YouSaid · the spoken record

Chas Cocke

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80
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2021-11-29
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2021-11-29
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1
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  1. “That the distance from age 20 to 40 is a lot shorter than the distance from age zero to 20. I have a belief that the only way you can experience time is as it compares to your prior experience to time. So when you're 10, a year, go into your 11th birthday feels like forever. It's 10% of your life. When you're 40, it's two and a half percent of your life. And when you're 80, it's one and a quarter percent of your life, right? So in a sense, your life is speeding up. And so as much runway as I think that I have in front of me, it actually risks being much shorter than it really is. And so the idea that like there's no time to waste and you got to get after it, like I am completely bought into that. I don't want to look back at age 43, which I am now, or age 44, and just think, you know, that one got away from. There's no time to.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “My parents fundamentally believe in the blank slate of people. When they meet someone, they are incredibly open and non-judgmental toward that person. And even if they learn that somebody is not someone you want to have in your life, you would never hear them say a bad word about that person. I grew up in an environment where talking bad about someone behind their back just truly did not exist. And when I hear it in real life now, and I'm sure that I do it myself, but when I hear it, it legitimately raises the hair on the back of my neck. And it goes back to the same thing I was saying about Alice earlier. I would much rather trust too much than not enough. They live that. They're just amazing, trustworthy, admirable people.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Somewhere in there, there's a smoke signal that's telling you, hey, buried inside this accounting, there's a business that's generating a ton of cash flow because it's actually allowing us to fund our own growth at hypernormal growth rates for 15 years. And you think that accounting is sort of the Rosetta stone of investing. And in the end, you realize, no, accounting is the exhaust. It's not the gas. And so you can't let it take over your mindset. You've got to think about what does the business actually do and what is it going to look like in three, five, ten years. So missing that and getting anchored that Amazon is a short is the most expensive mistake in my life. And I've still never owned it. And I would say even a decade ago, when it became obvious, I just kept saying, well, I've missed it even today. I feel like I missed it.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “From looking at Amazon as a business, I mentioned the duration of compound, but I always remember when I first joined EVIMCO October of 2002, Tim gave me this stock pitch on a short that was the stock at $16. And the pitch was it would fall in half to eight, and that turned out to be Amazon. And it always stuck in my head because the pitch seemed so thoughtful. And if you looked at Amazon for the next 10 years, it didn't make more than a billion dollars, I think until 2015 or 16. It made maybe a little over a billion. And this year it's going to make $32 billion. And in the meantime, despite the fact it looked like it was losing money and spending more on CapEx even than the little bit of money that it was making, it never needed to raise outside capital. And so”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I'll give you two quick ones. One is when we first started investure, I very much had the mindset and I think we all did that with venture capital, that if you're not with the best managers, you just shouldn't do it. And so we just didn't spend time on venture because the best managers were closed or maybe we could get a couple million dollars, but it wasn't going to move the needle. And in the end, that caused us to miss out on a new generation of managers that emerged. And so I would say there's a very fine line between a mantra and a dogma. And you risk taking a good idea and turning it into a terrible idea when you get attached to your initial thought. What's that saying that the worst idea is seeds are in good ideas? And so I think it is correct that you want to be with the best venture managers. And you've got to keep hunting. The second would be, I think I've learned a lot.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Interest rate sensitivity, even though none of them have to do with interest rates. He just sees the world in a different way that's incredibly powerful and mind expanding for me. And another person whose integrity is just completely unimpeachable”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “And willing to trust. And honestly, I think I would rather have somebody screw me over a hundredfold than vice versa. And so she errors to that side. And I think it's served her really well. And I learned a lot from seeing that with Hans. Hance West is the co-chief investment officer of Investor. He and I didn't sit more than 10 yards apart from each other for probably 18 years going back to our UVA days. He has so many amazing aphorisms. But when I think of all of this collection of little sayings and pieces of wisdom that he has, it's I'll be looking at a problem from the south side and maybe a little bit from the east and the west. And then I talk to Hance and he immediately goes, yeah, but have you thought of it from over here? Like if you're looking at it from the north, what you didn't realize is that all three investments you brought me in the last month, they all share.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “There's a bunch that jump out who we've already talked about, Tim and Michael and some of my parents, my wife. But I would have to say Bruce Miller jumps out. I would have to say Alice and Hance West. So Alice Handy is, she obviously, she ran UVA's endowment for many years. She was our primary founder at Investure. She took a shot on me when I was 25 years old and asked me to help her found this business for some reason that I don't fully understand. She just has the most incredible intuition about people. And I think I learned to trust my own intuition a little bit more about people by seeing when we were lined up and when we weren't. She was almost always right. And she also is someone who the moment you meet her, you know that you can trust her. She is never going to screw you, ever. And I would like to think that I can exhibit that as well. That you come to the world a little bit vulnerable.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “I think it is dangerous for people to possess a false humility or a misplaced disbelief in themselves. I think people have so much to offer. And so it's asking a lot for people to live right at the intersection of hubris and humility. But I really think that is the goal, both in investing and in life.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Into the Munger idea of he quotes the algebraist Jacobi invert always invert. He says, if I knew where I was going to die, I just wouldn't go there, which I love. And so when I was early in my career, I made a list that was called How I Would Hire a Hedge Fund Manager if I wanted them to blow up. So like, what are all the characteristics that they would have? It was very long, but I spoke earlier about the intersection of hubris and humility. I think it is such a fine line. So my biggest investment is both sides of that equation. And I find myself violating it all the time. So on the hubris side, I'm a big believer in pride cometh before the fall. And I find myself being too prideful and too confident. Even in this conversation at times, and I view that as a very ugly trait of mine. And I don't like it. I see it elsewhere. And likewise, on the humility.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “I make this mistake all the time, or at least I violate my own pet peeve all the time. I can't stand it when people say something is five times smaller, when what they really mean is that it's 20% as big. I don't think there's a mathematical concept such as five times smaller or ten times smaller. It's such a convenient way to say things, but it still raises the hair on the back of my neck every time.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Whether that's journaling or writing letters, I love writing tweets, which forces concision, although sometimes I find my way around that emails. I mean, I love the process of taking cloudy fragments of ideas that are in my mind and trying to put them on paper in a way that is clear and concise and complete. I also think it's an important part of deliberate practice. So if you were a basketball player and you were playing a game, at the end of the game, you get video that you can go break down, you know, how'd you do? You know, did you show some tendency to me in investing, journaling is probably the closest thing you can get to that where you can go back and see what was I thinking when I made that decision on that day in addition to being a very relaxing and enjoyable thing for me. It's something I enjoy.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “That you have. And I say, of course not, because that would mean you have to be able to see the future. I think it all fits, but again, you know, that's just me in amateur”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I am a big believer in free will. I would say a lot of the people that I admire would say that free will is an illusion. I disagree with that on an intuitive level, but also the story or metaphor that, you know, if you gave a million monkeys, a million typewriters and gave them enough time, they'd accidentally compose War and Peace. I think if there's no free will, then we actually are those monkeys. This is all sort of some sort of magnificent coincidence where it began as a series of chemical reactions from the Big Bang and now here you and I are talking in a way that was prescribed 10 billion years ago. I don't believe that. I believe somehow we are animated by something that gives us an element of freedom to make the next step. A lot of the there is no free will viewpoint says you can't explain why you're having the next step.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “I mean, I'm pretty boring because I managed to turn my actual hobby into my career. So outside of investing, I'd say UVA sports, passionate men's basketball fan, as well as other sports, and then philosophy and thoughts on free will. Those would be other areas of exploration I enjoy.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Raising needs or desires. Obviously, we have the bite index, which definitely want to get the word out there about it. But to me, this change in profile posture a little bit, it becomes very successful if it leads to relationships and feedback. And even you and I, we've known each other a long time, but I would say it really deepened in the last year and a half. I used to go into work every day and there were 40, 45 people there and they'd all be willing to tell me what I'm doing wrong is healthy to recreate a little bit of that and to see are there new pathways where I can get people who I trust and who I understand who are willing to push back and maybe make me a little better and who hopefully I can play that same role for them.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Think my default has always been the sort of tall poppy mindset of the British and the Aussies. Tall poppy gets cut in the field of poppies. And so keep your head down and just do your thing. I very much like the low profile. I don't think you'll see me becoming a real regular in the podcast circuit. However, it has been such a shocking surprise going back to Twitter sort of how much value I have received for just putting a little bit out there. I think there is a ton that I don't know and that I could learn. And I think by maybe having a slightly more willing exposure to expanding my profile through something like this, my hope is that it leads to engagement and ideas and feedback. That would be a massive home run for me. I mean, I don't have any LB partners funding.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Tweet was around some of the funky market mechanics that have been going on this year in 2021. And obviously this is the year of crypto and GameStop and AMC and NFTs and all this. And I think some of those topics have created so many questions in everyone's mind. But in particular, these are finance topics where the public is seeing them and saying, what is going on? And so on a particular one, I think I had a useful series of insights that helped illuminate some of the behind the scenes to the everyday person and even I think was information to finance professionals. And for me, it was just a way of getting my own thoughts out. It kind of came out in a big blurt in an hour. It was a long series of tweets. And for whatever reason, people really connected with it, felt like it was very helpful.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Have people constantly who want to engage and send me ideas and give me feedback on ideas they know I have. So as with everything, it's greatest strength is the flip side of its greatest weakness, which is the weakness is it's very engaging and addicting. The strength is if you're willing to engage with it in a thoughtful way, you can get tons of feedback and meet tons of thoughtful, smart people. I'm also somewhat new to it. I wasn't on Twitter really a year and a half ago. I got on during the pandemic and then as you know, I had this one tweet that went unusually viral and that led to, I think I went to sleep with 300 followers and then woke up three days later with 12,000 followers. That was a very strange experience.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Yeah, so as you know, I have it in a non account on Twitter. A lot of the magic of Twitter happens behind the scenes on DMs. And I have since become, I would say, very close with maybe 10 new people in my network. I trust their insights. I trust their feedback. I share ideas with them. We meet in real life. And disclosed who I am and really feel very blessed to get to know them. Obviously some of the very best investors in the world are on Twitter publicly. Some others are on there anonymously. And then there's, I would say, again, a long tail of people who are just really, really thoughtful and want to engage. And I somehow stumbled into accidentally having a reasonably big Twitter following. And it has its negatives. It's a very addictive product. It pulls me in.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “That would put 2% in on the way to understanding it well enough to put 10 in. But the real mission is go find those things that you can back up the truck on and that you're excited to own for years and years.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “It kind of gets everybody upset. It's both too concentrated and too diversified. We probably own 60, 50 positions, very long tail of small things where they're still doing diligence or we started buying and it ran away from us or a purpose that serves is small and we're too concentrated. Our top five positions are 70% of capital, our largest investment is high teens percent of capital. And, you know, over time, that is a very strongly my preference is to have fewer, better positions. If I think about the process, every day the goal is find the next thing that we can put 10 to 20 percent of our capital in. And if we find something along the way that doesn't quite fit that, but that we can get our arms around pretty quick, we're fine to put one or two percent in.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “If they raise capital, that pays us as the index provider, which pays my clients. I have tons of ideas from making money that are not necessarily going and buying the next grade stock. And this just happens to be one of them. But I love the fact that I can do it in a way that makes me feel aligned, where if this succeeds, my clients succeed with it, right? I only want to do things where I think my fund investors benefit because that's where my money is. And that's where people who I love have come into my life in a professional way and I've supported me. And so when I'm spending my time talking about bite, I want them to be the beneficiaries of it. And then I just think it's a fabulous product.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Is exactly the kind of product that if I were in an institutional seat or if I were running a wealth management firm that I would love to have. It is real assets. It is infrastructure. It's inflation protected, but it has growth, that it's not crazy prices. And so now coming back to LBP, how it fits, I think that's not only a product that I want if other people like it, it could be a fabulous income producing business owning an index firm. And so I actually took a piece of the ownership of that index firm and just granted it to my fund investors. So the idea there is if we raise money for our partners who actually own an ETF and license the index from us, I actually just, to be clear, don't own the ETF own the index. There's a firm called Roundhill that owns an ETF that also uses the ticker bike.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Index business, the byte index BYTE. And the idea of it was, I think that digital infrastructure, which is in the byte index, is 40 digital infrastructure businesses. So think data centers, fiber, towers, cable, I believe that is the class A real estate of the 21st century. It's incredibly recurring. inflation protected has secular growth, right? I don't have to pick whether Google is going to beat Facebook and building the metaverse. I don't have to pick whether Ethereum is going to beat Bitcoin. No matter who wins, they need our digital infrastructure to grow. And so we sort of are a derivative that gets pulled along in the growth of that. I actually conceived of this probably five or six years ago, basically looked at what was out there and thought it either didn't exist or was kind of garbage and said that”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “I mean, I should step back with LBP itself is already two things at a minimum. So I have a view that in order to have long duration and play offense, the first thing to do is make sure that life is covered. I have two funds. One is more income oriented and really all the goal of that fund is I filled it up with enough of my own capital so that I can live off the income it generates. everything else goes into playing offense and trying to compound capital. And my view was if I never need the money that's in the offense fund, then I can really extend duration. So we have these two different vehicles. And my perspective is I'm not going to be constrained by any typical style box, et cetera. And where we think we can make money, we're going to go make it happen. And whether that's in public stocks or private, or in this case, actually starting an”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “With my clients. And even though we're small and we're closed, we're not trying to raise more money. I already have taken on the habit of beginning to waive part of our management fee, just nominally every year. But I love the idea of saying we don't need it all. It's your money. We want you to benefit. And I think if they do well, then I'll do well almost automatically. And that's just been the perspective and kind of ethos that I'm trying to build into our culture.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Equity adventure, I think, does a better job of that alignment grew. And so when I built LBP, we intentionally built it with a multi-year measurement period. We built it with a hurdle so that if I'm having a down year or a down moment in year two and I was up in year one, well, our clients can actually begin to claw back some of what it looked like I might have been paid. So those kind of things to me that like builds strength into the ecosystem because it aligns people's expectations and it aligns my promise with real on-the-ground behavior that's good or bad. And so I would say like the rubber meets the road. It'll be someday when we're having quite a bad drawdown or something like that. But I thought a lot about that in the structuring up front. I never want to be in the business of making money off my clients. I want to be in the business of making money.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “And I think that has really changed the type of conversations we have. Almost all of them are either successful investors themselves or successful business people. They're accountable to no one else. And so that is one decision we made early on with that kind of stressful moment in mind. Another is I used to joke when we were hiring money managers. They would say, look, you know, we're long-term investors. We invest with a three to five year time horizon. And then they'd show me their fees and I'd say, well, your incentive fee is annual. You just told me you invested a three to five year time horizon. I'm like, do we agree that it's called an incentive fee because it creates incentives? And then yes. And it's, well, how come just because the earth makes a trip around the sun, it means you should get paid. Like, why are we not lining it more with your actual investment time horizon? And over time, actually, I think a number of the managers were with and of course private.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “While we run an institutional quality shop, we aren't going to bring in institutional money. And that means that all the people who are invested have a really one-to-one relationship with me where they are the principal.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “You ultimately cannot control the emotions of others in the moment that you described where you see a manager put up, quote, a bad print, you can't control their emotions, you can't control your own client's emotions, but at best, you can try to manage your own and use that as maybe a source of strength for the manager, maybe a source of strength for your clients. When you are now in that seat where you've got the clients and you are the bottom line, there's, I think, a little bit more intensity, potential stress that can come from that. And I think that it comes back to some of the early business decisions that I made. I mean, I structured LB with that moment in mind. We structured it so that I will always be the largest investor, right? So I've done great, but I don't cut checks the size of investor or Yale.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “Had some big successes. You're going to get everything on the range of outcomes and all the potential emotional baggage that comes with it. For me, the heaviest bags are actually not when you're getting punched in the face. It's when you're succeeding. That's where I start to slim. You start to believe your own press clippings a little too much and might get a little bit lazy about buttoning down a question that's lingering in the back of your head. And so for me, fighting that is harder for me than the other side of the equation.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “So, whether that's them as an idea source occasionally, but more likely them as someone who I can bounce things off of and who can poke holes in my thinking, I think if you invest scared, it's going to be very hard to generate excess returns. And it is that funny thing about investing that I don't know who said it first, but that the great investors live at the intersection of hubris and humility. You have to be arrogant enough to believe in yourself and your ideas and your research. And yet you've got to know that you're going to be wrong almost as often as you're right. And that set of trade-offs does not lend itself well to someone who's investing scared. You have to be confident and humble at the same time. And I like to think I'm walking that line reasonably well. We definitely have been punched in the face a few times and we've definitely”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “Maybe exactly like my first month at UVIMCO, where I decided to bring a manager to the table. And I just had the foolishness, the belief in myself. I don't worry at all about the fact that there's tons of smart investors out there. When I started LBP, in addition to the fact that a bunch of my old partners from Investor have supported me here, become investors, it turned out that actually a bunch of our old fund managers also wanted to invest. And I think maybe that speaks to the type of research and diligence and that last five or six years at Investor when I was overseeing a direct investment effort. We used to share ideas with our managers and they would share them with us. So I've never worried about the fact that there's other smart investors out there. However, I have absolutely tried to benefit from the fact there are other smart investors out there.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “Is very transparent. And so I think you can buy it with a value investor downside, but more of a growth investor upside. I love that type of framing. So, you know, that's the kind of thing where I think it's very easy for quant and systematic investing or even just first glance investing to miss it totally.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “How in three years perception has shifted. That fintech digital payments business as a standalone company probably trades for somewhere in the seven to ten times revenue. Moneygram, the whole company trades for less than one times revenue. And if all you did was put seven times revenue on just the digital business, the stock would be a double from here. That would give no value to everything else. And so from my standpoint, that's the type of thing that you want to find where the transition is so cloudy and so easy for people to write off. It's a small cap. It's a legacy business. Bitcoin and PayPal are going to take over the world. Stripe. And yet you look at it and you realize, actually, it's the low price leader. It's rapidly growing. It's built out a sticky DTC business. And in the end, this is a scale dominant business because price matters.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “Remember, it was about October of last year. I just stumbled on a headline that said, Moneygram, digital business, growing over 100% for something like the eighth straight month in a row. 100% digital business at Moneygram. And so that just opened up a series of questions for me. It's nothing to do there except learn a little bit more. And it turns out that MoneyGram inside itself has actually built a world-class fintech that is a digital payments business that a year ago was doing $40 million a quarter of revenue, $160 million a year today. It's doing $70 million a quarter, so $280 million a year. And so that type of thing where, yes, there is this melting ice cube of the big business, of the traditional business, but there is a rapidly growing fintech inside of it. You can easily picture.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “I would say US cable businesses today are pretty clearly in stage three. But for instance, I own a company Moneygram. And Moneygram, small cap company, you know, caveat MTOR, not an investment recommendation. But when I think MoneyGram, I think of the weak competitor to a business I already don't like, which is Western Union. You walk into a Walmart or a CVS where they have a Moneygram desk. You've got $500 and you want to send it to your grandma in Mexico. So you take that $500 in cash or a check. You pay a $20 fee on top of it. You send it and she walks into a bodega or whatever in Mexico. That's also a money grant partner and walks out with the equivalent in pesos. That to me just seems obviously like a melting ice cube business. The world is moving to digital, whether it's crypto or PayPal Venmo type solutions.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “Middle stage where the duck is perfectly still because the two things are offsetting each other. And then in stage three, the new business is massively outstripping the declines of what is now maybe a less and less important business in the legacy part of the company.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “On the transition side, I have kind of a light framework that I call swimming ducks, a duck swimming at the surface looks very still beneath the surface lots of activity. So you can imagine a business really obvious case would be US cable companies. They're now late stage in this, but where they have some legacy business that is the perception of the company. So US cable businesses, that would have been your TV video business. You subscribe to a cable TV package. That is in secular decline, at least from them distributing it to you. Then on the other hand, they've had this emerging growth business in internet connectivity, which is actually a superior business. And for a long time, if you break it into three stages, you've got this initial stage one where the decline of the legacy business is swamping the growth of the new business. It looks like the whole thing is going to die. You get to this.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “From kind of a quant perspective where the business itself in the future is going to look different than it did in the past. So I want to find things, and I think the best investors in the world who I admire are looking for things that are non-obvious. Time horizon creates non-obvious outcomes, especially if there's a duration of compound. And then businesses undergoing transition create non-obvious outcomes because there's so much fog of war that's happening during the transition period.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “Important lessons and truly one of the hardest onboard. And so I would say I saw the great investors. They are able to manage through that. And I think the way that the really great ones do it is that saying I'm looking for a great business on a bad day. It's how can I justify finding an on-ramp to a company that I can own for two decades, but I don't feel like I'm paying nosebleed prices for it. That would be, I would say, like one part of investment philosophy that came to me. And I would say the other is I really believe that if you can find a business that is going through transition where it's becoming a greater and greater business, but its perception lags, that type of opportunity set, I think, is really hard to systematize.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “And I actually think that is where the most special returns lie. And it doesn't have to be someone who has no team, but in small units where they are very, very synced up on this longer-term mission. So that was on kind of like the business structure side, I would say on the investment side. There's probably two things that I really underappreciated early on. One really is, I mean, you joke about the power of compounding as the eighth wonder of the world. I don't mean the compounding of returns necessarily. I mean the compounding of business performance and how it allows for you to pay up early and allow the business to earn into itself. So Amazon or Walmart would be great examples of that. And it's something that I keep failing at even now that is one of the most”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “The joke in LP land that you don't just want to hire a guy, a Bloomberg, and a dog. You want a team and you need institutional infrastructure and all that sort of thing. And it turns out that actually what I was very drawn to was a guy of Bloomberg and a dog.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “Build everything based on the longest possible time horizon. And I think eliminating some of the principal agent conflicts and being the principal and the agent myself and being vertically integrated and being the person who's sourcing and diligencing and making decisions, that was all core to what I wanted to accomplish. So our goal is put up epic returns over a 20 plus year time frame and have fun doing it.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “The low probability risks begin to potentially show up. I want the best possible returns without taking stupid risks. So generational compounding. We're going to build it around my capital. I don't ever want to be reliant on the kindness of strangers, so to speak. And so while we do take in outside capital, and I can talk about why I made that choice, the ethos is we're going to invest as if it's not just all my capital, but only my capital. And nobody's looking over our shoulder. And so what does that mean in practice? It means you're not going to put yourself into style box. That also applies to public, private, et cetera. And so LB pursues anything I think I can get my mind around that doesn't distract from our mission of compounding in pursuing it. And we want to”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “I think I have to leave and do this. And they were incredibly understanding and supportive. And we built out a timeline for that. And so I left at the end of 2019 to build out my own investment partnership, which is called LB Partners, as you know. And so LB is really meant to be a completely unconstrained approach to taking money and turning it into more money and starting with mine. And I have kind of the tagline for it, generational compounding. And part of what draws me to that is I want to put up the best 20 plus year returns possible. And I think as you start to frame things generationally, the goal of putting up the best returns, it feels like you're also wanting to maybe reach for risk. But when you extend the time horizon, like all”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “We either need to make an all in commitment to kind of expand this type of thing, or I need to figure out how I can contribute more value to the firm and not feel like I'm taking value. And I also feel like as successions happening, I want to recommit myself for a decade. I don't want to have succession happen. And then two years later leave and make it look like there was some problem. I disagreed. And I realized the path that I want to go on of challenging myself to grow in really different ways. Inside Investor, there were some incredible surface areas for that, especially around leadership and mentorship and business building. But it just turns out I love investing, you know.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “Like exceptions based investing. We don't need to own a portfolio. We already have a portfolio of the best investors in the world. So we should only deploy capital if it seems clearly superior, the super high cost of capital. And I did that for my last five or six years there. And as Alice was retiring and we were beginning to think about what the business looked like for the next 10 to 15 years, I mean, I had joked with them always that they basically were so kind to let me pursue a really selfish endeavor that I felt like if it worked could benefit everybody. But ultimately you realize, look, if we're giving at its peak the nomad guys eight or 10% of our capital, are we ever going to put that much into these ideas that I'm overseeing?”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “Least $500 million in fees in fiscal year 2021. It wouldn't surprise me if it's even higher than that. And as I thought about that, it increasingly occurred to me that, well, you know, if you gave me $500 million in fees, I bet I could have recreate a pretty incredible manager side, right? The GP side of this. And actually, I bet I could do it for a lot less than 500 million. And so that became an experiment that I ran internally where I raised my hand to my partners who are amazing. And I almost can't believe that they said yes to this, but I said, I basically want to step away from everything that I currently do. And all I want to do is take a shot at building a direct investment effort inside Investure. And it was very much a punch card.”

    2021-11-29 · Capital Allocators · Chas Cocke - From Allocator to Manager (Capital Allocators, EP.224) · IDENTIFIED FROM THE TRANSCRIPT · source