on average.

For reference, according to the World Bank, the average digital remittance cost 4% in the fourth quarter of 2022. And I actually saw recent data that said 6.5%. So maybe somehow they've gone up. But it could also be different corridors that they're referring to. This is the most obvious advantage, and it's one that they actively advertise. advertised so they want the world to know that wise is the cheapest solution for most corridors and it has been a big reason why they've been able to reach 9.3 million active customers i think that's up from like 2 million four years ago roughly but the the growth in terms of active

customers has been fantastic both for individual customers as well as businesses we're seeing more and more businesses processing or paying out, whether it's customers, suppliers, or it wouldn't be customers, suppliers, workers, contractors, whatever it is, cross-borders, they're using WISE to do so. They've got a chart on fiscal AI with the cross-border take rate over time. And it's come down, it's gone from basically 70 basis points or 75 basis points in March of 2020 to 53 basis points today. And that is something that's like a part of their mission. They want to drive cross-border transfer fees to zero if they can, which I know sounds crazy because it's like that's the majority of their business today or the majority of their revenue,

but they can build a business outside of it, which we'll talk about in a second. The second big benefit with having sort of this digitally savvy model of local banking licenses where you're basically just changing the accounts, so local liquidity pools and you're just adding one to one account and subtracting one from another, is you're able to deliver those transfers faster than your peers. So they aren't actually obviously moving money across borders. They're just adjusting the balances in local accounts, which means Wise can give customers their money much quicker. This is a big deal for customers who also spend out of their accounts. According to Wise, 64% of their transfers arrive in less than 20 seconds and 95% in less than a day. This leads into my third big benefit here, which is customers can spend abroad for cheaper. So when you travel to another country and you use your credit card, there are typically some hidden fees.

The alternative for a long time was either like getting cash, so trying to find someone to give you the local currency and cash. But guess what? That's expensive too. So Wise created a debit card. This allows customers to easily spend money in whatever currency they're using, using the Wise card, and Wise will use its digital infrastructure behind the scenes to transfer that money cheaper. This also provides another revenue stream for Wise and it's been diversifying over time. So I think roughly 50%, yeah, just about 50% of their revenue today is from cross-border transactions. That's down significantly over time despite revenue overall growing. But I guess the question and sort of the crux of this podcast in general, why is it an advantage to be founder-led here? And it kind of got me thinking.

I cannot think of any case where a company became the low-cost provider without having an owner-operator at the helm. Can you think of any single instance where a company became the low-cost provider in their industry with a mercenary CEO? I mean, that's – silence speaks volumes. Nothing comes to mind. I'm reminded of Amazon where if you want to drive low-cost and efficiency and push the boundaries of what's possible, it's better to have a founder. It's also NVIDIA, where the most advanced stuff, keeping on the cutting edge, it takes that mission-led focus as opposed to someone that's doing it just as their day job. Yeah, it's – I mean I tried pouring through it and I was thinking about like Costco today, obviously still the low-cost – one of the low-cost providers. But that's sort of just the stickiness of the founder initially.

Same with Walmart. They obviously wanted to be a low-cost provider in the early days, and they've kind of maintained that advantage. But I don't think I've ever seen a company become the low-cost provider while having a mercenary CEO. And a big reason for that is they can't take the hit because it'll affect their personal compensation. Right, you're sacrificing short-term earnings. Exactly. Crystal Carmen, who is one of the founders, is the CEO of Wise today. He currently owns 18% of the Class A shares, 47% of the Class B, so his voting power would effectively be more than 50, but they have a voting cap in place that limits his voting power to be basically slightly below 50%. 50%. So fair to say he is very aligned with shareholders. And I imagine his primary financial motivator is the long-term performance of Wise's Equity. Henrikus, the other co-founder is no longer involved, but he still owns a big chunk of the Class B. Anyways, there is this massive long-term opportunity for whoever can be the low-cost international transfer provider, because if customers send money and they spend money with you, there quickly becomes many ways

in which you can earn adjacent revenues. You can get swipe fees, interest income on balances held in their accounts, transfer fees still. Even if you continue to drive down the average take rate, you can still grow that nominally as well.

And then you can also license your digital infrastructure. So you've built out this low cost way of moving money around the world. They're actually, when I say moving, I put that in air quotes because they're not actually doing that. And banks use it.

Banks use the Wise API all the time, and it's a growing business for them as well. So if you look at who Wise is competing against, most of their big competitors don't want to lower their costs. It's often a cash cow for their business. So whether it's legacy banks, PayPal, Western Union, almost all of these companies have been around for a long time. they don't they have a ceo who is not the founder and they cannot sacrifice the short-term hit by lowering their prices because it'll impact the company's earnings it'll impact their personal

compensation so there's just no incentive for them to lower costs that's why i kind of maintain the idea that i don't know if a mercenary ceo has ever driven a company to be the low-cost provider in their industry the other reason here is that it's just not their primary business for some of these competitors. PayPal it is. But if you look at like banks and the correspondent banking system and sending wires across borders, that's like a nice to have, but they're not going out thinking like, I want to be the big international money transfer business. They want to be a bank. And so there's the element of focus there as well. I'll kind of leave it at that, but having a founder in this case is a really powerful economic incentive, especially in an

industry where you're competing against a whole bunch of mercenary CEOs and businesses that have frankly been around for a long time and are kind of ripe for disruption. So hopefully WISE can be a case study in some years to come. Good example of the innovator's dilemma as well. Other companies don't have the vision to innovate, so it's Intel too, versus NVIDIA. WISE is going to consistently have this advantage to try to steal market share because they have that lower cost and someone could try to copy them, but they haven't because they don't have that strategic long-term vision. All right. I think that does it for this episode. Make sure to check out our special sponsor for this episode, our friends at, oh gosh, I want to get the exact name right,

the Insider Ownership 100. Check out the link in the show notes. Thank you once again to them and all of our sponsors, Interactive Brokers, Blue Chippers Club, Fiscal AI. Let's hit the disclosure and get out of here. We are not financial advisors. Anything we say on this show is not formal advice or recommendation. Ryan, I, or any podcast guests may hold securities discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you, everyone, for tuning in, and we'll see you next time. We'll see you next time.