Oct 30, 2023 · 1h 6m · acquired
Charlie Munger (Audio) · Acquired
Charlie Munger · 30m spoken Ben Gilbert · 12m spoken David Rosenthal · 7m spoken Andrew Marks · 1m spoken Intro Theme Singer · 12s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In an intimate dinner interview recorded shortly before his 100th birthday, legendary Berkshire Hathaway vice chairman Charlie Munger joins Acquired co-hosts Ben Gilbert and David Rosenthal to discuss capital allocation, business moats, and life wisdom. Munger shares candid perspectives on his partnership with Warren Buffett, the operational power of Costco and BYD, and his sharp critiques of venture capital and financial speculation.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ben and David hold 35.5% of the talking time here. How this is scored →
Ben and David as informed peer 5.4 Guest teaching 6.7 Guest disagreement 5.4 Ben and David pushing back 2.2
speaking balance: gold is Ben and David, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 23:39 Munger's broadside against VC greed
Charlie aggressively attacks venture capitalists, accusing fund managers of enriching themselves with fees while delivering poor results to institutional endowments.
Hardest push from Ben and David ▶ 17:19 Ben challenges Charlie on Berkshire's leverage riskBen directly challenges Munger's assertion that they should have used more leverage, pressing whether higher leverage could have destroyed the entire Berkshire franchise.
Biggest teaching moment ▶ 10:24 Charlie reframes Diversified Retailing's failure as an asset tradeCharlie corrects the host's premise that Diversified was a retail loss, explaining how they swiftly recognized their blunder and redeployed cash into undervalued equities that tripled.
Ben and David hold their own ▶ 1:00:09 David breaks down historical newspaper cash flow economicsDavid displays his command of business history by citing specific monopoly dynamics and historical operating margins of local newspapers before Charlie clarifies small versus large print margins.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ben and David as informed peer | Guest teaching | Guest disagreement | Ben and David pushing back | Why |
|---|---|---|---|---|---|---|
| Sports Betting, Market Speculation, and Quant Algorithms | 4 | 7 | 6 | 2 | Charlie bluntly dismisses sports betting and retail speculation as pure gambling, proposing punitive taxes to drive speculators out of business. He breaks down Renaissance Technologies' mathematical edge and aggressive leverage risks in terms the hosts simply marvel at. | |
| Discovering Price Club and Early Retail Investments | 6 | 6 | 4 | 2 | The hosts demonstrate deep prior research on Sol Price and FedMart history, but Munger corrects the record on Diversified Retailing, explaining how turning a retail mistake into stock purchases actually made them a fortune. | |
| The Costco Moat and High-Conviction Betting | 6 | 7 | 5 | 1 | The hosts prompt Munger with his famous speech on Costco's virtues, and Munger delivers an investor masterclass on operational excellence, working capital leverage, and extreme conviction when finding rare edge. | |
| The Buffett-Munger Partnership and Financial Safety | 5 | 6 | 5 | 4 | Ben questions whether using more leverage might have blown up Berkshire entirely, but Munger rejects this framing, asserting that Berkshire was safe enough to have safely milked far higher returns with more leverage. | |
| Critique of Venture Capital and Global Reserve Currencies | 5 | 8 | 8 | 3 | Munger delivers a scathing critique of modern venture capital, calling the industry poorly executed, full of standard forms and fee-seeking promoters who screw investors. When Ben suggests Bitcoin as a store of value, Charlie firmly re-establishes the supremacy and fungibility of the US dollar. | |
| Costco Imitators and Walmart's Strategic Blind Spot | 6 | 7 | 5 | 2 | David and Ben discuss retail imitators like Home Depot, while Charlie explains Walmart's psychological blind spot: they were too wedded to cheap real estate in small towns to compete for wealthy suburban shoppers. | |
| Automotive Disruption, Electric Vehicles, and BYD | 4 | 8 | 6 | 2 | Charlie dismisses the automotive sector as generally uninvestable due to unions and capital needs, but explains BYD's founder Wang Chuanfu as an engineering genius who can solve any manufacturing problem. | |
| Luxury Heritage Brands and Brand Trust | 6 | 6 | 4 | 2 | Hosts discuss luxury fashion and consumer packaged goods, while Charlie explains how See's Candies gave them early lessons in brand pricing power and why ketchup has pricing elasticity while cheese does not. | |
| Investing Wisdom, Autonomy, and Self-Insurance | 4 | 7 | 6 | 1 | Munger reflects on why he prefers operating with his own money rather than taking outside fees, emphasizing personal autonomy and rejecting conventional insurance products in favor of self-insuring. | |
| Berkshire's Concentrated Apple Investment | 6 | 6 | 5 | 3 | Ben tries to frame the Apple investment as an intricate tech-picking triumph, but Charlie cuts through the mystique, stating plainly that it was a logical candidate on a shortlist of dominant companies that became cheap at ten times earnings. | |
| Allocating in China and Geopolitical Considerations | 6 | 7 | 6 | 3 | Munger explains his rationale for accepting China risk given valuations and growth prospects. When Ben asks about capital competing for scarce opportunities, Charlie compares market competition to brutal biological Darwinism. | |
| Costco's Execution, Hot Dog Discipline, and China Expansion | 6 | 6 | 3 | 2 | Charlie explains Costco's deliberate 10% growth speed limit, the origin of Sol Price targeting affluent shoppers wanting to save money, and how Jim Sinegal refused to enter China for decades after encountering a bribe demand. | |
| Rules vs. Exceptions and Wang Chuanfu's Genius | 5 | 7 | 5 | 2 | Munger expounds on rules versus exceptions, highlighting how BYD ignored their advice against buying an auto company and succeeded because Wang Chuanfu is a hands-on production fanatic superior to Elon Musk at building physical hardware. | |
| Centennial Birthday, Crisis Management, and EBITDA Hatred | 7 | 6 | 7 | 2 | David accidentally uses the term EBITDA in front of Charlie, prompting Munger to reaffirm his hatred of the metric as accounting manipulation and fraud, comparing it to John Malone's financial engineering. |
Statements from this episode (50)
Munger says sports betting and casinos are not good for America
“No, of course not. Are the dog tracks and racetracks of America, are the casinos good for America? Of course not. They're just very popular.”
Munger claims Warren Buffett never gambled heavily as a casino patron
“Well, but Warren never gambled heavily as a patron. Warren wanted the odds in his favor, not somebody else. It's just so simple if you're Warren. You want the house, you want to be the house, not the punter.”
Munger says short-term gains should be taxed without any loss offsets
“If I were running the world, I would have a tax on short-term gains with no offset for losses on anything. And I would just drive this whole crowd every ball of business.”
Munger claims quant firms achieve high returns through increasingly massive leverage
“And the way they get their returns year after year is taking the leverage, the midday leverage up higher and higher and higher and higher. So they're making smaller and smaller profits on more and more volume, which gives them this big peak leverage risk, whic…”
Munger says Warren Buffett refused to buy Carrefour's stake in Costco
“I tried to get Warren to buy out the French. When they left, careful. And Warren wouldn't do it. Warren doesn't like retailing.”
Munger and Buffett turned a $20M savings and loan into $2B
“We bought a little pissant savings loan company for maybe twenty million dollars. And when we left that thing, we had taken out of our little twenty million dollar investment Over two billion dollars in marketable securities, which went into Nebraska insurance…”
Munger says great investment opportunities only happen five or six times
“There aren't many times in a lifetime when you know you're right and you know you have one that's really going to work wonderfully. Maybe five, six times in a lifetime you get a chance to do it. And people do it two or three times early. All go broke because t…”
Costco sold cheaper than anyone with efficient stores and 10-foot parking spaces
“Well, they really did sell cheaper than anybody else in America, and they did it in big efficient stores, and all the parking spaces were 10 feet wide instead of eight feet nine or whatever they normally are.”
Costco operates on negative working capital by paying suppliers after selling merchandise
“They make the suppliers wait until they've been paid, and then they're scheduled to pay only after they're scheduled to sell.”
Munger says investors must bet heavily on their best ideas
“When you know you have an edge, you should bet heavily. You know you're right. And most people, they don't teach that in business school. It's insane. Of course, you got to bet heavily on your best bets.”
Munger says Berkshire Hathaway would be 3x larger with slightly more leverage
“If we used a little bit more leverage throughout, we'd have three times as much now. And it wouldn't have been that much more risk either.”
Costco co-founder Jeff Brotman stepped aside as CEO after board struggle
“They had originally agreed that Brotman would be the chairman and CEO, because he was his idea. He founded the whole thing, but Senegal decided, no, I have to be the CEO. So, it was a big, unfortunate board meeting, a big internal struggle, and Brotman moved a…”
Munger says consistently investing well in venture capital is nearly impossible
“It's very difficult to invest money well, and I think it's all but impossible to do time after time after time in venture capital.”
Munger claims most startup operators end up hating their venture capitalists
“By and large, having bumped into a lot of people in the businesses with venture capital financing, I would say the ordinary rule is that people in the business doing the work, they more or not, they hate the venture capitalists. They don't feel their partner t…”
Munger says Berkshire Hathaway never sells a halfway decent business
“If it's a problem business we've never been able to fix, we'll sell it. But if it's a halfway decent business, we never sell anything.”
Munger claims private fund managers enrich themselves while underdelivering to endowments
“The world is full of Goldman Sachs partners that formed a private fund, and they manage a billion dollars or something like that, and they charge two points off the top plus this, and that enables them to make very handsome livings themselves, but the endowmen…”
Munger says top venture capital earners are trend-chasers, not great investors
“The people who made the most money out of venture capital are a lot like investment bankers deciding which hot new area they're going to get in. They're not great investors or great at anything.”
Endowments across America are slashing effective private fund fees by 50%
“The endowments have started to say to the, all these people that charged three and 30 or whatever they charge, they said, we'll pay your three and 30, but we're going to put in twice as much money, and then the next half you'll get nothing on it, or you're jus…”
Munger says Floor & Decor is running the Costco model in flooring
“Floor and Decor is the current imitator, and it's just, it's in vinyl, wood imitating vinyl flooring, they're running a Costco model.”
Munger says Walmart made a terrible mistake letting Costco win wealthy suburbs
“So it offended them to go against the rich suburbs and to have to pay up for the good locations, and Costco just specialized in the good locations where the rich people live. And Walmart just let them do it year after year. It was a terrible mistake.”
Munger believes only one or two electric vehicle makers are investable
“Well, for maybe for one or two electric cars that are really good at it, maybe, but certainly nobody else.”
Munger attributes BYD's success to Wang Chuanfu's IQ and reverse-engineering skills
“BYD was a miracle, but that guy works 70 hours a week and has a very high IQ. He can do things you can't do. You can look at somebody else's auto part and he can figure out how to make the goddamn thing.”
Opportunities like Japan trading house arbitrage happen twice a century
“If you're as smart as Warren Buffett, maybe two, three times a century, you get an idea like that.”
Berkshire borrowed Japanese yen at 0.5% to buy 5%-yielding trading houses
“The interest rates in Japan were half a percent per year for 10 years. And these trading companies were really entrenched old companies, and they had all these cheap copper mines and rubber plantations, and so you could borrow for 10 years ahead all the money,…”
Munger says replicating LVMH requires exceptional skill across multiple lifetimes
“Well, if you're as good as they are, what they've done, you have a lifetime to do it in, or now a lifetime, really three or four lifetimes to do it in. You can create another, but it's not easy.”
Munger says Kirkland is a utilitarian brand like Tide, unlike Hermès
“Kirkland is a brand the way Tide is a brand. And Hermes is a different kind of a brand.”
Berkshire raised See's Candies prices 10% annually for roughly 40 years
“We found out fairly quickly that we could raise the price every year by 10% and nobody cared. We didn't make the volumes go up or anything like that, just made the profits go up. So we've been raising the price by 10% a year for all these 40 years or so, and i…”
Munger says Berkshire never paid a finder's fee since acquiring See's
“We paid that guy a finder's fee even. We've never paid one since.”
Munger says Heinz ketchup has pricing power, but Kraft cheese does not
“There's something about the flavor of ketchup on a goddamn fried potato. People are really willing to change brands over. They want Heinz. And so we could raise the price of Heinz pretty much. But you try to raise the Kraft cheese, and everybody goes into rebe…”
Munger says operating with personal wealth beats managing outside capital
“Once I had enough money on my own, I'd rather just operate with my own money. That is a much better way of doing it.”
Munger admits he and Warren Buffett could not rebuild Berkshire today
“The answer to that is no, we wouldn't.”
Munger reveals he does not carry fire insurance on any properties
“I carry no fire insurance anywhere.”
Investors need significant participation in a few top market leaders
“What everybody has learned is that everybody needs some significant participation in the 12 companies that do better than everybody else. And you need two or three of them at least.”
Berkshire Hathaway invested $30 billion into Apple, not hundreds of billions
“We didn't put hundreds of billions, but we put a thirty billion into it.”
Berkshire Hathaway bought Apple when its valuation fell to 10x earnings
“Yeah, well, it got cheap. It got it did about 10 times or anything more.”
Munger claims China's economy has better 20-year prospects than most
“Well, my position in China has been Well, that the Chinese economy has better future prospects over the next 20 years than almost any other big economy.”
Munger reveals he holds roughly 18% China risk in his family portfolio
“So naturally, I'm willing to have some China risk in the Munger portfolio. How much China risk? Well, that's not a scientific subject, but I don't mind whatever it is, 18% or something, whatever, whatever's worked out in the Munger family, it's okay with me.”
Munger prefers investing in consumer brand power over semiconductor foundries
“Well, I don't like that as well as I like something with a real consumer brand of its own like Apple.”
Munger believes nearly all investment assets worldwide have become overpriced
“Damn near. Of course it could be possible. It's not only possible, it's likely, and it's actually happened.”
Munger warns modern democracies risk becoming dysfunctional like Europe after blow-ups
“Yes, an unpleasant blow up of some kind. And God knows what happens after an unpleasant blow up with our modern democracies. You would get to see a lot like Europe, which is quite dysfunctional.”
Munger says an investor only has to get rich once in life
“And the beauty of it is you only have to get rich once. You do not have to climb this mountain four times. You just have to do it once.”
Costco delayed its China entry for decades after refusing a $30,000 bribe
“The first store they tried to open in China, the first store somebody wanted a 30,000 dollar bribe. You know, Chinese culture. And they just wouldn't pay it. And that made such a bad impression on Jim Senegal. He wouldn't even talk to him going into China for …”
Sol Price intentionally designed warehouse clubs for wealthy shoppers saving money
“No, so price had that figured out to announce. Yes. He always wanted the rich man trying to save money.”
Munger says BYD almost went bankrupt building its early dealership network
“After huge mistakes, they almost went broke with their early dealership building system.”
Munger claims BYD founder Wang Chuanfu is better at manufacturing than Musk
“The guy at BYD is better at actually making things than Elon is.”
Berkshire Hathaway would have survived if Salomon Brothers went to zero
“If it all blown up and went to zero, we would have written it off and gone on and done pretty well.”
Munger claims excluding depreciation from earnings via EBITDA is lying about profits
“You got a big truck company and Take the depreciation out of the trucks, out of the earnings. You're ever lying about the earnings.”
Munger calls John Malone a great manipulator who avoided paying income taxes
“Well, I've never liked John Malone's extreme manipulations. I don't want to be known as the great manipulator like John Malone is. He paid less income taxes than anybody.”
Munger says General Motors went to hell one contract at a time
“In its heyday, General Motors was a great company. It just gradually went to hell one contract at a time.”
Munger says business forecasting fails when CEOs like Bob Iger prioritize PR
“Well, I think a lot of companies are pretty good, but you can't confidently say what's going to happen because you may get some guy like Iger in that just wants to push everything and do the right public relations. So no matter how good the business is, it'll …”