YouSaid · the spoken record

Cristiano Souza

lines on the record: 54
first: 2025-03-14
most recent: 2025-03-14
sittings or episodes: 1
sources: podcast

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“You so much, Clay, for taking the time to speak to us and learn a little bit about our story. Anybody who's interested, you can find me on LinkedIn or our website is XenoEb.com, where we have all our letters available. We write on a quarterly basis. The first three letters of the year we're usually writing about one company that we're invested in. And the last letter of the year, we talk about more broader topics that are of interest to us and to our investors.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Came across that book very late in life. I wish I had read it when I was 19 because it would have framed my future in a much more interesting way than was kind of like fumbling around and trying to figure stuff out. But it gave me a great perspective on what it means to be a master in something and the journey to get there. What does it mean? How do you start? What is it that you're looking for, right? And how do you recognize mastery? And first of all, it was very sort of elucidating in terms of when I reflected on my own career and the phases that I went through in my life or that I'm still going through. And it gave me a very clear understanding of where I'm at it as a practitioner. What am I striving to in that journey to sort of master something? And maybe I'll master this when I'm Buffett's age. but at least I know what to look for.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Else, the fact that a photo has been as successful as it has been, even though it's been slower than what they would like, they're still getting a lot of new customers at the higher end. Is this a function of the fact that the incumbents were not as disciplined in how they managed their business?”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“It's interesting because I mean, they will tell you that it's becoming harder and harder as they move up the chain and they move towards larger property managers. The sales cycle is getting longer and longer. So there's no doubt that they're facing much higher switching costs of their target new clients than they were when they were acquiring like small clients and smaller property managers. That is unequivocal. It goes back a little bit to the behavior of the incumbents when they get to that point where they escape capitalism. Has Real Page really invested in their product that much? Realpage is an amalgamation of a bunch of different tiny companies that they bought over time. Then they got bought out by a private equity fund, which probably levered the heck out of it and it's probably much more focused right now on generating cash flow than anything else.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“For that, when we're looking at the business, and we know that the good thing is that we know there's a group of people running this business that are even more worried than we are about these things and seizing the opportunities and will act accordingly.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“coming up with a little agent that will automate a specific thing there are a number of things happening at the same time right so that's our view right now now like i said we're obsessed about the underlying risks of the businesses that we manage and we're scrutinizing this thing on a daily basis and i'm happy to change my mind if the facts change i have no problem with that right now the evidence is that this is working in favor of the company also because when you think about the competitive landscape above that photo there are two very large very old legacy property management software companies that will have a much tougher time embracing ai than they will and i think right now it's playing to their favor but like i said the dispersion of outcomes has increased so we have to be mindful”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Even that is not that simple. These things are not that straightforward because there's a human on the other side that makes it more complicated. But like, for example, screening, every time somebody else moves in, you got to screen that person, you got to go through, you got to get documents from them, they have to upload all the documents. There's a bunch of stuff accounting. You have to get the accounting done. You have to send the accounting to the property owner. The property owner will come back with a question. All these things are a lot more complicated. And then you have the data component. A photo is a system of record as well. So what we kind of like, where the conclusion that we're arriving at at this point is that the closer you are to being the core operating system of an activity that is very diversified, the more protected you are from an agent or somebody at a property manager.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Current are the different tasks that the software has to deal with that shows that this is one where AI by itself would be very hard to replicate.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Yes, that's exactly right. And there is a sense of virgin. led them to immediately sort of embrace it and take advantage of it. And you see that. And for the companies that are able to do that, AI could be an incredible boost to their profitability and their business. The second thing is when we think about the specific market in which Appfloto operates, I think AI is a particular threat to software business, whether they're VMS or horizontal, where there is a very repetitive workflow where the interactions are very predictable, right? And where there is an algorithmic advantage of the business, right? When you think about property management, which is where this company is inserted, it's anything but that. When you think about the scope of everything that Appfolio does and how not required”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“A folio embraced it from day one, both in terms of their tax stack and in terms of their product development, everything in the company is touched by AI more and more.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Just to be clear, AI is something that is much more recent in the history of the business than our investment in the company. So there's no doubt that the emergence of AI in the way that we've seen it in the last couple of years, it has widened the way we like to think about it is widened the dispersion of outcomes for this business, no doubt about it. There is a new thing that we have to think about. A lot of people faced with that would immediately react and feel like they have to do some things. I better sell a photo because then software is dead and that's it. And we like to be a little bit more deliberate in how we think about these things and go a bit deeper. So there's no doubt that AI is going to have a very significant impact on a lot of software businesses. So the way we're thinking about this right now is number one, basically since it really took”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely right, but the truth is, it is so against human nature to behave that way, both intellectually because our minds are just many people have said before me, our minds are not built to understand the impact of compounding, but also because we were bred to react. It's in our nature to feel like we have to be doing something all the time. So, you know, it's very much a struggle against your natural urges to behave that way. But if you're able to do it and you're able to figure out what works in terms of the businesses that you're going to own, then you can end up, you know, and you live long enough like Charlie and Warren did or do still, then, you know, you're going to benefit.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Of stuff that people that invest in markets really have to worry about. So to me, just find a great business or find a collection of great businesses, managed by people that are very high trust. And that's the thing that I think I learned in Brazil and I learned from Munger and Buffett as well is that you've got to invest with people that you trust. You're going to make mistakes. You're going to place your trust on the wrong people every now and then. And the good thing about public markets is that you can change your mind. But limit yourself to only investing in environments where you think it is a high trust environment and then you can wait. And then, you know, you can just focus your efforts and your brainpower on other things. Then, you know, is this the right time to buy? Is this the right time to sell? That's why I love that quote so much.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Mugger is probably the biggest influence in my life as an investor. And also because I love a sense of humor. To me, that is such an obvious sort of conclusion. And maybe it's because of my lack of skill of trying to understand a market structure and the behavior of people. When you're trying to make money in the short term, you're trying to understand human behavior. Markets in the short term are not driven by fundamentals. Market in the short term are driven by behavior. And if you're trying to buy or sell very frequently, you're always putting yourself in a position where you're trying to get us the way that people are going to behave. And I don't know how to do that. And because if I had to do that, then I would have to worry about things like volatility, like the kind of...”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“It's a couple of things. One is sort of the benefits from the merger between Proxer and Linda, which happened in 2017, if I'm not mistaken. And then it took a while over to get approved, et cetera. And then they started really ripping the benefits. And the second is inflation is a lovely thing for this business because they're extremely in control of their costs, but they have an almost, sure, that's why I say it's like an unregulated utility. They have an almost automatic pass-through of inflation to their numbers. So that's another thing that we like about it is it will, if we live, as I think as we believe that we'll continue to live in an environment where inflation is not going to go away, that's a great asset to own.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Or another year where the growth is not going to be amazing this year is probably going to be a pretty mediocre year for growth. But at the same time, the opportunity is there. And they will redeploy capital accordingly.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“High rates of return. The high rates of return are there. The question is, is there demand, right? And what we're seeing now in the world is that there's push towards the decarbonization of supply chains is very good for them because one of the things that they sell is hydrogen. Hydrogen is a very unfriendly product for the environment and unless you're able to capture the carbon that comes out from breaking the natural gas. And there is a lot of demand from companies, particularly in the US, to decarbonize their hydrogen supply chain. And they have a backlog of about 7 billion in new orders that they will deploy over the course of the next few years. And a big chunk of that is related to decarbonization. And then this effort that we see across the world of reshoring supply chains is also very much in their interest. So they have these two sort of long-term drivers that, again, you're going to have one year.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Don't think there's another. I think that's it. I think it's literally the founder's mindset is how they built this company over time. It's interesting because Linda is a spinoff from Union Carbu. And somehow that culture worked in a way that they over time built positions in certain markets that are extremely valuable that other companies that were competing with them didn't really pursue. Linda used to be called Proxair. And the three companies that I alluded to used to be four. And what happened is that Proxair bought Linda, which was the biggest one. And through that acquisition, they became the largest one in the industry that basically crushed it since then. The interesting question here is the reinvestment opportunity, right? So what are the drivers given that industrial gases is something that would grow in line with industrial production? What are the drivers that are going to allow them to redeploy capital?”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“And, you know, one there are investor relation. He could be the CFO of any company around Met White is a phenomenal CFO. The chairman, Steve Angel, who's a former CEO, was a phenomenal operator in Stewart. And the current CEO behaves exactly the same way. So they have all the attributes from a behavioral point of view that we like. And it's interesting because the three companies that own 90% of the market, they're all listed. It's Linda, Erikenair products. And they do exactly the same thing and they're the same business. And then you stack their returns against the other guys, the fundamental business returns. And it's like they're operating in a different level.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“monopoly and the reason why your monopoly is because you're basically transporting molecules of air and very heavy tanks and cylinders and those don't move very well right so once you establish the cashman area that's it you own that cash monarch so the market power is clearly there linda probably has one of the top three management teams that i've ever interacted with in my life and they have demonstrated again and again that they behave exactly the way that i would like a company that i invest in to behave they have been extremely disciplined in their capital deployment they are extremely transparent with investors they have a lot of skin on the game and we've spoken to dozens and dozens of people that work at linda and everybody is cut from the same”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Invest an opportunity in the founder's mindset. Market power, the industrial gases market is 90% of the businesses in the hands of three companies in the world. 90%, this is a global business that exists everywhere in the world from Brazil to China to the US to Germany to India. There are three companies that have 90% of the market share. It is the closest thing I've ever come across to unregulated utility. You sign a long-term 20-year take or pay contract with all of the kinds of inflation protection that you would want. And once you establish your air separation unit next to that big client that you're going to supply on a take-up-bay basis, you then can supply everything else in a catchment area of up to 300 miles where you're basically”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“First and foremost, the company has double DPS in five years. So that's the reason why it's done so well the other day, right? When you look at the top line growth, you have to be mindful of some accountancy counting peculiarities. They use natural gas as their main raw material and the contract that they sign with their clients is that they pass through the natural gas at cost. So whenever natural gas prices are going up or down, they'll have an accounting impact on their revenues that doesn't really matter for their profits. Linda has grown organic revenues, X acquisitions, X currency, et cetera, by about 6% a year over the course of the last five years with volume growing about 1% and price growing about 5% to 6%. Now, looking at this company from the framework of market power,”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“The only of the sort of mega large cap companies that we own in the US is Amazon. Why is it that we own Amazon and we don't own the others? Because in Amazon, it was the only company that we, and we've looked at all of them, almost all of them. It was the only one where we could see the recurrence of the kind of behavior that we believed would sustain the moats and would sustain the reinvestment opportunity for a very, very, very long time. That doesn't mean that Google or Microsoft aren't amazing businesses. They are fantastic businesses. But I don't know that I literally don't know.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“It's a good question. It's very hard to generalize because even when we were investing in Brazil, it's not like we could find a common thread of business model across all of the different businesses that we invested in or even if you look at our portfolio today, we have OVMH, we have software company, we have an industrial gases company, we have an airline. Who could thought that we would invest in airline? I never thought in my life that I would invest in an airline until I met Ryanair. But I think that the problem that we find is not so much that there are business models that people think are great that actually aren't. It's what happens after you establish that it is a good business model. How do you operate that business then to make sure that it continues to be a great business model for a very, very long time? So I'll give you an example.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Could be different is that we focus a lot of time on very few things and we're thinking with a very long-term mindset. Doesn't mean that we're going to have better access to anything. Everybody knows everything, but it's what you do with the information that you have and how you meet even different moments that really matter.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“From within. One thing that we do here is we probably speak to on average 15, maybe 20 former employees of businesses. And I think a lot of people do that. When you talk to people who've worked for all the media, for example, you can see the difference and what the culture is. And that translates to the results of the business over the long term. So yeah, I think paying too much attention to financial incentives is probably a recurring mistake. And then the other thing I think is that a lot of people, we live in a world where there is no informational advantage. Everybody knows everything. Everybody has access to the same data. Everybody's able to build the spreadsheets. Everybody has everything. The only thing that makes a difference is behavior. And in our case, we maybe.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Really spend time looking at the behavior because at the end of the day, you're absolutely right. CEOs these days, management teams are so well rehearsed and they're so good at telling the story, right? You're not with very rare exceptions and there are exceptions of people who are truly honest, transparent, and unrehearsed when we speak to them. And I like to think that all the companies that we own are like that. Because they're so rehearsed, what really matters is looking at the behavior. And you can look at the behavior. You can go back to periods where things were not going well. And what was the management team saying? How were they behaving? When the stock for any given reason went down a lot, did they buy shares? Are they in the habit of selling shares as soon as they vest? How are people promoted?”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Think the mistakes that we made more recurrently is putting too much emphasis on the financial aspects of the alignment of interest, taking that as a proxy for how well aligned people really, really are. And what we found over time is that you want the right kinds of incentive that will foster this right kind of risk taking. And that doesn't necessarily mean loading up on options that will vest in a short period of time and diluting your investors. And that means very, very aggressive financial targets in the short term. So I think the mistake that we made in the past, and I think we've learned and we're making that mistake less and less, is where you put too much emphasis on the financial incentives.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“You can then figure out how the market is going to behave with those specific names. I have no clue how to do that. Maybe if I did, we would manage $50 billion, but I have no idea how to do it. So what I worry about is avoiding permanent capital loss and avoiding permanent capital loss is about not investing in businesses that run the risk of losing a lot of value over time. So that's sort of when I talk about risk management, the way that we select the portfolio. It has a lot to do with mitigating the underlying business risks of the companies that we own.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Relative to the return that it can offer me. When I think about risk management, that's what's in my mind is the underlying risk of that business that I'm buying. If that means that a portfolio will be more concentrated because there are very few businesses that offer me a low underlying risk, that's fine because I'm not trying to think about these things with a 24 months window in mind. Most sort of active managers Their main focus is just I have to beat this index and I have to beat this index over the next I don't know what 24 months 18 months 36 months right so what then the behavior that you're incentivizing with that is the behavior of measuring yourself against this broad portfolio of companies and just trying to overweight some of them and underweight others so that”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“One very important principle, which is to me, risk management has to do with the underlying business that we're buying. We're buying pieces of companies. So what I care about is the underlying risk of that business. You don't measure that based on market-driven metrics such as volatility and value at risk, stuff that is representative of how the market is pricing that asset. So if you think about risk management as volatility management, then you probably are better off only a very broad portfolio of companies. Honestly, I couldn't care.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“That's why I like to say that to me, sort of active management, which, you know, if you want to be very precise about it, is what we do. It's much more about risk management than it is about sort of enhancing returns in comparison to a benchmark. So I'm obsessed about making sure that I can survive the tough time so that I can compound my capital over very long periods of time.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Is really, really rare. And it becomes particularly relevant when times are bad. The mistake that I see more people making that we try not to make is sort of confounding short-term momentum with longevity. Everybody is very momentum driven. Everybody wants to be in the thing that is going to work really, really well in the next three years. And usually those things that is reflected in the valuations. And sometimes that kind of people get blindsided by the fact that if you do really, really well in three years, that does not necessarily mean that in five years or in 10 years, your business is going to be as good, right? And we are always obsessed about when things go wrong, when things go bad, if the world is not working the way it should work, how are we faring?”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Take advantage of tough times to redeploy capital in ways that others won't be able to do in the founder's mindset, there's another aspect to it, which is what we're looking for also is this sort of very unique combination of a culture in a business. And I emphasize a culture because it's never just one person. You have on one hand a very clear sense of urgency of getting stuff done when things are not working, but at the same time you have this obsessive focus on the long term, right? You will find amongst US, particularly US-based CEOs, a very strong sense of urgency. And you will find in certain family-owned businesses through this very long-term orientation, but that can sometimes turn into complacency.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“And that comes back to sort of my origin story in Brazil, where we're always worried about what was going to happen if every theme went to hell in a handbasket. Every time we invested in a company or we were looking at a company, the first thing that we would think about is what if everything goes wrong? And we had to make sure that that business was able to survive that and more than survive that there would be a position to take advantage of that. That goes back to sort of the start of the very early days in Brazil because that's really what mattered. We're more about, I don't want to drown more than anything. And that's where sort of the market power and the founder's mindset are so important. The market power for obvious reasons because when you are in a dominant position, which you're not abusing, there are levers that you can pull that will allow you to”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Knock in on your door, or you're going to see your addressable market being hampered by your own behavior. So we happen to find in the US more of those companies that behave that way. So you take a company that we don't own, for example, Costco. To me, the thing that sets Costco apart is exactly that, is the fact that they've been time and time again willing to leave money on the table now to the benefit of their consumer and to the benefit of the long-term health of their business. That kind of behavior is so unique, it's so hard to find. And it's the ultimate filter at the end of the day. You find a lot of businesses that are phenomenal. The question is, can they be phenomenal for 20 years? And are the people who are running those businesses thinking in that framework?”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“My product anymore, I'm not going to be as much of a partner to my suppliers or my distribution as much. I'm not going to focus so much on hiring the best people because I've made it, right? That I can invest my stock options and make a lot of money. There are very, very few exceptions, which is really what we mean when we talk about a founder's mindset, that once they reach that position, they're much more worried about the compounding effect that you're going to get from staying there for a very, very long time, then whatever they're going to make over the course of the next three years. Instead of letting up on the quality of their product, they actually invest more in the quality of their product. Instead of raising their prices because they can, they actually leave some money on the table for the consumer. Because the moment you shift from creating incremental value to your customer to taking a predatory approach, that's when capitalism is going to start working again. And either you're going to see competition coming or you're going to see the states.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“It's not preordained, so it's not something that we decided up front that we're going to focus on the US. We've been able to find a lot more companies in the US where as we go through their behavior over time, they behave more and more like the companies that we like to invest in in terms of how they think about the long term perspectives of their businesses. And this is a very important aspect of the way we think. is that once you've reached that point where you've escaped capitalism quote unquote the vast majority of people once they get there their natural incentives are to maximize short-term profits so great i've achieved this dominant position in the market that i operate in i'm going to start raising my prices i'm going to expand my margins i'm not going to invest on”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Price, if you think about it long term enough, the opportunity to continue to service these people and their needs is there. Like I said, from a market power point of view, there are probably four or five luxury brands conglomerates and few more brands than that that control that space. So we kind of look at this and as long as they continue to deploy capital responsibly as long as they continue to take care of the brands in the right way, everything is in their hands to prosper and you're paying today, you're paying probably like 23, 24 times earnings that drop straight through cashflow that they will allocate properly or they will give it back.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“As easier to consume luxury as the Americans or the Europeans. And it's a funny thing because rich people, they all want to be able to recognize each other and identify each other. And their codes that they used to do that, and those codes are luxury, right? And those codes are represented by a very small number of brands that can be characterized as luxury. So if you think that trend is going to continue and the number of millionaires in the world is still going to grow six, seven, eight percent a year as it has been growing for a long time. And you believe that these people are going to continue to behave the same way that everybody that came before them behaved, then the growth is there. Is it cyclical? Yeah, next couple of years are probably going to have pretty mediocre growth because they're coming off of a very high growth period where they probably, they and everybody else in the industry probably overdid it.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Like 800,000 millionaires, we are not going to revert the trends that we've seen over the course of, I don't know, the last 50 years where income is becoming less equally distributed. You're going to continue to see as everybody gets elevated from poverty, as we've seen over the course of the last 200 years when capitalism really started work, you're still going to see the top of the pyramid growing faster. And those people that are coming into the level of wealth where they start to consume luxury are probably more prone to consuming luxury than the ones that are currently doing it. If you think about places like Brazil, like India, like Indonesia, like Thailand, like Malaysia, China, there's nothing that we can find that would point out to the possibility that they're not as at least”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“There's not a lot to be said about market power and founders mindset. So the question here is whether the reinvestment opportunity If you're paying 23, 24 times earnings for this business, you're going to be able to generate the kinds of returns that we would like to generate when we deploy capital, right? What drives demand for LVMH is a very straightforward, very simple thing, which is the number of millionaires in the world. There are about 58 million millionaires in the world today. That number back in 2000 was, if I'm not mistaken, like 12 million. And the number is expected to grow to 85 million in 2028. These are people that have at least a million dollars in assets. On average, they probably have about 3,000, 4 million dollars. Today, probably around 45% of all millionaires in the world are in the US. From here for the next 10 years, the vast majority of new millionaires are not going to come from the US. Take a place like India, for example. India has”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“The founder's mindset you find extraordinary companies when you look at their track record over the course of the last 10, 20 years that I've generated very strong returns because the business is phenomenal, but they don't necessarily demonstrate the right cultural aspects that give us comfort that they will stay that way for a very long time.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Very long time, so we end up saying that there are probably 70 companies in the world, maybe even less that are really extraordinary, that if the markets were to shut down for the next 20 years, you could own these companies and you wouldn't come out of those 10 years and your money would have compounded at very good rates of return.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Gravitational pull that competition exerts on returns on capital, right? So if that is the case, it's only those companies that really generate outstanding returns over very long periods of time. We kind of call them the discontinuities of capitalism. The companies that have not only escaped the power of capitalism, but that are managed by people who understand how important it is to do whatever it takes to stay there and who have the wisdom to also understand what needs to be done to stay there. So there are very, very few companies in the world that would really fit that criteria, that have escaped capitalism and are managed by people who are able to sustain a culture that will keep them there for a very”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“capital and that's great that's amazing the problem is that that same dry leaf force of capitalism is the worst enemy of the equity investor the worst enemy of the equity investor is not interest rates is not economic growth it's not geopolitics the worst enemy of the equity investor is competition it's what kills the returns of an equity investor so if you understand that capitalism works and you agree with the assumption that capitalism works because there is tremendous competition and in spite of tremendous competition people wake up every day and they think about starting a new business and they think about developing a new technology even though they know the most likely they're going to get competed away then the only logical conclusion of that is that there are going to be very few companies that are able to sort of escape”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“It's interesting when I came across the Besson Binder conclusions, I was surprised that people were so surprised. I didn't know if it was going to be 4% or 8% or 10% or whatever, but I intuitively knew that most of the results are driven by a very small number of companies. And that makes sense linking back to the Common Sam made in the letter I wrote about capitalism because the reason why capitalism works and the reason why free markets and all that stuff that generated so much prosperity for the world over the course of the last 200 years works. It's because there's a driving force behind it, which is competition. And it's the only reason why we have so much prosperity in the world is because most of the value created by most companies is transferred to society. And the vast majority of companies are lucky that they're able to earn above their cost.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“But who go out of their way to make other people better. So that fosters an environment where everybody feels at the same time incentivize and protect it. We had a bit of a sort of consensus-driven decision-making process where we had to build consensus on almost every single position that we had in the fund. Sometimes that didn't work. Sometimes we missed opportunities that somebody felt very strongly about it, but we couldn't build the consensus. But when you put it all together, I think it's the trade-offs were very, very positive.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Who was working there understood that? So the first thing is there's no place for ego and humility is probably the number one trait that you need if you want to be a good investor. The second one is that from the start, we were a genuine partnership. There was no hierarchy. And everybody understood that we were in this together and we were starting from basically scratch, then that translated into an environment where everybody could speak freely and say what was on their mind all the time. And everybody was respected equally, irrespective of how young or how experienced you were. And we ended up developing this sculpture where collaboration is highly incentivized, where the people who really do well in the partnership over the years are the people who not only are competent themselves,”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT
“Think it was very serendipious in the sense that it worked because we were lucky that small group of people got together. And I don't know if it's replicable over time, but there are a few things that stand out. The first thing is whenever you walk into the office, and I made this point to everybody that works here at Zeno as well, is you got to check your ego at the door. It doesn't matter who you are. It doesn't matter where you come from. It doesn't matter how experienced you are. Be ready to have every single thing that you say challenged. Question. And everybody understands that one of our main missions is to falsify hypothesis that someone else is bringing up, not because we have the objective of poking holes on that person's idea where we want to steal the limelight.”
2025-03-14 · We Study Billionaires · TIP706: The Founder's Mindset w/ Cristiano Souza · IDENTIFIED FROM THE TRANSCRIPT