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Lee Ainslie

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99

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2023-08-22

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2023-08-22

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1. “Was the nicest thing that happened to me? The kindest thanks to that was going to the University of North Carolina. I was asked to work with the board on something, join Robinson's on that board. We started talking stocks all the time. Going back to Jordan, it was just like talking basketball with Michael Jordan in my mind. And I was on my way to go work at Goldman Sachs and Owen the Blue. He asked me if I would consider working at Tiger. And I consider it the kindness because I didn't really realize the time. But once I was at Tiger and saw the other people they were bringing in and how smart and talented driven they were, I recognized that I didn't really fit the mold. I didn't go to Arbor Business School, obviously didn't go to Stanford. I didn't go to Ivory College. I didn't play Division I sport. But I think Julian did see is I had real passion for socks. And to me, again, I didn't realize at time it was so kind of him to give me that chance.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

2. “So having listened to a fear of your podcast, I had the suspicion that I may get this question. And see, you know, think about different things like my parents teach me the importance of integrity or the electoral science professor who made me retake an exam because he thought I didn't do a very good job in the first one. And I finally realized there's nicest in-kindness that are connected. And so the nicest thing that ever happened to me, I don't even know the person saying, but whoever was director of admissions at the Stanford Business School in the late 80s and did not let me in.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

3. “Thinking you can really help influence a company to the next level of success, dealing with the management team that really is interested in your input. It's just a different experience than we have on the pulp side.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

4. “Member of the public team, I'm glad you're really jazzed up about that $5 million private investment. But you do have this multi-hundred million dollar investment over here that I also need you to focus on. I haven't had too many of those conversations, but.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

5. “Companies. All three went public. We invested in two of them. And I think Dave was at the point that he was looking for a change in his responsibilities. So we convinced David to come join us late 2004, fast forward 10 years. We'd had a lot of success under his leadership to the point some of the investments have become quite large. We concluded we had a larger percentage of hedge fund capital in Liquid Privates than was appropriate. Started macro venture so we can continue to make those investments, but have a different pool of investors to support that. That in itself has become a great business thanks to the leadership of David and other members of his team. To your point has continued to be just invaluable in terms of not only what we learned, but what we can bring to bear on the private side. And it's also fun. And matter of fact, I think one of the risks when the disadvantages, if you will, is you have to every now and then remind.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

6. “So he first made a private mess back in 94 for their first decade, and this was within the hedge funds. It was done in a very opportunistic sort of sporadic basis if something came our way. We'd look at it and said it was interesting or not. And after a decade of that, we already concluded that we had learned a lot that, again, was very helpful to decisions we were making in the public markets. But I also recognized that the returns were okay, they weren't great, but most importantly to really add value, you needed the expertise and experience to help these companies be successful on as public equity investors. We pick up the phone and buy the stock and pick up the phone and sell the stock and occasionally tell management what we think and they usually not listen to us. But this was a very different responsibility to help these small companies be successful. So we concluded if we were going to continue making such investments that we needed to bring in that expertise. David Singer started three”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Extremely interesting that last piece. So, my goal is to get an exposure, and as they move forward their life, let them understand where their interests and passions are, but by at least exposing them, it opened up the avenue as a potential passion. Again, my younger one works at a venture capital firm and thinks about all things investing all the time. My older son works at an environmental consulting firm and cares about the environment.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

8. “Well, we always, and this is obviously not a unique idea, but when it came to allowance, a third was money that they could spend however they wanted, a third went into philanthropy, and a third was savings. And on the philanthropic part, we would sit down at year-end or now scope down depending on behavior or whatnot, cannot punish the head and make them make the decision of where it's going to go. And sometimes those things I thought weren't that great, but they weren't bad. And that's what's important to them. And then the savings part could be just let us sit there. And I think I gave them a really high rate like 20% or something just so they could clearly see compounding the value of that. Or they could pick a stock. And I would guide them and give a list of stocks they could pick from. And my older son was less interested in that last piece.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

9. “There's a downside that I wasn't a very present parent through some critical years, but there's the upside is my kids think it's the normal thing to do to work their butt off. They both work their butts off. And I think that is largely from learning from example. And then lastly, learning from example in terms of a healthy marriage and healthy dialogue and healthy arguments and all that. But like all these things, kids learn by watching more than do listening.”

   2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

10. “Again, tip with me, I try to research a lot of different things. We're not recognized that my children likely were to grow up with more fortune than more comfort than I had that concerned me. So I spent a lot of time with people I knew that kids were old enough. They had their head screwed on straight. And despite having some success, et cetera, and had probably a half dozen different conversations thinking I was going to find, aha, here's a magic algorithm, everyone, completely different opinions. And the only one that was pretty common throughout now my kids are adults and study, but spend a lot of time with your kids. Someone said, we talked about quality time. I don't know what that means. What matters is quantity of time. Just be with them. Discuss the meaning of life or watch TV. It doesn't matter. Just be with them. So I think there's importance to that. And clearly the example you set, so of course with regards to integrity and ethics, but with regards to work.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

11. “But good question. That's not fair because then you'll ask it. I don't know the answer, but the hardest question I ponder with is how do you raise your children in a way that when you look back on your deathbed, you're really proud of them.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

12. “Hadn't changed that much. So we have a version of a slide deck we put together back in 94. And one of the slides was what we looked for in investment company fundamentals, competitive positioning, quality management, different valuation metrics, et da. And over the years as different marketing people have been involved and different senior people that's been tweaked this, this and that. But you'd be shocked by how similar it is. And part of this, we're talking earlier about why so many folks have done wild tiger, I think most folks coming out of Tiger would give you a pretty similar list of what we're looking for. And people aren't too off track, but there are less than now there's a period of time like, oh, all the tiger folks talk all the time, just copy each other's positions, look at the 13 F's. In reality, we hardly, at least me, I mean, I've talked to a couple, but one based on we talk to each other is based on we're looking for the same qualities and we're identifying the same companies.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

13. “You've been a member for like six months and you haven't come up with a potentially interesting investment idea on the wrong path because that is your job. And we rather you have something that has to be thoughtful, even we disagree, but we'd rather have those wheels turning and you showing us that, hey, I'm thinking about these things and here are some potential ideas. And that's how you learn. We hire some super talented person that has a little too much confidence. We always hope his first idea is a disaster. Just a way of making sure people understand just how hard this job is and let's all have some humility because we have a very difficult job.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

14. “Obvious make sure it was being treated fairly and respected. We've worked really hard to try and have a culture of what we call constructive debate. We want to be friendly, want to be a good team. It doesn't mean you're not going to tell someone they're wrong. Now you can say it politely, you can say it's a jerk. We prefer politely. But again, one of our phrases, if you're only telling me things I already know, if you're agreeing with me on everything, you're serving of no value. You're not helping me in any way, shape, or form. Oh yeah, I think so too. So we want people to be motivated to have differentiated perspectives. Sometimes even it's just to be thought provoking, but that's an important part of teamwork working effectively. And then finally, we've always had the approach once you're on your team, you better be ready to start. Yes, super brand new analyst in the first year or two are going to be asked to do a lot of models and you're going to support the people above you.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

15. “Well, this is wimpy answer, so I apologize, but I would say Michael Jordan in large part because my dad played basketball in Carolina, so I grew up a huge basketball fan and very partial to Carolina, even to the point my first year at UVA was pulling for Carolina, which against UVA, which did not co-proper very well with my friends. Actually, what was it, the last dance show, got my kids to recognize, wow, maybe he was as good as LeBron. What do you know? And my favorite set of all time to be both leading scorer and defensive player of the year in the same year is something you have to admit my respect.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Being repetitive, and we've already talked about them, but again, it's just someone I've held in such high regard. And even when he's been in situations that people thought were pretty hopeless, he's shown the power of management.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

17. “So fruitful in terms of becoming a better investor. I mentioned earlier, but I do think the turn on Microsoft is something that I can't remember a good parallel, not just in terms of, hey, operating results are better, but completely new strategic focus, complete change in leadership style. So Saudi would definitely be on the list. Andrew Jassy, I don't know well, but met a few times. Again, very different than Jeff Bezos. almost like a Tim Cook to Steve Jobs, but highly competent in this blood with an Amazon beloved. He does this cool thing on the first day of March Menace, which is a Thursday where there's so many games we played. He bites over 200 different Amazon employees to watch basketball all day long. Until the very last game. So meaning out there, start to hit 9 a.m. or something. And for number three, probably Ed Breina.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

18. “So that's why I invited me to dinner and give him to finally talk to me. And the third probably Jim Simons sort of renaissance. And I do know Jim a little bit and he's a fascinating guy that I think has impacted our world more than most people recognize through his extraordinary philanthropy private, but he certainly is not very public about it. But I think very few people really have an understanding of the dollar amounts that he's been supporting causes are important to him for decades. And he was really in my mind the pioneer of Quant investing and likewise A.W. Jones, pioneer of long short investing, but I've read everything he's ever written or written about. So I don't think I've learned as much from AW.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

19. “My best conversation with Lauren Buffalo. I've met several times and finally never had much interest. And he came up to me one time and said, oh, hey, are we still having? And as he's talking, I'm so excited he's talking to me. I realized he thinks he's talking to someone else. Mr. Buff actually liaise. Oh, right.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

20. “Well, a couple things, but he really, and understanding the logic likes to argue that high turnover is evil, mutual funds are always over time to underperform the equity markets. They pay commissions, taxes, da-da-da. And I could make a compelling argument just looking at maverick data, that the degree to which we about perform the markets for a long period of time now. And we're doing that. We do pay commission. So it's after commission costs and even after our fees more than compensate for the incremental taxes. So if he's right, if you're just going to invest in indices, but there are independent scientists, there are a lot of firms that have added enough value to more than compensate for those costs, but try to have that discussion one time with him. He wouldn't really.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

21. “Let's see. Well, I'm a little biased, but join me top of us just because I love the opportunity to have another conversation with him, period. You got to put Warren Buffalo on the list. Not that I agree with everything he says, but he also is so amusing. So he makes for a fun dinner.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

22. “Management management. So while I do think we'll become more proficient, more productive, et cetera, we will continue to focus on where we think we can excel. And that is understanding the value of businesses run by humans.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

23. “Many things we're doing today that, like, you wouldn't even dream to be possible 20 years ago. So, back to your question. I think in 10 years, not just from Avert, from many places, AI is going to play a really big role. There are already ways we're using it, both in the back office, in the front office, that already have been minor step function improvements. And it's in the very early days. So back on that business plan, we do all these different things. One of the reasons we decided just focus on equities, I believe even back then it would be the most impervious to computers, to machine learning, to AI, whatever you call it, because we're in the bottom spectrum of the cap table, therefore the most sensitive to decision humans make. And what happened eventually, I guess, was going to be a very long time before any AI engine can evaluate a person, their intentions, their integrity, as well as we can. And for equities, it's still management.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

24. “So, I think one of the mentalities that's really served us well over time is the desire to continuously improve. What can we do better this year, whether it's part of the investment process or data gathering or managing people, interacting with their investors? How can we do it better? And yet you need to balance that with consistency. Investors don't want to hear, aha, we've decided we want to invest in used cars because it's a great opportunity. And so if you think about that we described early in the conversation that day one, the concept of being long and short within every region, with every industry which we invest and now factors take care of that, that really hadn't changed. Our average net exposure, average gross exposure, average industry weighting, all very consistent with number 30 years. But within that, our ability to execute on those objectives of preserving growing capital and developing our reputation has improved dramatically.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

25. “A lot of things long and short at the same time. Now they're smart enough from a transactional point of view to pair those that nevertheless collectively you don't have your very best on each side. Leverage is important, especially helpful on a low valley world. Higher ball world, higher cost world leverage has different implications. And those places are hard places to work. And turnovers are higher there than elsewhere. Huge respect for Ken Grookman, consider him a friend. I get what they built. who can't but be tremendously impressed with what they built. But it's just the person that we're asking join Maverick, that's not typically the experience they're looking for. So you look at the last 10 years, they've won, no question. I hope that next 10 years, and I think the next 10 years may paint a different story.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

26. “Ridiculous. So the longshore profile has looked more and more like the beta profile. No wonder people have sort of given up. You're right in that world, the platform, Gas, whatever you want to call them, the very successful millennium citadels have generated different return profile in a very different way. So every little pond has extraordinarily tightly controlled parameters, not just exposure to different factors, et cetera. Those are then collected. They typically have a center book, which they have their own algorithms to pick off the best of the best and upsize those. And then they have leverage, which all works because they have very strict control. Where I think the flip side is, again, if we're back in a world where fundamental stockpicking is more productive, that model I would argue is going to have a harder and a harder time keeping up just because when you put together all these collective books,”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

27. “Number two, I can use SP puts or short futures to create my short exposure. My catches, that doesn't generate alpha by definition. And by the way, most of your sophisticated investors could do that themselves. They don't need to pay you to do that for them. More ETFs, okay, maybe slightly better, but not nearly as good as researching every single stock in that ETF and making your own conclusions how they should be weighted, et cetera, et cetera. So people soy but surely gave up on shorting, especially after January 21, Wall Street bets. That's why a lot of people say, okay, I should totally give up.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

28. “Touch on the first part of the question first, the frustration with long-term equity. One thing I did not point out, but I think says it all in a nutshell. If you look at the correlation between the HFRI Launch Road Index and the equity markets on a trailing three-year basis, back in 98, 25 years ago, it was under 30%. Today it's 70. It peaked at 90 two years ago. Well, 90% correlation. Why am I paying you hedge fund fees? I'm just getting beta, even at 70 now just to rag at Maverick that's been in the teens. So we've not gone down that path. And so going back to senior investment committees, this is noticed. And the way we got there is shorting was really tough through this world of crazy monetary easing, fiscal stimulus, etc., etc. And so many funds, the answer one.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

29. “To day investing, I do not have final say unless it involves risk. So I had final sale risk, I thought a position was just too big, I would take it down, but not because I didn't think it was a great investment, more because I thought it contributed to a risk profile in a way that was inappropriate.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Well, as I've mentioned you at lunch, I did consult with a few people that I really respected who've been through similar transitions. Seth Cormann, Sandrucken Miller, the list goes on. And they all had different perspectives, but one that was probably most influential to me was Stan's point that if you're on Gibson the responsibility and the authority, you have to really give it to him. You can't say, usually you make decisions every now and then on overrule. But it will be fine. Don't worry about it. One, the odds are you'll probably make a coarse decision, not a better decision because you're down as close to it. But even if your decision was as good or say even slightly better, just the demotivating impact of being in charge but not quite being in charge has a real significant cost. So we had a year where that transition is gradual and then it digged to the point that I would still give advice and coach, but I also made it very, very clear to everyone that, hey, on the day.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

31. “Investors, which is the most important dust of all. And then almost three years ago, we went with a coast IO structure in Ben Silver and David Tikacinski letter, fundamental efforts ever since. It's interesting because they have slightly different investment styles, certainly different areas of expertise, and bringing both of their shrinks together has really created a yin-yang type dynamic that I think has been really, really effective.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

32. “Senior team, I was just a few years older than they were 15, 20 years younger. So it was more a sideways thing, if you will, and in part driven by, so tiger by contrast, there was Julian Robertson. There was everyone else beneath him beating him ideas he said yes or no. We, even from the very beginning, back that team oriented culture were much more five individuals working together to come up with the best decisions we could. And I was the leader of that five, but I was a member of the five, not the boss of the five. And so in that way, it wasn't as a dramatic change. And the person, and now we've had one more of these changes, but ask someone that was living, breathing, waking up at 3 a.m. to see what happened in Japan, just couldn't let it go the way I used to be. And so allowing myself to get more focus on the business and especially on risk management portfolio and develop some of the tools that we still have in place today, I really do think it worked out well.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

33. “Well, as we mentioned earlier, there was this recognition that I had three different jobs and I wasn't doing any one of them as well as I would hope to do them, to really excel at that role, I do think takes an almost 24-7 dedication. It certainly takes a level of commitment and energy because, again, it's a very, very, very competitive world. And I was getting to the point where I was not as intellectually interested in stocks as I had been earlier in my life. I was getting to the point where I missed not seeing my kids and starting to recognize, wow, they're not going to be kids a whole lot longer. And then when it became evident through performance that I was not doing either of those, well, the three, but stock picking or portfolio management risk control, particularly on either side, that to me was, okay, now it's really time. And it's a little bit different than that. It wasn't handing down to the next generation because”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

34. “Oh, yeah. And so a very important partner, he's semi retired, but any project where I need someone I trust who's super smart and will dive in deep, I call Steve and it's taken care of. And to me, the conversation has always been the back of my head because it's just the way you hope anyone who does know you now worked at Maverick for five or six years can just say, hey, it's going to be okay. We can't tell you what the numbers are. Jose, it's going to be okay. And I feel responsibility to earn that trust. And I think it's a good reminder of how important that is.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

35. “But not nearly as large. He had some frustrations in his position, and we were comparing notes one day, and I said, so maybe you should come work here. We always wanted to work together. Because, yeah, I would be interested in talking about that. So he came down to Dallas wise and to go look at houses, go meet them for dinner. We started about 9 a.m. Now it's 6.30, we're supposed to meet our wives. And the whole day, we've talked about what a fair economic arrangement would be. And of course, are all these different, how about we grow at this and return to this, where we're smaller, we're going to grow faster. And we spent all day, too, reasonable, logical people who had shared objective of getting that Venn diagram to overlap. And now we got to leave in five minutes. We've got nowhere. We don't even have a rough idea. And he finally just says, I tell you what, if you can promise me, you'll be fair. I'm in. And we shook hands. Didn't have a contract for years, then some general counsel said, no, everybody has to subcontracts. Eventually we did. And we've lived.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

36. “I mentioned earlier that the first handful of people I joined were all people I'd known for a while and I mentioned one was someone going to business school with there's a guy named Steve Capp. So after business school Steve worked for public company briefly and then started his own hedge fund. I went to Tiger. And when I decided that, Chief, there's a chance I'm really going to leave Tiger because this is a very interesting opportunity. I also decided, you know, I shouldn't just, if I'm going to do this, let's just make sure I understand all my options. And the only other thing I seriously considered was partnering with Steve and his hedge fund had some success, but purely driven by him, as I recognize, was helping him out in certain things. And Steve, and I've always liked each other a lot. But at that time, what he and I were thinking about didn't really compare well to what this family has offered me suicide not to work together. You fast forward a few years, four years, yes, but now Maverick's had some success. It's become much larger. His fund is doing”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

37. “And about year two at Maverick had someone do that and I held a wormwide meeting the next day and say, look, there is someone here who's asked me to review their conversation. I just want everybody to know the policy. I'm happy to review it. I can promise you it will not go up. Some chance will go down.”

    2023-08-22 · Invest Like the Best · Lee Ainslie - Hedge Fund Maverick - [Invest Like the Best, EP. 341] · IDENTIFIED FROM THE TRANSCRIPT · source

38. “Well, it's one measure of status, if you will. And I may more need to agree. And again, going back to being fair and make sure we have this balance of a team orientation and meritocracy. I work really hard, maybe not in any one year, but if I look, one of the things we do do, we have four different metrics that we track to drive the compensation decisions. And we look how each team does in each of those metrics on a trillion five years, three years, and one year. And I also have a lot of different metrics regarding how a team got compensated in different ways. Over time, which team got compensated the most and which team had the best metrics should be highly aligned, or I'm not doing my job and that maverick, that's been true. It was a long time ago. At Tiger, there were times that people would, after they got their comp going the next day and say, I don't think it's really fair. I think I deserve this. Here's why an assistance back there aren't that great. And every now and then that worked. Oh, you get more money. Well, once the word got around, you talk like an idiot. If you didn't go back to Nashville.”

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39. “Officially the most open question I've ever gotten in my life. Congratulations. So as it relates to Maverick, and it goes back to who we're trying to track, we try to make sure people are focused on the net present value of their economics over the next five, 10 years. And did you have the opportunity to make more money somewhere next year? Yeah, probably, but think it through, and that becomes or counters some of the platform type businesses. For whatever reason, our first all at Tiger and True at Maverick as well, when there's more money at stake, the more people care about it, even though on absolute terms, wait a minute, you should be the happiest guy on the earth. And when things are tough and there's not a lot of money because we didn't have a good year, people don't get us concerned. People are always more concerned about how they're compensated on a relative basis, not relative to the value they added, relative to what their friend made, whether that friend works at Maverick, works at a different firm. And I get that.”

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40. “Should be a home run doesn't really make in our world is because up through being investment banker college, et cetera, they lived in a task-oriented world. Write this paper, turn it in, take this test great, build this PowerPoint presentation, build the Excel model. Yes, sir. What's next? And we've thrown them into our world. There is no what's next every second, every day. You got new things floating around and you're never finished. You never can say, hey, I talked to every single customer, every single supplier, and every single competitor and every single employee. I'm done. It just is not possible. And so your questions are really critical one. How do you make the right decisions to use your time as reductively as possible to stay on top? And that's everything from being pointing in the right direction to having a nose of what's going to be important, not important, to have experience. I've read every time I read something or listen to this podcast, it's really been useful. Let's do more of those.”

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41. “Personal relationships are really important for all the bad press, deservedly so, that San Francisco gets first quarter of this year. There was twice as much money, BC money, invested in companies based in San Francisco than the rest of the United States combined. And that's still where it's at. And I think AI actually is going to make that even more true. And so, yes, to have relationships with people that are thought leaders and also who attract a lot of talent around them is very helpful. You start the question personally, I'm very fortunate in that I work with extraordinarily talented people that will give me sensitivities of things they read, things they've heard that you really should focus on this one, whether it's a sell-side report or magazine article, et cetera. But it's a challenge. We haven't really talked about analysts and developed analysts, but one of the most common reasons a person on paper”

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42. “Two, three. And Apple went to 600, and now it's $3 trillion. But the winners aren't just going to have a bad quarter. It's going to be much more extensive and last longer. So as we think about this world of AI, identifying winners and losers, identifying the peripheral plays, if you will, the secondary effects is something we've been really focused on since late last year. I think being ahead the curve helped us a little bit and getting that was thanks to our private team. And in the private world, As you can guess, there are so many talented people on so much money trying to chase after different ideas. And I think a lot of our competitors, frankly, don't have the background to really evaluate those efficiently, so we'll see.”

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43. “When we're thinking about the GPUs, what other components are needed to make those GPUs work? So we'll just take Apple and the iPhone as well as Apple Stock did. They're actually in terms of percentage gains. Some of their components players did even better being along for the ride. But you look at their competitors. So 2007, the iPhone comes out. Both Apple and BlackBerry or RIM have about a $70 billion market cap. Year one, RIM actually goes up over Apple doesn't have great security. Oh my God, who wants to type on a flat screen? Give me my keyboard. But after about 2008, it became pretty queer where it was headed. You go to 2012, Nokia's gone from $100.”

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44. “I first met Michael Dell probably 91. We're both in our mid twenties and saw with the PC revolution did to DEC, IBM, et cetera. First met Jeff Bezos in 98. Amazon had a $400 million market cap. And Altavista was a much bigger company back then. Then, of course, we saw mobile and the rise of Apple, cloud computing, software as a service. A few of these disruptive technological changes. Maybe you could argue internet's going to be as big in hindsight, but I really think AI will be bigger than any of those. And so we try to look back at all those and see what lessons we can learn. And hopefully we can avoid some mistakes as well. And I'd say it's really twofold in our mind to recognize that these disruptions create winners and huge losers. And AI, we have some ideas. I still think it's a little early. It's not as obvious. Number two, don't forget about the peripheral players. A little while ago, we were talking about...”

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45. “Better, you're not going to be able to tell. So, I mean, indiscernible. So I think, and I went back to the last decade, how semiconductor margins almost doubled at the same time, software margins have already been degrading. They're 29% down to about 24% today. I think that may continue. I think the ability for software companies to maintain their moats, if you will, will become more and more challenging. Not that they still won't be great businesses for a long time. Going back to what we talked about earlier, technology tends towards standards. which is a memo I wrote back in 1991. I think it's been a pretty useful paradigm as we think about technology. I'm not sure that's true anymore.”

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46. “I can use either one. Network effect, some would argue, well, ChatGP is going to get smarter and smarter of all the more and more questions, but you don't want ChatGBT to be taking in your knowledge. You don't want your knowledge to be accessible by the public. Number one, number two, ChatGDP doesn't want to be driven by people putting in garbage. So I don't think there's going to be huge network effect. And then finally, in terms of the better mousetrap, it doesn't really matter. For 99% of use cases for an AI engine, what was Robert Berford's best movie? You can get a pretty similar answer if you're slightly different. Who cares? Or write me a poem about this Oak Conference table and the style of Robert Frost. They'll be slightly different, but they'll all be good enough. Now, G, please read my radiology report. Okay, maybe I want the best one now. But for most things you're going to use it for, one site.”

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47. “Turns a lot of that on its head. So the infrastructure costs are now sky high. Again, talking to private companies, a different one, but another very large company said, you know, we're just finally starting to get our heads around that we looked at our cost structure. It's not going to be 90% labor and 10% infrastructure costs. It's going to be the opposite or entire everything we do. Microsoft just put in their annual report a material risk they may not get enough access to GPGO chips to maintain their competitive positioning. That's an interesting one item. So the low CapEx roles, mind you, switching costs. Who cares? What AI engine you're talking to? ChatGBT obviously is amazing, but anthropic, probably the number two player just released Claude 2. There's a lot of things where it blows ChatGBT away. ChatGPT does some things better as well, but there's more than one of these. There is no user interface. You just type in your question or talk to it. I don't have to be.”

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48. “I think it's a really interesting point in time. So sulfur is king. Sulfur eats the world. You know, all these phrases prove to be very true. Look over the last dozen 15 years, software businesses gained tremendous market cap, garnered tremendous amount of value add, et cetera, et cetera. But you need to think about what drove that. And to me, it's a few different issues, A, not very capital intensive, B, switching costs. If I walk into Maverick and say, hey guys, starting Monday, we're not going to use Excel. We're going to use Google documents, whatever they're being up for. The network effect. There's a reason we use Instagram and not something that no one's ever heard of because your friends aren't on that one. Just the value of having a better mousetrap, there's a reason you don't use Altavista or Yahoo to search because Google came up with a better solution. Everyone gravitated towards and it virtually cost us what and then just critical mass. Well, AI.”

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49. “Semicide to bring in Andrew, who's been investing in semicolon for 27 years and knows all the management teams on a first name basis. We were able to make some decisions that I think other firms just didn't have the knowledge and experience to make. Those have already worked out pretty well. So our venture team and private teams are in meetings together all the time. Andrew, the guy that runs technology on the public side, meets with the entire venture team once a week, all just making sure, what did you hear this week? What did you learn? And I'll say there's sometimes the venture team doesn't understand this turnover nugget that, oh, wow, really? Because they don't understand the ramifications for bigger companies. And likewise bringing Andrew's relationships and his experience to bear on these small private companies, not only is it helping us make better decisions, but it's helping us win the deals. Wow, here's someone that actually knows a lot. Oh, and you know that guy and that guy? It's a unique period, this whole different line of discussion.”

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50. “For good reason. And Sammy's got thought of as commoditized, it's very cyclical. When a reality over the last 10 years, the number of semiconductor companies is like the over a billion dollars is slightly down on the software side that's more than doubled. And yet collective market cap of those semiconductor companies is growing fivefold and margins amount has doubled. So it's not what people have thought about semis in a classical fashion. So in this new world where, wow, the bottleneck's going to be NVIDIA chips and other type forms of compute power, let's go figure that out. Even large, long, short funds are scrambling to try to hire semi people. I guarantee you, virtually no one in the bench world has semi-making doctor expertise. But we do. Andrew Human, who leads our technology efforts, spend at Maverick to actually go a bit over 19 years now. We first fought NVIDIA back in 2004. I mean, this is a company we've known well for a long time. And as the mentors team is starting to meet with some of these companies on the”

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