YouSaid · the spoken record

Thomas Russo

lines on the record: 94
first: 2022-09-18
most recent: 2022-09-18
sittings or episodes: 1
sources: podcast

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“Laptops. If you think that that's a discretionary purchase, then you don't have a teenage daughter or son. I don't want to seem anyways, because you go home and deliver to them their favorite, you're reasonably priced hitachi desktop and watch your child fall apart immediately in front of you because it just won't do. They need a sense of belonging that comes to that glowing back apple. And it's a fabulous part of that business, which is the stickiness, the unwillingness to switch, the high switching costs, I guess you call it. And so that brand is what we really find. In the case of Richemont, their total addressable market is jewelry, global. And of that market, only 10% of that market's branded. The balance, 90%, is the addressable market.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“For $6,000, they're all laden with the confirmation of what and who you are. And I think that's such a high order of need states that I had to think is more enduring than most people do. Most people would say, for example, we own a position in Richemont, and Rishmont owns in turn cliff, and they own in turn Cartier, which are two really tightened of the luxury goods industry. And people say, yeah, but that's cyclical, you know, because in a downturn, people will stop. I sort of say, well, they stop giving out wedding bands. Will they stop wetting rings? Will they stop the Rolex watch, which in certain countries when a young woman turns 25, she gets a Rolex watch, things like that, my belief is that they're not nearly as discretionary as people think they are. And the best example of that at all is Apple. Apple, Mac.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Take your pick. Heine I think they have really so much the same. You start with products that with strong brands, with strong enough brands, the consumer doesn't believe there could be an adequate substitute for. That's sort of what we start with when assessing the potential merit of any investment. And is that going to be an enduring reason? Or is it something that can be wasted and frittered away? Or is it one that could be competed away? you know, the people who you grow up with, you go back 30 years later and they're still having their same cars or whatever it is that might define who they tell other people they are by what they have remain enduring. And that notion that brands, which is what at the heart of what we tend to specialize in, brands are valuable because they help people shorthand describe who they are by what they have. If you wear an Izod shirt, if you wear a fair Gawan tie, if you wear this, Herm is back.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Suggestion that they were sufficient. It was just a sense that this would go on for a very long time. In fact, even today, they're still paying out large penalty payments from that conduct that took place during the period of collapse of Lehman and misbehavior that followed. In that case, we had a position that we felt could provide us with much the same kind of exposure run by a person who we quite esteemed named Jamie Diamond. And it was JPMorgan. So we sort of, we came out of Wells in light of the political challenges that we knew that they would face, believe that they would face for the coming decades, and found Jamie to have his shares were equally lower, as were Wells's at the time. So we sort of made a swap and had a position since then in JP Morgan.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Fargo, I think management from Wells Fargo went home that Friday night thinking that they were going to be acquired by Morgan Stanley and the froth that existed over that extraordinary weekend ended up that they ended up instead buying Norwest Bancorp. Two cultures never really melded and they were just extraordinarily different. One was West Coast-based, one was based in Charlotte. And they didn't share values and there were very different banks. I think that left awful lot of pockets unsupervised. And rather than go back and unravel the trouble, my decision reflected my belief that the trouble was going to endure for a very long time because there was a very strong political tone to the solution. There are many billions of dollars that were paid in penalties bywells and none of those had any”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. And again, why ever would they risk what they had and they know? I have a sort of a spin on that whole saga, which is slightly different. And I think that part of the lack of supervision, part of the lack of culture as it related to self-policing those who were in a position to make bad decisions, the self-policing process that would have been there since Richard Crawchek, I think his last name was, it was the CEO for decades and other prior managers. They were all distracted because of the acquisition that Wells Fargo made of Norwest at the end of the collapse of 1999, I guess it was, when the banking crisis hit such a hard wall. No, excuse me, it's the Lehman Brothers collapse, which created this outcome. If you imagine this, at Wells,”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Up by making those moves as they did, it was in some ways a form of suicidal kind of psychology of some sort. And then with the same sort of thing with the cannabis, it was just a slower fuse. The trouble why I go to such colorful links with Jewel, the real issue there was they found themselves with this product that they marketed to younger users than they legally are allowed to and it hit that particular age group and it created a real roar among parents and many well positioned parents and the whole process really became one of punishment and we did want to stick around so we sold it and that was perfectly reasonable we never looked back on that the other one what was the other wells fargo”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“From the time they bought it to the time they just recently wrote off some of the final bits, it turns out to be about $34 billion of capital destruction. And anyways, when they bought that, both of those, we knew that there was trouble, and it made no sense given their willingness to leverage up so much and compromise what they as Warren says, over the years Warren has often been asked, why do people do really stupid things? And this would be one of them. And Warren said, you never really know why, but he said, there is this situation where very smart people, for some reason or other, want what they see, they're willing to risk what they have and they need for that which they can't have and don't need. And so that was clearly a case. If you thought about the macro risks, you're picking.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“fruitful and likely to be rewarding investment. But on top of that, it wasn't capturing the exciting prospects of what might shift it from being considered dull in value to being sort of hot fire. And so they stepped across the way and bought into a position for $35 billion on a reduced risk product to help smokers quit smoking and they came upon a”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Yes. Well, that's what I'm supposed to, that's what we're supposed to. That's what Bill, that's what I was just suggesting. Bill did so well. And you pick two important examples, Altria had every reason to think that they had a quite glorious future. They were what was left standing from the company Kraft. And so they had the domestic tobacco business. They had a host of other related businesses. And the shares were modestly priced. They had every opportunity to big share buybacks increase. But for some reason, and it's most likely found in the executive compensation package because you can't make sense of it otherwise. Out of the clear blue, one day this business, which was sort of thoughtfully put together domestic cigarettes, the brand leaders, Marlborough, and they had 51% of the market. And even though the business is declining, he will continue to accelerate on the decline. It all penciled out to being a”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Minus is the one minus would be that I probably am less decisive as was Bill on that notion of than sell and fall prey to that human instinct, which is then sell, but a little higher”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“And at some point, that trajectory downwards Bill then said, okay, to the trader, sell. And at what price? Just sell. And the point was Bill had resolved that the business is better times behind them. And he didn't fall prey to this unbelievably typical failing in Wall Street, which is to say, yeah, it's true. It's impaired. As soon as it gets back to the recent highs, I'll let go and sell it. And then we'll put the capital somewhere else. But of course, it never gets back to the most recent highs. It's a trap. And so he did not suffer that. He finished the thoughts, the thought suggested something that is no longer as what once was in time to sell. And then sell. And so I think that's one of the more important lessons that I've carried from that training. And I'd say that as I think of my own classes.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Who didn't know the user, the broadcasters, and this group came up called Media Consultants, let's just say, who helped place all that stuff. And there was a company called Jam Blair, and they owned a big piece of the company. They're very close to the management, all the rest. But by the time I arrived, which was 1984, they were worried because the big position of the dynamics within the ad agency were changing. And so they wanted to make sure that they wouldn't be left behind as that change took place. And so they did some deep dive research as a team people clustered together, the deep dive research, and they realized the business was at risk. And so once realized, they had this sad misfortune of realizing it was at risk as it was eroding in the public market. So it was at 42 when I showed up, it was 39, then it was 36, and then 31, they're doing the work in increasingly uncomfortable with what you're learning about.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's a very good point. And he was super concentrated, though. He would have 20 plus 30 plus percent in a specific holding and would have three or four holdings in a portfolio. So it's a very important point. And you don't know which way the markets are going to go. And so you're going to have that market risk. And so he would have had plenty of times when the market was not conducive to near-term performance. But anyways, obviously he reigned supreme over time by virts who have been more right than wrong on those companies that he felt most conviction towards. Now, the other thing is at the same time, he had good instincts on how to manage risk. I remember one of the positions when I really started out there was called John Blair. And John Blair was a media rep company and it had to do with the fact that TV agency advertising agency was trying to place advertisement more broadly into.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Accounting and investing, but they also are playful. And so, and didn't let this process of trying to find investment, nirvana, overwhelm their balance into their lives. I sort of tend to think of that as the post-World War II generation, mostly all of his closest and colleagues had some role or another during the war. At the same time, at some point, he had an involvement in a startup company. So this is back in the 60s, and I guess the lineation between being strict value and startup companies and the equivalent of early versions of And Bill participated in some of it through a technology offering that took place. And so I was impressed to see that reference to a data, some kind of data processing company.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“He was perfectly content to be extremely thought leading investor. A couple of things about Bill Rawain really stand out from my relatively limited time there, but nonetheless one that I cherish and I felt extremely fortunate to participate in. One thing that was clear with Bill is that he had a terrific sense of humor and at the same time he had a very secure tight group of friends who shared the extraordinary talents and ability with a sense of humor. So as you know, they went away as a group once a year and they went to retreats and they talked about investments. It included all this Sandy Goddessman who was there and Bill Rawayne, Warren Buffett, Munger Tolls, Charlie was there and Tolls was there and David Dodd and Ben Graham. I mean just a celebrated group and they talk on subjects that had to do with”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Even with holding 50% cash for the two or three years when I was there, there was this cash bubble that just didn't get deployed because in some measure that was 83 through 89. And the period, call it 78 to 83, offered them such attractive opportunities to invest money at steep rates that they had become a bit spoiled and were less interested in coming back with capital if it was released from a position during my period of time through the capital bill. And then ultimately they were kind of crowded along and off they went and they continued to add enormous monster return for investors. And a couple of things about Bill is it's not at all surprising that he is, as you said, that people may not realize or may soon forget the fact is he applied very little ego in the process. And so he didn't have a need for people to say there's Bill Roey.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Think that's all undergoing some change. And you'd have to say that Todd earns his stripe as he comes home with the outcome that will arise from there. And then Ted, I understand, has had a huge role in several of the biggest positions, not overly heralded. I don't. He's also been seconded off to closing transactions on behalf of Berkshire when Warren has, as he said in the annual report, this is his disclosure that when there's times when he just can't do something, he's had Ted go out and do that and it's been terrific.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Valuable in both the portfolios that he and Ted manage are both terrific. And then the assistance that they both start to give in the form of those questions. And in one case for Todd, it meant that he even moved on to Geico's, to Geicoland, wherever that is, and became responsible for managing Geico as it conducted a sort of revision of how they assess risk proactively and use technology, interestingly enough, use technology to replace what had always kept them out of trouble just fine using the sort of analog and pre-digital type tools that they found created alignments that they could use to anticipate where risks might lurk based on history, not necessarily the modeling. They're mixing it up a bit now as they found that the industry moved on and those who were tooled with technology as an aid seem to have jumped a march on them.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“for that time than I see. And so I assume that he'll find someone else to share the thoughts with as I eat more in theory reportedly share their analysis together. And he'll go forth for as long as he's able and well. He's of a generation, of course, older than Todd, not midway between Ted, I guess, and Todd. And Ted would be midway between the two. And it just presumes good health in the case of Ashit's ability to continue. And Greg Abel has, I think, as I've seen him operate only through the annual meetings. I spend very little time with him. Outside that open forum, but he has a very assuring manner and seems like someone who can take on an enormous amount of responsibility. I do know, I've heard Todd Comb speak on many occasions over the course of the last year, and I get a sense that he's been”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“About it that Berkshire was good for it because they have $100 billion worth of cash and they're Fort Knox and they promote the fact that they are Fort Knox. And so they're the last place that you can go and you really, really need insurance. And I think that they will, you know, that they will continue to have the ability not to act. And so I often say that Warren's blessings in some ways is that he's willing to do anything and he's capable of doing nothing. In that scenario, he did no underwriting for the seven years plus or minus that he showed us with zero premiums written. And then when the terms were indescribably attractive, he started to write like, man, for about four years and they shut it off. And so I think it was his partner, I understand in all of those big risks. And I can't imagine someone whose instincts would be better served.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“And Berkshire had all the capital in the world to deploy with extraordinary favorable terms. And so I think they're disciplined. Their patience means that they're able to see better opportunities before they swing. As he said, proverbially swing for the big fat pitch. I think that's the case where the big fat pitch was percolating along. In the case of the put options, no one else would bid on that in a sense because you had to pass the movements through the equity market valuation shifts to market accounting. And so after they received their premium and began down this long journey together, over the course of the first five years, I think they passed through income $10 billion worth of losses and very few insurance companies would be willing to take on that kind of naked exposure. At the same time, the insured had the comfort all along, even as those losses.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“And the amount of premium that they have. And Berkshire would not write for half a dozen years in a row. Nothing. And then over that time, the cycle rolls through. And then all of a sudden it turns south and you can't make any money in insurance under anything. Then you can't make any money, but you're going to lose your fortune. And it's even worse still. And it's only until it's even worse still that suddenly Berkshire shows up again and starts to underwrite at a time when others wouldn't because the capital”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“You had Yes, I think it's really more like 15, and I don't know Berkshire may have come down a little bit. It was quite a bit higher for a part of this year as the story about the buyback sort of rippled through. But in any case, it's still in the mid-teens, let's say. And again, there are so few who are set up in the way that Berkshire is set up that it gives them an advantage. You know, I think of all the different big investments that they made the public equity put options that they, in a sense, underwrow as a form of insurance. $5 billion of premium, $30 billion of assets that needed to stay at that level 10 or 15 years out. And nobody else could bid on it. So Ajit has, in a situation like that, this extraordinary advantage, that there will be periods of time, as Warren has taught us by showing us a table at one of the annual meetings which showed the premiums written and then the combined ratio.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Question He knew exactly what should be done, and the power of it was that he also owned the idea because by virtue of answering the questions that Warren asked, he ended up having what ought to have been done reveal. And now I think one of the really big values within Berkshire has been the success rate of their investments and measured in some ways by the mistakes not made as a result of those three questions against many different scenarios, the mistakes not made and those that should be made are made with full gusto, no questions about how much money to spend, but funneling all of this activity under one approach is that if you have money, you don't have an idea where it should go. Senator Moir, if you have a project, have to fund it, go to Almaha and get the money. And it's all based on sort of one-offs and not some kind of conglomerate magic. But it's the reason why one of the reasons why we're so enamored by that company.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Virtually required to, and he said, Well, we stopped having to worry about capital. And it's a two-sided worry. It's that we have to worry about deploying it when we have no good ideas or that we want to give it to someone else so they can deploy it. But ideally they'll have something to grow organically. But if they don't, the forced requirement that they do something smart with money that they face as often as a public company gets them in trouble. Kevin Clayton's case, he says that for him at least, nothing that's changed by joining Berkshire was that he would have an opportunity to call Warren up the best strategic consultant in the world and ask him what to do as he considered an investment. And he said that Warren would fly him up in defensible at the time and they'd sit down and Warren would say, what's on your mind? And then Kevin would sort of give the first question, the second question. And he said that by the time he had heard halfway through the second question, he began to have a sense of the answer. And by the end of the third question,”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Begin to think that they can't do without the services of TTI. And we're always in the marketplace looking for businesses where the consumer can't live without the product that our businesses offer. Now, he was an interesting case because he was able to deploy the money internally, but many people are really great managers of the electrical wholesaling distributor business like this, are fabulous. managing their team, projecting out with the next team capacity, and a host of other features. They're excellent at it. But many of them, you know, once they end up with a pile of money at the end of the year, they really don't have a need for it. And in that case, it goes to Omaha and it fills the pot and all these $140 billion of that money waiting for someone within Berkshire's family to have a project that they themselves want to jumpstart. And I heard about this sort of anecdotally through Kevin Clayton at one point. And I said, what's life like for you after?”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Paul Danforth, I think his name is. I'll have to take a look. But, anyways, and Warren bought that business, I know 15 years ago, and it grew at its operating margin 15% per year for the entire period that he had held it. It was up sort of threefold in 10 years. And all along the way, he gated himself on the cycle of reinvestment, but he would make investments. It was an electrical contractor distributor business. And the killer application there is that they have everything under one roof from all the different manufacturers in the world of these different products. And so if you're trying to run a lean manufacturing company, you might be inclined to work with TTI because with just one call, they can composite the order, send it to you by eight o'clock the next day in your business. And it requires deep inventory to find a huge warehouse and a commitment to customer service. That means you'll never let them down. And the people who run those companies.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“That they oversee I think it's closer to probably about a billion, four, three billion four. And we're delighted to have the ability to have those assets. And people often say at some time a criticism, why would I want to hire you to buy what I could buy for myself or that I could buy myself with warrant and what people don't realize is there is an extraordinarily high benefit that comes from the structure in which all the activities take place at Berkshire. It's not just a matter of, it's not an old-fashioned conglomerate where you have some kind of vision that everything will work smoothly with one another and create this synergistic top. Rather, it's some ways different. It's the send it back to Omaha, the story that I think is what is at the heart of what makes Berkshire unique and interesting, which is that when you have a family business, call it TTI, which is run by a guy named”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Your investment spending, and it will mean that you're operating at less than full capacity and there's disruption in general of trying to keep.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“In the company. We chose the company to invest in because they had the prospects for the capacity to reinvest. And not all companies do. And so the last thing we want to do with the businesses that we most esteem would be to take them out of that reinvestment model. And that's where the kind of the mischief takes place as it relates to agency costs is that your compensation will be set largely by the stock market recognition of what Wall Street allows them to think is the level which they're optimizing their responsibilities of the company. And our view of that is that they're taking a very long view and they're pouring substantial money in to building out the interests that will reward people 10 years from now, but they'll do so as a result of the successful deployment of the capital into expansion. And unfortunately, when you embark upon a plan like that, it's going to weigh adversely on near-term results because you will be finally”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Of doing it, it disrupted the reported profit schedule. And the Wall Street voice was unanimous. They missed their numbers. You probably want to look somewhere else to play those cash because they missed their numbers. And of course, we celebrate that because if they miss their numbers because they're expanding and developing in a thoughtful way in the first place, we'd like to have them miss their numbers by an even broader margin if it meant that if they're investing upfront with more vigor. And that's really the trade-off. I'd say we're on the other side. On Wall Street, there's a very standard parlance called cash flow conversion ratio, which is a common language and a common expectation that is often commanded. And basically it wants you to give back almost all the cash that you earn, give it back to the investors and 100% cash flow conversion ratios, you're giving it all back. And our goal is to have it stay.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Is long, and it doesn't necessarily incent what you really want to incent, but it's more protective than it is collaborative. And we deal with that reality. And mostly the compensation that's used today has a substantial component that's equity linked. And so that equity link invites into the operations and the expectations and the deliberations of a company. It invites in the presence of Wall Street. Because if it's going to be equity linked, they will have all sorts of reasons to explain to you why if you do the following seven things, you'll hit the target. They'll make their numbers if they make their numbers. The shares will trade up. And you'll have an overweight for that particular thing. And you go from being underweight to overweight. I think I just read quarterly results that came in last week. And it has to do with a brewer. And the brewer was committing to making some substantial investments.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Therein lay her problem, which was they were still producing, but her agents decided to take them for themselves rather than to allow her to enjoy them as she once did. And it's not a corporate story, but I think conveys the principle, which is that in business you have structures where you have options, plans that are based on certain criteria. And Mr. Buffer will say this, is that one of the most critical jobs that they have at Berkshire is calculating appropriate compensation systems. And I recall him saying years back that he had something north of 140 different executive comp packages with his senior most teams, each one separately struck, each one commanding about three pages. Now, if you ever looked at a comp book for the public market counterpart of the book that Warren drafted in three pages, you'd realize that several hundred pages”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Yes, yes, I completely agree on the final point there. And it really is the tendency of someone to try to make another person's assets to which they're hired to supervise and to maintain and to develop and grow, but rather than hold those truths to be fully self-evident as the proper objective, they let slip in along the way. A few here for me, a few here for me. And I was thinking about it one day, not that long ago. I was looking out to the neighbor's house, the outline was planted with raspberries, and this lady who was in her late 80s didn't get around very much anymore. And I stopped by and I see her. She said, you know, I miss a lot. She said, but what I really miss those fresh raspberries, we just get a lot of them. And I was looking out one afternoon and heard lawn crew who were charged with the task of maintaining a decent looking lawn. They came around the corner. It was out of anyone's view. And they just dropped everything and ran to that raspberry bush and just ate it clean.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“That you know exactly what they're worth as the CEO of the company, and the seller can only approximate what they're worth. And he felt deeply enough that he thought it was important at that early stage to describe the bounty that was delivered by Cs. He talked about the extraordinary bounty that was delivered by Geico since they bought full control of that. And each time he says he just wanted to make sure that the components that one would want to look at and most recently he went to those five pillars that Protray had his equities, his operating companies, and the other assets that collect form Berkshire's valuation. And so he's struggled with that in a way that makes me feel more comfortable as a partner Hathaway, which is that he's thinking about how to make sure that we don't make a bad trade to his advantage.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Example There's another piece to what you just brought up, which was that he feels as the chief executive of the enterprise, Berkshire Hathaway, he treats it like a partnership. And he wants to make sure that his partners know the value of what they have. Now, he's not going to tell them the value of what they have, because I guess he must think that's part of the fun of the game or it's his competitive advantage to know his own intrinsic value on a per share basis. But when he wrote that in the annual report, He did so around the time that he was beginning for the first time ever to consider, meaningfully consider share repurchase. And a part of his expressed need for preparation for engaging in that activity is he had to come to terms with the inevitable sense of being at odds with your partner because you're going to be buying from your partner those shares.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Expectations placed upon them by Wall Street. He figured out that he's much better off by maintaining the structure, kind of setting down for the months when there's no activity, by just maintaining a skeletal group. Being always there for someone who needed the product and charging a lot for that. And I took from that the strength of brands, the notion of being willing to show losses even when you're building wealth.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“If just lucky enough to just buy that seize, the typical buyer would command a team of analysts who would come in and they'd come back and say, Eureka, I see what's going on here. You're not doing anything eight months of the year. You should really put in ice cream during the summer and soup, you know, hearty soup during the cold of winter. And really get the full leverage off of those assets, sweat those assets more. And of course, it's exactly the wrong step. And that was the beauty of Warren's insight, is that he didn't have to deliver profits every month, every quarter, every four months, whatever public companies often have to suffer from.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“He realized, so he said that in order to make a good return for a year in investment with C's, Had to be willing to suffer. Be willing to not earn a good return for eight months of the year. Because you really only make money during the four sort of pillar holidays of Easter and Valentine's Day and Christmas and Thanksgiving. The rest of the time, you're lucky to break even. But it's only because you suffer through that that you end up being the chocolate of choice at the higher price when it's called upon to serve. Now, where that would evidence important features that”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Warren, I gather this to be true, took on the responsibility for pricing chocolate because once he realized that the price paid is part of the benefit received. He wanted to make sure that the price was always confidently raised And recognizing that if he kept his side of the bargain, That the consumer would take that on. Now, his side of the bargain included something else, which is very interesting. It's more strategic, which is that there are lots of chocolate companies like C's Chocolate back in those days. And they all fought for market share. And so they cut prices, which of course was exactly the opposite approach that Warren took, which was to raise the quality of the chocolate, raise the price, and have that feedback loop keep their clients lawfully. The other trick is he realized, and this became very important later in my life.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“Lecture happened about the time that he was moving to that next chapter. He had bought C's chocolate several years before our session. And they had paid $30 million plus or minus for the brand and for all that came with it. And what they discovered is owning that powerful brand, they had something which they hadn't adhered to before, which was called economic goodwill. It's called Arises from the fact that the purchaser of that chocolate doesn't believe there to be an adequate substitute. And without the sense of an adequate substitute. They will bear price increases begrisingly in some cases willingly and even enthusiastically because in some measure the price paid is part of the bargain Because the recipients of a gift of that chocolate knows that somebody stepped up and paid a little bit more. And so when they bought the business,”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“We were together 15 years earlier, would have been deemed a discount between the price paid and the value of those collective assets within a business. But they would have been finite and they would have been based on the measure to which you received more than what you paid. The next steps were to try to release those trapped dollars into trapped money and have it come back to you and then you could redeploy it again and have it come back and redeploy it again and have it come back. And each of those, you calculated the intrinsic value in roughly the same way, added everything up and then divide by the number of shares. And if the discount was wide enough, you buy it and then you just wait until some force comes along to close that discount. And what happened is that it turns out to be difficult to manage large pools of money. And so he sort of grew to the point where it's harder to deploy capital that way. And you don't develop any kind of skill of business judgment, which was the next chapter. And we actually were in a class where the”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT
“I think the thing that struck me the most was how values laden the meeting was. You understand that that's the same Stanford Business School, where down the hall upstairs into the right was a Nobel laureate, Bill Sharp, whose premise in managing and harnessing the power of investment is that it's all mathematical and it all has to do with the regression of prior returns against the benchmark, against risk that's deemed to be the market's risk. And there's so many assumptions. And Warren just talked about the things that were important to him as he placed money. And at the time, that had become a more important question than it would have been 10 or 15 years ago because in those earlier episodes, Warren might have taught quite a considerable amount about coming up with net current value and liquidating value and then measuring the price against those measures and the margin of safety.”
2022-09-18 · We Study Billionaires · RWH013: Move Slow, Win Big W/ Thomas Russo · IDENTIFIED FROM THE TRANSCRIPT