· 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.
· Alexander Taubman, David Senra
[00:00:00] S1: Yeah. [00:00:00] S0: And he's like, "Nope, not doing it." He has this great line. He's like, "Oh, we'd sell if it was the maximally ambitious thing to do." [00:00:00] S1: Yeah. [00:00:00] S0: Which is obviously- [00:00:00] S1: Great line. [00:00:00] S0: Yeah, it's a great line, which is obviously his way of saying no. I'm even going to tell you some of the conversations I've had with him on the phone, which I was like, "I can't put this in the podcast," because he's definitely friendly UI, but conqueror spirit underneath that friendly UI. And then I just talked to Zach Dell. And I was like, "Is this the last business?" Because what I love about Karim and Eric from Ramp, I asked them both the question, like, "This is our last business." [00:00:00] S1: Yeah. [00:00:00] S0: It's not like I'm going to fucking sell this and start another company. Like, this is it. This is the last one. And Zach Del had the funniest thing because he wants to build something, like you said, he's relatively young. He's like, "I want to work on this for 50 years and go see how far I can take this thing." And he goes, "And do you think I'm doing this for a paycheck?" He's like, "Think about my background." I was like, "Yeah, good point. You're not doing it for a paycheck." So, what would be the point of selling it again for more money that you're never going to spend anyways? So I just love this idea. But we never closed the loop on your maximum ambition, which is like, you guys could be building a trillion-dollar company.