YouSaid · the spoken record

Li Lu

lines on the record: 86
first: 2024-09-06
most recent: 2024-09-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“This extreme fortune. It is something even the wildest imagination or the best fiction could not conjure. Now that I've compiled a record of my own for over twenty years, I still enjoy the game even better than when I started. I have three lovely children. They're beautiful, talented, and kind-hearted. I'm most proud of them. Reaching fifty probably makes me closer to the end than to the beginning. Regarding my age, my favorite quote comes from Norman Lear. At ninety four years old he's still active in so many different things, collecting fans who are in their 80s, their 60s, and all the way down to their twenties. I once asked him how old does he think of himself. Without missing a beat, he said I'm always the same age as the people I talk to. Now that is a cool answer. Now that I've officially crossed the halftime line, I really need to make more young friends as my new teacher.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“I believe in Confucius' dictate. Having done relatively well in additions in my life, I'm slowly learning the art of subtraction and focus. I would have failed in a lot of professions. For example, I wouldn't be good at ballet or basketball, but my temperament and experiences prepared me well for a career in investment. I have to pause there. I really do think one of the main themes that reappears in the teachings of Li Lu is you pick a career that you have an immense passion and that suits your personality and how you want to spend your time. I was extremely lucky to be introduced into the field by the greatest investor who ever lived when I accidentally stepped into a lecture by Warren Buffett at Columbia nearly 25 years ago. And it was even more magical 13 years ago when Charlie Monger became my investment partner, mentor, and lifelong friend. To this day, I don't know to what I would attribute.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Every five to ten years or so, I had to change so much about myself that at times it felt like almost a reinvention. And when I fail in self examination, I'm even more blessed to have some strong friends who could point out my blind spots. I would have been lost in life's various mazes if I had not gotten that help. So through the tumblings and the zigzags I kept going while at the time insisting on sitting in the driver's seat. It is my life and my journey after all. According to Confucius at fifty, one should know his purpose in life. What your life was meant to be.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“The other half, I was probably taking the wrong turns no matter, but I was on high alert to correct mistakes along the way. I was careful not to be influenced by emotions that I know are poisonous and counterproductive to the journey. Things like envy, resentment, hatred, jealousy, greed and self pity, again, that's very much munger and buffet-esque. Munger says self-pity has no utility. Buffett says that the world doesn't run on greed. It runs on envy. They both said that you need to cure yourself of envy. My early life experiences may require me to work even harder than others to guard against these human vulnerabilities. And when I did fall to their prey, I was fortunate to be able to correct them quickly. Socrates was right. The unexamined life is not worth living, certainly not living well. Every once in a while I would sit down alone to figure out where I might be wrong. In my experience,”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, and then the final thing is he turns, when he turns 50 years old, he writes this post about reflections on turning 50. And I think this is a perfect place to end. I could never imagine my life would turn out this way. It takes countless bridges, roads, means of transportation, and years of effort to travel this far. The countless people in my life, kind-hearted strangers, well-wishers, mentors, partners, friends, or my bridges, my roads, my transportation for getting here. Without your help, friendship, and constant encouragement, I simply could not travel this far. If I have anything to do with that journey, it's simply that I took it. Woody Allen is right ninety percent of success is to show up. At various stages of my life I could have stopped or took the long rest, but for some reason my heart told me otherwise. I just kept going. Half of the time I wasn't sure where I was heading.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“than other investors. And he says, I don't spend my time studying other investors. We spend our time studying industries and studying specific companies. In other words, he's keeping the main thing, the main thing. He is focused. He knows that if he does, if he studies great companies in great industries, he will develop those rare 5, 10, 15 insights an entire lifetime. That's all. And if he does that and only does that, he will be successful. And doing things that are not that spending time that is not that what is he? You know this. He makes his decisions through opportunities. So studying other investors instead of the way he makes money and the main his main business, which is studying great companies, identifying insights for great companies and great industries, the opportunity costs to study other investors is too high. So therefore, he doesn't do it.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And then remember, several times he's repeated the fact that Munger and Buffett are rare, great opportunities are rare. It's not supposed to be easy. In fact, he repeats over and over again that the future is excessively hard to predict. And he has a bunch of examples in trying to illustrate that point. And, you know, it's obviously important to him because he repeats it throughout almost every single one of these talks. But this is the best way that he framed it. I was like, wow, this is a great way to summarize that idea about, you know, the future is hard to predict. He says, if you went through the American Civil War, the country killed 2% of its population. And yet not only was it rebuilt, but it was rebuilt at a furious pace. After that, it went through two great world wars. After World War II, if you thought Japan and Germany were doomed, boy were you wrong. It is hard to predict the future.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's run that sentence back with people inside of businesses. Successful people have some combination of things that enable them to adapt to changes better than anyone else. I think that statement is still true. He hits this again on the next page. Successful companies are able to deal with change consistently.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“He also has a great line hidden in here that I really think speaks to the importance of focus. I don't invest anything outside of the fund. I put all of my investment capital into my funds. Lilu, going back to focus, really concentrate on the ideas where you truly have the time and energy to fully understand the situation better than anybody. And I believe the best founders know this instinctively. That is why Walton was, Sam Walton was not doing a bunch of investing outside of Walmart. Why? Because he's concentrating on the ideas where he truly had the time and energy to fully understand the situation better than anybody. Back to the importance of being a learning machine and constantly adapting. There is not a single business that I know of that will never change. Business is changed. That's the fascinating thing about business. Successful businesses have some combination of things that enable them to adapt to changes better than anyone else. I think you could switch out, that's definitely true for businesses, right? What about successful people?”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And by this point, I'm so deep. Obviously, I've been deep into buff and munger for years, but so deep into Lilu, I realized like this company is a learning machine. Okay, that applies to BYD, but it applies to Berkshire 2. It applies to Munger, applies to Buffett, and applies to Lee Lu. This guy's a learning machine.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“The story of BYD is relatively simple. The guy is a really terrific engineer, started the business with $300,000, takes no additional money until the IPO. He creates a company that has $8 billion in revenue. Thousands of engineers. He solves a whole bunch of different problems. The engineering culture there is consistently demonstrates its ability to tackle big, difficult problems. BYD plays in a big field with open-ended possibilities and has a reasonable chance of being successful. Berkshire is not ideological against technology stocks. They're just against anything they don't feel comfortable with. There's a line Buffett has on that. Buffet says that they're individually individual opportunity driven, individual opportunity driven. And I would say Lilu is too, because multiple times, like he's asked questions and they kind of like, are you only investing in Asia? Are you only investing in this? You're only investing that. It's just like, I go where the greatest opportunity is. I'm individual. He doesn't use the word, but that's what I would describe. He's individual opportunity driven. Lilu continues on BYD. The company is a learning machine.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think it was mark injury. Somebody said one time that you could survey the industry and it's the one bullet theory, I think, is what it's called, is you sell all of the COs in the industry. If you have a gun with one bullet, which one of your competitors are you shooting? And that's a good indicator that I don't want to compete with that guy. And if everybody's saying they don't want to compete with that person, that's an idea that that's who's truly great inside the industry. So what we learned quickly is that we really couldn't compete with Bloomberg. And maybe that insight is transferable to his BYD investment. So he talks about, you know, how were you able to get, he's asked the question, like, how are you able to get Charlie Munger interested in a company like BYD? Because Berkshire Hathaway shies away from technology-oriented companies. Keep in mind this is 2013, this interview's happening. And Lee's insight on that is different. He says, I don't think Warren and Charlie are ideological. They are not ideological, neither am I. It's really how much you know.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Charlie should forever, and this is bold, they bolded this on the website. Charlie should forever be credited with being the architect. So Lilu continues, I become more attracted to looking for great businesses that are inherently superior. And actually he mentions this because he's going to talk about Bloomberg again, which again we already know he thinks is an inherently superior business. So the first investor in this company called Capital IQ. But what was fascinating is the insight that he learned about Bloomberg through Capital IQ because they started Capital IQ to compete with Bloomberg. We wanted to create something just like Bloomberg. And in the process, we grew to appreciate Bloomberg much more because it was so hard to compete with them. We learned quickly that we couldn't really compete with Bloomberg. I think one of the best ideas for figuring out who is a really great inside of an industry. You identify who is really great by asking who I do not want to compete with.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Ben's ideas only work when practice at a small scale. With much backsliding, I subsequently followed his instructions. Many years later, Charlie became my partner in running Berkshire and repeatedly jerked me back to sanity when my old habits surfaced. Until his death, he continued in this role and together we, along with those who early on invested with us, ended up far better than Charlie and I had ever dreamed possible. In reality, Charlie was the architect of the present Berkshire, and I acted as the general contractor to carry out the day to day construction of his vision.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“A sizable edge over all other people. One of my favorite sentences out of every single thing that we've talked about so far. And even though that's one of my favorite sentences, I feel he does even a great job of summarizing the idea behind that with another sentence that's one of my favorite. I let my own personal interests define my circle of competence.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly, do not want to diversify away from the opportunity that you have been waiting patiently for a long time to discover for some really inferior other opportunities. Investing is essentially opportunity cost. Does that not sound like that 90-second video from Charlie Munger, right? So any other alternative, you really have to justify itself by comparing what the one that you already have. Charlie Munger is not going and looking to run Munger family money with other people that are inferior to Li Lu. And when you make that comparison, you tend not to really diversify too much. All decisions ought to be looked at through the concept of opportunity cost. So I'm going to go and summarize, this is the note I left on this page, right? Because, you know, I may never read this entire page again, but I'll go back and look through them and through my notes and highlights. And I want a summary, like a quick way to understand what did I learn from this page. Number one.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“He says, I would have first studied all the great examples in the past. And so he just pounds over and over again the same idea. Like, hey, only go for the best. You might only have five to ten shots in your entire life. Make sure you do all the work. Make sure you have the temperament. And one of the students, God bless them. Just God bless them. But he goes, I have to say that's a pretty high hurl rate. Come on, man. He just got done explaining why there's this flaw in human nature, why so few people are able to do so. And you just prove his point. And I wrote in the column. Yeah, no shit. Yeah, no shit. It's a high hurdle rate. That's his entire point. And he's trying to explain why this is so important. Because if you actually have a great opportunity, you only need one. When you turn out to be right, the upside is just enormous. It could really surprise your wildest dreams. He repeats, it is extremely rare to find no brainer great opportunities.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Do not bet often. I need to pause. I found another quote from him. I think that relates to what he's saying here. So Lilu says, in the short term, there will be winners and losers. But in the long term, there are very few winners. If someone can produce outstanding results over fifteen years or more, we can probably say that they are something exceptional. So his whole point is just like, you should just study the greats and then do what they do. So back to this. Many of the very successful investor practitioners do not bet often. Most people really do not have the necessary discipline. Mental discipline to do that. I would strongly encourage you to study successful practices in real life and in examples of history. What you are looking for or what he is looking for is you're talking about an enduring earning generating franchise, a compounding machine in other words, to know what to look for.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“He had. He spoke for like 30 minutes, took questions, and you know, it starts with really this is just about the fact that general business advice is useless. It depends on who you are, depends on the personality, depends on, it's hugely important to build up businesses authentic to you. And usually that requires experimenting with things and realizing what you don't like first, which is obviously true in Lee Lu's and Charlie Munger and Warren Buffett's case. And so he says, why is the practice that is being publicized by tremendous successful examples such as Mr. Buffett? Why do more people not follow what they do? It turns out it has a lot to do with human psychology. And he says, it is human nature to love gambling. Even if everybody knows the odds or stacked against them, that has never prevented gambling from becoming a very big business. It's also endured throughout the centuries. But he says this goes against the track record that Li Lu and Charlie Munger and Warren Bruff have. But virtually all the successful investor practice.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And then he ties it back to just not taking shortcuts and just realizing you have to build this base of knowledge. The process and progression is like compounding money. In fact, you can compound knowledge faster than money. If you truly love this game, I would suggest that you don't take shortcuts. It might take longer, but it's more rewarding and then he ends this with saying, you know, the truly great businesses and many times will grow even bigger than you could possibly expect. And he gives the example of Microsoft with truly great companies. It only looks logical and retrospect. Think about Bill Gates, how Bill Gates started Microsoft. I don't think he knew up front that he would take the entire market because at the time the market didn't even exist.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Continues to surprise me with his ingenuity to figure out ways to do something better than anyone else. But you cannot truly understand everything about our business in one week. It took me 10 years. He's talking about BOID still. It took me 10 years and I'm still learning new things about BYD. It is a continuous learning process. You build this knowledge base by continually learning. And it's during this section, he's asked a lot of questions from the students in the audience. And he talks about the importance of staying within your circle of competence, of not being intellectually arrogant. And so there's a bunch of times where they're giving them like, hey, are we in a bubble or some kind of macroeconomic call? And so I just want to pull out a couple things. He's asked the question. The questions are irrelevant. It's outside of his circle of contents competence. He says, that's too big of a question for me. I don't know. Few questions later. Ask another thing like this. That's just not my game. I don't know.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Bad business is just going to throw up one headache after another. And so he talks about, he starts analyzing BYD and the crazy thing. I think BYD just now like, I don't know, 80 billion market cap or something like that, maybe more. But he started his position in BYD in 2002. He's going to mention the founder of BYD and BYD a lot throughout the talks. But this is Lilu on BYD in 2010. And so he says, when you get into situations like BYD, you see a lot of good surprises. And so he says, the founder and his team have this fabulous culture. This is nuts. I didn't know this, that the founder only raised 300,000 in venture capital before the IPO. He raised money in an IPO and then Buffett gave him $200 million. And so at this point, they had $160,000 employees, $6 to $7 billion in revenue, and $500 million in net profit. It is amazing. He has this ability to adapt in a competitive environment. He has demonstrated that ability again and again. The way he does automation is far cheaper than anyone else and more reliable.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“This is why he kept saying businesses change, change equals opportunity. He says capitalism rewards people who are talented at capital allocation. It is a great game. He loves it. He refers to it as a game, as a passion, as an obsession over and over again. He just absolutely loves what he does. And so then he continues. Once you understand a single business inside it out, then you start examining the entire industry. If you can understand a business inside it out, then eventually you can extend that knowledge to understanding an industry. If you can get that insight, it's enormously beneficial. If you can then concentrate that on a business with superior economics in an industry with superior economics, with good management and you get it at the right price, the chances are you can stay for a very long time. And then he says something in passing that I hope I never forget and that superior businesses produce a lot of positive surprises.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“He's like, you know, I started my first business in'97. That was in the middle of the Asian financial crisis. Then we had the internet bubble. And then a few years after that, it was the great financial crash of 2007-2008. He says, these are billed, these financial panics are billed as once in a century disasters, but they happen every few years. This is really where the insight and temperament come in. You have to have a certain confidence in your own judgment and not be swayed by other people's views. It is not easy, but that is life. That sounds just like Charlie Munger. It is a given. It happens to everyone. Berkshire has had at least three times when the stock went down 50%. It happened to Andrew Carnegie. It happened to John D. Rockefeller. It happened to everyone. This happens to even mighty companies. Look at the top fifty companies in America every ten years. By the time twenty or forty years go by, two thirds of them are gone. By the time it goes to a hundred years, there might be only a couple left. That's just the way it is.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“One insight is the foundation of the Walmart financial empire. That is Walton's version of Lilu's idea of finding an edge only comes from the right frame of mind and years of continuous study. And so Lee has some advice for us. How do you understand and gain that great insight? Pick one business, any business, and truly understand it. I tell my interns to work through this exercise, imagine a distant relative passes away and you find out that you have inherited 100% of a business they own. What are you going to do about it? That is the mentality to take when looking at any business. I strongly encourage you to start and understand one business inside and out, just like obviously Sam Walton understood Walmart. That is better than any training possible. It does not have to be a great business. It could be any business. But you'll need to be able to get a feel of how you would do or what you would do as a 100% owner. If you can do that, you'll have a tremendous leg up against the competition. Most people don't take that first concept correctly, and it is quite sad. If you did, you would really seek out knowledge on how it should be run, how it works. If you start with that, you will eventually know how much that business is worth. And then he talks about the temperament you need to have.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“You have success at Walmart, and then he sees the success of what he wants to do like a Costco, like when he starts Sam's Club. And so at the beginning of his career, before he had this years of continuous study, one store for five years. This is fascinating because the faster you learn, the faster you compound your knowledge, the faster you can actually move in real life. So then, four decades later, he starts Sam's Club. He goes from zero stores to 105 in seven years and $5 billion a year in sales. And the edge came from this like slow, continuous study because Sam Walton said the key was that they started out underfinanced, undercapitalizing these remote communities, and it turned out by running these experience experiments in these small remote communities that there was much, much more business out in these little communities of like 6,000 people, 10,000 people than they could have ever possibly imagined.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Things that kind of smack me in the face is when I read that other biography of Sam Walton. So I think I've ran Sam Walton's autobiography twice and then I read this biography by Vance Trimble on him twice. So I think my fourth reading really smacked me in the face of the importance of like fast and then slow and then really fast. So he's talking about studying companies, reading about them, figuring out the management, figuring out the opportunity. It's like you need years of continuous study. For a founder, that years of continuous study is obviously going to happen inside and outside of your business. So like Sam Walton had seen more retail stores than anybody else on the planet. And the edge came from, he was relatively slow, right? He like, think about this. Sam Walton, greatest retailer ever lived. He had one store, a single store for five years. And then you look at how fast he learned. So that was his, you know, this is pre-history of Walmart. It wasn't even called Walmart. It was like a five and dime, which we would think of as like a dollar store today, okay? And then.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Episode. Maybe it should be just like Leo and Charlie Munger and Warren Buffett because it's like they all have the same ideas. Li Lu saying, hey, find something you have an intrinsic passion. Charlie Munger and poor Charlie Zalmanak says, another thing that I found is that an intense interest in any subject is indispensable if you're really going to excel in it. I could force myself to be fairly good at a lot of things, but I couldn't excel in anything which I didn't have an intense interest. Going back to Li Lu, the game of investment is really continuous learning. I cross that out. I really think the better way to say that is the game of entrepreneurship is really continuous learning and excessively profitable because finding an edge really only comes from a right frame of mind in years of continuous study. This is really difficult, but on the other hand, the rewards are huge. Warren says that if you only come up with 10 good investments in your 40-year career, you will be extraordinarily rich. That's really what it is. This idea of finding an edge comes from years of continuous study, okay? So one of the craziest...”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so the second talk is a lecture at Columbia again, but this one happens four years later, and I'm not going to repeat the ones we just went over, but he does tell slightly different stories in this where after discovering, watching that lecture from Warren Buff, it's not going to surprise you. He read every single thing he could about Buffett, all of his shareholder letters, every single book, every single talk. He says he embarked on a two-year intensive study, learning everything about Buffett. And so he says, after I graduated Columbia, I worked in an investment bank for a year and realized that was a mistake. I tried to start a fund. The first year I managed money, I lost 19%. That's when he goes into building the business or life that's authentic to you. If you could ever find something you can do well that you really like, this will be your best investment. You will do better than competitors. If you can do it with intrinsic passion, that really over time will add enormous value to you. And again, I need to point out, I don't even know I'm going to name this.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“What he talks about, so obviously he'll repeat some of the stuff in future conversations and future transcripts I have in front of me, but I'm obviously not going to go over it over and over again. So he says nothing, he really just talks about businesses change and you need to welcome that because change equals opportunity. So businesses change and change equals opportunity. Nothing is constant. That's the interesting thing about business. Nothing is constant. And that's why you have to keep relearning things. And that's a good thing. That's a good thing. That's why people who have an active mind and are actively prepared and have the psychological temperament to be able to act when they see an opportunity will always, always have a chance to be fabulously rich. And that is a good note to end on.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Munger said. So I'm going to pull this quote from Charlie Munger that I think Li Lu obviously understood when he's analyzing Bloomberg. He says there's actually businesses you'll find a few times in a lifetime where any manager of the business could raise the return enormously just by raising prices and yet haven't done it. So they have huge untapped pricing power that they're not using. That is the ultimate no-brainer. Disney found that it could raise prices a lot for the Disney parks and attendance stayed right up. So a lot of the great record of Eisner and Wells came just from raising prices at Disneyland and Disney World, and so Munger continues at Berkshire Hathaway, Warren and I raised the prices of Seese Candy, and of course we invested in Coca-Cola, which had untapped pricing power. And so back to Lilu. That is why it's a fabulous business, a fabulous business. What I mean by insight. You study every business. When you have things like that, you do not sell. And then finally, he ends this lecture where the vast majority of my highlights in this little handmade book is going to come from this because he's remarkably consistent in how he looks at things.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm going to pause here. I'm going to come back to what he's saying here because I think it's really important. But the point of his hounding on this that you need an encyclopedic basis of knowledge, you should study all businesses, all industries, you should read all the time. It's because you realize this is not, it has nothing to do with financial services, technology. It's a type of business that has pricing power because there is no other alternative. And again, this sounds a hell of a lot like Charlie Munger. When I just did, it was episode 355. It's on this very rare Bernard Arnold interview, right? He has the same exact characteristics. And they talk about the fact that Bernard Arnold bought Tiffany, starts raising prices. I think the average customer used to spend $500 per like visit to the store. Now it's like four times that. They immediately start raising prices. And when I got to that, right, I thought of that when I got to this in the Lilo, but when I got to that, I thought of what Charlie.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“They don't really have a choice if you decide that next year the price is going to be 10 or a year more. They don't have a choice. That is why it's a fabulous business, a fabulous business. He repeats that over and over again.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Then once you cross that line where everybody's using it, they have high opportunity costs at a time, high switching costs. Takes forever to learn. Everybody else is using it too. It's just like he's stuck in there. And so Lee says, suppose that was a public company and suppose you had to develop that insight, that insight is worth a shitload of money. That's the kind of insight I was talking about. That is a virtual monopoly business. He's telling them, look through this kind of insight. Do you even have a choice today of not using Bloomberg? He's asking the question, what is the cost of Bloomberg? What is the cost? Nothing. You can almost call that zero. Now, obviously, he knows it's $30,000 a year or whatever the number is. It's a very expensive, but his point is every trade to these kind of people that use it can mean millions of dollars gain or loss. So they don't care if you charge them $30,000 a year and they don't really care.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Anything that is hard to learn and that is highly, highly, highly relied upon to do your daily work. Once you learn that damn thing, you do not want to learn that again. And besides, then they add another advantage. And besides, everybody else uses the same thing. You have to be able to communicate with your partners, with your colleagues. Anybody you collaborate is using it. This business is winner take all. And he talks about one of the genius marketing ideas that Bloomberg had, is that they would introduce them, I think either free or unbelievably cheap to every business school student. So then you're in college and you're learning how to use the machine. And Lilu talks about what you could expect to happen after. He goes, okay, I have this thing available cheaply to me. I'll learn this thing. But once I graduate and I go on to the world, I don't want to learn that again. And besides, everybody else is using it. And so he makes the point that at some point, Bloomberg had stacked up all these advantages and at one point he crossed the line.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Though Bloomberg is a private company you can invest in, but he's going to talk about his a lot of respect. In fact, he mentions the business of Bloomberg multiple times throughout the years and later on when he tries to compete with him, he even realizes they're even better than he expected. But he's really trying to educate the students on like, well, how do you know you have a business that you shouldn't sell? And part of this exercise is like a series of questions you want to ask yourself, like, is there an actual moat here that is defensible for many decades to come? So they go through a bunch of questions. Why is it so sticky? And a lot of students answer he doesn't like, but one of them he loved. And they said, well, they have high switching costs. And so they talk about people that use the machine have a high opportunity cost for their time. And it takes a long, long time to learn all the functionalities of Bloomberg.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And so then he's asked a question what drives your decision to sell? And so I need to be clear. The Timberland investment made a lot of money on these like seven, eightX investments. He's like, you'll find a bunch of those maybe. But what he's really going for is like these things that return $5,000, $10,000, like the ones that one of those can make you unbelievably wealthy. So when you find one of those, you don't sell. So he's going to talk about his evolution of thinking on this. So he's asked the question, like, what drives your decision to sell? I used to have a philosophy. If I don't want to buy at the price I'm offered, then I sell. And so he talks about how he evolved away from this and the fact that if you're in a really great business, like first of all, there's just not many truly phenomenal businesses out there. And if it is a phenomenal business, that leader is going to take a disproportionate amount of the capital, even more so in the future than you could possibly guess. And so there's like an indirect way he kind of continues to answer this question. And he does that while he leads the students on a way to analyze the business of Bloomberg.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Read history. It's all searching for ideas. He even talks about the development of his daughters, like seeing them, seeing how human cognition develops. He found enormously important. He says, it's important to understand psychology. I guess it's all work anyways, essentially saying the entire world is his classroom. And he goes back to the fact that people like him, people like Munger, people like Buffett, they don't belong to the stock market, meaning they don't want to trade all the time. People describe them as investors, but they really are. They're business builders.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And then he ties that back to how he started this. He's like, You got to build something that is authentic to you. Because if you're not deeply interested, if you're not obsessed, you're not going to do what he did. They just go back to the Timberland example. It's like he downloads everything, goes to their church, finds out what boards they are, and then gets elected to the board. Like you're just not going to do that. And he says, this is what really drives me in the business. It's exciting. It's utterly exciting. And he extends this to everything. He treats that really the Lilu treats the world like a classroom. He's like, you know, I was interested in physics and mathematics and history and economics and law and politics. I like everything. I'm interested in everything. And that's what you need. You might need models from biology. Some of them help my investing. You have to be intensely curious about everything. And occasionally you're going to stumble into a big opportunity. You want to go through everyday learning something. It's a good mental discipline to have. And as time goes by, you have learned a great deal. So when I read biology, when I read physics, when I...”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Chain costs and wise people think in terms of personal opportunity costs. In other words, it's your alternatives that matter. That is how we make all of our decisions. The genius in Buffett's advice to the students, if you really think about it, he's just like, well, what's a good way to make sure that you're thinking through opportunity costs saying, hey, I'm going to limit your entire life. You have 20 opportunities and no more. That forces you to weigh them against the alternatives, does it not? So now we go back to Li Lu and he's talking about the fact that, hey, if you don't, if you didn't do the work, if you're not psychologically, you don't have the temperament to do it, you're not ill-prepared, you're never going to make any real amount of money. You're not going to make the outsized returns that Buffett has been able to achieve. Why should it be easy? Opportunity that gives you 10,000 times your money. And he says their biggest idea is meaning munger and buffets. Their biggest ideas really gave them 10,000 times their money. An opportunity like that, if done once in your life and you're set, why should it be easy?”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Picky. Once I have Li Lu, if I am comparing to him, who else am I going to pick? By the way, that is a good way to make decisions, and that is what we do, meaning him and Warren. If we've got one great thing to do more of, we are not interested in anything that is not better than that. That simplifies life a great deal. And so when I hear that, when I read the transcript, I no longer has talked about this over and over again. It talks about making all of your decisions through opportunity costs. And if you would do so, you're obviously going to be your bets and what you invest in, your time and energy is going to be heavily concentrated. So I go and I search and I was like, okay, I know he's talked about this before. I go to founder's notes and I search opportunity costs. First thing I find is a quote from Monger from that book. I keep mentioning all I want to know is where I'm going to die so I never go there. Episode 286. He says, decisions, this is Munger speaking now. Decisions in your life are all about opportunities.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, make any real amount of money. So I got to that part and I was like, oh, that's another one of, you know, Buffett's ideas, Amongger's ideas essentially coming out of Lilu is just echoing what he learned from them. And so Buffett goes, and I think he speaks to University of Florida MBA students. But this is from the biography Snowball. And so it says to the students, Buffett explained his 20 punches approach to investing. You get very rich, he said, if you thought of yourself as having a card with only twenty punches in a lifetime. And every financial decision used up one punch, you would resist the temptation to dabble. You make more good decisions and you'll make more big decisions. I need to actually read something to you. I watched this video of Charlie Munger. It's like 90 seconds long and it says it's titled Charlie Munger on What's Different About Lee Liu?”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Missed it. I couldn't bring myself into it. That was the biggest, biggest mistake I made. The biggest mistake is not how much money I lost. It was how much money I foregone. That is the biggest mistake. I cannot forgive myself for making that mistake. And so then Lilu is going to elaborate on why. And this is going to sound a lot like Warren Buffett's punch card idea. So Lilu says, you go through your life, you might not have more than five or ten insights. You developed that over many, many, many years of study. Some of the things I'm doing I really found myself doing first 15 years ago. So what he means, I studied an American company 15 years ago, and now I found the Asian counterpart. But I studied that business for 15 years in between. I know everything about that industry and what really makes that business tick. You need to have that kind of insight in order to really swing with conviction. And if you cannot do that, either psychologically or because you're ill-prepared, you would just never.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And so therefore, he can direct not only all of his money, but all his time and energy into this thing because he knows it better than anybody else. And by just by getting that one insight, getting that one fundamental understanding of his company, he didn't need anything else. Even if he never invested anything, never bought a stock, never made an investment in another company. He's still fabulously rich. That idea, that fundamental truth gets me fired up. And then Lee talks about the other side of this, that his mistake, because he hounds on the margin of safety, right? He's like, you know, he's lost some money, but in very rare cases. And he's his biggest mistake is actually not making a big bet when he had that tremendous opportunity. So he says, the biggest opportunity came or the biggest mistake or the missed opportunity came from this company that I had an absolute insight on. I had the absolute insight. I knew the management. I knew that they were trading below cash. And subsequently, that went up 50 to 100 times.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“No more than 10 insights essentially. Tremendous insight. And what he means by tremendous insight is we're just going to bet the entire house. How do you really build that insight? There's no other way than basically continuous curiosity, intense curiosity, and continuous study. Your entire life. I would also say this is why founders that still run and control their company do so over a long period of time have such a massive, massive advantage. Because think about it, it's like Sam Walden talks about, you know, I never really had to invest in much. I never really invested much outside of Walmart. And how many people understood Walmart the way Sam Walton did? Probably nobody on the entire planet.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“He starts talking about what becomes his mantra that other people describe as his mantra in his investment company. You want to provide accurate and complete information, accurate and complete. That is his mantra. Most people will fail on both of those scores big time. And you have to go that extra length in order to get it done. The extra length you described in the Timberland, right? If you can't succeed on that, you cannot succeed in this business because most of the time you're going to stand alone and you're going to be against just about everybody else. And if you're not really confident about what you know, you can't possibly be putting that kind of money into something. If you want to do the buffet and munger type, which is more of the kind that I want to do, he's describing. This is Lee. And you want to be that way. Your return is going to come from a handful. Great ideas are rare. There's going to be no more than the number on two hands your entire life. He says over a course of 50 years, you might get tremendous insight.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“Hugely just by listening and actually doing it. That is the difference. There is no bullshit theory. All everybody's telling you is what works. It's what works. You guys have a terrific opportunity. And if you don't really use this, then shame on you. You've got to do it. You've got to use it. You've got to do it. I mean, you're young. You have energy. There's nothing to lose.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“How does it actually function? And so after like struggling through this and kind of, you know, criticizing them or just, you know, chastising, I guess, for a lack of effort is the way I would put this. He makes a point again, this type of approach is not natural. However, if you come to the conclusion that your personality somehow will fit this mutated gene pool, this is something you might really be looking to do. The only thing I can add to this is that there's a lot of money in it, as has been repeatedly proved by people from Ben Graham to Buffett and everybody else. I took this class and it really changed me fundamentally. But one thing you have to do is you've got to do it. That's why I was somewhat disappointed with the amount of work that you have put into this. I made hundreds of thousands of dollars just taking this class, just listening to the 14 or 15 people. But I did a lot of work. I'm telling you, you can make a lot of money if you're really into this. Not only just listen, but do it. I benefited hugely.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“There's just one thing I want to pull out that I think is a really important point that you shouldn't be fooled by what things are called or how things are described, but you should be asking how do they actually function. And so there's this business that they're analyzing that has a bunch of other businesses. And one of the businesses that they own is like this department store. It's called a department store, but it's not like you and I would think about department store. It has this holding all this inventory. Therefore, the book value of this department store, it's worth more than the book value, in his opinion. He says it's not a department store that we understand here. They don't take any inventory. It's more like a shopping mall that would take a percentage off the top line of all the merchandise and all the stuff that they sell there. And so it's clear from his description when he's talking about this section, he's like, oh, I don't care what you're calling it. I don't care what you're describing it, like what you describe is like, what does it actually do?”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source
“And I wrote in the column in the margin that they would not be one of three at the NLS meeting. So it continues. I'm going to just talk, I'm just going to talk about his reaction to them, right? Because this effort, how bad do you want it? Come on, guys. You're the Columbia Business School. What do we pay you for? Come on, guys, you have work to do. This is not good. Bruce, the teacher, he goes, I don't know what the hell you're teaching them. Come on. This goes on for pages and pages, so I'm going to skip over this. It's so bad. This is his response. This is why all my employees I had never went to business school. They never worked in an established management firm and some of them never even had accounting because I find it's easier to train them than somebody who did. This is something that pops up in the biographies a lot that in many times, especially if you're running your business differently. These are, you know, from very, I hate states, but like very much like first principles thinking, it's better no experience than bad experience, better no habits than bad habits. And so they're going back through this stuff.”
2024-09-06 · Founders · #363 Li Lu and Charlie Munger and Warren Buffett · IDENTIFIED FROM THE TRANSCRIPT · source