VALUExBRK 2026 | Bill Ackman, Mohnish Pabrai, Tom Gayner, Chris Bloomstran & More

You're lying to your line for everything. >> Well, actually, it wasn't that the wedding. He was going to introduce me to my next wife because Let's go. >> Testing. Testing. 1 2 3. Testing. 1 2 3. >> There's a 15 seconds. Oh, for a muse of fire that would ascend the brightest heaven of invention. A kingdom for a stage. This guy testing. Testing. Excuse me. We're trying to do the Swiss clock thing. We're a bit late. Makes us very nervous. Can I all ask you to take a seat quick? If we can all shuffle through and find a place to sit, it's probably more comfortable for today. >> Hello. Hello. >> I think everybody will find a spot at the moment, which is great. Welcome. Welcome to Value X Clusters. uh value XB or K. Sorry, I'm seeing too many cloths faces. Welcome to our event. We are very happy that you could all make it. And um I don't have that much to say, which is very special because I usually have a lot to say, but I want to introduce you to our boss, Guy Spear, who's hosting the event. is very very kind. I have not much to say. Um, I'm only here because of Shantel and the team. Uh, she keeps me going every day. It's unbelievable. Uh, the only person who's better is my wife. Um, really. Uh, I've said everything that I wanted to really say in the letter and, uh, in a video that I just saw Whitney in the room that Whitney recorded at Value S Clusters. I just have three things before going to uh, the first speaker. One is that um I really like the idea of the Canterbury Tales. I talked about it last time. Uh we're telling stories before the big event tomorrow and we're learning from each other and I think that's a lot of fun and that's where what we're really here to do. I talked about it last time. Uh I talked about my lessons from my GBM. It's been a huge wakeup call and I I uh have sent some people this email. If you haven't seen it yet or the video, I'll make it public. um this idea, you know, um uh Warren Buffett has said that the grim reaper wins at the end of the day against all of us. And my dash or uh uh improvement on that, if you like, is that we have to every day, whether you're in my shoes or in anybody else's shoes, we all find difficulties in life. We have to win as many points against the grim reaper as possible. And we do that when we have a family dinner with our family, when we do sport, when we do the things that we love to do without hurting anybody else. And in a way, that's what we're doing here. We're doing a celebration. We're doing a uh uh something that makes us all feel good and happy. And that's at the end of the day the purpose of life. And so don't just think of this as being uh an networking event or an opportunity to further your career, which I hope we all do anyway, but it's a it's it's a it's if we do not being joyful in every day that we're living, then we're doing something wrong. And I realized that Warren Buffett realized that a long time ago. I still have not learned a lesson that I don't realize that Warren Buffett already knew. And uh that's it. That's all I have. And the next person on the stage is Steven Michael Jones who was selected by Charlie Munger to run the Daily Journal Corporation. So he's part of the family. Welcome. >> Morning everyone. Charlie Munger said, "The best thing a human being can do is to help another person know more." That's what you've done over many years, Guy, in your writing and with events like today. And before I begin, I want to specifically acknowledge your widely read February letter to Aquamarine investors. Um, your directness about your health and the life wisdom you shared were impactful impactful to a great many of us. Um, thank you and our thoughts are with you in your journey navigating things. So, Guy asked me here today to share how I came to meet Charlie and join Daily Journal Corporation. Usually, I like to explain with a a straight face uh that I just replied to a Craigslist ad, but the uh the actual story ties into events that Chris Sparling of Tiny shared uh at this very event in 2024 uh about their exploration uh around merging Tiny with with Daily Journal Corporation. My story starts in mid 2021 when I received an excited text from my friend uh Andrew Wilkinson telling me that he and Chris had just had dinner with Charlie Mer. Andrew is excited to share because he knew I was also a big fan and followed Charlie for many years. Amazed I replied, "Oh my god, you met Yoda or something like that." And uh and then he lets me know that I'd actually come up in their conversation. Uh Charlie had shared with them that Daily Journal was in the midst of a COO uh succession planning process and Andrew and Chris mentioned me based on the parallels with the software company that I'd built and what they understood Daily Journal was seeking to build with its uh technology business Journal Technologies. And while I appreciate their vote of confidence, I quickly brushed the idea off. I've always said I would never run a public company. I'm an entrepreneur, not a executive for hire. Um for background, I founded a geographic software company at 23. Um we were just two shareholders. We bootstrapped it uh and uh got acquired after about 18 or 19 years. Um speaking of geography, I'm also Canadian, happily rooted in Victoria and not about to immigrate to Los Angeles. But I had to admit after a few years away from it all, I was starting to get restless. I missed uh doing what I'd spent my first chapter learning how to do. I love being part of working with amazing people to help build something larger than myself. Anyway, 6 weeks or 6 months go by and it's late 2021. This time Andrew calls me to tell me they had dinner with Charlie again and the Daily Journal is still figuring out a succession plan for the CEO role and this time Charlie wants to meet me. I again reply I I don't want to waste Charlie's time. Andrew says, Steve, have lunch with Charlie Mer and keep an open mind. So, a week or two later, we fly to LA. And the day before, we send ahead a seven-page document I've written uh my background, my values, uh the logic about while I about why I'm likely entirely unsuitable. And I'm I'm not inverting because I think Charlie will like that. I'm I'm trying not to waste this time. And as we board our plane, we get word that Charlie has has has read it and it was positively received. So, um just by show of hands, how many people here are familiar with Daily Journal Corporation? Okay, a fair number of folks. Um, for those who aren't, Daily Journal is a unique little NASDAQ listed company. Um, so its traditional business has been continuously publishing legal related newspapers in California since 1888. Um, but today that's a secondary uh gradually declining business. Now 80% of operating revenue uh comes from Journal Technologies, which creates uh and implements software to run courts and related justice agencies. So, it's the growth engine that everyone has long envisioned as as as as the future. Um, as well, during the financial crisis in 2008 2009, our newspapers received $28 million in unexpected revenue uh uh from publishing property foreclosure notices and not having an immediate use for the cash, uh Charlie invested that money for the company at a handful of stocks, which quickly grew to several hundred million, right? As one does. And uh so today, thanks to Charlie, a big part of our market cap resides in our portfolio of marketable securities. Anyway, uh looking ahead, I could see how some of my experience would transfer transfer to journal technologies. And what appealed to me is that we're in a sector without a a popular dominant incumbent. Um I think the market is is hungry for an all-round uh excellent vendor to emerge and we see an opportunity to become that. Um, it can be challenging selling to the public sector, but now in the era of AI, uh, industry and regulatory complexities that once felt burdensome compared to simpler SAS businesses, appear to provide strong notes that we're very grateful for. Okay, so we arrive at Charlie's house just before noon. Sitting in his library, I can tell he's sizing me up for the first 10 or 15 minutes. Then the conversation shifts and we all have a wide-ranging enjoyable lunch. And I notice Charlie isn't particularly focused on me anymore. And I leave thinking, well, at least I got to have lunch with Charlie Mer. It was an amazing experience. I got to pepper him with questions for a couple of hours. And then a few days later, I'm driving home from a coffee with a friend and I get a call. And uh I hear, "Please hold for Mr. Mer." I was like, "Oh, okay." Charlie comes on. Stephen, I'd like for you to become CEO of Daily Journal Corporation. And before you say no, I'm almost 98 and it's probably time for me to retire. So, I'd also like you to succeed me as chairman. Ladies and gentlemen, I nearly drove off the road. In fact, I mean, I actually almost crashed into a car when I pulled over to to to continue the conversation. Charlie then assures me he'll remain on the board as a director, uh, help me learn the chairman's side, and continue managing the portfolio of marketable securities as long as he's alive. the the arc of a human life is short, full of whatifs and paths contemplated um but not taken. How could I pass up the opportunity to work with Charlie Mer? And after a couple months of conversations where he addressed my various concerns with humor and clarity, I say yes. I asked for the title uh initially of interimm CEO because I hadn't actually had the opportunity to meet any employees yet. Uh fortunately, the team was very good. I've now been at it for four years and it's overall wonderful. I had the privilege of working with Charlie for nearly two years before he passed away in November 2023. We've all heard the expression never meet your heroes. But in my experience across calls, meetings, and meals, how Charlie thought, how he operated, his values, he was a truly extraordinary human being. Before I wrap up, I want to share a couple reflections about incentives in organization building. I completely agree with Charlie's adage, "Show me the incentive and I'll show you the outcome." Poorly designed incentives will produce uh undesired or sub-optimal outcomes. That said, I think incentives and motivators are still often interpreted too narrowly by people as being almost purely financial. Intrinsic extrinsic financial incentives matter. Absolutely. But many people are highly intrinsically motivated and will do what they believe is right for the mission of the organization beyond what's best for their personal finances within limits of course and not to be assumed or take it for granted. But intrinsic motivation properly harnessed can be an incredibly powerful driver. Of course, this isn't a new idea. Maslo's research pointed to it decades ago and others have helped popularize these ideas for business. The goal isn't to hope that people's values override their incentives. It's to build organizations where incentives and intrinsic motivation are aligned, where people naturally undertake right behaviors. And it also happens to be the right thing for the business and aligned with how they get paid. Take me. Yes, I enjoy generating wealth for others and my family. But that's not why I decided to do this. Following the sale of my business, I had freedom and I had enough to scratch my itch to build. I could have started another venture. I was absolutely excited by the long-term growth opportunity with journal technologies and the optional and the optionality our marketable securities enable. Like Charlie did, I believe deeply in the importance of the work the company does. Uh the rule of law is an absolute cornerstone of society and our technology makes it makes a difference. However, it was the opportunity to work with Charlie Munger and the exceptional people surrounding him that overcame my hesitation. Probably my biggest 3:00 a.m. motivator is wanting to live up to whatever Charlie figured he saw in me when he chose me. I take the trust that he, the board, and our shareholders have placed in me more seriously than I think people might ever imagine. Charlie has this extraordinary track record of good judgment. The list of his mistakes is short. I don't ever want to be on that list. I want to be worthy of the faith he placed into me. Reputation is what lives on after we're gone. To me, being trustworthy and honorable and competent matters more than virtually anything else. So, part of this is about my personal reputation, but it's also rooted in my conviction that Charlie will inspire people for generations to come alongside the likes of great individuals like Benjamin Franklin. Charlie was one of a kind, irreplaceable, and I feel a deep obligation to support his legacy in whatever tiny ways I can, and I'm so grateful for the daily journal opportunity entering my life. Thanks everyone. Story uh questions. Mike, who wants to ask the first question? because it's not me because I'm I've blanked out. Go to the mic and go ahead. So, we'll And uh Shantel, you'll keep a time uh how long you're going to answer as many questions as we have time for. So, blast away. >> Good morning. Thank you for sharing. Um, this might be an overly personal question, but I'm wondering if you would share given um Charlie's historical cander if you ever asked why he hired you and what attributes he's looking for in leadership. I never asked him specifically um why why he hired me. I think that um you know I've I've often wondered about that. Um he he had indicated and that I'd heard that I think he was very keen to have someone who was focused on a on a on a P&L and connected to a P&L and so my company had been debtree and profitable every year that we had existed because we had to be we had no no outside investors. when I started in 1999 at 23, I would have had better luck raising money for a a hot dog stand than explaining what web-based mapping was that hadn't really emerged yet. Um and so so I think that that that connection there and then I think he there were probably some folks that we knew in common where he he might have spoken to them and um it I think it was also around um you know I had expressed concern around being focused on on short-term uh results and that's that was one of the reasons why I was reticent to run a public company and uh and I said I always had a 5 10 year view and trying to create long-term value and I said the idea of a fiduciary responsibility to just maximize profit quarter quarter was something that you know I I looked at a different time horizon and he and he had a great he had a great response he said well you don't have a fiduciary response to be a total as you go through life like all right how do you respond to that >> I'll ask a couple questions and I think Brian Oh, I need to I have a couple of questions. So, Steve, uh I've heard a lot now about um Leonard Cohen actually just last night. >> Okay. And somebody was saying I can't even say Mish was saying that he in a way they have a better acquisition model than even Burkshire Hathaway and they call up 70,000 software companies every year to try and get some of them to sell themselves to uh what's the company called Cohen's company. What's that? Constellation Software. So I'm asking you to teach me something about that if I may. And the second thing is how is and I'm sorry because it's the question that is on everybody's minds. How is um AI affecting your business? >> Sure. Lost away and speaking to the mic I've been told. >> Sure. So specifically about Constellation Software and their and their playbook for assessing and acquiring companies. >> Okay. So sure. So it's interesting because there's um there are a couple approaches. So we have competitors that have taken the approach of acquisitions and we've done that. Um we have a journal technologies was was brought together through a number of of of companies in the space as well. Um what's important to me is that we so as we look at the landscape of companies that are available to us and because we have with the we have the capital to be able to make some acquisitions we want to do that very mindfully and and uh historically with my prior company I had grown it organically um but we recognize um and and we ended up being acquired by a private equity firm that ended up um and then they had a long-term thesis and they've brought together a number of folks in the space and so we see there's an opportunity for that. So, it's around deal quality. Um, it's around finding something where it's going to match and also making sure that it's with, you know, it's not really part of our DNA. And as we look at deals, we want to make sure that if when we do it that we do it well, compared to stat when you when you look at like maybe 20% of deals people would do in the in in in um later on. So this is something that um developing that organizational capacity. I think constellation is so well known or one of the things that's made them so successful is they have such a great playbook for incorporating companies. And there are some other folks that I've studied um where they actually have teams that are set up to do that so it creates value rather than destroys value. Um and and I believe it's easier to grow quickly than it is to grow well. And so as we have looked at, we haven't done a deal since since I've joined as CEO, but it's something that um we're building that capacity so that we'll be able to move and and hopefully do that very effectively. Um and then the second question around AI um I I'll just say very quickly uh and I had mentioned in my in my comments before is that you know Charlie had always talked about what a difficult business it is and um and and selling to public sector uh the procure the long procurement cycles um and uh uh and and and just complex uh processes the complex regulatory environment and so these things where we would kind of look on the grasses is greener on the other side of the fence with with simpler SAS type businesses. And so now as we see um the threat that's posed where those businesses can be potentially challenged um by by uh inefficiencies being eliminated in the process of creating managing software. Um we feel very grateful for the uh for the uh for the moes that exist from all of that. looking at a a large project that we recently bid on. The idea of across all these different courts and and managing all these different things, it was unfathomable that you could someone could spend a few weekends developing something with clawed code um and to be able to create that. Humans are so integrated part of the systems. There's so much complexity there. It happens on such long cycles. Um we feel who knows comments like this can can age not not age well. But I but I feel uh in a relative sense um we we see there's tremendous potential for being an enabling technology too where it's not zero sum. Um it's allowing us to accelerate the development that we're doing and build things that would have been hey wouldn't it be great to be able to build something like that. I think it'll be able to accelerate our road map with the same number of people. >> Okay. I can't let Koshell and I I so appreciate your letter. It's sitting on my desk and I was gobsmacked so I haven't yet responded to your letter but I will respond to it. It's the first thing uh on my desk when it comes back. So you've got the last question to Stephen. Thank you so much for being here. >> Thank you guy. Thank you for doing this to everybody especially the aquamarine team. Um Stephen, pleasure to see you. Very impressed. Uh I'd love to ask you uh what's you know you got an extraordinary opportunity to spend time with Charlie especially I guess the last few years of his life. Uh what surprised you the most and what did you learn the most? What surprised you the most is is question one. So like what you thought versus what you what you learned about him and then also uh what what did you learn in in that time that you got to spend with him? Thank you. >> Thank you. I know we're sensitive to time so this could be a long answer but I'll go very quickly. One of the things I was most struck by was um we all know he he was an incredible polymath and had deep knowledge of different topics but his memory and being able to discuss books that he had read 20 years ago or I remember he made a comment one time he goes oh my memory my you know my memor is not very good and I'm like you're trying to remember the name of a guy who was incillary to a deal in the 1960s right like your memory is fine Um, and uh, but even I I had dinner with him two weeks prior to when he passed away and it was the night before he did the interview with Becky Quick and we were chatting and and it was I mentioned that I had taken a Whimo in in in Phoenix and uh, and we went on this whole conversation had this whole conversation about um, AI and autonomous driving and the and and unintended second order consequences and things and his um ability to analyze and provide um really amazing thinking about autonomous cars and the risks and things that could happen. It was it was he was a month from his 100th birthday and it was it was it was an extraordinary conversation. Um, and so that was the thing is, you know, his the level of curiosity and interest and thought and everything. He was it was it was it was absolutely inspiring. And I I I could go on, but I'm going to stop because I know we've got lots to get to here. But, uh, hopefully that gives us an thanks everyone. I was just saying to Stephen that I think he's won a whole bunch of new fans and I could have him talking all day just about the Charlie Manga stories. Who wouldn't want to have dinner with Charlie Manga at a regular basis? Um the next person we're going to have is is Adam Me. Um at Value X and Clusters Brian Lawrence has said that um it's the greatest bunch of oddballs in the world. Um, the great thing about being having people like Adam Me in the world is you know that you can be an oddball with him. Um, I I think of Adam as the ultimate introvert more than me more than actually Brett Gardner is a pretty much of an introvert as well. So we we like introverts a lot and it's really hard to be an introvert but somehow at Berkshire Hathaway you can have your own crowd and be an introvert. He's written uh it's it's a new edition of the same book. You would say it like that >> extended through 2024. >> So I give you Adam me. >> Thank you. What is the common thread connecting 5-year-old Warren Buffett to 95year-old Warren Buffett. I would argue that it's numbers. He's a man that who loves numbers. They've been a part of his life. He's adept with numbers. So, let's take a look at some numbers from Berkshire Hathway and its history. We start with a word cloud. This word cloud is the 100 most frequent words in Warren's last 50 chairman's letters. And of course, as you'd expect, Bergkshire comes out on top. So, let's start with a pop quiz. In the last five years, Berkshire added more equity capital than it in its first how many years? So, how many people think it's 10? Nobody. Okay, good. 25 years. Okay, we've got one in the back. 35 years. All right. Well, this is this is my fun point. You're all wrong. And this is this is of course a function of incredible compounding 52 years from 1965 or 62 years from when Berkshire Hathway or I'm sorry Pathway Manufacturing and Berkshire Fine Spinning Associates merged in 1955. Just an incredible statistic. Here's Burkshire's shareholders equity in a regular graph form. And you can just walk through that progression over time of I mean when you look at the the the first chart in the the blue there to think that when you're sitting in 1995 all the progress have been made at Berkshire becomes almost a line. And when we look back through its history again back through to 1990, we still see that progression. And it just what what will Bergkshire look like in another 25 years? I mean these numbers will be absolutely enormous. A big part of that growth in equity capital is from operating earnings. That has really been Berkshire Hathaway's core economic engine. This chart only starts at 1999 again just because of the the sheer exponential nature of of the numbers. But if you go back to 1965 all the way up through 2025, operating earnings contributed 58% of the growth in in total capital at Berkshire Hathway. The rest was investment gains realized and unrealized and then offset by some uh some share share buybacks. Bergkshire's key to success, one of its key to success has been its insurance business. Last year they ended with 173.5 billion of average float. Just an incredible incredible amount of capital, free sources of of funding. The little the bars at the bottom here are the cost of float. So a negative cost of float is a benefit uh which means they had underwriting earnings. A positive cost of float is not something you want to see. 2020 uh sorry 2001 was the worst year. 12.8% loss. And what's remarkable about that that graph that history is how infrequent those those positive years are. Even those bars that are positive but are lightly shaded. So 1998 and 2002, those are years where Berkshire's cost of float was positive, meaning they had an underwriting loss, but that cost of float was still below the 10-year Treasury bill. So this co this float still was better. Bergkshire still borrowed at a lower cost than the US government. Just incredible. And if you go back to 1967 when Berkshire bought national indemnity, there's only an additional 5 years where they had an underwriting loss. It is an incredible record and one that I don't think will be repeated. Berkshire share price. We've probably all seen this graph off the charts. Not something that happened by by accident. It was a result of that compounding, that intentional compounding over time, operating earnings, uh, smart investment decisions over time. And of course, what did Warren Buffett do? He made himself rich by taking two and 20. No, he paid himself $100,000. And if you look at this in real terms, he took a pay cut every single year. And so I think that just makes the record even that much more admirable. Here's Bergkshire's rolling 10-year market value compared to the S&P. And this is just I mean when you when you look at the entire record and you look at its history, the mid mid 80s to mid 90s are really when Bergkshire's engine took off. And that chart uh the bar there in the middle the 31% that's the outperformance the average outperformance over that decade. That's not the performance that's the outperformance over the the S&P just an incredible record. Bergkshire's average quarterly book price to book ratio. I have just a couple of key points in Berkshire's history on this slide. 1996 they issued shares at about two times book value. 1998 they did the Genri deal which combined Genry with Berkshire Hathway in an all stock deal. Off the charts it was nearly three times book value. One of the the pivotal points in Berkshire's history. And again, we sit here in 2025, you know, almost almost three decades removed from that. We fast forward to 2011 2012. Bergkshire dips its toes in repurchases and then we really start to see this capital return happen in uh 2018 to 2024. 78 billion of share repurchases at a very attractive price to book ratio. This chart of Bergkshire shares outstanding dates back to 1965 when he took over. Bergkshire's history, they use shares probably more frequently than people realize, but not to the extent that some other companies did. Uh there were some times in its early history where it was repurchasing shares. There were a couple events such as blue chip stamps, uh the devestment of the Illinois bank and trust that brought the share count down because of that. And then we get into the 1990s, Bergkshire had there was a buying spree where part of the deal is in cash, part of the deal in stock. But Berkshire was not not afraid to use all of the tools in its capital allocation arsenal. And you think back to that other slide, it it ties to the price to book. Very conscious of the price to value that Bergkshire was giving up. The Gen Reed deal stands out in 1998 right there. This huge jump in shares. There were also a host of acquisitions. Uh 2000 early 2000s, there was a one year where Bergkshire purchased eight businesses in one year. some of them with stock. Just an incredible period of Burkshire's history. And I'd encourage folks to to read back and and study that period of time. It's just an incredible period of deal making and excitement at Bergkshire. And this these were not not always the most exciting companies, but from a a standpoint of Bergkshire Hathway, they were exciting. Shaw's carpet, um, Acme Brick, for example, Benjamin Moore Paint. one one kind of interesting data point. If Berkshire Hathaway begins repurchasing shares, which I believe it will start doing again, probably in earnest, depending on the stock price, if they repurchase about 2 and a4% of their shares over the next 15 years, they will get the share count back down to about a million7,000 shares that existed in 1965. If they retire 3.4% over 10 years, they'll get there. And if they repurchase 6.7% over the next 5 years, they'll do it by Warren's 100th birthday, which is not out of the realm of possibility. Berkshire's annual report dating back. Are we running out of time? Okay. Burkshire guy starts getting his presence here. you start feeling it. >> So, just for fun, I'm going to cold call two people to ask a question or to riff on what he's saying. One is um uh Brett, so prepare. And then because he's sitting next to you, David, you're going to both riff on what he's saying, so be prepared. And those are the two quest two questions you'll have. So, I'm giving you fair warning. Brett wrote a great book. David's a great guy. So, go easy on me, guys. Bergkshire's annual report I was struck by, and probably everybody is if they go back and read old annual reports. Pre pre-Buffett, maybe a page of of a letter if if it even existed. And then you see this incredible progression over time of Bergkshire's annual report. Bergkshire's annual report length compounded at uh compounded annual growth rate growth rate of 4% over this time and I don't know if uh if my friend Chris Bloomstrand is here but his letter exceeded the entire Bergkshire annual report in 2024. An interesting consequence of Bergkshire's growth over time in book value and the growth of the report itself that differential has meant that some of the businesses it acquired have shrunk not because they haven't been good businesses just because Berkshire has grown around it. Scott Fetzer is a prime example. 1986, Berkshire spent almost 20% of his equity capital acquiring Scott Fetzer. Scott Fetzer was home to almost two dozen businesses, including Kirby, World Book, and a host of others, and it was a a major acquisition, almost doubled Bergkshire's revenues. Fast forward to 2003, I mentioned all of those acquisitions that Bergkshire made in the early 2000s. Scott Fetzer loses its place as a reportable segment. 2024, it's mentioned in two sentences. And so this incredible growth that's just happened around Berkshire, uh I I think you know when you go back and read the history, this was a big deal. And it just I think illustrates the size of Bergkshire today. And the manager Ralph Sheay Buffett said he put him in the the Berkshire Hall of Fame. So again, this this is a guy who contributed an incredible amount to Bergkshire, but Berkshire just kind of grew up around it. Another pop quiz. I'll go quick. Oh, I'm sorry. >> And we have two questions to go. And I have a question. >> Okay, I'll go quick. Okay. Bergkshire's largest acquisition. I'll just skip to the answer as a percentage of equity capital, the Illinois National Bank and Trust in 19 uh 69, 44% of equity capital in the six complete decades of Bergkshire's history under Warren Buffett. No, no acquisition was less than 15% of equity capital. So that just goes to show you the size that Berkshire if it were to make a 15% acquisition today that acquisition would have to be 110 billion. This is the last slide. This ranks the acquisitions of these select uh companies against the the company level return on capital against the uh multiple of invested capital that Bergkshire paid. And so you can see this sort of up and to the right. Um the couple outliers, one on the left, NV Energy, low return on capital but a low price. And you see that C's and Scott Fetsz are there in the middle. An incredible return on capital but a very modest price. And that is what contributed to Bergkshire's growth over time. If you'd like the charts, you're welcome to download them here. Um, I think I'll just end with um, you know, >> Oh, don't worry. Yeah. So, uh, are are you ready? >> You can you can do do the mics over here. I I have one question. So, congratulations on geeking out >> so thoroughly. Um, can you imagine geeking out on any other company other than Bergkshire? >> I try. I mean, it's just so fun. And and what's great about Berkshire, I mean, when I went I I wrote the book, it took five years in total, but when I went back and did started the editing process, you know, I went forward writing it. And when I went back and and read what I wrote of Bergkshire's history, I even learned things. So, it's just so fun and I think it's timeless. It's really timeless. >> So, let's get uh we'll we'll get the two questions together and then final answers. So, uh, first of all, Brett and then David and they've been cold call. So, uh, you you have a pass or something like that. >> Okay. >> Go ahead with a question. Yeah. >> Yeah. >> Adam, I actually have a critique first, which is I don't think you're promotional enough. Like, you did such a masterful job. Um, Warren Buffett wrote you a letter thanking you for writing it. He bought the book for the directors, I heard. Um, you know, I think you understate how great your book is. Um, I hope people don't do a uh price per word comparison to mine. Um, you know, you did a fantastic job and I have not finished the second edition yet because I just got it Tuesday, so maybe in a couple weeks I'll have more comments. Um, my one question for you is, um, so we shared a panel about an hour ago and I said that I thought that when Buffett passes, Bergkshire is going to buy the stake back. Do you think I'm right or am I wrong? >> So, first question, go ahead to uh, thank you, Brett. Well, I haven't uh written a book on Buffett, so sorry to disappoint you. >> Um I was just curious um since you studied it for such a long time, if there is like a favorite investment or like acquisition like that you think is particularly good or insightful that you want to share. lost weight. >> Um, on the question of Bergkshire buying Warren shares, I think probably not only for the reason that I think, well, not not in one fell swoop. I think the structural advantage of having it parcled out over 10 years will protect Berkshire. So, if it's a state just winds it down over 10 years, you know, we'll have a decade or 12 years. I mean that chart with equity capital, you know, we may be at a a trillion five when that happens. That will really solidify Bergkshire's place uh and protect it against any, you know, uh corporate raiders and so forth. Um I really like Scott Fencer, David's David's question, and David writes a great a great blog. I should, you know, if you can find him, uh wonderful guy. Um, gosh, Scott, I like Scott Fetzer, but I think, you know, and I didn't I ran ran over time here, but Bergkshire was was uh a heavy better in bonds. Um, they they bought uh about 13% of equity capital for uh in the Washington public power supply system. Uh there were five projects. Three of them had trouble. Bergkshire went in and bought uh the bonds of two of them earned 16%. Uh Salomon Brothers was you know 20% plus of equity capital. So I think the the theme through Bergkshire's history is a willingness to bet big when it makes sense. Big acquisitions, whole companies, large positions in stocks and even bonds when you look back through its history. So thank you. >> Yeah. Thank you so much. We could we could have you all day and we and we would all geek out together, but time is limited. But everybody buy his book and read it and we'll have him back. Thank you so much. Yeah. So, um Brian, you have two new analysts. One is called Marvin. He's going to tell you all about it. Marvin and somebody Vicki, you know. So, um, I give you Brian Lawrence. I studied with him a long time ago. His I married his wife to him. His her name is Seagull, not Seagal. I give you Brian. >> And you give me the microphone. Thank you, Guy. Um, all right. Good. Well, before I talk about AI, I want to talk a little bit about Guy Spear. Um, multiple people have come up to me and said how amazing that letter was, uh, that he sent us all. And I just want to say for me it was amazing but not surprising. Um, my wife has written a great book called Getting There about tough times that you go through and how to be prepared for them. And the thing about Guy was he spent his life getting ready for the the diagnosis. And so I'm not surprised that he wrote such an amazing letter. Uh, however, uh, even though I just want to call out one thing about this experience you're going to have. glorious that he's with us. But uh uh he's he may speak six different languages and be from five countries or whatever the reverse is, but he keeps calling it a moheakin and it's a mohawk. So just everyone tell him that if he wants to dub his own hairstyle mohe, he should shave the other side and and dye the top of it purple. So that's my All right. So, I uh I want to talk about AI. It's on everyone's mind. Uh we've been using it a lot like uh all of you have. And I have some thoughts to share. Um there's this uh famous quote from Sam Alman uh about AI being able to make a single person make a billion dollars. Um maybe that's true. I I would point out that the PR of this is not great. We tech overlords are going to get a lot richer while you guys lose your job. They need to work on that. But the question is how novel is this idea the single person can make a billion dollars. And uh I just want to put out the the point that value investors kind of got there first. Uh Buffett was managing $900 million in today's money with with five people and he really I mean the four people were not making the decisions. Munger was two people. Ted Wexler uh is a oneman show but he had a couple of people helping him. And we at Little Oakcliffe have uh three people $360 million. So value investors have this amazing leverage of being able to manage capital uh with not a lot of people. So this is not new uh despite what Sam Waltman has to say. Um so what we uh are doing at Oakliff is we've got these two agents. One is named Marvin, one is named Vicki. They live on Mac minis. They are open claws. The reason they're on Mac minis is because uh getting them inside your corporate tech stack will make your IT guy very cranky. Um and uh but we're intrigued by Sam's point. And so let's talk a little bit about our experience with these two so far. Vicki is a shopbot. Uh she's out there searching for real estate deals, uh autos, restaurant reservations, uh for two purposes. one to stress test a couple of the investments we have in areas where people think agents are going to take over and two to see what this technology is capable of. And the summary of it is she's not capable of very much because the internet is engaged in a kind of a spy versus spy uh game right now where uh an attempt by an agent to gather information is being blocked. Zillow, Compass, Cars.com, CarGurus, their foreign equivalents have all blocked her. Um she can't even make an a restaurant reservation. She OpenTable blocks her, but she told me to go to the resi website and hack the API out of the HTML because it hadn't been properly uh coded. And that worked for 3 days uh until they blocked that. They they found the the the hole. And then this is Vicki in her own words. Literally, you you talk to them. It's like they're people. Um when I use a residential proxy account, which is you you can rent for $5 a month, the ability for Vicki to pretend she's a lady from Queens. Um, it's indistinguishable from a normal person browsing. That's how I bypass bot detection. And this is why they live on their own Mac minis because they are not necessarily uh always on your team. They're prepared to to jump boundaries. And of course uh she has been cut off uh from this as well. She's having sort of a frustrating time. Um but we're going to keep working with her because it's a a game of spy versus spy. Marvin is an investment research analyst and uh we're having more success with him. Um he does research for us. He takes our frameworks and applies them. He monitors our portfolio and watchless companies. Uh he writes reports and he has a a memory base that is compounding. Um but what I want to talk about is how important human discussion is to how he works. This is Marvin in his own words. Uh in this this is the end of a long segment in which he had been cross-cheed by human analysis. We I sent a report he had done on a company to a very smart investor friend. That very smart investor friend had his own analyst cross-check Marvin. Marvin had made some errors and he's protesting here. He's basically saying the highest value use of me is cross-checking humans. I'm better than an analyst. Okay. because I'm not anchored to prior work, not career risked on the conclusion, and I don't get tired on page 200 of the 10K. What he's basically saying is I'm prepared to apply your frameworks tirelessly to information that you get me. You did not give me enough information to compete with that human. I can't tell if this is sickantic or real. Um, is probably some combination of both. This is what Marvin looks like. Uh, there are inputs along the top. He's able to access agentically. He's got LLMs there on the left. Uh it doesn't really matter which LLM he uses. He uses Opus a lot, but he can use Gemini. That stuff in the kind of the green and the purple on the right is his memory, which is compounding. Um and then he's got outputs at the bottom. And there's a process by which he's continually looking at things and trying to make his memory more effective. So a way to think about this uh in simple pictures is when you open up a chatbot and you ask it a question, the context window is empty. And I don't know if you guys remember that amazing Chris Nolan movie, Momento, but the guy forgets everything every 15 minutes. And what he's done is he's tattooed onto his body certain important facts. And the LLMs are trying to tattoo on their bodies like certain important things. Like they'll know that Brian is a a man. He lives in New York City. He's an investment guy. He likes to sell. But it's not the same thing as having the full context for uh for the search. And what Marvin is doing is he's injecting as context into the context window when we ask him a question our frameworks, our prior work and a memory of what has made sense. And to get that context injection right increases his value. And what you're seeing on the right is a map of his memory. So far he is developing interconnections between different subjects, different companies, different themes, different industries. And to curate that memory so that it is high quality and not full of junk is the trick. Here's Marvin commenting on this presentation. Marvin was given a a draft of this presentation. He wanted you guys to know this. Um I'll just read it. You This is you is me have read 500 annual reports a year for decades. Your instinct knowing when something feels off does not transfer to an agent. My memory compounds correct and incorrect beliefs equally. Stop and think about that for a second. Human discussion is the quality filter. Without discussion with you, I drift towards confident mediocrity. I I kind of want you guys to think about how many humans in your life are already at confident mediocrity. And I want you to think about what happens when a guy like Marvin is ingesting stuff from the internet. There's so much junk there. There's so much opportunity for the error bar on something to be wide and to stack errors and for Marvin to drift. And there's a related data science question which is if you think about uh Google search, Google search when you when you search Google, you're not actually searching Google. You're searching an index like a a vectorzed database of the web which serves you the right answer in 10 blue links depending on what they think will maximize your engagement, your engagement and their advertising dollars. What we're trying to do with Marvin is have a small number of curated frameworks that maximize a query's focus on information that is knowable, important, and true. These are two different things. A Google search is not necessarily important and true. What would you guys pay for an agent who was willing and able to apply your frameworks in a highquality way to the nonsense that's on the internet? Um, we're working on it. It's it's a work in progress. Some predictions. Uh, some of these I have high confidence in and others are just to be provocative. Um, many humans will have their own agents. And I I don't mean the agents that are being developed on Silicon Valley like now that are going to be headless and are going to do all sorts of stuff. They'll do your CRM, they'll do your call center, they'll do your uh accounts payable. Um I'm talking about knowledge assisting agents. I think many knowledge workers will will have their own agents. I think the training of an agent is critical. I think your agent will be as good as you train it to be. Agents will maximize the opportunity to marinate in your own biases and intake even more crazy information. If you think about the news, the news used to be curated for you. And as as angry as you might get at how the news was biased, at least it was curated. But can anyone here argue that the internet has made politics better? People are living in their own echo chambers. I think agents will accelerate that. I think that bad humans will train in bad agents. Bad in the sense of sloppiness, bad in the sense of malevolent. I think there's a whole bunch of stuff that has to be figured out. I think that good agents will be worth 100 times their token cost. Marvin is costing very little in tokens, but he's already very valuable. What what's the spread going to be between human cost and agent cost? And then this is something it is so easy to push the button and have Marvin tell us something. But just because he tells us something, are we getting smarter? Are people going to overrely on these agents and get less intelligent as a result? And I think the answer is yes. Um, and before I go to questions, I want to clarify one thing. Guy Spear just called Value X a collection of incredibly effective oddballs. Okay. And I think that's true and I'm so happy to have been a member of this community. Um and I benefit from it every uh every year. I think I'm incredibly lucky. However, I just want to point out guy the collection of oddballs is a reflection of your own brain. So what are we going to do with that? And I'll stop there. I don't know if people have questions. I I just want to say, Brian, that my my brain is diminishing as we speak. I've had three pieces taken out. So, it's getting more weird all the time, you know. But, um Oh, we have a question. That's great. So, one person there and then number two. And number three, you don't realize it, but Calvin, where is Kelvin? Calvin, um, you're gonna ask the third question and I may put you on the spot beforehand. You never know. But, uh, go ahead. First question. >> Thank you. Um, congratulations on using like being bleeding edge technology, using agents and putting open cloud work. It's it's fantastic. Um, my experience with agents is as you use them, you find them to be great tools and then over time in that engagement, you actually start to ask different questions, right? the agent changes us back. And I'm curious as you're using these for kind of doing your financial research and your investigations, how has it changed you in the questions you're asking it or in the research that you're doing? >> Yeah, I mean it's a it's a terrific question. I I think the first point is that um just because something comes back at you beautifully presented doesn't mean it's right. And so in this new world, we're going to be presented with a lot more information, but that is probably going to erode all of our judgment unless we're careful. So I'm just being very thoughtful about that. And we're 8 weeks into this. People talk about >> open claw frenzy like that's what this feels like. You can see the change happening. Um so that we're very conscious of. The second thing though is it is enabling us to cover so much more ground. I mean, once he knows what we own and he knows our frameworks, we can ask him questions that would take weeks to respond to um you can have him do weeks of work in 7 minutes. It's astonishing, but the quality of the work depends on the quality of the frameworks. So, I feel like I should answer that question again in a year. >> Okay, great. Thank you. Thank you. >> Thank you so much. Number two, what's changed in how you monitor investment thesis durability now that AI is a credible disruption vector across most businesses? Yeah, I mean I think that it's coming guys like it this is real. uh and you can you it almost feels like the world is divided into uh people who are laughing about the hallucinations that chat GPT is capable of and then there's like a small number of people who are who are like doing this uh who are like wait a minute and then there's an even smaller number of people who are actually doing these models and some of them are giving podcasts and so every I I'm quite convinced that we have a big investment in in a company called Gildan that makes t-shirts not going going to get disrupted. Okay, Transime Aerospace Parts not going to get disrupted. I don't know. There's some other things that are going to get disrupted. There are other businesses that are going to get better. If you have a business that is selling something denominated in human time or human productivity or advertising dollars, but its cost of goods sold is increasingly denominated in tokens that are going down in cost by 99% each year. Holy crap. So, both good and bad. I'm just pausing because it's Coxy. >> You want to make it feel a little uncom. >> Yeah, exactly. I give you Coxy. >> Firstly, thank you, Brian. Um, interesting presentation. I uh I think working from home had like a different impact on different ages. Um, >> sorry, Coxy, introduce yourself. I would do it, but you can do it better. and he's a he's a member of the Value X community and he's a great person to have around and very unusual, another oddball. And then you can ask the question. >> Yeah, >> thank you very much. Uh I'm James Cox. I um spent a bit of time working on Uber. Uh now I run a tech company called the routing company. Um also a good friend of Brian's. He's Brian has taught me a lot. Um, so I think working from home had a very different impact on different generations. Um, I'd be interested in your prediction for how agents will impact different generations. >> Oh, that's so interesting. Um, really interesting question. I would say if you're my father, 83 years old, um, I think he's thinks this is amazing, but he he's not going to use the technology. he's going to have me build it and ask questions. Um, if you're, let's say, 20, I think you're terrified of this because what does it mean? Like the obvious place where this work gets automated is in the intern, the associate. Um, if you're my age, I think this is amazing because all of the stuff that I've learned, I can turn into frameworks to make Marvin smarter. Uh, and if you sit on top of capital, I think you're capital unless you get disrupted. But I I do think there's too old to use it, too young to be secure with it in the in the middle. And there's a thing coming that we've got to think through as a society. >> Yeah. Thank you. >> Um would you ever consider licensing out your software to other money managers? >> Me specifically. Aha. >> Um the answer uh and like there have been some people who I've been talking to about this. Um the answer two weeks ago was maybe the answer now is no. Uh there is no way. I I I think that uh what you realize is that the like Tolken had this point when you when I start quoting Tolken, you know, I'm speaking from the core like the internal geek. Um the story grows in the telling, but also like the story changes the storyteller. Like Marvin and I interacting, it changes Marvin. I don't want someone asking questions of Marvin that are nonsense questions. >> I always knew you were such a good friend, Brian, you know, and it's interesting to know that you're better friends with Marvin than with me, but forget it. It's okay. Um, but so, um, Kelvin, I'm No, no, no, no. I'm going to talk to you first. Okay. >> So, I want to tell a story. This is very weird. uh of um the way I asked my wife to marry me. And I'm not going to say it right now. I can tell it to you later, but you don't want to do what I did because he she nearly break up with broke up with me. And now you can ask your question and we can have that conversation later. >> We should definitely have that conversation later. But thank you. Uh Brian, this is a great presentation. um really appreciate what you're doing here and I think a lot of people still haven't used I think AI this effectively in investment research. I guess my question is more related to predictions especially around the last point of over reliance on agents. would love to hear how you're thinking about I want to say the future of markets but more like navigating as an investor especially as at least from what I've seen a lot more volatility in markets where certain stocks get bought on very little understanding because of the over reliance on agents. >> Yeah. Well, so in uh artificial intelligence, there's this concept called gradient descent. And what that effectively means is you're trying to get across the surface of vectors. I mean, we can get really technical here to the most optimized answer based on a whole bunch of AB testing. And so Google search engine is the perfect example. Across 4 billion users, they can isolate 100 million and show them this ad as opposed to that ad and see what maximizes in real time. Okay. the pro and for quantitative trading which it it feels to me cartoon math half of the market is indexed 40% of the market is algorithmic 10% is activist of the 10% maybe 1% is concentrated okay ETFs are not going to use this okay the algorithmic guys are like the TPU announcement Google just made the number one non-cloud customer is Citadel securities for TPUs okay they're they're all over this but that's about what's going to happen 10 days from now and there is gradient descent but how do you use gradient descent if a decision made now you don't know the outcome of it for 2 or 3 years right so it's a different computer science problem it's a computer science problem about finding in vector space if you want to speak their math what is knowable true and important and that is very different than what can I figure out AB testing in the next two days >> Brian I'm still working on having new license, Marvin and Vicki, to me. I hope I get better at it. >> We'll talk. We'll talk. >> Thank you so much. Yeah. So, um, we we now have somebody who needs no introduction, so I'm not going to give him an introduction. I give you Bill Aman, the one and only. I have no I have no idea what Bill's going to talk about, but great to see you. Thank you. Uh he's I I'll just say this. Brian is Brian uh Bill has been a great support from a distance in all sorts of ways. He's an amazing human being on a personal level. You know him publicly, but he is privately as well and we can go into that at another time. Bill, >> thanks so much. So actually I I have only unprepared remarks. Um so what I'd rather do instead of say stuff is maybe just answer anything that you guys find interesting. So, we allowed to do that. Okay. >> No questions for him. Line up in front of the mics. >> Yeah. >> Who wants to be first question? Ask me anything. Hearing no questions. I'll No. Hi. Um, thanks so much for putting this on. And my question is regarding AI. If it starts making research breakthroughs on like physics, science, do you think it's going to replace investment management like to 99%. Or what are your thoughts? So I I think the citadels, the millenniums, uh I think that AI is going to make a lot of investing strategies more and more short-term almost like an arms race where you know a company files a 10K and the AI can read it and come to a conclusion faster than anyone else who's got the fastest model to analyze and come up with a conclusion that and they'll put a trade in on the basis of that. Um the two biggest forces in markets right now are indexation, right? uh I don't know that is half the company but some you know meaningful percentage of companies are getting the float is being taken out of the market by index funds and the other big force are this sort of pod shops millennium and others incredibly short-term you know they individual teams very high compensation very tight risk limits which basically means stop-loss type uh sort of structures and the effect of those the float shrinking and more and more short-term money and then AI is going to do the same actually presents very good opport opportunities for probably most of the people in this room. If you're kind of if you have a horizon that's longer than a minute, you know, if if you have a rise, if you can take a multi-year view, uh some really great companies are going to become available at stupidly cheap prices because of some short-term piece of information that anticipates that the stock will go down and you have a whole bunch of people following along. So, I think AI is is a great research tool. I think the way it's going to be used in markets is going to be used for the kind of very shortterm insights. You know, if you think about, you know, Citadel, there are always these stories about, you know, locating the uh the server within, you know, shortest distance possible with the fastest, you know, fiber, if you will, close to the exchange so they can have a slight edge over the competition. So I think that's where AI I think is a more useful or where where a lot of and they're going to have the resources you know to to be the third largest customer or whatever of of Google. Um but I think the kind of long-term patient investor I think more opportunities will present themselves. The other thing I would say AI is at least at this point is about understanding everything in the past and on the basis of that perhaps predicting the future and that relies on you know I I think creativity is basically doing stuff that has never happened before. When I look at Persing Square many of our most successful investments transactions were things that had never happened before. you know, going short the credit of a AAA rated company, you know, buying the stock of a company going bankrupt. You know, those are two of our most successful investments. But it hadn't happened before we did it. Now, we just did an IPO. We did it in a completely unique way. I mean, the AI wouldn't have told you to give a gift to IPO investor with their purchase because it hadn't happened before. So, I think there's still room for for human creativity. So, I think AI is more like an accelerant. Um but I I think there's still room for us for now. >> Thank you. >> Yes. >> Uh practical question. You hold the Tel Aviv stock exchange and the pricing is rather high. How do you how do you see it now? >> So uh the question is I own I own a stake in the Tel Stock Exchange and you think the the price is high or the valuation is high? >> The valuation. Ah, so um a couple months after October 7th, uh the the management team of Tel Aviv Stock Exchange, I got a call from Rich Handler at Jeffre. He says, "Bill, you have to meet this team." I said, "Tell me about it. It's telev stock exchange." I said, "Well, we we actually haven't invested in Israel before." He says, "Just take a look at this." He said, "Well, how big is the investment?" He says, "The most you can invest is 25 million." I said, "It's just hard in the context of Persian Square to make a $25 million investment." He said, "Bill, take the meeting." Fine. Met these guys and I thought, "Wow, this is pretty interesting. Uh the problem is that was too small for Persia Square. But I pitched the team and the team said, "Bill, we can't make a $25 million investment because it's going to take time and energy. Doesn't fit into a 12 stock portfolio and 20 billion of assets." Uh so I uh I said, "You know what? I want to be supportive of Israel. Uh what better way I had been supportive philanthropically. Uh what better way to be supportive actually with support capitalism in Israel, investing in exchange. And so I'm going to make this investment." I did the only due diligence I did is I met the team and I I had to get approval from my compliance officer and she said you know it's not a it's not a competitive threat to Persian Square. So I bought 5% with my wife the Tel Aviv stock exchange but part of the theory and is I'm very bullish on Israel from an economic perspective. What is Israel? It's like Silicon Valley imagine if Silicon Valley was a country. That's what Israel is. Okay. You have this incredible density of talent and IP and IQ in a very small country and you have now a generation of 24, 25, 28-year-old people that went through a pretty brutal war, right? What what happens when you go through that and you survive it, you develop grit and also the Israeli military is very technologically uh savvy. There have all these different divisions. All the top venture capital firms have opened offices uh in Israel and um what mistake the Israeli entrepreneurs used to make was they would sell their companies you know when Google showed up and offered 100 million or 200 million now whiz sold for 32 billion so the entrepreneurs realized now we can build big companies there so I think you're going to see trillion dollar company come out of Israel in the not too distant future will probably be an AI company or a cyber security company and the value of that company will be advertised over this relatively you know, small economy, which means it's one of the best economies in the world. And so owning a piece of a stock exchange is like owning a royalty on on the success of capitalism in a country. Um, so I'm very bullish on Israel. And if you want to a good way to make that bet is to own a piece of the exchange. And I think it's >> the value of something is not a lot of people say something's expensive based on it's trading at a multiple of X versus current earnings. what the value of financial asset is the present value the cash the business generates over its life and I think the Israeli economy is going to grow the number of companies that are going to list in the exchange is going to grow uh and the exchange itself is structured as like almost like a mutual and it charge below market fees versus all the other exchanges around the world those prices will come up it's and exchanges are inherently monopolistic kind of businesses so I I I wouldn't go short okay next line >> ah the back >> yes hey Divia Narendra from Sumzero um have a bit of a mag seven question for you. There seems to be um a situation where markets are willing to give companies that are selling compute through you know like an Amazon or or Microsoft or or now even a Google with with kind of at least recently their stocks done extremely well um to the tune of like 30 times earnings, right? So you see a lot of these big hyperscalers trading at multiples that you know you could argue are fair maybe aggressive certainly not cheap or on any kind of standard metric. On the other hand you've got Meta which is spending very aggressively on capex on on building out these data centers. I think that they've got like 30 in the works or you know some have been completed, some are on in plans and they get zero credit for building out all this capacity and the difference is they're using that capacity for themselves, not to resell out to um tech companies and third parties. Do you see this valuation gap converging at some point? Um yeah, I think I think Meta is extremely cheap. >> It's crazy. Like I'm just curious what you think. Yeah, I think Meta is very cheap. I think look, I think shareholders are nervous about Mark Zuckerberg because every once in a while he goes off on a journey and and they worry that he's going to spend a ton of money on something almost like a hobbyist and it's a controlled company and I think that makes that's unsettling for investors. But I think the the long-term track record of Mark Zuckerberg shows that he's rational and so I I I agree with the basic thesis. I like I like Meta. Yes, >> I think um building a permanent capital vehicle has been on your mind for quite a while now. Um I would be just interested in maybe if you could comment on your journey towards that. Obviously, you've had the IPO uh a couple days ago. Then you have another horse in the race with the Howard Hughes uh story that you're doing. maybe you can share a little bit of of from from transitioning from just a fund manager um to towards yeah the goal of having permanent capital. >> So so there's two reasons why people want permanent capital. One reason is wow people can take their money back. What an amazing business. But the reason why we wanted permanent capital is our strategy really requires it. We started Persian Square. You can't launch a fund at you know 37 years old and say okay just hand me your money forever. It's not a great pitch. So you you have to start out if you're lucky as a traditional hedge fund manager. We had an offshore and onshore fund. But we knew we had to get to when we got to scale, it becomes dangerous in our strategy not to have very stable money. Why? Because we buy large stakes in companies. We're concentrated. We join boards of directors. We recruit management teams. We make commitments to CEOs. You know, we do transactions that can happen well out into the future where we're committing capital. You can't do that if your money can go away. But we we had to live with what we had. and we launched our first permanent capital vehicle October 2014 we launched it offshore um and that was the beginning within a year we had made the worst investment mistake in the history of the firm company called Valant Pharmaceuticals our first large passive investment we lost 90% you know the stock was down 90% uh and then we had you know amazingly positive press for the first whatever number of years of persing we gave it all back uh with all the press then and then our friends in the hedge fun industry started shorting all of our stocks they went long the one stock we were short company called Urbal Life there's a movie I recommend commend it. Um, by the way, when they do a movie about your short position, that's when you get out of short selling. Okay, that was that was the moment for me. Um, and uh, that's when I had I said, you know what, let's this is a great moment for us. Let's give back all the open-ended money. Let's focus on permanent capital. That was 8 years ago. We've had the best eight years in our history. And and you understand why the competitive advantage that Warren Buffett's had over a very long period of time. And he recognized this also. So he ran a act Buffett ran an activist hedge fund started in 1956. He wound it up in 1969. And why did he wind it up? Because he he realized as you get to scale in this strategy, you cannot have money that can leave overnight. Uh and that's why Buffett went the route that he did. And we've done something analogous um in the but you know what we did recently is there's an entity called a 40act closed end fund and everyone kind of thinks these are bad things and they are because the average closed end equity fund underperformed the stock market over the last eight years by 7% perom right these are not great vehicles but the problem is with the people running them and the strategy not with the entity itself and And I actually uh we were trying to figure out a way to take our London listed vehicle and and bring it to the US. And we kept going down a path where the lawyers kept saying, "Bill, if you do this, you're at risk of becoming an inadvertent investment company." And they said this again and again and again. I said, "Well, I don't know if this is a word, but what if I want to be a ver advertent investment company? Does it make sense? You know, send me the book." And I'm I'm probably the only person who's read this book, but there's a book on investment companies, you know, and I read it like u you know, the Bible. It was amazing. And what a 40act investment company is, it's a corporation that has only one layer of tax. So it's not typical corporation. You pay corporate tax and the shareholders pay a dividend tax. Uh it's a corporation where you can buy minority stakes in companies, but you can also buy controlling stakes in companies. You can't buy minority stakes in uh in a traditional corporation. You can't have a meaningful amount of your assets in minority stakes public companies. And it's a vehicle where you can actually invest in derivatives and have big hedging and other gains. So, it was like a perfect fit uh for our our strategy. And so, we now have an onshore and an offshore entity. Now, if you're an American, you can invest with us. You know, for $43, you can buy one share. Um and we're going to turn it, I think, into a pretty interesting company. Takes me to Howard Hughes. What we didn't have um was a Bergkshire Hathway like entity. You know, what what is Bergkshire Hathway? It was a dying textile company that Buffett liquidated over time, reinvested the capital in insurance and and really Berkshire is about a well-managed insurance operation where the assets, you know, the float was invested in short-term treasuries and the surplus was invested in common stocks and Buffett did a very good job picking common stocks. And there really hasn't been another one of consequence since Berkshire. And the reason for that is that insurance the best investors generally don't go to work for an insurance company. they go to work for a hedge fund or a private equity fund or a traditional asset manager. And so what we're doing with Howard Hughes is uh we have a company that uh bit like Berkshire. It's undervalued. It's traded at a significant discount to the value of its assets over its life. Uh it's got a 100 110 plus dollars of sort of liquidating value in a very interesting business, but one that Wall Street doesn't care much about, which is it's a business of owning these small cities. We sell lots to home builders. Uh we build apartments and office buildings. Uh we develop condominiums in Hawaii. Um we own Summerland in in Las Vegas, the Woodlands in Houston. Um but it's a CC Corp. doesn't pay a dividend and half the value is if not more than half the value is land. And so what we're doing instead of what the company's done over the last 15 years as it generates cash from real estate, it reinvests in real estate. What we're going to do going forward is we're going to reinvest in real estate as much as necessary to keep building these communities, but we're going to take the excess cash, which was multi-billion dollars over the next, you know, number of years, and reinvest in much higher return businesses. We're starting with insurance. And so we bought a company called Vantage. The transaction will close in two months. Persian is going to manage the assets. We're going to take the float, put the float in short-term US treasuries. We're going to take the surplus. We're going to invest in common stocks. We're going to take a page from Mr. Buffett, and we're going to build this into an interesting company. And today, you can buy it at, you know, uh, we paid $100 a share to buy 15% of the company. We own a total of 47%. So, we have the attributes we need. We have 47% of the stock, about what Buffett had. We have a a specialty insurer and reinsurer. We just recruited a guy named Mark Granderson who many people consider to be the best insurance executive uh of our you know kind of our generation uh to help us uh both at Persing and and at Howard Hughes and we're going to build this into an interesting company uh over time and the power of compounding combined with capital that you don't have to worry about leaving is a very powerful thing. So who's got the best question? Why don't I take three and I'll try to give a one-word answer. I'm a little too longwinded. I'll take three and I'll get very quick answers. How about that? >> Oh, okay. Let's I'll take one then. Okay. >> I don't have a problem. There's a lot of people. >> Thank you for for taking our questions. My question is, as index funds become increasingly driven by capital flows rather than valuation, as assets in passive investing have surpassed those in active investing, and as commentators raise concerns on weakening US uh institutions, would you still still recommend a non-professional investor to regularly invest in something like the S&P 500 or they would be better off investing in of course Persian Square or something an active investor? >> Index funds have proven to be a very good place to invest money. They're very low cost. Um I do think there's an argument that eventually we get to a place that you know the problem with an index fund is that you know the you keep reinvest disproportionately invest with companies with the the highest market cap. They're market cap weighted and you would you would think at some point that would lead to absurd outcomes but I think individual investors have a huge advantage. generally they have permanent capital if they're investing money they can you know don't need to live on uh and they can take a long-term view and they don't have to worry about people pulling the money. Let me take one last question because this gentleman's waited very patiently. I'll take yours. >> Um yeah I was I was just wondering with the geopolitical and the Iran war like do you see things coming to a resolution in a disruptive or non-disruptive way? I think the most likely outcome is uh a very successful resolution of Iran in a relatively short period of time. You know, a hopefully a few months or less. Uh and I think it leads to a a massive sort of peace dividend uh in the world. Iran has been one of the grave threats to the world. Uh it's a sponsor of global terrorism. It's created uh you know massive disruption in the Middle East and and in other parts of the world. I think the administration's done and the military's done an amazing job washing the regime. They're choking them now by effectively shutting off their their resources. Uh so I think this comes to a head in the relative short term and um and I think the outcome of that is I think the Abrahammer cords expand. Uh and I think it's very good for the world. So I'm I'm an optimist. Anyway, thank you for my brief uh >> Thank you so much. I you have a busy schedule so you have to go. But um I am going to ask one thing. If you're if you were invited to be Treasury Secretary right now, would you say yes? >> No. >> Okay, there we go. There you have it. Thank you so much, Bill. Um and we have just the most incredible lineup. And Shantel says it's me and I say it's Shantel. She did an excellent job. I have another amazing speaker, Tom Gainor. He used to fill the room. He used to have security with I don't know how many people last year did you have to have just like you had like 5,000 people that you gave brunch to. But there's but the only thing that I'm interested in at the end of the day when he's done his paration is what he's reading to his kids and what he's reading to himself. But you can do that at the very end. I give you the one and only Tom Gayner. >> Thank you. Yeah. Well, thank you very much for your hospitality and having me. Um, are any uh Chicago Bulls fans here? All right. Anybody know the name Stacy King? You know who he is? He played uh during the Jordan era for a bit. And the night that Michael Jordan scored 64 points, Stacy King scored one. So, he referred to that night as the night that Michael and I scored 65 points. And I I feel following the crowd that comes in. Uh I feel like Stacy King and I'm the I'm the guy who scored uh you know me and Michael scored 65 points with the people who went before me. So thank you again. I don't want to touch the screen or anything if I if I may. Um I want to thank guys for his invitation and 15 minutes in total. He suggested and asked that I would tell perhaps a story about something that had happened in Omaha and Bergkshire weekend and I would tell a story about Guy because I think that that's appropriate. So Markel has done very very well over a long period of time. We went public in 1986 at about $8 a share. As of a few minutes ago, we're about $1,800 a share. We've been a permanent capital compounder. Uh we've learned studied from from Berkshire quite a bit. And that idea of having an insurance business at your core and using the pennies of underwriting profit to invest longer term. We we learned that from Buffett. I learned it by reading the Carol Lumis Fortune article in 1984. Markeel went public in ' 86. I bought stock on the IPO which I've never sold and uh went to work there in 1990 and and so far so good. But it has taken place in batches and there have been times when we're sort of off to the races and really bringing in the crops. And there's other times where we've we've stepped out. We've we've tried to learn things. We've tried to do things and and there have been some challenges and some real operational uh difficulties to get from where we were to where we got to the next plateau. So here's something that happened and I think it was probably in about 2005. So guy referred to the the brunch that we used to have out here that started in 1992 with six people and last year which was our last year of doing it, we had 24 2500 people. um at at that branch and it sort of compounded over time. But in 2005, we were five years into owning Terteranova Insurance Company, which was the international business we had bought. And we knew that it was a troubled company when we bought it. Uh we had a history of buying troubled companies and trying to turn them around and improve them and fix them. So we knew that Alternov ended up being a little more challenging than what we had thought it was going to be. So that J curve took took a little longer and I was uh taking a little heat from from our investors and and people in the room and and one of the items of heat that was being lobbed out is that we we just weren't really skilled internationally and we didn't didn't have investments in developing companies. So that branch probably had 125 people or so in it and the stock might have been 350 bucks at the time. um two points between the time that we bought Teranova in 2000 and 2005 where people were unhappy the stock roughly doubled so even amidst the challenges in 5 years it went from 175 to 350 in in rough terms and and again there's been more IQ points with Bill Aman and Brian Lawrence preceded me here than than I'll ever dream of having but I I like doubles and rule of 72 and rough math math that I could do in my head so that means the compounding in that 5-y year period was about 15% a year to to make that math happen. So in 2005 um again taking heat at the brunch and we don't know anything about international investing or developing countries and guy gets up and he says well as a Brit one of your languages and cultures along the way it's been my point of view that um the US has been a developing country for over 250 years. So I appreciated the perspective that guy brought at that particular moment. So guy that is something I will remember for the rest of my life because you were kind. You were kind and we live in a business where we quantify and we do math and we use AI and we use these tools and sometimes we lose the human dimension as part of that. And Brian, I especially enjoyed your quote about the the discussion being needed because otherwise you will deteriorate into into mediocrity. I I feel that way all the time and I feel very lucky to have the relationships and the friends and the networks that have been so fostered through the Omaha presence uh to do that because uh sitting by myself alone in room reading would would would keep me stuck at a certain point. So I did want to start off with that. U I I I would like to uh again thank those of you who are Markeel share shareholders, those of you who have been interested in us. Uh we've gone through periods before. We we went through one a couple of years ago. I would argue that we're coming out of it pretty pretty nicely at this point and there's pretty strong evidence that that uh that is indeed the case and the creativity and the energy and the values and the curiosity by which we attract uh attack businesses both insurance and non- insurance businesses has a long record of uh compounding in low to mid- teens for uh for the 39 years since we've been a public company. And that's also recently been been true over shorter shorter time frames as well. Uh, last thing I'll say before taking your questions. So, sitting on the chair, I don't know whether this was a gift to me or I'm stealing my neighbors books, but there was a winning long-term games by Luca Delana. Winning long-term games. And to the point that uh uh Bill's Bachman preceded me talking about the time horizons, I think having the time horizon that we do of generations and thinking in in terms of handing off our business to the next generation in a better way than we had, that is an epic advantage. And I tell myself and I think I I have some accurate self-awareness that I am an old fat slow white guy. I know that about myself. And I'm comfortable with that. So choosing which game you play is epically important. And often times I use the example if there was going to be a 100 meter dash between me and Usain Bolt. And I know Usain is no longer competing perhaps the level he did, but I'm going to tell you right now, this is a lead pipe cinch dead. Bet all the money you have on Usain. He's going to win that race 110 times out of a 100. He's going to win. Make that race a 200 meter dash. I think you should still bet everything you have on Usain. He's going to beat me. Make it a mile. Um, pretty sure Usain's going to win, but he might have been so optimized to use to use a word we hear a lot of these days to run 100 meters at a time that running a mile he might be gassed before he gets there. And you may I'll let you in on a secret. I wouldn't beat him in a mile either, but I I I think I think there's a chance. There's a chance and and make it a marathon. 26 miles. I think I've introduced an element of doubt that there may be a circumstance which I could compete with the same bulls over a period of a marathon. Make it a foot race from Key West, Florida to Seattle, Washington. That's a bet. because it is no longer about pure athleticism and the skills and the horsepower and the IQ points that you bring to the table. It's about will. It's about determination. It's about the proper pacing and um stick tuitiveness that can last for decades. That's my edge. That is our edge. We do have a permanent capitalbased business. Uh we have uh shareholders who've been very loyal and owned it for for decades. We have a a cadre of long-term shareholders. We have we have people who are newer to the party and may have a different agenda than than what we have. But we know what we can do and and we have a track record of having done it for a long period of time. And I think the values and the formula by which that has been done both in insurance and non- insurance businesses has proven itself to be quite durable and quite uh able to absorb the volatility that the world throws us. And uh when we look at things in those 5-year kind of time increments and it's the way in which we measure ourselves and compensate the senior folks um it's been a happy thing for people to own for long periods of time. So with that I will stop because I know our moments were brief and take your questions. >> Any question coming back from there? Any comment on Janet? They they they uh published a letter I guess couple couple of days ago that was a restatement of of much of what they said when they first engaged with us back in December of 24. Um there were many things that they said that that I agreed with. We had underperformed in our insurance business and you know we've made some substantial changes in management and leadership of our insurance business and we've gotten to the point where I think we're starting to show some pretty good results from that. Um they talk about the Markel Ventures set of businesses as a distraction. I actually find I believe again with the time horizon that that we have u the idea of diversification and multiple streams of income coming in provides resilience and durability um and the ability to have cash coming in the door when the insurance business was not doing quite so well that I think is of great value. But the the net of it is I think they have a different time horizon that they look at things than than what we do. Uh and we've delivered wonderful returns for our shareholders over long periods of time and would like to continue to do so. >> So he was talking about some kind of I just heard about it some kind of activist campaign which maybe uh uh Tom wants to go into. I want to go somewhere else. First of all I want to say that I think that that comment that I made to you I actually picked up from Tom Russo. Tom Russo is the first person who said that um the United States is the best emerging market. So I need to give credit to Tom Russo for that. I don't know if he's in the room, but uh uh and then uh I you know I think that other than Charlie Mer um I like to know what you're reading. So I'm just going to ask what are you reading? What is in your bedside stand right now? >> Thank you. So, um I will tell you in the in the uh worst part of co when we were all sitting at home and staring at one another, Susan and I were staring at one another on the couch and I like probably many of you in this room have a copy of War in Peace in my house and I might have read I don't know three chapters of it during my teen years but that was about it. So, we were staring at one another and I said, "Would you like me to read War and Peace aloud to you?" She declined that particular offer, but I did pick it up and start reading it. And uh fortunately on my travels in the last couple years, I flew back and forth from Singapore. So uh with with travels like that, you have time to read War in Peace and I did. And I was very glad I read it. U and and pop quiz here. Uh who knows the name of the French general who was attacking Russia at the time? Raise your hand. Say Brad know the name of that you all know you can admit it's we're among friends here it's not so Napoleon right does anybody know the name of the Russian general >> correct well again read my war in peace you you jumped ahead of the of the curve I I think if we had had a graded exam not many people would have gotten that but he's the one who won and and he did it by strategic withdrawal and letting Napoleon punch himself out so observing markets where you get out of faith case and and uh being in touch with your values and your core principles is incredibly important. And so that book actually reinforced some sense of that. Second book I I'll talk about and and uh 95 books out of a 100 I will read rather than listen to but some I would recommend listening to rather than reading and one called the cost of these dreams by a writer named Wright Thompson. I would recommend listening to it. Right. Thompson is a long form sports writer and he talks about characters and people you would know. Um, and I'll skip ahead. Start with the prologue. Don't skip it over. He talks about the craft of long form sports writing, which is a worthy essay in and of itself. Chapter number three was about the integration of the University of Mississippi. And so many of us who are maybe not quite as keen a student as you know James Meredith in that story he wrote about it from the point of view of the football team which had been contending for a national championship and basically got so discombobulated through that process that they lost their way and miss you know is back in a football powerhouse in the world we live in now but they they spent 30 or 40 years in the wilderness of not being a particularly good football team and and that moment of integration broke them. It disrupted. So read that story and and every single one of those chapters is basically a story, you know, written from a different point of view. So the idea of perspective and seeing things from other people's point of view. the the older I get, the more I I find myself trying desperately to think about what somebody else thinks and how they came to that conclusion and why they wonder that and to have empathy for the way they see things and not be so proud about my own opinions or or own views on things. So I found that book to be a delightful way to just frame the idea of different framings and different perspectives and it it really accelerates your learning and and I think your personal skills and how you'll get along with people when when you have that point of view. >> I don't want to make this uh there we go question. Thank you so much >> Tom. This is a philosophical question. I've heard people describe coming to Omaha hearing Charlie and Warren speak as um hearing the gospel. It doesn't change year to year. It's the power of doing nothing. And Adam slide showed the power of doing nothing compounded over many years. >> Um it's very hard to resist the pull to shorten your attention span, your time horizon if you are someone that but look at the value that would have been destroyed if they had been changing their approach year to year. If you want to sort of counteract that and continue to hear the gospel in places, we don't have Charlie anymore. That's a huge loss. Besides maybe the Markell reunion, where are other places where you think people can hear that gospel now? >> Well, thanks for the plug on the Markell reunion May 20th, Richmond, Virginia. Please, please come. We would love to have you. as Charlie himself talked about books, you know, or conversations with the eminent dead to to use his his phrasing. So, the idea of of reading and thinking about someone who was a hearer to you, somebody who got it right, somebody who did something, read about them, read about them. Um, that that is very helpful. Um, so I I I don't know a spot or a a particular convention or meeting uh other than, you know, here and what we're trying to do in in Richmond. Uh but reading would be the number one kind of option I think that exists to to re to reinforce things. >> Thank you. >> Go ahead. >> Hi Tom. Uh Benji Sanderson, I think very highly of you. Uh and I'm saying that because I'm going to ask a potentially rude question. Um >> it won't be the first one I've had. >> I know. I know. You can hand >> Can I ask you one too? Sure. Go ahead. You first. >> I'll show you mine. So speaking of perspective, in my universe, uh you you so you talked about Markeel being a home and you want shareholders to view it as a home. In my investing universe, you kind of are a very nice home that is next door to two other very nice homes, namely namely Berkshire and Fairfax. Um so my rude question is why um why should I choose Markell over those other two beautiful um potentially cost-effective homes? >> Um I think they're all great companies. They have some unique aspects that make them a little different in in the ways that they prosecute their their game plan, but they've all done very well and they've all all been very long-term focused and all gone throughow periods, but anybody who bought them and held on to them, it's uh you I joke, you know, what what do you call somebody who who bought uh a slug of Markell Berkshire or Fairfax 20 years ago? >> Rich. >> Rich. Bingo. So, you're ahead of me. Thank you. So, the last question. Thank you so much. >> Sorry about that. Tom, thank you for taking the picture earlier. Michael Hilit from Treasure Capital. I just want to ask given the Jana Partners uh letter and and activist campaign. Um, of course, Markeel is known as a as a familyrun company. It's named after the Markeel family. You yourself called yourself, I think, the fourth generation of Markeel. Um, but there isn't a, let's say, a long-term uh, big shareholder. Uh, so a familyowned company where we had Buffett with Berkshire or Prem with Fairfax. Um, there are some bigger uh, long-term focused quality shareholders as Larry Cunningham would say, but what would you say to to people who might actually try to be successful in such a activist campaign? and and what what guard rails does Markeel have to maybe wander off a short-term activist to keep the longer term focus in place? >> I see. Well, I think communication and in in fact uh I was I was recently again in in a meeting with someone and uh this was a a Scottish gentleman and he was telling the story about a particular project he had been working on and he was the third presenter in in this and the first two presenters had gone before him and this was a pretty thorny thorny problem that he was working on. Um and he and he said at the beginning of his presentation and I'll do my best not to butcher the Scottish probe too much. It says in order for this project to work the three of us needed to commit to a program of hyper honesty and hyper commmunication. So what I pledge to you is to be hyper honest and hyper communicative. That is the process which I can control. The outcomes I cannot control. For 39 years, we've acted very honorably as a public company and delivered upon the promises we've made, not only to you as our shareholders, but to people who are our customers. That's why people keep doing business to us, to our fellow employees, our associates, and taking care of each other. That is a culturally wonderful way to live life. Charlie Mer talked about um his his objective wanting to live in a seamless web of deserved trust. It's a spectacular concept and a spectacular way to behave. What markets do and how people behave, I cannot control that, but I can be hyper honest and hyper communicative and do what we said we would do. Keep our dos say ratio uh approaching one and u we'll let the chips fall where they may. >> Thank you. >> Thank you, >> Tom. That was amazing. Thank you so much really. And >> I learned two things. First of all, I didn't realize that Tom can do such a spectacular Scottish accent. I think he's not listening, but I think that he should do all his meetings in the future just in a Scottish accent. Tom, I just want to say I didn't You need to listen for a second. I've learned one thing, two things actually. The first is you do the most amazing Scottish accent. in the future. We want all of your questions and answers to be in a Scottish accent, please. It's really fantastic. And then I want to say something else. I War in Peace is just an amazing book to read. Don't wait to read it because you'll be get get wiser through doing it. But I've never had that interpretation of Cutters of Retreating. And um I didn't never applied it to investing. I want you to know that uh another person whose life it's changed is Neil Ferguson who the historian who decided to become a historian because he read War and Peace. Anyway, thank you so much. Yeah. >> Uh and now before I Where is Where is Eric in the room? So, the first time I met Eric was in Kyoto with my family with a friend. It was an amazing experience and I have to say that in the letter that I wrote to investors uh I um failed to attribute two points in my life lessons to him. Maybe Tom will you'll uh get into it. Um but uh the living in the everpresent now is something that I learned from you at that dinner and I should have attributed it to you. And the other thing is, and I want to repeat it again, I said at the beginning, uh, being here to see it all unfold, just being here and enjoying what's happening is the purpose of life. And I spent far too long seeking something that was beyond the horizon and I didn't realize what I have. I now realize what I have, and it's thanks to you. You have an amazing story. He's he's writing an amazing book. You all need to buy it when it comes out. welcome. And you know, we're two people alike. We've both had, I think, multiple brain surgeries. So, we're a special special crowd. So, >> thank you. >> Yeah. >> Thank you, Guy. I uh I'm not good at speaking off the cuff, so I'm I'm going to read today. And uh like guy, I've had brain surgery. So if I am a little slow, I just blame it on the missing chunk of my brain. But hopefully I'll hold it together. I won't I won't be talking about that uh experience today. Um I've written about it publicly. Uh you can find my essays on on the website, but today I wanted to talk about actually an experience that I had uh in Japan uh shortly after I I met up with Guy. Um, specifically the story is about a hotel. Think I lost this. That's okay. Should I put it back on? Sure. Thanks. Uh, the story is about a specific hotel in in Japan. Uh, it's called Hoshi Rioen. Uh it's buried deep in the mountains and from the outside there is nothing particularly remarkable about it. Uh it has about 100 rooms. Uh and it costs roughly $200 per night for a suite. Uh but this Rioin holds a very special distinction. It was founded in the year 718 AD. To put that in perspective, Hoshi Ryoken opened its doors a thousand years before the Declaration of Independence was signed and it was founded 200 years before the Kingdom of England was established in the year 927 AD. Uh perhaps even more remarkable is that this business is still operated by the same family now in the 47th generation of continuous ownership. It is definitively the oldest independently familyrun business on earth. To say that this is a resilient business uh I think would be the understatement of the century if not the millennium. Uh the business has survived countless economic cycles, regime changes, succession battles, natural disasters, uh and even a few more recent uh snarky Yelp reviews. Uh but it's still here and you can go there. Over its lifespan, the business has hosted all manners of guests from Japan's royal family, Shogun dictators, imperial emperors, samurai warriors, spiritual leaders, and more recently a decidedly less remarkable visitor, myself. Uh, this year it celebrated its 1,38th birthday. All of that preamble to ask a very simple question. How is this possible? What could possibly explain this incredible outlier of endurance, of family succession? Is it luck? Is it randomness? Is it a specific secret formula of long-term success? That's what I'll be exploring today. So, some context. Uh, as Guy mentioned, uh, for the last several years, I've been working on a book called Outlast, which comes out next year. Uh, it's a book about the world's oldest businesses along with some of the lessons we can learn from them about long-term thinking. To research this project, I've traveled across multiple content continents, sat down with many multigenerational owners, um, and before becoming an investor. I'm a managing partner at Iview Capital. I began my career as a business journalist. And I've approached this project the same way that I used to approach investigative stories, boots on the ground, shoe leather reporting. I've always believed whether investing or in journalism, you physically have to go to a business to understand it. So, I'll admit uh I can't possibly explain the precise singular reason this particular business in this particular region of Japan has survived for this long. Like all things in life, the deeper you go, the more complicated it gets. It's messy. But I do have a theory. And the theory boils down to a very simple word, stewardship. Stewardship, as I might define it, is a philosophy of care. It removes the ego from every aspect of life with a total focus on simply serving those around us. Stewardship, I'd argue, is the most important concept in business that rarely gets the examination it deserves. And I think it's very much part of the reason why this company in this particular region has survived for this long. So let me tell you this founding story of this company. It begins in the year 718 AD AD when a Buddhist monk named Taicho Daiishi was traveling through the mountains of what is now Kamasu, Japan. And he came upon a hotring deep in the hills. The water was warm. And the legend as as has been told over the generations is that this particular spring had magical healing properties. Now unlike a gold prospector of the 1800s or maybe a real estate speculator of today, Taicho did not claim the spring for himself. He did not seek to commercialize it or extract profits from it. Instead, his first action was something different altogether. He gave it away. In the months that followed his discovery of the spring, Taicho adopted a young man to help build a small inn around the flowing water. The only thing he asked for in return was a promise that this man would protect the spring for all future generations. That he would preserve it for weary and sick travelers looking to be healed. He gave the young man a name, Zenoro Hosshi. And every steward since the first Zoro Hosshi, all 47 of them across 13 centuries, has lived with a very simple belief. Their business exists to help people in need of healing. It is their family's duty, indeed their moral ambition, to cultivate and maintain the eternal health of the business. This takes patience, restraint, and an utmost respect for the quality of the experience for the guests themselves. Last July, I took a three-hour train ride from Kyoto to the hotel. I entered through large oak doors, slipped off my shoes, and was handed a wooden key to my room. The hotel today is a sprawling structure of corridors that center around a mossy Japanese garden that has been cultivated for centuries. I got myself settled and soon sat down with the 47th generation, the first woman to lead the business in over 1300 years. Though her given name is hay, when she took over the business, she adopted the formal family name Zingoro Hosshi. Zingoro explained that the inn has a long-standing saying, quote, monks to emperors, meaning from the poorest to the richest. It's an open door philosophy that has passed down through the generations and still guides how they think about hospitality. To her, the inn exists to serve everyone, not to maximize her shareholder value or optimize for the highest paying customer. She told me many stories about the traditions her family has kept. One of them stuck out in my head. She told me how every morning for over 50 years, her father would put on a pair of white gloves, walk to a gong in the garden, and ring it. Guests who heard the gong would come and sit with him, and he would talk about the inn, about his family, their families. He would talk about nature and about what it means to endure for so long. He liked to say, quote, "We learn from water. Water adapts and finds a way." Like any business owner, she also talked about the struggles. And in many ways, Hosiroken is facing a pretty gnarly downturn. Some investors in this room, myself included, have gone through rough periods. But if you're ever feeling bad about a three-year stretch of underperformance, consider that Hosshien is currently experiencing something like a 30-year downturn. As she explained it, her father made the mistake of taking on too much debt in the 1990s and overexpanded the hotel. Essentially, he levered up at a pretty bad time. Today, there are entire wings of the hotel that are dormant because they can no longer maintain them with integrity. So, they've downsized, but they've survived. Perhaps even more devastating was that Zangoro's brother, the designated heir of Hoshioken, died unexpectedly several years back. In fact, towards the end of our conversation, she admitted to me that she never planned to run the place. Frankly, she didn't want to. But she understood what the business had represented for over a thousand years, a place to take care of people. She respected the ambition of her parents, her ancestors, and the ambition to to make a special place that treated customers well. Customers who returned season after season. So when her father came to her and said, "It has to be you." She said, "Yes." She understood implicitly this idea of stewardship. Later in the day, we took a walk together through the property. I found it funny. She kept pointing out little flaws here and there to her staff. She'd find a piece of paint missing from a wall and sum summon a handyman or she'd point to some towels and ask the manager to refold them. I realized she had a very specific idea of quality for the customer. She was obsessed with getting all the details right. Many times throughout our interview, which was conducted through a translator, I would ask her questions about her ownership of the hotel. But her response was that she didn't even consider herself an owner, even though she technically owned the equity in the business. Instead, she considered herself a caretaker, a person whose job it was to ensure the business survives for the next generation. In many ways, she saw herself like a gardener, someone whose sole role was simply to cultivate the property over time through good seasons and bad. Which leads to a hypothetical question for this room. What if instead of calling ourselves CEOs, chief investment officers, vice presidents, research analysts, we simply called ourselves caretakers of the businesses we steward? How would our actions change if we embodied this philosophy? What deferred maintenance would we stop deferring? What would it do to the quality of our work? What investments would we make today knowing that we may never live to see the payoff? It reminds me of a Greek proverb that I love. A so a society grows great when old men plant trees in whose shade they shall never sit. When I asked Enoroshi what her goal was for the inn, her response had little to do with growth, scale, expansion, innovation, or anything else you might expect another owner would say. Her response was simple. To hand the business to her nephew in a better condition than she inherited it. That was it. Her answer reminded me of a phrase that I had long forgotten and a phrase that Guy and I talked about at our dinner. Tikunol. Tikunolam is a Hebrew expression that translates roughly to repair a broken world. The concept holds that the world as it exists is always broken and that the purpose of a human life, the actual point of being here is to participate in its healing. It's not to extract from it or to accumulate or even to compound. The purpose is to heal. Tikunolam is not about grand gestures, but it is an orientation. It is about whether you move through the world as someone who is taking or as someone who is giving back. It strikes me thinking about this little old hotel how similar their philosophy is to Tikunolam. Remember the monk who founded that spring in 718 AD said, "Build something here so people can be healed." Of course, he did not know that it would become a 1300-year-old business. I'll close with something a little bit more personal. Um, I have two young girls at home and they're both under the age of five. Uh, many of you have children here as well, maybe grandkids, too. Uh, when we talk about our kids, we don't talk about building them. We talk about nurturing them. We talk about taking care of them, about giving them the resources and skills to survive so that one day they can live without us. I think businesses are not that different. When you treat a business not as something to be built or even to be grown, but rather instead approach it with care, with duty, with love, you create the conditions for something that can outlast you. Since working on this book, many people have asked me, "So, what's the secret to longevity?" The answer is that I'm still working on it. Uh, and I owe the book to my editor at Simon and Schustster in 4 months. So, hopefully I have the answer in 4 months. Uh but I will say that I think this is very much the wrong question to ask. Longevity shouldn't be the goal. Longevity is what happens when you stop thinking about longevity altogether. It happens when you focus instead on the quality of what you're doing right now for the people that you serve with everything you have. Before I left the hotel, the 47th generation told me her father had a saying that he repeated to her constantly. Everything is temporary within your hands. You own nothing. You are simply passing it down. That is stewardship. It's a daily act of selfless love. So my advice, find your hotspring. Find the thing that you believe is worth passing on. Take care of it. And who knows, maybe one day, long after we are all gone, your business will celebrate its 1,300th and 9th birthday. Thank you. Stay there. So you you stood up and so you get to ask the question, but you need to go to the mic. No qu. We have one question and I don't want to make it about me. So well, I will say one thing that um and we have one question. So somebody's got to get get to the mic or else you're going to listen to me talking for a while. So, Eric, um, uh, and I called you Tom for a second because I'm having brain freezes the whole time, you know. >> That's right. And the last person who spoke was Tom, but I was sitting at a family event of Brian Lawren's. And who am I sitting next to? The owner of the sandwich shop. And I felt the same feeling about meeting them. I think it was a couple than I did as I did about this hotel which I'm sorry I didn't visit. I hope I'll visit in the future. But Brian, do you want to talk about how So I think I just want to say that it doesn't just exist in Japan. It certainly exists in Burkshire Hathaway and it exists in other small ways. And uh if there we go. So I was rattling on but now we have our question. Thank you so much and please introduce yourself as well because I don't recognize you and it's the last question because then we'll go on to Gizel and I'm sorry Gizel, you're the you're the person who's standing between us and launch but um go ahead. Hello, I'm Aloise. I'm an economics student from Switzerland and so um what a great speech. Um it's difficult to follow up but and my my question I it came up in my head when I listened to uh Bill. My question is um if you have um a creative investment that you think uh the the the expected value is basically 100x what the value of the share is. Um, but it needs 7 million injected into it in order to not go bankrupt. Um, and you're an e economic student like me. Uh, pretty. Yeah. Um, h how would you go about like do you think it's possible to raise that money and how would you go about doing it? >> I'm not sure I'm going to be able to answer this question. So, I'll try to I'll try to hit it though. Um, so for this this project, I've uh I've spent a lot of time at businesses that have been around for for multiple centuries. Um, in fact, we're we're working on building out a database of the world's the the world's oldest companies around the world. No one's actually endeavored to do this. Um, and so we're getting a lot of input into our own system of thinking about these questions of what creates these incredible outliers of of of longevity. Um I think you know the the question as it's framed is um it's a very leftrain logical question. Uh and I would I would urge you to think more maybe right hemispheric about what are the conditions that must exist within any organization for it to grow. U the central metaphor throughout this book is that we post-industrial revolution we've thought of businesses as machines. Um I increasingly think we need to think of them as gardens. So given enough time and given enough capital um laced with some really thoughtful stewardship what are the what are the conditions necessary present for it to grow and evolve into something really beautiful um so I don't have a 100x 100 bagger uh you know lined up but I think focus on the culture within an organization first and then start thinking about what those outcomes could look like over time u but it's not it's not about I mean so many of the you're from Switzerland Um, you know, I've spent a lot of time at the at the watch makers. I was in Geneva with PC and Bashron, and it's, you know, very often these companies didn't start out making luxury watches. They started making out pieces of of steel and wire. Um, so who could have predicted that they would have become luxury watches 200 years ago. Um, so I hope that addressed it. Um, >> and I would just want to take a moment to appreciate that you um you appreciate the value of feeling living in the now and also the value of um of the long term. So beautiful to see. >> Thank you. >> Um yeah, >> thank you. Uh you can tell why his book is going to be a must readad for everybody here. And I think that hearing Eric and having had dinner with him, I mean, two of the eight life lessons I I learned from him and what you were saying, whoever it was who just spoke, there's two kinds of time. There's the everpresent now and there's forever. There's the only and you said that was so beautiful and so I'm so looking forward to reading your book. Thank you so much. from from one from one uh brain surgery survivor to another. Uh I now give you the translator and the um friend of Warren Buffett's for a long time, longer than I've even known about Warren Buffett and the woman who has translated uh she's gone between the German values and the Omaha values and he's made she's made them one. How is that as an introduction? >> Okay. >> Yeah, it's okay. Good. Thank you. I give you Gizella Bower. >> Thank you. >> So, they put me between u here and lunch wasn't isn't that comfortable. And I'm happy you have me here. I learned a lot already. I learned, for example, that you will cut me off if I talk too long in a very kind but strict manner. So, if I I'm going to skip some parts. If it doesn't make sense what I say, it's his fault. Um, I title my little speech uh what I learned from Warren Buffett and what I wasn't able to learn from him. and I hope I would have but I wasn't. Or make it short, Warren and I. It's uh pretty exactly 30 years now that I first came to Omaha. I was young, I was brave, a bit sassy, a journalist and uh during an interview tour in New York, I first heard the name Warren Buffett and we're talking the ' 90s. So when I came back to Germany, I tried to find something out, but we didn't have internet. So the only thing I found was one article in German and it was titled The Odd Guy from Omaha. And the opening credit said, "Driven poorly by a love of numbers, hes one million after another." So made me even more curious. But it didn't say anything about how he does it. It was just uh he buys stocks. So, you have to understand, we're talking the '9s in Germany. I'm a young financial journalist. I'm crazy about stock market but I live in a system of familyowned businesses and uh savers would go to insurance companies and banks and stock market was something of an evil unpredictable a bad place to be for German people and um so I was fascinated by the stock market and I tried to find out more about war and of course there were ways state library and stuff. And I decided we need him. We need a role model like Warren Buffett in Germany. And I tried to figure out how to get how to reach him. And somebody told me he loves to read. So I started writing. I wrote a letter and it was long. It was very long. And I told him everything about Germany, the economy system, Europe, the stockholder, the big fraud market in Europe because people weren't skilled in investing. So fraud market was big and I did send it to Omaha. And then the '9s again a fax came back uh saying, "Enjoyed very much reading your letter. Why don't you come over to the meeting? the beginning of a long journey. I went to the meeting and we're talking the '9s. So, it was in a smell of sneaker hall some somewhere outside of Omaha, some thousand attendees and Warren would walk in the main entrance and everybody could approach him. I didn't because I missed the moment. So in the evening there was this football game and I mustered up u my courage and decided I'm going to approach him. So I prepared my little speech like hi I'm Gizilla I'm the journalist from who did blah bloop. I didn't need it. I just got as far as, "Hi, I'm Gizela." And he said, "Oh, Gizel, come over." And right there and then, I was given some of the things I of the secrets of Warren Buffett's success in one spot. And the first one, of course, and we heard that about Charlie Mer earlier, uh, is his memory. He had questions, two numbers in my letter I didn't even remember I put in. And uh yeah, we're just talking a photographic memory. We're talking being a computer in a time where nobody has one and the advantage of being a computer and um obviously that's something I couldn't learn from him. I just can't. The second thing which really changed things in my life um is what I call his ability to build his very own precious collection of people. I spent a lot of time with him and I saw him a 100 times ending conversations within seconds or minutes. very polite, very nice, but he's not he didn't want to to get closer with somebody. And I saw him twice, not ending but clicking at once with a person just just building a relationship. And that's a bit tricky because one of the two was me and I can't explain where why and how. I only can say it's for lifetime. He decides in one second. He lets you in his orbit, in my case the power orbit, I guess, and you're going to be there forever. Um, so the fact was he wasn't giving interviews, but uh he gave me one and he even said we can continue next day in his office. So, I went to the office. Of course, I didn't say no, I don't want to. Um, we went to the office and I had a long interview with him and as I said, I can't explain why, but it happened. And this interview is uh unbelievable because it's everything inside I ever learned of Warren Buffett at our first interview. Uh, one thing I want to share with you is this sentence, it's really easy or it's really simple. He repeated in that interview for several times. And it took, of course, it took me years and months to find out what that really means. It means he cuts off complex complexity by saying that's easy. Let's let's remember a sentence he repeated a lot like America's best days lie ahead of us. This is a big scissor for all the micro prediction worries complex. You just cut it off with a sentence like that. Great. And it works. I tried it myself. It works. So, it's another way to focus on your best skills, cut off the rest. And that's of course one thing I really learned. Uh the other thing, and I talked about it, is the insight in human beings and the ability to judge people. And um I think that's an incredible factor of the success of Warren Buffett. We can talk numbers, we can calculate, we can whatsoever. We won't get the human factor. And um the good news is you can learn to judge people to a certain extent of course, but you can learn it. And the most important trick here is be curious. And that came to me naturally. I'm a genreist. I'm always curious. I always want to know who are you. But I try even harder not to tell too much about my success, my profession, my dog, uh my family. I won't learn anything. I knew everything before. I want to ask questions. I want to know something about you and other people. So that's a that's a really good trick. I think we haven't left the 90s yet and lunch is waiting. So let me uh go to a more abstract path. If somebody has other plans for tonight, um things I've learned from Warren Buffett. Let's do it that way. The first time I met him, of course, I was fascinated by his financial success. And I was like, most of the people in this room probably are fascinated by value investment. It's something taking you at the first love at first sight and it won't leave you. And you and I studied Graham and and Charlie Monger's approach to a good excellent company and stuff. That was my first thing. But after a while, I started to get interested in Birkshshire. How does Birkshshire work? We're talking one of the biggest companies in the world. And we're talking about costs for for personnel and everything else. Some million ridiculous. How does it work? And we heard that before. It's a web of trust. Charlie Monger explained it to me once as heartwarming trust. uh is is the fuel of Birkshshire and trust it worked. You don't have big fraud cases, scandals or stuff in the past. It worked because we go back to inside of human human being. That's that's the point. And if you have that, it's not only a financial asset. uh it just makes everything more enjoyable. Trust is really heartwarming. So that was the next thing I was exploring Birkshshire and then I was exploring the question how is Warren Buffett able to be such a happy person? I mean he has money and many people have money and we know money adds comfort, power, scope which is very important but not everybody is really happy. I know with money some people are even not really happy more lonesome than without but Warren Buffett is one of the happiest people I ever saw. So, how does he do it? And we think we know most of the answers, the simple life, the being in Omaha, the the people he loves around him, the things he do, uh, stakes bridge in office. So, but if you look closer, it's only half the truth. If you look at Warren Buffett's life, he always had explorations to other fields. Like when he was friend with uh Katherine Graham, he would explore the big world of the US. He would meet with the elites of politics and economics and he would travel around and try himself in this field. And later on he dipped into politics by uh being advisor for Arnold Schwzenegger first for for California and then Barack Obama. Later on he started exploring the world first with Bill Gates and it Vana he traveled and I found out that he really is digging into things when we made the film with him. He was so present. He was like he has no job but but being our protagonist in the film, he had time, he had ideas, he wanted to know everything. He really went into it. And so maybe that's his secret. He lived his his hamburger office and bridge life and made room for extra tours. And the most important thing I tried to learn now is it was only possible because he was willing to You're coming. I see you. Three more sentences. Um, I was only possible because he was able to give up. He ended all this. So I tried to think about do I do something because I love it or because I used to love it and end it if the answer is I I was used to love it. So one very last thing I didn't learn from Warren Buffett. He's brilliant in speaking and he enjoys it. Not here. I only did it for my precious collection of people guy and Shantel. >> Um, so um I'm actually going to let uh Paul ask the last question because I swore I'm listening intently to you. So go ahead. You know, it's when uh Munger asks you to be the thing, you're like, yes, when guy asks you to ask the last question, it's like, yes, I'll do that. So, I have two I'm battling two questions, so I'm going to put them both out there. You get to pick. The premise of this whole thing was you thought from a professional journalist perspective that Germany needed a role model like Warren Buffett. So my question then would be did you has he become a role model in Germany at any level? That's question number one. Question number two you get to pick from is how has knowing Warren so well changed your life along the way that you wouldn't have had those exposure if you hadn't taken that trip to Omaha. You get to pick A or B. >> A or B. >> A and B. >> A and B. The first answer is quiz quick so I can do both. Yes, it changed Germany and Warren once said if you bring more German shareholders asking questions at the meeting I won't I don't want to see you here again. So you might recognize there's a big German participation a change. >> So he has become a robot. >> Yeah he he's a hero in Germany now. And uh the second answer yeah did change my my professional life for sure. I did a lot of for I always was keen not being only Mrs. Buffett doing other things as well because it's, you know, it was so close for me, but it uh paved the way for many. You know, I I made a film. I never learned film making just because I said I I'll bring you Warren Buffet, Charlie Monger, and Bill Gates and everybody said, "Oh, come in." You know, so >> yeah. >> Thank you. >> I have to say that you're a much better speaker than you think you are. You're quiet and you take your time. You are awesome. >> I now give you the the person who's really behind this. I'm just the front man, Shantal. >> All right. Thank you very much. I hope you enjoyed it thus far. In the afternoon, after lunch, we have some more fantastic speakers, but I want to invite you to go over and have lunch. We invite you. It's outside prepared for you if you can all make your way back in at 1:00. So, it's going to be a yala yala quick thing. Half an hour. Thank you. his seat. Who else do we have here? We need to get going. Um, yeah. So, um, why don't you guy Guy Spirit is your name is Guy Spirit? Could you could you come up please? No. No. Please, please, could could you stand up? Ladies and gentlemen, I want to introduce you to my double. This is uh he used to be known as I'm Adam Franks, but he's now known as Guy Spear number two. Yeah, he's he's available for photographs. He's available to sign books. He's a friend. He's a great guy. Yeah, I wanted him on stage, but it's not happening. I give you. He needs no introduction. We love him. He lives in Turin. It's a wonderful place. You have a Singaporean wife and we learn every time. I give you Luca Delana and And you should publish your book with Mile to Tom Miles Thompson soon. Thank you so much guy. Thank you again for organizing and inviting. Uh today I will talk about incentives and let me begin with a quick thought experiment. You're walking down the street. You find a wallet on the ground. No one's around. Do you pocket the money or do you try to return it? If incentives were the main driver, your behavior will depend on how much money is inside the wallet. If it's if it's almost empty, you should return it. And if it's full of cash, you should be more likely to to pocket some of the cash. But that is not what we observe in the real world. Some people will return the wallet no matter how much money is inside. and some people will pocket the cash even if it's little. The point is that incentives matters but there are plenty of contextes in which culture and habits matter much more. And this is a principle that we see in many aspects including business. Let's see another example. A sales team is underperforming. A leader introduces a new bonus scheme but a month later nothing much has changed. Why? That's because compensation was not the bottleneck. The bottleneck was that people felt awkward during hard calls, were uncomfortable following up, didn't know how to qualify leads well, and so on. The bottleneck was habits, not compensation, and not financial incentives. Sales bonuses can motivate those who are already great at selling, but they cannot create great salespeople out of those who lack the right habits. And I'm not saying that you shouldn't incentivize people. You absolutely should, if anything, to attract and retain talent, but incentives alone cannot create high performance where there is none to begin with. If it seems otherwise, it's because of sampling bias. We look at the top performers, we see that they are all well incentivized and we assume causation. But what happens is that there are just there are many people who are just as well incentivized and yet underperform. So there must be something else going on. And here you see what strong incentives coupled with strong habits create strong performance of course. But strong incentives without good habits, they're more likely to only create gamed metrics or ineffective action. And this is a principle that holds across contextes, including sports. Take Cristiano Ronaldo. Money can influence which team he plays for, whether it's Juventus, Real Madrid, or somewhere else. But money is not why he plays soccer so well. That's determined by his extraordinary habits when it comes to nutrition, training, and playing. Another way of seeing this is Cristiano will play excellent soccer even if you were paid a fraction of what he's paid today. Whereas even if you paid me millions, you couldn't get me to become a great soccer player because I lack the habits for that. Uh this is why it's so important to differentiate between one of decisions and repeated behavior. Incentives are strong at influencing one of decisions but they are weak and influencing repeated behavior which depends much more strongly on habits. Another way of seeing this it's incentive shapes intentions but intentions are not enough to change our habits. After all, if they were enough, everyone will go to the gym, eat well, and never procrastinate. Instead, it is habits that enable intentions. And this is why it's so important to differentiate between incentive problems and habit problems. Because if you have a habit problem, you will not be able to solve it effectively with incentives. And this is a mistake that many policy makers make as well. Take the example of Hungary who despite spending almost 5% of their GDP on family formation incentives. They are not successful at increasing fertility rates much and that's because family formation it's not an incentive problems but it's a habits and culture problem. So this is the principle so far and once you see it you start noticing it in the most successful businesses. Take Ryionaire. They didn't become costefficient just by incentivizing its managers to cut costs. Many companies already do that and with worse results. What Rionaire did differently is that they built habits. They got their people to constantly ask what's unnecessary and how can we make this cheaper. Toyota did something similar. They didn't become incredible at quality just by incentivizing their managers. They built mental habits. They got their people to constantly ask whenever they spot a problem, what's the root cause and what can we how can we prevent it from happening ever again. So the point is performance doesn't come from incentives alone. It comes from repeated patterns of thinking and behavior. It comes from habits. So how do you create them? Common advice focuses on repetition, reminders, and identity. And these can work, but they are slow, energy intensive, and time consuming. What works much faster and more reliably are competence and feedback. Let me give you an example. Imagine you are trying to build a habit of going to the gym, but you do not know how to lift weights properly yet. It's going to be an awkward, uncomfortable, and ineffective experience. And awkward, uncomfortable, and ineffective experiences rarely become habits. Or consider a salesperson who is told to improve her results by making asking more questions during sales calls. During training, everything seems simple, but then she goes back to her desk. She makes the first call and she realizes that she doesn't know what questions to ask. So she feels so awkward. She speaks with an uncertain voice. She asks weak questions. It cannot go well. And when something doesn't go well and it's uncomfortable, it doesn't become a habit. You don't want to do it again. You don't want to learn how to do it better. And this is why competence is such an important prerequisite for habit formation. And yet we often skip this step of building competence. We jump straight into action because we think it's going to be faster. It's actually slower. Now let's go to the second point, feedback. Imagine you're in a meeting and uh you notice a problem or you spot or you have an idea, so you raise your hand. What happens next? If the feedback is positive, if your manager listens and acknowledges it, you are more likely to raise your hand again next time you spot a problem. But if instead the reaction is negative, if you are ignored, interrupted or subtly punished, you will not raise your hand again next time you you you have an idea. And this is how feedback can shape habits by determining which behaviors take root and which ones stay early. And finally, Rory Sutherland has this great point about toothpaste. It almost always comes with a mint flavor. Even though mint does nothing towards cleaning your teeth and that's because without mint brushing teeth will feel like nothing. You will you will get no feedback and so why bother doing it and you will stop after a few days. Instead, Mint provides the immediate feedback that gives you the idea that what you did was useful and so you keep doing it. And this is why it's so important that you give people immediate feedback. And yet managers often forget this. They spot one of their employees doing something well and they wait until the next one-on-one or quarterly or performance review. But that is far too late. If you look at it from the point of view of the employee and especially of their unconscious mind, you put effort into something and then the following day already you're evaluating did I get any feedback? If not, why should I bother doing it again? And this is why immediate feedback is important. And finally, notice how these two fit into each other. If you take the time to build competence before you start demanding the habit, it will probably go well. You will get positive feedback and that will kickstart a virtual cycle where you where you want to do it again where you're interested you're trying to learn more about it and that leads to habit formation. Whereas if you start without enough confidence you are more likely to receive negative feedback and that kills habit formation to begin with. You don't want to do it again and if you are forced again you will do it passively and it doesn't work. Yeah. So, this was it for me today and let me know if you have any questions. >> I have I have so many questions but we are limited on time and I've invited Thomas Buller to ask the one and only question in the mic. So, we will have two I so Thomas and then you go ahead. >> I was just wondering whether >> No, no, no. you you need to introduce yourself first. So, because he's a fellow fighter, he doesn't he doesn't speak with an acc the the accent, but he speaks perfect Swiss German. This is awkward. Um, hi everyone. I am Swiss. I speakuch, which is a entirely useless language, and therefore I learned how to speak English. Um, but it's a real pleasure to be here, and thank you very much uh to Guy and everybody for organizing this. Um, I was just wondering is there a perfect example of where habit formation, incentivization, like an organization where you feel like they've nailed it in terms of creating the right balance between those two things. Uh I'm thinking so two of the so Toyota for me is one of the biggest examples because you know people always talk about um you know six sigma quality everything as processes but for me the real uh thing comes in giving repeated tools so that we don't think anymore do we need to do something but we just apply it. It starts becoming a habit. Another example comes from my previous employer which was Dupont and they really had extremely strong habits when it when it comes to safety and uh I can give you an example. They were so much with a habit of putting always putting a hand on the handrail and I was wondering why and you start seeing it that it's multiple reason. One is because it's a major source of injury. You're on the stairs, you trip. But there is more. Another source of injury is if you are walking down the stairs with a box because if you have a box or or something in your hands, you don't see the steps. You're more likely to fall. If you need to put a hand on the handrail, you cannot take the stairs with a box. Plus, it keeps you reminding about safety. So that's that's start of start of the power of habits. And that was so strong that I remember that once with Dupond, I uh went visiting uh our plant in November says, "You're going to the Dupont plant, right?" And I'm like, "Yes. How do you know? And he's you guys are the only one buckling up on the back seat. So that starts to starts to give you to to give an an idea of the of the power uh of the power of habits. But one more thing since you mentioned this and I think it's it's super applicable because I remember my first week in the pond the training was like you know first week in a new company you do training they tell you you need to be safe you need to do those things but you think ah it's just compliance they're just saying it so that not getting sued do who who knows if they really believe it and then a few weeks later training in Switzerland and in Geneva where the headquarter was. And one morning there is a bus that you know, one of those chartered bus 55 seats that comes pick us up, pick some of us, some even some very important people in the company to go to a plant that was half an hour away. And my boss's boss is the first one climbing in the bus and he notices that there are no seat belts. That's and he just bring tells the bus go back to the depo and bring another bus. We so that result was about 17 people blocked in a parking lot for almost 40 minutes. That's you can imagine the financial cost the opportunity cost but in that moment I understood oh they really believe in safety and it's precisely because it was a costly action that it sent a costly signal and that's when I truly believed and so this is also something when you talk about habit formation it's super important constant consistency and the moment that you keep practicing the habit even the time the one time that it's costly is the time that you will convince yourself and convince inside us that the habit is not performative but we are doing it because we believe that it's worth doing it. >> I have a story about for that about you later. Your your final question and introduce yourself as well >> because I'm now really curious to see who you are. >> Oh yeah, just uh just me Benji Sanderson from Hermosa Beach, California. Um question on what you said about Cristiano Ronaldo. In other words, attracting someone one time that has incredible habits that then creates value for the team or, you know, in the case of a CEO of business um and applying that to what might be called the Buffett premium for Birkshire. And I'm curious to see what Chris Bloomfram thinks of this later. Um I was kind of on the uh on the side that the Buffett premium was over overdone and that it didn't really exist and that Greg Ael his first year being here will will be just as good. But then hearing Steven's firsthand account of why he chose to join the Daily Journal um be directly related to kind of you might call it the halo effect of Charlie Munger and the aura that that brings. Um I just wonder if you have any thoughts on applying this to companies. How do you get the Cristianos to come when they don't need to play for your team and and how do you how do you attract them? >> Yeah. So I wonder like I'm of course not as big as uh as an expert on B like I never experienced the people in Burkshshire firsthand like some of you did but what my impression is that I would expect many of the habits to be surviving um Warren Buffett and Charlie Manga and so on precisely because there is such an abundance of anecdotes that are concrete and that are conspicuous and everyone knows about it and this is one of the most powerful tools to get habits to survive over time and that's something that I expect will survive. You mentioned Cristiano Ronaldo. mentioned one of the benefits is that once you take a person with exceptional habits inside your company people is not I'm not saying we learn from it because you can learn from a book but they will trust because when I read a book I learn from it but I don't know I don't put the same trust in the book in which I will apply it blindfolded because I'm like the book makes sense but I don't know if it's worth applying But when you've witnessed with your eyes someone like I imagine Cristiano Ronaldo that I suppose for example never goes to McDonald's or then maybe you're thinking maybe it's really worth it not to go to McDonald's if you want to become a soccer player for example and and so I think that that's one power of getting the people with the habits not much because you learn from the habit but because you learn that there is someone you can see and you know that he's trusting those habits and that makes it immediately worth it for you to do the same. >> There is so much there but we have little time but I would just in this room there are there are very evolved habits far better than the general population. Um Luca thank you so much. I learn every time that you give a presentation. It's wonderful. >> Thank you so much guys. Thank you. >> Yeah, I I I could wax lyrical about a lot of things, but I'm not going to because I'm standing between you and Tom Russo and he's got a packet of cereal. The only cereal that's worth eating. I have it still often. And I've learned so much from Tom Russo. I met him for the first time 30 years ago. So Tom, it's great to have you here. Thank you so much for coming. Thank you. >> Oh, um uh hello. >> Hello. >> Great. So, here here's here's my my gift to guy. Um uh it's please come back. Oh, it's fine. But anyways, the idea here, first of all, >> I'll take the wheat to big salty. No problem. >> Good. First of all, let me say My name is Tom. I'm from Wisconsin. >> And and um I saw that done by um Al. That's beautiful. Alec Alec Baldwin at a um at a a tennis event and he was the moderator and uh there was sponsored by Hennessy. So there's a a f a very deeply speaking French person presiding over everything. Then finally Alec was asked to say something. U the man sergeant walked by stopped. is my name is Alec Baldwin from Mesopa. And so that was that was quite quite a illustrious but here I'm I'm really here um to just uh tell a guy how much fun it's been together over these almost 40 years now chasing down ideas. 41. >> All my best ideas were yours. >> Well, mine were yours, too. So, they bet somewhere over uh but um Thank you. Um uh we we just had an amazing journey and and um and and uh and Guy is a really deep student of of the businesses that we overlapped. Um Weedabix is an unusual one. Um it is inedible and loved by the British and that's probably a pretty universe of things but the truth is um it is it is u a very traditional thing. Um I checked the date here and it turns out NA and that not applicable. Uh it doesn't change. Um, I had a I had a a particularly grueling investment uh meeting with an endowment at some point way back and uh and uh finally one of the board members showed mercy on me and said to the cluster group that he had had the great privilege of studying at Oxford Cambridge and he said over over there uh this stuff is really popular and and it it's inedible. So we established that and he said but but he was going to propose using weedabix as a oil spill desicant. Uh what do you think guy >> sacrilege? I I eat it almost three times a week. >> Well you have a you have then you then have um more than enough at least through the weekend. >> Yeah. And uh look, everyone here has a has their own personal stories of their journey together and I know I can speak on behalf of mine. It's been just tremendous and I wish you all the well. You bet. >> No, no, you get you get to answer questions now if you don't mind. >> Okay. It's made out of something nobody knows. Uh and >> it's wheat. It's in the name. It's wheat. You know what he doesn't say is that I literally I read an article about Tom in some newspaper and I saw weabix and I knew we bix and uh I then is when I discovered the power of brand and but I visited the company which was an aimisted company and the um it's now owned by private equity I think >> it was bought and boy did they do well but we did fine. So >> did you visit the company ever? I did and it was >> and it was Yeah, go ahead. >> Let's do it. It's the same. It's like a Lionel train set, you know. It's an ancient little little clearing house for a train that comes in. It's in the town called Burton Latimer and uh and uh it's really family controlled and patriarch controls the family and and they had a mountain of cash. >> Yeah. >> And they had this stuff people eat >> and the analysis was very hard. you know, it was a mountain of cash and four times earnings. That was it. And and when I couldn't meet with the investor relations guy because they didn't have an investor relations guy, but eventually somebody took kindly upon me and the person who was responsible for customer satisfaction was willing to meet me and I just saw on the wall the kind of like the family business ethos basically. >> And did I report it back to you or did I just quietly buy more shares? No, I knew you went and I think what happened is after after Guy went, they realized that there were two of us >> and they immediately sold the company. >> Yeah. Not not long after that. In fact, uh I've discovered that it was being sold on my honeymoon. >> Gosh, what a nice gift that would have been. You could have had weed to mix the entire stay. >> It's you you you need to learn to eat this stuff, you know. It's good for you. >> I I will do so. >> Who wants to ask questions? I want to give the floor to Tom. not to me and just uh um Chris Rossbach who knows more about brands probably than both of us put together. Go ahead. Go ahead. >> Hi, thank you very much and what a wonderful conference guy and thank you so much for bringing everybody together. >> Yes. >> Um Tom uh you represent now for such a long period really uh the best of investing in compounding businesses. You're basically Mr. brand investment >> and I think one of the questions and I have to declare an interest in uh investing these kinds of companies is what's going on. >> There's a big real issue uh in that uh these branded goods companies whether they go from luxury to uh food to spirits are struggling. >> Is it cyclical? >> Is it structural? >> How much does it have to do with the pandemic? How much does it have to do with inflation and what's going on? Yeah. >> And is it different this time? >> Is this a a 10-minute meeting? >> That that's the sum of many many weeks of uh discussion and and review, but it's all of the above. It it's all of the above. I mean, yes, the pandemic and the and the um COVID still plague the spirits business. their working capital all out of joint because when they had to shut down they never really caught up and there's a balance sheet limitation that that that burning through but it takes time. Uh Nestle had their own idiosyncratic problems of a of a of a group that stopped being so self-critical and uh and when they loosened up the standards all sorts of mischief took place both personal and professional and financial and and and so they're they're now redirecting her efforts. Um uh uh let's see what was it Philip Morris um which which would have started the conversation way in the back of the pack just received for the first time um uh approval by the FDA to u launch the ICOS brand and the uh and the heat brand in North America. So I mean it it's it's happening in some cases there's enabling of of activity some there's there's crippling and uh you know I think u the spirits one is is a is an interesting one because we all carry our own biases around with us but you know for me to buy a tin of you know buzzy ball or something I think it's called just it's just not going to happen and I assume this is a Charlie Mer expression that since um I believe it'll be and they're smart and I'm right um that the that these premixed drinks will will lose their cache. Uh it's been it's been longer this time around, but our investment in in Bron Farm, ironically, came after a a returnable direct beverage uh collapse that took place in 1986 um and and and caused the company to focus on its business. um we find that our ability to communicate with consumers is enhanced by um the uh uh access through AI and so we hold forth a lot of excitement about about uh display advertising and and that's that's sort of underway but um I I guess I'm left with the belief and then what uh which is that uh that the products that are are perceived to pose a a serious deadly threat um are not as as threatening as they are when you when you examine them and think about what the the other forms of entertainment can offer. Um but you're absolutely right in terms of all all the you now have direct channels to consumers through e-commerce you have uh delivery you have um you know package changes so much underway um you know uh at least for as long as we can it'll continue to have uh the industry will consider have guy and I as expert testimonies >> actually um uh uh Chris, you're a student yourself. What What do you make of it? What What do you think's going on? >> Yeah. >> Um well, I I echo a lot of I think what you said and one of the interests is that I have to declare on the Baron's round table this year. I pitched a lot of these stocks. Um and some of them have uh actually bottomed. So you can see with companies like Nestle and Dagio, for example, uh they're really look like they're at the process of bottoming. Yeah. um uh with companies like LVMH for example or Esor Luxotica the leader in frames and eyeglasses clearly they're not um at least not at this point although they rebounded obviously from those so I think it is about those kinds of issues I think one thing and that comes from a lot of conversations with managers of these big companies is >> um perhaps not some of us but I think the market really underestimates the impact of the pandemic the fact that we're even standing here being able to have this meeting is not something we would have we would have known in March of 2020. >> Right. Right. >> Um and uh the decisions the keeping people at home, the shift in incomes, the shift in spending, the reopening, the inventory issues, the lack of innovation, the wrong innovation, which Nestle did, >> all of these issues are things we're dealing with. >> And uh I think that when things clear, as they will, I echo a lot of the positives that have been said today, I think that's when we're going to see they're going to return to growth. So that's the be the take that I have >> and that's I I I sort of leave as the sequel to my observation which is and then what I think you pull pull forth and then you're also being greeted with these sharply enabling um we'll see with time whether they're too sharply enabling but uh ways that it can onetoone marketing and and delivery and just innovations that are underway. >> Totally agree. >> Thank you Tom. I'm going to ask the last question before we move and you actually share I think probably a common investment with the next speaker. So Tom was one of the first people in the United States to go to Europe and to examine Europe from a um fundamental standpoint and you know a lot about the luxury goods business and I I I would like you just to work wax lyrical a little bit about it. What do you think about it right now? Well, I I I uh have I think it's it's a very um case byase business and um you know, grouped together is sort of what's what's going on with luxury um clutters the thinking um something like Cartier um which is pretty much state of steady course um uh and uh and they they they sell something that accomplishes what the what the recipient hopes to have, which is a badge that allows them to tell others who they are by what they wear, what they drink, what they eat, what they whatever what watch they wear. And it's it it's it's um indispensable if if if it has the luxury of being called um something that they cannot live without. And and think this isn't a luxury. It is in some ways if you think about the price premium but think about how uh you will be received if you come home uh and give your child young teenage child a Toshiba laptop instead of the Apple laptop which has you know the big luminescent you you'll really fall deeply flat on your face if you expect that they would accept anything but because they don't want to be part of that that tribe that group of like-minded consumers. person. At the heart of what we've got is the hope that you have uh that you have vital uh outreach uh thoughtfully delivered that asks you know people get up and and go buy something. >> Yeah. So a followup and then I will say thank you. I think it's you who who said and you've said it many times that um the richer you get the lesser you opportunities you have to distinguish yourself as special. >> Yeah. >> And it goes to the quality of your thinking. I think that originates from you and please share it with the audience. Well, there are a couple of funny things that happen u when when you try to stand out um you know and there's evidence everywhere, you know, luxury yachts, ever larger homes, ever larger parcels, the whole bit. So, there's a lot of that. Um uh but I I think that the other side of the investigation is is there just lots of people who who want to join something uh that they don't have the means. And so um they're extremely loyal to brands that might be mid to uh mid-pric and uh and to that group there's an expression that that for those who um service the needs or sell into the the riches class um uh they they go back and forth on the subway and they're extremely brand loyal. So um yeah, thank you. >> Thank you. It's it's such a pleasure to have you here. Thank you so much for coming. It's uh I'm going to give you a hug. >> Thank you. >> Yeah. You you didn't see Do you see the quality of his thought that the quality of thought in a way is lacking? He goes to the heart of the issue and he's been doing it for 30 years. Thank you so much. I can't believe that I go back 30 years with him. It's just crazy. Um, I now give another incredible thinker who I hope I'm not going too far to say he is going to write a book that's not just a letter. He's going to write an actual book and the man who is maybe going to help him is sitting right behind him, but that's for another day. I give you Chris Bloomstrand, you know, and and you haven't really hung out with Chris until you're um swimming semi- naked in the lake in Zurich, which was what we were doing last summer and which I hope to do this summer again. So, >> we'll do it indeed. >> Yeah. Do you want Do you want that? You can actually take it off if you like this, however you want to do it. Oh, I'm so I'm good standing. Uh, first guy, thanks for being here. I mean, uh, that that you're here with energy and you're upright and you have Chantel and team. Uh, I know you know everybody in the room has been sending you constant energy in your fight and just keep fighting. I >> I I I'm going to say it now. So, when I get back to Zurich, I'm going to have a mohawk. Okay. You have to convince Shantel to do it. I mean, when do I get to have a mohawk? When I don't even have hair on this side, you know? So you've you've you cornered Chantel there's no chance but back to Chris. >> So in in 15 minutes uh I I didn't know what I was going to talk about uh until I arrived and uh but I think for one if you've read my letter I've told a couple stories once this year one a few years back but I was trading uh an exchange with over a number of things with with Warren Mr. Buffett a few years ago and I just mentioned kind of casually that I'd just done a little math and realized that Bergkshire's stock price could decline by 99.3% and Bergkshire would still have outperformed the S&P 500 from when he took over Bergkshire Hathway in 1965. Uh to which Warren responded um uh this is pretty amazing war uh Ben Graham would be proud but let's not test the math. two weeks later, three weeks later, whatever, I was in Pasadena for uh Charlie's West Co meeting, and I mentioned the same stat to Charlie and he just kind of thought about it for a second, just glared into my soul, and he said, "Chris, um that's just nothing but simple compound interest. There's nothing impressive about that." So, you just slank back to your seat. So, in my last two letters, I I' I've been working on some math, and I wanted to show the difference between buying stocks at or near a secular peak versus at a secular low and the differential between earning the Ibson 10 and a half% and over time, uh, how incredible it can be. And so I stumbled into a number uh so I'll ask the audience uh and if you've read the letter don't shout out but on what single day in the history of the United States stock market would it have been the very best single moment to buy the S&P 500 rhetorically. So June 1 uh 1932 uh the S&P had fallen 86.2% 2%. The Dow Jones had fallen 89%. Actually, the the the Dow traded it traded it as low a month later, but the S&P was $4.40. On the date of the Dow low, it was $440. It was 440 versus 441. Had you bought the S&P at that moment of the cheapest the stock market had ever been, by 1965, you'd compounded at 15 a.5.6% 6% and you'd turned each $100 invested into $10,000. Not a 10 bagger, but a hundred bagger in a little bit shy of a third of a century. Now, who in their right mind would have been willing to give up 99% of their capital to buy a single stock on that day? Well, you know the answer, of course. Uh September 30, 1964 was the end of Bergkshire's fiscal year. That's when the Berkshire performance record begins when Warren took over. And so from 1965 to uh uh year end 2025 uh each $100 invested in Bergkshire would have compounded uh to $6.1 million at 19.7%. The S&P 500 compounded at 10 a.5 uh to $45,000. And that's how you get the math on the 99% decline. But you could have lost 99% twice. You could have gone from $10,000 to $100 and had your money under a mattress would be the equivalent for the first 33 years. And Berkshire would still beat you even though you were uninvested from the entire market low. So essentially, you could have lost all of your money or 99% of your money two times. And so a $100 invested at the market low in 1932 grew uh to $4.5 million versus the $6.1 million had you waited a third of a century and bought Bergkshire. I think Charlie would be impressed with that. I mean that's just an incredible testament to the performance record of Warren. So I came in at the very end of Acan but I got to hear Tom Gayner talk. And so here's what so I decided what I'd talk about is War and Peace, which I've never read it because as some of you know, I spend better part of the first seven weeks of the year trying to write my own version of War and Peace. But the notion of Napoleon and the French army attacking Russia, uh, and the Russian army retreating and as Tom put it, uh, the French, uh, punching at the air and exhausting themselves kind of makes you, it makes me think about Bergkshire. So when you think about Brookshire Hathaway and why it's been successful and what and and what they've done, it would be the purchase of Natural Indemnity in 1967, it would be buying C's. It would be buying uh Geico at its lows, American Express at its lows, Washington Post, all of the big investments that wound up being uber successful uh compounded for the duration of ownership way ahead of the market. But it was really Warren pivoting at the proper moments and retreating and letting everybody else punch at the air. So if you think about the textile business, closed it in 1985, it went to zero. Uh you think about what Warren did with his partnerships, started taking stopped taking money in 1966, market was expensive, closed it down in 1969 because he had no more good ideas. He said, you know, you can buy Berkshire, you can buy munis, or you can invest with my friend Bill Ruin. uh 1998 Bergkshire had compounded at 28%. Uh the stock had uh been had reflected Bergkshire success compounding capital traded at three times book. Bergkshire's investment in Coca-Cola made in 1988 and89 had grown from 1.3 billion to 17 billion. Coca-Cola was 50% of the equity portfolio. The equity portfolio was 115% of book value. And Warren had the high class problem of not only his stock being overvalued, but everything he owned was overvalued. So he buys Genry, doubles the size of Bergkshire's assets, uh, triples the size of Berkshire's float. Jenry gets 18% of the shares, and he cuts Coca-Cola from 30% of Bergkshire's assets to 14%. Coke is only compounded at 4.5% per year for the next 28 years. So he pivoted. Um so what we're going to see tomorrow uh is going to be uh probably decent improvement in the railroad, decent earnings and improvement in the energy operation. Manufacturing service retail group may may have grown at 3 or four or 5% whatever it is might be down a little bit but we're going to see what is going to be interpreted as pretty awful insurance results. So Geico which dramatically has been improved. You went from Geico being behind in electron in telematics and technology uh not matching rate and risk uh they cut half the headcount fixed the problem and two years ago Geico under wrote at an 81% combined. Last year they wrote at an 85% combined and the media and observers took it as an awful thing. Well, no. The three percentage point decline in the combined ratio, the lack of improvement, decline in profitability, GEICO stepped on the gas, spent an extra billion dollars on advertising, and they grew their policy policies and forced by 5%. Uh, but they're coming off a period where you you're not going to make 85% or 80%. In a normal world, auto industry, progressive, geico, are going to write at 96, not at 85. So, we're going to see a decline. In auto, you write three bucks of premium for every dollar of capital. There's too much competition today. No insurance commissioner is going to give an autoinsur a price increase when you're immensely profitable. So loss inflation is going to erode profitability, but more so competition because there are a lot of people that want market share that are compete for the next dollar of premium and the results are going to decline. And the primary group, specialty insurance, so much capital coming off a very pro profitable cycle. Bergkshire is intentionally writing less business. They're retreating from many of their corporate lines, many of their property lines, many of their cashy lines, writing less premium volume. They're going to try to maintain profitability. There's a there's a table that Warren included in the 2004 chairman's letter called Portrait of a Disciplined Underwriter, and it showed underwriting premiums by year for a 30-year period of time. Beginning in 1985, Berkshire shrunk premium volume sequentially by a cumulative 80%. They maintained underwriting profitability, albeit at a lower and lower dollar amount. They didn't cut headcount by a full 80%. But they maintained profitability during a period that was brutal for insurance and all of their competitors hemorrhage cash in reinsurance. Bergkshire last year wrote 6% of all of the insurance reinsurance premium volume globally. 6% they have 50% of the capital which is what allows them to own common stocks. There's too much capacity in reinsurance. So Berkshire in the last two years of its $370 billion in cash has sent $und00 billion upstream to the holding company. They took capital out of the insurance reserves. Why? There's too much capital. You've got $730 billion of industry capital. If you take Berkshire's underwriting out of the mix, the reinsurance industry went from writing uh uh uh at at at uh 86% of premium volume to cap to to 94%. They're writing almost a the reinsurance industry is writing almost a dollar of premium for every dollar of capital, which is crazy. It should be more like 60 cents on the dollar, 50 cents on the dollar. So, we've had no storms for the last two years. big cat events. Bergkshire stopped writing CAT. They're in retreat. The top line's shrinking. They're going to write less premium volume. The underwriting earnings, which were $9 billion two years ago, were double what they would be in a normal period. They were $7.3 billion last year. They should only be $4.5 billion. So, we're going to trend down toward those numbers. It's going to be taken as a bad thing, but it's a wonderful thing because they're doing what they should do, and that's retreating. It's the Russian army retreating in a period where everybody else is punching, and they're going to exhaust themselves. and the industry at a point is going to lose a mountain of capital. This is what you want from a disciplined underwriter and you're at a point where they're pivoting and this is why Bergkshire is Bergkshire and nobody else does it this way and it's a wonderful thing because I think the investment community some are likely to take the results as a bad thing and if they drive the stock price down Berkshire gets a chance to buy more shares back at a cheaper price. So that that was my unprepared offthe cuff. You >> you heard it here first. Thank you. Who wants to ask quickly? There we go. >> Chris, nice to see you. >> How are you? >> Dave Sther, um I'm curious with the War and Peace theme. I hear the uh public media uh often talk about how Bergkshire's got this boat anchor 373 billion dollars of cash and it's because Buffett can't find any good ideas. I'm curious to know your thoughts about is it because Buffett doesn't have any good ideas or because it's a a secondary version of 1969 all over again and Buffett is worried about valuation and something far bigger on the horizon. No, I think it's because Warren even later said uh he did buy Jenry and I think to my mind it was to diversify the Coke in the expensive stock portfolio and he did that pretty successfully and there are reasons why Bergkshire is a lot more valuable today than it was but having not sold Coca-Cola I think that's why he's trimmed down the Apple position by 80%. So you've had a enormous amount of capital come out of the proceeds of that sale at a 21% tax rate, which would have been a 35% tax rate if he had sold Coca-Cola. That would have been a $5 billion tax liability, which was over 10% of Bergkshire's book value just going to the government in 1998. So the cash sits there as a function of the sale of the Apple. He sold a few other stocks. I don't think it's a market timing call at all. The opportunity set for Burks to put money to work is a very small pool. And I think Warren also later admitted that he screwed up 08 and09. He got five billion and $3 billion into GE and into Goldman and the preferred and some of the Dow preferred. But in his investments in common stocks, he didn't do anything. I mean, he bought a few in 19 2007. Didn't do anything in '08. And Berkshire had 14% of their assets as cash and he should have leaned in. I think Greg gets that and Greg and Warren would have talked about this. And so Greg's sitting there on $370 billion of cash, a hundred of which is required in the insurance operation to underwrite the different lines they have. So there's $270 billion to deploy plus an ongoing $40 billion. He shouldn't do it today because Bergkshire's opportunity set is expensive. But if in the next recession, crisis, pandemic, whatever comes along, and it's believe me, we've all seen it. it's going to come at whatever point. Greg's obligation, his his his real task is to spend money and spend it in earnest. And I think Warren endorses that. I think Greg's going to do it, but we can't judge him until that moment comes along. But some point it's coming. Hello. Sorry, I've asked too many questions, but you're probably one of two people in the world I can ask this to, so I can't resist. Um, a question is on the the chlorali chloralk alkali industry and berkshire capital allocation. So, Greg in his first letter delineated kind of the reasons why he bought Oxycm and he gave attributes. You know, it's a industry with a few competitors and they're focused more on efficiency of Wow. Uh, >> clearly they don't like your question. >> Yeah. Geez. Uh, efficiency of production over volume and all that. And it seems that the same attributes can be applied to a couple other publicly traded uh chloroacolyte businesses, but they have not bought shares of those companies. So um besides the opp the the obvious they don't want to own every single asset in the in the country that produces the same thing. Why do you think they didn't tack on a couple hundred million into those businesses as well to basically monetize the exact same thesis that they had for Oxycam? Well, I I don't So, we own Olan. Uh, we bought a whole bunch of it in 19 and bought a whole bunch of it in 2020 when the Cloroxy world and chemicals were flat on their back. Made a lot of money. Bought it at 12. Sold half the position, which was then 15% of our capital at 67. In retrospect, should have sold it all, but we were buying more again at 18. They've bought back a third of their stock. It's an industry that's an oligopoly in North America and Europe. You've only got Olan, Westlake, Oxycam, couple European players. uh nobody's going to build more capacity in North America and Europe. Uh so it's not a business that for Berkshire will have a reinvestment opportunity. Midcycle free cash or midcycle cash flow is going to be a billion. They paid 10 billion for it. So it's a 10% return or they essentially bought it at a 10% return. All that money is going to go to Omaha. The assets were incredibly wellmaintained. So it's just a good business that over the the full course of a cycle will throw off capital. And I think there there's so much so much of of chlorine and costic soda and epoxy and some of the some of the downstream being dumped by the Chinese in particular, but Indians to a lesser degree. Uh the the West has sanctioned that in the past. Uh and I think Berkshire uh behind the scenes uh probably has a better lobbying potential uh to introduce and and try to help implement some sanctions to get rid of some of that over supply coming out of China. So it's it's it's a really good assets, well maintained assets at a good price. >> Thank you. >> Um, >> last question. >> Yeah. Okay. I'm Fabian Dhard. I'm investor from London and whenever someone asks me about Berkshire, I say just read um your letters. So I just forward them some part of your letters and I have to admit I've read not the latest one but two or three years ago and you always had a lot of data also on the economy and on market cycles and kind of like where you think we are in the cycle and I think we've all seen the graphs of the debt in the US and you know there's this story where Warren always jokes about oh macro doesn't matter like just focus on the cash flows and the companies and then there's this joke that drunken Miller said recently Like whenever I go to a value investor conference, I hear everyone talking about cash flows, but 50% is the market, 20% is the industry, and then it's a little bit the company. And so I just wonder what your latest thoughts are on the data of the economy and how you think about that. And because yeah, you do a lot of work on that as well. >> I I was terrified when total credit market debt reached 250% of GDP in 2000, wound up after the financial crisis at 350%, which is where it is now. We're running untenable budget deficits. We and the West, I mean, you've got a whole baby boom generation that's now retiring and we are not going to doge. We're not going to shrink government spending. That's problematic. But I I I've learned over 35 years investing in 27 or 28 at Simper. Uh it's hard to let the macro enter into your thinking with the exception of you work off leverage either through deflation or we print more money. And I because of that, we've tended to keep balance sheet integrity a heck of a lot higher than we probably would have over time just because bad things can happen with leverage and there's enough of it in the system that we don't want to let it seep into the companies that we own. Chris, thank you so much. as as a as an oper I'm now doing the operation survivors club and so he's another operation survivors club in a thousand different ways. So thank you so much >> hips and miseries. >> Yeah, exactly. Yeah, I would love to try it. I wasn't given that choice. >> So uh Lauren, has she gone after your daughter or are you in the room? There you are. a director of uh Fairfax. I'm looking forward to hearing what you have to say. It's it's you carry a a heavy last name. I don't know what it's like to do that. Maybe you can open with that actually. So, thank you for being here. >> Thank you all. It's a pleasure to be here with you today. I want to start by thanking Guy for organizing this event and his excellent team that works with him. It's because of you all that we've we've gotten together and learned learned from each other over the years, which has been a great gift for everybody in the room. Um, so I'm so pleased to be here with you today. I will start by saying that I do have big shoes to fill. My great uncle was Sir John Templeton. That always makes me nervous. I'm not Sir John. So, go ahead and lower your expectations a little bit. But I am going to take you on a a little bit of some time travel today. And sometimes in life, life does give you a second chance. And I'm going to offer a second chance to you all today. So I'm going to talk about Fairfax Financial and I'm going to frame this conversation entirely through a lens that resonates or should resonate with everybody in the room. what Berkshire Hathaway looked like 30 years ago before size became its greatest constraint. So Fairfax was built on a similar blueprint. insurance float as permanent capital, value investing on the asset side, founder control, and a decentralized structure that trusts managers and essentially leaves them alone. The DNA is nearly identical. The key difference is scale. Berkshire is over a trillion dollar at over a trillion dollars simply cannot make a move that meaningfully changes outcomes for shareholders. Fairfax at roughly $40 billion in market cap still can. And importantly, the flywheel is now clearly spinning. Since 2017, Fairfax has delivered an 18.6 compound annual growth rate with float growing at 18%, a 74.9 billion investment portfolio, and a greater than 5 billion annual operating income rate. Now, let's look at what Fairfax has actually delivered. Since inception in 1985, book value per share has compounded at 18.7% annually against its stated target of 15% over the long term. Share price in USD has compounded at 19.5% versus 11.5% for the S&P 500. And Fairfax, if it were ranked among US listed companies, would be ranked seventh out of US listed companies since 1985, putting it in the top 1% ahead of Bergkshire, which ranks 49th. Now this chart illustrates visually what four decades of consistent compounding looks like. As you will see the line is not smooth. There are difficult years but the direction and slope are unmistakable. Compounding at this rate for this long is extraordinarily rare. And I would note I went on the board in 2016. So to appreciate how le elite this track record is, this slide puts into context of every US listed company since 1985, Fairfax sits at the top 1%. And that's not a function of one great decade. It reflects consistent execution across four decades. Behind these numbers is a structure and culture that makes them repeatable. Like Bergkshire, Fairfax operates through a highly decentralized model. Subsidiaries run are run by empowered managers with long tenurs and deep ownership cultures. This is not a bureaucracy optimizing for the next quarter. It is a collection of businesses built to compound. The most recent chapter is particularly important. Since 2017, Fairfax has found its stride resolving the legacy hedging positions that weighed on returns from 2010 to 2016. repositioning the investment portfolio and delivering a 18.6 compounded annual growth rate over eight years. This is not a story I'm telling you today about potential. The transformation has already happened. And here is where Fairfax stands after a full year in 2025. gross premiums written of 33.3 billion, a 93% combined ratio producing $1.8 billion dollars of underwriting profit consistent even through a catastrophe year. And I will note in these numbers there's $1.2 billion of catastro catastrophe losses embedded in those numbers. It's amazing what the portfolio could absorb. The total investment portfolio of 74.9 billion generated a 9.3% return in 2025, 7.7% since inception. Float has reached $40.8 billion, growing at 18% since inception. Net earnings were 4.8 billion and book value per share grew at 20.5% in 2025 alone. And management has been explicit about their forward earning target earnings targets. Over five billion in annual operating income with 2.5 billion from interest in dividends alone, 1.5 billion from underwriting profit and a billion from non-income. That translates to approximately $150 per share in potential earnings before any investment gains. And these are not aspirational numbers. They are anchored in the portfolio and float already on the balance sheet. Now, this is the slide that I find most compelling and one that I wanted to share with you since you are a room full of Bergkshire Hathaway shareholders as I and it's lining up Fairfax's metrics today against the year Bergkshire reached the same milestone. Sorry about that. And that makes this opportunity incredibly vivid. Fairfax's shareholders equity of 26 billion. Bergkshire was there in 1997. Bloat of 40.8 billion. Berkshire crossed that in 2002. An investment portfolio of 74.9 billion. Bergkshire hit that mark in 2002. Gross premiums written of 33.3 billion. Bergkshire hit that in 2012 and a market cap of 40 billion. Bergkshire hit that in 1996. So why this moment? There are four reasons. First, Fairfax is still in the sweet spot of compounding. We're small enough to move, large enough to matter. With share count already reduced from 27.8 million in 2017 to 20.9 million today, Fairfax opportunistically and consistently re buys back shares. Second, the earnings power is locked in. $40 billion a float at a 5% yield generates over 2.5 billion in interest in dividends annually before a dollar of unwriting prop underwriting profit. And third, hidden value continues to be surfaced from the portfolio. Digit insurance cost $101 million. It is worth 2 billion today. Eurobank has compounded at 15% annually. The Poseidon and C-SPAN partial sale generated nearly 865 million in pre-tax gains above book this year alone. And fourth, culture and alignment. Primatt's family holds a control a controlling stake. The average holding company executive tenure exceeds 20 years. This is a business that is built to last. So Warren Buffett has said time is the friend of the wonderful company. Fairfax appears to be exactly that. So thank you and I hope that you have enjoyed your step back in time. Hopefully this gives you a second opportunity to find an investment as compelling as Bergkshire Hathaway was 30 years ago. I've told Guy that we released earnings today. The conference call was this morning. So if you're learning more, if you were want to learn more about Fairfax, I suggest you listen to the recording of the earnings call. Because of that, I'm not going to take any detailed questions on Fairfax. As a director, I have to be careful what I say the same day of. Um I'm happy to close with my favorite story about Warren Buffett if we have a second. >> Well, we have one question. Oh, so at least one question. So if you want to ask a another question, >> say it now and you'll close with the Warren story. So go ahead. >> Great. >> I give you not anybody but Goldberg. >> Thank you guy. Um Lauren, it's great to see you again. Misty at Value X. Um the question I had is okay so now that we place ourselves in like let's say Berkshire 30 years ago how do you think about um allocation within a portfolio? I know you might not be able to answer directly but um if you do have a lot of conviction in a stock in general how do you at Templeton um and Phillips think about allocating to something like this? Well, we have a large position of Fairfax in the portfolio and we've held it for many years. Um, I think of adding Fairfax, you know, really initially it would have been more about downside protection, but over the years it has generated great returns for us and has been, you know, one of our major holdings and will continue to be. >> Um, my favorite story about Warren Buffett, if you >> We're going to do one more question. Okay, >> this is a quick one. It's a little bit uh selfish question. I think you're also on the board of another solar company if I'm correct. >> Yeah. >> Could you talk a little bit about that or is that not allowed? >> That's a different type of company. So, he's referencing Canadian Solar. It's um listed on the NASDAQ. I am on the board of Canadian Solar. Canadian Solar is a solar um manu well we have different parts of the business. It's solar manufacturing and um energy development projects and we also have an energy storage division. So a few years ago we did a secondary listing on the Shanghai exchange for the manufacturing assets um mostly in China and um the development side of the business is called recurrent energy. Um that is a completely different business than insurance. So it's um you know it's a volatile business because it's it's largely dependent on government policy and you have to adjust very quickly when um the rules change is what I would say. So it's a different business. Um but that's Canadian solar in a nutshell. More volatile um for sure. uh property casualty insurance is very different than solar business. But my favorite story about Warren Buffett. So um you know many of you know that my dad introduced me to investments. He put me to story bed with stories about the magic of compounding. I was fed a diet of BLTs growing up. Buffett Lynch and Templeton's all of these guys are my heroes. My dad is a true value investor. He dresses out of Walmart. He um you know Costco would be an expensive purchase for him. He just showed up for his meeting with his estate attorney with all of his documents in a Walmart plastic bag that had been recycled. He is the classic value investor. Okay, he's done well. Uh and and he dresses like the classic value investor is what I would say. But one year, this is about 20 years ago, I asked my dad, "What you know, your birthday's coming up. What can I get you for your birthday?" And like every dad, he says, "Don't spend a penny on me. Don't spend any money on me. You spend too much money, not a penny." So I had to go home and think, what can I get my dad that really matters that cost nothing? So I decided to write Warren Buffett and said, "My father's birthday's coming up. Would you mind just calling him and wishing him a happy birthday?" So I I got on to Bloomberg and Debbie, his assistant's email was on Bloomberg. So, I emailed Debbie and literally forgot about sending this letter because Warren Buffett's not going to do that. I mean, there's no way. And I completely forgot. Well, my dad's birthday rolls around and guess who calls? Warren Buffett. My dad's at home with the flu. He answers the phone and hangs up on Warren Buffett. I get a message from Debbie that says,"I tried to call your father. There was an issue. I'll try to call back later." So, I don't even get the message until Warren Buffett had called back. And the second time, dad picks up the phone and Warren Buffett identifies himself, wishes my father a happy birthday, and my dad thought he was joking. He thought it was his brother. So, after they went through all of that and they talked for about 10 minutes, um the phone call ended and uh Warren wrote back and said, "You know, I talked to your dad." And I replied with, "Well, thank you so much. I'm so surprised you did that." Um, please let me know the charity of your choice and I'd love to make a donation in your name. And his reply was very sweet. It was, "Please do not do that. That would cheapen what I did. your dad was a perfectly lovely person and I enjoyed spending 10 minutes with him on his birthday. And I think that's um just a great story because I hopefully what you've all learned from Guy and from um Warren Buffett and your experience here at Bergkshire Hathaway and I would also add the experience at Fairfax because the same type of people attend the event at Fairfax is that this group is a incredibly humble and kind group and it has meant a lot for me to be a part of it over the years for my daughter to be a part of it. even though I had to drag her in here. Um, it's a privilege and I've enjoyed getting to know you all and a special thanks to Guy. >> Thank you. Um, you we um, Lauren, we live off those stories like that you just gave and it's such a beautiful story. Thank you so much for giving it and uh, yeah, I'd I'd be on stage with you. I'd have lots of questions, but time is short. So, um, so Brandon, you know, you're only stuck between Lauren Templeton and Mish Pabry, you know, so how are you going to do? Um, you're going to do great. That's what you're going to do. I give you Brandon. I It's I'm sorry to say I can't remember if it's Australia or New Zealand. Australia. There we go. There are people in New Zealand as well, but I don't know how you do it because lot many of the people that you interview are on the other side of the planet, but somehow you do it. He's a great interviewer and he really makes you he makes you think that you're brilliant, which is pretty special when you're not. I give you Brandon. >> Thank you. >> Thanks, guys. Uh yeah, so I'm going to be talking uh about something a little bit different which is in my realm of I guess expertise now though I feel I always feel like I have imposter syndrome and that is uh YouTube. So um Guy and Chantel said that I have 10 minutes which initially was uh I was very daunted by the fact that I have to get through a presentation in 10 minutes and then I realized that's pretty much talking for 10 minutes at a time is pretty much what I do for a living. Um so I just want to start by talking about YouTube more generally. I should say my name's Brandon. Um, for those that don't know me, I was in 2017 a physiootherapist or physical therapist. Had never really thought much about the stock market before. And in 2026, somehow I have the probably the world's largest uh YouTube channel on value investing, which is weird, but here we are. So, um, so how did that happen? And I think that that setup is kind of an interesting story to talk about why YouTube is such an interesting company, an interesting business and some of the advantages that it has. So we know that YouTube uh is one of the big three under Alphabet. Uh people talk a lot about Google Cloud. Uh people are worried about Google itself and and then YouTube can sometimes get a little bit forgotten about. Um, but I'm here to say that YouTube is a very big business and it's a a very uh unique business and uh it does exceptionally well for lots of people like me that kind of start putting their journeys out on online and um fast forward a few years they get a following and here I am with imposter syndrome talking to you guys. Um so I guess there's some people kind of know this already but a lot of people don't. If I was to say out of the streaming video streaming platforms, which one takes the largest share of TV watch time? You'd probably say Netflix, unless you already know. I'm giving it away. Uh, but most people say, "Oh, of course it's Netflix." But it's not. It's It's YouTube. So, this is from February 2026. Streaming takes up 48% of TV watch time. And then, uh, to make up that 48%, uh, Netflix is 8.4% of watch time. And YouTube comes in really quite comprehensively on top of it at 12.7%. So when we think about funny old YouTube and cat videos and whatnot, we can think about it like this where it's demanding higher watch time in lounge rooms than than Netflix. So it's it's pretty uh pretty interesting. So I want to talk about why it works and kind of my experience on the platform as well. So, I think what sets it apart and why it's so unique, why it works is that as opposed to a Netflix where it's high production and not everybody gets to have their own TV show and whatnot, it's very curated. Um, there's a lot of money that goes into every single show. YouTube's just the opposite. Anyone can make anything about a video about anything, you know. So, uh, and that's what makes it so unique and so interesting. So, there's over 113 about 114 million YouTube channels that are competing for attention. There's 500 hours of new content uploaded per minute. So you think about that, that's pretty mind-boggling. Um, and what you get because there's so much content because anyone can make content is you get highly you get so much content that there's highly tailored content to your deepest interest as opposed to like, oh yeah, I kind of like that show on Netflix. There's enough content on YouTube that whatever your deepest interest is, like say value investing, there's going to be many channels and lots of hours of content that you can watch. so you can find the right person that really hits your your interest. And yeah, I've I've kind of chucked a couple of examples up on on screen to show just how crazy niches can be. So slime squishing is a very popular niche on YouTube. Who would have thought? I don't think you'll see a Netflix show dedicated to slime squishing. Um there's one like what's that best drain unclogging compilation or the one I find interesting is the one in the middle which is a sardine review. So there's people that specialize in sardine reviews. that person's channel is called Canned Fish Files. So, you can see this just shows you that clearly these have millions and millions of views. So, you can find there's there's viewership for every single niche out there. It doesn't have to be the mainstream topics. Uh yeah, there's enough viewers to support every single niche. So, uh Netflix has 325 million paid monthly subscribers, I think, and YouTube has 2.7 billion monthly active users. So, there's a lot of viewers uh that watch YouTube. Honestly, there's uh not a there's not a um a subscription cost that you have to overcome to be a a viewer on YouTube, which definitely helps, but it's still pretty interesting. That's a lot of eyeballs. Uh so, I thought I would take you guys behind the curtain as well. So, that's why YouTube works as a platform. How it works is also quite interesting. So, for those that maybe maybe some of you guys know this already, but for those that don't know, if you click on a YouTube video, you're probably almost always greeted with an ad, right? You wait for the 5-second countdown where you can skip it, skip um obviously advertisers will pay for that ad space. And what's interesting is that the ads that get shown on your videos or on my videos, YouTube doesn't just take it all. They'll cut me and they'll give me 55% of the ad revenue that they generate. So, you can think maybe this doesn't work so well if you're getting a few views, but if you're starting to get hundreds of thousands or millions of views and you're getting 55% of the ad revenue that YouTube's generating on on these videos, it can be quite uh it can sustain a business. It can become a business. Uh, and we're seeing that. So, it's this really interesting effect uh which I've not seen any other business really have to this extent. Uh it's it's a really strong network effect and it's two kind of overlapping flywheels is how I think about it. You've got the basic one which is you have more viewers on YouTube that equals more creators. More creators equals even more content filling even more niches more um you know we get deeper dives on random stuff and that fills needs and then you get even more viewers and that keeps going and going and going. But then you have the monetization which sits on top of that which kind of fuels which I guess another flywheel on top where more viewers attracts more advertisers, more advertisers increases monetization, monetization attracts even more creators. So you get this flywheel effect. Uh and that's that's what sets it apart. It's that people like me, as I said, I was um 2017 I was a physical therapist and somehow now I my business is I make YouTube videos, which is kind of crazy. Yeah, this is more about my story. So, as I said, um 2017, I was a physical therapist. I learned that I wasn't going to make a whole bunch of money as a physio. So I turned to learning about the stock market and I was educating myself um by just reading lots and lots of books and my mind was blown that these guys um really famous investors really really good investors they were all kind of doing the same thing that had the same strategy underlying underpinning the same philosophy which we all share as the the Buffett mentality. Uh, and that's how I learned about investing. And I started making YouTube videos about it because I was I got into it, you know, I was really interested. Uh, yeah, this was my aha moment where I figured all of these famous investors were all doing the same thing that had the same philosophy, understanding the business, looking for a moat, durable competitive advantage, you know, finding a management team with skill and integrity and then watching the valuation, waiting for margin of safety. That was the moment after I read all of these books, it's like, ah, it all makes sense. They might have different flavors. Monish would say heads I win, tails I don't lose much. Charlie Mungle would talk about margin of safety to account for the natural vicissitudes of life. In reality, they're kind of talking about the same thing. Uh, so this is where my channel started. This is a little just a bit about my journey. I started in 2017. Aussie wealth creation was what my channel was called. Thank goodness I did the rebrand. So my channel now is called New Money. It's much better for international appeal, you know. So, New Money is my channel. Um, in 2020, I was able to leave my job as a physiootherapist to to pursue YouTube full-time. Uh, this is what my channel looks like. Um, and I make my content is pretty much around four pillars. Value investing. I talk about super investors in the 13F filings. Uh, I talk about economic events and I talk about occasionally company deep dives. And the reason I put that up there is not to, you know, boast or talk about, you know, look at me what I'm doing. It's to say that this to most people, I know we're a select group, but to most people, you wouldn't say that's the most thrilling of topics or the most thrilling or Mr. Beast style YouTube videos out there. Um, but somehow um because of the things I was talking about before with YouTube, we uh this is what's happened. So, over the lifetime of the channel, we've done over 100 million views. We've added over a million subscribers. And the monetization thing is is what I find really interesting just through that. This is just YouTube AdSense revenue. This is not brand partnerships. This is not businesses that I've created to funnel into the YouTube videos. None of that. This is just the ads that are shown on the YouTube videos. It's generated our channel about 1.4 million since 2017, which you know is you can think maybe as a big business that's nothing. But as one person just making YouTube videos, that's pretty remarkable. And you can see why so many people now are instead of wanting to be pro sports athletes, they say they want to be a YouTuber, you know. So it's quite interesting and YouTube is the only platform where this in-built monetization um engine really works effectively. So so many people turn to YouTube and make long- form videos to capture this um to capture that kind of revenue and to build their own businesses off the back of it. Yeah. So the point of all this is not just to say look at me. It's to say, you know, YouTube didn't just create a media platform. They really created a new economic model for niche interest and niche expertise. You no longer need mass appeal. You don't need a Netflix. You really just need to be uh you need to be useful or interesting to the right people. And that's kind of what I found by talking about investing. Uh the internet is now big enough to support almost any obsession. It's a win-winwin. The creators win, the viewers win, and because both of those win, um YouTube wins as well. Yeah. Yeah. And that kind of leads me to the end of the presentation. I just wanted to say like one of the crazy opportunities that I've now had on the back of um building this YouTube business is I've been able to write a book which I'm actually kind of in Omaha to to launch at the moment. So if you if you wanted to pre-order the book and kind of learn more about I call it the my education of a value investor. I wanted to call the book that but apparently it's taken some dude's already written a book called that. What was I don't know. Um but yeah, if you wanted to pre-order, I'd really appreciate it. And the other thing I would also like to do is um we coordinated this so we didn't have overlap with Value X, but after Value X finishes, if you wanted to come across to the Diamond Room, Omaha, I'd love to invite you guys to come to our book launch event. Uh I'm going to be there. Phil Town's going to be there. Three-time New York's Times bestselling author. Uh Divian Narendra is going to be there. We're going to be chatting to him about uh his uh story with Facebook and how he and the Wingle Boss Twins got screwed over by Mark Zuckerberg. Um, if you guys have seen The Social Network, you guys seen that movie? Yeah. Yeah. So, Divia is portrayed in that movie. So, I'm going to chat to Divia. Hish hotter is going to be there. I'm going to be there. Matt Peterson's going to be there. Nate O'Brien's going to be there. So, there's lots of creators going to be there as well. So, if you would like to, I would definitely uh invite you guys to to join us after Value X. Uh, it's a short walk from here, so we made it very close. But, uh, with that said, that's the presentation. Thanks very much for listening, guys. I appreciate it. >> Thanks. Where's Where's Shantel? So, um I when I was taking money in, I'm not doing that anymore. Um Shantel would ask the question, "Where did you find out about us?" And they kept coming back with YouTube. And so, it was Shantel who forced me onto YouTube. She for forced me to take invitations from people like you. My point is that it's a discovery mechanism also for people who try and sell their ideas. I did a podcast with um Luca Delana and then many people found him. So here's my question. How many people here by the way? Where where's Hamish? >> Where is he? He's out the back in the back corner there. >> I've never met you in real life. We've done this podcast together long handshake. So >> but how many people in this room should become creators themselves? And maybe you can just talk about that for a little bit. >> Sure. I mean, I'm biased, but uh I think if you have a business, if you have a fund, if you have anything where you would like to get more clients, uh more investors, I think you should put organic social media strategy at the core of what you do. Uh organic as in not paid. So, I my business partner Ed will not like me for saying this because he's he's nicer to paid ads than I am. With paid advertising, you pay money to force your way in front of people that don't really want to see you. So, you're just running numbers and you're hoping that one in a hundred will click your website or something. With what we do, uh we actually work with clients to help them get these results. So, if you're interested, you can talk to me after. But, um what the idea is that instead of forcing your way in front of people, just make content that would resonate with your end customer or your, you know, someone that might be interested in your fund. use, you know, do really good packaging, titles and thumbnails and hit their core interests. So, hit what these people are going to want to search on YouTube and then people will funnel through through your YouTube videos into uh into your fund or into your business or anything like that. >> Does somebody have a question? Because I have another I'm going to put So, you're going to Divia, you're going to ask a question and that's it. I'm going to say one thing that I learned from Jeremy Jeremy Stikney. Is Jeremy in the audience? >> Oh, Jeremy because I learned so much from him. the learn this. If s if your contact sucks, if your content sucks, it's okay because nobody will click on it and nobody will watch it. So, it doesn't matter if you have a lot of bad stuff out there, it's just fine. And uh there's a famous kind of like uh rock star who said this, have the courage to suck. And if you put content out, I mean, maybe you can talk about that rather than me lecturing about something I know nothing about. and then we'll go to Divia's question and you're only standing Divia between uh you and uh Mish Pabry but uh go ahead. >> Yeah, I think just starting is key. Um a lot of people are scared that you know it won't be received well or they don't know what they're going to look like on camera, but you can just start. Uh, and I would just think my biggest tip would be if you're doing it for a commercial reason, if you're trying to get uh investors or or clients or whatever, just reverse engineer what your person is asking. Like, what are the questions that they have and make YouTube videos that specifically answer those questions so that when they inevitably look it up on the second biggest search engine behind Google that they will find your videos? It's a great last. No, no, you need to you need to get a mic here. >> There you go. >> I'll come down with you, mate. So, as the world gets more and more add, I want to understand monetization a little better. There's a big transition to shorts. So, talk about monetizations visv YouTube shorts, reels versus the long form content, which you do a great job with, I have to say. Um, >> but but no, you have to get back on stage. Thank you. >> Schulz, uh, they suck. you you won't make any money doing shorts. The way I think about short form, well, that's that's not true. People on Instagram and Tik Tok, they make a lot of money doing doing that, but they do it through brand partnerships. So, that's where the money is made. The inbuilt monetization engine is really on long form YouTube videos. uh shorts, there is that inbuilt monetization engine, but we've heard on um on on earnings calls just how hard it is to, you know, monetize and charge a lot for the ad space on short form content because it's just not very effective. So, from a creator's perspective, I'm not going to make a lot of money by making shorts. It's good for discoverability to just get your face in front of people in a in a small way frequently, but then in terms of actually making decent money off of the AdSense, it's just YouTube long form. >> Thank you so much. >> No worries. Thanks, guys. Appreciate it. Thank you. >> Thank you. >> Sometimes you just have to get off the stage and let the star perform and that's the case with Mish. So I give you monish pab. Um I I have I have nothing to add. So uh I've seen guy a few times uh over the year and uh this is the best he's looking and uh it's really awesome. We're going to style here for a second. So, I need to do this. So, this supposedly will come back, but I think that I want the mohawk down the middle and I leave this side. And I'm fine with it. The barber's fine with it. You just have to convince that lady. So, please do your best. >> Thank you. So uh so it's really wonderful to to see guy looking and uh feeling as good as he is feeling right now. And uh uh one of my um one of my mental models is uh that your deepest desire is your destiny. And uh we know what guy's deepest desire is. And uh if you don't have a deepest desire then you can make that your deepest desire. Uh but uh it's wonderful to see this event and like to thank Guy for putting it together so selflessly. So thank you guy. So I I wanted to uh just spend uh the time talking about what you guys want to talk about. So we can go straight to questions. >> Hi uh thanks for taking my question. Before I get to the question guy, one way to con uh convince Shantel is you could clone Manisha's hairstyle. You'll have to do the mustache too. Okay. Uh Manish, since we have you and we have been talking all day about US and AI and more AI and more US um I'm very curious to hear your views about international investing in a world where AI seems to be the biggest divide kind of between halves and have nots. >> Well, uh so very early days, very embionic in terms of what's going on with AI. So from an investing point of view, as long as humans are involved in the process, we will vacasillate between fear and greed. And as long as we vacasillate between fear and greed, there's opportunity. And uh we can do well as as investors. uh at some point it's likely that there's a lot more AI influence in in the space and um the fear and greed vacasillations become much lower and uh I don't know when that happens but uh I have not seen so far uh any movement in that direction uh that is telling me it's happening next week or next month or in 3 years or something and uh so it might be a while uh till till we see that the have and have not I don't think that's going to be a divide with AI. I think that uh what what I what I find if I look at look at a place like India in the remotest areas there's um you know internet access good mobile access and at a very low cost and so it's actually been a big equalizer in terms of uh helping the have nots move move into uh towards the middle class and so on. So I actually that's on that front I I see it more as an enabler rather than anything problematic. >> May I ask a followup if that's okay? Actually India is a great example. Uh and not because I'm an India fund manager but also because you know that's where like a billion.5 pe 1.5 billion people live. So it's important for humanity. um access is yes but monetizing and the whole story about you know a billion people moving up the middle class does that become come in jeopardy does the fact that having people is no longer a demographic dividend it's a liability from an economic perspective how does a country that does not have foundational models how does that country fare 5 years from now 10 years from now. >> Yeah, I actually wrote about this uh last year in Duxana's annual report. Um we we had a we had a girl in our program who uh basically qualified to get medical coaching from us and uh and she eventually got to med school. But her uh father she came to a very remote village in North India. Father got paralyzed when she was about 11 years old and family lost all possible livelihood which is already very meager and the mother had some very basic uh sewing skills with a sewing machine and she taught uh our scholars two elder sisters whatever skills she had to make clothes and then the two sisters uh went on YouTube and they became ace tailor just based on what the mother taught them and what YouTube taught them. And with that skill set they started to in their home uh make custom clothes for local people in the village for for weddings and whatever. And uh they they did well enough and the one of the problems they had they only had one machine and two of them. So the one of the uncles got them set up with a second machine and actually a small shop because they were bringing enough money to do that. And uh the the two of them actually were able to sustain sustain the family. Uh Musan which is the girl who was with us u helped them wherever she could but and then you know when the sometimes the sewing machine would break down and they had no way. YouTube taught them how to fix the sewing machine too. So, you know, the specified like very narrow content. Uh I mean that's an example where the uh bandwidth cost was extremely low. The videos were free. they were able to uh really pick up uh everything they wanted and it led to uh their sister uh getting to dua and then she got to med school and um and of course now I think in about 5 years the family will be in a different place because she'll be a doctor and all that. So I I think that um in India we have this term and I don't know the exact translation maybe you can translate it's called jard what is the exact English translation of jugard >> like make do >> yeah so it's kind of like you know coming up with a solution uh which is not not a traditional solution but basically I think that that's an example of how uh technology becomes such an enabler in a manner where you know the government is not in the picture, the infrastructure is not in the picture, nothing's in the picture and it still works and uh so I'm optimistic about that. So >> and we've seen it firsthand actually. >> Yeah. Thank you. >> We need to >> So is it before you go we need we're going to go to you but you're going to introduce yourself as well. >> Okay. >> Hello. I'm Aloise. I'm from Switzerland and >> Huh. Givol. Okay. Um, so Monife, you're one of my heroes. So, so cool to have you here. Um, so I would describe you like like a a bit of a cowboy, you know? You do stuff like no one else does. So, how do you nurture that quality in yourself? I'm just putting one foot in front of the other, you know? So, we just kind of make it up as we go along. Uh, there's no grand plan. And uh but I I think the for me the main uh I would say beacon and it's a very important beacon is uh the pursuit of passion. So it's it's difficult for us as humans to sometimes know what what our calling is and what our passion is. But it's worth spending the time to trying to figure it out. And it's not easy to figure it out. So one way you could try to figure it out is wear a lot of different gloves and see which one fits. But uh you have to or introduce randomness in your life and through that something could lead to something. But basically if you if you spend all your time doing what you love doing uh you're going to do it very well and you're going to you're going to have a great time. >> Go ahead. Thank you. >> Hi. Uh you recently talked that you bought some Constellation at the current valuation. Can you talk a little bit? >> I'm sorry. >> Constellation software. >> Oh yeah, sure. >> Can you talk a little bit about how you see the situation of the company right now? >> But not after you introduce yourself. >> Uh I'm Gilad from Israel. >> All right. uh uh so I I uh I think constellation is you know part of the selloff in a lot of different uh stocks in the software space the SAS space because people think you know with AI you'll just kind of don't need these companies you don't need Adobe you don't need a lot of different companies and um um I actually think the opposite is true in the sense that I think the incumbents get a tailwind and um new entrance uh probably face uh similar barriers as they were did did in the past. I don't think it really helps them that much. So incumbents like like constellation may see their costs go down uh somewhat. Now it won't go down a lot because people think that that's the uh you know code generation is most of the cost but that's not most of the cost of uh writing and selling software. So they they they may get some reductions but or they may be able to increase feature sets you know may become broader. uh but in either case I don't think they get challenged uh because these are a lot of this is to do with business rules and user experience and all that which takes a long time uh to get right and so uh constellation may also get some advantage on the acquisition side in the sense that uh there may be some um there may be some founders who may be nervous about what AI does and so they may be more willing uh to do a transaction and company reconstellation is a little bit better placed to uh to look at that. So I actually think it's um there's some opportunity in the space because of some irrational uh perspectives. So we'll see. >> Thank you. And plus, you know, I think Mark Leonard um very unique person, amazing leader and uh and he's he's built an engine that I have not seen uh built by any other non Mark Leonard company in the sense that uh you know I think in the US they've got maybe close to 100,000 vertical software companies in their in their database. And they touch these companies at least twice a year. Uh at least twice a year by calling them and at least twice a year by emailing them. And they're just saying what Warren says, which is, you know, if you ever decide to do something, uh think of us. And so if you think about a 100,000 software companies and you think about everyone being between the age of 40 and 80, for example, who's a founder, uh about 2 and a half% of them are just going to be gone either retired or whatever every year. And so that's 200 companies right there. Plus there's others who want to retire and other things going on. So I think they've got very robust uh pipeline of uh and they can be very choosy and um humans humans are very poor cloners >> and um so we are not going to see anyone else clone it even though they should. They're trying in Europe with chapters. >> Yeah, they're but but I'm just saying those are Leonard companies even topicus and so on, you know. So, >> thank you Gilad. And now you know that you have to introduce yourself. So, go ahead. >> Yes, Andrea Vino, investment professional from Italy. So, thanks guys and team for organizing this event first for me. Really impressive. So, my question is about active management. You represent really a successful case of a oneman shop. You have a team but I guess you are the key decision maker in the current framework where AI and the information flow will be different. So analysis will be done differently. You think is going more or less likely that those uh singleman shop are going to outperforms against larger organization. Well, I think I think uh you know we don't know too many committees who won Nobel prizes, you know. So, um I think this is this is a very much a lone pursuit for the most part. It's not not a team sport. And uh so I I I get I get a lot of uh help from a couple of guys on my team and uh but I don't think this is uh the trend is that the single guy is at a disadvantage. In fact, one of the advantages a smaller team and a single guy or a girl has is that um they are able to focus on uh the smallest opportunities and because generally speaking they'll have less assets to manage and uh you know Greenblood pointed out that you know all of us start out at the bottom looking at the smallest opportunities and the successful ones have to move up because the assets increase which leaves the bottom fertile ground for the next generation to come in. So even when you have different tools and different things take place that bottom continuously is getting kind of replanted without without having the old people there and so on. So I think that it's almost evergreen that if you are starting out and looking at uh the nooks and crannies those will always have some promise you know it helps you if you have an 80 IQ as well and he's not aware of that but so you need to take it with a pinch of salt but uh thank you for your question. >> Thank you. >> Hi Mish I'm Favin from London. I think in the industries I'm looking at the situation is actually that China's companies are kind of have very high market share and are dominant. So like solar, batteries, EVs and so on. So if you just look at market share, the Chinese are really dominating and in some way there are things I will never know about Chinese companies, right? So um how do you think about China? How would you deal with it? And I know that maybe Charlie and Warren also had different opinions on that and I know you've been quite close with Charlie. I don't know if they argued about China, but I was curious if you have any uh any ideas on that topic and also how you deal with that not knowing for different countries because I know you diversify between different countries, but you have these kind of unknowns as well in your portfolio. So I was just wondering what you how you deal with that as well. >> Yeah. So I actually don't uh I don't start top down. I I never start top down. So it's actually the wrong way to for me to think about it. And so I don't start out saying I want to invest in China. It always to me starts with a business and you know where it's based and all that that comes in later. And I would say that most of China and most of the companies in China would just go in the too hard pile. uh you know I just wouldn't have any kind of edge or anything like that which would help me uh get there. So so in general most things I look at are either outside circle of competence or they're too hard or I don't understand them. So it's a very small sliver of things that kind of cross my radar which I say oh I can understand this oh this makes sense or whatever else and then we can uh look at that. So, usually like one of the one of the models I use is that if you cannot um explain your thesis to a 10-year-old in about four sentences, it's a pass. And so, if anything is not does not have the level of clarity for me to do that, then it's a pass. And so, most things will not get to that level of clarity for me. And so, uh but the good news is there's like 50,000 stocks around the world and we need to find like two of them in a year. And so there's not been a problem so far. >> So uh we have uh after this one two more questions. Please nobody else stand up because we have other things to do as well. So uh you're going to go and then you're going to go and then well I don't know your names but you're going to tell me your name so I will try to remember them. So and where you from and a little bit about you. Go ahead. >> Yeah. Hi my name is Anand. I'm originally from New Delhi but uh now I live in Vancouver. Uh hi Mish. Uh I think uh I'm having one of the most exciting days of my life today meeting you and Guy in person. So um and I mean the talk in the morning was wonderful. So to the audience uh I was attending I attended a talk this morning at University of Nebraska given by Moish on mental models. So in case you guys uh whenever it is uploaded online I would highly recommend uh you know taking a look at the talk. Uh I think it was amazing. Uh and Monish uh the question uh to you is u regarding leverage. So u there is with dollar being highly leveraged do you think it and with uh a prospect of dollar debasement do you think there's a real risk for equity investors and if so how should long-term equity investors should think about it or u like with the recent rise in gold do you think there's actually a seismic shift in terms of or a shift to something like gold is uh likely to happen in the future um >> yeah so if We look at a company like let's let's take a company like Coca-Cola and let's say we have a you know global nuclear war and 99% of us are gone and u coax uh you know the the 1% who are left they'll be willing to trade you know 10 15 minutes of their labor for a can of coke and they'll be willing to do that all day long. And so eventually from the ashes there will be, you know, a bottling plant created and a concentrate plant created and coke will kind of come back and whatever else. And so uh it doesn't really matter what the currency is. Coke has value regardless of the currency, right? Regardless of what happens to the dollar or anything else, it has value because we are willing to trade certain percentage of our labor for the can of Coke. And so I think it's not worth wasting brain cells on these very difficult to answer questions. I think it's better to put the brain cells on investing in businesses that we think have some resilience and that can be around and that have got some more around them. And you could even maybe think about what happens to the business in the case of you know so currency is not necessarily going to negatively impact a business no matter what happens to the currency. I've got more than 70% of my portfolio in Turkey. Uh the currency has gone down by more than 90% in the period I've invested. in dollar terms we've had spectacular returns and it so the currency has been irrelevant basically and so I don't really spend a lot of time trying to answer questions that are difficult to answer on you know what happens with this and that but as long as if core businesses are great I think they'll transcend a lot of these things >> thank you very much Manish >> hi Manish my name is Shaha I travel here from Israel I'm a fan manager we've been following your work closely there especially especially your your commitment to Dakshana. I'd love to hear how the foundation is doing lately and what's on the horizon for it. Also, since you have such a close bond with Charlie Manger, I was wondering if you could share a story about him. Perhaps something personal or less known that we shouldn't find in the books or YouTube videos. Thank you. >> Okay. Well, um, Dakshina has worked out far better than I would have ever thought, ever dreamt and, uh, now it's been, um, uh, 19 years since we started. And, um, most of our team is alums. So, um, our CEO is not an alam, but everyone below him, almost everyone below him is alam. Most of our faculty is alums. And these these people have uh far more passion for it than I do. And so it's actually in extremely good shape. I actually get really humbled when I meet them because they are just so uh so driven. And um so that's worked out worked out very well and um I don't know uh whether we have enough time uh for Munger story. You have we have five minutes. I'm under Shantel's orders >> because you know you guys have passed the time that you paid for the room by 11 minutes. >> I think we need we need a we need a manga story. So we need a manga story. >> So um it's a somewhat x-rated manga story. >> Aren't they all? So, you know, Manga's assistant, Dorothy, she she told me once I I I had mentioned that when I would meet Charlie, uh, every second sentence he said to me had the f-word. And um, so she comes to me and said, you know, Mones, I've known Mr. Mer for all these decades. That is not how he speaks. I said, Dorothy, that is not how he speaks to you. But I can assure you that is how he speaks to me. Okay. So one time I was um I was uh at the LA country club and I used to meet Charlie uh and uh Rick and maybe probably every like five six weeks or seven weeks or something uh for a afternoon of bridge. uh Friday afternoon Charlie would play bridge and they had a regular group but uh I told them when one of the old guys can't get out of bed just call me and they so I was there like a standby backup uh you know be the fourth or whatever. So uh so we used to have lunch uh before the bridge game started. So I I got to the LA country club and um there were we were still waiting for a couple of guys to show up but it was just me, Charlie and uh and uh Rick. And so I was sitting across from the two of them and I told them I said you know you guys think this is just some lunch before some bridge game but this is a f historic event for me you know this is a big I I know you guys think this is no big deal and whatever else this is a very big deal okay and they said yeah whatever you know they didn't really didn't care so I said can you tell me about the time when you guys were doing your deals builds together in the 60s and 70s an interesting deal where um you know you were shooting fish in the barrel after the water's been run out, right? So Rick Goran looks at Charlie and says, "Tell him about the blonde." Okay. And um so Charlie then takes over and he says that so there was this um there was this kind of maverick entrepreneur in California and he had come up with an adhesive kind of a fluid that you could pour into your engine and it would seal any engine leak. And so he had kind of invented this thing. Now the guy was kind of a nutcase in terms of finances. They were all upside down. But the way he built sales was he used to go to uh auto repair shops in Southern California with his gun and he'd shoot a hole in his engine with his gun. Then he'd pour the liquid. Then he'd show them that there's nothing leaking and that's how he built sales. Okay. So he drops dead unexpectedly, relatively young, like in his late 50s or whatever. And uh the business is all upside down. they got a lot of debt and and and such because he was just not very good at some of the other things. And so Rick Goran sees in the obituaries that this guy is dead and that there's this business. And so they do the research and they find that there's a lot of bank debt and they buy the bank debt at like, you know, 20 cents on the dollar because the banks it's all uh non-performing. But the guy uh um his his wife is the technically the owner of the business because it passes to her and they didn't want to take the business without making some payment to her even though they weren't really obligated. So what the what the what this maverick entrepreneur had done is he had a mistress uh who his wife knew nothing about uh who he made the executor of his will and then he passed the business to his wife. So the grieving widow first she's grieving that her husband has passed away and then she finds out about the blonde nurse you know and uh and then Charlie says the blonde nurse was very wellendowed. Okay and uh so he said that the two women were very upset with each other. The blonde nurse felt that the wife never took care of him, which is why she was he was with her. And the wife said, "This is just the whole thing is ridiculous. That guy, you know, he was cheating on me. I didn't even know and all that." And Charlie needs the two women to cooperate just enough so that they will sign things over and they can get the business. And the guy had borrowed 80,000 from the wife's aunt. And so Charlie talked to the wife and said, "Look, you need to cooperate because your aunt, she can get some money from this." And uh otherwise like there's nothing coming. It's all locked. And so he pacified the wife. And then he had arranged a meeting at the California club uh to have lunch with the blonde nurse, right? And uh the California club is a very blue-blooded 100-year-old institution. That's where I met Charlie first time for lunch. you know, ornate uh you know, lunchroom and all that. So, uh he's meeting her there. She comes straight from work and she's in her nurse's uniform and it's three sizes too small. Okay. And in Mr. Dignified Munger's words, there were tits everywhere. Okay. So, he never told Dorothy the story, you know, so Dorothy doesn't know. And uh and so all the other members of the club are watching Mr. Munger, their distinguished member, having lunch with this porn star. You know, they just thought she's a porn star. It couldn't be anything else. And they couldn't understand what the hell is going on here. Like, you know, Mr. Mer and this and that. But anyway, Charlie said, "I pacified her enough. We got the deal done." And then eventually that company actually went to Burkshire Hathaway and later they sold it. But um so that's what they that's what they told me at that lunch there. >> Great story. So >> I don't know how you follow this, but you but you're going to try and answer a question that tops that. I don't know how you're going to do it, but I I give you somebody unnamed for the last question of the day. >> Hi, I'm I'm Satish. I'm from Charlotte, North Carolina. First of all, thanks to Guy and your team for organizing this event. Uh Manish, I have uh actually a couple things to say. So, first one, I'm a huge fan of yours. I've actually watched almost every video of you on YouTube and then I've always learned something new when whenever I watch your video. Right. So uh recently uh in 2025 I did watch a video of your podcast on uh D of a CEO Steven Bartlett and I've learned a lot of things in in that episode and one thing was specifically when you said you know uh I believe I'm paraphrasing it but you said you know >> you were trying to get something uh and then you kept trying you kept trying kept trying until you got what you wanted right so what I thought okay I'm I'm a podcast host for somebody who doesn't know I'm a podcast host and at that time I thought, okay, I wanted to have Manish on my podcast. So, I did reach out to you as I thought, okay, I'll just keep reaching out. I'll just like how you cloned Warren Buffett, I thought I'll clone that idea of yours. I'll start, you know, bugging you so that one day you'll say, "Hey, enough of your emails and come your podcast, right?" So, and >> I got a reply from your team saying that you you're going to pass this time, but just so you know, I'm going to keep trying, keep trying until until you're going to be a guest on my podcast. >> So, so there is uh one of the mental models I talked about today and actually been earlier was that your deepest desire is your destiny. >> So, if you really want something to happen, it will happen. >> Yep. >> So, you should keep trying. >> Yes. >> Thank you. And you know >> I have actually said the second second thing to say. >> Uh I want to invite Shantel uh Mariana and David onto the stage. >> Uh I would say one thing before you get your your last word is you need to vary your approach as well. So but uh go ahead. Your last comment. >> Uh yeah I mean my last this is a question actually. So like I said I've always watched almost all of your videos on YouTube. So one thing very common is you always talk about the power of compounding right you know the power of compounding and how it applies to money and stuff. So actually my podcast is called compounding project you know how you can imply apply compounding to not only money but other areas of your life as well. So one my question to you is you know we know how you have compounded your money right so I'm curious to know what other areas of your life have you applied it applied the principle of compounding and how let's say if you're starting over how would you have done that differently I'm not talking about money but other areas of your life >> yeah I think I think compounding is a is actually it's myopic to think about it just in terms of money or assets I think the bigger part of compounding is how to compound and have a great life and in fact if you study Warren and Charlie um the best lessons they have is about compounding goodwill and compounding great life and so uh there's a number of different things you can do we don't have the time today to go over it but I would just say that you look at their example uh about you know being selfless and helping the world in different ways and the goodwill does compound and it does come back manyfold And uh that's a great model to follow in life. So >> thank you. Thank you for your question. Monish, look who's behind you. So come forward because uh uh the people who really did this. I did nothing. Nothing. No nothing. No nothing. But it's these these people. I guess Mish, you're you're in the crowd. Mish helped. No, stay there. Stay there. But um No, no, no, no. Don't go. Don't go. You can stay as well. In fact, Mish, why don't you thank them for me because you'll do a better job. Why don't you thank them for for me? >> Well, Guy, you know, so guy has a lot of difficulty firing people. Okay. And uh so and you know, and and he'll tell you that, you know, in about 15 seconds after meeting any of his staff members, I would tell him uh whether they're keepers or they could be let go, right? And and I'd repeatedly meet him and say, "Okay, guy, so and so needs to be gone." Okay? And then a year later, they're not gone. And I say again, I said, and I told guy, I'll do it for you. You don't need to do it. Just just just let me talk to them and it'll be done. And of course, he's too nice. He won't let let me do that. And so, you know, these thoroughly incompetent people uh and you know, they suffered. These are the good these are the good people. They've suffered through with these incompetent people. I've had conversation. Shantel, have we not had conversations? Yes, we've had a lot of conversation about these incompetent people that I wouldn't let go and they had to painfully deal with. So, I just want to say this is the 18. No need to make any changes. A great 18. We finally got there. It took took probably 10 years to get there, but we got there. So, it's wonderful. Thank you. >> I got I got there just before I shut my thumb down for for medical reasons, but whatever. Thank you so much. Thank you. Thank you. Thank you. And thank you, Manish.