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Show Notes

[00:02:45] - [First question] - How working on The Outsiders project shaped his thinking

[00:06:29] - His interest in long-term holding periods and dealing with multi-decade time horizons

[00:09:42] - Shared characteristics among compounding machines

[00:11:23] - Defining capital efficiency and the return on tangible capital metric

[00:13:02] - An example of an attractive business that requires a lot maintenance CapEx

[00:14:22] - Thoughts on the measurement of intangibles and whether or not he’d avoid great businesses that are intangible heavy

[00:15:25] - Tangible ways capital efficiency rolls into compounding capacity

[00:17:45] - Being patient early on and things that reveal themselves after doing thorough year long research in a company like TransDigm

[00:20:32] - Lessons learned about good game selection for companies

[00:22:47] - Common features of customers that tend to be served by the businesses he invests in

[00:23:43] - Evaluating culture and its ability to propagate forward in the public equity markets

[00:25:09] - An example of a decentralized structure and why it works so well

[00:27:53] - Successful decentralized companies regularly assemble general managers and compare their results and share ideas

[00:28:46] - Thoughts about software as a business model and lessons learned about this industry across his career

[00:30:00] - What the best serial acquirers do for long-term holders

[00:31:46] - Advantages of using debt for financing and acquisitions

[00:33:39] - How different the future might be for young CEOs with capital allocator mindsets

[00:35:40] - Other forms of recurring revenue he’s seen and things that are one the line between recurring and non-recurring revenue

[00:37:42] - The biggest changes for him moving from outside client capital to just managing his own

[00:39:09] - 3 companies that Housatonic Partners has owned for more than 25 years

[00:40:29] - What made Karen Moriarty so good for so long

[00:42:36] - The crossover between public and private investing and the virtues of each sector

[00:45:35] - How he thinks about the function of Compounding Labs and what he wants it to become

[00:47:10] - What is at the top of his wish list of the companies he wants to explore

[00:49:15] - Which companies he’d still be fascinated to learn about that don’t fit the criteria he’s laid out today

[00:50:25] - The development of investor conviction over time and what he’s learned about it

[00:52:19] - Lessons learned about producing great media

[00:53:43] - What he can teach us about deep research on companies with analysts

[00:55:10] - Adjusting his thinking and investing in a high variance world