· David Senra, Alexander Taubman
[00:00:00] S0: Why? Why is that maximally ambitious? [00:00:00] S1: Because I think we'll have ultimately deeper and lower cost of capital, and just the public markets are the biggest stage in terms of deepest pools of capital. And I do believe, and one of the things about some of the great holding companies and people like Henry Singleton and others, and John Malone, they've all proven this over time, is that if you execute over a long period of time, you earn a currency that trades at a lower cost of capital, and then that allows you to do even more ambitious things. And so by getting access to that over time, we can think even way bigger. So I think there's some, potentially to scale our impact to even larger and larger businesses and industries, over time I think having that currency will be very valuable. [00:00:00] S0: What else did you learn from Singleton? You and I have talked about Teledyne a bunch. [00:00:00] S1: Yeah. I mean, he's probably, like of all the holding companies, one of the people that's inspired us the most. And first of all, he was a math genius. He was on the Putnam team at MIT. He was in Office of Special Services. I mean, you sent me the book, I think- [00:00:00] S0: Yeah
· David Senra, Alexander Taubman
[00:00:00] S0: Yeah [00:00:00] S1: ... "Just In Force," which is a great book. One thing that people don't understand is Singleton compounded his earnings per share at like over 40% a year for 20, 25 years. And Buffett always called him the best capital allocator in America and the best operator, and he was very kind of under the radar. The biggest learning from him, I think, is he used to say, "Stay flexible." His mantra was he didn't like detailed strategic plans. He preferred to stay flexible. [00:00:00] S0: He says, "I prefer to steer the boat a little bit every day." [00:00:00] S1: It's a great quote. He was subject to all these outside forces- [00:00:00] S0: Yes
· David Senra, Alexander Taubman
[00:00:00] S0: Yes [00:00:00] S1: ... and nobody's smart enough to predict them, so you just need to come in and steer the boat every day. And so I think that's part of our whole philosophy of staying open to different industries, the flexible capital allocation mantra of... For example, we never would have said when we started the company that we wanted to do travel. It just wasn't something I'd thought about. We eventually built a thesis on it, but that was because we had an open mind. And now we're doing, I think it's one of the most exciting deals we've ever done. I mean, it's like an unbelievable iconic business with a reputation for gold-plated customer excellence with one of the best AI opportunities to improve the service at a pretty reasonable multiple, actually, when you look at it. And had we not kept an open mind and stayed flexible about industries, we never would have looked at it. I think that's a very inspirational principle to us that we try to embody. [00:00:00] S0: What about John Malone? Anything from him?
· David Senra, Alexander Taubman
[00:00:00] S0: What about John Malone? Anything from him? [00:00:00] S1: Yeah, I mean, he was amazing. I was studying him at Oaktree, and actually we invested in a number of his stocks over the years. I think just creativity on structuring and creativity on financing and things like that. He was kind of top of his class. And another thing, I read in "Cable Cowboy" that he was a very first principles thinker, which he would do, like ask why five times, get to the root cause. Like, he was a big root cause thinker, and that's something we try to also embody in our investment process, now capital allocation process. We want to always understand why is a business good business? Because we do plan on doing... You talked about permanent capital. We want to be doing this for decades. And so it's actually very hard to think out 20, 30 years on what's going to still be a great business, especially now. [00:00:00] S0: Yeah, especially now. [00:00:00] S1: So first principles thinking about why a business is going to be great post-AGI is really important. It's maybe the most important thing in capital allocation right now. And I think stock selection, they used to say it's a stock picker's market, meaning there's going to be winners and losers, a lot of dispersion. I think there's going to be a lot of dispersion in the next 20 years between the best assets and mediocre assets in terms of a post-AGI, you think about how industries are going to shift. [00:00:00] S0: The gains of the winners is going to be even more extreme in a post-AGI world. Is that what you mean?
· David Senra, Alexander Taubman
[00:00:00] S0: The gains of the winners is going to be even more extreme in a post-AGI world. Is that what you mean? [00:00:00] S1: Yeah, I think there's just going to be a lot of dispersion. I think the gains to the winners is going to be extraordinary. [00:00:00] S0: Yeah. [00:00:00] S1: And businesses that are well-positioned, that are high-quality services, that are going to preserve their place in the ecosystem and expand it, which we think our businesses all fit that mold, can become orders of magnitude more valuable. But businesses that are lower quality, easier to disintermediate, aren't providing a sort of enduring value-added service, and really are more of like a tax, some of those are just going to go away. [00:00:00] S0: Yeah. [00:00:00] S1: And that's good for the economy, by the way. Less friction is good. But I think thinking through businesses holistically and sort of thinking about what makes a business sustainable or not, enduring or not. [00:00:00] S0: Have you guys bought any businesses that were weaker than you expected? And have you sold any of them, or no? [00:00:00] S1: No. We've never sold anything, and we don't plan to ever sell anything. You never say never. [00:00:00] S0: Yeah, of course.
· David Senra, Alexander Taubman
[00:00:00] S0: Yeah, of course. [00:00:00] S1: It's more about are we adding value to the business? Is it a business that Long Lake should be in? I think that's the bigger question. If you're going to invest all this time and energy to get into a great business with a great team, build that partnership, build nexus to deploy into that space, create the best technology in the space, the best people, the best team in the space, and then you're going to sell? You want to let it compound for a long period of time. [00:00:00] S0: So wait, I just had a thought, and I don't even know the answer to this question. You guys are acquiring businesses. Have you guys had any acquisition offers for Long Lake itself? [00:00:00] S1: Everybody knows we're not a seller, so we haven't really entertained or had any of those conversations. My plan is this is what I want to be doing forever. [00:00:00] S0: Okay. I'm on a run right now, so a bunch of these episodes aren't even out. Thorsten from Helsing, he sat in the same chair, and he's legitimately mission-driven. He's just like, "I'm building a great European defense company because..." He's already rich. Like, he was rich when he started the company, and he's just like, "Because Europe has to be able to protect itself too." This is a mission-driven company. He's like, "We're not for sale for any price." Scott Wu, I push him on this a lot because billions are getting thrown at that guy's face. [00:00:00] S1: Yeah.