YouSaid · the spoken record

Tren Griffin

lines on the record: 96
first: 2018-05-15
most recent: 2018-05-15
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

“I'm in the software business, and I tell you, I look at other businesses and I see the gross margins, and I go, my God. What a nightmare. How do they survive? They got no money for anything. They got 2% net margin and gross margin is tiny. And if like it snows, trucks don't roll. It's like, whoa. These guys, they better have some cash in the bank to go through these bumpy points. But I just go back to my own business. I go, God, we're lucky.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Elon very smartly and brilliantly sort of doesn't rely on other people who can have, he's avoided wholesale transfer pricing. The inverse of that is MoviePass, which is completely dependent on these movie studios selling them actually goes through the theaters, but they got a bite from the theaters like Regal at retail. And you can't make that up on volume. Negative gross margin is awful. It's sort of like another point we should sort of get into, which is...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Gets margin gets taken. And if they ever got some margin, they just upp the price. And so that is the same principle as Roger Fitness Batna, as Charlie Munger's optionality, is Porter's Sustainable Competitive Advantages. You never want to have one supplier of anything. And that's something like Tal would talk about Luigi or whatever, but some basic guy who's making pasta knows that he doesn't want to be completely dependent upon his brother-in-law for vegetables. Because if he does, his brother-in-law is going to basically take a lot of his profit. And so that applies in SpaceX.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's basically imagine you were at a bakery and you were making bread in this city. They got a lot of bread bakeries and you go down there and you had to buy your flour from Joe. You couldn't buy it from Ben or anything else. You had to buy your flour from Joe. You have wholesale transfer pricing problem because he can price the flour, whatever price he wants. This is Spotify's fundamental problem in that they have these.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Black Panther, or whatever. You have to go into that movie, right? So they're buying at retail and they're selling at a discount in a subscription and they have as big a wholesale transfer pricing problem as I've ever seen anywhere at scale.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, one of the key things in life is Roger Fisher's getting the S-book as a concept called Best Alternative to Negotiated Agreement. Basically what he says is if you're negotiating for something and you only have one choice, you're screwed. And that translates into another concept that another professor has across the river at Harvard Business School. And Michael Porter said basically there's these five forces that you have to think about. And one of the five forces is supplier bargaining power. And so what I did in my own life with Craig was I got to have this conversation where I was listening to John Malone talk about wholesale transfer pricing. And basically, it's supplier bargaining power all the way back to basically opportunity cost. And the movie pass business model is fundamentally dependent on the price of those tickets. And they're buying them at retail. And they only have one supplier because every movie isn't, you don't buy tickets in the movie industry. You buy tickets to...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're going to be popular someday when they got cheaper. So maybe there's a business doing that. It's certainly dicey. And so one of the things that SpaceX has done is said, okay, well, we want to have a backup. So we're going to put up our own broadband satellite communication system called Starlink. That's a completely separate business, and they're creating a customer that's going to be within the same P&L, presumably, unless they spin it off because the business is only so big. So that's an example of a company that has, I believe, some unanswered questions about the elasticity of demand.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of last one, this is one of the trickiest ones is elasticity, which is if you take a business like SpaceX is in just the launch business, it's only a $5.5 billion business only, but there's a lot of competitors. There's Russians and Chinese and Indians and U.S. government traditional launchers and the Europeans have an Arianas boss. And so they're all fighting it out for launches. And if you get two a month, you have big 30, 40% market share. So the market can only get so big. And so for launching payloads into space, also the payloads are getting smaller because of Moore's Law and a number of factors and they're coming lower or urban. And so the only way you can really grow that market is if humans start taking rides up there. So what's the market for taking rides into space? How many people have the kind of money they're going to go up in for four minutes can float around to space and come back down? And predicting that kind of thing is like what Craig did with the cellular business. He knew that these things...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“almost nothing. Their business is growing quickly. You don't need that many people. They don't still don't employ that many people given how their market is. Yeah. And go down the list of these things. And there's sort of an additive effect. No business is perfect and they're not all quite the same. But those are the sorts of factors which determine the scalability of the business.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Or an accounting firm, they are hard to scale. It's just so many people. People get jealous or they see a chance to make more money and they break off and whatever. So if you have very people intensive service, it's hard to scale. So you have size of the market that, and then you have basically if you have a technology where costs are dropping as volume increases, if you have true economies of scale, business is more scalable. If you have demand side economies of scale, which are network effects, and you have a lot of virality, a lot of new product getting more valuable the more people use it, then that creates the business of scalable. And probably the key thing is you can't scale a business very well if you have inorganic approaches to acquiring customers. If you have to go out and buy radio ads, if you have to go out and do the stuff that these meal delivery firms are doing, it's a hard slog. If you have a product that is naturally viral like Facebook was or whatever, your customer's friend.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“One of these things like product market fit and scalability is the kind of concept where there are many factors involved and it's super dynamic. And what you're looking for is a confluence of things. And you may not have everything in a particular business, but something's sort of critical and some things are nice to haves. And so usually if you're looking for scalability, the VCs will tell you like Don Valentine was famous for this, which is he wants a big market. And he didn't even want a market that might be big someday. He wanted already to be big. So the classic chart on the slide deck of a lot of startups is huge pie chart, and they're only going to get a small part of it, and everybody is going to have their own private island in the Caribbean, right? And so huge markets really help because it's hard to scale a business for horse bridles or horse blankets or something like that. So big market. And then the other thing is businesses that are highly people intensive, like a law firm.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“But I bet there are more of them out there waiting to be discovered with machine learning and modern data science. I'm sure that more of them will be discovered. The problem is, of course, is once somebody founds them and they try and market it, then everybody piles in and then that alpha can get harder to generate.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's hear about that. So, you're looking at the fundamental DCF of a business, looking at all the factors in lifetime value and all that. You're building models bottom up and top down. And you're basically trying to discover whether the business is a good value. And so I think you can look and value Google, or to me, Apple right now is a value stock because it's price attractively. I don't like to pick stocks. Yeah, I understand. But for me, I would say Apple is a value stock. It's priced attractively. It has a margin of safety. And people say, well, but it's not cheap compared to its past or, you know, whatever it is. And I say, it doesn't matter. The important thing is when you do your DCF and you look at the value, this is a value stock. Google can be a value stock. Lots of stock. Amazon can be a value stock. But that's using value as an analytical style. You may not do it because that's not in your circle of competence. But then there's another style of investor, which is factor investing, which is using value as a statistical factor.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“I have a lot of admiration for what he's done and the pools of alpha that he found that other people didn't realize existed.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's actually interesting to watch people are doing factor investing and watching them find pools. People doing private equity deals in specific sectors and different kinds of roll-ups or like I said, constellation or what Smith is doing it at Vista or whatever. And there are different ways to find value for I think wow, I should have thought of that. Or I wish I thought of that. But what it makes me think when I look at the overall pattern is, I bet there are a lot more of them out there, just people aren't seeing them. It's hard to see what nobody's seen before. And it takes those people who have that savant quality to say, no, there's something here. There's this thing here and you should back me. And I just think the constellation thing is just brilliant. His letter just came out a couple of days ago.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“three billion dollars in January of two thousand one. We could raise three billion dollars just by making a phone call. By April, you couldn't raise a nickel for anything. People were scrambling for cash. You couldn't sell. And to have something change that quickly makes you realize that you have less control and less ability stop. I thought things were funny and unusual and odd and didn't seem real, but I had no idea it was going to correct that quickly. No idea.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, the same thing that sent you up sent you down, or just even the whole chart of the internet bubble and the telecom bubble, which were different bubbles, but if you separate them out, they have the same slope, it's up and down, and it was, you know, that to me Gurley's talked about that, that experience of going through the internet bubble, that has forever changed my muscle memory. I think about the world differently, and I think people who didn't go through that have a different attitude about risk and life than somebody like me who went through it. It was especially the kind of went out of it part. When you couldn't raise a cash, you know, there was a moment where we could raise.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“You're doing something wrong because you're not challenging your own ideas. It's almost like a litmus test because it should be more than one, actually. But if you haven't even done one, then are you really challenging yourself? Are you really listening to diverse opinions? Are you listening? Are you trying to learn new things? And so, for example, you would maybe relate to this, which is the older I get, the more I realize there are more pools of alpha than I thought. And when I was sort of younger, I used to think, no, these are the ways you can invest and these are the best ways. But then you start to realize There are different pools and people efficient in them in different ways. Even this Mark Leonard constellation guy who I wrote about recently, he has this idea that basically diseconomies of scale. There's an example of something that to me was a new idea that I had to think like, wow, there can be the flip side. For example, I remember at one point, I was thinking, well, gee, network effects are really good. And I started to realize, like, whoa.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“The whole worldly wisdom speech that Is one of the great speeches of all time. And God knows how many times I've read that thing. It would be even more if you added up the times that I just went back and reminded myself by reading a section of it. But those two speeches, the two human misjudgment, those two speeches were just like ones where I just. And I go back and read them again and again. And it's also not just what he taught, but the way he thought. And the whole idea of if you go through a year and you haven't changed your mind on one key topic,”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Munger says they're about 100, I think, is what he said, metal models that are sort of essential and twenty that are critical. And understanding those is important. But then there are many, many other ones. And there are all these specialty ones. And then you learn something about physics, and then you find out like, wow, that's not all the work at Santa Fe. I just love because it's cross-disciplinary. And you become wise, which is different than being smart because wisdom is about understanding when you don't know something. And you can know everything in the world about an ebotoned worm and you can be really smart about nebatoned worms, but it's going to be terrible at managing your portfolio and being in a good father or a friend or community-minded or whatever. And so this whole idea of being broad.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I love to read, and I'm like munger a book with legs sticking out and paper sticking out and things like that too. But the point here is that you can just learn when you find somebody like that. And then if you chase them down and read the books that they recommend, then you find other strands. And it's like the root system of a redwood tree. You're just tracking down all these things. And all of a sudden, he's reading Annie Duke and somebody else does. And I hear something from you and Ritholtz or somebody, you know, and you're constantly getting this rich broth of stuff to read. It all fits together. The more you know, the more you know you don't know very much.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“In worldly wisdom and all that. I know you're this way. When someone says something and just like, whoa, Lycos on, like, this is a whole new way of looking at the world.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“The alchemy of finance, which is long waist for munger, but they gave me that book, and that just set a fire unto me that said, I got to read more books. This book is the hardest book I've ever read, maybe, but it made me think in completely different ways. I got to read more books like this. And I kept reading, and then I started reading more Buffett books, and I read Hagstrom's books again. And I said, who's this munger guy? And I couldn't find anything written about him. So I said, okay, well, I'm going to go out and collect every Charlie Munger book, quote, I know, and I'm going to make my own book, and it's on my website right now. He's a Charlie Munger quotes. And I assembled it for my own use. Like I was writing a book for audience of one. So I wrote a book that it was those quotes. And it was just like, what does he think about accounting? It's all advertising accounting. And then there's B's and C's and D's. But I wrote a book just so I can understand what the guy's philosophy was. And then later the other book's damn right came out and the almanac book came out. But really I want to understand the way you thought because he was such a critical thinker and this whole idea of metal models.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“I thought I knew a lot about business and I'd done a startup for six years and I studied it and fascinated by it. And by 1998 and 1999 things were nuts. And people were getting rich in ways that I couldn't imagine. And I was getting rich in ways that I couldn't imagine. I didn't think it was real. And I didn't know where to turn to. And I was listening to value investors and Michael Erson was nearby.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Be stupid. Don't make dumb mistakes, and look for really easy decisions. And so he describes his personality as, and it's almost contrary things, but he has to be amazingly patient. And yet when an opportunity like two thousand eight arrives, you got to be willing to jump in both feet. So it's a combination of patience and aggression when the time is right. And those are almost contradicted. But to do those things, those are the people that jump in and that's why Howard Marks, Claran, all these people have this ability to say now. They can raise a lot of additional money quickly when the time gets good, when there's a 2008. And then when you're in a 2012-2013 to 2015, you just got to sit on your hands. Occasionally getting a deal, but you just got to be patient.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's also, they have this specific niche where I built this business and I love this business. I love this business in some ways more than my own children. But I don't want to sell it to Exco because if Exco gets it, they're going to strip it and they're going to load it up with debt and they're going to take it public again and then it's going to be off in a circle of bankruptcies. And so a tech seller is unlikely to say, oh, I want this to be bought by Berkshire and run in a Berkshire sort of way and I can continue to run it or somebody I know can run it. And so you're not handing off sort of a legacy of your distribution business or your brick business or you go down the list of those companies. And so they don't have that sort of magic thing on the private equity side when they're buying the private businesses. So for them, it's really, the last point I'll make is also a key to Charlie's philosophy is the way to get rich is to not”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think I would phrase it a little bit differently in that first of all they've said flat out, if they were younger today, they'd acquire a circle of competence in the technology business. They'd have to. And the other thing to understand about them is every one of their businesses is a technology business because every business is technology business. So they actually understand technology fairly well too. But they don't have a substantial advantage over other investors. And what they're looking for, he talks about is he likes shooting fish in a barrel. He wants a shotgun and a barrel full of fish. He wants the easiest possible things he's looking for. And he's looking for situations like 2008 when he dumped all the daily journal money into the right stocks at the right time. But he's looking for those sort of easy bets. But also in terms of technology for them, they just don't feel like the nonlinear nature of the business avails itself as easily to their particular style of investment.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“In radio, do the same kinds that he was with Danny Kay at one point, the White Christmas guy. There's all kinds of early radio stuff that he had in the back of his mind, but he knew that this asset was going to be valuable so quickly that he was always going to be able to take the equity value and roll it into the next one. And they also knew that when I first had my first brick phone, my Motorola brick phone, I couldn't take it down to Portland and use it. Roaming was like, there wasn't what's called the North American Cellular Network then. And so Craig knew that when that happened, that was going to be something like super valuable. But most people were just thinking, this is a toy, you know, no one's a desk line. And even this is the remarkable thing. When AT&T bought Macau Seller in 1994, they thought it was to save the long distance business. In other words, even in'94 they didn't understand what they're buying. And so the irony is AT&T bought Macau Cellular to save their long distance business. So they made the right decision.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“So Craig knew that these licenses, which were all allocated by regions and there was no national license, were going to be more valuable. And so he knew that if he bought a cable system, and if you did some good things to it and you consolidated operations a little bit, you could basically take the cash flow from the two systems or the three or the four or the five and buy yourself another system. And classic roll-up. But the value of this spectrum was increasing so rapidly that the speed and the power of the rollup was sort of pretty unprecedented, and he was braver than everybody else. Like, for example, when he did Berlin broadcasting in New York, that was like, you know, nerves of steel, but also he'd seen his father who started”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's fascinating to watch him go through that process and then to be around when he had to sell it to AT&T because the debt service was so big, that was a huge, it was his child that unfortunately he had to sell because there was just the cash flow was going to be requiring a bigger owner. And then him rolling into Nextfel after that.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“And he had the vision to see no, this is going to get cheaper, and there's going to be demand elasticity there, and this is going to free people to do what they really want to do. So we saw the value that other people didn't, but he also had his father's example, Eroi. He knew how to raise money and buy assets. Because unlike software, the business I'm in now, cellular is a very capital intensive. And so it just happened, this guy Milken came along just right then and was raising money for Malone and everybody else, and you were able to raise a lot of money, and he was able to roll up the cellular industry. And it was fascinating to watch that and to watch him basically always have enough cash, but always pushing the edge of the envelope. And at one point, a key point, he sold all of his, he started in cable TV and he sold everything he had in cable TV was the 20th biggest operator in the country, and he sold it all to Jack Kent Cook, the Washington Redskins guy. And he basically doubled down on cellular. So he was a guy who believed.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“About how many cell phones there were going to be in the year 2000. McKinsey assumed that anybody who had any sense would never use a mobile phone when they could use a landline phone. And so the demand, you know, sort of like, I'm using my mobile phone all the time with my desk phone right right now.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the interesting thing about cellular was Craig because he thinks differently than the average person, it's very analog in that sense, and his favorite plane is De Havilland Beaver seaplane, which has flown in with analog instruments and all that. But he's a very analog person. And he understood that people don't like to live and work in cubes. And where we're at right now, there are lots of cubes around, and that's an anathema to him. He thinks that people are essentially nomadic, that seeds sort of made human beings sort of stay in one place, and there's one theory that it's because they wanted to grow seeds and because that would make a nice beer. But whatever the theory was, he thinks we like to move. And so he understood deeply that the cell phone was going to be, it wasn't called the mobile phone then. It was called the cell phone, was going to be something that freed people from being in a specific place. And for that reason, he understood the value was a lot higher. And so when McKinsey did their famous stuff.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“They have this gestalt sense, analog sense of where value is and customers want. And it's easy to look back and say, oh yeah, cell phones, they were going to get cheaper and they were just going to take off like crazy. The hard thing would have been the phones weighed a couple four pounds and they were $4,000 and a lot of them put in cars and it should go day to install them. The bills were $250 to understand that someday this thing was going to be magic. And looking forward is the real test of genius. Now you can say some of it is it's just survivor bias. Those people had some luck in there and there's some of both, everybody who's successful. Anybody who's successful doesn't feel like some of it is luck is fooling themselves, right? But they also had special skills.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Have to be an artist to create one. It's just such a dynamic because you're talking about complex adaptive systems. You're talking about multiple factors. You're talking about competitors, nests of complex adaptive systems. And so the guys like Craig Macaw, Jim Senegal at Costco, Howard Schulz at Starbucks. You know, I'm just listening to Seattle ones that could go all around the whole country. But these people, they're artists. And they're oftentimes when you actually talk with them, they're not like you and me.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the way I would describe it a little bit differently in that what Charlie Munger says and what Buffett says is they don't know how to build a moat. They maybe built one with reinsurance, but they never built one. And Charlie says we don't build them. We buy them. And if you look at what Constellation is doing or you go down the list of Robert Smith and other people who are doing things in software, for example, they count on some founder who's totally driven, who spent their whole lives trying to build up this business and building this moat. They're in the right place at the right time with the right skills. They built this thing. And there are artists and their genius in some sense many of them are savants about how the product should be built and what the customers want. That's a separate question is what's that worth? And that's where the investing skill comes in. And so Buffett will come in and say, hey, my hurdle rates 10. This is what I'll offer. I won't strip your business. I'll let you continue to run it. And so he is a quantitative analyzer of moats.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Cascade, he manages the Gates Foundation money in a huge pool of money, but he's a fantastic investor. But he introduced me to Mobson. And Mobeson has this classic memo on basically essay, on measuring the moat. And basically what he's saying is what creates a moat is quantitative, and it's an art and it's a skill and it's dynamic, and you have to do it. But the test is quantitative. And so you know you have it because you can measure it by ROI and sustain ROI over the years. Sustain ROI over the years generated the fact that you have some pricing power and you're not just selling a commodity product. And so Michael's work has been sort of clarifying for me in the sense of the qualitative side of business is about creating the moat and the quantitative side is about measuring it. And keeping the two buckets in separate places mentally is helpful because most people tend to just confuse the two.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to have a prayer meeting, Buffett says. But the key thing here is one of my other mentors is Michael Mobbeson, who was introduced to me by Michael Arson, who's a guy who works and manages.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Get enough of a barrier to competition to get you the most important thing in business. Buffett says the most important thing in business is does the business have pricing power? If you don't have any pricing power, you're in a tough situation.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Say, well, you can have really strong intellectual property. And in the old days, it used to be patents or trademarks or whatever. These days, a lot of the key intellectual property is actually just hidden in a server and can't get at it and it's protected in that way. And then you can have a range of brand-based competitive advantage, and Charlie Munger talks about the fact that it used to be in the days of television advertising if you had French's mustard or whatever, the brand was worth a lot. That source of competitive advantage is sort of eroding. And you'll look at their 52-week lows of the brands over the last couple of months. They're struggling because brand doesn't mean as much anymore. Word of mouth means warren to the millennial generation and younger, they're not as hooked on getting a Heinz or Hunts or whatever. They want some product that Yeezys using or something. It's a different world today and they're struggling with that. But those are the basically the buckets that you look to find something that allows you to”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“So value capture really is best described, as Warren Buffett describes it as a moat. It is a metaphor that he used to sort of help people understand that you can't just focus on demand. You have to focus on the supply of competing product. And so you really have to look for some sort of sustainable competitive advantage, is what Professor Porter talks about. And in order to find that, you really have to search in a couple of buckets. And the most important one today are network effects, which is basically a feedback loop where the product becomes more valuable the more people use it. And so demand side economies of scale is your first source of capture. You acquire a moat, you acquire a stable convent advantage. The second one is economies of scale. If you have as many Amazon warehouses as they have, there are certain scale advantages that they have that are hard to keep up with or what Netflix has. Now, both those companies also have network effects, but they also have economies of scale. And then you go into the next bucket and then you...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Describe that as most people don't die of starvation, they die of indigestion, which there's another aspect of that as you try and do too much. But the point here is that you really need to solve what Andy calls the value hypothesis before you proceed to the growth hypothesis.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“As Andy likes to say, I learned as much from Andy in venture capital, is that the word of mouth should be growing on an exponential basis. Yeah. And the key thing about a company is we'll get to scalability in a minute. But if you really want to scale and you really want to scale and create value, it shouldn't be with marketing. And so if you look at the early days of Microsoft or the early days of Costco or the early days of Amazon or the early days of Starbucks, it was word of mouth. TV ads, it wasn't radio ads, it wasn't a guy with a spinning a mattress sign, you know, all this stuff you hear on the radio, it's hard to sell. If you have strong word of mouth, then you've got something magic, and then you really have product market fit, but unfortunately most people, they have 24 months worth of money, they're at month 18, they know they only got six months left. They think they have product market fit, but they really don't, and they go for it, and they die of premature scaling. So the phrase that you used to...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“You've got the Justin Stevens quote about you know it when you see it In this situation, we have a situation where, you know what, when you see it, usually it's because everybody in the company's thinking, my God, how are we going to satisfy all these orders? You're not sitting around in a conference room thinking, well, maybe we should add a feature. And the sales team is really letting us down or whatever. And technically driven companies oftentimes with technical founders can follow that trap. They're thinking, well, if these only the salespeople could sell better, the stuff would be moving out the door. So when you have product market fit, stuff is moving.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Because you have a product people want to buy doesn't mean you're going to have any margin. There are a lot of great products that people love, like flying in a commercial airline or weed or meat, cattle, or potatoes or whatever. Charlie said a meeting two years ago or something like that, someone asked him, what do you think of the cattle business? And he said, it's a terrible business. When you're out of 20, you have a good year. But the point here he was making is people do it because they love it. People do it because it's a lifestyle. Buffett added that, well, maybe if he owned a bank on the side, you'd do okay. But also making cattle and making food, it's an important thing. Operating an airline, making wheat, but these businesses are commodity businesses that have a hard time capturing any return in excess of their opportunity cost of capital as Maupazan would say.”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think the key thing is Steve Blank sort of has this definition which I've shortened a little bit, but basically in a business model you're trying to do things. You're trying to create value and you're trying to capture value. And there are very different things. And most people focus on creating value. And the problem with creating value is most people don't actually create it. And so they try and find product market fit and they try and they try and they try and most people don't get it. And even if they don't get it, they say, I'm running out of money. I better go try and grow it. And they're growing a product. Nobody wants to buy. And so the key thing is there you get a death from premature scaling, which is they never find and create true product value that people want to buy. As the Y combinator people like to say, if you don't create something that people want to buy, it's over. You may as well put a fork on it. But even if you do that and you have a product that people want to buy, then there's capture value. And this is where Buffett was really important for me, which is to understand that just...”
2018-05-15 · Invest Like the Best · Tren Griffin – Pulling the Thread - [Invest Like the Best, EP.87] · IDENTIFIED FROM THE TRANSCRIPT · source