We Study Billionaires - The Investor’s Podcast Network - RWH056: Calm Amid The Storm w/ Christopher Begg

Starting point is 00:00:00 You're listening to TIP. Hi there, welcome back to the richer, wiser, happier podcast. Our guest today is one of my favorite people in the investing world, an extremely thoughtful hedge fund manager named Christopher Begg. Chris is the co-founder and chief investment officer of East Coast asset management, which has produced superb market beating returns over the last 16 years. Chris also teaches the prestigious security analysis course at Columbia Business School. That's the same course that Benjamin Graham taught back in 1951, when the star student in the class

Starting point is 00:00:35 was an aspiring stock picker named Warren Buffett. Over the last 13 years, Chris has taught more than a thousand students at Columbia, and his guest speakers in the class have included a who's who of famed investors like Nick Sleep, Todd Combs, Howard Marks and Seth Claremont, along with brilliant thinkers like Ian McGilchrist and Peter Kaufman. Chris has an unusual lifestyle, splitting his time. between a small town in Massachusetts and a home in the jungles of Central America, where he spends a fair amount of time surfing, playing tennis, meditating, reading voraciously, and hanging out with his family and friends. It's all part of his pursuit of an unusually

Starting point is 00:01:14 spacious life that's balanced, joyful, and rich in the deepest sense of the word. One reason why this lifestyle is possible is that he owns an extremely concentrated portfolio of high-quality businesses that he can typically leave alone for many years, getting out of the way so they can continue compounding without too much meddling. At the moment, he owns only eight stocks. He's also unusually patient when it comes to making any new investment. He typically waits for rare, opportune moments when the long-term potential of an exceptional business

Starting point is 00:01:50 is temporarily obscured by clouds of uncertainty. That uncertainty allows him to invest at a hefty discount, and he then sits back and waits until the clouds eventually disperse. As you'll hear, he's particularly fascinated these days with one of the most controversial companies of all, Tesla. In recent months, Tesla facilities have been vandalized or set on fire. Many consumers around the world have vowed to boycott its cars, sales have plummeted, and Elon Musk has become one of the most polarizing figures in business. Meanwhile, Tesla's stock has been cut in half, so it's hard to imagine a better or more timely example of a formidable business that's operating under dark and stormy clouds.

Starting point is 00:02:37 The interview you're about to hear took place in early April when the stock market was plunging after the US government's new tariff policies triggered a maelstrom of shock, fear, confusion, and frankly, incredulity. Amid the mayhem, Chris seemed to me totally at peace. calmly and cheerfully using the turmoil as a long-awaited opportunity to invest in a couple of mispriced stocks. It's a great example of the temperamental advantage that I've seen in all of the most successful investors. I hope you enjoy our conversation. Thanks so much for joining us. You're listening to The Richer, Wiser, Happier Podcast, where your host, William Green,

Starting point is 00:03:23 interviews the world's greatest investors and explores how to win in markets and life. All right, folks, it's lovely to be here with you and with my good friend Chris Begg, who's a returning guest to the podcast. Chris, as you know, is a terrific hedge fund manager and a great teacher, a professor at Columbia Business School, and also a wonderful human being. So, Chris, it's lovely to see you. Thanks for coming back. Pleasure to be here, William.

Starting point is 00:03:56 Thanks for having me back. It's great. It's a real treat. And we're doing this on a particularly interesting day, right? There's a fascinating backdrop with I think this will come out on your birthday in a couple weeks on April 19th, if I remember correctly. 19th, yeah. Great.

Starting point is 00:04:11 But we're speaking in early April 2025, and it's a dramatic day in the markets. There was an announcement today, I guess, of tariffs on about 60 different countries. And it's caused a lot of mayhem and volatility in global markets. And so when I checked earlier today, the S&P was down about 4%, NASDAQ, maybe 5%. Nasdaq was down 5% almost instantly after the opening bell. And stocks like Amazon and Apple were getting hit hard as you to can imagine. I think that Bloomberg was saying that the dollar fell the most in more than two decades. And so a lot of investors are searching for safety. And you're obviously a very long-term investor

Starting point is 00:04:46 and you tend to like volatility. So it's different for you. But I really wanted to get a sense of what it's like for you on a day like this, like how it feels for you, how it's experientially different for you as a long-term investor on a day like this. Yeah, I think, you know, now that it's 20 years plus of investing experience. I think you learn to feel into these moments and you kind of go through a pattern recognition to say, this feels like this date and this date. So today, for example, we love volatility. I mean, volatility is our friend, always. The price we pay will determine the rate of return. So if we don't have opportunities, whether they're geopolitical, their macro concerns, they're specific to a business, the returns that we can expect are pretty average.

Starting point is 00:05:36 So we're always operating into a period, something of uncertainty. Some type of cloud has kind of entered into the marketplace and has created an opportunity where the price is going to give us that higher return. And today's a perfect example. We were in the market this morning on two securities, one that we didn't own, but that we've been waiting for. And we're taking advantage of kind of the year's volatility. And today was kind of that it finally hit a price target. We're, you know, in our minds, it's a 15% or better, 10-year IRA. You know, there's lots of things to figure out, too.

Starting point is 00:06:13 You know, when you're talking about tariffs, this isn't easy for anyone. We have to understand what this means. What's the real cost to the business that we own? Yeah. So it's volatility is something that we welcome. But we also operate like anyone else where there's things to work out. And you have typically a watch list of, we'll get in more detail to this later, but a watch list of I think about 120 to 150 companies that you call your grove of Titans.

Starting point is 00:06:42 So you're sort of actually kind of looking forward to moments like this where something's going to get pummeled enough that you can pick it up? Yeah, yeah. The Grove of Titans is this, you know, our universe. And our universe is like you said, it's over 100 businesses now where we've actually done, you know, at least three months of work. We have a full-blown investment model on the business. So we're keeping tabs on it. We understand the key drivers of the business, the growth algorithm. And then it comes down to, you know, we're following moat with the secular tailwind, you know,

Starting point is 00:07:14 the operating execution. But price, and as that price changes, you know, we get a new input. The hologram gives us a new input in that. And the output is an IRA. You know, so the IRA starts to go higher, for these higher quality businesses, we want that information to be hitting us so we can actually make intelligent decisions. So you launched the fund back in 2010, I think, the first fund East Coast asset management. So you've been through quite a lot over those 15 years. And I was checking the other day, I think the toughest year for you probably was 2022 when you were down just under 26%. And I'm wondering, based on those experiences of dealing with uncertainty and volatility and periods where things just aren't working well. Do you have advice for our listeners, for regular mortals

Starting point is 00:08:04 who aren't necessarily as rational and long term, on just dealing with the emotional and psychological pressures of investing so that you can kind of hold firm and be as rational as possible amid turmoil? Yeah, you know, I think when you're, you know, so from the Grove, we end up with a portfolio that's quite concentrated. So we want to concentrate in and on our best ideas at the time. So, you know, we have a portfolio of eight companies today. And, you know, we're constantly kind of looking at, is there anything changed to our hypothesis for each business? We don't call it a thesis as much anymore because it feels like you have a bit of a confirmation bias on your thesis. But a hypothesis is, you know, there's something that can be challenged,

Starting point is 00:08:46 can be questioned. And, you know, as we understand these businesses better and better, you know, when we do see volatility, it's not a time that we, we get worried because we know what we asked ourselves, does anything fundamentally change? Or is this just a price change? If it's a brightest change, you know, this has given us an opportunity to acquire more shares at a lower price, a higher IRA.

Starting point is 00:09:11 So my advice, I guess, to listeners that maybe don't have the years of experience having gone through tough markets is that, I think if you looked at a very long-term compounding record of a business, is you're always going to have these big drawdowns. And the big drawdowns are going to be, those are the times where the cash register is hitting 20 IRA or higher.

Starting point is 00:09:35 And so you have to create a temperament to act intelligently in those times. It's when everything feels okay and you feel comfortable. That's when I kind of get worried because I know that we probably are kind of in a period of fair value or maybe even into a range of higher evaluations. When I feel a little bit uncomfortable, my stomach feels a little often I'm buying something, that's when I know we're in the vicinity of greatness. This is what we should be doing, but that just takes time to get those reps. So when you bought this morning those two stocks, one of which you already owned and one of which you didn't,

Starting point is 00:10:12 do you actually feel, I mean, you mentioned an awareness of your stomach. I know you're very aware of your somatic experience, having done lots of meditation and breathing, exercises over the years and lots of sports as we'll get to later. Do you really feel it in your body? What was the experience like for you this morning? Yeah, this is probably an insight that I've kind of lent into more this year is that I truly believe intelligence is embodied. It's not something that's just cognitive. And so I'm learning to feel into what an embodied sensation feels like when, even when I'm making an investment decision, there is a feeling I have, you know, and it's in different places in the body where you know, you're, you know,

Starting point is 00:11:00 this one is of a high quality decision. And it's, you know, that comes with time. It's hard to transfer that knowledge cognitively to someone. It comes with time. It comes with experience. And you can apply that to anything. You apply it to sports. You can apply it to, you know, you're talking to an athlete at the highest caliber, and you ask them what it feels like when they're, you know, on that court and it's, you know, a finals or championship. So sure, it's an embodied feeling that we're operating from. It seems to me that there's also, there's an element of being able to train this particular muscle. So you become more and more aware of your your own state. And so you sort of, yeah, you'd become a better observer of the particular machine

Starting point is 00:11:47 called William Green or the machine called Christopher Begg. And I was reading something recently. There's a, it sounds like a weird digression, it probably is, but I was reading a very interesting book by this woman Tanya Lerman, who's an anthropologist at Stanford. And she became an expert weirdly on, on sort of connecting to the invisible to spiritual experiences. And she studied evangelical Christians and shamans and I, and Parsi Indians. really interesting work. And she talks about how you can sort of train yourself to become better at feeling this stuff. And I think that's true. So I find now often when somebody says something that I'm pretty certain is true, I feel chills. We've talked about this before and you once said

Starting point is 00:12:28 to me, oh yeah, truth bumps. And I wonder if there's some sense in which like the body knows whether something's true almost before your intellectual mind does. Absolutely. There's a French philosopher that is probably one of my deep dives this year has been Maurice Merleau-Ponty. And he died in 1950s. And so his two books that he wrote, one when he was alive, one posthumously is in the feminology of perception. And then the one that was published after he died was the visible and the invisible. And when you really died, you really died, into Merleau-Ponty's work, it's what he was trying to share is that, you know, intelligence is, is it embodied us. It's an embodied sensation. And, you mentioned somatic awareness.

Starting point is 00:13:23 But if you think of like when we're children, we're babies, you know, it's like, you see children, babies learning, they're grabbing something, they're holding it, they're sensing it. And that's how they're observing the world. They're creating an intelligence. And I think as we grow and become adults, are we transfer, we've come more cognitively focused versus this embodied, or the awareness of the embodied intelligence. And so, um, becoming more aware of it, I've, I've tried to create practices around the invisible, not just the visible. What's, what's the invisible intelligence, the synchronities, the feelings, the intuitions? And, um, it's certainly a work in progress. Yeah. But you would love this philosopher, William, but he's, uh, I've been diving into his work and

Starting point is 00:14:07 I'm no expert yet, but it's all. Your listeners would enjoy it. That's good. And the best thing to read would be what? What's the entry point here? Yeah, the entry point would be, you know, his first book, The Phenomology Perception, and then the Visibly and Invisible, which really takes that to the next level. And it will be an interesting body of work for those that are interested in,

Starting point is 00:14:32 in kind of the evolution of artificial intelligence. And as we look at artificial intelligence, which is also evolving from large language models to which will be real world AI. And as we think about real world AI, the intelligence, you know, when you look and say a humanoid robot, the humanoid will actually be learning the way we do and be learning by way of its perception, by way its sensory interaction with the world. And so for the humanoid robot to have these next phase transitions, It's not just a large language model that we're inserting.

Starting point is 00:15:08 It's actually an awareness of how it's sensing the world, the way we do. And so that's why Merleau-Pon-Tis is kind of an interesting body work as we kind of begin to understand the vector that we're on of our artificial intelligence. It's really interesting. I'm sort of grappling to articulate this properly, but it feels like part of what you're, and I guess I, in my stumbling kind of way, are trying to do is to see things more holistically, to sort of use more tools to sense what's going on. And I've often felt in the past that I was just this sort of disembodied braids sitting on

Starting point is 00:15:43 sitting on a slightly flaccid body. And I think it's interesting to, you know, whether it's AI or whether it's sensing what your body is telling you or being, just this general effort to be more open to more sources of information. And I keep thinking of this line that you, you as will probably mention later, you often have these. these anagrams or word tools that help to remind you of certain things. And I always think, you often talk about one that's, I think, silent the eyes, listen they see or something like that. How does that fit into this sense of, well, you explain. Yeah, I'm glad you brought that up. So silent the eyes, listen they see, you know, is an anagram. It's a beautiful anagram that I

Starting point is 00:16:27 I kind of discovered in thinking about how our eyes are observing the world, often through language, right? So we live kind of through this veil of language. And we also coarse grain the world. So we kind of, this is a tree. This is the pattern, you know, of a mountain. And oftentimes we miss things because we're coarse graining. And that's just the way that our bodies efficiently, our brains efficiently receive information.

Starting point is 00:16:57 So you almost have to override that mechanism to see differently. To see differently is to signal the normal eyes and listen. So open up your sense, all your senses to say, let me see this with new eyes. You're a big fan of Proust. And so the Proust quote that I love is the real voyage of discovery, I wrote that's down here. I thought it was useful. It consists not of seeking new landscapes, but of having new eyes.

Starting point is 00:17:25 Yeah, to see the world with new eyes. I think that's something that Christopher Sy, our mutual friend, also talks about a lot, that passage from in search of lost time. Yeah. So, you know, in Salat the eyes, listen they see, it's about opening the awareness to see things differently, to see truth, to see things from first principles, not just how they're being, you know, demonstrated by way of, you know, through someone else's narrative. And so I think that's a great lesson for investing. I think it's a great lesson for life, you know, as you kind of make your way through. And I was surfing with a dear friend this weekend. And Mackey Saturdays is one of the world best design people, you know,

Starting point is 00:18:12 as far as he designed the Instagram logo, for example. And we're sitting, it was sunset. And he said, Chris, look at that. And he points to this amazing, you know, the way that he's like, look at the way the colors. and the mountain. And it was just like this pause moment where I was kind of focused on something else. And it just like, look at it, look at it differently. See it differently. And I think that that's a great attribute. And it's funny you've introduced me to Mackie Saturday, who has a splendid name a couple of times. And his eyes are very alive, very vibrant. And so you do have this sense that he's

Starting point is 00:18:48 very wide awake. There's another great quote. There's a guy I think I quoted from France who I, I interviewed a long time ago, I quoted him in my book, Richard Wise, a happier where he has said, you should be too jure on a way or something like that. You know, it's always awake. So I think that's the great challenge. And I mean, it sounds like we're going off in some sort of self-indulgent digression. But actually, I think it's very relevant because I remember Dan Goldman, who I spoke to right before we got on, who's a, you know, obviously a great expert on emotional intelligence

Starting point is 00:19:22 and how the brain works and also a great meditation expert. He said to me at one point something about how, when we're very stressed, you know, our attention kind of narrows. And so I'm probably misquoting him, but I'm directionally correct here, that we, you know, in some way, I feel this myself that when I'm very tense, it's really hard when something comes at me from out of left field, like if my daughter is upset about something and wants to talk or something like that. Or, you know, I'm on deadline and suddenly someone needs help.

Starting point is 00:19:52 And it's like, no, no, I'm focused here. And it's like very hard actually to be spacious enough to deal with it. And part of what's striking to me is, here I am talking to you on a day when there's kind of mayhem in the market. And you seem very spacious. You seem, you don't have that narrowness where you're sort of maniacally focus on, oh my God, where's my cash? What am I going to do?

Starting point is 00:20:14 Yeah. No, I think temperament is probably the most important attribute for a long-term investor. I remember hearing Warren and Charlie talk about temperament. And I remember when I was a young investor, I'm like, I want to have some good temperament too, you know? It's like I could buy it off the shelves. But it does take time. And as an investor, you have to seal into what your temperament is.

Starting point is 00:20:36 You know, for me, owning businesses, feeling like I owned the whole business outright. And I was buying into this for a very long period of time. I knew I didn't have to act from day to day or from our time. to hour and that once in a while, the market, Mr. Market, would kind of hand a different price. And that price would be something that is very attractive. Or something I own, someone hands me a price that's very high in it. And now my IRA is pretty unattractive. And I could make these decisions, but there are decisions that aren't frenetic. They're very long-term. And that matched my temperament. And someone asked me what the secret,

Starting point is 00:21:18 all the secrets of investing over. I said, just, get out of the way. I feel like when sometimes I look at my business, I'm like, they're doing all the hard work for me. And I just need to get out of the way sometimes and allow that compounding to work. And that compounding doesn't matter how long you're in this incredible craft. It continues to blow me away. It could just, it's just, human mind can't understand the exponential.

Starting point is 00:21:47 It is such a magical thing at work. And you can only look at, you know, the history of Upper Cher Hathaway and Warren Buffett. We have an annual meeting coming up, right? And you just look at just, that is case in case in point for this, this incredible superpower. It's also interesting that you said to me at one point a while back that you had set yourself up, basically, so you only really have to make two or three decisions a year on the whole. And so there is something about the way you've structured your life around this. investment process where you can do very deep research, very in depth, and you understand these

Starting point is 00:22:26 businesses really deeply. And then there's a moment when you can pounce. And so I think of the last few years for you that there was sort of, as I understand it, there was a moment during COVID when you put something like 25% of the fund in two companies, I think, that were in the aerospace industry, when all of the planes were sort of grounded and you could invest in. in these great businesses long term when there were really serious clouds above them. And then also when meta, everybody hated matter a couple of years ago, you did the same thing. And so it feels like, you know, there's something about, at first glance, when you hear, wait a second, Chris only has eight stocks. That sounds kind of wild and aggressive.

Starting point is 00:23:12 But actually, it sort of makes sense that there's something very slow moving and discerning that may almost be less risky. Can you unpack any of that, us. Yeah, you did such a great job. Yeah, so I think when you step back and look at the process of what we're trying to discern with the, you know, the grove of Titans or what we deem as an exceptional business that we'd like to own. So we want three pillars. We want it to have a moat and we want the moat to be widening. So we have, you know, a framework which is, you know, seven layers of moat. Ideally, the business has many layers. If it has all seven, maybe, could it have five of the seven? And the second thing is, does the business enjoy a secular tailwind? We really don't want

Starting point is 00:24:01 to invest in businesses that they're kind of facing secular headwinds. We find that's too hard. You can make money, but then it's a three-decision company, right? You have to buy right, you have to sell right, and then you have to figure out what you have to redeploy the capital. The third pillar is what's the history of capitalization and execution of the business. So those are the three we're looking for. The next thing is we kind of value these businesses based on a 10-year kind of history of where we think free cash flow will look like, you know, what the top line growth is, margin improvement, all the natural things that would go into a growth algorithm.

Starting point is 00:24:35 And it, you know, based on today's price, we kind of derive an IRA. And like we talked out earlier, you know, we had. have, say, 125 businesses where we have completed work where that range of outcomes, we feel is, and it's a range, you know, there's a best point estimate, but we know that there's a vector of asymmetry between the low end of the range and the high end of the range. And what we want to do is likely invest when the clouds are most, I mean, there's many clouds, ideally, you know, you mentioned meta and 22. We had a recent one with perimeter. solutions. What usually happens when there's a real buying opportunity is you had many,

Starting point is 00:25:18 you have like, it was met and there were seven clouds that we articulated. You know, with the aerospace businesses during COVID, you know, certainly it was when are we going to travel again? And, you know, I remember just refreshing my screen on TSA visits. And just like, okay, we're 95% below normal. And you could just see it as a trend as that trend in, you know, we could start to have some probability of the confidence interval of the return of free cash flow and so forth. And so that's the process. And when we know we have a business that has the three pillars and we're really focusing on the clouds, sometimes those clouds are persistent and they could be storms. They could be literally enough of a storm that it disrupts the moat. It disrupts

Starting point is 00:26:09 the capital allocation discipline. And so cloud sometimes doesn't mean, oh, this is the time to invest. The college could be right. And we want to steer clear. But if there are clouds, meaning there's short-term obscurity to long-term value creation, that disconnect. And we really understand and we articulate it. We understand the duration of the cloud and what we need to, what kind of patience we might need or what kind of time horizon we might need to understand here. I'll mention perimeter solutions because, you know, that was a business that the cloud that was over that company, this is a company that, you know, Will Thorndyke, you know, from the outsiders, Nick Halley from Transdime, I mean, we're steered, it's in the fire, we're charted in business.

Starting point is 00:26:57 And as they took over that company, the management of that company, put in Hatham Corrie as CEO, they have the perfect storm, the perfect cloud, which was two back-to-back seasons, fire seasons, that were extremely below average. And below average means less volume of fire retardant that, you know, the tankers are spreading on wildfires. And we're kind of looking at the whole historical weather pattern. And we're like, okay, didn't expect two back-to-back seasons like this. Could there be a third? Of course there actually a third.

Starting point is 00:27:30 And so that cloud and the internal conversations were, okay, can the business get through a third season? Would there be a financial issue with their debt and debt covenants and so forth? So just like we were doing with Tramstein, we kind of stress test the business. And we did determine at certain prices we were able to build that position at the same time the company was buying back stock. and lo and behold, last year, we had a normal year, a normal fire season. And what happened, the stock went from $3 to $14 a share. And as that cloud was removed, and there's always clouds. And it says, okay, now what are the ones we're working through?

Starting point is 00:28:17 And so when there's no clouds, and internally our conversations are generally, if there's no clouds, we're probably looking at single-digit IRAs, and we should probably be looking for, you know, something to replace that. Perimeter is a small company, right? I mean, it's a billion and a half market cap, something like that, and does these fire safety products and equipment and personnel and logistics and stuff. So lots of firefighting chemicals for wildland firefighting and stuff. And so I was wondering, given that you always have this focus on secular tailwinds

Starting point is 00:28:48 or, as you would put it as a surfer exponential waves, is that partly a play on global warming in extreme weather? What's going on there that you're playing in terms of a long-term trend? The way that I see perimeter solutions is when we've invested in TransTime since 2009, TransTime and Nick Howley, probably one of the best operator, operated companies that we've ever studied, particularly as it comes to capital allocation. And we often ask the question, would you ever diversify out of aerospace? Would you ever do this in other verticals? And I think they saw their opportunity set in aerospace and this, the purity of thought, we're going to stick to this. But I think there was always a question in next slide.

Starting point is 00:29:34 Like, of course this is going to work in other articles. And if I had the energy effort and people, maybe I would do that. And I think that's how that initially kind of began perimeter's journey. And so they set up a shell company to acquire perimeter. But perimeter is going to be many things. So fire retarded is the first leg of what I think will be many legs. And there is a secular telling, William, when it comes to fire retarded, you know, unfortunately with climate change, what we're seeing is we're seeing with more fires.

Starting point is 00:30:12 But what we're also seeing is as we've, you know, in North America specifically, the interface between wildland or forest and homes, you know, that edge continues to increase. We need to protect, we saw this with the LA wildfires, we need to protect that edge. And so we need more retardant, faster, more capacity to kind of hit these fires earlier. And so we think there's a long-term secular tailwind, a volume of fire retardant over time. So that leg, we think, is going to grow, you know, well above GDP, and we think, you know, perimeter will do quite well. They just entered their second leg.

Starting point is 00:30:54 So we have an announcement a couple weeks ago where they made a $38 million acquisition in printed circuit boards. And the printed circuit board business is very similar to kind of your position in aerospace parts. You get specced into a printed circuit board, PCB, and you may be in that for 15 or 20 years. So you get both the unit volume, you get some, you get some, you get some, you get some, some pricing lever. And so we think that the PCV business could be a very important business for Perimeter over the next 10 years. And then we say, okay, what's the third? What's the fourth? So I think perimeter could be something very different than it is today as it kind of grows into

Starting point is 00:31:41 its life. But if you go on this journey with it from a billion five market cap, you understand what they're doing, you understand the management team, you understand the individual business is, cap allocation, and you know that the results are going to be extraordinary. I think that that's how we view this. I mean, granted, we can measure what it is today for cash for yield and so forth, very attractive. But I think there's something that's invisible about where we're going that I think is highly inevitable, if that makes sense. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord,

Starting point is 00:32:28 and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to,

Starting point is 00:33:16 end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedom Forum.com, with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it.

Starting point is 00:33:57 If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI class E-RP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence.

Starting point is 00:34:35 And now with the Netsuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, NetSuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, demystifying AI at Netsuite.com slash study. The guide is free to you at Netsweet.com slash study.

Starting point is 00:35:08 When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with

Starting point is 00:35:50 helpful AI tools that write product descriptions and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing... Sign up for your $1 per month trial. today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right.

Starting point is 00:36:24 Back to the show. Yeah, it's interesting. That seems sort of part of the essence of what you do. And I remember we were emailing or texting back and forth at one point. And I was saying I have this very, what people probably don't know is I invested with you at a certain point in the last year. or two, I think. And so I have this very idiosyncratic way of investing where I have invested with France, like with people I trust, individuals I trust. And it's kind of controversial in some way to do that.

Starting point is 00:36:54 And I was texting you about that and you wrote back to me, getting into the river with goodness is the secret of intelligent compounding. It's what we do on the business side, the whale road. Can you explain that, that idea that in, maybe I'm just looking for a reason why I'm not totally nuts and irrational in doing this, but what were you thinking? Unpacked that for us. You touched on something. So I've sat down to write an annual letter called the Whale Road twice. It's just the letter that doesn't want to be written.

Starting point is 00:37:27 And it's just as it means something so big to me. So the Whale Road is a reference to truth seeking. It's about finding, you know, asking better and better questions, which allows us to arrive at, you know, like you said, that river of compounding that will materialize in front of us. You and I had spent some time on, well, we'll probably get to this, but it's, you know, we're thinking about businesses that are kind of in a point of value creation where you can't measure everything about the business today. And you know that there's going to be a lot with vectors of that business that are going to be quite constructive, quite important for that.

Starting point is 00:38:16 And what we call that, we've called that value 3.0. And value 2.0 is something where you can see it. It's in the free cash flow. We're kind of extrapolating where it's going to go. But this value 3.0 category, there are these vectors of uncertainty, but they're asymmetric in their, in my view, oftentimes quite inevitable. And I think that that dealing my way somatically, intuitively into the businesses that have these extra vectors of upside is a bit of the magic of where we've grown as investors.

Starting point is 00:38:52 Yeah, to give people a little more background, Chris and I were on a panel together in England, I think last September. And I interviewed Chris and our mutual friend Frederick Blackford, who's a venture capitalist, and also a legendary investor named James Anderson, who had this incredible record at Bailey Gifford, and Nick Sleep was in the audience, so I got to call on him as well. And so we were talking about this concept of value 3.0. And so Frederick and Chris made the point that value 1.0 was more like Ben Graham's version, right, where you're buying a basket of assets at a big discount, and they might not really be growing or anything. And then Munger comes along and says, well, no, you should buy like a good or excellent business at a reasonable price. So he's

Starting point is 00:39:33 sort of merging value and growth a little bit. And then Bill Miller and Nick. sleep and the like are coming along with value 3.0 and are saying, well, actually, there are these excellent businesses that have really great tailwinds and these layers of moats, but you can't really see it in the free cash flow. And so there's something very different going on philosophically that you guys are exploring that I think, I mean, is it fair to say, I mean, that's, that's Amazon, that's, I don't know, is that Tesla? I mean, we, we, we, I at least want to talk to you in depth about Tesla. What thoughts arise from just that background on value 3.0 and the evolution of the definition of value investing? You did a beautiful job, William, describing it, you know,

Starting point is 00:40:17 the negative theology. What isn't it? It's not one point O, right? It's not just, you know, we do a lot of value 2.0. That is a sweet spot, right? If we can buy things where there's current free cash flow and that current free cash flow yield, say, is five to 10%. 10%, and then we kind of work our growth algorithm and we get to our 15% better IRA. Trans-Dine is that example, perimeter is that example. But then there are businesses that come our way that the current free cash flow yield may be low, maybe single digits. And we know this through kind of looking back in history.

Starting point is 00:40:55 We know this through Nick Sleep's experience with Amazon. And they're very much, when you look back here, oh, no, these were value stocks. They had to have been buying value stock. They've been compounding at 20% plus for over 15, 20 years. That means my criteria. So what's the toolkit that we need to identify these when they're in there, when they've kind of reached a symmetry of their returns, right? They've reached escape velocity.

Starting point is 00:41:23 And like I've said before, the vectors, the paths are asymmetric. And so value 3.0 is trying to understand, you know, where we are on. the S curve? Are we in the knee of the S curve? Are we kind of in the middle of the S curve? We're in the shoulder of the S curve. And when a business reaches that escape velocity and it's just kind of has this long run, maybe multi-decade decades of this extraordinary compounding, not visible in the earnings or free cash flow numbers, you have to do some work to get there, that's the kind of what we're referring to here. Certainly, James Anderson is such a pleasure being on that panel with him because he's done this in such an extraordinary way.

Starting point is 00:42:10 Probably one of the legends, I think, that a lot of U.S. investors may not be as aware of, but James is just a wonderful thinker. I had him as the first speaker in my class this fall and started to build that friendship. and I have a lot of respect for James in operating in this space for so long, also write some beautiful letters. But you mentioned, you know, you mentioned Tesla, which is also, you know, a pretty controversial name right now, certainly in the news. And, you know, Tesla would be an example of a value 3.0 business, right? How do we work through that?

Starting point is 00:42:50 And to kind of think about, you know, is this something? that is investable here. And certainly we can go through that if you'd like. Yeah, we were texting back and forth yesterday with some trepidation about whether, whether to touch the third rail of Elon Musk and Tesla. And I was saying to you that I, I think it's a, it's a really important thing for us to discuss, not for any political reasons or anything like that, and not as a stock pick or anything like that. But actually, because it's a, It's a beautiful illustration of your multi-dimensional approach to stock picking, to research. Because when I visited you in Latin America where you live half the year, really a year ago from now, last April, 2024,

Starting point is 00:43:37 you were just starting to think really seriously about Tesla and you were doing a lot of interviews. And I think you sort of said to me at the time that you were kind of waiting maybe for it to fall 80%, and then it might be really, really exciting. So you were very fascinated by the business. And then when we met in England a few months later, I guess in September 2024, you'd maybe dipped your toes in a little bit. I think you bought a few shares for your kids, but not for yourself or your founder or anything. So you were just sort of, and my sense is that in the last few months,

Starting point is 00:44:08 you got really serious and you actually did start to buy seriously. And I'm interested to know, like, given the kind of depth of research, that you do, what your process was for breaking this down over months and months and months. Because I remember, you know, I would sort of say that I thought Musk was a sort of awful man. And you would say, well, look, I've been reading every single one of his tweets for six months, like systematically at going through this. And so this is about getting beyond prejudice and actually getting it sounds of deeper truth. What did you do?

Starting point is 00:44:46 So September of 23, I was invited to go to a retreat in Zermat, Switzerland. And wonderful retreat. I've now gone twice. It's every September, 25 investors, really thoughtful investors, many of that you know, we kind of meet there. We hike for three days. And during our hiking, we're talking, sharing into different ideas and so forth. And then we have a formal session.

Starting point is 00:45:13 But one of the formal sessions that was scheduled was that a few of the investors wanted to talk about Tesla. And they asked me if I'd moderate the panel with the idea that I could share. I wanted to share one segment with the students in my class that fall. So we thought, oh, this would be a great thing to share with the class. It's very kind of an interesting case study. I had done zero work on Tesla. So literally, I'm like, I'm a terrible moderator for this because I know nothing.

Starting point is 00:45:39 And these are the wonderful investors. So I kind of like, okay, I knew enough to at least ask some questions. And I partake in this panel. Very thoughtful investors had done years of work. And I realized just through that experience, I kind of left September of 2020, 2003, and I said, you know, I may have had an incorrect observation of what this business is and who Elon is potentially based on what I heard. Let me go back and actually understand it from first principles. Let me actually go through the work. It seemed interesting enough to me to actually go through it to the work.

Starting point is 00:46:19 So I got back to back. In our normal process when we start on a new business is let's read everything from the beginning. Let's go through every earnings report, every annual report, every investor day. In the case of Tesla, they had a battery day and an AI day. And you could really do a deep dive. At the same time, I said, I don't really know who. you know, on Muscares, I have this impression that he's uninvestable. Let me see if that's true. And so at that time, I started to read every ex or tweet, reply, like, post, and I've done that

Starting point is 00:46:55 to today. So just understood not what someone said about what he said, but let me just look what he said. And let me make that judgment from my, from just touching the source material. And so what formed over that time period, and when I started to look, you know, when I started to look at the business, it was about a $775 billion market cap, September 2023 when we did the panel. And over the course of that time frame, when you came to visit, you know, it dropped from 700,000 to, you know, 300 something billion in market cap, you know, about $139 a share. And so it's interesting, right? You had this cloud, you know, clouds were forming around the business. But the way that I would frame an understanding of the process of looking at Tesla is, you know, you have a company, does it have a moat? Does it, you know, have the secular tailwinds? What's the capital allocation execution history? If you were looking at just process alone, you'd say they have, you know, an evolved mousetrap in making EVs. And those EVs are very small percent of the total, you know, car sold globally. And that's a secular tailwind. They make a cheaper, better, faster, safer vehicle.

Starting point is 00:48:12 You know, so you can build a case just for the core EV business, history of capital allocation, that it's worth something. It's valuable. And you have a, that's your, kind of your base case of what Tesla is as an EV company. And then you can look at the energy business. The energy is selling megapax and power walls. Megapax most important. They just delivered last quarter, you know, 10 gigawatts of megapats.

Starting point is 00:48:37 So this is a real business now. Let's value the energy business. That's a secular tailwind. Okay. Those are two vectors that actually base a certain amount of evaluation. And obviously, you dive into that and you're going to say, why vary the versus another EV, different geographies and so forth. The third business is full self-drive.

Starting point is 00:48:59 So if you have a tested vehicle, you might sign up for a monthly subscription to have an autonomous with driving solution in your vehicle. And that has been iterating and getting much, much better. So you can look at that as a software, right? It's a software revenue. What percent of the cars out there will actually, you know, take that as a subscription as it gets better and better. That's another vector.

Starting point is 00:49:22 But the two things that are really important in understanding the vector of Tesla going forward over the next five and then 10 years is going to be its Robotaxy solution, which is the really solution of full self-drive in being an autonomous solution. And then the fifth leg, which is a humanoid robot, and the humanoid robot being a really big product release, consumer product released, whether that's in the factory, in the home, how to think about that over a long period of time.

Starting point is 00:50:00 and if you do all that work, what you might end up with is a business that's trading in a significant discount to its long-term value. And each one of those vectors, you can say, okay, I'm protected here, I'm protected here, and then my vectors of return above that are from good to extraordinary. And so that's how we would build a kind of an investment hypothesis on Tesla over time. Now, what's the cloud? Are there any clouds in Tesla today? Well, you know, people are burning down dealerships.

Starting point is 00:50:41 And this is probably the biggest amount of clouds I've ever seen a business. This is like American Express salad dressing scandal that Buffer, you know, invested 40% all Bertia Athaway into it. It's a big, big cloud, right? Big big cloud should give us a price, a significant price to where it was down 50% from highs right now. So, you know, that's something that is, you know, there were real time working through it, understanding it.

Starting point is 00:51:12 It takes an enormous amount of work. There's nothing I can transfer to someone who hasn't done the work to say this is something, these are the things that you need to you have to actually do the work. So we created a mastermind, a Tesla mastermind of, let's see how many people we have in there, eight or nine, I think of probably the most thoughtful people who understand this business globally. And we share information in real time. So we're real-time learning, insights, understanding the autonomous evolution and cadence,

Starting point is 00:51:47 understanding where humanoid robot iterations are coming through. And so, you know, it's been an interesting journey. You can have me on five years from now. I'll let you know how it goes. But it's, we are curious. We're asking questions. We're very empathetic to what people are feeling about this administration. We're being non-political when we apply investment decisions.

Starting point is 00:52:16 So all of those feelings, we understand. We understand what's happening. But from an investment consideration, it's very interesting. This is the setup, William, that, you know, we want to have all three pillars, huge clouds. I don't want to touch it. Oh, it feels very uncomfortable. We'll see where we go. One thing you've talked about in the past is your interest in network advantages.

Starting point is 00:52:47 And you've also, I mean, obviously you've had a lot of success in the past with companies that have these great network effects, whether it's a master card or many of your other best investments. You've also talked about graphs, or as Americans would say, graphs. And you've said that Elon Musk is sort of a master of understanding graphs, which is not something really I understand, but you've talked about Starling, you know, where obviously he's putting up an enormous number of satellites and has created this incredible network in something like 100 countries. Can you talk about what the architecture is that's being created here that maybe isn't really obvious to most people just looking at, you know, these ugly, kind of brutal big trucks that or the quite

Starting point is 00:53:37 handsome cars. But there's actually some sort of architecture, an underlying architecture that's being created that I think people like you or James Anderson, who are very interested in network effects and what you've learned from the Santa Fe Institute and the like, much more tuned to seeing. Yeah. So, you know, that question is really,

Starting point is 00:53:58 really important. And I think when you, when you step back and kind of look from a systemic understanding of how the world works, is I think of things

Starting point is 00:54:09 as information. And so everything is information. It's clustered information. The information wants to do something. What it wants to do is it wants to grow exponentially. So it's very strange thing. How does it grow exponentially? It grows exponentially by clustering, and it reduces entropy.

Starting point is 00:54:30 When you reduce entropy, you increase information through a system. And when you increase information through a system, you create value. And so I think all clustered systems are seeking to create value oftentimes. And what I realize when you look at this from a kind of, of an information theory perspective that information wants to travel on networks or graphs, node and edge. The travel, information travels on the edge. The more information can travel through a network or a graph, the more valuable the graph

Starting point is 00:55:06 becomes, meaning lower entropy increase information. The internet was this incredible value creation moment. You know, Tim Berners-Lee, sitting at CERN, writes down the sports. code of the internet, and all of a sudden we have a way, you know, what evolved was a way that we can actually transfer information. That created an enormous amount of value. MasterCard visa, you know, we didn't have a way to send payments. Okay, let's create a graph, a way for the banks to actually efficiently move. That was, so the money was information. And so if you look at the world, and this is probably the most important epiphany I've had in my life is when I started,

Starting point is 00:55:49 to see things as graphs. Does it have a graph? Does it benefit from a graph? Is it value creation based on graph architecture? And I said, geez, if I only focused on graphs, my record would be so much better. You know, doing all this stuff that's not graph related. Because I look back and I said, geez, you know, MasterCard Visa was a graph, you know, meta is a social network as a graph. Google was big, its page ring system literally was built on graph theory. And so graph theory dates back to the 1700s, Leonard Euler, he was solving a problem called the seven bridges of Connoisseper. And he wrote down these mathematical system to understand. It became the basis of what became graph theory.

Starting point is 00:56:33 So fast forward, I kind of think where are new graphs being built? Where are they evolving? And where are those graphs going to unleash an enormous amount of value creation? So when you look at Tesla, and I think Elon is unique. in being someone who sees the ability to reduce entropy and where the value creation can be on the other side. He looked at, okay, this is a, I want to create an electric vehicle.

Starting point is 00:57:01 I think it's cheaper, better, faster, safer than an internal combustion. But then he kind of looks, oh, what's the next step on that? Supercharging network. Supercharging network is a graph. Right? Robotaxy, if we actually have a fully autonomous solution,

Starting point is 00:57:15 8 million vehicles can be turned on to actually operate as a graph or a network. That's a different level of value creation that that is created in that moment. And then can we build 2 million robotaxies to put on the network each year? Okay, that's interesting. That is a graph. So when I see a graph, William, I pause and reflect. I just want to say, oh, what's possible here? So, you know, I don't think a lot of people appreciated that when SpaceX was launching, you know, Falcon and over 400, that they were putting up 23 satellites every time, 23 satellites.

Starting point is 00:57:58 And all of a sudden, we had this incredible constellation, which is now Starling, which creates internet connectivity, or one of the most cheaper, better, say, a faster, safer graphs for connectivity of information. to flow. That was happening. I don't think everyone appreciated. That's what was being built, right? And so the evolution of graph is something that I look at all the time. I asked a question two years ago when I started to think about this. I said, where is the next $10 trillion graph? What is it? I didn't know what it could. And I kept asking the question and a friend of mine, Santi, said, you've got to talk to Charlie Burgoyne in Austin, Texas. He's a graph nut. And I, I don't. And I kept asking the question. And I, I kept asking the question. And I said, okay, and I invited Charlie to come into the class. We had an amazing class on graph theory, but he's like, you know, database architecture doesn't really operate on graphs. It operates on SQL

Starting point is 00:58:56 databases and everything siloed. And he's like, it should operate as a graph, a dynamic, traversable graph where you can actually access information real time. And he said, that will be an incredible value creation moment. I said, well, who's doing it? Is this someone building it in their garages. And I kept asking the question, who's building that graph? Fast forward to today, you know, that graph might be palanteer. And when you think about the general architecture of the ontology of what Palantir is, we're not invested in Palantir. We actually haven't really done much work on it. But it's, it finally kind of hit me about three months ago. I'm like, maybe that business that I was looking for was being built for the last 20 years. And it is volunteer. So,

Starting point is 00:59:40 TBD on that one. Yeah, so that just is how I think about graphs. And it's each business's application of graph theory interests us a lot. So in a way, this is your equivalent of when Nick Sleep and Case Sicario said, you know, when they figured out that scale economy shed was the best business model and that that was just what they wanted to focus on. And Nick said to me something like, yeah, once you have an idea like that, you realize that might be the best idea you've had in your whole life and everything else, as he would put it, using language that we won't beep, even though we in the past half, he said everything else looks a bit shit in comparison. Is that sort of what's happened here that you've come up with this kind of major

Starting point is 01:00:23 revelation and you're like, oh, that's how the world works? You know the expression? It's turtles all the way down. It's graphs all the way down. And it's when you when you see things kind of from a viewpoint of information theory, it's kind of true. It's like what is going to be the next graph that's going to unlock the next amount of value creation? If you continue to look and ask that question, that connectivity, that allowing more flow of information more seamlessly, that reduction of entropy. Yeah, it's a, it almost is above language, right? It's hard to express, but it's, you feel it and you see it. And I started to see graph. Graph IQ. Who has a natural graph IQ where they can see this as almost a second state of insight.

Starting point is 01:01:16 And it's the way they operate in the world is seeing by way of a graph lens. And so, you know, I'm in the earlier stages of this epiphany. So I'm hoping I'll gain more kind of comrades along the way as I found out, you know, find others that have kind of seen this and identify businesses that are kind of emerging that share these attributes. When I spoke to Nick Slee, when we were all together at Goodwood last fall, thanks to Frederick Blackford, who invited us all. This, when we had the panel, I was asking Nick afterwards, why it had been so hard for him to find a fourth company that was as great as Costco, Amazon, and Berkshire, which he and Sachs great investments. And he sort of talked about how difficult it was and how he had looked at Tesla. And he was like, yeah, it's really interesting. But this

Starting point is 01:02:07 guy's a little bit odd, isn't he? And Nick is much more down to earth than almost everyone we know. And it's just, you know, it's a very English understanding. The guy is a bit odd. And I don't know if this is the kind of guy I want to partner with. And so he just sort of kind of went in the too hard pile. And so I'm wondering like how you think about the genius and the problem that is Elon. Because he is a kind of epochal, historic figure. And at the same time, incredibly polarizing. And I look at stuff. Like I look at things like, you know, know, I mean, you know, the ex post when he was posting about his transgender child now called Vivian and I literally said, my son, Xavier died. And, you know, I look at that and I'm like, oh my God. Like, you know, what sort of a mutant would sort of, you know, because I, you know, I mean, look, I'm a loving father of two kids. I'm like, there's pretty much nothing my kids could do that would make me not love them and think they were great. And likewise, I mean, the whole thing where he was like, we spent the weekend. you know, feeding USAID into the woodchopper. And I'm like, wait a second. Like, I heard Atul Gawande recently sort of, you know, talking about USAID where he'd been, you know, very senior. And he's like, well, hundreds of thousands of people will die because of that.

Starting point is 01:03:22 And I look at that and I'm like, well, maybe, maybe that's a part of it that maybe the sort of person who can understand graphs and systems and networks, maybe has something kind of missing in emotional terms. I don't know. And I've never met him. But I'm just wondering, like, how you, how you get a sort of nuanced appraisal of this guy who's obviously, like, really brilliant, but kind of like, in some ways, kind of seems pretty defective. Yeah, I think Peter Kaufman, who's a dear friend and we learned so much from Peter, he has a wonderful mental model that he calls like, he calls it the, you know, it's like, if you look at an orange, and when you peel an orange, you're like, you know, you want to keep the, the, the meat of the orange, and you want to throw away the peels. It's his mental model for studying

Starting point is 01:04:12 kind of everyone in history. There's always peels with everyone at Carnegie and Rockefeller and you know, you name it. And Elon has peels for sure. But for many people, and I'm very empathetic to this, those peals are really emotional right now. And so I'm not here to defend anything he's done or the perception of anything that he's doing because I don't know enough. But I do, from my own observation, you know, I see someone that that cares deeply about humanity. And I see that because of, you know, following his, his behaviors. I think he believes that he's doing something that is really important. When he's looking at the holistic view of where we are today as a society, as a country, there are certain decisions we need to make to kind of

Starting point is 01:05:08 write the ship. And write the ship is, you know, $37 trillion in debt. We have a budget deficit of $2 trillion. These are inarguable things that have to be addressed. And part of that is some level of austerity on spending and then some level of revenue augmentation. And not to, you know, We've seen the volatility of that today in tariffs, right? And so as this medicine is applied, it's quite unpopular. All medicine in these things are unpopular, particularly given the situation that we're in. And so he's the face of spending cuts, of doge. And that's a very unpopular position to be in.

Starting point is 01:05:54 Is it a patriotic thing he's doing, potentially? We will see. And I think what it looks like is that. I think he's stepping back from being the spotlight of that role and focusing, you know, back on the businesses. And so, you know, I think that that is a, but what I've seen from a business operator and from some of the things just following them for the last couple of years, I see a conscientious person that cares deeply about doing the right thing. Yeah. And I, you know, look, I'm not trying to impose my prejudices on these.

Starting point is 01:06:30 things. And one reason why I'm kind of, I kind of have a hedge here, which is I like the fact that I own a couple of hedge funds around by friends who both have invested heavily in Tesla. So there's a sort of hedge against my own bias. And I kind of like that position. I don't, I don't want to have my investments driven by my half-baked biases and blind spots and the like. And I think that gets to something kind of interesting, which is you've talked about being obsessed with asking better questions. And you said at one point, are you converging on an answer or living in a question? And I think this idea of living in a question, like being open to the possibility that we're wrong and that things are paradoxical and complex is really, really important both in investing in life. And I,

Starting point is 01:07:17 I wonder if you could just talk a little bit about what that means to you, this idea of living in a question and how that applies to these intellectual problems like solving an Elon Musk or a Tesla. Yeah, I know. I think that's wonderful. So I think about a question as kind of a wave function, right? You don't want to collapse the wave function with an answer necessarily. You want the wave function to be open. You want to be curious. You want to be testing. That's why the idea of a hypothesis is just kind of the right feeling, right? This is something that the weight of the evidence suggests today. Let's see what the weight of the evidence suggests tomorrow. And so everything is kind of this hologram or this wave function where we're just on the railroad of curiosity, of question asking. I love Douglas Adams' book, You know, Hitchhackers tied to the galaxy where, you know, the kind of the sweet spot of that book is where, you know, the answer to the ultimate question is 42. But the punchline is, but what's the question?

Starting point is 01:08:22 And I think that's such a wonderful way. Think about understanding the universe is, let's continue to ask. ask deeper questions, but we need a force function oftentimes for better questions. I think all of us get stasis. I think we get stasis as a country. We get stasis as a business when we're not asking deeper, deeper or harder questions. Like, should we go to Mars? I don't know, but I know the force function of trying to do it. That question asking, that material science that's required, there's so much discovery that will happen through that force function that we will, you know, evolve as a species in many different ways.

Starting point is 01:09:06 And so I see this across many, many different systems where the forcing function of writing a book, of writing an annual letter, of creating a challenge to nurture new habits, the forcing function opens up a whole level of learning, discovery, of insight. And so that's that, that's that curious, if I were to screen, you know, for a new employee, that's the number one I think I'm looking for. Is this person curious, like innately curious that wants to go on a journey with me to ask better questions and find, you know, find cool things. And that's kind of love the tribe I've tried to build around me of friends that they're also asking great questions like you.

Starting point is 01:09:53 When you go into a company and you're trying to figure out, obviously you're always asking questions and trying to figure out whether management is any good, whether they're allocating capital rationally and the like. And you've said, I think it was in a 2015 letter to shareholders. You wrote the only truly sustainable long-term competitive advantage lies in the culture of the business. So when you're going in and you're trying to assess the management and assess the culture, what are the sort of questions that you try to ask in very practical terms that are helpful to you to figure out, like, does their talk actually match the execution? Is there

Starting point is 01:10:34 consistency here? What are you asking? Yeah. What I've realized with culture, what I'm looking for in culture is the rate of change, the rate of learning that has been. being employed in the business. And so when you look at an extraordinary company is the rate of learning and iteration is very high. They're getting better. They're incentivized to get better. They're incentivized to improve. And so progress is both iteration, learning, and iterating, but it's also innovation, creating these elites and improvements that challenge the way things are being done. Question the requirement, automate, like use different tools. And so, you know, I'm looking for rate of change of learning in the system, how fast it is, how deeply felt

Starting point is 01:11:28 in culture that is. And that's kind of at that leading edge, which we've talked about in dynamic quality. You know, quality is kind of, as soon as you think you know it or have it, it's lost, right? It's like the Red Queen effect. The leading edge of quality is the leading edge of the train. It's continuing to change. Like, if you've ever been in hospitality, hospitality is so hard because you're constantly having to improve. You know, what's the new menu? How do we surprise the guest? Oman Tanashi, one of my favorite words, like, how do we delight the guests before they know what they want? And so that's kind of a great business, a great culture. Yeah, this gets us sort of to where I intended

Starting point is 01:12:13 to start our entire conversation, which is this whole Piper mindset. And there's a lot to unpack here, but basically what I was sort of thinking I would start with, but then got distracted for an hour or so and went in different directions, was the fact that you and your lovely wife, Stephanie, had a new son on January 1st. So first of all, congratulations. And you named him Piper, which stands for something that's very related to this issue of doggyed incremental progress. So tell us why you called your son Piper and what this means because I think this philosophy

Starting point is 01:12:51 really connects to the kind of businesses you're investing in but also the way you want to live your life. So explain what Piper means to you. Yeah. Piper is an acronym and it stands for persistent incremental progress eternally repeating. And I realized that that is this, that's the secret, right? It actually is the definition of compound interest, the definition of evolution, the definition of anything that grows and grows better. So this Piper Mindset was what I was looking for in cultures that you had referenced. I was kind of looking at for my own cadence of learning. It was like, did I, you know, was I exhibiting the Piper Mindset in my daily practices? Was I finding periods of intramidancy in my own, my own progress?

Starting point is 01:13:41 Stasis, static quality, not dynamic quality. And so Piper had long been this kind of fun term. I love acronyms, as you know. And when we were, you know, our son, we were trying to think of names for our son or daughter at the time. We didn't know. And we're like, Piper's a great girl name. So we both have said that, yeah, that'd be great.

Starting point is 01:14:04 And I was surprised. Stephanie was all in on the Piper name. And then we're really, it was going to be a boy. And we're like, still like it. still like it as a boy. So we're, and that's how it came to me. And I was so happy that she also,

Starting point is 01:14:17 you know, loved the term because it obviously means a lot to me when I think about this as a practice. Well, we did choose Charles as his middle name, Piper Charles. He was born on January 1st. And someone reminded me,

Starting point is 01:14:31 he's like, oh, that's really cool that you named your son after Charlie Mumber. I said, well, because they share her birthday. I said, oh, that's pretty, interesting. So Charles is a family name, but it was kind of also quite fitting that Hyper Charles is born on Charlie Mender's birthday as well. Let's take a quick break and hear

Starting point is 01:14:50 from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks.

Starting point is 01:15:27 Companies like Ramp and Ryder spend 82% less time on audits with VANTA. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at vanta.com slash billionaires. That's vanta.com slash billionaires. Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and plus 500 futures is the perfect

Starting point is 01:16:01 place to start. Plus 500 gives you access to a wide range of instruments. The S&B 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4x, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for. See a trading opportunity.

Starting point is 01:16:29 You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus.

Starting point is 01:17:01 Billion dollar investors don't typically park their cash in high-yield savings account. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes, thanks to the Fundrise Income Fund, which has more than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise Income Fund in just minutes.

Starting point is 01:17:42 The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund's perspective. at Fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Yeah, Charlie would have been 101 that day. And so let's talk about this whole mentality of Piper a little bit more because about three days before Piper was born, you launched a challenge called the Piper 66 challenge, which you described to me as a commitment

Starting point is 01:18:30 to clarity, strength, and results. And you send me the program, which made me come. up in, you know, I sort of start to pass out just at the idea of the things that you were committing to. But it's a really interesting program in terms of the philosophy behind it and the daily tasks and how it's emblematic of the way you live your life. So can you tell us in a reasonable amount of detail, like what this entailed, what you did and what the impact of it has been? Yeah. I think it, like I said before you know, I think like a writing of letter or a challenge is a forcing function to try to kind of shock your system into learning something.

Starting point is 01:19:15 Right. So I think all of us, particularly around the holidays, we kind of, we take on new habits, holidays, sweets in the house. And when you're nine months, you know, your wife is nine months pregnant, there's a lot more sweets than the house and things like that. So I was like, December 27th, I'm like, I really want to launch something that's going to get me out of this pattern physically that I wanted to like, you know, start the new year, but also this birth that was coming. So I wrote down a bunch of things around kind of mind, body,

Starting point is 01:19:46 and soul that I wanted to challenge myself for six, six days. If I could, you know, create a habit or just if I did these tasks, which ones would stick? You know, 66 days to make a habit. But 66, as you know, is a much more meaningful number. To me, it's kind of like a source code number in many ways. It's the number of chromosomes of a coastal redwood tree, which is the tree that has evolved to have unequaled access to light. So when I ask the question, well, geez, I think Costa Redwoods grow fire retardant bark and grow to 375 feet in height,

Starting point is 01:20:29 like, ah, maybe it's their DNA. Maybe it's their source code. Maybe it's this hexaploidal 66 chromosomes that's very quite unique. So that's what 66 means to me. It means something that gets to the core first principles. So the challenge, as I mentioned, is this mind-body soul. So, you know, the 12 tasks were 66 push-ups, 66 setups, 66 setups, 66 minutes of cardio, 66 reps of shoulders.

Starting point is 01:21:04 And it was hydration, it was mindful eating. It was sauna, cold plunge, a holotropic breath were leading to meditation. 66, you know, it was kind of a theme throughout, right? But journaling. And so, yeah, tech detox. And so you would have sort of 6 p.m. to 6 a.m. Tech detox. So you'd have the 66.

Starting point is 01:21:29 in there. So, yeah, it became a kind of organizing principle, the 66, right? The 66. And, yeah, and, you know, at the end of the 66 days, you know, there was also one called no thank you. So, like, what are the things that you wanted to say no thank you to over that 66 days? Alcohol, sugar, or the two that, but I shared this with some friends. I said, you know, let this be an expression of what works for you. And they went on the journey with me. And I think we're dating 90 now or something. And, you know, I continue to do the practice. And not everyone was the way that I started, but I did nurture some new habits. And so it's been a fun, fun thing to do. I look forward to the next one minute. What's been most helpful to you? I mean, and also, why is

Starting point is 01:22:18 this relevant and useful for an investor or a highly productive person? Because obviously, you're, you're an athlete as well, right? I mean, you take your surfing and you're foiling and your tennis and all of these things seriously. But for regular people who are sort of serious about their work life, serious about their families, have limited time. Like, why is this relevant and what, and useful and what are the most important things we should be incorporating ourselves based on what you've learned?

Starting point is 01:22:49 Yeah, I think for anyone that's looking for to kind of iterate change in their light. So if they see a number of things that they'd like to be better at or do better, you know, whether that's fitness or anything, creating a challenge that you can say, I'm going to set aside this amount of days that I want to make a commitment to myself to do this. And I think you'd be surprised that, you know, that you can agree on that. And if you follow those, you can then determine at the end of it, ah, you know, this is a habit that I want to continue or which ones I want to continue. So I think it's a, you know, for one of the habits, you know, it was just permission to get on the floor and do some exercises, some stretching.

Starting point is 01:23:32 And that led to all kinds of other benefits. But I could be on a podcast and I'm like, I didn't listen in my chair. I could lay on the floor and, you know, and go through a couple of these tasks. So stacking things throughout the day where I was able to, you know, use the time for two different functions, not multitasking, but just to see. using that time more wisely. So I think for anyone that's looking to improve in any area, it's, you know, it's kind of a fun thing to do. And at the end of it, it gives yourself the confidence to maybe start other things that have kind of been seem insurmountable at the time. One of the things that's interesting to me is the degree to which deferred gratification

Starting point is 01:24:19 is built into that practice, but also into investing and many other areas. areas of your life. And I wrote about this, I guess, at length in my chapter about Nick and Zach, the power of delayed gratification. And you wrote at one point, to enjoy the views from the top of the mountain by way of the compounding path requires sacrifice, delayed gratification, a long-term focus, and most of all, a plan to fight off the foes of intermittency and variance when they rear their idle heads. I think that may have been from one of your year and letters about a decade ago. Can you talk about this idea of the enormous importance of overcoming the desire for immediate gratification and also your sense that on the whole good things tend to come

Starting point is 01:25:05 from struggle and challenge? Yeah, I know that's a, if there is one thing I could transfer to students that are interested in investing would be, you know, and you take on a little bit more of this attribute of delayed gratification. I think my entire focus of the class over the last 14 years is to both share these insights of investing, yes, but also share what they look like when they're practiced over a long period of time

Starting point is 01:25:41 by way of this delayed gratification. So I bring in lots of speakers and by example, say this is how, you know, this collection of people have done it. And I think at the end of it, what I hope I've transferred is, oh, maybe I'm not going to be so much in a hurry that I can go a little slower, that I can actually go work for that person who could be a real mentor for me. I'm not going to make as much, but the reward could be that much greater. Or I'm going to invest in myself over the next two years to where the three and four and five year reward is going to be that much better.

Starting point is 01:26:23 Because I think we all are inclined to kind of want to go really fast, but we can go much further if we can just be much more thoughtful in that kind of those initial conditions that can create something much more exponential. Last time you were on the podcast, we talked, I think, in some depth about the security analysis. class that you teach at Columbia, which obviously has this incredible history because it was the class that Warren Buffett took with Ben Graham back in I think 1951. And so you've done it now for 13 years and you've taught over a thousand students, I think. And there is something really

Starting point is 01:27:00 interesting about the type of guests that you bring. And I've come in and sat in on the class when people like Nick Sleep came and Todd Combs, who speaks every year. And it's interesting when you've talked about the class in the past that you talk about bringing in these specific guests, like people like Seth Klaman or Todd Combs or Howard Marks or Nick Slep, who you've described as models of success who are playing infinite games in an admirable exemplary long-term way. And you describe them as playing it with virtue and with a sense of class. And I think that's really unusual and very distinctive to you, this emphasis on values and virtues. And there are so many people who I think when they go about, you know, the business of investing,

Starting point is 01:27:41 they go work on Wall Street. And they're just like, yeah, I'm just going to make a lot of money. they don't really think about these questions of playing with a sense of class or playing with virtue. Can you talk about that? Because it's so, it's so characteristic of you and it's not common, I don't think, on Wall Street. Yeah, I think our last conversation I shared that I think about a kind of a bit of a continuum of intelligence from knowledge to wisdom to wisdom to mindfulness and mindfulness to virtue. And I think that is the continuum that I've tried to be on. And that end state being mindfulness and virtue is where I've seen the most extraordinary

Starting point is 01:28:31 success, both in a balanced life and both in business and investing, you know, and you look at Warren and Charlie and just how they've done it with such class, with such virtue. So the people I invite is not the ones that have the highest, the best investment record, but that they have two things, that they've had extraordinary success and that they're extraordinary people. And so that combination is the role model that that I'd like to share with young students. And now I'm less, you know, that's the bar. And it's the bar. And it's the barn that we try to invest in. We want to invest in businesses that are really trying to make the world a better place, that they have this essence of win-win and in the mindset across all counterparties.

Starting point is 01:29:25 You know, HICO and the Mendelsohn's have come into the class now. They're one of the most popular classes, and I always have them in, but just the way that they have a Piper mindset in running that business is doing good, doing so well by doing good. And, Todd, you had mentioned, and we have just an extraordinary kind of tribe. And, you know, the SSA from students to the speakers over here, as Peter Kaufman comes every year. Yeah, it's been a lot of fun. And I continue to, you know, love going in there in the fall to do it. I think the bar that I operate with everything I do now is, is this something I love to do?

Starting point is 01:30:07 you know love is kind of something which is also kind of an expression of of virtue is spend all of my time doing something I love and doing it with people I love it's unusual right I mean we we've talked I think in the past about a line that both of us loved from Josh Waitskin who you're very close to this idea of unobstructed self-expression and it's very it's very central to you this idea of doing stuff that you love. Love, of constructing your life in a way that's true to who you are. And I was thinking of you this morning because we had talked about that line that Spinoza had about studying everything from under the aspect of eternity and how Ben Graham had taken that as a really important line. And you've used it as the motto for your class. And so I was reading Spinoza yesterday and I sent you this line from him where he said, nobody is bound by natural right to live as another pleases, each man being the guardian of his

Starting point is 01:31:10 own freedom. Because it strikes me that freedom is sort of really central to what you do, like this sense of like wanting to be free to live the way that you want to live. And you, you sent me back a quote from Jonathan Livingston Segal. Can you tell me about that? And just talk about this idea of doing the stuff that you love and why that's not just self-indulgent. Do you have the quote handy from Dr. Livingston, yeah. Yeah, it was. So this is, from the writer Robert Bach, if I'm pronouncing that right, who said, Richard, Richard, yeah. Oh, Richard Bach, sorry, who said the only true law is that which leads to freedom.

Starting point is 01:31:44 There is no other. To fly as fast as thought to anywhere that is, you must begin by knowing that you have already arrived. Dr. David Simpson-Seagull is one of my top five books of all time. I've never read it. Oh, you would love it. It's my favorite book to gift, and I gift it to every age group. It's one of the ones that, you know, 16-year-old would get just as much out of it as an 80-year-old.

Starting point is 01:32:09 And it's, I always keep going back to it. But I love that quote. And I love that you had shared the Spinoza quote on freedom. I had came up with an expression, the essence of everything that grows lies in its freedom. And I expanded that. And I said, the essence of everything that grows lies in its freedom and un-freedom. And so freedom is a, is a, really an important construct of what you had to share, which is that unobstructed self-expression.

Starting point is 01:32:40 But also, we live with certain unfridoms. Unfredoms would be partnership, family, relationships, where there's, it's not just about you, it's about others. Like, how do I want to share this experience? How do I want to, you know, value others along the journey with me? And so that freedom, we think of a very like self-saying, but ultimately, I think there's the unfreatms that make life so enjoyable, too. So there's this paradox here with freedom and un-freedom that I've kind of played with. And you know, you look at the unfreatms of a tree, Costa Redwood wants to grow as high as possible, but it also has to grow really strong roots.

Starting point is 01:33:30 has to grow fire-retarding bark. It has to, you know, exist in a very special climate. And so there's lots of kind of gives and takes that lead to greatness and playing that infinite game is kind of that beautiful balance between freedom and on freedom. Yeah, and you see it when you're raising kids, right? If you give them total freedom and you give them everything they want, it doesn't really serve them. And if with your diet or whatever, you just take everything you want, it doesn't really work.

Starting point is 01:34:04 Like there does seem to be this kind of dynamic tension here in life. And beautiful when you signed it. And you had mentioned Infinite Games. You know, that's James P. And Jim, just a wonderful, had such an influence on my life. And I was able to share a class with him where we just had a fireside chat.

Starting point is 01:34:25 And that book today still is such an extraordinary book that, you know, he shared this kind of contrast between those that pay finite games and infinite games. And infinite games are just where there's, there's no finish line, right? You're playing for the game never to end. And those are the kind of, those are the kind of games I think are really interesting, where there's no finish line. There's no immediate, like you said, immediate gratification. And the result, there's no just this short-term reward, but that we're playing for something that's

Starting point is 01:34:58 beyond us and among us potential. You and I have talked a lot about these ideas of how to design a kind of spacious life, where you have room to think about these things. You can be kind of productive and successful in your career, and you're very idiosyncratic in the way that you've done this. And so I wanted to ask you a little bit about how you think about the allocation of your time. And you've said that success is the ability to control your time. Can you talk about the importance of constructing a life where you have this kind of freedom, this control over your time?

Starting point is 01:35:37 Yeah. Time is our most valuable resource. And it's how you, you know, we're we always talk about capital allocation. You know, ultimately we're all time allocators and how you, I think your joy will be how you think about how you allocate your time over your lifetime. And so I want to, I think you need to be, one should be intentional about that. Like my definition of joy over, say, a week or a month is how balanced I've allocated time across, you know, I count seven different areas, right? my how I am employed my craft of investing really important to me my family my friends my extracurricular activities my you know my community my total wellness to be you know healthy and then my

Starting point is 01:36:41 spirituality whenever you know over a day you know I worked really hard you know spent a lot of time in the employer category, or I served a whole day and spent a lot of time in the extracurricular category. But over a course of, say, a week or a month, I want to measure how that time allocation has been allocated. And I want to make sure that they've balanced there. And if there is balance, I find my level of joy is much, much higher. So very intentional about that. And that means saying no. It means saying no a lot. It means saying no to potential investors that, that want to come on, you know, they may want 10 meetings with various things and this. And I'm like, you know, that's going to be a time allocation that I can't make or I don't want to make.

Starting point is 01:37:30 Thank you very much. And just being really thoughtful about that and being kind of courageous to say no, when you, you know, that time is just going to take away for, you know, leading that balanced life. And do you think it just comes from a very clear sense of what you're optimizing? for what really makes for a happy and meaningful life for you? Yeah, I love that expression that Buffett put in the early partnership letters, the joys of compounding, right? But if you kind of flip that around, so the compounding of joy, you know, and that's kind of an ultimate bar,

Starting point is 01:38:09 you know, have you, you know, lived a real purposeful and meaningful life where you, you know, experienced a level of joy with your friends and family and you've left a bit of a legacy of goodness and virtue. That seems like a good life. You always seem pretty joyful to me. And I feel almost like I sort of internalize this idea that everything has to be a struggle. I'm pretty good at the struggle part. I tend to do everything through gritted teeth.

Starting point is 01:38:39 And then I have to kind of remind myself, you know, no, this is really fun. I get to interview my friend Chris. And like, I don't know. It's like I almost have to consciously remind myself to enjoy what I do rather than to enjoy it all in retrospect. When I look back and say, wow, that was really cool that I got to do those things. Yeah. No, it's a, I think one of the gifts has been getting to know you and seeing how you operate and how you treat people. Thank you.

Starting point is 01:39:08 Yeah. Yeah, you haven't seen me when I'm grumpy and hungry. So tell me about this concept of utori, that we've discussed before because I've seen one of the things that's very striking about you is that you always arrived places early and this seems to be reflective of a broader principle of cultivating utori. Tell us what this means. So, well, can you define utori for us? Well, I think you said to me at one point that it's living with a kind of spaciousness, but I'd never actually heard the word. I assume it's a Japanese word, right?

Starting point is 01:39:42 Yeah, you know, facieciousness, it is a Japanese word, and you are describing it well. You know, when I look at my schedule over the week or around a calendar, it kind of struck me because everyone that met Warren was up, you wouldn't believe how open his schedule is.

Starting point is 01:40:02 I remember Todd Combs, that was like the biggest takeaway when he started working for Warren. It's like, you couldn't believe his schedule is just wide open. And that is the definition of kind of like when I look at my week and I'm like, oh, look at the spaciousness in my week. I'm going to have this time to just sit and read any reports or I'm going to have this time to

Starting point is 01:40:23 take a meeting that will just be really organic, some type of kind of fun interaction with someone that I wouldn't normally take if I was just going from meeting to meeting. So I like to have lots of spaciousness in my schedule for these kind of synchronicities or just to kind of chase down some random thread, whether it be philosophical, learning, business-wise. And that's where I find to have, some of my best discoveries have been

Starting point is 01:40:52 when this spaciousness leads to, and curiosity leads to that kind of epiphany moment. So it's certainly a designed feature that you need to apply. You have to be very intentional about it. And there are costs to it. it too, right? Because I could have built a much larger, more successful firm had I wanted to take on X amount of, you know, billions of dollars of more assets. But there's a certain spaciousness

Starting point is 01:41:25 that would have been required of that allocation. So quite content with the decision. Do you think it also helps that you live in two places, right? That you split your time between a small town, 26 miles or so north of Boston and the jungles of Central America where you live near the beach and get to surf and the like. Does that help in a way? You've talked to me about that living in two places as a kind of life hack, that there's a kind of time dilation. What do you mean? Yeah, this was something that we discovered as a family, kind of when we were entering COVID. We had, you know, we came down to visit, our friend, be a minute. and Josh, and we were taking on the art of foiling together and some surfing. And going into COVID,

Starting point is 01:42:19 we had planned on spending four weeks in the jungle. And we looked at ourselves as we're about to head back to New England and we're like, we could be locked down there. We could be locked down here. Let's let's be locked down here. And the airport's closed. And we, this adventure and discovery of six months living in the jungle kind of opened our eyes to. what our family wanted and some of the benefits we saw in inversively being in two different geographies and being deeply involved in our work. You know, not checking out, but leaning in. And we could do it from two different locations.

Starting point is 01:42:59 And, you know, my wife, she was, he said, what would you need to do to live here more permanently? And she asked that question. And it was during during that first year. COVID. And, you know, I said, well, you certainly, we would need really great office space with generator backup and five or six redundancies on, on internet connectivity. And, and so her background was hospitality and real estate. And so she built this really wonderful workspace that I'm currently in, actually, and called Outpost. And that led to a lot

Starting point is 01:43:33 of things for our family, but it has, it has created this really, interesting insight about how it's linked in our year. I really feel that our one year feels like two years and that time dilation that you referenced of having a deep level of community, both in work and in play, had, you know, a jungle latitude to then going back to, you know, where I was raised and grew up in New England and having that. having, you know, going into New York and engaging with students. And all of that just really feels rich and exciting. And, um, and this is our 60 year now doing it. And it's, uh, it's, it's really been fun. And it was, it was such a play for here to be able to host you guys down here and

Starting point is 01:44:28 and share it with you. I, I really enjoyed it. We had a really wonderful time. And it was funny, because it's so hard for me to give myself permission to take a break. And I think, I think I came for nine days with my wife Lauren. And I had so many creative ideas while I was there. I mean, I'm sure I've lost them all because I wrote them in some book that I can't find or something. But it was amazing to see, I think, because I also went on a meditation retreat for about six days around the same time. And there was something about giving myself that space not to do anything formal that was such an unbelievable release. And so I think that's one of the things that struck me most in in observing your life. It's like you you clearly work hard, but there's a

Starting point is 01:45:12 spaciousness that you've allowed for. I don't know. I don't know if you would do if your results would be better or worse if you like didn't have all of these hobbies like playing tennis and surfing and foiling and you know, doing meditation. I don't know. What do you think? no, I think the, you know, when I, when I come back, you know, like that, that weekly time allocation, by being balanced, by making sure that I've allocated, I'm a better investor because of that. And I think that that's, you know, I bring more energy to my work if the other things are taking So I think that that's, it's the way that I've, I've found to kind of enhance the things that I'm trying to enhance, which, you know, on the, you know, our investment objectives and so forth.

Starting point is 01:46:06 But it's, it's fun. You know, we, I just got back from a three day trip with some dear friends and we were, we did this wonderful trip to the end of the road where, you know, we just got to share one of the most extraordinary surf trips with, you know, with Fred. Then you come back from that and you're just like, I don't know, you're inspired to pour yourself into this other other task. So I think all of this creates, I think it fuels, it fuels you, put you in a better place for each role. There's also something about you having constructed an investment approach where it's super concentrated in about eight stocks. So you don't have to make many decisions.

Starting point is 01:46:51 that allows you to live this kind of lifestyle. And it sort of reminds me of Joe Greenblatt once saying to me something about how when he decided, I think he dropped out of Stanford Law School. And he said to me, I didn't want to work like 80 or 100 hours a week. And he's like, I wanted to do something where I was rewarded for the quality of my decision making, not for the number of hours that I put into it. So I think it's sort of connected to your investing style as well, which not only suits your temperament, but allows you to do the kind of deep dives that you do and to live a rich

Starting point is 01:47:24 life. Yeah, and I think, I think when you look at, you know, I find the four to six a.m. window for really deep work is really important to me. And, you know, so when you look at that, that time throughout the day and just understanding where can I do deep focus work, or, where I want to allocate other time where I'm a little bit more distracted. And, you know, yeah, so I think it's, it's just choosing, you know, what's right. What's that unobstructed self-expression that works for each person? I think another thing that's been really central to your success, just having observed the way you operate, is the way you've surrounded yourself with this kind of group of people.

Starting point is 01:48:14 all of, you know, I remember Tom Gaynor talking to me about being a node in a neural network and that that was a great strength for him. And you've talked about network intelligence being a kind of cumulative superpower. And it obviously stems in some ways from your class where you have this incredible array of former grad students and teaching assistants and like, do you have advice on that? Because you have this incredible community of peers who, you mentioned your mastermind group that discusses Tesla. Do you have advice on building this kind of network of trusted, high quality people who can learn together and grow together? Because it's very distinctive to what you do. Yeah, no, I wish I knew it 20 years ago, because I think I wouldn't even approach

Starting point is 01:49:01 it differently from the beginning. And so I've discovered it. And it is so joyful to go on a journey with people you love. And, you know, dear friend of mine, Paul Buser's here for this family right now. And, you know, he has a great podcast. That's called The Joy's of Compounding, I believe, State of Road. And, you know, and these are long, you know, relationships of shared trust and learning. And when you're able to do that and you realize everyone's painting their own canvas, you know, there's not just one canvas.

Starting point is 01:49:37 Everyone's painting their unique canvas. And if you can help each other kind of on that journey, it becomes so fun. And you get to appreciate the canvas that these other investors that are your friends, kind of part, not competitors. We're all helping each other. It was a big realization. I think one of the things I struggled with for a long time was that I'm naturally very competitive. and then I was also, you know, I was in these environments like at Eaton where they would read from, you know, 210 up, like where you came in your year and they would literally read it out loud. And then you're competing for a few spots at Oxford and Cambridge. And then, you know, and then I became a journalist where it was always sort of a zero-sum game. Like, you know, I've survived so many rounds of layoffs before I was finally laid off. And so I think it's really hard actually.

Starting point is 01:50:35 to overcome that feeling of like always it being a contest for survival. And it took a long time, I think, for me to get comfortable enough to sort of drop at least some of that and be like, no, no, life is much better when my friends and peers are doing well. I don't know, does any of that resonate at all for you? 100%. 100%. It is a positive sum experience. And the more, you know, this idea of scarcity versus abundance, you know, I think scarcity is there's

Starting point is 01:51:05 not enough. And I grew up with a lot of people that believed there wasn't enough and they had to take theirs. And then I realized that there were certain people that there was linked. You realize that it's not just an abundance mindset. The more you give, the more you receive. And that was like so counterintuitive. But it was like the, and you talk to people who do this and operate this way. And they're like, I don't understand. The more I give away, the more generous I am, the more. The more I've been given. And so that is a, it's a reality that then I realize, I just only want to be around people that, that share an abundance mindset, that are abundant with their, you know,

Starting point is 01:51:50 their learning, their insight. And so I have all these wonderful groups in my, in my graph, my network, where, in WhatsApp is a great tool for this, right? Where we're just real-time sharing information. You know, I generally have a mastermind around every business that I, I carry. deep about, even things I don't own. And maybe a two-person mastermind. It might be 15-person mastermind.

Starting point is 01:52:11 Sometimes it's a philosophical topic. And in that real-time exchange of information, of staying connected, of kind of appreciating and sometimes traveling, you know, the Zermat trip, which is called the Longwalker Tree. I hope this Goodwood event becomes an annual perennial event for us,

Starting point is 01:52:32 which you talked about value in. We really highlighted. value 3.0. So now these have become spots on my calendar where, you know, it's getting together in person with these groups down here. It's been really a treat because, you know, because of the destination, you know, I get folks like yourself and Lauren and Paul and Molly and others that, you know, come through to kind of share this experience. It's, you know, I like that. I like that mindset. It's interesting. It's a whole different approach to life that I think requires a degree of courage. And whenever you talk about living in this kind of more generous giving way, there are a couple

Starting point is 01:53:15 of natural reactions to it. So one of them obviously is just the sense of hypocrisy, right? Because I always feel like, you know, I talk a good game. But then when it actually comes down to it, I don't live up to it most of the time. But then the other thing that people often complain about is, especially when you're hedge fund managers and the like talking about living in this kind of generous sharing way with lots of service and they're like, well, it's all very well for him to say because he's rich. And I think that's a really, it's a really interesting reaction that you get from people. But I think it requires a kind of leap of faith almost to be like, no, maybe it will actually create greater abundance and happiness for you.

Starting point is 01:53:55 Do you have thoughts about that? Because you must encounter this kind of skepticism as well. Yeah. Another acronym that I kind of try to orient around is it spells lights. You know, love, integrity, gratitude, humility, trust or deserve trust, and simplicity. You know, that last one, simplicity is one of the most important ones. It's how do you design something that is also potentially simple. Like it's in, and you live by these other attributes, I think it can get you to a place that I think you'll be really happy about. And it might be different from what an outward expression of success versus an inward scorecard that you have. And I think that's important.

Starting point is 01:54:49 Like I have an inner score card that means a lot to me, but it might not meet the external court scorecard that others might deem as being successful. And I think that that is, it's important just to know what, which scorecard you're playing for. Is that your internal score card, your external scorecard? Yeah, I was thinking about this before with this idea of self-improvement as well, like the constant perpetual incremental progress. And you had sent me something when you were traveling in Paris a while back and you were in the, in the Shakespeare books store, and you sent me a quote that was, I wish I could show you when you were lonely or in darkness, the astonishing light of your own being. And then another time you

Starting point is 01:55:34 sent me something that was a poster someone had written about a bimitsva boy whose rabbi said to him, I think the challenge will be whether you ever find a way to be proud of yourself. And this gets a really interesting question about the inner scorecard, right? It's like, we're sort of constantly trying to improve ourselves. And so there's a sort of dissatisfaction there. And yet at the same time, you do have to have a kind of pride in yourself. an inner joy. Do you think about that at all? Like how to get this balance where you're constantly striving to get better and grow, but without actually this sense of self-loathing or dissatisfaction with who we actually are right now with all of our flaws and imperfections?

Starting point is 01:56:16 So happy you remember that you saved that quote. Yeah, I love that quote, both of those quotes. Yeah. And of course, you knew the bookstore right away. You're like, oh, I've been there. It's a beautiful, beautiful store, right? Yeah, no, I believe the luminosity or the illumination of a pure, every single person. And something might be obscuring that light. Could be seers, could be vulnerabilities, could be shame, like whatever it might be, is obscuring the light. And it's kind of like that.

Starting point is 01:56:49 If everyone knew just how brilliant their own light is, you know, and kind of helping them kind of see that. It's kind of a, it feels like a, it's nice. You know, when you witness someone else, you see their life, and you could help them make that more, make others see it as just kind of a beautiful journey to go on. And you can do that with friends by being a witness. You can do it through, you know,

Starting point is 01:57:18 if you're mentoring someone and giving them that, you know, just that adding confidence or through a child. or a family member, but just reminding them of that, just that inner light. And then giving them also a way to kind of measure their happiness on their onlyer light versus some external measure of what they think that the light should be. So those are things that I think,

Starting point is 01:57:47 like he said, it seems to be a good, a good objective. Yeah, I sent you a song once a while back that my daughter Madeline had written. and sung and it was, I think it was accompanied by a video that I had taken of her when she was a little girl just leaving school. And she was talking about the fire in her eyes or the light in her eyes and whether, you know, like whether it would last. And you wrote back to me,

Starting point is 01:58:11 the light we have in our eyes gets clouded over by life. Clearing away those things to keep that light shining bright is our life's greatest purpose. And then you said, when your light is brightest, others can see their own. Wow. That really moved me. That's how... Yeah, she writes very beautiful music. Yeah, but I think it gets at a lot of those issues of like, you know, we get so

Starting point is 01:58:35 down on ourselves or so lost or misaligned or frustrated with ourselves that like we kind of, we lose sight of who we are and what we can do. And so I like the fact that you're constantly focusing on like, no, no, like, There is this shining, the shining light underneath it all. It's very Buddhist in a way. Yeah. And it's one of my favorite living poets, writers and thinkers is David White. Yeah.

Starting point is 01:59:04 And I think David's poetry always speaks to me in this, in this, speaks to this horizon edge that we're all on, whether that's the inner horizon or the outer horizon. And to be aware that in this liminal state is something so special, constantly. 2, which was David's second book of essays on words, was something I had gifted as kind of my year-end gift, both to the students as a parting gift, but also to my friends. And he signed, David signed a, I mean, did he sign, I think 200 copies of the Constellations 2 for me. But it was such a fun gift to give because his words kind of take us to a place, like, post, post, poetry can into that something beyond language, right? And it's, for any of your listeners who haven't experienced David's work, it's just extraordinary. Yeah, he's, he is such a light.

Starting point is 02:00:07 He understands his powers as a, as someone that can communicate this in such a way. And, you know, I've got to know David over the last few years and he's a great tennis player as well. So we play tennis together between me and joining, enjoying his writing. I'm pretty sure, I may have said this to you before, and I'll let you go in a minute. I'm pretty sure I heard him on an amazing podcast. I have a feeling was the On Being podcast with Krista Tippett many years ago, where he talked about how he ended up kind of exploring stuff and going off into the wild and stuff. And if I remember rightly, basically he had met some guy while sheltering from a storm.

Starting point is 02:00:51 I'm giving you a super abbreviated and probably wrong version of the story. He'd met some guy. He went randomly to shelter from a storm, and this other guy came in and sheltered from the storm. They started talking, and the guy became a sort of model for how to live his life. But as I recall, that guy had tried to commit suicide in London and was jumping out of a window, and the window kind of fell and trapped him. And so he actually couldn't get out. And so it was just this amazing story of the strange turns that life did.

Starting point is 02:01:21 take. It's a great story. Yeah, he did, he did these very long-form interviews with Rick Rubin. I think there's six hours of recorded conversations with him and Rick. And whenever you spend time with David, all of his poetry is memorized. So he can literally just share these things verbatim, the way that he wrote them. And the way that he delivers and then contextualizes is quite special. Well, on the subject of poetry, you had sent me a poem that you had written a while back. And there were a few, there were a few phrases that I cut out from it that I really like where, that are very quintessentially Chris Beck, where you had said, everything is a paradox, everything is infinite, everything is a graph, everything is a miracle, everything at its core is pure joy.

Starting point is 02:02:14 And so I like that. It's a, those are nice summaries of a lot of the themes we've discussed today. So I'm very thankful that we're on this journey together. And I've learned a lot from you over the years. But I also just really enjoy hanging out and getting to chat about these things. And I love the fact that you have this sort of soulful approach to investing where your returns are fabulous, but you still get to kind of enjoy your life and study and think about things and meet really interesting people.

Starting point is 02:02:43 And so you're a great model and a lovely friend. So thank you for everything. Absolutely. William, you've enriched my life by being part of it over the last number of years we've known each other. So it's been so fun. And I look forward to so much more adventures with you. Thank you. And yeah, the compounding of joy, not only the joy of compounding is hopefully the road ahead.

Starting point is 02:03:08 So yeah, thanks so much. It's been a great treat. Thank you, William. All right, folks, many thanks for listening to my conversation with Christopher Begg. If you'd like to learn more from Chris, it's well worth revisiting. the previous podcast episode that we did together back in May 2023. That episode was titled High Quality Investing. In that conversation, we talked in some depth about how Chris identifies great businesses by seeking eight different layers of competitive advantage. We also spoke about

Starting point is 02:03:39 what he learned from his many conversations with Berkshire Hathaway's Todd Combs, who's a regular guest speaker in the security analysis class that Chris teaches at Columbia Business School. And we chatted about three of Chris's heroes, Andrew Carnegie, Charlie Munger, and Warren Buffett. Speaking of Buffett, I'll be heading to Omaha at the start of May for my usual pilgrimage to Berkshire Hathaway's annual meeting, so I hope to see you there. In the meantime, please feel free to follow me on X at William Green 72, and as ever, do let me know how you're enjoying the podcast. It's always good to hear from you. Until next time, take care, and stay well. Thank you for listening to TIP.

Starting point is 02:04:21 Make sure to follow Richer, Wiser, happier on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting. Thank you.

We Study Billionaires - The Investor’s Podcast Network - RWH056: Calm Amid The Storm w/ Christopher Begg

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.