00:16:00 · Paul Buser
[00:16:00] S1: So inspirational. I mean, we've been teaching for fifteen years at Notre Dame and have seen a thousand students. Every 22 year old comes with very similar questions every time. And for them to hear this kind of message that, I mean, in a way we think about is make time your friend. While you wanna be in a hurry, you wanna work and be ambitious as possible, you actually have a lot of time in front of you. And you need the time if you're gonna build the next Berkshire or Danaher or whatever company it is. In many ways,
00:16:28 · Luca Ferrari
[00:16:28] S3: it's like delayed gratification. There are paths for someone who's, let's say talented, especially if you're born in the right places. But generally speaking, there are paths to very high level of gratification and success with a much higher probability on a shorter timeframe. Again, could go into investment banking or consulting or join a successful scale up or be an entrepreneur in more conventional ways. And that's perfectly fine. If you're aiming for something truly massive, you need to have that urgency and work your ass off just as much, if not more and for longer. But you have to be patient on the timelines. You are basically building an engine, a rocket ship that will take you longer to take off. But once it does, it'll move 100 times the speed of your more rudimental vehicle that you're using for the other carriers. But if you measure yourself one year in two years in three years in, you look like you're trailing in many ways. Not everybody wants to work hard anyway, but even among those who won't, many are impatient and they need to see an immediate ratification occurring. And if that's your path, more like sometimes the private equity path that I want a bigger bonus this year. No moral judgment, perfectly easily understood, but you're unlikely to be an exceptional outlier twenty, thirty years down the line. I love the framing. Often,
00:17:48 · Paul Buser
[00:17:48] S1: it's so hard for someone young to realize they don't actually have to wait twenty years for something good to happen to them. They're not gonna starve generally if they're, in this case, coming out of university, have some options. But being willing to do something just a little bit differently, we think it leads to one thing you talk about a lot, which is this ownership mentality and that people just care. And I think maybe there is a connection. If you want to derisk, not delay gratification, you can't really think like an owner because you're not planting the seeds for a much longer term, potentially bigger outcome. How have you found this many people that think like... I think you and David Center were talking about extreme ownership that think that way. Everything we're doing, we've helped to build something like 14 other holding companies. We have a lot to learn from you on centralization of a lot of things, and we want to get into that. But what we find is that incentives are aligned and the team, the founders act like it's their life's work. I think you're potentially the best example we've seen at scale, getting a crew of now close to a thousand people all thinking that way. Where does that come from? How did you end up doing that?
00:18:57 · Luca Ferrari
[00:18:57] S3: It starts by realizing that it's almost the most important thing. Basically, it boils down to if you have a strategy that makes sense, which is a big if by the way, most companies don't. But if you do, it's almost all about talent and culture and culture is almost all about caring. What we call extreme ownership. I think if you have talented people who care tremendously about their job, the company, and are pursuing the implementation of a strategy that's likely to succeed, you're already 80% there. Everything else kind of takes care of itself for the most part. If you end up understanding that almost all that matters, you need to work hard toward accomplishing it. So it starts with recruiting. You want to promote the company as a company where we all care tremendously. We work hard, we're dedicated and that will certainly lead you to missing out on certain candidates may be extremely competent, in some cases brilliant, but for whom maybe work is not a priority any longer. There is a whole slew of companies that are trying to attract the phase two Googlers. You know, people who are now, okay, now I'm in the phase of my life. I don't really want to work hard. I'm still a serious professional, you know, but want to feel that the CV I've built up means something, but I don't want to work too hard. I want to do my part of the job. I want to be more of a leader. I don't want to get my hands dirty. There's plenty of people out there are very competent, very intelligent who will do that, but I don't think you can succeed really not in a competitive environment if that's your typical profile. So you give up on some of those by saying here, everybody's hands on, starting with the CEO, everybody's hands on, in doing primarily individual contributor work. We work hard. It doesn't need fund investment banking, but still, we push hard. We have a sense of urgency, dedication, focus. We don't do passion projects. We do what's needed for the company to succeed. So you have to promote these things and you're missing out on certain types of candidates, but you attract a higher density of those who are likely to buy into this model. Then you need to develop good tools to predict or better understand what these people bring to the table. It's very difficult, especially these more qualitative aspects and especially for people with a short track record.
00:21:03 · Luca Ferrari
So we have made it a science really, an it's entirely different discussion. If you want, we can get into it, but we have invested heavily over time to develop the tools to predict futures behavior in people who apply. Once you have the people, hopefully you have a lot of people that are predisposed toward behaving like owners, it becomes very important to maximize their potential in that regard. Part of the problem is solved by creating a high density of people with this sort of high levels of care because caring is contagious, but also negatively contagious. If almost everybody cares, the one person who cares slightly, if they have the potential to care, the poorly care. Vice versa, if almost nobody cares, all those who are in the middle line could care or not care end up not caring. You want to have a very high level of gravitational pull toward the caring pull. And so hiring well, and that's part of it. Then you try to retain accordingly. So if someone doesn't care, want to part ways with them. You want to preach constantly. This is important. First and foremost, you as an individual, especially if you're in a position of greater visibility, you need to embody that quality, no matter what. So every time you get a chance to demonstrate, in our case, extreme ownership, if you don't, especially as a manager, as a leader, that's your greatest failure. I'd rather have someone make a bad decision, but consistently demonstrate Extreme Ownership than vice versa. Because when people see that people who progress in the organization get more responsibility and better pay, the one trait everybody has is that they care tremendously. If you have the potential to care, that will be very powerful in maximizing that potential. It's never going be perfect, but if you do all these things well, over time, you'll be at 80 out of 100, where most companies are 20 out of 100. Ultimately in life, almost everything is relative. Nothing is perfect. You just want to win, relatively speaking. It's almost like basketball. Nobody shoots the three perfectly, but if you shoot at 45% on average, your team and most other teams are at 38, you're very likely to win vast majority of matches. So you shoot for the highest possible average, not 100%, which is impossible. It's so fascinating how you're talking about the individual unit of a Spooner of a teammate.
00:23:09 · Luca Ferrari, Paul Buser
When you go from five of you to 50 to 500 eventually to 5,000 or maybe not, I don't [00:23:13] S1: know where it goes, how do you keep a grip on the organization? Feels like actually what you described could be one answer that if every individual unit, individual person feels ownership, you could have an unlimited amount if you actually could do that. But the history of corporations and law of large numbers tends to fight against that on average. As you grow the team, what sort of management system do you use to either keep control of that, maybe diffuse it, stay centralized, I'm