The Wisdom Wall

“there is a positive benefit to monopolies because they create the cash flows that fund these sorts of boondoggle basic research. A lot of the most important technologies that move society forward come out of these.”

“we're not embarrassed about learning from things that other people, like, discovered that were good first, and, and then we build a better version of it, and, um, I mean, I think that that's, You know, no one company is going to invent everything, right? I think if you don't invent anything, then it's hard to, to kind…”

“You know, they, the CEO wasn't technical. The board of directors had no one technical on it. They had, like, one dude on the management team who was the head of engineering who was technical, and, like, everyone else wasn't. It's like, alright, if that's your team, then you're not a technology company.”

“If, if you take responsibility for things, because you think it's a corporate crisis, not a political crisis, um, and your view is like, okay, I'm, like, I'm gonna take responsibility for all this stuff. Like, and people are basically, like, like, blaming social media and the tech industry for, like, all these…”

“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.”

“The more accurately an LLM predicts that next word, i.e. the name of the criminal. Ipso facto, the greater its understanding, not only of the novel, but of all general human-level knowledge and intelligence, because you need all of your experience in the world and as a human to be able to guess who the criminal is.”

“But there's also more competition, which is, I think when, when people are, are talking about Spotify and criticizing it, that's the part I think is the biggest misconception. Because they hear so many, many people who are trying and it doesn't work where they're not making a lot of money of it. They're naturally sort…”

“If we start, all we're doing, we're investing more money in late stages. We're lowering our returns. That's all we're doing because our commitment is fixed. It's not like we're going to be more committed. So we're, you could say we're getting more cash on cash for, yeah, but we're lowering our returns.”

“You know, I've always felt, and I still do, I'm really interested in dealing with conflicted people because if you have a conflict, in essence, you want it to work out on both sides. So a lot of times I'll go to someone with a heavy conflict to this day to work out a problem.”

“That whole strategy of a fire hose of content is completely orthogonal to the flywheel strategy of only the best content very infrequently.”

“So in the long run, if the main reason to subscribe to any given channel ends up being actually about the game content itself and not differentiated by stuff around the game, then the excess profits in the long term Will just be captured by the rights holders like the NFL and the NBA.”

“It's structurally a worse business, as you were just mentioning, than the old cable bundle where you just got checks. Consumers can cancel easily. They do so every few months. It's expensive to make The amount of content you need to make, especially now with the quality that people expect out of streaming content.”

“if you want to operate a streaming service that gets to scale, and if you're going to operate a streaming service, it has to get to scale since the fixed costs are so high. Then you must have a broad set of content. That is weird. That it must be a broad set of content because you must appeal to lots of people and…”

“the IP that works best for Flywheel Dynamics almost has to be animated, i.e. not live action, because with live action characters, the characters are too bound up in the actors that play them, and that creates all sorts of problems.”

“The beauty here and the discovery that Disney makes is that when you put the IP into these other ancillary nodes, it doesn't cannibalize the core IP.”

“Passive index investing just lends itself better behaviorally. If you're in one of those funds to just saying, I know the market's up, I know the market's down, but whatever. I own the index. I've, I've made my piece. Whereas if you are either the active manager trying to improve the outcome of the fund or an investor…”

“Vanguard, the downside of its structure is that there are no excess profits that can be invested for the long term in things like technology and things like customer service.”

“I think even if you had 95% passive, the prices are set by the marginal trader. Right. You don't need very many people in there arguing with their dollars about what something is worth to figure out what it's worth.”

“I think the point I keep kicking around is much like the quartz crisis in the world of watches, speed is no longer relevant. I mean, the F-Eighty goes zero to 60 in 2.2 seconds. This is the supercar. This is the three to five million dollar car. The Tesla Model S Plaid does it in 1.99 seconds. So the reason that people…”

“in the media business, in podcasting, You can grow your audience, and thus your revenue, and thus your importance in the world. All outputs can scale completely independently of your inputs.”

“The most liquid auction Will always win, and Google has already run away with the search ads auction liquidity, and so traffic on Google searches will forever be worth more than traffic on the second place browser.”

“If the DOJ's ruling is that Google has to divest Chrome, there is one way that Chrome is a business, and that is getting paid by Google to drive traffic to Google as a search engine. It's the only way to operate a business of a browser.”

“The state of play of being a big tech company, and this dates back 80 years, is technology moves fast, and the new paradigms disrupt everyone that came before you, so you get one era. And you gotta make the absolute most Of the one era that you grew up in, and after that, you're probably gonna lose relevance.”

“Almost all of Google's successful products are based on a core technology insight that is underneath the whole thing. The type of insight that could be in an academic journal.”

“This is basically why Google beat Yahoo. I mean, there's a lot more to it, but The portals all had this mentality of we want to build more and more and keep people on our site, in our ecosystem, continue to look at our banner ads, and Google, from this point, basically forever, was how quickly can we deliver someone…”

“platforms need apps. You want to have the top first party app that runs on your platform. Otherwise your platform can't get good.”

“there's so many technologies that are hard to not just popularize, but even get good at, unless you have a phone these days, just take voice. You know, if you want to really be good at voice. You got to get enough signal and you'll get the signal off the phone. You can't say talking to my PC is sufficient.”

“If you're trying to unpack how did our health care become 18% of GDP versus 11% of the UK GDP, or a staggering six percent of Singapore's GDP, albeit at a much smaller scale. Why are we 18%? A big thing you have to understand is, psychologically, every healthcare encounter is that the system is paying for it.”

“The reason why they truly are among the very highest quality watches in the world is because they throw their scale economies around. They do absolutely unreasonable things to engineer and build and test these watches that other people in the industry just can't.”

“it was the best thing to ever happen to Rolex, Audemars Piguet, Patek, etc.”

“Mechanical watches are an industry today that serves an entirely different job to be done than they ever served in the past. And this is a new industry that has nothing to do with telling the time, and is just goofy to compare to other quote-unquote parts of the watch industry, like the smart watch, the quartz watch,…”

“People would not respect us if we lay off by performance ratings. [1196] Ben Gilbert: And why is that? [1198] Morris Chang: Because it's very subjective. Performance reviews, the performance ratings are done by everyone's own supervisor. So, the 700 was performing people in the company. And who gave the 700 people…”

“If in a year you have to hire people back, you have to hire the laid off people back, then you shouldn't lay off, because the layoff, the separation expense is usually half a year, about half a year, and it takes at least half a year to train a person. So if you need the people back, Within a year, you shouldn't have,…”

“I really did not think that the foundry business, TSMC's business, uh, Was suitable for the divisional structure. Because, you know, we have almost the same group of customers.”

“my principle, when I was, ah, The chairman and not the CEO, ah, was, well, sometimes you have to let, you have to let the CEO make his own mistakes and learn from them, you know. Ah, of course, ah, not if the whole company is going down the drain, drain, so you, you, you have to interfere then, but only then.”

“The, the, the company that co-developed something with them will send its engineers to IBM, you know. And when we do that, we lose our ability to, to develop our own process. We'll have to depend on this co-development thing.”

“when you combine these two things, the Moore's Law and Moore's Second Law, it implies that the leading company, that most profitable company, will become a monopoly.”

“You can hire lawyers. You can hire accountants. You can hire advertising men or financial types. But if you want to get rich, you got to know how to make a product. And you aren't going to hire anybody to make a product for you to make you rich. They'll only make it for themselves.”

“multiples are kind of a blunt instrument used for valuation when you don't actually deeply know and understand the business, and when you do, you can just underwrite better than everyone else, and you have more margin of safety in the price that you are willing to pay than the rest of the market does.”

“ByteDance is an AI company. ByteDance is not a product company. And the core product that ByteDance makes is its AI, along with all sorts of other stuff. TikTok is like the product vector, one of many, and the biggest. By which they deploy their actual product, which is AI.”

“So the internal saying that Spotify is talk is cheap. Because we want to be really deliberate about what it is we're doing and how we're doing it.”

“what's so amazing with the platform is every time we try to do something deliberate sort of top down, it's sort of fail. And most of the time, actually, what we see is the inflings of something already existing on the platform and then growing from there.”

“if you don't have enough of your, kind of, share of the company as engineers, then you're not a technology company, and I think that that also is important to the board”

“I think strategically, a lot of the time, it's, um, It's somewhat harder to know what to do when you're winning. Like, when stuff is going well, it's like, what is the next move to, like, go from winning to winning more? Um, but when you're losing, it's usually pretty clear what you have to do. And, and I think a lot…”

“I think in a lot of ways we're like the opposite of Apple, and clearly their stuff has worked really well too, right? But I mean, they take this approach, it's like, we're gonna take a, like, a long time, we're gonna polish it, we're gonna put it out, um, and maybe for the stuff that they're doing that works, maybe…”

“we're not embarrassed about learning from things that other people, like, discovered that were good first, and, and then we build a better version of it, and, um, I mean, I think that that's, You know, no one company is going to invent everything, right? I think if you don't invent anything, then it's hard to, to kind…”

“Founder leaves, I'm not talking about me, it's you, historically, and companies lose not only the extent of the entrepreneurial DNA, but they lose the ability to be on offense. And the worst thing that a company can do, like a sports team, is start playing defense because you're afraid to fail. That is a disease.”

“everyone loves to talk about product-led growth, and how it's this new thing in the late twenty-tens, and how Slack, and Atlassian, and Trello, everyone figured out PLG in this bottoms-up, workforce-adopted way, rather than selling to procurement, or IT, or the central administrator. And it's just not new.”

“So fundamentally what this does for you as a business is it just leads to better risk-adjusted returns. You already know what's going to work before you ship it. Like, you don't really take market risk. So you're not gonna be the first to the market with early adopters, but most of the time you actually don't need to…”

“the Microsoft versions never actually won until there was a platform shift that they could take advantage of to beat the incumbent. Like, Microsoft wasn't gonna beat Lotus one, two, three until the graphical paradigm came along, and then Excel being graphical was just obviously so much better.”

“Dee maintained that if you give computer people more time, they will just consume it. So he always insisted. So it's so true. So he always insisted On shorter projects with uncompromising deadlines.”

“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.”

“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.”

“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.”

“And so causality for a lot of problems in the world doesn't matter. We just want to emulate the system and predict the outcome.”

“within the world's languages and text, there's a fair amount of reasoning that's encoded in it, and we describe a lot of reasoning things, and so if you were To say that a few step reasoning is somehow learnable from just reading things. I wouldn't be surprised. You know, for a lot of us, we get our common sense and we…”

“your organization should be the architecture of the machinery of building the product. Right. That's what a company is.”

“in a command and control system, the person who you reports to has more power than you. And the reason why they have more power than you is because they're closer to the source of information than you are. In our company, the information is disseminated fairly quickly to a lot of different people, and it's usually at a…”

“you could do all the right smart things and still fail. You could do a whole bunch of dumb things, and I did many of them, and still succeed.”

“you can't just throw money at trying to get an audience. It's not that, it's not that easy. Um, and having an audience where people love the dude who's at the top and are, are fans and want to be a part of his business, that makes it even easier to like convert them to real traffic as opposed to just some business…”

“every moat only works if the castle is sufficiently small. If the prize at the end of the finish line becomes sufficiently large, you're gonna need a bigger moat, and you need to figure out a, uh, you know, how to defend the castle harder.”

“I think the athletes are your most important marketing tool. I think the product is a monetization method for the marketing that you do through athletes.”

“So, I will answer, uh, somewhat seriously, which is, um, high take rates are dangerous. So, our job as a company is to grow volume as much as we can, as fast as we can. And make your shareholders happy enough. Yep. Minimizing the take rate, which is taking as much of that dollar and, and giving it to drivers and…”

“All these contracts kind of go to all of the contractors. They just rotate around who's the prime on it, and the prime makes the most money, and then it has the most sort of sway, and you don't want to be with a subcontractor, you'd rather be the prime contractor. But still, this current military-industrial complex is…”

“So there really isn't power. Within the industry. But to the extent that you have already become one of these five, then together the five have power versus new entrants.”

“We all believe that these like sort of internet companies that go global day one, that's like the right approach. I, I actually think. 99.9%. This is just untrue and false. The entrepreneurs have to revise. We all, all are benefited from constraining ourselves To finding what our first audience is. And it could be…”

“In addition to that, just monetizing the content in itself is probably becoming an auxiliary revenue sources around them. Three 60, very similar again to mom and pop shops, like where you could do live events. You could be doing merchandising. You could build, um, another business, um, like Kylie Jenner or something on…”

“And you look at the Activision deal, sixty-nine billion dollar acquisition of Activision. It's basically like, you know, Netflix or Apple or, or, or one of these other companies buying exclusive content.”

“I invest in businesses, not in studios. Right? And the, and those businesses have to have a strategy that transcends, I want to make a game and put it on Steam, or I want to make a mobile game and put it in the App Store, right? And I'm really interested in that strategy more than I'm interested necessarily. The…”

“I resist as long as possible going paid, although sometimes you're so profitable that you can with and not really mess your margins up too much, right? But I think once you start down the paid path for customer acquisition, it's kind of a, a slippery slope and it's a very difficult thing to come back from because you…”

“Like, I think you can expect to spend as much or more on an annual basis than you were spending in development in LiveOps.”

“And so, when you're, when we're looking at web three related deals, like solving that problem, like incentivizing you so that you don't feel like an idiot for utilizing the token is a key, key factor in these games.”

“one thing that we do in Silicon Valley is we overrate, overvalue growth rates and undervalue durability. And he's like, that doesn't make sense for a technology company because all your profits, the vast majority of profits are 20 years in the future. And so if you're trying to optimize for growth and that, that, that…”

“For the type of podcast that we are, where you have lots of founders and CEOs and hedge fund managers and these sorts of people listening, You, you could never ask someone to pay you in membership what they are worth to the most valuable advertiser for that slot. And so the way it sort of works out is like you're…”

“And he's like, he definitely feels that some of them are going to be less motivated because they're born rich, but he said this was the most surprising thing. But he goes, you have to give them the money anyways or they're going to hate you for it.”

“from a microtransaction perspective, I think one of the issues is To create the piece of content is very time consuming. And then obviously you get the free distribution on the back ends. You have zero marginal cost on the back end. But the problem is you have a timing mismatch with microtransactions between when the…”

“If you have a new business model with a very low cost structure, Social media is a godsend because you basically get free marketing. What a lot of people don't understand is I think a lot of writers give away way too much content on Twitter and they're out there posting. It's like, why should I read your site when…”

“The result of Sarbanes-Oxley being stay private longer, that it's much more likely that fraud now happens in the private market than the public market, and that is basically what we saw with Theranos, with FTX.”

“I would say the memo. Is a crutch often because yes, it can force you into clarity of thought, but it also allows you to fill in blanks that the entrepreneur themselves are not saying. And it pushes a sort of bias and perspective that maybe the firm has, or maybe you have a sector thesis and it's like, there's a lot of…”

“Our customer isn't, it's not the founder. We say it is, but it's really the purpose of the founder, and it turns out that purpose, if that's the customer, One of us may be deviating from that, and we can keep each other accountable, and that happens internally.”

“our job, we're really focused on how do we scale the company, those companies, right? And how, as part of that, having a relationship that doesn't get sort of adulted by this question of the us making another commitment decision. It's like we're, we're, we're in and we're not evaluating anymore. We're not deciding what…”

“we have faith that every year, some number above zero companies will be founded that are going to be worth more than ten billion dollars, and then about every two or three years, a company's going to be found out it's going to be worth more than a hundred billion, and it seems to be independent of the cycle.”

“One benchmark, no pun intended, I guess, one measure of quality for the firm will be how good our failures are. Webvan was a really good failure.”

“It turns out that a bad idea well executed is a problem because then you give it more money. Or a good idea, poorly executed, well, that hurts because you think, oh, I mean, we can think of companies like Friendster and think, oh, but the bad idea of poorly executed is kind of an apex.”

“The founding two or three employees set the culture. And it doesn't change unless there's some catastrophic event where it has to get reborn, but good luck with Elon at Twitter. You know, that culture was set in motion, and its root system goes so deep.”

“Allow the entrepreneurs to take some money off the table so they don't sell the company for fifty million dollars and instead let everybody make fifty billion dollars.”

“backing a repeat entrepreneur in the enterprise sector is near risk free.”

“You want that to be true when you make the investment, but you don't want to be very non-consensus for long. You want to quickly be consensus and right. You just don't want anybody to see it until you make that bet. But like, you don't want to make that bet and then be sitting there for five years still non-consensus.”

“And the unfortunate thing for Microsoft and for Google, who really started at this platform as a service layer, was you basically didn't get the startups because you didn't have a mature platform yet that people were excited to build on and understood how to build for, but you also didn't get the enterprises because…”

“What's becoming clearer to me is the machine learning capabilities that Amazon has need to be good, but they actually don't need to be as good as Google's. Because here's sort of the strategy with machine learning. You're gonna use whatever ML is available with where your data is. Because running machine learning near…”

“And by the way, when I say the value investor does this and the growth investor does that, Probably the biggest single theme of the memo was that that dichotomy should not be so hardwired.”

“Human knowledge is cumulative, and lately it's been rushing forward at an incredible pace, so it's hard to imagine that there's a piece of information that I can get off the internet that's going to make me any money for the simple reason that everybody else can get it off the internet. This is a zero-sum game for a…”

“I mean, one critique you could make of Buffett is he just totally ignored technology, and technology not only became much more pervasive, but I also think that, I mean, he's an incredibly smart guy, and he understands lots of different elements of business, and when he talked about technology, I think he was referring…”

“I always say that I don't think that a computer can sit down with five business plans and figure out which one is Amazon in advance, or meet five CEOs and know which one is Steve Jobs.”

“People say to me, can you teach somebody to be a second level thinker? And I said, I don't know. It's kind of like asking the basketball coach to coach height. All his efforts won't make his players any taller. Some people get it, some don't.”

“This idea that as soon as there's a profit, you should take some of it off the table, seems like a huge mistake.”

“Most firms, if they have a very successful fund, will follow it up with another fund which is larger on the back of that. But if you think about it, if you had a success in a given area, the good performance of that fund is synonymous with appreciation. In other words, everything in that area is now more expensive. So…”

“No private enterprise can underwrite a fifty-year R&D project. The payoff's not there.”

“These companies usually become holding companies pretty quickly and attract all of the talent. There's finite talent around things like aerospace. There's finite talent around things like defense. So you don't see as many competitors. And as I said, they are harder to build in the beginning, but towards like the middle…”

“Silicon Valley is the most peculiar place in the world, because it's the only place where incentives are aligned with that sort of positive sum mentality. Whereas in places like DC, no one ever turns down talking to the press because it's information trading. It's a consulting class. It's a group of people who very…”

“You have to pick something that most people think is going to fail to be an outlier. Otherwise, by definition, you're picking something that most people think is going to work, and therefore a lot of people are picking it, therefore you're not an outlier.”

“cause I, I was always optimizing for the, the longterm value, which is the annual value per customer. So if I had to give the customer terms that would lock them in, I thought that's actually shrinking my market. Cause they'll pay less if they're locked in. That's one thing. Then the other one, I didn't want us sort of…”

“Not early stage. You know, for the first four years, no need. But down the road, you, you already see the market of fate, right, the product of fate. You want to scale your business. At that time, you have to change your philosophy.”

“Your, your new product, if you have a chance, it should be way out here, and maybe have the potential to be bigger.”

“I think we were the first one to identify that the real business was in trainers. It wasn't in racing shoes. It wasn't in spikes. It wasn't in marathon racing shoes. The business is in the trainers.”

“This is 15 years of CUDA and the hardware underneath it and the libraries on top of it that Nvidia has built. To go recreate that and surpass it on your own is such an enormous, enormous bite to bite.”

“all these things that reduce friction are easily available to lots of people, and so your very ability to spin up quickly and make something happen, and it seems very powerful, may in fact be the very thing that makes it easy for a competitor to catch you.”

“people that are just amazing at innovation, which I have a huge admiration for. That is to say, getting product market fit, think that they can just out invent the competition forever. And that story usually doesn't end well, I don't think. And the things you're in, you have to solve the power equation or all else you…”

“So flywheels are a sign of product market fit. And tell you absolutely nothing about power.”

“I might argue the venture market has over-earned for many years, right? And so the market's gonna become more efficient, it's gonna be more competition, with more competition, that means founders are gonna have better access to capital, they're gonna have more efficient markets, so it means they're gonna be, you know,…”

“early stage venture, those first two to three years is craft building, and we like to partner with founders who are wise enough To put around that early board table, people who have been through the trenches, and so that increases our probability of success and reduces, you know, we think the risk inherent.”

“JavaScript's mutability was a huge boon. It probably wouldn't have survived without it, but it also means there's no Security property called integrity.”

“So for our system with users getting ad revenue share and publishers then getting creators on YouTube, getting, you know, tips or recurring donations, just 10 of those or so could fingerprint you as a user, right? If there are a few bits each, that's enough bits to fingerprint you. It's a unique identifier that can…”

“The extension is just weaker. Both in terms of its powers, but also its security model. If it's doing its own secure store for a private key, it's just in a weaker footing than a native app by design.”

“And if we virtualize the credit card, then we can actually put e-commerce in the browser. We can deconstruct Amazon. Every site, without having to change its merchant JavaScript, which is not going to happen easily, can have an option where you can use something like a virtual credit card that could even be topped up…”

“his quote is everything linear dies, everything on demand wins. And it's so true. Like, you know, the being able this, this element of being able to access Best in the world content on your schedule when you want it.”

“in the last 10 plus years, there has not been a breakout consumer hardware piece of technology that is, that survives as a standalone company, and you look back at Fitbit and GoPro and Jambox. Uh, I, I even wanna call out, this one's gonna be a serious callback, but Flip Video. Some of these companies that kind of…”

“all of the training I had as an agent has led me to a career in the digital world that's fantastic because what am I doing? I'm packaging. I'm putting young founders together with money and distribution, and nothing different than I did for 35 years. It's all the same, except I'm doing it with smarter people”

“as soon as I go in-house somewhere, Like I lose half of my value or, you know, X percent of my value as soon as I go in-house somewhere. Um, and that is kind of one, even though, you know, I do do sponsored posts and all of that, there is like this independent voice that I have that obviously goes away. Everything that…”

“the needs of Moore's law are just so difficult that like, it's hard enough to just do one of these things well and doing multiple of them well, um, makes it, um, makes it harder.”

“when technology changes, like, I just didn't have a concept for the smartphone. So technology was about to change quite a bit. And, and in that change, you really want to be vertically integrated because you're not pushing, uh, efficiency. You're pushing sort of product technical ability.”

“when you leave money on the table, what you're doing is you're, you're creating goodwill for your customers and you're buying the company duration, which is oftentimes the way to maximize total value, right?”

“some people think, oh, you want positive free cashflow. Well, the answer is not really. I mean, what you want is you, if you can invest at a high return, you want to invest as much as you humanly possibly can, right? That you have access to.”

“the paradox of Gil says, and activities were both skill and luck contribute to outcomes, which is most stuff as skill increases, luck becomes more important.”

“It was because it had ESPN, but it also cost the company It's strategic clarity. Disney never again would get to be just Disney. It's the flywheel business and the ESPN affiliate slash advertising cable business. And it's worth it because buying ESPN was this pseudo infinite wellspring of capital to fund everything…”

“I think these franchises, whether it's core Disney, Pixar, Lucasfilm, Marvel, are just like luxury brands. You cannot kill them. They will have uptimes and they will have downtimes, but they will always come back.”

“The business of feature film production is a mediocre one, especially by the standards of, uh, what we study on this show here with Acquired, except for Disney.”

“If you take all the winners and all the losers and sum them up, And don't take out any fees. You come up with zero. Every positive winner on the side of a trade has a loser on the other side of the trade. And so in aggregate, all investors together are the market.”

“Jack had the insight that running a successful mutual fund is actually not a differentiated product. It is a commodity. What you are seeking is the highest possible long-term return on your capital. That is not like buying a unique piece of jewelry. It is like buying a soybean.”

“There's gonna be lots of funds that you can be in that will outperform in fits and starts, but if you wanna be the, in the upper decile, After 40 years, then it turns out owning the market with no fees is an almost surefire way to do it.”

“A company is perfect when the number of partners in it is odd and less than three.”

“there is not a direct correlation between Ferrari victories on the track and the number of cars that you can sell, but If for many years you do not win, it means that you do not add wood to the fire of the myth. The myth of Ferrari is based on competition on cars. In the competition, you can win or you can lose, but…”

“Ferrari is Hermes and Manchester United smashed together.”

“If you can marry a luxury brand with a sports team, it is a business cheat code.”

“Even as the NFL has become this incredible business, they don't trade at rational economic prices because the people buying them are doing net present happiness value equations, you know, not economic value.”

“the books have a kind of, Market, and it's a big market, biggish market, but it doesn't, I see no evidence that I'm dragging people along with me. I feel like each, each book feels like another startup, and then I've got to go out and make it happen almost as if I've not written one.”

“Niches are way bigger than you think they are. So if you think you're writing about a niche topic, the internet being a global community of four-ish billion people means that any little niche, there might be six people in your geography that care about it in your local town, but there, there's millions of people…”

“The media business model of splitting the commercial activity from the editorial is a societal benefit that we all benefit from, from publications like the New York Times.”

“great businesses have a stored potential energy that you can't see in the current financials.”

“I think a lot of people think it is a analytical industry. You're learning all about the company. You're doing diligence. It's not that you're not. You are doing that. But that's the commodity. It's an access business.”

“The, you know, growth stage private companies, you can tell what the good ones are. Most people can't get in. If you can, you should.”

“You're really just making a founder bet, and then you're trying to support it with all this like structural information that is a very, um, imprecise. You're acting like you know the third or fourth decimal place, when in reality you barely know the first one.”

“And so the core insight is that Pronto Markets is effectively just an empty vessel to sell the same products. In a situation like that, it is a race to the bottom on your margins, and scale will determine the winner.”

“Trader Joe's has this philosophy of we only make money one way, and that's when someone checks out an item and pays money to us. We don't make money from our suppliers, whereas those other grocery stores, they actually make a lot of money from the suppliers. They make a lot of money in slotting fees and in advertising,…”

“all of social ended up pivoting to either look like messaging or like YouTube anyway. YouTube is kind of the winning paradigm in quote unquote social media and UGC media.”

“It's a Google-y thing that this genius technology is the product itself, and if you try to Craft some cool idea that you have that is not just directly translating tech breakthrough. It's not gonna be the type of product that succeeds at Google. They don't know how. Some people can make an Instagram, and those people…”

“And accounting, you know, of course, accountants hate it when I say this, you can drive a truck through accounting rules.”

“the truth of the matter is Microsoft office slash M three 65, whatever exactly it's called today is super important. It was the foundation for having permission to be in the enterprise. And yet it's a product that sits right there in front of users.”

“We've got to do all the software that these things will ever need. I mean, it was still of the mindset that said, and that there's an arrogance to that, and there's a hunger to that. That says there's just nothing we shouldn't do. And I don't think that was a good mindset by the time I took over, and yet it was still…”

“It also is interesting because it basically rewards the most reliable software, not necessarily the most innovative software. You end up not taking any risk in situations like this because you're not going to get rewarded unless you actually stand the system up and then start getting meaningful use. So you end up with…”

“Anytime you've got government coming in and distorting a market, you're going to get weird stuff happening. And especially anytime you have government coming in and regulating how products are to be developed and used in a market, you're going to get really messy stuff happening.”

“And so in a situation where you can't make any mistakes, the single vendor playbook is the right playbook, even if it's going to take 47 years to build the dominant company. You should have to write a lot of software, and it all has to work together really well.”

“They could sell their products for much, much more than they do, and they do not, because it is the right long-term decision to do so.”

“Well, they raise prices slowly every year. It's a modest price increase every year that kind of sets the floor. And frankly, if they do it over enough decades, Everybody just believes forever that these things are gonna appreciate, because it's almost like they're the Fed, and they're guaranteeing a certain rate of…”

“I think it's kind of an innovation lab. It's a way to protect Rolex's brand, because if there's something new and interesting that might be a fad that customers seem to be caring about in the watch world, Tutor can go and implement it, and they can figure out how to produce it. If it's a flop, that's fine. The watch…”

“The goal of managing a successful luxury brand is to manage for the long term. And by the long term, I mean, like, Centuries. And so you're actually willing to sacrifice huge amounts of profits to do so.”

“The insight is that like the goal that you are playing for is to be the largest volume player kind of at the end of the game. So if you take that as a given of like, if we get to be the largest volume player, this is a fixed cost business. This is a scale economies business. We can spread that fixed costs over the…”

“A government top-down innovation mandate from a country that's not a world power tends not to turn into a gigantic economic success.”

“There is a thing that you have to raise 10 to 20% of the capital that you otherwise would have needed to raise if TSMC exists.”

“There is no amount of money you could spend to catch up next year. You can't. Because the engineering is so hard, and the learning curve takes decades to get to this point.”

“Essentially, if you trust the brand more, and the prices are the same, you just buy more of it over time. So you give more absolute margin dollars to that company over time, especially in a reoccurring purchase business like this. That's the way that brand power accrues. It's not in Margin percentage. It's in total…”

“I think the candy industry is much like the luxury industry in that once you have an established product and product brand, it is impossible to kill it. You just can't.”

“If you're okay splitting the market, you go for the white space, and then you say, let's see how much of the low-hanging fruit we can easily get. But if you're Facebook, you're gonna say, let's go to the hardest possible competitor, Extinguish them. And then, and then we, uh, we'll have a better shot at owning the…”

“for the first six or seven years of its life, Facebook was a change maker, defining what social networking was, and then after that, it became a change taker, and we'll talk about this when it happens, but like, again, the mental flexibility of Mark and the company to be like, okay, I'm not gonna have pride about that…”

“The reason why we aren't all using rich Facebook apps all the time today and think of it as the default platform, it was just too many layers of abstraction away from the hardware to win.”

“TikTok and ByteDance, its parent company, as you point out, Ben, was so completely orthogonal to everything that Facebook had learned over the past 15 years. Because, yes, number one, most importantly, it's not social media. It's media. There's no social. And your graph doesn't matter anymore.”

“I think the only way that this new paradigm exists is because of AI and because of GPUs specifically, and I'm not even talking about generative AI, I'm talking about, like, feed recommender systems and personalization systems. And so, like, there is a very, very large minimum barrier to entry there that keeps going…”

“this is almost always true, really is true in every great company that I can think of. The core senior most executive team are all people who came up in the company Or have been there for a very, very long time. It's not a whole bunch of mercenaries there at the top.”

“a network effect is good, but it's not as good as that incredible platform durability.”

“So when your product is being used in spite of it actually being a pretty terrible experience, you kind of know you've got something.”

“The way that you should look at YouTube is not, what is the, the discounted cash flow of YouTube as an independent business if you look at their, you know, profitability today. It's, what was the existential risk to Google of not owning YouTube? If YouTube became a thing somewhere outside of Google, and that is worth…”

“And my point there is the super point of entrepreneurs, which is your superpowers are partly your ignorance, that you don't know how hard it is.”

“So like I define our strategies. We can learn faster than every other company. We're going to win. We're going to build a better product than everyone else because we're going to get it out first or early. We're going to, Uh, have a good feedback loop. We're gonna get, get a bunch of feedback. We're gonna learn what…”

“I, I do just think that, like, you want to really have a culture that values shipping and getting things out and getting feedback more than needing always to get great positive accolades from people when you put stuff out. Because I think, like, if you want to wait until you get praised all the time, you're missing a…”

“we basically took, I think it must have been like a year or something, we were just like, look, we're gonna pause feature development of the company, because it's hard enough to do a rewrite, right? So if you look at, like, the history of the tech industry, there are all these examples like Netscape and, you know,…”

“I think it's actually when you have something that's working well, and you're on one local hill, and you need to jump to another hill, that's the stuff that's really culturally hard.”

“If your distribution decides to compete with you, and decides to make that a priority, your business is over in a minute.”

“In doing all this research, it seemed to me that once a enterprise adopted Active Directory, They were gonna tip, and they were gonna buy the rest of the software, too, because whoever manages the source of truth for who are all the people and what are all the resources, you know, devices and everything that my company…”

“When IT becomes your customer, when you become an enterprise business, the quality of the software, especially the user-facing software, is no longer priority number one.”

“Money is not the scarce resource. The scarce resource is time and talent and focus.”

“When it doesn't cost you focus or your best people or whatever the scarce resources are and it only costs you cash, then you should totally think about it as, am I willing to bet 2.3% of my company or whatever percent of the cash that I'm not getting any credit for if something could go really right? It's a venture…”

“Microsoft used IBM to generate demand for their software, and then they used every other PC manufacturer to capture the value. That all that demand created.”

“a new technology generation, when something becomes possible and opens up a new market, It enables a shift in the point of integration in a value chain. The old value chain of IBM, if you shipped the mainframe, you had all the power. But in this new world of PCs, if you controlled the operating system that all the…”

“The key insight is that by adopting art as a critical piece of the bundle that is your product, it enables you as the seller to completely switch tracks, to disconnect from any evaluation of value.”

“Hermes has this incredible unassailable flywheel, but it operates in the exact opposite way of An Amazon flywheel. It's not about maximizing the cycles. It's slowing. It's minimizing. It's a intentionally rate-limited flywheel, and it all works together.”

“There's the opposite of scale economies to an individual luxury brand, but at the group level There is power, and specifically scale economies power, that does not exist at the brand level.”

“This is the crux of the incentive problem in our healthcare system. There is just a mismatch in Time Horizon. You are invested in your own health for your whole life, but your insurance carrier is not.”

“the money that card issuers make Only a minority of it is actually from the interchange. And keep in mind, the card issuers are the ones that make that 1.6%, the bulk of the transaction. Most of the money that card issuers make is from interest payments.”

“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 they think it's easy. In fact, it's very hard and rare.”

“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.”

“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 rebellion, including the final customer, the housewife. They…”

“And for certain segments of the market where the technology is never good enough, like three D graphics, when we chose the right technology, three D graphics is never good enough. And we call it back then, three D gives us sustainable technology opportunity because it's never good enough. And so your technology can…”

“And so when you push your chips in, what you're really doing is you're, when you bet the farm, you're saying, I'm going to take everything in the future, all the risky things, and I'm going to pull it in advance. And that is probably the lesson. And to this day, everything that we can prefetch, everything in the future…”

“the disconnection between where NVIDIA's computing is done versus where it's enjoyed, If you can separate that, your market opportunity explodes.”

“A data center is distinguished from a desktop computer versus a cell phone, not by the processor in it. A desktop computer in a data center uses the same CPUs, uses the same GPUs, apparently, right? Very close. And so it's not the chip, it's not the processing chip that describes it, but it's the networking of it, it's…”

“Observation that whereas cloud computing started in hyperscale, which is about taking commodity components, a lot of users, and virtualizing many users on top of one computer, AI is really about distributed computing where one job, one training job, um, is orchestrated across millions of processors.”

“Oftentimes, if you created the market, you ended up having, you know, what, what people describe as moats. Because if you build your product right, and it's enabled an entire ecosystem around you, To help serve that end market, you've essentially created a platform. Sometimes it's a, it's a product based platform.…”

“And I think that that's kind of the, the superpower of a entrepreneur. They don't know how hard it is, and they only ask themselves, how hard can it be? And to this day, I, I trick my brain into thinking, how hard can it be? Because you have to.”

“the really expensive DSLRs hanging off of drones, you can do that stuff, but it slows you down and it limits the amount of content and you can do. And then you end up hating your life. Then three, four years down the road, you're kind of married to that. Your audience won't let you get away from it.”

“so many of my fellow content creators sell merch, but I feel like that's just sort of the hamster wheel. Like you sell merch, you do your videos, you sell merch, you do your videos, but that's not a, that's in my mind, that's not like a business. Like, yes, it is A component of your YouTube channel. But like, if you…”

“Well, I think most of the time it is negatively correlated, except for the most extreme outlier successful outcomes, it is required.”

“we don't change anything about the structure, we just give it way more data and let it Run these models for a long time and make the parameters of the model way bigger, and like, no researchers expected them to reason about the world as well as they do, but it just kind of happened as they were exploring larger and…”

“the constraint today is actually in how much high-performance memory is available on the chip. These models need to be in memory all at the same time, and they take up hundreds of gigabytes. So while memory has scaled up, I mean, we're gonna get flashing all the way forward, the H-one hundreds on-chip RAM is like, 80…”

“As Saul is running the company during these first few years, he starts to codify some retail management philosophies, and he, uh, famously sort of canonizes these as FedMart's four priority order principles, and he teaches every new employee throughout the whole company about this. Number one, first priority, provide…”

“There are actually only three sports that matter. So Nike, Adidas, you know, Reebok, they sponsor lots of sports, but running, basketball, and tennis are the only sports that matter, because those are the only shoes that normal people can wear. Normal people don't wear baseball cleats or football cleats. Or soccer…”

“Early Nike did so many things right, but they made one critical mistake. They mistook the running and the jogging boom for the broader fitness boom. The broader fitness boom was a massive secular trend that continues through to this day. The running boom was a cyclical trend that was part of the fad-driven fitness…”

“unlike tech businesses, there's no potential for any form of lock-in, and there's no potential for really any form of network effects.”

“The NFL is a better business as a league than the NBA. No question in my mind. But the amount of value created out of the leagues, I think more value is created out of the NBA. The NFL just captures way more value, and thus is the more valuable league.”

“While they were drawing on the brand equity to make the SUV, this was a big part of putting cash back in the bank of the brand equity.”

“None of those companies are independent anymore. It's not, it's not really possible either because of the way that regulations are structured, um, especially fuel economy. You have to spread out your fuel economy over your corporation.”

“every year when I can't speak to how our competitors are matching and pricing, but every year matching and pricing probably improves by five percent a year. So you improve your, the marketplace throughput by about five percent.”

“and the reason that it's in 46 states is because That way, basically, every member of Congress is incented to vote for it.”

“In a 130, or whatever it was, space shuttle missions, there were two that were tragic loss of life calamities. And so, you look at that, you're like, that's actually not a great safety record, so maybe this isn't the right way to do it. Maybe calculating something to, you know, 15 significant digits of unlikely to fail…”

“where you aggregate demand On an online platform, and then you utilize that demand to leverage the supply side of the, of, of whatever industry that you're entering. And I think you look at steam and steam shares many of those attributes. And I think that move, which was essentially perfected by Tencent with QQ and,…”

“So you're, you're, you've got this audience there that's pre-qualified where you've got their credit cards, hundreds of millions of users. And so you just use it as a way to lower your customer acquisition cost effectively to zero for the next products that you launch. In the pipeline, and it just gives you tremendous…”

“most of these people are just so, they're like, best in class in this one dimension in the world, and of course, to get that, they had to, to be poured, they had to, they couldn't optimize all other areas of the life at the, at what they did for, like, their work.”

“Colts are the best businesses, though.”

“if you feel your product can improve people's lives, I think you guys already know, cause you get thousands of, you Messages, just like I do, that yes, listening to acquired, listening to founders will improve people's lives and work, right? Then you have a moral obligation to get good at marketing.”

“It's like Morris Chang and TSMC. It's like, he invented the notion of a fabulous semiconductor company before there was any demand for that, and then it turned out that his timing was exactly right, that, like, within a couple of years, a whole ton of, you know, fabulous companies spun up and wanted to use his foundry,…”

“He goes, he makes the argument that they're actually underpriced assets. And I was like, Ooh, tell me more. He's like, that's, that's not, what I would expect to hear. Yeah. So I'm going to tell you this book that just proved his point. I actually got to text him and tell him this. Um, so he's like, they, they use it…”

“the low cost structure thing, that's, that's not, that's a Walton thing. That's a sole price thing. That's a Jeff Bezos thing. That's a Rockefeller thing. That's, that's the most common theme in the history of entrepreneurship.”

“People who crave security, which I get, like all humans crave some level of security, um, miss sort of mispriced security because no jobs are as secure as we think they are, but they definitely cap your upside.”

“subscription pricing does make much more sense for content production, because in this case, you're actually getting the money upfront. The money is funding the work as opposed to the work Being a speculative bid for the money.”

“if you produce super highly differentiated content, that is something that. Is not going to appeal to the whole world, but to the people who like it, they'll really like it, and if you have that sort of audience, you should maximize your revenue per user, and the way to maximize your revenue per user is to charge them…”

“What the internet does do in industry after industry, I think this applies to creative talent as much as anything else is number one, there's always a barbell effect. You're either very large or very small, you're very large, you get scale, you get aggregation effects, and then you can make massive investments. Or…”

“This is actually an example of the power of branding. I wrote articles that were basically aggregation theory well before I wrote aggregation theory, but giving it a term and coining it is what made it stick.”

“There's this, uh, trope in the industry, right, which is you want to be the founder's first call. And it's like, I've never really liked it insofar as it's like very reactionary for you. It's like, oh, they'll call me, I'll pick up the phone and, and respond. It's a low bar. I think it's a, it's a low bar. I think that…”

“One of the things I found is when there's secondary selling, it does tend to clarify people's interest in price. It's one thing if you're just selling this, you know, equity on the cap table, but when you're selling your own shares, you start to get really focused on the, you know, we're not running an auction, but it…”

“And that's the best, the best M&A. Is when you look like you robbed the bank. And then five years later, it looks like you robbed the founder.”

“The venture business is an intensely personal relationship business, and it's not an industry that scales well.”

“And as a venture investor, you want to be buying all that risk. You don't really want to be making these sort of risk mitigated bets and have a port. No, that is why you have a portfolio of 30 companies. Go get all the risk you can.”

“For most groups of people, I think it actually trends towards mediocrity. And this was some of the criticism of LPs and some of the other GPs in the early days thinking they were crazy. They called it communist capital. This looks like communism, right? Like if everybody's responsible, nobody's responsible. And so you…”

“And I also think that's why they have to retire once they sort of age too far out of their forties, because it is an implicit thing among the group of you gotta be bringing it all day, every day. And at some point, if you want to notch down to 90%, it's time for you to not be a GP in the fund.”

“it takes seven years or it takes fifty million dollars to make a VC, which I think are all quite reasonable because your first several investments, you're like, it's like, you're getting the crap out.”

“our job as venture capitalists is not to see the future, but to see the present very clearly.”

“The other thing where they're sort of a victim of their own success is the Amazon two pizza team thing led them to launch all these different services. Rather than having a cohesive product strategy, AWS has kind of been alphabet soup.”

“When you launch a service for enterprise customers, it is really hard to kill it. You burn customer trust, and actually, if you think about what's the bigger risk, burning the trust and losing that customer in all their future revenue, or having to maintain kind of a crappy service that didn't work, you just maintain…”

“How can they insure people's lives when they know they're all gonna die? And the answer is, number one, it's risk they're aware of... Number two, it's risk you can analyze... Number three, it's risk you can diversify... Number four, it's risk they're well paid to take... And I said, this is exactly what we do in high…”

“if everybody has all the company data about today and the means to massage it, How do you get a knowledge advantage? And the answer is you have to either somehow do a better job of massaging the current data, which is challenging, or you have to be better at making qualitative judgments, or you have to be better at…”

“You know, it all comes down to maybe we can think better about the selling decision if we rebrand it and we call it the decision to unbuy. The thought process should be the opposite of the buying decision and not some chicken stuff about being afraid to lose.”

“my experience is you can't disrupt a financial sector except for in a downturn.”

“Basically points out if you can do something in the old paradigm, you should. And when there's a new paradigm like the internet, you basically want to find things that you could not do any other way. In order to really exploit the power of the new paradigm.”

“obviously you gotta be smart. You gotta be right. You know, you gotta have managed your company in a way that you have access to capital during those times, but that's the best time to build moats.”

“It's that insight that people far out from cities want the same thing as people in cities, and so they're just as bright, they want the same things in life, they just happen to not live in cities, and so let's not be pejorative, let's serve them with high quality retail experience.”

“It's not your growth rate in any given year that matters. Frankly, that doesn't matter at all. Uh, what matters is how many years of growth do you have left? Like that is the ultimate question. And in the case of Amazon, in the case of Apple, if you have decades of growth left, again, that's all that matters.”

“And it's only the advent of the internet with cloud computing with, you know, super low cost to start a company that there has been this wave of, uh, very young founders creating these consumer internet companies, but That's actually a blip in history.”

“being an unregulated utility company in technology, it, it can be so defensible and powerful. Like, that's what Square is. That's what Shopify is.”

“the sort of similarity of what I saw in my colleagues and what I did is it's like trying to get at the forefront of cultural shifts, even if you don't know what they mean, just trying to see, okay, are these like these weird movements that are happening in society? And like, maybe you should be the first person there…”

“the kind of biggest trend in media, and I can talk about another one of our investments, Substack, which I think has sort of benefited from this trend, is that people are now brands. They are identities. And the individual journalist is ultimately more powerful than the institution.”

“if you, if you get a high market share in an area, and you don't expand to another area, what will happen? Just because the nature of your company and the creative people, You'll do more stuff in your established area than you should, right? And that creates its own set of problems.”

“And what no one understood that I found out later is that the mindset in our industry literally came from owning a factory. When you had a shoe factory, you had to keep it busy all year long and keep the people employed. So you went from baseball cleats to wrestling shoes to bowling shoes to running shoes to You know,…”

“The sport is the soul of running, right? Track and field, cross country, road racing, the Olympics, now trail and ultra, but the business is people that are investing in themselves, fitness and health and wellness.”

“the future of investing is people who understand and create narratives, and that's what you all do, and you actually are very good stock pickers, period, because you understand the power of stories And narratives. So this is the future of investing in my view.”

“How fast do they ship? How fast do they iterate? Is the single biggest indicator and correlation to how successful they're going to be, how soon.”

“oftentimes when someone has hardware that is differentiated by software and services, and then they decide to start selling those software and services a la carte, it's a strategy conflict. It's your classic vertical versus horizontal problem, unless you are good at segmentation.”

“there are really two major step changes in the value of a company. The first is product market fit, and the second is getting power. And they're, they're quite distinct and involve different things.”

“We think of it as an intermediary for transactions. And that's it. I know sometimes we see people sort of think of platforms as being bounded to digital technologies. People equate the term platform as digital platforms. For us, that's actually limiting the scope of the topic, because platforms really is more than…”

“returns to scale is always diminishing, but how quickly it diminishes depends on the space you operate in.”

“if edge cases matter, there's a pretty good chance there's an opportunity for power. And because when you say edge cases matter, what you're really saying is that curve doesn't flatten out very quickly.”

“That performance frontier is moving in sort of a kind of predictable way, and so being a leader in technology means that you are a cost and performance leader in the business, and so it makes a lot of sense to me to kind of give up current profits to guarantee that ability.”

“And my advice always is don't think, how am I going to lock in my customers, but actually think of it a different way. What is it that I can do for my customers that create value for them And then if that proposition has with it a way that they're tied to me, then so be it. But think about the value creation part…”

“So the value comes from matching a buyer and a seller, but power in these things is really different. It comes from one platform doing this materially better than another platform, And that the thing that drives that difference in performance is sustainable. Typically, that the difference in performance is Driven by,…”

“in venture capital, if you fail, the risk is largely on the venture capitalist. I mean, in Silicon Valley, failure is on the part of the founder, so long as you conduct yourself in a way that's honorable, it's a badge of courage that you gave it a go. And we have an institutional structure where the venture capitalists…”

“if you are a high burn business with negative unit economics, and you fly into a world where risk premiums change, it doesn't matter how good you are, you cease to exist.”

“being an entrepreneur is the art of the possible. Right? You have to will things into existence. And he said, you know, you constantly think about what can go wrong. When you're an entrepreneur, oftentimes you have to suspend disbelief and just think about what can go right. And he said, but as an investor, investors…”

“this idea that you can't innovate in the public markets is nonsense, right? Jeff Bezos innovated plenty in the public markets, Facebook in the public markets. You know, look at what Marc Benioff has done in the public markets. And so I think that that the public markets not only is an important source of capital, but…”

“No one who wills an entire sector into being is in a balanced place.”

“I think that in the end, our sort of, our sense of this is like, look, this isn't, it's not like, you know, you can choose to be compliant or you can choose to be functional and like you have to choose which company you're, you're, you're launching. I think, you know, the way we think about it is In the same way that…”

“Actually, public company shareholders are not short-term oriented. They're long-term oriented, and that's why when you change your guidance for the next quarter, the valuation can change by billions and billions and billions of dollars because people are accounting for the next 29 and three-quarters years after next…”

“We don't know how the future is going to unfold because the system is interacting together, and it creates what's called emergent behavior, and emergent behavior makes predicting useless in most cases, and we can have guidelines and heuristics, and those are all helpful, but As far as exact, you know, sort of outcomes…”

“You know, it's really more about resilience than it is about predicting the future. And it's about adaptability. Like biology doesn't really care that much about the future. They care about, they care about adapting to this wide range of futures, right? Like my bees don't really care if it's going to snow tomorrow.…”

“one of the things that we're careful about is like looking for companies where, you know, part of their moat is kind of, um, you know, inserting themselves into the value chain or into their, um, you know, their customers, you know, share of wallet basically, where they put themselves in a position to extract as much…”

“TSMC has lower margins than most of their gross margins than most of their customers. And so at any point they could, they could probably take the margins from 50% to 60% and say, Hey, I'm obviously have a monopoly in this market, but the way, you know, Morris Chang architected the culture there. Um, is, is on, you…”

“we use conviction as a synonym for overconfidence. I think that's what Really is the right way to, that's the right way to think about it. Conviction for us means, hey, I've done a ton of work, so I've got a lot of sunk costs, which means I've got bias, and I think that my view of the future is better than yours.”

“Valuation is a key piece. And this is the piece that we get every day as public investors and valuations, expensive valuations force predictions. I have to believe a lot more at 10 times sales than I do at 10 times earnings, right?”

“it's really this ecosystem approach that makes sense. No one can do all of this. It's just way too hard. It really does take a village.”

“like, up to a certain point, saying something makes you look guilty, but then past a certain point, not saying something makes you look guilty, and standard past this point.”

“Anytime somebody declares the end of something, like, you know, this game is over, this market is over, blah, blah, blah. They're wrong. That is the, uh, bottom of the market and is all going up from there because it is never the end.”

“your stock price reflects a set of expectations about the future financial performance of your company. And it behooves you to understand what's priced in. And if you want to do really well from the point of view of the stock market, you have to not only meet, but exceed those expectations.”

“And so we argue that a competitive advantage should have two features. One is an absolute one. One is a relative one. The absolute one is you should have returns today or returns that are promised to be above your cost of capital, right?”

“when it rolls over, you know, so in other words, the number of companies is declining. It's actually really interesting time to invest because usually the industry itself is continuing to grow and it's a fewer number of companies that are capturing the spoils, right?”

“whether the thing's worth fifty million or a hundred million, if it's going to be worth ten billion in 10 years or three years, like it doesn't really matter that much what you pay for it today.”

“what we've seen in domain after domain is relative skill gaps have narrowed. The difference between the very best and the average is less today than it was in the past.”

“Rockefeller and standard oil as a organization, but Rockefeller as a person is really like the prototype of so much of American culture today. Like he is, he was simultaneously viewed as this like, you know, sinister villain and as this great hero. And like people, you know, people hated him, but people wanted to be…”

“because they don't make most of their money from actual profits at the box office when the movie comes out the first time, There's a delayed impact to animation sucking that doesn't show up in the financials until way later.”

“Sports have a very limited shelf life. You are not going back and watching Manning cast episodes from last season. The flywheel does not apply here. So you can't build long-term value around that original content.”

“There's a great business model lesson in this, which is with the first two Mickeys flopping, if you just do the same thing as an existing competitor who already has distribution, brand, customers, It's not enough. You need to go do something leveraging a new piece of technology or a new platform. You gotta come at it…”

“It turned out that sound was the critical enabling technology for animation to go beyond a novelty and allow the characters that are on screen to actually have personality that audiences connects with.”

“What's happening at Disney isn't just the intersection of art and commerce. It's the three-way intersection of art and commerce and engineering and always has been.”

“This gives you a sense of Walt's leadership style. He would take a talented creative person and he'd be perfectly willing to assign them to things that they've never done before and say, yeah, you'll figure it out.”

“There really is something unique about animated IP in its timelessness, in the ever availability of its stars, in the better economics of not having to share too much on the back end or in merchandising fees, et cetera, with stars.”

“And Disney is playing a many decade compounding game, which can take three decades to really kick in. And all these other studios change ownership every decade. And so there's really not the right, like, ownership incentive structure to play a three-decade game.”

“They can't fully avoid being a hits-based business. They are a movie studio, but they've gotten about as far away from it as they possibly can.”

“The lowest cost provider will win in those markets.”

“I have always thought about Berkshire as the vanguard of private equity funds. Like, it is essentially a no-fee private equity fund. You get to buy shares, and you don't pay fees and carry on it.”

“The more you're just buying the market, and the more you're buying the market, the less interested you should be in paying fees. You should pay fees when it's more concentrated and thus uncorrelated with the market.”

“Similar again, though, to the Fidelity strategy, BlackRock's profits elsewhere in the business allow them to subsidize the ETF business and just win massive amounts of clients.”

“Venture capital and private equity is an access business. And it's not like you can just call up your broker and say, hey, I want some shares of Anthropic today and execute an order. Like, you need to pay for access, and that's what venture capital is doing, and that's what private equity is doing.”

“There actually is no built-in incentive or obligation to grow. With a structure like Vanguard. The only reason to do so is if you believe the mission of the company either As set up by Jack, or as it should be today, is to bring the service to as many people as possible. But that's just a value judgment. There's no…”

“The investors are the board of directors, or elect the board of directors, and thus will always vote To lower fees when they can lower fees, because it's in their own interest.”

“If you were to try to start a new one today, in order to break even, you probably need one or two percent fees. Starting from a zero asset base, and so you'd be inherently non-competitive. You, if you're not already big, or you don't go raise a giant amount of money to subsidize it, then you kind of need Vanguard scale…”

“There's no chance that I'm going to sell my Vanguard index fund and realize the capital gains tax only to switch to a different index fund.”

“They love that cold shoulder of a artist creating the car mysteriously, In some small town in Italy who's just interested in racing. He's not interested in mass market cars. You're just lucky to get one of these racing cars, and he couldn't even care less about you.”

“Ferrari will always deliver one car less than the market demand.”

“The primary ingredient in French luxury is the dream, and specifically the dreamlike connection to French royalty and this, like, mostly imagined past that, you know, if you buy a Birkin bag or if you buy a Louis Vuitton trunk, you too Can be like the bygone French royalty.”

“So with Italian luxury, the primary ingredient is the craftsmanship. And that's embodied in the design and the passion.”

“Fiat's attempt, their best solution to fixing the problem of the road car business is to produce more road cars, which is the cardinal sin of luxury strategy management.”

“And the really impressive thing about Ferrari is the cars are just different enough where they deserve different names. But a lot of the R&D and the components are carried over. When you look at the internals from some of these cars to the next generation that carry a different name, that have a different body style,…”

“The thing that makes you successful at scale prevents you from being able to execute Ferrari's strategy.”

“Like they've expanded the pyramid so much in recent years that a period of slower growth probably is the right thing to do in terms of luxury strategy management here.”

“If you're gonna build a luxury brand, you need time and you need heritage where you tie it to an important emotional thing that people lust for connection over. And in cars, it's racing. I'm sorry. It's just, it's the, it's the obvious thing to tie the emotion of your brand to.”

“back on our Rolex episode, we threw out the idea of a, uh, functional alibi, a reason you could claim that you need such a watch. For Ferrari, they have lots of incredible alibis. Most people do not experience the thing that you just described, feeling maximally alive and going right up to the edge, but that is one of…”

“If you bring a client to an F-one race, like ServiceNow brought us, you spend three days together, and the race is only like two hours, and actually in the race there's not that much you need to pay attention to most of the time, that there's some really exciting moments and you pay a lot of attention then, but there's…”

“In other words, the teams are already making 72% of what they would make if they owned the league, because there's just not that much profit left over after all the costs to run the league, after selling all the sponsorships at the league level, general overhead, administration, and of course, running the Las Vegas…”

“But ultimately, they do say yes, and it really, like, speaks to the thing that has made the NFL successful, which is saying no to growing my slice of the pie to grow the greater pie.”

“What you want to be paying for is the smallest amount of content possible that gets distributed to the widest audience possible. So you actually should be willing to pay up to twenty million as long as the aggregate number of viewers that you get on that day is the same.”

“on a revenue basis, you know, it's an eighteen billion dollar a year revenue business. The NFL actually owns way more mind share than its revenue would illustrate. A strange statement to make is the NFL is an oddly small business for how large a role it plays in our lives.”

“During the dawn of the TV era, I think they were counter positioned against major league baseball in that while decline in revenue from the gate by adding TV certainly was a hit to them. It wasn't as much of an existential hit in the way it was for major league baseball. And so the NFL was more able and willing to…”

“The product is scarce. You know, a 162 baseball games a year. It's called America's Pastime. You pass a lot of time with it. But with the NFL, because the product is scarce, and then they have very smartly cultivated that and engineered it to be more scarce, more of an event-driven sport, That's made all the…”

“maybe if we just admit that we are heavily constrained, and then try to just lean into that constraint in the way that Hermes leans into every single Birkin bag must be handmade by one artisan, and we're going to build a business model around that. And it turns out to be a great business.”

“So podcasts are unique in that it does have that true subscriber base, but unlike anything else where you click subscribe, there's not an algorithmic platform that disintermediates you.”

“do you know how your heart sinks when someone gets up at a podium with a script, with a, with a speech, and they're gonna read their speech? The audience is waiting for you to get through this thing, because they know nothing's going to happen. Like, whatever's on that page, that's what's gonna happen... And that if…”

“We thought the interviews would be better than our core storytelling episodes because we hadn't discovered that the Ben and David storytelling is our N of one product. It is the thing that we uniquely can do that no one else can do, and we thought getting these big gets would be the key to success, which is funny…”

“All dollars do not have equivalent value. The marginal dollars have way smaller value than the early dollars.”

“If one of us feels passionate about something, even if the episode is a relative dud, it's still worth doing, because invariably, somebody latches onto that passion.”

“If you're only going to sell very few things, you're only going to make very few episodes, it puts a lot of onus on making Exceptional choices on the things that you do choose to carry. So it's like a very high leveraged strategy.”

“The fact that there's a large number of listeners to amortize all the inputs across makes it So that we can do an unreasonable amount of things for each episode. I mean, if you were gonna try to compete with Acquired today, you couldn't do all the stuff that we do for your job.”

“Most, uh, podcasts sell their ads on a CPM basis, and they are incentivized to make as many episodes as possible. With as many ad slots as possible. Our business is entirely structurally different.”

“I don't think we've figured out a better way to do it. Like, I don't think we figured out the way to do it and everybody else should just snap to our way. It's like, we have an enormous amount of Privileged that we can run a business in this way, and most people have constraints that prevent them from doing this. I…”

“The beauty of Doug, his, his key insight, Was, you know, all the other car YouTubers are making, making videos for car enthusiasts. He makes videos for, like, people who need to buy a family SUV.”

“The Coca-Cola company has higher gross margins, much better returns on invested capital, requires less invested capital. They get to focus on just making syrup and marketing. They don't have to do any of the undifferentiated stuff. You'd much rather be Coca-Cola than the bottlers.”

“This is textbook counter positioning. Coca-Cola cannot respond because they and their bottlers have just invested all of this capital and all of this IP into the six and a half ounce contour bottle. They can't react.”

“if you really boil it down, the Coca-Cola company in a nutshell, it is figuring out how to incentivize partners to sell your product. And everyone is incentivized. The bottlers are massively incentivized. The retailers, there's great margin there for you. The soda fountain operators, the restaurant, the billboard…”

“It's funny, when I finished reading Joe's book, One of the takeaways was it seems like if you can master, A, negotiating real estate leases, two, regulatory stuff, like if you can figure out regulatory arbitrage, and three, if you can figure out how to not have your employees and customers steal from you, then you're…”

“You can build a much better business on being known for, I will be surprised and delighted when I come to the store, and you have selected interesting items for me, than you can on, you are an empty vessel through which to provide me milk.”

“This is the unlock for thinking about Trader Joe's. They are wine merchants, and they merchandise everything in the same way you would merchandise wine.”

“The other retailers want to use the house brand brand name to signal to customers this is the same product at a cheaper price. Trader Joe's Wants to signal to customers with all of their products, this is an N of one product.”

“They aren't focused on the margin percentage of each item. We didn't talk about this yet, but they actually don't apply a consistent markup. They focus on the absolute dollars of margin in each item.”

“And this is how AI research tends to work, is there's some breakthrough that gets you this big step change function, and then there's actually a multi-year process of optimizing from there, where you get these kind of diminishing returns curves on breakthroughs, where the first half of the advancement happens all at…”

“And because of scaling laws, you need your models to be as big as possible in order to have the best performance possible. If you're trying to maintain multiple models within a company, you're repeating multiple huge costs to maintain huge models. You definitely don't want to do that. You need to centralize on just one…”

“The faster that we get the internet using public to fall in love with and use web applications, the less and less leverage Microsoft has over us.”

“When you have a small number of total websites, curating them is interesting, but when you have 10,000 times more websites and 10,000 times more niches that people are interested in, directory is not going to be an efficient way to surface what people are looking for.”

“if your formula for placing ads is a combination of the price that an advertiser is willing to pay per click and the click through rate of the ad, Well, that's actually the mathematically optimal formula for maximizing your own revenue as Google.”

“if you're a better advertiser for that Keyword, then you actually get to pay a lower price. If people are more natural to click through to your service and transact on your product, you get the privilege of bidding lower prices and still winning the auction.”

“every great company has like a stored potential energy of value maximization that it doesn't fully maximize. Like Costco is the, the extreme example of this, but Google has this too.”

“Having marketplace liquidity means you always generate the most revenue per search versus other smaller search engines. So it's not just that unit costs go down, it's that as they scale their revenue per search actually goes up due to the auction system.”

“A pop is a bad thing for existing shareholders. It means that in the IPO, you incorrectly priced it too low, and then within one day, upside that should have, or really like is yours because it happened in all the intrinsic value was built all over these years, goes to the people Who had access to buy your IPO shares,…”

“When you sell the enterprise, you have to provide peace of mind, which is kind of like an insurance policy. So buying more than you might be using, or some users are using, it's an insurance policy.”

“I also think we screwed that up. You can't have a long goodbye. Long goodbyes are not helpful.”

“succession plan has two candidates. It's what happens if you get hit by a bus and what happens if you get served to term, whatever term feels like. And they're different people, right?”

“The problem with the partnership with Nokia is they didn't have the money to invest in marketing. We did. We did. They didn't have the market to go. They did not have the ability to go deep pockets. We did. But if we didn't have the monetization capability back through the phone, We weren't going to be able to make it…”

“And that's the existential need for an electronic medical record system, but really also, and maybe more importantly, an electronic medical billing system.”

“Our customer, these hospitals, do not want to buy piecemeal solutions. They want to buy everything from one vendor, and they want that one vendor to provide the very best, most integrated experience possible.”

“Epic has bet the whole company on having a reputation for, we don't have failed implementations. And that wins deals.”

“When we say customer, we mean hospital CEO, CIO, the chief information officer, and CFOs. When we refer to their customers, that's who we're talking to. Obviously, the chief medical officer and all of the physicians and nurses and care folks are a part of that, but A part of my research has revealed the customer is the…”

“regulation tends to Shut out new entrants and entrench the older companies because the older companies are the ones that have the resources to comply.”

“It is super important that your central revenue stream of your TV rights, deals, and your central sponsorships, that that be very, very large, and that that be the most important revenue stream for your teams, because that's what keeps competitive parity.”

“the only way for a team to gain an advantage over any other team in the auction is to have superior market intelligence, which has come to mean have superior analytics and superior player evaluation.”

“You'll continue to see this in everything that is in the Rolex universe, is we don't want to be lumped into any sort of a category, so we have to refer to something entirely different, such that we can't be put into a box. Like, they don't make spore watches. They make professional watches.”

“Once you create the Porsche nine 11, you should just tweak the Porsche nine 11 once every seven, eight years, and that way you can buy a nine 11 just like your grandfather bought a nine 11.”

“The mechanical watch renaissance really came first from auction houses.”

“That is the absolute opposite of what you need to do as a luxury company. It can't be like, this one's better than that one, or different levels of quality, or these imperfections here, and it's cute. It's like, absolutely not. That is critically important because all the clientele that are buying these products are…”

“My best comparison that I think I came up with is Rolex is Porsche. And I know there are different categories of price, but, like, cars are expensive things, and you do need one anyway. It's real scale manufacturing with a high-quality engineered product with extremely good margins differentiated by their brand. You…”

“Nobody for any reason needs a watch. It, it has no functioning alibi anymore, and so it is a pure display of, I feel like a better version of me when I wear this, and that's the only reason why I'm owning this thing.”

“It was, for basically the entirety of the 20th century, the only acceptable form of male jewelry.”

“You know, we always had a pretty strong sales effort. But, uh, to me, sales effort is just, uh, uh, the tactical side, uh, uh, with the customers. Marketing is the strategic side to the outside world now.”

“Actually, back in my mind, I was thinking of the time when Kissinger was Nixon's national security advisor, and somebody else whose name I have even forgotten was the Secretary of State. And Kissinger, you know, probably had a couple hundred people reporting to him. Whereas the Secretary of State, you know, had…”

“Apple is a very close mouthed company. If you try to talk with, if you offer, you know, your service, I mean, they will just tell you to go away, you know. They will come to see you when they are ready, you That's what I knew about Apple, even then, and I knew, I know the same thing now, you know.”

“The difficulty was, you know, you, you have to satisfy a lot of customers, you know, and everyone, you know, wanted the factory to run his way, you know. But you can only run for one way, you know, which will satisfy more or less all the customers. And the advantage, of course, is you have a lot of customers, you know.”

“Assembling an iPhone is completely, completely different than taking a brand new design for a next generation chip and manufacturing that chip. One is manufacturing and one is alchemy. The alchemy can only be done by alchemists.”

“Software will always match the complexity on the most advanced hardware it can run on.”

“When it comes to candy, and specifically when it comes to chocolate, the most important thing in the business is being first to market, and setting the taste of a specific regional area.”

“You look at Ingvar, you look at Sam Walton, you look at Buffett. I mean, all these guys, it feels like it's a part of their childhood story that as a teenager or a college student or something, they were out earning the average head of household.”

“complete ownership, or at least board control in Meta's case, is freedom. You can do things like invest for 10 years from now when it's gonna be a super lumpy period between now and 10 years from now. If you believe in the long-term vision, you can suboptimize the short-term.”

“who won chocolate between 1950 and 2024 is a story of marketing and distribution.”

“Mars just has a durable competitive advantage in that they're selling something to consumers that they value at the same price, but the cost of goods sold is way lower.”

“Great retailers have more in common with P.T. Barnum than poor retailers.”

“I mean, it's the Amazon play, right? Of once you reach scale and you have enough customer eyeballs, You can staple on a near hundred percent margin advertising business for free.”

“The ultimate maximization function is, it's almost like, it's not margin dollars. I think it's like number of items sold profitably at all. They want to sell more things to more people.”

“The issue with that, though, about going global is that tastes at the high end are way more heterogeneous and fragmented, especially across geography. Than they are at the middle and low ends.”

“So it's kind of like this amazing simulation of what it's like to run one of the top 10 market cap mega capitalization companies in the world today.”

“this is like the first time in history where you need neither money nor permission to launch an application like this on the internet.”

“People react really strongly when you change the ease of obtaining that information or whether it feels like you are pushing that information out Versus someone is sort of pulling by going to your profile and viewing.”

“I think when someone invents a new interaction paradigm, it's one of these things where, like, you have to adopt it because otherwise people are just going to flee, and of course your business depends on you adopting it because you can't let someone use this new discovered mechanic that's perfectly timed for this…”

“When a shift like this happens, the most scale player with the most engineers and the most data turns out they're still the winner.”

“And a good test for this is when you bring somebody brand new into the organization and plug them in, does the power transfer to them as well? If no, then it's a cornered resource. If yes, then it's process power.”

“When you think about it, it's actually a form of operating leverage, where he's basically saying there's a big fixed cost I am willing to bear in order to bootstrap this ecosystem and commoditize all of these complements, commoditize all of these other closed source AI models, and in exchange, what I'm going to get for…”

“Only a company of the scale of Meta can kind of run this playbook, playbook in quotes, because no startup is going to be like, oh, okay, what is my strategy to make sure that OpenAI and Anthropic don't get leverage over me?”

“It's quite ironic that Facebook became the prototypical startup, given that the goal was never to be a startup. The goal was first to be a project, and then to build, like, a very profitable business. The largest empire in the world. Yes. There was no in-between of, like, we are building a startup here. It was, like,…”

“Amazon uses interface so teams don't have to talk to each other. At Meta, they require incredibly tight communication. It's a very different organizational philosophy where they're like, no, no, no, not only do we not have external customers, we want this insane type coupling between our infrastructure and our internal…”

“It would be easy to look at this company and say, wow, what a viral product. What a universally applicable product. That is not the case. It is unnatural to have connected four billion humans. This is a freak of nature. This is not just something that people adopted. And so, while I think it is totally fair to say,…”

“Ultimately, my big takeaway is the company moves like water. It is the company that has connected the world that will always gear up for the next battle and be whatever they need to be in the next era, and whether it's them defining the next generation of computing or creating all these AI experiences or fending off…”

“But I think younger consumers, especially, they don't know what the difference is. They just want to feel closer presence to the person.”

“while I still think music is very social, I think what we got wrong in the product was this sort of notion that just seeing sort of what all of your friends are listening to may not be the sort of right social product. But if you instead sort of say like, I want to work together with my friends and I want to have a…”

“it also is problematic to have more people working on something than you should have for the stage that it's at, because then the people who are working on it don't have the agency to actually, like, make the changes and do the things that they need to, Which is less fun, and then you can't attract the best people to…”

“I think there are, like, a lot of people for whom, you know, if you knew how painful, ah, it would be along the way, you wouldn't get started. But then, you know, I think that that's one of the things that's good about human nature, is you can underestimate how painful things are going to be, so that way you can go and…”

“I think it also is problematic to have more people working on something than you should have for the stage that it's at, because then the people who are working on it don't have the agency to actually, like, make the changes and do the things that they need to, which is less fun, and then you can attract the best…”

“You're already getting this picture of Microsoft's business strategy, which is until we know exactly what the future looks like, start placing bets that approximate So that we're sort of in the mix, even though we don't know exactly what the future is.”

“the embrace and extend thing is actually a brilliant business strategy. There's already a whole bunch of people who love this thing. We want to embrace that new behavior. There's sort of no product market fit risk because we can clearly already see it happening. People want to use this browser thing to access hypertext…”

“the key to enterprise is backward compatibility. Saying, look, we don't necessarily need to promise you anything too groundbreaking. We need to meet your needs today and be the most cost efficient, you know, total cost of ownership driven system that meets your needs and your employees are fine with. And from here on…”