Acquired

Seven Powers is about defending the castle and less about is this a good idea or not.

Seven Powers is just those structures that if you can get there, make you more iPod-ish and less bow-marish.

I used to think that it was sequential. You get product market fit and then you deal with power. But my biggest education is talking to founders...

But my partner Bill says that it turns strategy from an essay question into a multiple choice question, although I don't know with chat GPT the difference anymore.

So product market fit and power are more or less worth I go.

Seven powers was an attempt to take an understanding of strategy and make it Generally available as sort of pattern recognition

And the reason it needed to be decentralized is that there are really two major step changes in the value of a company the first is product market fit and the second is Getting power and they're they're quite distinct and Involved different things

So what we've found is that platforms They often involve different types of power They're very complicated and idiosyncratic. They're complex You can look at one and you it's hard to tell whether they have power or not and figuring that out is hard

So I think there are two parts to this so number one is If they're readers of seven powers and you're patient enough to flip to the appendix after each chapter There is this concept that we call surplus leader margin Which is the maximum price you can charge more than your competitor while still maintaining your competitive position

And Hamilton always says no It's an active tradeoff between both entrepreneurs do it because when you see such a large green field You can penetrate you should grab that and sacrifice short term margin for a larger market share And that's still power because you can realize those profits in the future

This is going to be so fun because I think they're a bunch that Bitcoin has uh like a whole bunch um the obvious one that we've been begging the drum on through the whole episode and it's probably the most powerful is is network economies uh I think in particular versus other cryptocurrencies like nothing Ethereum is the only one that stands a chance and it just kind of has a different use case that that's really more around um the the smart contracts and compute that's sort of built into it but for for sure like you can't start anything that looks like Bitcoin now and have any chance of beating it like it's in the same way that Facebook just outran any other consumer social network consumer social entertainment type app and then obviously very smart and acquiring those who did get scale like uh Bitcoin just leapt ahead at the beginning of this paradigm and I think what's cool is it even applies at the technical level too with this idea of like the amount of computing power going into that has gone into maintaining and making robust the Bitcoin network over time is itself a compounding asset right like because the more power that goes in over time the harder it is to crack undo yeah you can't there is no supercomputer that could conceivably ever be created that is going to as long as the Bitcoin economy like a miners keep working that is going to be able to go back and like redo everything and that lead just keeps getting wider and wider and wider certainly not really old things in the blockchain but you know there's always the risk on the newer ones things that are only two or three blocks behind and and unless there's a paradigm change like unless quantum computing arrives and suddenly you have you know 10 million x more compute um than than we did in the past on a single core or something like that.

And so it matters less what they are doing and more just that people come on board and that your value grows according to Meccaf's law and then as it grows more sets of users in use cases will come on board and it will evolve and so like in Bitcoin's case this is why I said I want to be not careful but specific I am not in any way condoning what happened with Silk Road or that that's okay or that that should happen or anything but just from the perspective of value building of the network the fact that it happened like transactions needed to start happening nodes needed to come on the network for users and for minors and Silk Road provided that as the bootstrap the first use case and then there were you know more after that and one thing led to another and now here we are here we are is so radically different than what Silk Road was you know but for the underlying like network and the protocol it doesn't really matter what matters is increasing your velocity and growth of users and transactions and so I then I look at Facebook when I look at Airbnb it's actually the same story like what was Facebook in the early days as we've alluded to it was like undergraduates at colleges looking for attractive photos of you know other incoming undergraduates at their college is right like that is so different from Instagram and WhatsApp today right but that's okay like that's similarly with Airbnb like what was Airbnb in the early days it was like people sleeping on air mattresses in each other's apartments yeah what is it today it's something wholly different but the point is going the network

I think this whole story really illustrates for me when you are pursuing a network effect a network economy based power business you know like this is like Facebook is like most social networks and the like like Airbnb two-sided network effect in the beginning what matters is getting nodes and usage on the network to start and so it matters less what they are doing and more just that people come on board and that your value grows according to Meccaf's law and then as it grows more sets of users in use cases will come on board and it will evolve and so like in Bitcoin's case this is why I said I want to be not careful but specific I am not in any way condoning what happened with Silk Road or that that's okay or that that should happen or anything but just from the perspective of value building of the network the fact that it happened like transactions needed to start happening nodes needed to come on the network for users and for minors and Silk Road provided that as the bootstrap the first use case and then there were you know more after that and one thing led to another and now here we are here we are is so radically different than what Silk Road was you know but for the underlying like network and the protocol it doesn't really matter what matters is increasing your velocity and growth of users and transactions and so I then I look at Facebook when I look at Airbnb it's actually the same story like what was Facebook in the early days as we've alluded to it was like undergraduates at colleges looking for attractive photos of you know other incoming undergraduates at their college is right like that is so different from Instagram and WhatsApp today right but that's okay like that's similarly with Airbnb like what was Airbnb in the early days it was like people sleeping on air mattresses in each other's apartments yeah what is it today it's something wholly different but the point is going the network

I think Hamilton points this out in Seven Powers and Pacquie and O'Yara, avid reader of Hamilton's work with Seven Powers too.

So I listened to that I picked up the book I said to Ben I was like Ben you gotta read this book and we reached out to Hamilton and rest his history I was like really David I've never heard of it like I don't know and he's like look read Hastings says it's the best business strategy book and he's like the best business strategy practitioner in the world and I was like okay fine it is amazing to be just flashing back what was that six months ago and having skepticism there I mean just to pile on there I was introduced to Hamilton through Daniel Lack and I think that Daniel's the best strategist that I've personally spent time with and he says the same thing about Hamilton or something similar anyway so that's two pretty good ringing endorsements there albeit from a very similar business model in Spotify and Netflix one trying to be the other pretty quickly yeah yeah so anyway yeah "7 Powers" is something I think about a lot it's now a whole section on the acquired show which we're gonna make you go through for Osam in a minute.

And in fact that is his he has a strict mathematical formal definition of power and it is long-term differential profit margin so Patrick the very easy question to you is in your web of businesses and let's start with Osam to keep it simple to where do you derive power we're definitely going to have to extend our end time here because that you guys can get me going on this for a long time you know I'll just throw out examples and this was maybe one case where several years ago probably three years ago I did literally sit down as I think probably everyone that reads "7 Powers" does and say okay which one of these can I do which one do I already have or which one can I engineer so you know I'll just take through ones that I think are relevant for one of the things that's going on in my world so I do think brand is like the most straightforward one that I don't need to spend a lot of time on which is just like high quality low variance outcomes like that's how I think about brand like can can you just consistently deliver something really high quality so that you build trust with people you know trust takes time therefore it takes consistency there needs to be a high minimum quality bar I love that phrase from Toby I think about that a lot if you can do that consistently with whatever it is that you do you will build a good brand over time like the logo doesn't matter all this other stuff really matters less than just consistent high performance at a certain thing and in many cases you can airdrop a brand maybe it's possible maybe Dollar Shave Club did it I think arguably that wasn't a good business it had really low retention maybe it was an amazing story and everyone wants a hack to create a brand instantly and it did there are exceptions there are hacks which can be very useful not discounting them but I think a hack should be on top of some steadily compounding trust equation with the end audience so I do think we've established a brand what exactly it is we could argue over but I won't say a whole lot more about that and the barrier there is just I think time if you want to establish the same brand that you see today okay well we're 5 years ahead or 10 years ahead or 20 years ahead depending on which of the brands you're talking about so I think time is a ultimate barrier to entry for some of the highest quality brands I love that I hadn't thought about that brand as in specifically those terms of high quality low variance and time and you think about of course like we talked about a bunch on our show in years 2 there's persistence and venture capital what is that persistence due to it's due to brand power of the top firms what does that brand power do to it's due to high performance low variance over time right so that's the first maybe my favorite I know it's Hamilton's favorite too because he's always said that to me when we've talked about it is counter positioning and here I just think it is that radical transparency of the research process I joke with a lot of my friends who run investment firms that have that classic mysterious website that's just a logo and you know an info at email address and nothing else basically the digital velvet rope which I love I'm close with a lot of these investors and indeed oftentimes they are literally the best investors and so I respect the hell out of almost all of the people that have that website I joke that one of my goals is to convince as many of those people as possible to come on this podcast on my podcast which I've done many a time and have many more in my sites on long sales cycles but I do think there's an incredible counter positioning there I won't pick out a name but how am I going to as an investor now say with positive some how am I going to beat one of these illustrious incredible firms with track records and crazy brands and everything it's to do literally the opposite of that right to be the most open the most non proprietary investor on planet Earth where I'm externalizing all the things that you're normally buying from them like if you get one of these great investors to be on your cap table you're accessing this thing in their brain that they've built up over time and I'm just saying no actually forget that like you're not getting my brain you're getting the positive side effects of me externalizing that process in a radically transparent way I think it would be very hard for most of those firms to completely change their their attitude on this topic to say nothing of their behavior like they're just they've been doing a certain thing a certain way for a long time so so that would be counter positioning do you think that that osam today has counter positioning or do you think it's actually that it's a folderable to counter positioning and that it's more of the sort of incumbent that derives its power from what we would you think branding and maybe scale economies so I think it's very counter positioned because to be able to build canvas you basically need a heavy quant background like firms that don't have that skill set this is a seriously complex problem that we're solving I mean it is it is non trivial to build I mean each of these things requires a complex modeling exercise they all have to integrate there's crazy optimizations that happen there's there's quite a lot of like compute understanding that that is required to make things happen fast like this is a really complicated problem most of the firms that I would get scared to hear that they're launching a canvas competitor are the most well known quantitative hedge funds not long only firms and then a different business model and their whole thing is that their proprietary you know research and insight and data that isn't shared so it's like the Bezos thing when he was asked about you know other big tech competitors and laughing saying you know those guys are used to software margins like I'm a retailer you know like it's it's an advantage sometimes to not be as fat and happy and have lived on a different business model and so I think we're very counter positioned with canvas specifically against the firms that would most scare me to be competitors and it's a lower margin business so I'm not worried about them we're not as up to speed on probably who those current people are in the but like talk about like 10 years ago if SAC is like we're building canvas that would terrify you but like they're not going to do that because they make their money from performance their hedge fund I'll use a salacious example and SAC actually wouldn't be one of them like the most obvious example would be renaissance technologies right like it's the most extreme example because it's absurd they charge five and fifty or whatever and still produce you know 40-50% returns annually on their own capital they're not launching a canvas competitor but they could and it would be awesome that's the sort of thing I mean like the most sophisticated and advanced research shops quantitative research shops just doesn't make sense for them to do this right now and we'll have at least a few years head start the other one I think about is you're going to get me going down all these now there's kind of a fun one in cornered resource which Hamilton also acknowledges is the least common of the seven powers but nonetheless is an interesting one which is through a program that we call research partners at Osam which is a very simple trade we effectively give away our entire data library infrastructure and access to our team to independent researchers in order for them to do their own thing at their own pace in whatever way they want where the trade is we own we own the intellectual property that gets created for the most part these are retired engineers people in completely different fields the most famous of them is an anonymous guy on twitter who's I think probably the smartest person I've ever met in my life not modest Jesse Livermore's name although modest a very close friend and actually next week's podcast guest so Jesse as he goes by is has an engineering background of sorts very technical background again literally the smartest human being like if I could stick a human being on understanding a complex problem it would be him and he does these like months long deep dives with our data and teaches us as he goes and because we offer so much flexibility and we offer this data set for free again the thing that most firms like us keep as the most proprietary asset they become contractors with us and as a result we've captured some of the most interesting people like this in the world and I think have the best value proposition to them so that's a super tiny example of a cornered resource but we have benefited tremendously from those research partnerships and this is the one where I will admit to thinking about that program because of reading "7 Powers" so actually the power came before the implementation and that one's been a smaller scale success but but a huge success nonetheless I thought you were going to say the podcast was a cornered resource which in your case may be fair because obviously the CEO and you know major owner of the firm but one of the things I love from the book and Hamilton's work is that people are not cornered resources it has to be like what you're describing people are not cornered resources because somebody else can hire them like they're arbitrageable has to be non arbitrageable and I love this it's like a cornered resource plus counter positioning that you've built this practice up I would argue I don't know which maybe you guys could tell me what's where you would put this power but I think of this more as just a flywheel than a power but there's got to be something in there and traditionally like this flywheel would normally manifest as scale economies but maybe it's network effect here on the podcast side it's something like every week you get more listeners who are incredible who can have a positive impact on the guest which then helps you get ever more interesting guests who then help you grow the audience and you spin that flywheel and therefore the best guests are just going to every week have a better reason to do yours instead of someone else's with their precious time and you just have to be patient with that like I always talk about it like someday you know I'll have Bezos and Elon on like back-to-back weeks like I'm just I'm convinced I will like I know how compounding works and maybe it's two years from now maybe it's five years from now like it's gonna happen that's I think something that is a very hard to compete with what power it should be assigned under I have no idea but it's something to do with that kind of growth flywheel that that again no amount of money I don't think could buy yeah I've always thought about it not as a flywheel but and I think this is a Ben Thompsonism laddering up where once you sort of have someone on some wrong then they become a part of the way that you're able to describe the show to the next great guest.

And to review, he's got these seven, as you can guess from the book: Counter positioning, scale economies, switching cost, network economies, branding, process power, or cornered resource.

And uh, just really think is brilliant, uh of the seven powers.

So What are the seven powers? They're basically the ways that and i'm gonna hamilton if you're listening I'm going to butcher the definition here, but they're the ways that A leader in a category can earn outside profits versus all of their competitors

It's basically what what's the thing that makes your business powerful versus your competitors?

I think this really gets at the core david of like what and why We want to dissect what the core essence of a business is

You know, there's so much going on here with the technology platforms The evolution of the games industry in real time And then this fortnight phenomenon What is the power that epic has so there's seven categories of power?

there's no power in the business.

Sam Walton actually wrote in "Made in America" that he stole more ideas from Saul than anyone else in his business career.

Sam Walton talks about this in "Made in America" by the time Walmart was starting people knew what Fed Mart were they were expanding

Sam tells and "Made in America" where a few years later Sam is going around again to price

My top two Acquired books and they genuinely are also my top two Acquired books for the year Made in Japan and Made in America.

Isn't that crazy that they're both named that and they're both so good

His book Made in America is like, oh my god, that told me what the mind of an amazing entrepreneur looks like.

He is one of the all time great hedgehogs.

Julian Guthrie wrote an awesome book, How to Make a Spaceship that covers the entire history of the XPRIZE.

Julian Guthrie wrote an awesome book, How to Make a Spaceship that covers the entire history of the XPRIZE.

I'm only halfway through this book right now but it's excellent. And if you liked our SpaceX episode, I think you will love this book. It is called 'How to Make a Spaceship'.

It's just a really good, if you kind of like 'Shoe Dog', it's almost these like thriller bio book. It's just like it's exciting, and you never quite know what's going to happen next. And it's well-written, and well-story told, so I highly recommend it.

This is of course Michael Porter Competitive Strategy, Porter's 5 forces

he's literally making an economic argument for shareholders that that's the long term value maximizing thing to do right

The intelligent investor is like the Danny Kahneman thinking fast and slow You know a version of like, uh, you know, it's case studies. It's like distilled down for public consumption

David: Cormac McCarthy (author of All the Pretty Horses, No Country for Old Men, etc)'s contribution to W. Brian Arthur's landmark paper about the economics of the internet, "Increasing Returns and the New World of Business"

You just gotta imagine he was eight and his family went through this wow you know a busted IPO doesn't seem so hard after stuff like this

later Ben of course would write The Hard Thing About Hard Things and you know live through all this crazy technology stuff

if I had to describe Andy with one word it would be gentlemen.

if I'd learned anything it was that conventional wisdom had nothing to do with the truth and that the efficient market hypothesis was deceptive how else could one explain Opsware which is what they changed the name of the company to trading and half the cash we had in the bank when we had a 20 million dollar a year contract and 50 of the smartest engineers in the world.

a lot of crying by me

I actually went back and read some of the parts that I had highlighted from that book, The Hard Things About Hard Things. And I think two things resonate with me now more than ever. And one is embrace the struggle and not try to avoid the really difficult things and get right to the hardest thing. And two is see the silver lining in the worst case scenario.

And I remember thinking in the second week of March, tabletop my ass. Like this is there is no tabletop exercise that could actually prepare us for this.

I assume this is a joke He said either he would write a letter to them to plead his case to get into Columbia saying I thought you guys were dead I didn't realize you were alive in teaching classes Because he had like just picked up their book and was like this is that you know, he what the intelligent investor

So Graham's book the intelligent investor had just come out

The intelligent investor is like the Danny Kahneman thinking fast and slow You know a version of like, uh, you know, it's case studies. It's like distilled down for public consumption

And for listeners out there who have read the uh intelligent investor, you're probably thinking wait that was supposed to be the not dense one Different era different era.

So Warren's read, you know the intelligent investor and he's he loves it. He's like this is amazing and and what The intelligent investor and security analysis in a even more dry way before it what they did was they espoused they were like, hey You should think about stocks investing in stocks systematically and based on the fundamentals of the companies that they represent And as pieces of a business not like tickets on, you know, horse race betting here And they basically introduced the idea of the discounted cash flow Like this is the first notion that like stocks are You know the market cap of a company is representative of the sum of all future positive cash flows or I guess all cash flows discounted at a certain rate back to today and you know, this sort of Forcing you to look and say does the price of the stock today reconcile with what you actually believe the business will yield or produce in its full lifetime You know that that was frankly novel it was and

If you read Shoe Dog or watched Air, you may think you know its history.

But Shoe Dog ends in 1980, and Air... well let's just say it's an enjoyable piece of fiction.

And it turns out (as always) that the real story is filled with far more drama, twists and business lessons than either of those works.

It's the Shoe Dog of the 80s truly.

It is. It is in many ways.

I think it's the best fiction I've ever read definitely the best sci-fi I've ever read

I think it's the best fiction I've ever read

The coolest thing about Project Hail Mary is how it is basically all in our universe

There's no big leap like in Star Trek, You have to like take this leap of like, well There's warp drive and you don't really understand how it works and that's fine And now that we accept this black box now we can go to other stuff There's not like an accepted black box in Project Hail Mary, There's just like all the known rules of physics that we know about

Yeah, it's uh, it's hard sci-fi. I think is the term right? Is that what they call it?

Project Hail Mary Andy Weir it's so good really enjoying it so far

It's Andy Weir who wrote The Martian this is his newest novel

The Martian was good

And if you read the book, Console Wars by Blake Harris He spends a lot of time with Tom Kalinsky, the CEO of Sega of America

And for as compelling as the nintendo story is it's compelling because they won long term for this brief moment of time The genesis era I think sega probably has an even more Impressive narrative and sort of hero's journey with tom kolinsky.

I think this is the best example We've ever seen on the show of how to compete against an entrenched incumbent

We're gonna get into what they do this four-point plan, but it is freaking brilliant

We are a tiger who will skit in you piece by piece Obviously, he doesn't say that publicly, but this isn't really good for nintendo's image

The fact that you can play something at home and take it outside This is the gamer's dream

My top two Acquired books and they genuinely are also my top two Acquired books for the year Made in Japan and Made in America.

Isn't that crazy that they're both named that and they're both so good

I was having lunch with my Navy colleagues when the incredible news of the atomic bombing of Hiroshima arrived. The information was sketchy. We were not even told what kind of bomb had been dropped, but as a technical officer just out of college with a degree in physics, I understood what the bomb was and what it meant to Japan and to me. The future had never been more uncertain. Japan had never lost a war and only a young man could be optimistic yet I had confidence in myself and my future even then.

I do not believe any amount of market research could have told us that the Sony Walkman would be successful, not to say a sensational hit that would spawn many imitators. And yet the Sony Walkman has literally changed the habits of millions of people around the world.

Really well written book and then the author of Masters of Doom, David Kushner, just did a Follow-up piece, I think in Vanity Fair, of a pop interview

Really well written book

Especially having not knowing that that was coming having just recently listened to the audiobook of Masters of Doom I was made for you It's perfect Uh I'm just in heaven in heaven reading Masters of Doom and now

the story of John D. Rockefeller transports us back to a time when industrial capitalism was raw and new in America and the rules of the game were unwritten as yet.

the old man had a passion for money that amounted almost to a craze. I never met a man who had such a love of money, except of course for his son in the future.

I believe the power to make money is a gift from God just as are the instincts for art, music and literature to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, the gift to make money, I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man.

John betrayed a special affinity for accounting and an almost mystic faith in numbers. For Rockefeller, ledgers were sacred books that guided decisions and saved one from fallible emotion.

Clark was an old grandmother and was scared to death because we owed money to the banks.

the war had stimulated growth in the use of kerosene by cutting off the supply of southern turpentine, which had yielded a rival illuminant called a campine. The war had also disrupted the whaling industry and led to a doubling of whale oil prices. Moving into the vacuum, kerosene emerged as an economic staple and was primed for a furious post-war boom. This burning fluid extended the day in cities and removed much of the lonely darkness from rural life. Soon, John D. Rockefeller would reign as the undisputed king of that world.

you see this scheme is bound to work. It means an absolute control by us of the oil business. There is no chance for anyone outside but we are gonna give everybody a chance to come in. You are to turn over your refinery to my appraisers and I will give you standard oil company stock or cash as you prefer for the value that we put on your business. I advise you to take the stock. It will be for your own good.

as the owner of almost all the Erie and New York central tank cars, Standard oil's position grew unassailable. At a moment's notice, it could crush either railroad by threatening to withdraw its tank cars. No tank cars, no business.

Rockefeller's creation could only be discussed in superlatives. It was the biggest and richest, the most feared and most admired business organization in the world.

Rockefeller must be accepted as the greatest business administrator America has ever produced.

the general public was of two minds and viewed the new entrepreneurs of which Rockefeller was the foremost as alternatively sinister and heroic. By 1888, Rockefeller began to pop up in fawning magazine features about rich Americans but he was also singled out as a notorious trust king in Joseph Polis Tzer's world and other papers. The press kept up an editorial drum beat against Standard Oil demanding vigorous state and federal antitrust action.

It was the theory of the originators, the larger the volume, the larger the opportunities for the economies and consequently, the better the opportunities for giving the public a cheaper product without the dreadful competition of the late 60s ruining the business. During his career, Rockefeller cut the unit costs of refined oil almost in half and he never deviated from the gospel of industrial efficiency.

own shares of standard oil and your family will never go hungry.

The book was nothing like I expected it to be.

Rockefeller is such a fascinating human because he is both the most egregious penny pinching capitalist of all time and also probably the biggest philanthropist in global history.

He was able to square the not in two chapters of his life simultaneously during his entire life being just ruthless in the business practices and being Puritanical in his religious beliefs and an absolute devotion to god and to

He somehow thought it was his god given right and something that he needed to do to make the most money possible and then give it away in the way that he saw fit and he did like the modern medicine no chance that it would be where he is today absent the absolute monopoly and absolute anti anti-competitive practices of standard oil in the railroads.

He started a Rockefeller university, which is a yep research institution in manhattan that has developed many I think it's all PhDs and post-docs, right?

Colin goes on to do many things including recently co-authoring the book Working Backwards, which is a great book. We used for a source in both this episode and the previous episode on Amazon.com.

There's a lot of good stuff in the Working Backwards book about this about how hard it became to get anything done and built at Amazon because of this rat's nest of complexities involved on the technical and infrastructure side and

David: Cormac McCarthy (author of All the Pretty Horses, No Country for Old Men, etc)'s contribution to W. Brian Arthur's landmark paper about the economics of the internet, "Increasing Returns and the New World of Business"

Michael's (truly excellent) book, Who Is Michael Ovitz?:

and we're going to start in medias rest and then rewind just to set the stage for what's to come.

It's called Who Is Michael Ovitz? And if you've read Shoe Dog and you've read The Ride of the Lifetime and you've read What's the Ford one? An American icon. These like iconoclastic CEO founder business. Business built in America. I think, yeah. Yes. This one needs to be on your list, especially if you've enjoyed any movies or TV shows that were put together in the last, well, let's be specific. Or like two part injuries in the Horowitz series. Totally. From like 1975 to 2000, Michael Ovitz put everything together and it is just wonderfully written book about an unbelievable business story, the strategy behind it, the way that with Creative Artists Agency they just completely upended the entire industry in Hollywood and did it really without ever talking to the press and were very tight lipped about it.

For some Hollywood outsider, I found the book really, really wonderful, really compelling.

Graham and Dodd together had written published security analysis Back in 1934, but that was a textbook. That was like an academic You know, I haven't read it, but like it's super thick dense. It's it's not meant to be readable

This is a quote from The Snowball: No, it's not that simple.

That's really impressionant.

This is 1992.

Alice has a great quote in The Snowball: She says Buffett avoided technology stocks partly because these fast-moving businesses could never be run by a ham sandwich.

He thought it no shame to have a business that could be run by a ham sandwich, he wanted to get Berkshire Hathaway to the point where it could be run by a ham sandwich too.

Alice actually just says that line in The Snowball.

And he also, this is according to Alice in The Snowball, most of, not like all of Genri's investments, because as we've talked about insurance companies with their float, they invest the float in securities and Warren and Berkshire prefer to do that in equities.

Most of Genri's investments were in debt and relatively conservative bonds and the like and so Warren's worried about a equities crash coming along here because of the tech bubble.

He wants to essentially dilute Berkshire security holding, he doesn't want to sell security hold because that would be a signal to the market like Warren Buffett is selling stocks that might tip everything over into the crash.

He's like, how can I change the mix of securities that we have at Berkshire without me doing something like that.

I can do this all stock equity deal by Genri and essentially get a portfolio of 20 ish billion dollars of bonds that are going to be insulated from equity prices.

Boy that is some financial jiu-jitsu engineering right there.

He definitely overthought this one because Genri sucked to be blunt.

Alice writes in The Snowball: Warren was already being ridiculed for his refusal to buy technology stocks. Now he had bought the light company. How dull.

We owe a big big big. Thank you to Alice Schroeder and her wonderful book The Snowball

I thought this book was awesome people talk about snowball all the time as the one as the sort of more Popular Buffett biography.

So definitely go check out both The Snowball and Buffett great books highly highly recommend

Alice writes about that that every time He looked at spending money He would not see the sticker price for things He would see it Times eight or 10 or 20 of what that money would be worth in the future

So I bought my cigar butt and I tried to smoke it This is amazing You walk down the street and you see a cigar butt and it's kind of soggy and disgusting and repels you But it's free and there may be one puff left in it Berkshire didn't have any more puffs so So all you had was a soggy cigar butt in your mouth That was berkshire hathaway in 1965. I had a lot of money tied up in that cigar butt I would have been better off if I'd never heard of it in the first place

Amazon Unbound (on Amazon, natch): https://www.amazon.com/Amazon-Unbound-Invention-Global-Empire/dp/1982132612/

We were fortunate enough to have repeat acquired guest Brad Stone join us to talk about his most recent book, Amazon Unbound.

This book is the successor to Brad's first book, The Everything Store. It is about everything that has happened at Amazon since 2013, including Alexa, Amazon Go, third party sellers.

I finished it. I came in right under the finish line yesterday. I definitely felt like toward the end, your description of how the company did through covid and basically what they did for the world was really well balanced.

I don't know if listeners would agree or if you would agree. I felt to a certain extent like Everything Store was. It was kind of like the Liars poker or the social network of Amazon.

we are having brad stone back on acquired to hang out with all of our lps and talk about his new book dropping this month Amazon Unbound

i can't wait to read this book i've been and i both have a pre-ordered uh the uh brad's first book on amazon was just like a classic that's uh the everything store