YouSaid · the spoken record

Cliff Sosin

lines on the record: 140
first: 2025-04-29
most recent: 2025-04-29
sittings or episodes: 1
sources: podcast

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“They feel that they want to. And I think that that's sort of the only solution. It's like kind of resolves this problem that isn't fraught. I've noticed in my career that people in investing circles, they talk a lot about panics, this idea that you want to buy when things are bad. I have noticed that there are certainly economic panics that have happened in my career. I've also noticed there's sort of moral panics that have happened. you can buy into moral panics much the way you can buy into economic panics and you can do well. Now economic panics bring with them the risk that things get worse and the business might not survive the challenges that lay ahead. Moral panics bring with them the risk that you could bring about legislative or regulatory or rulemaking change that can hurt the company. And so you need to take these things into account. But I think that”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, sort of what gives you this deep wisdom about what's right and what's wrong that is better than the collective will and unjudgment of society. And by the way, maybe you'd say, okay, fine, I'm not going to use my judgment. I'm going to use my investor's judgment. But then the question becomes, okay, well, but which investor? And how do you weight them? Equally, is it by AUM? What if it's an institution? Do you pull the underlying people at the institution? This is a wild thing. I think I think a much better approach is to just say that the goal is to maximize returns. And obviously in doing that, companies have to comply by the law. You have to comply with the law. And you have to take the change in norms into account. But laying any sort of further ethics onto that, and then of course you maximize returns, people can, of course, take that money and give it to whatever charity, you know.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that if you manage money for other people, you're deeply arrogant if you are going to apply your ethical framework onto the way that you invest. Society in agri comes to a collective view of what's allowed and what's not allowed. And we call that the law. And if a business is violating the law, that's often a bad investment because, you know, obvious. If society is evolving and the law is likely to change, that is a risk that one needs to factor into an investment. And you'd be sort of silly not to think about that. But if something is just disliked by a group of people, but they haven't built up the critical mass necessary to change the law in this country, and you don't think the risk of that happening is particularly high. But you decide that you're going to apply some moral framework and not make them money to do it, not make money for your partners to do it. That's a really fraught thing because what?”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Has been pressed proliferated and there's a lot of brand loyalty. But that wasn't obvious. At least it wasn't in the historical data until, you know, so all of these tricks, they're not useful until they are, I guess, would be kind of the way to think about it.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Observing Zin. And, you know, a lot of this intellectual construct gave them a sense that Zin was going to have a lot of brand loyalty, where at that time, it was sort of unproven. And Zin, of course, is...”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, sometimes things come up, and there were, I was involved in a nicotine vaping company, which was reasonably successful and ultimately acquired by a large tobacco company. In the early days, you didn't have necessarily all this evidence that these were going to be really great businesses. But the theoretical construct that I just laid out to you was an important sort of guiding factor in giving me confidence that this was a business. There's a lot of other factors, but this is a business that, you know, would ultimately be successful. Or, you know, I have friends who I didn't do it because I thought they were right, but I thought I had other things that were better. And there's opportunity costs to consider. But I have friends who were successful investors in Philip Morris International. They were”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you need something that scares people away. You know, I think the example I gave, I don't think it's a mystery to most people that Coca-Cola is a good business. Going to make you a lot of money in the public markets anymore because I think it's priced in. I'm not totally convinced that the people who own these things understand it. They just have observed that in practice these are very brand little businesses. However...”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“You're working your way farther down. You get to your savories or whatever. Here, you know, yes, these are things people really like, but like the sort of stimulation is much weaker, it's more time-lagged. And as a consequence, people, like they have a preferred tomato sauce, but like, you know, in the end, it's much less brand loyalty than, say, like a cigarette. Obviously water, other than if you think about brands that are more status focused, but like if you think about just sort of like a bottle of water, I don't think in the end anyone's that picky.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Not only if you ever watch smokers, they're not only smoking the same brand, they're smoking at the same time in the same place like every day. It also helps that nicotine is addictive, which creates a trigger for a habit, which is a whole other brain function piece where you're kind of making and following habits. If you go down the list, caffeine is a good stimulator, but it's not as potent necessarily as nicotine. More importantly, you're taking it through your stomach. And by the way, dip goes through your lips. So it's pretty fast, but not as fast as cigarettes, caffeine, you know, soda has sugar and caffeine. It goes through your stomach, so it's slower, but it still creates a fair bit of, you know, the association isn't that far apart. As you work, then you get to things like cookies. The cookies mixed with fat and stuff. So it slows it down. The sugar is mixed with fat and stuff. So it slows it down even more, but it's still pretty potent. It's obviously a sweet.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“That same list, and you ask, What is stimulating the pleasure people's like, you know, pleasure systems? Well, in the case of nicotine, you know, inhaled through a cigarette or a vaping product, nicotine is incredibly powerful. And the respiratory system is a very fast delivery mechanism. So you get this very rapid stimulation of people's pleasure sensors. And lo and behold, it creates these very strong secondary reinforcers, which make people very brand well.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“They'll continue to seek out that light, even when you deprive them of the cocaine. Okay, cool. That's a neat thing to know about the human brain. Where do I see that applied? Well, if I were to rank by margins, the consumer packaged goods industries. I think the ranking might look something like this. You'd have the nicotine cigarettes at the top. And then you'd have like dip. And then you'd probably have, you know, Coca-Cola. And then you'd probably have coffee. And then you'd probably somewhere have like candy. And then you'd have sugary sweets and stuff like that. And then you'd have like tomato sauce and bread. And then you'd have, I don't know, water, right? Something like that, but it's probably a rough ranking. Well, it turns out that if you go down”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Inversely proportionate to the time lag between when the stimulus comes and when the pleasure sensors get stimulated. So if something makes you feel good three hours after you got it, your brain kind of doesn't know where it came from. If something makes you feel good within a moment of when you got it, then your brain knows exactly. And what's interesting about that is called secondary reinforcers because you create these associations between the stimulus and other things that are in the context that it was received. So you can make rats prefer cocaine that's given to them with a certain color light.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Secondary reinforcers. So, this is just a different place. This is out of psychology. It turns out that there's a meaningful psychology literature that's been built up in animal studies and people and all the rest, which basically says this idea that when you give mammals something that stimulates their reward systems, your brain, for lack of a better term, sort of captures the context in which it was received. you know, if it likes it, tries to replicate that context. And these sort of evolutionary reason why this makes sense is self-evident. And what makes that interesting is that it turns out that the strength of these secondary reinforcers is proportionate to the power of the stimulus, as well as its proportionate to”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, so you keep asking, how do you find the gold on the ground? The answer is yes. It's hard. There's nothing, I keep coming back to that, but there's nothing about investing that's not hard. We look for, you know, I hired a Stanford professor to assemble all of the economics models in all of the courses in Stanford and then just like walk me through all of them to make sure I hadn't missed any. And I picked up a few that I'd like, you know, missed or forgotten about. I tried to read broadly. Then of course you study companies and one after the other. In various companies, it'll sort of like click for you. That's something is happening.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Print them out, but like for now and for the foreseeable future, this is going to be fixed. And so you're looking for relatively sort of technological change invariant advantages. Layered and interwoven that kind of give you the business. And then from there, I have a friend who jokes that a good value investor's memo is 20 pages about the business and one page on the valuation. So like from then from there, it's like, I don't know, like, is it cheap? Does it make a lot of money relative to the price? Is it going to grow a lot relative to the price? These are pretty trivial calculations.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Up at the fair, and you bought your tray of cookies and it rains. Well, now cookies, pressive cookies plunges, and you lose money, right? Or let's say you show up and for whatever reason a famous singer shows up and there's a gazillion people and now you sell the cookies of premium. So are you at equilibrium is another good question. But it turns out that a lot of travel businesses are a corno oligopolies, rental cars, air travel cruises. So this is an example of using a mental model that allows you to understand certain types of businesses in a somewhat systematic way. One of the investments I sort of cut my teeth the most on where I sort of first had a lot of success was in the construction equipment rental business. And that is also, it is a Corno oligopoly. You know, in any market, there's a sort of fixed number of”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've never owned a cruise line business, but it's been, you know, I've been around it. It turns out that if they want more cruise ships, they can't just snap their fingers and have more cruise ships. The number of cruise ships for a good long while is essentially fixed. And so what they do is this is a perfect example of Cornwalligopoly. The number of cruise ships is fixed. And in the short to medium term, so they maximize yield, which basically means they're just testing price. That leads you down a path of say, okay, this is a business where just from that perspective, there's lots of other things to think about. There's brand, there's distribution, there's a gillion things. But from that perspective, now you have a sense as to how this is a business where there should be some monopoly profits. But what will mediate how much economic profits there are is how many competitors there are, right? And also how much elasticity of demand there is. And then, of course, other factors. And then, of course, there's also the question of are you in equilibrium or did people accidentally bring too few? Let's say you should.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“So I end up behaving like an a monopolist, but a monopolist who only absorbs half of their price impact in the marketplace. In other words, one who faces more elastic demand. But I still behave like a monopolist, just with one facing more elastic demand. So there's still monopoly profits to be had. So the equilibrium gets worked. We will solve our differential equations at the same time. We get to an equilibrium. And lo and behold, we end up, we both end up making profits. Okay, this is all very theoretical. So you start studying the cruise line industry, just to pick an example of an industry I'm not that”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Cookie, and that's the equilibrium, that's the non cooperative equilibrium. We make no money. But now, let's imagine instead that I had to bring a tray with a fixed number of cookies, and I can't make more. Well, what happens is that morning I'm trying to figure out how many cookies I'm going to make. And I ask myself the question, should I make one more cookie? And if I make one more cookie, it'll have two effects. One is I'll get to send extra cookie and I'll make whatever the profit on the cookies are times that cookie. But the other is it will increase the number of cookies in the market, which will drive down the price of cookies. And this will cause me to sell all of my cookies at a slightly lower price. And so as I'm making this decision, you can see how there would be a natural maximization point where I maximize profits. Now, in this case, there's two competitors. So when I add an extra cookie to the market, I lower the price for me. I also lower the price for my competitor. I don't internalize the effect on my competitor.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“And this seems like a subtle change, but it results in a pretty big difference in the competitive equilibrium. So in a Bertrand oligopoly that's non-cooperative, that is to say that people aren't figuring out a way to signal and to cooperate. Then what happens typically if you imagine, like let's say I'm selling cookies at the state fair and there's me and there's another competitor and there's two spots to sell cookies and we both can manufacture all the cookies we want in a truck next to the fair. And let's say people only buy cookies based on price and they're right next to each other in perfect competition all the rest. So what happens is let's say each cookie costs a dollar to make. Well, I start out, maybe I started selling them for $2. I want to make a dollar a cookie. But my competitor realizes that if they charge a dollar 99, they can get all the sales. And so they charge $1.99 and then I charge $1.98. And before we know it, we're both down to a dollar, and we're making no money.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“I have in my head a number of different frameworks for how a company can make money over time in a competitive world. And a simple example from microeconomics would be that of a Corno oligopoly. And just for those who maybe forgot their game theory from college, there are two broad types of oligopoly in the economics literature. One is Corneau, the other is Bertrand. The key difference between them is that in a Corneau oligopoly, the competitors choose the quantity of things they're going to sell first and the price falls out. It's the thing that moves. In a Bertrand oligopoly, the competitors choose the price. That they're going to sell at, and then the quantity falls out, and it's the thing that moves.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“About 15 different moving parts to sort of have a general sense as to what's going to happen. Of course, the problem with these contained things is that if they're easy for everyone to understand, if they're easy to understand, then everyone understands them. And so, again, investing is this incredibly challenging endeavor where you're dancing on the knife set. You're looking for these things that on the one hand, they're simple to understand so you can understand them. On the other hand, they're challenging to understand so everyone else misses it.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that would be a great example, right? So, you know, who knows how people are going to write software in 10 years, like for what, for quantum computers. And it's just like you might have a business today. It's like building a castle on sand, right? Like it's just very, very hard to make predictions. But on the other hand, the cigarette business, right? Like people, nicotine's habit forming. There's this phenomenon called secondary reinforcers, which is a psychological phenomenon that you can put into ChatGPT. It'll explain it to you. And, you know, but basically it makes people incredibly brand loyal to things that stimulate the reward systems. And then there's also distribution economics. But that is just not an area where there's a lot of dynamic change happening. It's also not an area where I need to think.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“I generally think of a contained business as one where when you're trying to understand a company. If you find that it's just the problem starts to feel intractable in the sense that it's very hard to think about how changes there's many things that could change in society that are changing that could cause your view of what the business could be to change over time is just a tough problem. The thing that makes it work or things that make it work are relatively narrow and in a sort of part of our lives that isn't evolving that much, that would be very contained. Once you sort of understand everything immediately around that, other changes outside they're sort of happening feel less relevant.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's the emperor of intellectual pursuits. I think that there's no arena to train people better about understanding the world. And I think if you're just curious about the world, like there's nothing more interesting than to study business.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“People have views, and like they're definitely wrong on a lot of them, right? And in business, people, they have this narrow world and they kind of have to be really good about executing in their narrow world, but they don't necessarily need like a deep understanding. Like you can run a deli without necessarily having like a deep understanding of why meat prices are what they are. But in investing, it is wildly accountable. You're making predictions about which businesses are going to win and which are going to lose, which to understand businesses are sort of complex social structures embedded in our society, which is a complex social structure. So what do you need to understand how a business's success or failure over time? It's like you kind of need to know everything. And unlike all these other pursuits, this one's like highly accountable.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“To replicate, you know, you want to bring a lot of value to your consumers, you want to things that are working for you to be generally invariant with time as society evolves and changes. And when you kind of have all those things lined up, you should be able to have high returns on capital, reasonably good margins, all those things grow, all those things people look for. Of course, everyone knows everything I just said. And so the whole game is to identify the ones that other people, you know, have missed for one reason or another. And it's really the emperor. I think investing is the emperor of activities in the sense of intellectual activities, in the sense that in academia, people write papers. They're wrong. They're right. Eventually they die with a bunch of ideas. Most of them wrong, right? Like in politics.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“If you think about it, in most markets, you shouldn't have a lot of profits, right? Like profits are kind of a fluke of some sort of something about the setup that makes it so that some reason why competitive forces can't drive economic profits to zero. And those reasons, I mean, there's sort of a lot of them. And in terms of how to think about them, I gather different examples from sort of microeconomics, from psychology, from business history to try to understand different ways that companies have carved out a piece of the world where they are advantaged. And then they can, you can think about a company's profitability over time as kind of its market opportunity, times its advantage. And so, I mean, I don't think there's anything particularly exciting about what makes a great business. It's you generally want to have multi-threaded advantages, a lot of things working for you that are very hard for your competitors.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of investments, we tend to, over the course of time, I've been investing, I think on average, I've sort of bought and or sold one thing a year. It's a pretty sort of lethargic pace of turnover. It's this idea that businesses compete and win in certain ways. There's sort of a minority of businesses that once you sort of figure them out, like you can just tell, like they're going to be very successful relative to other similarly priced businesses. And so, and we can talk, there's a lot of like mental models and stuff, like ways that I think businesses can be sort of a taxonomy of businesses that I've sort of think about. But those are just, you know, my ways of understanding a really complicated world and sort of trying to find a few things at work.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Your predictions aren't lining up, then you need to update your role to model, and it might be that you need to throw it out. At some point, you sort of realize you don't know which way's up anymore. And then that would be an investment that you would jettison because you just no longer know. Over time, we've sort of had kind of between like, we'll call it foreign aid. It might have been as many as 10 at one point, but that's kind of the number.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“The premise was always, you know, let's find a handful of businesses that are publicly traded where I can buy a piece of that business in the markets and own them with a premise of owning it forever and then own it until basically I find something that I can upgrade that I think is even better or I discover that I've misunderstood the business in the first place and So these are two ways out of the portfolio. One is that the gap between what I think I find something better so I can upgrade or the other one is that I have some view as to what makes a business successful. You can think about like a mental model of kind of how the business is competing and winning in the ecosystem and that makes predictions about the world and then you get real world data and you can compare the real world data to what your predictions of your mental models are and if you discover that”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I don't remember exactly how many investors we have. It's sort of between one and 200 across a few different vehicles. And the firm's moves around every day, but sort of between a billion half two.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“It was 2 million from me because I'd been successful at UBS and they'd paid me. I like to joke. It was a lot for post-crisis, not a lot pre-crisis. And I also got 2 million from my mom. She was a sympathetic audience. I had one million from a friend and it was at the end you always ask people who they're most grateful to. I had two in mind and he's one of them. I'd known him for years and we talked and he's a very successful person. And I had this meeting. It was like my third marketing meeting ever. And I sit down. He basically is like, I'm absolutely going to give you my dollar. He's like, no problem. And I was like, wow, this is going to go great. The next time I saw a check like that, you know, years. And then it was a couple hundred thousand from some other people that I knew started with that. And, you know, over the years was sort of able to kind of steadily bring in a little bit of money here and there and compound and was fortunate. I've had up years I'd have down years. If you changed the order of the years, get to the same place. But I definitely wouldn't have raised any money.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Really focusing on long term compounding, finding a relatively small number of stocks, treating it like owning a piece of a business, dealing with the volatility that comes with it. And I figured would be maximally optimized around returns and minimally optimized around marketability. And I think certainly on the marketability side, we nailed it. And so that's where...”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Reporting to. And like, we're down this quarter because Cliff thinks really hard, apparently. This is just a really challenging setup. What this means is that, you know, when I started this, I wasn't fully aware of quite how challenging would be, but the premise was that I would start a business based on”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically, buying a piece of a company through the stock market and owning it for a long time. These are multi-year, three, five, ten year feedback loops that are incredibly noisy and they just don't lend themselves to it. And if you think about it practically, let's say that I meet with someone from an institution. And, you know, first of all, and I convince them that I've got that they're going to say, like, how do you pick stocks? I'm going to say, well, I think really hard. And, you know, and they're going to be like, okay, cool. I'm convinced Cliff thinks really hard. He's good at this. But then they have to go back to their committee. And the committee is going to be like, well, how does Cliff pick stocks? And he's like, well, he thinks really hard. And they're like, well, you know, that's not very credible. And then even if they do make the investment, now, you know, they're going to own it. And so invariably we're up or down. We're up. We're down. I look smart. I look dumb. And along the way, they're going to be like, why did we do this? And by the way, we have a board that we're reporting.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it became pretty clear to me that I was right. And I was naive enough to think I would just explain to them that I was right and they would just do it differently. Further occurred to me that they couldn't change and they couldn't change because they had a principal agent problem. The problem was that they had to deliver steady profits to the bank. And if they had big drawdowns that they would lose their money. And so, you know, I started poking around quietly looking for another place to work. And I realized that all the other firms in the industry had the same problem. In fact, it's endemic. Basically, one might naively think that the investing business is about maximizing performance, which, but it's not. It's about maximizing marketability. And performance is a component of marketability, but really what you're trying to do is signal talent. And the way you do that is by finding things with short feedback loops, with low amounts of noise so that you can sort of show people, look, we did this and it worked and we did this and it worked and we did this and it didn't work. But on average, we win. And the type of investing I was thinking about.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a lot of trading around events, there was a lot of hedging. And as I was involved in that, there was sort of an effort to teach me how to do it. And I didn't like it. I sort of discovered that they would sort of say, well, we should do this and we would do this. And I'd sort of say, well, why? And that doesn't make sense. And I don't know why this stock has the three beta. Why do I have to, why do I need to short $3 of S&P for every dollar of stock that we're going to buy here? That doesn't make any sense. And this led to a really vigorous debate between me and some of my former colleagues there and to their credit. I mean, I was young and incredibly difficult to have as a someone working for you. And I just hounded them about it. And eventually this debate went on and on.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“Going into financial structuring because I didn't want to do as much marketing. So I worked at a place called Hulian Loki, which is a leader in financial restructuring, and I did that for a time. I still wanted to get to the buy side, so I went for places called Silver Point for a year. And then from there, I went to UBS, where I spent five years before I started my business. And while I was there, that was really where I think I did a lot of my maturing. And I thought a lot about I'd come from a lending and finance background and at UBS I was involved in trading, investing in stocks, trading in stocks. UBS at the time, it was their proprietary investing business. It was the bank's own capital. Think of it as a hedge fund with NLP. And it did a lot of the sort of traditional things that I think a lot of hedge funds do. There was a lot of focus on short-term performance. There was a sort of desire to have, yes, we want things to sort of be misvalued, but we want to have a bunch of catalysts that are going to cause the price to go up.”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source
“You'd gone all the way back to when I was in high school. I thought I would have been an inventor. I sort of modeled myself as an Edison in my mind or something. But when I went to school and I studied engineering, a lot of inventing is kind of obsessively debugging real things. And nature is pretty unforgiving. And so what I learned about myself was that I didn't love that process. It just wasn't as fun for me. And so I was sort of casting up for what I wanted to do and I ended up doing an internship at a big private equity firm. And I just thought it was really neat that I could use and I discovered I could use a lot of these things I'd been learning in school like game theory, apply them to these situations. And that brought novel insights that these people who've done this for so long weren't using. And I was hooked. Like the idea of being able to do that. From there, I was trying to kind of get into investing. I thought I was going to do private equity. I knew the path into private equity was through a banking analyst program, but I didn't want to do a traditional sell-side analyst program. So I ended up”
2025-04-29 · Invest Like the Best · Cliff Sosin - Investing in Carvana - [Invest Like the Best, EP.421] · IDENTIFIED FROM THE TRANSCRIPT · source