YouSaid · the spoken record

Mason Morfit

lines on the record: 86
first: 2025-09-29
most recent: 2025-09-29
sittings or episodes: 1
sources: podcast

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“Maybe the other side of that coin, and I learned this from Rob that in every setback, there's an opportunity. Rob is a very steady hand, and I'm a little bit more emotionally expansive. And so when things go really wrong, Rob is utterly cool customer and figures out how there's actually a blessing in this and how we're going to make something good out of this.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Learning that it's okay to cut your losses and move on to change your mind, learn that from Mason probably more than anyone else as you get into an investing career, that's really important because there are going to be some situations where you're wrong. And sometimes it makes sense to be persistent and stick with a situation. And sometimes it's better to cut your losses and move on to the next thing.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I went to college, both my father and mother said, Don't choose classes, choose professors. I didn't really know exactly what they meant. It took a year of stumbling through some subjects that I thought might be interesting but didn't have great professors to finally get the wisdom, tried to carry that forward into my career, making sure that I was choosing mentors, choosing people I worked with. The inverse of it is people don't quit their jobs, they quit their boss. And so as I think about people who work on our team make sure to keep them engaged and be generous with my time and make sure that I'm serving them in addition to doing my own job.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sachin Adela was a huge influence on me. I was still fairly young when I was working with him, and he had this mantra that the learn it all always beats the know it all. First of all, nobody wants to work with the know-it-all. You're not going to get to the right answers unless you have a learned all mentality. A decade later, when I started working with Mark Benioff, he had his version of this, which was the beginner's mind, that there are many possibilities to the beginner's mind, but to the expert's mind, there are few. That is also very profound. We are all generalists in every industry we invest in. None of us have this hard-baked expertise. We come in with these basic, generous questions that often unlock things that nobody's really talking about. Those two together, learn it all in beginners mind or the best.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“I worked for a house painting crew when I was 15 years old and growing up in Massachusetts. My parents were very focused on that I have summer jobs and actually do manual labor. I thought that as a house painter that on the spectrum of manual labor that was going to be a little bit easier, but I didn't understand that when you're the most junior member of the paint crew, your job isn't to put the paint on, it's to take it off. Up on the ladder 95 degree heat scraping paint all day and hailing paint chips despite the mask I had on. It was the first lesson in hard work. Also, we had a foreman who was excellent leader of the crew and patient with me and made it fun. He kind of set the tone, got everybody working hard in some very hot summer Massachusetts days. So seeing that benefit of leadership was also key.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Play guitar and a little piano and drums and write songs in my little recording studio in my basement. Some of these are on Spotify if your listeners look really closely. They might be able to find these things. They'll find that they are somewhere in between embarrassing and mortifying.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“World to think critically about the world with a group of people that you like and respect and this army of advisors and to be building and not just trying to make a trade on a quarter, but actually building the most important companies for the next century is a real honor and privilege. And I feel very blessed.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“This firm put in place, and we've carried forward the idea that the snowball effect of relationships, networks, and life experiences gets stronger and stronger over time. As we are entering what may be the fourth industrial revolution in terms of AI, there's a lot of change in management that's going to have to happen at a lot of companies and a lot of securities that are going to fall out of bed. Having that 25 years of history being part of some of the biggest previous platform shifts, PC to cloud. linear television to streaming television. We have a lot of pattern recognition and a lot of people in our corner to help us work through that with all these building blocks. We're locked in on a lot of fascinating projects in the portfolio today with some of the companies that will be among the most important for the next decade. I get up every day loving my job. This is the best job in the world.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fired on the first leg down. This culture overall, and this together, we're here to help each other in the way that we take risks and the way we think about the world has been enabled by how we built this organization. It's also extremely flat. Remember somebody coming in for a performance review one year and saying, what do I do next year? How does my job look next year? And I said, look at me. I did basically the same job as you. We're at the destination. I should be building models and getting my hands dirty with customer calls and you get to come to meet the CEO and have dinner. That's just the way we work this place. That lack of hierarchy is important. Somebody came from another firm who shall not be named and he said at that firm, the people on the lowest part of the children poll want to do as little work as possible. The ones in the middle want to get done as many deals as possible into the book. And the ones at the top are looking down and thinking everybody's lying to them. And I was like, well, that's not the layer cake we want. We want everybody working together thinking we're all telling the truth. That is something wise that the founders.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are elements of the culture that we're put in place from the very beginning that I think have served us really well. We all have the vast majority of our net worth in this product. We eat our own cooking. We all get paid on the performance of the whole. Nobody gets paid on their idea or their sleeve of it. And those two things have led to everybody on the team rooting for each other, supporting each other and working with each other rather than compete. You don't want the other guy's idea to blow up and go terribly so that you can get his sleeve of capital into your book at all. It's also had this thing that I really benefited from is that if you're running your own book, you're going to be very scared. And when things leg down is a lot of our best investments went down 20% before they went up 200%. You're going to stop out and panic and freak out. But if you're on a team, you can press that bet and your ability to take risk and ride the J curve is so much more enabled when you aren't about to be stopped out.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why we're grateful to have this opportunity with you, Ted, because it does require long form. Most media orients around conflict, around hero, villain, A versus B. First of all, it isn't really how the world works. Companies are not monoliths or autocracy is run by one person and everybody thinks the same. They're tribes and communities of people with lots of different ideas. And most of the time we're coming in and being part of the conversation and empowering one group and their point of view and being part of the gradual shift internally rather than this A versus B. And that's just not the story of the newspapers want to write.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Authentic when he says that we don't deserve the credit because there's not just the CEO and the board. Usually when we're investing in a company, there are a lot of people inside the company who see the exact same opportunity that we see. It's almost never the case that we have some idea that nobody in the company has ever thought of. There's usually a troop of people who are celebrating when we get the CEO to pay special attention to the idea that they already had. Those people aren't going to get the credit either. The reality is that maybe nobody deserves the credit because it's a collective exercise. We tell our story to our own investors. We don't do much in public.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've been much more comfortable behind the scenes. Some of its personality, some of its culture of the firm, and some of its expediency, it's just people will generally be more inclined to work with you if you're not going to go in the front page of the Wall Street Journal and say, that was me. It never is us. It's always a team effort and we're very happy to let other people narrate their own stories. And they do deserve more of the credit than we do. That makes for a sales challenge when you're running a business and have to promote your story. People tend to overstate and sell and celebrate and wave the flag. And that's just not what we've done. That's the downside we've just chosen to accept of the methods that we use and the culture that we have and the mission that we're on.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today, we know what it is today. We need to deduce whether it's a good investment. Now, we generally take three to six months to make a decision, but in the meantime, we can be buying the stock, interacting with management, getting iteratively more confident. And then when we're trying to create the right strategic alignment, the right incentives, that's taking place mid-course as opposed to mostly at the outset, like a private equity firm. We think along the same lines. have rolled as a minority investor into some private equity deals. We just have one such case in Japan with a company called TopCon, which is being taken private by KKR and JIC Capital. And we'll probably have other opportunities to do that.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“You abstract it as private equity trying to choose a great business, invest at a great price, have the company have the right. Create the right incentives, yes to all those things. And those are all things that we're also trying to do. But the execution is very different. I worked in consulting a lot of the projects where private equity due diligence. When those projects kicked off, we knew that we had a three-month period of time for the initial consulting presentation that would go into the investment committee to make a decision on a first bid, and there would be another one month. They'd have an opportunity to make their final bid. That would be a defined auction. In the meantime, not just the business due diligence, but the accounting diligence, the tax diligence, all the management meetings, the data room is populated with perfect information. That process is trying to accomplish the same thing that we're trying to accomplish, but we don't have the data room. We don't necessarily have four months to make a decision. We have a share price.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have rolled into take privates of a couple of our portfolio companies, but very few. Get investing. You have to be very good at one thing. That WhiteSpace that Jeff identified 25 years ago, that nobody is playing this, think like an owner long-term business builder in public markets remains true to this day. It's a white space and we are the best in the world at it. That's where we need to stay focused because we're not going to be the best private equity firm in the world. We know how to work when we don't have a board seater at a company, when we have an NDA at a company, when we have one out of ten board seats at a company. We know the ups and downs, booms and busts and bubbles can warp public company thinking. We have a depth of relationship with the people that vote all the shares, whether that's BlackRock or State Street or T-Row price or Fidelity. We've got those people in our corner. We understand how to navigate as a minority, sometimes even a very small minority shirt.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“But we found that there was a play on Broadway that was a taking on banks and private equity. We called the playwright up. If you're going to have an investment that might have a severe downside, however remote that might be, you have to understand it from every angle. That might have been a little overkill because of its timing from history, but that gives you a sense of how seriously we take that other side of the coin. I'd love to ask you a couple questions about the business of Value Act itself. The first that comes to mind is so much of what you're describing feels like the playbook out of private equity. I'd love to hear if you've thought over the years about either having a sleeve or a strategy or I imagine there are companies you're involved with that at times could be take private care.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Call that the value act triangle. Our thesis, the market thesis, and then the antithesis, and we write them out very explicitly, and then we run down that antithesis with as much intensity as the thesis. People investing tend to get wrapped up in the stories that they've got behind a stock. You've got to run down that really scary thing. In the aftermath of Valiant, we made an investment in Morgan Stanley, which was a G-SIFI bank not too long after the great financial crisis. It was eight years after, but it still felt recent. And I said, well, this is a industry that's hated by a lot of people in government and people in our society. Let's go meet with them. So we went to Capitol Hill and we met with this banking committee and we went to the Fed and we talked about regulators and we even went to try to get in to visit Occupy Wall Street so that they could give us their point of view. They told us we were Wall Street so they refused to meet with us.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Safety, but if we're right, if the market comes around to our point of view, if management executes, we can make a significant multiple on our money. There are lots of mistakes that we've made, some on a small scale, some valiant on a larger scale that have led us to those lessons.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“In investing, you're going to get some things wrong, making sure that you size the things that you get right versus wrong is really important to your overall result. Another is to just let the team be explicit about what could go wrong. We have this idea of the value act thesis, what's our point of view, what is the market's point of view. We want to think that we're going to buy at a discount that will close the gap, that will drive the share price up. That framework's important. Mason has added to that. What is the antithesis? What are the things that you could honestly write the story of how does this go wrong? Let's talk about it. Let's think about how correlated those things are to other things in our portfolio and how will the company perform in that situation. And that leads us to just try to focus the portfolio in things that have a very attractive risk-reward skew where we think the downside is limited, it's protected, we have a margin of”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“We can do a whole separate podcast on mistakes. We do reminate it on them a lot, and we try to learn from all of them. And they span issues of portfolio concentration. We manage the portfolio slightly differently under my management than under Jeff's. We are more discerning about the types of problems that are really perfect for our kind of engagement. It's easy to get a company to shift its allocations away from making Windows phones to focusing on Office 365 than the one we took on at Rolls-Royce, which was how do we engineer your engines to have a lower cost of goods than what they currently have and try to get them to GEs standard of excellence with a workforce in the UK. It also didn't help that one of their engines was recalled by the FAA and then COVID hit and grounded all the fleet in the world. Fundamentally, that was a biting off more than we could.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The depths of engagement concentrated portfolios Love to ask you about mistakes. There was certainly Valiant back in the day and others where something happened that didn't go as you thought it might.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Someone said early on that in the Japanese languages there's six different ways to say yes and five of them actually mean no. To some extent it's an exaggeration. But decoding the communications has been the biggest challenge. Our approach just naturally to be polite, humble, empathetic, but direct has worked well getting through differences in communication. We have a great team including people who are Japanese natives who have upped our game in that regard. One thing that we've learned to focus on is when you hear yes, you always have to ask yes when because yes can mean yes but in 10 years after I've retired and you want to make sure that that's not the source of the misunderstanding that is always a source of tension in our investing is we like to have a sense of urgency. We acknowledge these things are difficult. But if you're not in full”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“What was left was an incredible medical device franchise in GI endoscopes. We thought that they could build a strategy around that business, and we were able to sync up with a management team that saw the same opportunity. But what we didn't do was try to change the way that we would approach the engagement. There's no special category of competition for Japanese companies or European companies or American companies. We're in a globally competitive world. The approach that we've taken for Olympus and every investment since then, including Nintendo, including 7 and I, is to try to have very high standards for competitive success for the companies. At this point, we've invested over $7 billion into Japan since 2017, 12 publicly disclosed investments, many others that haven't seen the light of date. We find consistently that there are management teams.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“We thought there are great companies. Let's see if our model can be successful. We received a lot of advice about ways that we should try to adapt our model to be successful in Japan. But Mason and I thought we should see if our approach with as little change as possible can be successful. We started with one investment in Olympus. Olympus was perceived as sort of a multi-industry holding company. They had a camera business that”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The issue was that there was not a shareholder oriented corporate governance system. We talked about the diseases of abundance, great companies have lots of opportunities to say yes, they get distracted and unfocused. In Japan under their corporate governance system prior to 2012-13, when the corporate governance reform kicked off, disease of abundance was everywhere. And there was no really corrective mechanisms in the public markets. But that all started to change in 2012-13 Abe came to power. He emphasized corporate governance reform. There has been a big generational shift in Japan of corporate leaders who looked at in a period of economic and market malaise and want to improve productivity of their companies, improve the productivity of the economy, that generational change happened at the same time as the corporate governance reform. By 2017,”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Japan. We've been looking at Japanese companies since 2013. It's been a long time of looking at companies and engaging with them. We've seen a lot of change during that period of time. We made our first investment in Japan in 2017. What attracted us was that there are so many great companies. If you look at the companies in the world with over 40% gross margins, 40% gross margin is our proxy for pricing power, business quality, the number one market is the US with about 1,000 companies with over a billion market cap and above 40% gross margins. The number two market is Japan with 250. After that you get to numbers around 50 to 100 in countries in Europe. A lot of people talk about Japan and they talk about the valuation, the low price to book. We talk about the quality of the businesses. There are lots of great companies there.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Through several of those examples, you described two quite different investments in Japan. Nintendo, which was pulling the same thread, and then Seven and I, which turned into this proxy contest, how have you thought about Book that you've applied in the US Being much more”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Credibility to influence management. And we also need to have credibility with other shareholders who, in some cases, can be advocates for us or can get aligned on a strategy that makes sense for the company and can be influential as well. When are we going to do a proxy contest in the future? I hope it's never, but if it does ever happen again, it will be because we're so convinced that we're going to make a great return. We know that a lot of other investors that support us are on the same page and we think the situation is so egregious that we can easily explain it to the corporate community and our reputation will be intact. That has proved to be the case in both of those situations.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The second one was in Japan. It was the largest ever proxy contest in Japan, a company called Seven and I Holdings. Very similarly to what Mason described in the situation at Axiom in 2006, we thought that the corporate behavior was so misaligned with the general shareholders that it was the right thing to do and B, that we would make a better return on our investment if we pursued that proxy contest. We have three major constituencies outside the firm. We have the people in the walls of the firm who are very important. But outside of the firm, we have our investors, number one who trust us and they're really important. And we have two constituencies that I would put on equal footing. The boards and the corporate management community and the institutional shareholder community. Our relationships with both are very important. We need to have”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first one was in 2006, and as we laid out the history of the firm, we founded in 2000, 2002, 2003, the world changes with these scandals. It was our opinion that in that scenario, the corporate behavior was so egregious that we had to take a stand on principle for the shareholders, we couldn't let it stand. There was a lot of stuff in there that's in the public record. I don't need to restate it, but it sharpened our ability to intuit situations that are going to be intractable and has led us for most of the rest of the firm's history to avoid situations like that where we're going to get into loggerheads. So that was 2006, and that brings us to probably 2022.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the two situations where you were involved in a proxy, there's always this question of how deep do you want to get versus just exiting because you have the liquidity option in the public markets. What was the story behind why you would get into a proxy contest when that's not your normal playbook?”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“In terms of influence, because we don't think in terms of shareholder voting first and foremost or shareholder rights first and foremost or how successful could we be in a proxy contest in our entire history, we've only had two proxy contests, over 125 investments, 55 board seats, only two proxy contests because that's not how we think, we think that the way that you persuade people and you get influence is through good ideas and good relationships, it's not a problem for us if there's a founder who controls the company, if we think that we can achieve alignment with them, if we think in an adverse situation, talk to people that we know on the board, that we have a relationship with. We've had a lot of successful investments that were companies that were completely or almost completely controlled. KKR is one example. We had great.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Rank ordering is always investment first, influence second. If you flip those, you're going to end up with mediocre investment returns. The number one thing is great company that we have a vision for and a unique insight into that we think is differentiated from the street, that we can hold for a long period of time and then secondarily do we have a voice in it really does need to be belabored where I have seen companies go off the rails is when they flip that ambulance chasing it looking for a problem that needs to be fixed. You're going to have some serious adverse selections if you put the number two in front of number one.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“You go through that last list of companies, there are some, whereas an outsider you might think you can get in there and have an influence. And there's another, say, like a meta. Are you really going to be influential in the boardroom or talking to the executives? How have you thought about the importance of the degree to which you want to be influential in your investments?”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love are undergoing a very significant technical revolution and have been for the last several years. It's really hard to overstate how connected all these issues are and what we learn from going deep in these companies. And new conversations with people and then new insights that are unique.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Little esoteric, but it relates to a few years later we built a big position in Roblox because we understood the direction of travel of the video game industry was to massive multiplayer, user generated communications and social dynamics into it while Nintendo has closed the gap. We'll forever have the best IP in the whole industry. They were lagging in these things and then they absolutely leader was Roblox. So I can connect learnings from Microsoft to Nintendo to Roblox. There are analogous lessons from the Roblox matching systems and algorithms and how they've used AI to pair you with something that some creator has made is super relevant for Disney thinking about how to match viewers to a TV show or from Meta for an advertiser to an eyeball or for Expedia from a hotel room to a traveler. These online massive matchmaking business models that have a take rate based upon pairing you up with something that you're really going to”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“To digital example was at Nintendo, historically very closed off Japanese company with, we saw the best IP library in the video game industry because of a variety of different factors. They were behind the times in terms of adopting digital distribution, subscriptions, in-game monetization. We called on a lot of the things that we learned at Microsoft with the Xbox team to develop insights on Nintendo and to try to provide some insights to them on what the potential would be for their business if they could go from selling 20% of their games through their own eShop to 60 or 70% like Microsoft or PlayStation, if they could go from a small percentage of their customers on the Nintendo Switch subscription to the majority of their customers like their competitors. Analog to digital is one really big category.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are countless examples we're always talking internally and externally about the through lines between different investments. There's a whole host of investments that are about the transition from analog to digital. You could put Microsoft in that category selling physical PCs with Windows and office licenses. You could put Adobe in that category selling Creative Suite as shrink wrap software on a CD-ROM transitioning to subscription. Xbox was our first exposure to the video game industry. And that went from being a very difficult industry with lots of boom bust cycles, huge inventories required to distribute the software to a much higher quality business because of digital distribution and subscription. Probably the place we applied that insight the most, again, in the analog.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The more global reach, the more sticky, and as importantly, the more important the mothership became versus all the individual brokers as a human capital franchise, if you can be the place where the best people want to work because you get the best clients and the best clients want to work because you have the best people, now you've created something really cool. We have evolved our thinking on that to be more sensitive to this building compounders for decades. We draw on this history which ones work and which ones don't in this framework. Not everything can go for decades, but some can. We've been a part of unusually large number of those.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Picking a scab there, Ted, because as many of our LPs remind us, we sold a little too early on a couple of these things, including Microsoft and MSCI. So it's something as an organization that likes to learn and improve constantly. We've given a lot of thought to this idea. There are some investments where there's a discrete three to five year strategic planning cycle under which the company can execute a plan. And then it's going to mean revert to the average equity return. There were other businesses. The best term I can come up with is they win by winning, which is the more they win, the more horizons open, the more adjacencies, the more second order business models, the more bol-tons, the more bundles. We did this extremely well with CBRE from 2011 to about 2023 for about 12 years. We were a significant part of building the biggest real estate company in the world. One of our partners was chairman of the board of that company. And that's a lighthouse example, a place where the stronger the network got, the more services it could offer.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“As you own a portfolio company over several years and things start to happen in how you had hoped and the company starts to make changes, improve the quality of the business, how do you think about selling or exiting the investment?”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we go meet the next med tech company that's trying to do a global expansion and has underearning operating margins, Rob was shoulder to shoulder with me on that investment and can apply that to med tech companies in Japan or the US. There's really no substitute for being inside the belly of the bees working with people for a long, long period of time to get these little nuggets. Investing is about connecting dots, saying, wow, that connects to this, if this could be like that, what we're seeing in these numbers could be radically different. It's a creative act and it's an intuitive act and it's a relationship act, but it's also experience and knowledge lights all that stuff up.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you approach the problem with you're here to build something great, not take somebody down, it goes a long way, but you also can't overemphasize the value of 25 years of life experiences and insights that that brings because we just have a different conversation than others are having with them. When we're talking to the Salesforce guys about how to create packaging and bundling solutions for their products, we were there when Office 365 was being put together and how did E1 bundle versus E2 versus E3 work and that's something the sales force people are interested in. How might that translate to them? I was on the board of a med tech company called CR Bard that had one of the highest margins in the industry and was quite early in developing the China market. And I went and went around Beijing with the CEO in 2011 and met PLA officers and saw their army hospitals and understood how that channel worked and then back to the US and Salesforce how many reps did they have? What were their quotas? How did this all work?”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“We try to do it in a Socratic way. We're asking questions and they're responding and then we're getting to a shared understanding. When we do analysis on a business lines potential, we're going to put that in front of the management team and get a reaction. In that reaction, we're either figuring out, are we right or wrong, which is really important. And also if we're onto something, how does management respond? Are they defensive or are they nodding and saying, yeah, this is right? It's an interesting way of looking at it, but it's important that what we don't do is we don't show up with a fully baked investment thesis after six months and a big stack of PowerPoint presentations and memos and say, here's your strategy. The best thing is for the company to lead the discussion of strategy publicly. They have to execute the strategy. So it's much better to get there in a back and forth, iterative way.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what they could do to drive the value of their company. And we're assessing that directly and indirectly through our background checks and in the network. Those are the key things. It's a long process. We do a lot of first calls, fewer second calls, and we're trying to make two to four investments a year. So typically the cycle is at least six months before we're really sure that we have a good investment opportunity.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“The Office 365 example where you could just say, okay, this is the number of users. Here's what the annual subscription could be. Where could that go over time? What's the direct cost against that? And you could create a profit pool. We do that in every single case. And that's usually just primarily with the company management and the IR team itself as a first step. And then we're validating it with people in our network who work in the industry. The second key thing is the evaluation of the people, the board, the management, the strategy, because as I mentioned, we're trying to find situations where, yes, there are opportunities to improve. There's something that the market doesn't see. We always want to have a different view from the market, but we're looking for opportunities where management gets it in our conversations. They are getting positive energy over the interaction around strategy.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mason has many strengths and geniuses, but the thing that first struck me about Mason's abilities as an investor was by first investor relations call when I was an analyst and Mason was a partner leading the call was how quickly he got from the reported financials to the actual cost structure and the actual unit economics. It's segment by segment, what's the pricing model? What's the mix of customers? the fixed and variable cost, specifically where are factories located, where people located, that analysis of let's just ignore what you see in the 10K, let's just build up zero base. What does this business cost structure look like? That is by far, I think, the most important exercise that we do early in our due diligence process. And there's lots of different examples that bring it to life. Mason mentioned.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Research of something you might be interested in investing in. There's less information than, say, it was a private equity type company and you're behind the wall. What does that process look like before you get involved in a company?”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talked about in setting up these shadow PLs is also relevant for these CEO successions. We really love the synergies that come with what we bring to the table with public company boards because together it's a pretty powerful combination and everybody's stronger together.”
2025-09-29 · Capital Allocators · Mason Morfit and Rob Hale – Quiet Activism at ValueAct (EP.462) · IDENTIFIED FROM THE TRANSCRIPT · source