Yet Another Value Podcast - Management interviews: the most underdeveloped skill in investing | Ross O'Toole

Episode Date: August 2, 2026

Management interviews might be the most underdeveloped skill in fundamental investing. Ross O'Toole has been investing for 25 years and read over 500 investment books, and he couldn't find a single one on how to actually conduct an investor-management interview.... so he wrote Breaking the Script, a field guide to getting management teams off their rehearsed talking points. We get into why "what" questions beat "why" questions, whether you should grade a plastic surgery CEO and a coal company CEO on the same curve, the case for recording your management meetings, and why asking for examples is one of the biggest double edged swords in investing.I push back with my standing worry: management teams are really, really good salesmen, and I always walk out of these meetings wondering if I'm the patsy at the poker table. Ross's answers (build a longitudinal baseline over repeat interviews, ask for the negative example every time you get a positive one, and save the hard questions for the crescendo) are why this book went straight to the top of my "hand it to an intern" list.Grab Ross's book, Breaking the Script: https://amzn.to/4fLg8ROThis episode is sponsored by Fiscal.ai: https://fiscal.ai/yav. Fiscal.ai is a modern financial data platform for global equities. In addition to their web-based terminal, they offer API access to real-time fundamental data: 20+ years of financial statements, ratios, segments, and KPIs, with data updating within minutes of earnings reports, not days. I'm not just an advertiser; I signed up with my own money to plug their API into the AI tools I've been building. Use my link, fiscal.ai/yav, for 15% off.Chapters:(00:00:00) Introduction(00:02:00) Why management interviews are a double edged sword(00:03:47) Why Ross wrote Breaking the Script(00:07:15) Are we deluding ourselves? Testing management credibility(00:11:53) Should you grade CEOs on a curve across industries?(00:14:44) "What" vs "why": framing contentious questions(00:18:27) Are interviews actually an alpha source?(00:19:39) Where management matters most: deep value vs tech(00:22:32) Would interviewing 2008 Zuckerberg have helped?(00:25:14) Preparation and repeat interviews(00:29:20) Should you record management meetings?(00:31:54) Asking for examples: conviction builder or sales pitch?(00:34:00) Always ask for the negative example(00:36:00) Making management grade their own execution(00:38:20) Interviewing companies under activist pressure(00:41:30) Buffett's silver bullet question, reframed(00:46:02) Question order: crescendo to the hard stuff(00:48:29) Closing thoughtsRoss O'Toole / Breaking the Script: https://amzn.to/4fLg8ROLinks:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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All right. Hello, welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. Today, we've got a slightly different one for you. Ross O'Toole, who wrote the book, I'm holding up for those of you on video, Breaking the Script. There'll be a link of the show notes. Of course, you should click on that and go read it. It is only about 75 pages, I'd say. So it's a super fast read. But breaking the script is all about management interviews. And look, I find management interviews fascinating. And I will admit, I was also thinking about podcast interviews when I was reading the book. But it's all about how to improve management interviews. And I find management interviews fascinating because I use the term double-edged sword on a different piece

in the interview, but I find them to be a double-edged sword, right? Management teams are very skilled. And they talk to a lot of investors, and they're very good at telling a story. So I always walk away from them saying, hey, am I having the wool pulled over my eyes? How much can I trust did I just gain false confidence by talking to a management team that kind of reassured me? Or am I finding out new information? And look, I think they're vital, even if you're like me and a little bit of a skeptic and a little bit worried about getting the rule pod over your eyes. I will tell you they're so useful because if you've got a bad management interview, it can be such a red flag and it can save you from so many disasters.

And I will not say the name of the company right now, though if you're an OG who's been listening for about a year and a half, you can figure it on. I did a management interview last year that set my hair so much on fire that I instantly published the public letters to the board because I was like, this management team is going to destroy this company if they're not, if they're not held accountable. So, you know, even if you don't think the opposite is there, which it might. might be on the downside protection that's there. And hey, half the game is avoiding the downside, right?

So anyway, Ross has written the book. We're going to dive into how to improve your manager interviews, taking notes, all sorts of stuff. We'll get there in one second. Link to the book and the show notes. But first, a word from our sponsors. Today's podcast is sponsored by Fiscal.aI. Fiscal.aI is a moderate financial data provider for global equities.

In addition to their web-based terminal, Fiscal is one of the leading data connectors for Claude and ChadGBT. With their self-serve API, you can connect in a re-reactored. You can connect in real-time fundamental data directly to your LOM. And look, I sent it in a podcast before and I'll say it again. I am, they're not just an advertiser. I've been doing lots of cool stuff with Claude and cowork in particular, building all sorts of awesome tools. And I need an API.

So guess what? I signed up with my own money, tossed my own credit card down and said, hey, fiscal. I need you guys to plug into my Claude co-work for me so I can keep building these cool tools and ab assets to real-time fundamental data and stock prices everything. And that includes more than 20 years of financial statements, ratios, filing, segments, KPIs, and all sorts of other things. Unlike other providers, their data updates within minutes of earnings reports, not days. So whether you want powerful out-of-the-box terminal or the real-time AI connector with API, you can use my link at fiscal.a.i slash yav.

That's fiscal.a.m. slash yavit to get 15% off. And there'll be a recommend show notes too. All right. Hello and welcome to you another value podcast. I'm your host, Andrew Walker. And today I'm happy to have for the first time. I'm holding up, he wrote the book, breaking the script on Mathory Management interviews. Ross, how's it going?

Thanks for asking. How are you? Doing good, doing good. Excited to talk about the book and perfecting management interviews, which is something I've done a lot of, thought a lot about. Super excited to talk about that. Before we get there, disclaimer, nothing on this podcast, investing device.

I don't even know if we're going to talk about socks today, but people can see the disclaimer in the show notes and at the end of the podcast. Speaking of in the show notes, I'll include a link to Ross's handy little, again, I'm holding my copy up, my daughter, put a little sticker on it right here. I'll include a link to Ross's book in the show notes so that if you hear this and want to learn more about management interviews and stuff, we can dive in there. But let's hide into the interview. So, Ross, you wrote this book. Let's start.

Why did you write a book on conducting management interviews? Yeah. So I've been investing for 25 years. And I think over the last five or ten years, it just, I kind of realized that there really isn't anything in the public domain or things that I've seen. I've read over 500 investment books that are specifically related to the investor management interview. And I found that sort of surprising, since for fundamental investors, a large part of our job

is talking to management teams. And I've worked at four or five different asset managers. And it's just something that's never kind of handed down, at least at the firms I've worked, at and there's nothing, well, there's books about valuation or competitive advantage. There really wasn't anything about how do you actually conduct this interview. And so I had originally thought it, I would have a book of questions. I had a large book of questions that I would just keep adding to over time. And then that slowly turned into, well, maybe I should actually address, like, some of the

principles and tactics of doing an interview. And it's a book I wrote for myself. I thought if I was coming out of college and I was starting a career in investment management, I would buy this book. I would want to have a reference guide to some of the key tactics or principles that you can use. And I thought the way I set it up as just sort of a reference book that if you're an experienced investor, there are still, you don't have to read front to back. There are still parts of the book that I hope that even an experience investor would go,

oh, that's actually pretty interesting. I should incorporate that into my process. And so that's the reason I wrote the book. No, is spot on. And it's so funny, you say that when I was reading the book. And I can prove I read it. As I told you, where is it? Bottom of page 41, I caught a typo.

So there you go. Anyone can go read it and see Andrew. When I was my first thought was, man, if I hired an intern or a first or second year, this would go right to the top of what I want them to do. And particularly, you know, I say first or second year, but depending on the program, they might not have first or second years like leading interviews. Like whenever they're transitioning to leaving interviews, this goes right to stop.

And as you said, that's not to say that someone who's in their 20th year couldn't benefit from that because I was reading it and I was like the whole time I was reading, I was actually thinking, oh man, these notes don't just apply to management meetings. Like I want to apply these notes to how I conduct podcast interviews, right? Like it's just how to do interviews. But so I'm with you. Let me go into the management interview itself. You know, my first, I just stepping away from the book, you know, as an investor,

my big worry with management interviews is that management gets the top because they are good salespeople, right? Like, and that doesn't mean salespeople in terms of like use car selling someone. They're just good at selling themselves. They have to be. They tend to be much more personal, all this sort of stuff. They probably, depending on the day, are dealing with multiple investors a day. And I, they probably deal with more investors than I deal with management teams, right? I kind of worry that whenever, whenever I'm going into a management interview, you know,

if you don't know who the Patsy at the poker table is, you're probably the Patsy. I worry that I'm the Patsy at the poker table. And despite having all these skills, like, it's very rare that I walk away from management interview and think, oh, that management team just, like, embarrass themselves. So are management interviews as valuable as you and I seem to think they are, where we probably invest every company we invest in.

We're probably talking to management. We're going to conferences and doing tons of management interviews. Are they as valuable, or are we kind of diluting ourselves? It's a good question and it's something that I've thought about myself and I don't actually know what the answer is. I think to a certain extent we want to believe that we're very good at reading management teams. Like, right, this industry is a lot of alpha personalities. You have to be both confident and humble to be a good investor. So I think there's an aspect of it.

If you have a career in this business, you think you have good judgment. and you think you can decipher what management team is telling you the truth and which one is not, we probably overestimate our ability to do that. On the other hand, there are benefits to having this conversation with management, and there are, again, techniques that you can use to hopefully get to a better responses. I mean, one example would be, and I think Howard Stern does this well. It's like called poking. I have a chapter on poking.

And it's, you know, in his world, he's asking like a provocative question, usually about one of his guests' relationships. And it sort of embarrasses or makes his guests laugh. But he's sort of doing that in purpose up front, and he'll kind of continue to do that through the interview because eventually it sort of breaks down this wall that his interviewee wants to answer the question. And I think that's one of the dirty little secrets about,

interviews and people is people really do want to talk and people do have a hard time lying. And so if you construct an interview and kind of continue to come back to the same question, and I think asking follow-up questions in different ways where it's the same question but just ask differently, it's hard for someone to keep a straight story unless they're actually telling you a story that's believable. That comes back to There's that movie with that confidentiality. They have that police scene

where he's got two suspects in different rooms and he's playing him off each other because, you know, and that's why police do will ask for someone's story once and they'll bring him back in and ask for the story again and again because if you're lying, you will end up not being able to tell the story

the same way all the time. So it's kind of a long way to answer and it's unknown if it's helpful, but as a fundamental investor is a big part of our job. I do think there are benefits to it. I think the benefits are probably more from longitudinal.

If you can talk to the same management every quarter year after year, you're going to start to discover whether they're more credible or not because you're going to have a baseline. So that's helpful. And, you know, I think it's not necessarily, for me, it's not necessarily about the numbers.

There are, like, asking the atypical question is a good example. At the end of the day, there is an aspect of you're trying to find out the CEO or CFO. Do they think logically? Do they have, are they nice people? Are they just good? Like, not even outside of the business aspect because businesses are run by people. So you actually, you hit on a lot of things that I wanted to touch on on this interview. So rather than try to hive into the six different things that you touch on, because I think we'll hit them.

I'm just going to stick with my kind of script that I prepared. Okay. You know, one of the things I was thinking about is I'll go in, I'm a journalist. I'll look at any company. If I'm interviewing and let's choose two diametrically composed companies, a coal company CEO versus the CEO of a plastic surgery company, right? Those are two wildly different tasks, right? Should I be grading them on a scale?

because the plastic surgeon, again, I have trouble investing in things that do medical sales because they sell to doctors and those guys are just like the kings of salespeople. And I'm always like, oh, God, little me sitting in my corner, sitting in my, not corner, in my closet of an office. Like, I'm going to go and they'd be like, dude, we try to sell plastic surgeons $100,000 worth of surgery equipment in five minutes. This investor who wants to buy stock, like, I'm a fish to them versus a coal company CEO. You know, not that coal company CEOs are going in and.

you know, actually swinging the pickax anymore, but they tend to be a lot sleepy or small bank CEOs, small insurance companies. Should we be grading them on a scale or should we kind of have the same scale for everyone? Yeah. Let me think about that for a moment. Well, I think you could do it either way again. I mean, it's like the end of the day, like the interview in your example and maybe not trusting the medical device company CEO as much because that industry, it's extremely important to be good at sales. And so you're running the risk that they're pulling the wool over your eyes in terms of what they're telling you. I mean, the management interview is just one part of our jobs, right? So that comes back to more of the mosaic theory in that you'd have to marry that interview

up with what you're seeing in the financial results with maybe what you're reading and other expert network calls with what you're talking to the cell side or other analysts about to come to a fuller picture the interview itself would probably give you a false ideas if it's if you're only relying on that because you're also kind of playing into some of your are and it's not just yours we all have our own individual biases right the bias that hey i don't maybe when i go into an interview with a medical the vice CEO, I might come in not trusting that as much as if I go and speak to a CEO of a coal company where I feel more comfortable about that industry. And so I'm more inclined to believe what they tell me. Let me let me switch to a different question. A lot of your book is based on

I'm investing and you can tell me for wrong, but it's kind of, I think the baseline interview you're structuring for this is I'm investing in maybe not necessarily a Berkshire Hathaway style compounder, but I am investing in a good company. You know, I'm probably investing in a good company at a good price, or I'm looking to invest in a good company at a good price and hold it for three to five years. It's kind of like that's, I tend to be a little more of a bottom feeder, and I think a lot of people listen to this more event-driven, bottom feeder, deep value, that sort of stuff. And a lot of times when you're event-driven, deep value, you're not looking for, you know, a good insurance company that's going to put up an ROE of 15% for the next five

years or something, you're looking for the company that, hey, guys, our cost is over, are the new plant six months behind and 50% over cost, or, you know, we just blew earnings estimate and lost our largest customer. Our stock is down 50%. When you go to those calls, they tend to be more contentious. And I hate to say it, but like if you were holding the stock before, it's probably going to be pretty contentious. If you weren't holding the stock and you're coming in, it's still probably going to be a hard interview because you're asking, you know, When you're doing those types of stuff, those types of abuse, stocks down 50% earnings or disaster, how does that change how you're interviewing the management scene?

Yeah, I think what I would tell you, at least in the book, is this sort of comes to the question around how you frame your questions, right? So you're going to make an already contentious interview more contentious if you use questions that start with why versus using questions with start with what. I think this is one of the, to me, like one of the better chapters in the book. Because why, when you say why did you miss results as an example versus what were the reasons that your results didn't meet your expectations? It's really the same question, but the why it creates defensiveness, right, on the part of the

other person. They feel like you're almost attacking them. And it comes, you know, why did you do that versus what were the reasons you did that? And so I think if you're in a contentious mean or in the types of situations that you are referring to, and really this works across all interviews, it is better to structure the questions with what. You're going to likely get better responses. You're going to create that rapport that I talk about the book. You're going to maintain that trust.

You're still asking a challenging question. But I think you are more likely to get an expansive response than if you attack the person, it's why questions. So it's, you know, as we, as you're kind of alluding to in our total interview, and I mentioned this book, I can't, no one can give you the best questions to ask a management team. Every situation's different. Every interview is different.

It could be the first time you met with the management team. It could be the fifth time. That's obviously going to influence the type of questions you ask. You're going to have a different rapport. If it's the first time you're meeting with them, if it's someone that you meet every quarter. But, and that's why these are just tactics and sort of examples of. of things you can use to hopefully get better responses. I know this is a little bit of a tangent

I'm thinking about right now. Like so there's Cameron Crow, the filmmaker that almost famous, has a new biography out. And he has a section in there where he's 14, and he's interviewing Chris Christopherson, who was a musician and actor in the 1970s. And he asked him a question, and Christopherson doesn't give a great response.

And Crow is 14. And so he's like, oh my gosh, this is going to be a terrible interview. And so he almost not by choice is silent. And that silence then is filled by Christopherson, who starts talking and sort of spilling his guts in a way. By the end of the interview, Christopherson tells Crow, he's like, this is one of the best interviews I've ever done. You're such a great listener.

And I think there's aspects of that that you can take into the management interview or any other interview, but the management interview too, where you're trying to create this space for them to be able to talk. And these framing of questions like why versus what, I mean, if you feel like you're being attacked, you're more likely to button up. You're more likely to give yes or no answers. You're more likely to not want to be totally honest with someone.

Whereas if you feel like the person's on your side, it is really trying to understand the reason behind what happened, and not like, you suck, then you can frame things like this way and you're likely to have a better conversation. It doesn't mean you will and it doesn't necessarily mean, I mean, this is the other dirty little secret? Like, is this going to lead to better alpha. I mean, at the end of it is what we're trying to do, right?

We're trying to pick stocks that we can generate alpha on. But I do think it can give you a fuller picture and a clear understanding of where management are coming from and you still have to use your own judgment that. You know, let's pick on that. So you mentioned generate alpha. I mean, you're right, right? Like everything as an investor, everything you do should be in the pursuit of alpha in some way, shape, or form, right?

Does the mentoring interview techniques, you know, it strikes me, again, just to come back to my question on different sectors, are they more useful in some sectors versus others? And I'll give you an example. I said coal earlier, right? Well, if you're the coal CEO, if you are the best coal CEO of all time, I'm not saying you couldn't create value, but you're still going to be kind of limited by, You know, your assets, the environment. There's a lot of stuff that's outside of your control. Now, a great CEO is a great CEO. And, you know, they kind of find a way.

But a great CEO in Cole versus a great CEO in tech, right? Mark Zucker, like, why is MySpace gone and Facebook is dominant? It is Mark Zuckerberg, right? So do you think the management interviews matters a lot more? Like if somebody came to me and said, hey, I just don't want to do management interviews. Could I say, oh, cool, go focus on my example, Cole. Or if somebody said, I think I'm awesome at management. Would I say, hey, biotech and tech, those are the two areas where you can get the most alpha.

Do you think there's something to that, or do you think it kind of cuts across this ones? I think that's fair. I do think that it probably speaks more to what you mentioned earlier. If you're a deep value investor and you're more reliant or your process is more dependent on a reverse. version of mean type strategy. So a relatively, you know, a quality company or maybe it could be a non-quality company, it gets to the point where it's, you know, every stock has its price kind of thing. Like, it's just cheaper than what it really is for the quality of the company.

I'm not sure. Like your Cole example, I, it may not matter as much to have a management interview with that CEO. It might be like, hey, this company is trading at a, 50% discount to its asset value and it's not asset value, and I think that gap will close over time, that might be all you need to know. You might just need to study the financials and know how cyclical industries work and have a view on the commodity price. And management isn't really, management is definitely not responsible for commodity prices. So that's a different situation

versus if you're trying to look at, yes, the technology company, if you're, studying meta or Facebook earlier in its career, you might want to understand Mark Zuckerberg's vision. How does he see the world developing over the next three to five to seven years? And how is he positioning his company to compete in an industry where technology moves very quickly? And there's more qualitative responses than quantitative answers in a financial statement that are going to be more important to you to get comfort or conviction around around the investment. You know, it is funny you say, you say Zuckerberg because I said Zuckerberg, right?

But it's funny because if you interviewed Zuckerberg, I don't know, in 2008, 2009, his vision almost would not matter, right? Because it was still Facebook desktop, right? But what would have mattered was, I think, with the people who blew back to him, you would have been like, hey, this is like an N of one CEO, and he'll figure it out, right? And you hear that so many times when I talk to VC's like, oh, I'm invested this guy. And I actually kind of think the business is building shitty, but he'll figure it out. Like, this guy is awesome.

And it is funny because I wonder if a management interview, if you had given me foresight of the next 20 years, except for who the winners were. And I'd gone to interview Zuck in 2008, I think I always said, Facebook is toast, right? The mobile shift is coming and these guys are going to be dead. And by the way, there's this startup app called Instagram that is going to eat all the young people. And you would have been totally wrong, right? he would have bought Instagram. He would have convinced them his stock was worth $2 billion instead of $1 billion.

It's just interesting how that happens. And would the interview have helped you or not, I guess would be my question to you. Yeah, it's a good question. I mean, look, I'm old enough to remember when Google went public and obviously Facebook went public. And, you know, in retrospect, Amazon, the same thing. In retrospect, these seem like they were easy investments, right? But when Google came public, the stock would doubt the day it went public. right? They did it. They did an effort

IPO. People had concerns. It actually went down the day they came public. Facebook broke IPO price. Facebook went down 50%. I think it IPO like 36 hours a share and fell to 18 because CNBC was every day on the news. It was right at the time like the iPhone

was coming up right. The mobile was taking over. They were predominantly on advertising business on desktop. And the market immediately thought, are they going to make this transition? And then, of course, they did. And it seems so obvious in retrospect.

Of course, like, it's Zuckerberg. It's Facebook. They were always going to be dominant on mobile. But, you know, that, in a way, this is a different discussion about markets and how, and narratives and how quickly they can change. But, yeah, I mean, I'm not sure. I think if you had had a conversation with Zuckerberg and he was able to explain to you why he thought they could make the transition to mobile, I mean, hopefully you could ask some smart

questions or at least get further information to give yourself conviction that everything you were seeing on the news was wrong. Because it is pretty amazing that that stock fell 50%, like very shortly after its IPO. Let me go to earlier we mentioned, you mentioned, hey, a lot of these are better if you're interviewing management over and over again, right? Like, you interview them once.

And again, this can be a problem if you're coming in and parachuting in after a one earnings blowout. Like, A, it's a contentious interview, and B, you have nothing to baseline it off of. But let me answer on the repeat interview. So when I've done repeat, repeat, interviews with the management teams, you know, one issue I have is they say something. And when I'm trying to compare it to the last time, like human memory is frail, right?

So how are you kind of benchmarking and keeping track of what happens over time? Because when I rely on memory, a lot of times I can forget or even in the interview, the management can shape my thing, right? I'll ask some question. They say, oh, well, if you remember when we talked about this last time, and I'll kind of be like, is that how we mentioned it last time? So I guess the solutions are recording. Like I have thought, should I just record all my management calls?

But, you know, that can be awkward. I say, hey, I'm going to record the calls. And they're like, well, okay, I'm going to be super buttoned up here because this is going to come back and bite me in court. Are you taking furious notes while you're doing it? Are you taking notes immediately after? Like, what do you think the best way is to get ready to do those repeat interviews with people? Yeah. I think this is actually unfortunate, in some ways, unfortunately.

The preparation probably is the most important part of the interview. I mean, really good interviews start well before the interview begins. And you're addressing this point. Like, in ideal world, you would have enough time to go back and review your notes that you would have taken really good notes. You could read, again, maybe the last four to eight transcripts. And you would go into that interview, and your memory would be a lot better than just trying to read,

remember what happened last time. So I think preparation is a big part of all interviews. And that's true outside of the investor management interview process. This is also something I've thought about that is this book going to be outdated very quickly because of large language models? I mean, large language models are pretty good. If you communicate with them about, if you data downloaded like a few transcripts and your personal notes and said come up with like five or seven good questions it can do it like a lot of that prep work and the interview process can almost be done by AI in terms of in terms of your question

around note taking that that's also super interesting uh what i found at least in the research is the ideal situation for interviews would be to go in with a lead interviewer and have a second person in the room that's lead responsibility is taking notes. It's very difficult to actively listen and to be able to think about what the person's saying and then also anticipate or think about the next question you want to ask them while you're trying to type or write out notes. Your brain is not sophisticated enough to hand multitask across all of that and I don't take good notes. I wish I took better notes. I really do need like a note taker or to have my conversation.

to record it because my first focus has always been, I want to focus on the person I'm speaking to and give them 100% of my attention. And I think I have better interviews for that, but the downside is I often walk out of them and either need to write down everything I talked about immediately, or I do end up forgetting it.

It becomes just more of a, oh, I remember that was a really good conversation. And I remember thinking that I heard a lot of good things and it leads me to believe it's a better fundamental investor, But if someone asked me specifics about the meeting, I'm kind of at a loss because I don't do well with taking notes and running the interview at the same time. It's very hard. So just to go back to what you said, it's funny.

You say, hey, I wrote this book, and I'm worried it's instantly going to be obsolete because of LLMs and all this or yourself. And I actually would have a different view. So my view has been, and this is kind of why I was thinking about recording and great note-taking. I kind of think like LLMs and AI,

it decreases alpha from alpha from some skills and it really amplifies alpha from another skill. And my contention would probably be like being a great interviewer. Now you have to get the data, but being a great interviewer unlocks unique data, just unique data in terms of answers, questions, and sort of serve yourself, which, you know, if you've got this AI that can analyze everything, I actually think being a great interviewer would increase because it's bringing in unique data. I actually think it's going to get rewarded in the future would be my contention. And now, again, you need to be a great interviewer and you need a way to get the notes.

And that's kind of why I was driving to the note-taking question. Because if I could get it recorded and I could get management to answer because I asked a great question in a unique way, I can get unique insight. That's actually unique data that I have that no one else has. Now, it's, you know, you can't get them to give you MNPI. But if a, the way they frame something is much different when you present correctly, I actually think AI would really amplify the alpha that comes with that. I'll pause there. Again, I've got plenty more questions, but I'll pause there if you want to response anything I just said.

Yeah, I mean, I think even with large language models, I mean, I foresee a future probably where these meetings are going to be recorded, right? Because it would be beneficial to be able upload your notes. And I, you know, I've read a book about Amazon a few years ago, and it was really about like their six-page memo, and it was about a number of things they've done internally from an organization. organizational perspective. And there was a chapter in there around their interviewing process.

And when you, you know, a candidate would come in and interview separately with maybe five individuals. And then they would have a team meeting the next day to discuss like everyone's perspective on that candidate. And what they found was if so, if they're just taking notes and sharing the notes, it didn't really represent what actually occurred in that interview. And at least in Amazon cases, I remember it, they, they did have a note taker like writing verbatim everything the candidates would say so that

every other person that wasn't in the room could actually read exactly what the interviewer said. So I think in that I think note taking, you know, I think in the future we probably are going to have recordings with this. And yeah, you mean you're speaking to someone like broadly where I'm glad I didn't, this is someone of a side topic. I'm glad I was, I'm not 22 coming out of college and being an investor today with large language models because it seems to me that a lot of younger analysts are using that as a first source. And what I was able to do because we didn't have that is I was able to create these mental models or frameworks by reading a lot and developing sort of like industry points of view. Because our job at the end of day is about judgment

and whether or not large language models are going to take that away. I mean, I'm still in the camp that human judgment is going to be in poor, particularly investing. And so it doesn't, you know, I'm glad I, I've developed those skill sets because I think it's just too easy to kind of outsource your judgment to other people. I mean, lots of, lots of investors already do that with just like sell-side research. They read a sales-side research for it, and then they allow that to kind of dictate what they think of things. That's like Jim Chanos used to talk about work from the inside out, not the outside

in. First place you start is read the, you know, the SEC documents, read the 10K, read the transcripts, read the company presentation before you even look at anything else, form an opinion yourself before you start taking information from other sources. Speaking of information for other sources, non-SCC information, one of the things that jumped out in the book is you're asking for examples chapter. And what this means is simply if a company says, hey, our new product saves our clients 10% per year, you ask for an example and they say, hey, you know, we worked with Starbucks and

they cut their spend on napkins from a million to $900,000 with our product, right? And that one just jumped out at me because I have found the asking, for examples, to be one of the biggest two-sided swords I've found, right? Because I feel like the example can help you build so much conviction. And the reason you ask, for examples, is because humans, we are narrative-driven, right? So somebody says, this is save 10% kind of goes through your head, right? but somebody says, hey, they give you the specific example, and now you've got something to hang your hat on, right?

And the reason I found it to me too sort is it, it's a real conviction builder. And, you know, if I've got a great investment and they gave me a great example, that's always what I'm going to leave with, right? But my biggest loss is when I've looked at them have been companies that have this great product or this great example of their product saving something, and they go and they give that Starbucks example,

and they say, hey, we helped our largest customer, you know, say 50%, or grow 50%, whatever it is. And the companies do this on the call, right? I was reading the Meta call last night. And Meta is calling out like an Indian brand who they helped to grow by 95% in a quarter with their AI. So companies know this works really well. The reason I said is my biggest losses have been, hey, the company says it. And then guess what?

The only person who used it was their largest customer or something. So I found it to be a double-sided sword. And this probably loops back to my first question where CEOs tend to be pretty good salesmen. And if you say, hey, give me an example of that, you've just teased. them up to sell, right? So how do you think about the double-edged sword of your asking for examples? And like having examples help you build that conviction and help you build the story that we all are looking for versus my kind of bear case where, hey, they tell you this story and you've built conviction. And that's the only good story they've got. Yeah, it's a really good point. And

it kind of also relates to my point about asking leading questions where you just get management to kind of tell you what you already are asking me to tell you. So, you know, the obvious answer here is whenever you ask for examples, you should always ask for a negative example or even more than one negative example so that you get some kind, you get a balanced perspective from the management team. If they're going to tell you like, to your point, like, here's all the customers that use it, then find out like why the customers don't use it for all you know, if I know, if you have a 5% attrition rate, why are they a tritty? And it's not perfect, but yes, I think as an investor, we always have to think about the negative side. I mean,

humans generally optimists own the future, right? Asimus sounds smarter, but optimists sort of own the future. And, you know, it's natural to always gravitate to the things that they're telling you well. To your point, like, I've read tons of transcripts over the last 25 years. Rarely do management teams, tell you that things are going wrong. Even when things are going wrong, they spin it into, it's good. Like, right?

And so it is a really difficult thing, but I think you just have to always push for the opposite. You'd always have to ask for every positive example that they provide you. Say, well, I want to hear the opposite side. Tell me about a customer that you lost. Why did you lose them?

It's not going to be perfect, right? No, it's just so funny. Like, when I were prepped for the, one of the last, podcast it was on parks, which owns SeaWorld and SeaWorld and a few others. And I was looking at him. And for four years in a row, 15 of the past 16 quarters, they've blamed poor results on bad weather.

And it's like, hey, guys, like eventually 15 of the past 16 quarters bad weather. Like, you're stacking, you know, did it go from, oh, there was a little rain to, oh, there was Titanic style like typhoons sitting in our thing? And it, there are other. Again, like, this is like, this comes to the like the scaling question, too. In your example with Parks, I would love to then ask that management team, like on a scale of A to F, like what grade would you give yourself in terms of your execution versus external environment over the last four to six quarters?

And if they say like, well, we give ourselves a B plus, that's where that preparation comes in. You say, okay, well, you blame weather for those six quarters. Like, of course, they might not, you know, they might not say, well, are we really deserve a C minus, but it does give you an insight into, are they really being honest? And do you want to invest with them because of that? That's not, it's not an end all to be all. Most people are going to always overgrade themselves. But by starting there and then if you followed up with a question of, like, you know, you blamed whether for the last four quarters, do you want to reconsider your grade?

It would be really interesting to see what they say. I think, you know, people, it's okay that management teams make mistakes, right? We all make mistakes. But, and I would generally want to invest in companies where the management team is at least realistic with what they've done and hear that, okay, yes, we didn't execute in this part of our market better and we need to do a better job. Again, it's one part. It doesn't mean you shouldn't make the investment, but I think you should all be a little bit concerned if a company is blaming weather for multiple quarters, but then, you know, we didn't ask them the question, but gave themselves like a high grade in their performance.

It should make you step back and say, how do I feel? about this? No. Well, two more questions. That transition to basically, you know, I think activism is a really interesting space in the market. And if a company blames whether 15 of the past 16 quarters, like that might be a signal for, hey, an activist needs to step in and kind of hold management's feet to the fire or, you know, there are a lot of proxy fights, like a lot of, how do you think about conducting a management interview in a company that is under activist pressure? And I asked that in a few ways. Like, you're kind of on your hand, your talking to the management team, you might be thinking about voting for the activists late.

The management team knows the activist slates hanging over everything that they're saying, they might be under a little more pressure. How do you think about that dynamic when there's kind of an activist going on there? So I think this also kind of comes back to preparation. I mean, we're management teams probably have more of a contentious relationship with their investor base is when their investor base doesn't really understand their business or the industry as well as they probably should, but has a high opinion of their perspective

on what the management team should do. And I think that probably creates some unnecessary tension that if you really prepared, it might be a better conversation. So if you're in a situation like that and you really did understand the company, and you really had a point of view, if it's rational, logical,

if it's backed up by a true understanding of the business, then hopefully, the management team, if you're addressing that, hopefully they would see the point of view. I mean, I think that's what the activists are probably going for. They believe they have a perspective on whether it's allocating capital or a strategy, a divestment that's distracting management teams or whatever it is. But if you just are like randomly saying, I should divest this business or you really should buy back stock versus like making these capital investments or whatever, if that's all you're saying, it's, it's just not, management

even could read through that you're not really that well informed and it's, you're not going to get anywhere. If you go in and say, like, I know, you have a better understanding of the capital programs, you have a better understand what the ROI and that is relative to their stock price and you walk through the math, maybe even you have something written down and you show them, if at that point they're still pushing back, like that's part of the conversation, then that's part of your analysis of them and how they do things. I mean, I think the really good activists, they convinced the manager teams that they're right.

And a lot of times I've also heard the dirty little secret with activism is you're getting the board and the management to do what they already need to do. It's just you're providing cover for them to do it. One more. You know, I think I think it was Buffett. It was someone Buffett adjacent, if not Buffett, who used to ask, hey, you know, if I gave you a silver bullet and you could kill one of your competitors. right who would the competitor be or I think another way for him it was if you could only invest if you couldn't invest in yourself but you could only invest in one of your competitors who would you invest in and I think I could be wrong I think one of the way this is one of the ways he

uncovered capital cities right because he'd ask all the media investors and they'd be like oh tom Murphy that's who we'd invest in could be wrong I maybe it's a failing on me but I've never been in a management interview where someone has said that and I've never asked that and And like, maybe I've just got a mental wall preventing me from it because I feel like if I said, no, it's, it's company dependent too. Again, like oil and gas company, maybe they just pick someone because what does it matter if your shell and Exxon, what Exxon does? It doesn't super matter unless you're, but I've never asked that question.

Have you tried that? Do you think that be a useful question? Because I don't believe it's anywhere in the book. Yeah, I think I might have a similar question at the end of the book when I have just kind of a generic set of questions to ask. You got the big list of questions. I'm looking at those. Yeah. I mean, you raise a really interesting point here. And I've definitely seen people on Twitter kind of throw shade at that question. No one ever asked it. It's the dumbest question ever. And I go both ways on that. I think

in, I think it's another way of asking the competition question, right? I mean, that's the other the thing about management interviews is in all likelihood, we as investors are at, 80% of us are asking the same questions, right? It's like, what keeps you up at night? That's like the classic question, right? And I think if you do that and you ask that exact question, they're used to that exact question. They have a rote response board. So finding a different way to ask the same question might get you a different response. And that's sort of what the book is about, like finding different ways to ask the same question. Because every once in a while, all of us will come up with a super clever question that they've never heard before and it's really insightful.

And even that might not necessarily mean you're going to grit alpha in the stock. But I do think getting management out of their PR answers by asking questions that they typically receive in a way that they've never received that question, you're more likely to get a slightly different response. Because like you said, a lot of times, they might be, they might see eight investors in a single day. And they're answering the same question

the same way every day. So I do think that is an interesting question. Look, I mean, I think management teams probably do that. I mean, I would imagine, for example, like technology companies that are in the valley, they're probably talking to their customers or their vendors and saying, who's really good?

What do you like? And that's how they all figure out what kind of acquisitions they should make. So that's not a dissimilar question to, if you're an industry analyst and every year you ask that question, and then over time again, this is where the long longitude comes important.

You start to get different responses. That's going to help you figure out like what's changing in the industry. Who's making? progress who's falling behind. So I think that's actually can be an important question, especially if you're talking the same managed team over and over again over a multi-year period of time. Just two points of that.

It is interesting because like the framing of which competitor would you invest in versus which competitor would you kill is actually, it makes a big difference because I wonder how honestly would be on the invest side. And I also wonder, you know, if their embeds side would reveal themselves to be very pro-cyclical and pro-momentum. And on the which competitor would you kill side, it is funny because for the past 15 years in airlines, I think if you had it as any airline, they would have said, oh, we would kill spirit, right?

And if you were an investor, you said, oh, that's because spirits that is this disruptor, low caught, they're eating their lunch. You would have gone bankrupt twice, right? They've had 100 jobs we're doing to do and liquidated. And it's just funny because there is no, there's no perfect answer. Like management teams are just as blind as us, but, and to your point on getting management, teams out of their comfort zone. Like, you're, you're definitely right there. It's very hard. I don't wear a suit, but, you know, we're just guys on a Zoom or in person going and meeting

them and asking like a lot of the same questions. Page 41, I mentioned it had the typo, but it also had my personal favorite question that asked, it's at the end of every investor meeting. What are other investors asking that I should be thinking about or that I should be? And I always pat myself on the back. It's like, oh yeah, of course. It's in Ross's book. But, you know, so we're all the same. But I guess where I was driving was, have you ever seen the interview Hot Wings? Yeah, yeah. The reason that show is so successful is they get an actor or an actress and they give them

the spiciest wings possible and ask them questions while they're doing it. So it takes them so far out of their comfort zone and they get a lot of real time like interesting answers. And you know, I wonder if we could do hot wings management interviews, right? Where we take a management team out and it probably wouldn't be recorded, but you give them some super spicy wings and then you start saying, hey, we won't say why, but what were you, what was going on during Q3 when he missed earnings by 50% after they have the the jalapeno popper super hot reaper wing.

Like that could get some interesting questions. Yeah. I think that's, yeah, I think in our world, that's, you know, how you structure an interview can be important. If you go into a meme, you should have hopefully an idea of what you want to accomplish for that meaning, right? So if you have a mean with management and your most pressing question is something around their margins. I actually don't think, and I think this comes through in the book, I would not ask

that question first, especially if it was contentious, right? You want to start off, I mean, it's not even bad to start off with a softball question. Ask the management to talk about their strategy, something they're going to get really excited about or their culture. Get them on your side. And as you build that rapport through the meeting, and it's like an arc, you crescendoing up to it, you know, you start, then you get to the margin. question when they're kind of primed, when they already sort of like you and they've developed like a relationship and they're more, you know, hopefully they, you know, doesn't work all the time. Like, nothing in this book works all the time. But hopefully you're going to get a more thorough answer at that

point. You have broken them down a little bit. And, you know, this comes back to asking the pessimistic versus optimistic question. I mean, I do think a lot of times it makes sense to even be, to ask a question that you don't know the answers. Like, you could say, are you, you know,

in my mind, I think you could do 20% margins and maybe you know they can't really get above 15, but you just throw it out there to see what kind of response you're going to get. And then you can follow up with like, walk me through the levers to that margin growth, which these are typical questions, but, you know, you can anchor

the management team to a certain number versus just asking an opening question, what true your margins be? Just say, when I do the math, I think your margins are going to be between 25 and 30 percent. Tell me why I'm wrong. Versus, you know, it's just a different way of saying, like, if you ask it optimistically, I really, you know, your margins are going to be higher than 30 percent, right? You could say, like, I really don't think your margins are going to be 30 percent. And you, it's just, you're going to get different responses depending on how you ask the questions. And I think you have to think about the order questions you ask. You want your harder questions to come a little bit later in the interview.

Great. Cool. Well, Ross, I think we'll wrap it up there unless there's any closing thoughts or anything you want to hit people with. No, that's great. Thanks so much for having me on. I really appreciate it. Yeah, Ross A Tool, the book is breaking the script.

There'll be a link in the show notes. If anybody wants to go check it out, I think it's just a great refresher on how to conduct many interviews. Or if you're in very unique case, podcast interviews, because I was thinking the whole time, how do I improve my podcast interviewing skills with this? And one of them was, you mentioned earlier, I'm always just trying to remind myself, SCFU, SCFU, just stop talking and let the guests talk. So hopefully I did a good job.

But Ross, it's been great, and we will chat soon. All right. Sounds good. Thank you. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor.

Thanks.