Adam Karr: Know Yourself, Pick Your Game, Build Your Blueprint (Lessons from a Janitor & Investing)

Research shows that people who are better at describing and understanding what emotions they are feeling demonstrate better investment performance, suggesting that emotional literacy is a learnable skill that improves decision-making.

“they're study that show that those people that are better at describing what emotions they're feeling end up demonstrating better investment performance and it's just the simple concept of like having a better read of what you're feeling”

Public market turnarounds have very low base rates of success compared to private equity turnarounds because the market's tolerance for the difficult, patient work required is short—you can take shortcuts and appear to win in the near term, making public market turnarounds structurally harder.

“public market turnarounds are tough and have very low base rates for all the reasons that you were just drawing out the Market's tolerance for doing the hard work is very short”

Investors should approach companies as owners (thinking about capital allocation, defensibility, moat creation over time) rather than traders (focused on near-term price moves); this fundamentally different posture shapes how you ask questions, evaluate risks, and hold positions.

“we very much approach it as owners and we're thinking about what you would as an owner like Capital allocation and defensibility of the business and what they're able to create over time show up in that way asking questions around that and in the midst of that conversation you can typically glean pretty quickly like the way in which they're thinking about the business”

The firm created a 'decision analytics initiative'—a standalone team using third-party software to analyze all portfolio manager and analyst decisions, identifying individual patterns, strengths, weaknesses, and biases in real-time, functioning as an internal coach.

“one of the things that we did a couple years ago uh which has been really interesting is um we created this what we call decision analytics initiative right so we have a Standalone team um for individuals we went out and got third party software and we run all these decisions from our portfolio managers and our analysts through and we're looking at to pick up strengths weaknesses and biases it's meant to be kind of like you know internal um coach”

Tom Brady, Michael Jordan, and Kobe Bryant all treated practice like game play—not coasting, with same respect, effort, dedication, and even frustration at missed plays; they didn't half-ass practice and expect to win on game day.

“as you were saying that part of what popped in my head was if we go back and we look at the GDs and in sports because that's an easy reference but like I talked to somebody who played with Tom Brady and they basically said like practice was a game and if you talk to somebody who played with MJ it's like practice was a game like you you're not coasting and if you are he calling you out and like um and Kobe was the same way where they treat the practice like they would treat treat a game with the same respect the same effort the same dedication the same frustration if they don't make a play they don't sort of like half ass it and expect to win on game day when they don't do it in the practice”

Creating 'nudges'—system-generated alerts when you demonstrate a known bias in real-time—can help override automatic biases without dictating behavior; the nudge reminds you of evidence against your current behavior but leaves the decision to you.

“we create these nudges what we call nudges and so this is coded into our system it's watching your behavior real time and then if you're demonstrating one of these it'll send you an email and I'm never that excited when I get them to be clear um and it'll say you know remember the data you're demonstrating this right now in this position it doesn't dictate that you do it but just encourages you to think about it”

The average tenure of an S&P 500 CEO is between three and four years, creating a structural mismatch with long-term value creation; short average tenure incentivizes CEOs to take risky short-term actions to preserve their position rather than building enduring companies.

“the average tenure for an S&P 500 CEO is I don't know what it is but it seems pretty short”

Learning is a loop: experience (12 o'clock) → reflection (3 o'clock) → compression/abstraction (6 o'clock) → action (9 o'clock) → back to experience. Most of what we consume is others' compressions, which breaks this loop because we can't go back to the raw experience.

“I think of learning as a loop there's like you have an experience consider that like the 12and on a clock you reflect on that experience which is the three-and you create a compression or abstraction which uh you can think of as the distillation uh as the six and then you have an action so you have this Loop that constantly feeds back into itself often what we're consuming is other people's compressions and when we do the book summary is a great great example of that right you're consuming somebody else's uh you don't know what's missing”

The speaker has specific biases identified through decision analytics (endowment effect—hanging with positions too long; regret aversion—scaling into new positions too slowly). Knowing these patterns through data feedback allows creating 'nudges' (system alerts) to encourage more objective decisions.

“it's showing you these patterns right like I have specific patterns that I've demonstrated over time I talked about one of them already with regard to the endowment effect another one is Regret aversion the riskiest position in the portfolio is my newest position so when I'm initiating a position I tend to scale into it so let's say I want to take it to 3% of capital I'll buy 50 basis points and then I'll another 50 and I'll scale into it turns out that's wrong”

Book summaries and secondhand distillations lack crucial context and miss important details relative to engaging with source material directly; listening to a summary misses the experience of working through the material yourself, which changes how you contextualize information.

“we were talking about this last night sort of like listening to book summaries in a way right it's like they sound great and and you listen to them in your ear and you're like oh that's amazing but then you go to the source and you're like how do they miss this and it contextualizes differently in your head and the degree of filters between you and the information also matters right if you're reading an author talking about a subject that they have no experience with directly it's going to be very different than reading direct from The Source somebody who touched the problem and had the direct experience”

Having a clear blueprint or role model to study deeply is essential for developing skill; people can study anyone in the world virtually through books, videos, and written work without physical access, and should treat this as seriously as an in-person mentor relationship.

“everybody as they're coming up should have a clear blueprint of somebody that does what they want to do has done it really well a lot of times people talk about mentors and one of the things that always frustrates me with young people when they ask me like oh it's difficult to find a mentor and I'm like what you could have any Mentor in the world that you want there's so much out there like pick somebody that you really respect and just like be a sponge get obsessive learn everything you can about them”

The firm does months of fundamental research to produce 50-page reports, but then discards this and produces only a few pages distilling the truly key points; distillation after exhaustive work is the hard part and the 'sauce'—identifying the 2-3 fulcrum issues that drive outcomes.

“we do a lot of work we're really fundamental we can spend months working an idea and then you know you get this 50-page report I don't want a 50-page report like I want a few pages that really just still like that's the hard part is to do all the work but then distill it down to like the few things the two or three really key points and in particular where we see this differently than others capturing that and knowing kind of those fulcrum issues like that's the sauce”

Simplicity on the other side of complexity is only reachable by going through complexity first; you cannot skip the work and consume only the simplicity, because you won't be able to evaluate whether the simplification is good or bad.

“it's also a manifestation I think what what you're pulling on that you've you've gotten to that it's like there's simp Simplicity on the other side of complexity but you can only get to that Simplicity if you've gone through the complexity but I feel like everybody wants the Simplicity they want to consume the Simplicity they don't want to do the work they don't want to go through the raw material”

The magic in investing is in the last 5% of understanding—doing all the standard work (balance sheet, P&L drivers) and then pushing further to understand the essence and breakthrough insight; stopping short of this leaves money on the table.

“you really like getting to that last 5% where you understand the business in a way that you do make that breakthrough that synthesis that's where the Magic's at don't stop short of that like keep pushing until you get to that point that you can distill it like what what is the essence of this like one of the things we talk about in the team is what's the essence state statement for this company meaning like what's the thing that really drives it”

The speaker's favorite investment situations are ones where the bear case is actually the bull case—a common bear narrative exists, but deep investigation reveals the bear reasoning is flawed and the actual competitive position is stronger; this requires independent work to uncover.

“it also ties to some of my favorite investment situations are the bare case is the bull case so there's this common bear narrative and if you don't kind of do it on your own your own work”

Alan Gray liked talking to younger people because they provided less filtered, more contemporary perspectives closer to the source; he understood this as survival and adaptability—staying connected to cutting-edge thinking and problems.

“he always liked to talk to folks that were younger um and I think for a couple reasons one was um it's it's less filtered that it's closer to the source um and it's probably more contemporary in its view you know I was reading earlier this year I was reading uh was a biography on Andy Grove and it talked about you rise to the level in the company that you're a manager more senior engineer like you you lose your connection to like The Cutting Edge engineering and so you know it was very clear part of their culture it was non- hierarchical quite flat they would interact directly and it's like why do you do this he was like it's survival like it's I need to be close to the source of the people that know the problem the closest and and when I read that I was like wow that's the same thing that Allan did in a different way a different industry a different business but it's the same concept never called it survival but know that that was underneath it of like getting directly to unfiltered the best information”

A billion-dollar company CEO's Chief of Staff discovered that CEOs make bad decisions not because they're incompetent but because information reaching them is so filtered by the time it arrives that they have 'completely terrible information'; by calling people closest to problems, he bypassed filtering.

“I had a friend who was the um Chief of Staff to a CEO of a billion dollar company before he assumed this role he he sort of said you know I think by and large and know I'm paraphrasing here so these aren't his exact words but like these guys make incredibly stupid decisions uh and I want to help change that and then he got up there and he's like actually they make really good decisions with the information they have they just have completely terrible information cuz it's been so filtered by the time it got up to the CEO's office and so he started this thing where he just started calling the the person that he could get in touch with closest to the problem to understand the problem and having briefs from that person and skipping like five layers or six layers of management and he got in so much trouble for this”

For investors, the equivalent of practicing piano daily is: (1) practicing deferred gratification and probabilistic thinking, (2) continuing to practice thinking about uncertainty and not taking it for granted, (3) inoculating yourself through daily practice for moments of high uncertainty.

“for us as investors like what's the equivalent of practicing skilles every day talk to me about the blueprint the first blueprint for me in [Music] investing... I mean I think there's some parts of it are temperament related like just practicing defer gratification there's elements of it that are you know um thinking about the world probabilistically everything just continuing to practice that every day or the uncertainty of a situation but not taking that for granted and like really practicing that day after day essentially inoculate yourself to to prepare yourself for that”

Time allocation is as important or more important than capital allocation, because you can get more capital but can't get more time; before committing to a project, ask whether spending 3 months on it will improve odds of a better outcome.

“as investors we we allocate Capital You could argue that's our most important job you say that a lot of CEOs you know ironically most important job is allocate capital I think there's something on top of that which is more important is how you allocate your time people just don't think about it enough and they fall into these patterns without really thinking about the most important question because you can get more Capital you can't get more time”

When clients ask the speaker about US election outcomes and implications for the portfolio, the honest answer is 'it's 50/50, it's unknowable'; rather than tilt the portfolio for a particular outcome, the speaker focuses on portfolio resilience across scenarios.

“I was I was recently in Australia seeing number of clients and a big topic is the election the US election in their mind and obviously for us it's it's a big deal but the best answer is like it's 50 it's kind of 50/50 you know and I'm not going to position in tilt the portfolio for a particular outcome one because I wouldn't be well served to do that but two to this point like it's it's unknowable and so I just want to be resilient as opposed to spend all this time obsessing on is there going to be a particular candidate that wins and position the portfolio in that way much better to just focus on it like from a position resilience”

Buffett's earned secret (not widely recognized) is that he's always positioned for success: he rarely puts himself in situations where external circumstances dictate his actions; instead he maintains optionality and adaptability, allowing him to capitalize on opportunities others miss.

“I think one of Buffett's earned secrets that most people don't recognize is that he's always in a position for Success he's very rarely put himself in a situation where circumstances dictate any action that he takes and the optionality and adaptability that that provides makes him look like a genius because he can always take advantage of whatever the world's offering him and if you think about it now it's like they have 300 billion is in cash and it's like well if the the stock market crashes and the economy goes to shed who wins Buffett wins and if it stays the same who wins Buffett wins and if it like skyrockets who wins Buffett win like you know he he's just set up this scenario where he's he's not predicting he's positioning”

After extreme due diligence on the short report, the speaker built deep conviction; on the back of this extremely deep rigor, they put a billion dollars into the position (and Brad bought back stock at dislocated prices); common Trope is 'rollups never work,' but base rates matter—conditions precedent for successful rollups are what matter.

“the beauty of it on the other side is it built a deep conviction right and we probably put a billion dollars into it on the back of that and the stock was extremely dislocated I think Brad and the company bought back 2 million like unprecedented magnitude of company buy back he borrow he borrowed money to buy back and bought back huge it was a gut check but on the back of like extremely extremely deep rigor like conviction building you know the easy thing would be to go the other way like oh this is messy this is noisy the common Trope is rollups never work and I it's true like the base rate on rollups is not good it doesn't mean all Roll-Ups don't work what are the factors and common Hallmarks of rollups that are successful and are those conditions precedent here and those are the things that we found as we went deeper and deeper and peeled back the onion that's what it takes and again kind of turned it like the be case is actually the bull case”

Buffett's filter 'is it knowable?' prevents wasting time on unknowable questions or arguments; applying this in personal disputes (family reunion arguments) helps avoid engaging on subjective/unknowable topics.

“going back to tsmc for a second I think one of Buffett's filters is is it knowable and if the answer is no he doesn't want to hear your opinion on it uh or your fox or anything he just doesn't waste any time on it and I don't know if that's true but I find that as a good filter it's a great filter for like when you're in an argument with somebody or you know you're at a family dinner or a big family reunion or Thanksgiving or something and you know people are like arguing about very subjective things if you just have this filter in your head which is like is this knowable and if the answer is no you just sort of say you're probably right you might be right uh and just move on because it's not worth sort of spending time on”

You must start by imitating a blueprint exactly, then gradually adapt it by finding elements that don't resonate with you and changing those, while drawing in new elements that feel authentic; this process transforms imitation into authentic innovation.

“in the beginning you're just you know you're imitating it and then you're going to find there's certain things that don't totally resonate with you and they're not completely authentic and you change those things and there's going to be some new things that you draw in that you kind of adapt from whatever that blueprint was and then that's going to become you and over time it becomes you and it's something completely different”

Recognizing when you're wrong requires: (1) writing down thesis and showing your work, (2) tracking and measuring against that thesis as events occur, (3) maintaining an investment journal to understand emotions at play, (4) not selling on the same day as an emotional trigger to allow space for objective reflection.

“talk to me about being wrong how do you recognize you're wrong and then do the hard thing which is sell it a lot write it down show your work track it measure it as that thesis is evolving and events occur measuring it relative to that and trying to be as accountable and objective as you can”

The rigorous decision-tracking system (writing, paper portfolios, feedback, nudges) creates the daily practice equivalent that separates exceptional performers from competent ones, leaning on factors that reinforce best decision-making in a way most constructive to the individual.

“all of that that whole Mosaic is kind of like how do you create a rigorous process that's repeatable that really leans on the factors that you know can really help reinforce making the best decisions in a way that can be most constructive to you as an individual”

The strength of an investor's learning machine is measured by: (1) whether they take in new inputs from feedback, (2) whether they adapt their approach based on feedback, (3) whether they employ new thinking in subsequent decisions; this cycle must be obsessively tracked.

“you know how strong is the learning machine like are you seeing them take in new inputs based on the feedback that they're getting adapt that and employ that as they go forward into you know how they thinking about stocks how they're making decisions and it's really hard for us the way in our game selection because we're we're making these four five year decisions so it's very easy to say well it's about this and you know let's check in in 5 years no like there many incremental steps between now and then that you want to track to and hold yourself accountable to”

Having a journal of things that don't conform to your beliefs (like Darwin did) is valuable; rather than dismissing disconfirming evidence, integrate it into your thinking or disprove it.

“I've heard that before you know and and I think it's really interesting when it comes to running a business or getting better at things is like almost being like Darwin right who kept this journal of things that didn't conform to his beliefs and then he had to go through and like how do I integrate this or just prove it or how do I think about this in lie of dismissing it how I don't want to dismiss it I want to incorporate this”

When Brad Jacobs's company faced a short report in December with a 75-page attack and an immediate 20% stock decline, the speaker invested heavily in forensic investigation: hired forensic accountant, private investigator, and went into extremely deep due diligence during Christmas/New Year's to validate whether the short thesis was real.

“the second time um was and I'll never forget I mean we were actually sitting we went to C Brad in December in the midst of the conversation his assistant came in and said i' um a short report has been filed and she had printed it out and she set it on the table and I I like I can still distinctly remember like the thud of this report was like a 75 page report and so we continued to chat about 15 minutes later his assistant came back in to the office and said um you know I think at that point the stock was down more than 20% and he said you know sorry guys I think I think we need to cut this short I need to attend to this my colleague and I when we got in the car and we're trying to read this short report I'll never forget like the the feeling of anxiety in my stomach um and we had done a lot of work on it it was intimidating to kind of you know hear these claims on the surface in the next three weeks we lean into that like we we hired a forensic accountant to go through all of the statements every one of the claims that were in there hired a private investigator um we knew what cars they drove whether they had loans or not whether there were any disputes the people on the short side on no in the company to understand Brad his CFO Chief Operating Officer there were certain aspects in there that were claimed kind of on on dealing really to to go into that last 5% maybe the you know last 1%”

A skilled baker (chef with direct experience making cookies) can instantly identify what went wrong in a failed batch by looking at it or tasting it—did they overheat butter, not melt it enough, compact sugar too much, run oven hotter than specified; but someone who only follows the recipe can't diagnose failure.

“the way that I try to explain this to my kids as imperfect as this is is they uh every Sunday we have this cookie recipe and I make them make cookies before they can have the Wi-Fi password so I I leave the recipe on the counter and you know when they follow the recipe the cookies turn out amazing and when they don't follow it exactly they have no idea what went wrong now the the chef or the baker who created that recipe would instantly be able to look at a photo probably or take a bite of the cookie and they would know instantly what went wrong did they heat the butter too much did they not melt it enough did they compact the sugar too much was the oven running a little hot you know even though it said 360° was at 375 but the baker they would know that”

Alan Gray (founder of the speaker's firm) modeled dissonance—the ability to hold competing ideas simultaneously; he was super long-term but obsessed about short-term details, and was tremendously convicted but always loosely held his views, constantly seeking opposing perspectives.

“the Third Way going back to the blueprint um we didn't talk about but probably the most meaningful blueprint for me is the founder of my firm Alan gray you know genius is is um dissonance and mean you know the ability to kind of hold to competing and so on the one hand like he was super long-term but he was always obsessing also so in the short term the long term is just building up those short-term things he was a person who was very convicted about things like tremendous conviction but it was always loosely held and so if he heard anything that was counter you know threat he would really grab that um and he was never ashamed embarrassed shy to then grab on to that and then totally flip his View and so that that ability to like be very convicted but then constantly in search of like he never wanted to talk to somebody that agreed with him about a position like who's got the the opposite view on that that's the person that I want to wrestle with intellectually um and hear about that cuz he was he was like seeking it and if he thought that whatever they were putting forward was good in that then then he was off”

The compression phase involves: (1) sorting what matters from what doesn't, (2) decompressing emotions from facts, (3) identifying variables that govern the situation, (4) determining how variables interact across time, (5) identifying models that carry the weight; this is where judgment is forged.

“your brain sort of like we're going to compress this into something much smaller that's the reflection angle you're sorting what matters from what doesn't you're sort of like decompressing the emotions from things you're determining what are the variables that govern this situation going forward how do they interact across time what are the models that sort of carry the weight here and then you come to this compression but you can go back from that compression to the experience where somebody who consumes just that compression can't go back to the experience”

Time allocation principles from professional investing carry into personal life, but you must balance utility calculations with presence; asking 'is this useful right now?' about time with kids is a horrible question—you need space for play and presence without instrumental purpose.

“I can fall in the Trap of like is this useful right now that's a horrible question to ask with your kids right and so just to give yourself the space for play to just be in that moment with them or whatever it may be”

Positioning also includes mindset: you must embrace adversity when it comes, asking 'this is the hand I have—how do I play it?' rather than 'why me?'; this psychological positioning is as important as structural positioning.

“so it's another form of positioning right is sort of do you have the balance sheet when you go into things that are unexpected but you also have the mindset for how you Embrace things like that when you're in the moment because you could sort of just suffer woe is me or you could say okay this is the hand that I have now how am I going to play that if you embrace it in that way I find that it puts you in a very different position”

Personal lifestyle and fixed-cost base influence decision-making quality; if you've adopted high fixed costs and need investments to work, you've shifted from risk-adjusted decision-making to outcome-dependent decision-making, corrupting judgment.

“you know how you run your personal life very much impacts your ability to make good decisions particularly if they go sideways right and so you see people in the industry who then you know adopt a certain lifestyle a certain fixed cost base and then like you need the investment to work as opposed to making you know what you think are good risk adjusted decisions and I think once you kind of cross over into needing to work you've changed the dimensions of your your temperament and your emotions and once you do that put yourself in a bad position to make great decisions”

Creating 'advantageous divergence' from the crowd requires both (1) diverging from consensus and (2) being correct; merely contrarianism for its own sake is not valuable—you must create positive deviation in results to justify the divergence.

“the way I encapsulate that idea in my head often is through creating positive deviation or advantageous Divergence so it's not enough to diverge from the crowd you actually have to be correct if you want to create uh results towards the tail it's no fun being a contrarian just to be a contrarian but a lot of people are right like I mean when I used to work at the three-letter agency there's a lot of people who are contrarian just to be contrarian okay you're contrarian all the time and then people just start to dismiss you and and nobody listens to you and then the odd time you're right but you're you're no better than a lottery ticket at that point”

Set your life up for your obsessions so that you can grind at them in ways very few others will do, and this requires deliberately designing your environment (time, space, incentives) to support that obsession rather than fighting against it.

“set your life up for your obsession cuz if you do that you're all in you're grinding at that in a way that very few other people will do”

Allan Gray (founder) modeled intellectual ambidexterity: extremely convicted about positions but loosely held—always seeking the opposite view, never wanting to talk to people who agreed with him, ready to flip positions when presented with good counter-evidence.

“he was a person who was very convicted about things like tremendous conviction but it was always loosely held and so if he heard anything that was counter you know threat he would really grab that um and he was never ashamed embarrassed shy to then grab on to that and then totally flip his View”

You can have any mentor you want in the world through books, videos, and deep study; the myth that mentors are hard to find is false because you can study someone intensely, develop a mosaic of how they think and act, ask yourself what they would do, and learn as effectively as if they were physically present.

“one of the things that always frustrates me with young people when they ask me like oh it's difficult to find a mentor and I'm like what you could have any Mentor in the world that you want there's so much out there like pick somebody that you really respect and just like be a sponge get obsessive learn everything you can about them how did they do it what did they do like you can really you can you can watch videos you can read and you really develop a mosaic a blueprint of what they did and why they did it and pretty much everybody's accessible to you”

If everyone consumes only summaries and distillations without understanding the source, they cannot evaluate whether a distillation is good or bad, only whether it sounds convincing; this creates a vulnerability to bad advice.

“if everybody just wants to consume the distillations they're not going to be in a position to know this is a good distillation and this is a bad distillation”

You can't go back from compression to experience—once you have only the distillation, you lose access to the details that made it work. A baker can diagnose a failed cake from one bite (direct experience); a recipe-follower with a bad batch has no way to know what went wrong.

“you can go back from that compression to the experience where somebody who consumes just that compression can't go back to the experience and the way that I try to explain this to my kids as imperfect as this is is they uh every Sunday we have this cookie recipe and I make them make cookies before they can have the Wi-Fi password”

The speaker's fee structure: all fees are performance-based and refundable, so when underperforming, fees are refunded to clients in same ratio; this cushions clients during underperformance periods and elongates their time frame.

“on the other side it means that you you need clients that are actually willing to absorb the volatility that might come from taking a long-term position that are not going to be the first to redeem when you're out of sync with the market and they don't just profess that but that when they're in that situation that's something that they actually do by the way maybe you put a fee structure around it so we all of our fees are performance space but they're refundable so when we go through these periods that we're underperforming we refunding fees back to them in the same ratio and we do that because it tends to be when you're in that period a way to cushion for the client being in that period which elongates their time frame but that reinforces us to be in a position to take long-term decisions”

Inversion is a useful mental model: rather than asking 'how do I succeed?', ask 'what would cause me to fail?' and reverse those factors; this can reveal blind spots and risks more effectively than forward-looking analysis.

“part of the concept of kind of going back to this journey that you're on of like knowing yourself thinking about game selection accelerating your learning feedback know that you're on this hero's journey and there's going to be these setbacks and I think one of the things that really was helpful for me was kind of inverting it and just thinking like this is part of it like this is part of the struggle”

Positioning is about having resilience to absorb what may come in your portfolio—building structures and behaviors that let you weather unexpected shocks without forced action.

“positioning is uh is everything right in the sense of um you can think about it in the portfolio of do you have the resilience to absorb what may come you know we have these situations where you wouldn't have anticipated it and then it can be quite devastating if I go back to um I mentioned sem anch but 2018 like I um really one of the most difficult years of my professional life”

Alignment means manifesting long-term strategy in every way: hiring independent-minded people (who need space), creating culture focused on independent thinking and long-term horizon, structuring meetings around these values, choosing clients who absorb volatility, and fee structures that align incentives.

“give me an example you profess to be a long-term investor and that's really part of you and you have the temperament to do it but you need to manifest that in every way so that starts with the kind of people that you hire when I'm hiring and interviewing people everybody likes to say they're contrarian but are you really contrarian like give let's talk through some examples when you've done something that's different to the crowd in a way that like had consequences and was difficult to do create an environment turns out if you hire people that are really independent-minded they like to be given a lot of space so you have to create an environment that gives them the space to do that and you have to create a culture in the way that you interact the way that you talk the way you structure your meetings that Focus around independent thinking and taking a longer term time Horizon”

When assessing whether a CEO is obsessed, direct observation of demonstrated action (track record) is more reliable than words; specific questions about culture and intrinsic values (e.g., 'What would you tell my nephew to be successful here?') reveal obsession better than questions about quarterly profit margins.

“one of the things that I like to go to is talk to me about the will to win versus the will to practice... one of the things that I tend to I like to go to is around culture more often than not they sit down with folks and they they tend to be relatively short-term oriented they want to understand something around the quarter or a particular um you know profit margin point or Capital allocation Point tell me about your culture and what's important here to be successful or you know my nephew is going to start at your company next week and what would you tell them to be successful right like they probably haven't gotten that question”

When acquiring a skill, choose a role model who has done it recently in the current environment, not someone who did it 30 years ago unless the underlying operating model remains durable (e.g., membership model, low-cost model).

“if you're looking to acquire a skill and you're using a blueprint or a mentor as a role model you almost want somebody who just did the thing not somebody who did it 30 years ago unless what happened 30 years ago is enduring so the way that you set up uh maybe you know Price Club or something is enduring or Costco is sort of like enduring right where you have this operating model where we operate basically uh break even and then we make our money on memberships that would endure in like 30 years probably”

Entrepreneurs tend to shut down when receiving compliments but activate predatory curiosity when hearing threats to their business; they want to understand all details of the threat; most other people do the opposite—they accept compliments and dismiss criticism.

“when I talk to entrepreneurs it it's so interesting to me because compliments and this is a generalization so it doesn't apply in all cases but compliments they tend to shut down they don't tend to listen they're already like a minute they anticipate a compliment out of you they stop listen and you can kind of see it in their faces if you pay attention really closely but if you say something that's a threat to their business then there's almost like a predatory Instinct that they have to be like I want to know all about this I'm curious about this like why do you think this where did this information come from how does this affect me like how do we validate this I feel like a lot of people are almost the opposite right where it's like Compliments are great uh things that uh might be criticisms or things that we might not be great at they sort of go in one and out the other or you stop listening to them”

Two people will create two different distillations from the same source; if everyone consumes distillations without checking sources, they lose the ability to distinguish good from bad distillations, creating a cascade of error.

“two different people are going to come up with two different distillations but if everybody just wants to consume the distillations they're not going to be in a position to know this is a good distillation and this is a bad distillation”

To identify if a CEO is obsessed with building something meaningful (rather than hitting quarterly guidance), ask open-ended questions about culture and success—watch whether they can escape their prepared talking points and reveal authentic passion.

“one of the things that I tend to I like to go to is around culture more often than not they sit down with folks and they they tend to be relatively short-term oriented they want to understand something around the quarter or a particular um you know profit margin point or Capital allocation Point tell me about your culture and what's important here to be successful or you know my nephew is going to start at your company next week and what would you tell them to be successful right like they probably haven't gotten that question and so they they can't use the the CD they got to go somewhere else”

Brad Jacobs' 2015 acquisition of Conway, pivoting from asset-light truck brokerage to capital-intensive LTL (less-than-truckload), appeared to contradict his strategy but made sense in context of his demonstrated track record as a capital allocator and opportunist with a DNA of finding attractive situations that weren't in the original plan.

“the first one 2015 you made a big acquisition was a big pivot probably one of the best Capital allocation decisions I've seen in my investment career brought a company called Conway it was a complete pivot from his stated strategy at the time his frame was you know we're asset light brokerage Truck Brokerage business he pivoted to go into the LTL industry which was Capital intensive”

When a 75-page short report attacked Brad Jacobs' company, the speaker's team hired forensic accountants and private investigators to validate each claim, went through Christmas testing evidence, and built conviction through extreme rigor—the stock was dislocated, Jacobs/company bought back 2 million shares at unprecedented scale, and the position became a major winner.

“I'll never forget I mean we were actually sitting we went to C Brad in December in the midst of the conversation his assistant came in and said i' um a short report has been filed and she had printed it out and she set it on the table and I I like I can still distinctly remember like the thud of this report was like a 75 page report”

Having a clear blueprint of someone who's done what you want to do well provides a mental model to imitate initially, and then you adapt by keeping what resonates and changing what doesn't, eventually becoming authentically yourself while building on the foundation.

“everybody as they're coming up should have a clear blueprint of somebody that does what they want to do has done it really well a lot of times people talk about mentors and one of the things that always frustrates me with young people when they ask me like oh it's difficult to find a mentor and I'm like what you could have any Mentor in the world that you want”

When seeking skills, look to people who did the thing recently in the current environment, because old blueprints may teach outdated tactics. When seeking perspective on the maze, talk to someone who's done it before regardless of when, because they'll remove blind spots that transcend the era.

“if you want perspective you want to go to somebody who's at the end of the maze who's done it before and it's almost regardless of when they did it it could be you know six months before and it could be 20 30 years before but they're going to give you a perspective which removes blind spots and if you want skills you have to go to people who have relevance in in the current operating environment”

Implementing a rule to not sell the same day you decide to sell (giving yourself space to step back, review your original thesis, reconsider) improves decision-making by reducing emotional reactions and providing a cooling-off period to distinguish signal from noise.

“I used to have a um a framework for myself that when I came to a decision I wouldn't sell the same day and it turns out like that's a really good kind of level Setter because you go into a meeting with management team and they do something that um Sparks you and you're like particularly turned off you're like I'm selling this if you just give yourself a little bit of space to step back from that go back look at what you wrote originally pair that up with what you saw that can be really helpful”

Filters matter between you and information—secondhand analysis from someone without direct experience differs from direct source material. Independent analysis requires going to primary sources (management calls, direct observation) rather than relying on filtered commentary.

“the degree of filters between you and the information also matters right if you're reading an author talking about a subject that they have no experience with directly it's going to be very different than reading direct from The Source somebody who touched the problem and had the direct experience so indirect versus direct experience”

Time allocation is more important than capital allocation because you can earn more capital but you can't get more time—every decision to focus on one thing is a decision not to focus on others, so the question should be 'will this move the odds of a better outcome?' not just 'is this useful?'

“as investors we we allocate Capital You could argue that's our most important job you say that a lot of CEOs you know ironically most important job is allocate capital I think there's something on top of that which is more important is how you allocate your time people just don't think about it enough and they fall into these patterns without really thinking about the most important question because you can get more Capital you can't get more time”

Most investors don't invest in attention-seeking or high-lifestyle CEOs because their personal choices reveal temperament issues (need to signal status, inability to defer gratification) that predict poor capital allocation and risky behavior.

“will you invest with attention seeking CEOs or like high lifestyle CEOs generally not I mean it's um it's it's a part of the Mosaic of you know what will be the driver”

Allan Gray's practice of talking to younger people reflected 'survival and adaptability'—by staying close to people solving cutting-edge problems (like Andy Grove's non-hierarchical Intel culture), leaders maintain connection to reality rather than rising above it.

“he always liked to talk to folks that were younger um and I think for a couple reasons one was um it's it's less filtered that it's closer to the source um and it's probably more contemporary in its view”

A CEO's Chief of Staff observed that CEOs of billion-dollar companies make good decisions with the information they have, but information is fatally filtered by layers of management—his solution was calling the person closest to the problem directly, which got him in trouble but revealed the filtering problem.

“I had a friend who was the um Chief of Staff to a CEO of a billion dollar company before he assumed this role he he sort of said you know I think by and large and know I'm paraphrasing here so these aren't his exact words but like these guys make incredibly stupid decisions uh and I want to help change that and then he got up there and he's like actually they make really good decisions with the information they have [they] just have completely terrible information cuz it's been so filtered by the time it got up to the CEO's office”

Fee structure influences alignment: performance-based fees refunded during underperformance periods means firm and clients share pain, which extends client time horizon and frees firm to take long-term positions.

“maybe you put a fee structure around it so we all of our fees are performance space but they're refundable so when we go through these periods that we're underperforming we refunding fees back to them in the same ratio and we do that because it tends to be when you're in that period a way to cushion for the client being in that period which elongates their time frame but that reinforces us to be in a position to take long-term decisions”

The investment equivalent of daily practice is: thinking probabilistically about all situations, practicing deferred gratification, deliberately inoculating yourself against uncertainty by acting confidently despite unknowns, and building resilience through repeated exposure to discomfort.

“I mean I think there's some parts of it are temperament related like just practicing defer gratification there's elements of it that are you know um thinking about the world probabilistically everything just continuing to practice that every day or the uncertainty of a situation but not taking that for granted and like really practicing that day after day essentially inoculate yourself to to prepare yourself for that”

Most people spend time on the surface-level work (balance sheets, P&Ls, competitor analysis) but miss the 'magic in the last 5%'—getting to the essence of what really drives the business. This requires grinding until you can distill the business into its core driver, which then acts as a lens for all future decisions.

“really like getting to that last 5% where you understand the business in a way that you do make that breakthrough that synthesis that's where the Magic's at don't stop short of that like keep pushing until you get to that point that you can distill it like what what is the essence of this”

You can't be a baker in everything—you must pick your domain of mastery and borrow/crib from others in domains where you don't need depth. Game selection applies to where you'll be the baker vs where you'll use recipes.

“but you can't be the baker in everything so you have to pick your discipline going back to what game are you playing where am I going to be a master and where can I borrow and just crib from other people because by borrowing and cribbing the compressions I'm going to get to average really quickly”

Clarity of writing directly correlates with clarity of thinking; distilling months of fundamental research into a few key pages (not 50-page reports) requires identifying the 2-3 fulcrum issues that truly drive outcomes, which is the 'sauce' that separates mediocre analysis from valuable insight.

“is there a correlation between the clarity of people's writing and their performance I haven't studied the data to specifically support that but my I believe so when you're able to clarify your thinking and writing is a very strong representation that you've clarified the thinking right”

The speaker has family dinners on Fridays and Saturdays, all roles assigned in kitchen, everyone participates, and they lose track of time (4-4.5 hours)—these are among the times the speaker values most, with nothing intentional except being present in the moment.

“on Fridays and Saturdays we have family dinners together and it'll start call it at 6 o' and everybody's got a roll and doing something and everybody's in the kitchen and you're just mixing it up and um you're just totally in that moment the next thing you know it's it's 10 or 10:30 and like it's the end of dinner like that's been a four four and a half hour journey and like just totally lost in the moment of it you know those are some of the times that I value the most and there was nothing intentional in that except that you were going to be in that space”

Creating a 24-hour waiting period before selling (not selling the same day as a triggering event) allows emotional reactions to settle, enabling more objective review of the original thesis against new information—this simple constraint significantly improves decision quality by preventing reactive selling.

“I used to have a um a framework for myself that when I came to a decision I wouldn't sell the same day and it turns out like that's a really good kind of level Setter because you go into a meeting with management team and they do something that um Sparks you and you're like particularly turned off you're like I'm selling this if you just give yourself a little bit of space to step back from that go back look at what you wrote originally pair that up with what you saw that can be really helpful in like putting you in a better mindset to make a more objective decision”

Parents can instill the will to practice by modeling it themselves (letting children see you grinding, not just relaxing) and helping children find what they're genuinely obsessed about, then being deliberate about creating space for deep engagement in that obsession.

“if I just draw my own example and I go back with my grandfather it was just the example that he said I think kind of just the first layer of that with my own kids is just them seeing me grind every day...it's the it's the setting examples is is the first layer I think and the craftsmanship of it no matter what you're doing it from a janitor to um you know a soccer player to whatever and then the second dimension I try to think more about with my kids is just trying to help them get in the way of the things that they really love...what can you be obsessed about doesn't matter what it is but what is that for you and be deliberate about about it be intentional about it”

An investment position that was well-reasoned but failed (PG&E during wildfires, Symantec with audit issues) teaches more than successes—if you size them to absorb the impairment, you can weather the blow while building convictions on future decisions through the hard work of examining what went wrong.

“I I sized it at a level that I could take an impairment I thought it was lower probability than the actual probability but I wanted to try to position for that to weather it...three hits pretty devastating it's part of the concept of kind of going back to this journey that you're on of like knowing yourself thinking about game selection accelerating your learning feedback know that you're on this hero's journey and there's going to be these setbacks”

When sourcing primary material and talking to management teams or subject experts, remove the filter of persuasion; there's a tendency to emphasize supporting points and downplay risks, so seek direct communication without intermediary framing.

“you're going to be authentic that there's a tendency to want to convince somebody or persuade somebody to buy a stock and so when you're persuading you're persuading and you may not as equally kind of pull out the potential risks or other factors to to weigh against that creating that objectivity and that Honesty in it I think is an important part in a process and sometimes people over time will develop a skill at doing that but sometimes not and so you really want to remove the filter so that you can get to that kind of direct read”

Focus is critical because time is finite; repeatedly across conversations, the theme emerges that what you choose to focus on is underestimated in importance; people fall into patterns and spend time without questioning whether it's the right allocation.

“talk to me about the role of focus we don't have infinite time right and so what you choose to allocate it to is is really a critical decision it's really underestimated how important that is over and over and over again and it's part of the journey right because you're going to be in the rabbit hole holes but that's part of like seeing the algo improve over time and it's an area that you can help you know as a coach kind give some feedback on that but just asking you a question like when you're spending the time to what we were just saying like is this a question that I can answer very simple but like you know take a simple idea take it seriously”

Alan Gray believed 'there's nothing more perishable than a great idea' and treated idea generation as a numbers game ('the secret to a good idea is a lot of ideas')—this frames innovation as output-based rather than inspiration-based, emphasizing volume and continuous turning of rocks.

“he used to say there's nothing uh more perishable than a great idea he was always turning rocks like the secret to a good idea is a lot of ideas like always turning rocks but then when he saw something he thought was really interesting like it was just was Allin”

The most important job for parents is helping children discover and get in the way of their obsessions, not pushing them toward what you think is important; each child is different, and your role is to help them identify what they're drawn to and create space for deep exploration of that.

“and the second dimension I try to think more about with my kids is just trying to help them get in the way of the things that they really love I have three kids from age 21 to 12 and they're they're they're so different right but for each one of them like to help them get in the space of it goes back like what can you be obsessed about doesn't matter what it is but what is that for you and be deliberate about about it be intentional about it”

Part of positioning is mindset: when facing setbacks, you can either respond with 'why me?' (reactive, victim mindset) or 'this is the hand I have, how do I play it?' (proactive, adaptive mindset); the latter puts you in a better position to make good decisions.

“part of it is the concept of kind of going back to this journey that you're on of like knowing yourself thinking about game selection accelerating your learning feedback know that you're on this hero's journey and there's going to be these setbacks and I think one of the things that really was helpful for me was kind of inverting it and just thinking like this is part of it like this is part of the struggle... you're going to be in these moments and how you handle it part of it is the positioning going in but part of it is also how you embrace it when you're in the moment right so it's another form of positioning right is sort of do you have the balance sheet when you go into things that are unexpected but you also have the mindset for how you Embrace things like that when you're in the moment because you could sort of just suffer woe is me or you could say okay this is the hand that I have now how am I going to play that if you embrace it in that way I find that it puts you in a very different position”

The speaker knows what it feels like to be in the position where you do not know how to do something but have a hunger for it; when he sees that hunger in others, he gets tremendous satisfaction from helping them achieve it—this is what success means to him now.

“I know what it feels like to be in that position where you you you don't know how to do it but it's a it's in you it's a it's a hunger that you have and when I see that in others and I'm able to help them do that like there's just tremendous satisfaction enough for me like that's success”

You must choose your domain carefully; you can't be a master in everything, so you should surround yourself with bakers (experts with direct experience) in domains that matter to you, become a baker yourself in your core discipline, and borrow/crib from others' compressions in domains where you accept being average.

“and you want to surround yourself when you're trying to acquire information with Bakers right and you want to be the baker but you can't be the baker in everything so you have to pick your discipline going back to what game are you playing where am I going to be a master and where can I borrow and just crib from other people because by borrowing and cribbing the compressions I'm going to get to average really quickly”

The speaker generally doesn't invest with attention-seeking CEOs or high-lifestyle CEOs because they represent a mosaic of risk indicators; managing lifestyle preferences and managing capital are correlated—good capital allocators manage both.

“will you invest with attention seeking CEOs or like high lifestyle CEOs generally not I mean it's um it's it's a part of the Mosaic of you know what will be the driver”

All analysts run paper (model) portfolios where they write up research, present buy decisions to investment committee, debate, then buy into the paper portfolio; for every buy or sell decision, they write reasoning and thesis, creating documentation for feedback loops and performance tracking.

“all of our analysts run paper portfolios or model portfolios and this is something we've done for decades when you go through the investment process you write up you know your various research reports when you want to buy it you put forward something to investment committee um you debate it and then you buy it in your paper portfolio and what you're for any decision a buy or sell you're writing down your reasoning you're putting down why you're buying what the thesis is”

CEO characteristics that make someone good at reaching the CEO position (charisma, political skill, ambition) are not always correlated with skills needed to allocate capital well or make independent strategic decisions.

“it's an interesting thing with um with CEOs are like what are the characteristics that allow one to be in that seat and they're not always correlated with the skills that are best to allocate Capital to make certain strategic decisions to um make decisions that are independent of what might be popular”

In 2018, the speaker experienced three major hits: Semtech audit committee review (35% down), PG&E wildfire loss (November position, portfolio loss), and short report on Brad Jacobs position within a month, all in the same period—one of the most difficult years professionally.

“so the sanch hit um about a month later it was in November and I I'll never forget because it was on my birthday we had a position in a company called pg& which is a California utility oh the wildfires yeah so we we went into it after they had had their wildfires thinking that legislation had passed but there's this little loophole if anything happened before the end of the year we were already through the main part of the heavy wfire season then another fire hit like we're in San Francisco I'm literally in my office looking out to Marin County and I see the flames in the Smoke billowing and I'm I'm thinking that's my position billowing that's my portfolio you know that's my invest in track record like just kind of devastating and you know I I I sized it at a level that I could take an impairment I thought it was lower probability than the actual probability but I wanted to try to position for that to weather it and then a month later the story I told you about XO and the short report hit so three hits pretty devastating it's part of the concept of kind of going back to this journey that you're on”

When you hear disconfirming information from an analyst about a company, pursue it aggressively; analysts may not prioritize flagging risks or contrary narratives because they want to persuade, so you must actively pull on threads they don't emphasize.

“also when you're working with an analyst and they're filtering you're not getting it directly when you hear that kind of stuff that's what you want to go to and really pull on it because they may not be that um excited to put that first and foremost because they want to persuade but when you hear it you got to really you got to pull on that”

The US election is unknowable (roughly 50/50 probability) and uncontrollable, so positioning the portfolio for resilience (able to succeed regardless of outcome) is better than trying to predict and tilt for a particular candidate.

“the best answer is like it's 50 it's kind of 50/50 you know and I'm not going to position in tilt the portfolio for a particular outcome one because I wouldn't be well served to do that but two to this point like it's it's unknowable and so I just want to be resilient as opposed to spend all this time obsessing on is there going to be a particular candidate that wins”

Young people often don't see the grinding (early mornings, difficult moments, getting up at 4 a.m.) that goes into investments—they see the result and think it requires less work than it does. Setting an example is the first layer of teaching the will to practice.

“with my own kids is just them seeing me grind every day they make fun of me like you know I want to do what you do I want to be an investor you don't really have to do anything you just sit around and read all the time they don't necessarily see those difficult moments or you know getting up at 4:00 in the morning”

Entrepreneurs as a generalization respond to compliments by shutting down (they stop listening), but respond to threats with a predatory instinct (they want to understand all details), while most people are opposite (they like compliments, dismiss criticism)—the ideal posture (Darwin's) is to actively seek disconfirming information and integrate it.

“when I talk to entrepreneurs it it's so interesting to me because compliments and this is a generalization so it doesn't apply in all cases but like these guys make incredibly stupid decisions uh and I want to help change that and then he got up there and he's like actually they make really good decisions with the information they have [43:31] they just have completely terrible information cuz it's been so filtered by the time it got up to the CEO's office and so he started this thing where he just started calling the the person that he could get in touch with closest to the problem to understand the problem”

When disconfirming evidence or red flags emerge (e.g., aggressive sales culture at Symantec), do not stay myopically focused on the original thesis; treat disconfirming signals as the most valuable information and aggressively pursue them, as they often reveal hidden problems that matter more than the thesis you were tracking.

“if you're over myopically focused on one thing that you think is the important thing you need to keep your mind open that there may be other things in the Mosaic that are critical and that when you do see those threads and we started to get a little bit of the flags like you got to go after that and go after it really aggressively”

Arnold Schwarzenegger exemplifies blueprint mastery: he set a blueprint (Mr. Austria), achieved it, reset to a bigger blueprint (Mr. Universe), achieved it, reset again (movie star), achieved it, reset again (governor), succeeded—three completely different domains, each approached with a blueprint mentality and obsessive execution.

“Arnold Schwarzenegger like I mean it's a fascinating story if you think I mean he grew up in Austria and his original blueprint is I want to be Mr Austria and then he did that and he was like I want to be Mr Universe he followed regge Park and then he decided he wanted to be a big movie star and he did that then he [13:27] decided he want to go into politics became governor of California three different domains completely different each one he had a blueprint and so it just can be really really powerful”

Every six months the firm consolidates analysts' paper portfolio performance and shares it back with them; this provides powerful feedback for the analyst and for leadership about who is making good decisions, which decision types are stronger, and whether individual skill exists.

“one of the things that we do every 6 months is you know we consolidate that we look at the performance and then we share that with the the team members it's really powerful feedback mechanism for the analyst but it's also powerful for us is we're thinking about um you know looking at the simulation if you will like who's making good decisions and what kind of decisions are you demonstrating more skill on the buy decision the sell decision”

When gathering information, you must remain authentic to avoid unconsciously persuading rather than discovering; there is a tendency for analysts to persuade rather than objectify, pulling out risks less equally than potential upside, creating bias in distillations.

“when you're persuading you're persuading and you may not as equally kind of pull out the potential risks or other factors to to weigh against that creating that objectivity and that Honesty in it I think is an important part in a process”

The firm's culture, client relationships, and team structure are all part of an interconnected flywheel that enables good decision-making; breaking any one component (e.g., hiring a dependent person with high overhead, taking on a short-term client, creating a hierarchical culture) damages the entire system.

“companies do that I mean that's something to be very mindful of it's something to think about as a firm and investment teams like it's you're looking for a certain type of individual but you're trying to create a certain culture within the team you're trying to have a certain relationship with your clients like those are all part of enabling you to try to make the best decisions in the way that work for you if you break any one of those kind of components of the flywheel if you will like then you really got crit in the flywheel and it could be dangerous”

One core practice is developing an 'essence statement' for a company—what is the single thing that truly drives it; once you have ground on a company enough and reached that insight, it becomes a powerful anchor that helps you hold through volatility and complexity.

“one of the things we talk about in the team is what's the essence state statement for this company meaning like what's the thing that really drives it it can take you a long time to get to that when you've grinded on it enough and you get to that point if you've really been able to dial into that thing that is the driver that can be a real balance to help you through as an owner and a holder of it”

Focus on a few things where you can make a difference and the magic happens in the extremes—if you think something is worthwhile, push on it deeply rather than spreading effort across many ideas.

“focus on a few things where you can really make a difference that plays to you but the discipline to actually do it do it consistently like really lean into it I'm really a believer that the magic and the sauce is in the extremes and so like just keep like if you think it's worthwhile like push on it really push on it like really go deep”

Hiring practices should screen for people who claim to be contrarian but who have actually taken consequential contrarian positions (with cost/risk), not just those who talk about it; demonstrated contrarian behavior under pressure is a signal of independence, not mere philosophy.

“everybody likes to say they're contrarian but are you really contrarian like give let's talk through some examples when you've done something that's different to the crowd in a way that like had consequences and was difficult to do”

When interviewing a CEO, frame challenges as questions that force a response rather than accusations they can deflect; asking 'We've heard you have high sales turnover—why is that?' is more effective than making it a negative statement because it requires a substantive answer.

“three ways one is we were talking about questions and it's can be a really valuable way when you sit down with a CEO is to frame a question in a way that they have to respond so like you might sit down and say we've been hearing that you're having a lot of turnover in your sales department why is that it puts it in a position where they they kind of have to respond cuz to your point A lot of times when you will frame something in the negative or as a threat or challenging you know cosos are very skilled like they'll shift it to something else but if you frame it in a way that they have to respond”

Alignment between what you profess (long-term investor) and how you structure everything else (clients, fees, internal culture, team hiring) is critical—without structural alignment, client pressure to redeem during downturns will force short-term behavior regardless of stated philosophy.

“you might say I'm a long-term investor but you're only going to be able to be as longterm as your clients allow you to be right if you're in a position that's offsides to kind of the market sentiment at that time and you have in your in your mind that you know this is something it'll play out over four to five years but your clients are knocking on the door and want to redeem you're not going to be able to play your game right”

Resilience and positioning mean having strong financial footing personally (low fixed costs, financial flexibility) so that investments don't have to work out—this prevents emotional/financial distress from forcing short-term decisions.

“you know how you run your personal life very much impacts your ability to make good decisions particularly if they go sideways right and so you see people in the industry who then you know adopt a certain lifestyle a certain fixed cost base and then like you need the investment to work as opposed to making you know what you think are good risk adjusted decisions”

Success has changed for the speaker over time: high school = escape, 20s = numbers/money, 30s = career and relationships, today = finding meaning in using strengths to help others ('dream builder'), and having something meaningful to pursue while helping others succeed.

“what's interesting to me about this question is how it's changed for me over time when I was in high school if you would have asked me that I would have said it's just to get out you know when I was in my 20s it was it was a number and then as I got into my 30s it was more about certain career aspirations and relationships you know my wife my kids but today um I get a lot of meaning in using kind of my um strengths and and skills to help other people like I get a it's I call it being dream Builder that's in my firm but it's outside of the firm too and success to me is like having something that's meaningful to you that you're really going out after and helping other people”

Because the speaker's game is making 4-5 year decisions, it is easy to defer accountability ('let's check in in 5 years'), but instead you must track incremental steps between now and then, holding yourself accountable to near-term milestones that validate whether your thesis remains sound.

“it's really hard for us the way in our game selection because we're we're making these four five year decisions so it's very easy to say well it's about this and you know let's check in in 5 years no like there many incremental steps between now and then that you want to track to and hold yourself accountable to doesn't mean you're trading every day or every quarter but you want to be really thoughtful on this is why I bought it these are the things I'm going to be looking for and then holding yourself accountable during those interim steps”

The speaker has become very wary of public market turnaround situations where they must bet on management team making dramatic change, because base rates are poor and the difficulty is high; this represents a major evolution in their investing approach over 20+ years.

“it's probably the way that I've changed the most at as public market investor over the past 20 plus years is um very leery to go into turnaround situations where I'm betting on the management team making some kind of dramatic change like the base rates suck it's very difficult to do in the public Vis”

The speaker has identified two specific personal biases through decision analytics: (1) endowment effect—wanting to hold losing positions to see them play out, and (2) regret aversion—scaling into new positions incrementally rather than committing fully when hurdle rate is met.

“I have specific patterns that I've demonstrated over time I talked about one of them already with regard to the endowment effect another one is Regret aversion the riskiest position in the portfolio is my newest position so when I'm initiating a position I tend to scale into it so let's say I want to take it to 3% of capital I'll buy 50 basis points and then I'll another 50 and I'll scale into it turns out that's wrong the bias that I'm demonstrating the Rion is a regret aversion”

Success has evolved for the speaker over time: high school (get out), 20s (numbers), 30s (career and relationships), now (using strengths to help others—'dream builder' role inside and outside firm).

“what's interesting to me about this question is how it's changed for me over time when I was in high school if you would have asked me that I would have said it's just to get out you know when I was in my 20s it was it was a number and then as I got into my 30s it was more about certain career aspirations and relationships you know my wife my kids but today um I get a lot of meaning in using kind of my um strengths and and skills to help other people like I get a it's I call it being dream Builder that's in my firm but it's outside of the firm too”

Learning to sift what is important from what is irrelevant comes from feedback; the speaker once took a position in Symantec focusing heavily on the new CEO's technical credentials, but missed emerging read about aggressive sales culture, which eventually led to an audit committee review; in hindsight, he was too myopically focused on one thing.

“we took it in 2018 we took a position in sematech... I spent a lot of time on him as a technologist because I they needed to infuse that in the business... most all of my work was around that... very later stages of the work we started to get some reads that yeah he was genuinely um a very Savvy technologist but um had a reputation for playing fast and loose little aggressive very aggressive sales culture... the company came out the board came out and announced um the audit committee was going to undertake uh a review... stock Gap down 35%”

The TSMC (Taiwan Semiconductor Manufacturing Company) investment case illustrates time allocation discipline: TSMC is one of the best companies in the world, but the big question is geopolitical, which is unknowable; spending three months on geopolitics would not move the probability of a better decision, so the speaker does not allocate time to it.

“it might be something like like tsmc the Semiconductor Company one of the best companies in the world the big question there is a geopolitical question I could spend three months on that and I'm not sure that that would move my probabili in terms of making a better decision on that thing that is the Big Driver”