Title: The Making of a Star Investor w/ Rob Vinall (RWH072) Show: Richer, Wiser, Happier (The Investor's Podcast Network; host William Green) Guest: Rob Vinall (founder & managing director, RV Capital; manager of the Business Owner Fund) Date: 2026-09-19 (YouTube publish date; recorded 2026-08-20 per the conversation) URL: https://youtu.be/MMyfAJRU6o4 Length: 1:46:47 Note: YouTube auto-transcript pasted by Stephen; fillers (um/uh, contentless "you know"/"like"/"sort of"/"kind of") and stutters/false starts removed; wording otherwise verbatim; (mm:ss)/(h:mm:ss) cues kept in place. ">>" marks a speaker change. The host's two sponsor/promotional segments (masterclass, Intrinsic Value Conference) are kept but are not Vinall's words. Auto-transcript garbles fixed: "Vinyl/Vanell/Finale"=Vinall, "Seafford"=Seaford, "Christ Hospital"=Christ's Hospital, "Kyle Griev"=Kyle Grieve, "Stig Broers"=Stig Brodersen, "Norman Rentrop/Renro"=Norman Rentrop, "Andreas Lner"=Andreas (surname as spoken; spelling unconfirmed), "Vidar/Var" and "Wolf Gang"=former colleagues Vidar and Wolfgang, "Ajit Jane/A Jeep Jane"=Ajit Jain, "Mrs. be"=Mrs. B, "Zach Sakaria"=Zak(aria) (Nomad), "Nema Shai"=Nima Shayegh, "John Hilvich"=John Mihaljevic, "Dennis Hong"=Dennis Hong, "Cavana/Coffana/Cavano"=Carvana, "Cliff Sosen"=Cliff Sosin, "Jean Mary Messier"=Jean-Marie Messier, "Luck in Coffee"=Luckin Coffee, "10 cent"=Tencent, "Process"=Prosus, "HWorld"=H World Group, "DD Global"=DiDi Global, "Lundine/Londin"=Lundin, "Burkshire Hatherway"=Berkshire Hathaway, "Engleberg"=Engelberg, "Michael Ble"=Michael (surname as spoken), "irrationality"=as spoken (context: rationality).
00:00 You tend to like people who are similar to yourself. So it means you need to cultivate in yourself the qualities you're looking for in other people, and you see that the whole time. And so the big lesson that people like us should take away from that is we really need to cultivate the values in ourselves that we're hoping to find in other people, because we're automatically going to be drawn to them whether we want it or not. [music] >> Hi there.
00:29 It's wonderful to see you again here on the Richer, Wiser, Happier podcast. I have a very special treat for you today. A really rare interview with a superb investor named Rob Vinall. As you'll hear, I embarrassingly mispronounce his surname at the very beginning of our conversation. In any case, it's well worth listening to Rob's hard-earned insights on investing and business and studying how he's crushed the market in the 20 years since he founded his investment firm.
00:55 [Host promotion: Richer, Wiser, Happier masterclass — details via Kyle Grieve at The Investor's Podcast.] But before we get to that conversation, I also wanted to let you know about an exciting opportunity that I hope will be of interest to you. Later this year, I'm going to be launching a new Richer, Wiser, Happier master class. If you're interested in studying with me over the course of a year in a very small, intimate group that's likely to be somewhere between 10 and 20 people, please contact my friend and fellow podcast host, Kyle Grieve, to find out more about dates and prices and all that good stuff.
01:24 His email address is kyle at theinvestorspodcast.com. Who's the masterclass intended for? Well, based on the first two masterclass groups, I would say this is ideal if you're a fund manager, an asset allocator, a wealth manager, manager of a single family office, CEO, an entrepreneur, or simply a serious investor managing your own family's money.
01:53 Essentially, the master class is designed for keen investors and passionate learners who like the idea of studying with me and an amazingly accomplished and diverse group of people over Zoom each month and also in person at a couple of very special private events that we'll host in Omaha and New York.
02:15 My current plan is to make this my third and final Richer, Wiser, Happier master class. So, if you're interested in this year-long exploration of how to build a life that's truly richer, wiser, and happier, then please don't wait. It would be really great to spend some time with you. In any case, I hope the stars align and that I'll see you later this year. And now, as my friend Stig Brodersen would say, on with the show.
02:38 Hi folks, I'm absolutely delighted to welcome today's guest, Rob Vinall. Rob is the managing director of RV Capital, an investment fund that he founded almost exactly 20 years ago. He has a superb investment record as the manager of the Business Owner Fund. Since launching the fund in 2008, he's racked up an annualized return of around 15% net of all fees, which is a cumulative return of more than 1,200% over the last 18 years.
03:07 He's an exceptional investor and a delightful person as I'm sure you'll see, and it's extremely rare for him to do an in-depth interview like this. So, I'm particularly excited on multiple fronts to be chatting with him today. And Rob is joining us from Switzerland where he lives with his wife and three children in a village near Lake Zurich that I gather is about 100 yards away from the famed Lindt chocolate factory. So, welcome Rob.
03:31 It's really lovely to see you. >> Yeah, thank you so much for doing this with me, William. It's been a few years since I did a podcast. So, the downside of that is I may be a little bit rusty, but the upside is that hopefully there's lots of stuff which is new for people. >> Well, I managed to whittle down my questions to about 15 or so pages.
03:49 So, we should be here for the next seven or eight hours, which is great news. So buckle in everyone. We got a lot to discuss. I wanted to start by asking you about your early life and wondered if you can tell us a bit about where you grew up and what your parents were like, because it seems so different in a way from the life you've built for yourself as a fairly cosmopolitan globetrotting fund manager in Switzerland with investments everywhere from Denmark to China.
04:15 And when you and I spoke recently about your early life, I was just really struck that there was nothing that really seemed to predestine you for a life as a successful globetrotting investor. >> [laughter] >> Yeah. So I grew up in a very small town called Seaford, which is on the south coast of the UK. It quite literally is the end of the line.
04:34 It's the final stop on the train, and if you get off the train then it's a few hundred yards and you're at the English Channel and beyond that France and the rest of the world. So it was a small town, and I was reflecting on where things all started recently as it is the 20th anniversary of my firm coming up, and I read once that people love to tell this story about their lives, about how they started in this impossibly difficult situation, against all of the odds turned things around and
05:01 had the success they had. And when I look back at my life there's for sure in the early childhood things which were tough. Mom and dad didn't have a whole lot of money at the time, and when dad got home, mom would go out to work and that kind of stuff. On the other hand though, it was a very loving environment, and I got early exposure to investing through my grandfather, who was a passionate stock picker.
05:27 So overall, I think I was pretty lucky and there's nothing I would change about how things had gone. >> And your dad, if I remember rightly, had an office job in the local port and your mom was a stay-at-home housewife. So there wasn't a big financial urge in the family. It wasn't like everyone was working on Wall Street, right? And then you got an unusual trajectory change, I think, because of your education at this extraordinary school, Christ's Hospital. Can you talk about that? >> Yeah. So for people who aren't from the UK,
05:56 the UK has this dual system where you have the private schools, which somewhat confusingly are called public schools, which are for wealthier people, and then you have the state schools, which are not uniformly bad but it's for sure a bit of a lottery.
06:15 And when I was about 11 I took an entrance exam to go to the school Christ's Hospital you mentioned, which is quite a special school in the sense that it's not for wealthy kids. It's means tested, and the philosophy is very much to give an opportunity to kids who otherwise wouldn't be able to afford to go to a public school. I remember very clearly at the time working very hard for the entrance exam, and fortunately I passed, and when I look back on it I sometimes have a little bit of mixed feelings about the experience. Public schools in England 30 years ago were closer to, or at
06:45 least it feels like closer to, the age of Dickens than the modern world we live in today. Corporal punishment and all that kind of stuff was very much a thing. Certainly predates mobile phones, that's for sure. So, it was a tough environment, but it was one which ultimately gave me a great education, which culminated in getting a place at Cambridge University when I completed my A levels. So overall, I think it was a good start to have in life.
07:11 >> Yeah. And quite an eccentric background, right? I was looking up the school yesterday and I think it was founded by King Edward the 6th in the 1550s. And you wore these strange blue coats with these brass buttons and I think yellow socks, if I remember rightly, the eccentric world that you got thrown into. >> Yes. Yes, it was.
07:32 The uniform was very unusual, as you mentioned. Yellow stockings and breeches and a long blue coat, and the school then and still to this day always leads the Lord Mayor's Show in London, and so the band would play and then the people who weren't in the band would be tasked with wandering around selling programs, and put it this way, we were definitely a target for the local London kids walking around like that. >> And as you said, you then went off to Cambridge and you studied modern and medieval languages. I think you were specializing in French and German and studying literature
08:02 and philosophy. >> Mhm. >> Why counterintuitively was that actually a surprisingly good education for an investor to have? >> Yeah. Well, the philosophy in England, and I think generally it's a good one, is that studies are generally not vocational. So you will study something you're interested in and passionate about, and we tend to be quite finished with studying quite early in England.
08:31 So typically when you're 21, 22 years old, and the idea is you study what you want and then when you hit 21, 22 then the real life starts. But I was very interested in modern languages, and that's what I ended up studying at Cambridge, and a language degree at Cambridge isn't so much about the language per se, it's studying the literature and also the philosophy. And although it wasn't my plan at the time that this would be the great preparation for becoming an investor, in fact when I started studying I'm not even sure I realized I wanted to be an investor at that time, I do think
09:01 fortunately it was a great preparation. It was very deeply analytical. Every week we would take on a new author or a new philosopher, starting effectively at zero and trying to get up to speed and understand their thinking and how they fitted into the wider social context, and then by the end of the week present a ready-written essay to our supervisors.
09:26 And if you squint, that's not so different to the life of an investor, where when you start analyzing a company, typically you know nothing about it at the beginning, and then hopefully by the end of the research process, you have a decent grasp of what's happening. >> It makes me wonder what the impact of AI is going to be on our ability to think and work through these difficult problems,
09:47 because you and I last time we spoke were talking about the horrifying challenges of writing, where both of us I think have derived great joy and satisfaction from writing. You write these terrific shareholder letters, and at the same time we talked about how agonizing it is, and I'm curious what your view is as you embrace AI more and more in the research process, because it's incredibly helpful, what your view is on what we can lose as we do less of this agonizing with a problem. I mean, I remember you saying to me when we spoke, I think back in June, that when
10:21 you needed information when you were at Cambridge, you literally would cycle to the library. >> Yeah. I think there's two slightly different questions in there. The one is the research process and the other is the writing process, although of course the two are connected.
10:39 In terms of research, it makes me feel a little bit old when you put it like that, but it was really the case that I was probably one of the luckiest people on the planet studying in Cambridge, because I was close to one of the largest libraries in the world. But to get to information, I would still have to get on a bike and it was about a 15-minute ride to get to the university library, and from there you would order a book and it would probably take about an hour for it to find its way to you, to the extent someone else hadn't already borrowed it before you.
11:04 So, it was a clunky process, and still probably one of the best you could possibly get at that point in time. And you fast forward that to say 15, 20 years ago when the internet came along, and all of a sudden you didn't have to get on a bike to get to the information. You could just Google it or look it up on the internet, but you still would have to find the relevant document, read it through, and then get ultimately to the information you were looking for, which took a certain amount of time. And then if we fast forward to the last couple of years and the LLM revolution, it's truly astonishing.
11:40 If there's something you're interested in, you put in the question and, of course there is a little bit of hallucination, but most of the time you get the exact answer you're looking for and it takes a fraction of a second. So, it's really an incredible time to be alive in that respect. So, that for sure makes the research angle easier.
12:00 You also asked about writing, and we did indeed speak a few weeks ago and we cried on each other's shoulder about how agonizing the process is, at least for the two of us. Not sure that's the case for everybody. But anyway, it's propitious timing to discuss this now because I actually pressed send on my most recent investor letter this morning.
12:23 So, I've just finished the process of doing that. And for the first time, I really used AI not just as a research tool, but as what I would describe as an editor, to help me formulate my thoughts, sharpen up the text. And I think it's an incredible tool for writers in that respect.
12:44 I was talking to my daughter about it earlier and encouraging her to use AI in a similar way, and she had some misgivings. Is this cheating? Is this taking a shortcut on the thinking process? But I don't think it is. I think what it effectively puts in your hands is this very high quality editor, which professional writers and journalists have always had, but it's obviously prohibitively expensive for most people.
13:11 Whereas now that editor is available to anyone, irrespective of how worthy they are. And I think it'd be madness not to use it, because it really improves and sharpens the writing. >> Yeah, I feel ambivalent about it all. Like you, I feel like it would be madness not to use it. And at the same time, I worry about my brain becoming softer if I rely too much, because I think most of the things that I've learned that are really deeply valuable are things I agonized over for a long time, where often there was a cognitive dissonance and I was trying to resolve something
13:42 that seemed contradictory, and then at a certain point you're like, "Oh, that's what it means." So I think the ability to stay with a problem. A friend of mine, Chris Begg, we've talked about this, where he talks about the ability to linger longer, as he would put it, to keep at a problem. So I don't know.
14:03 I think this is just going to unfold in an interesting way. >> Yeah. Well, it's a half year letter and the half year ended on the 30th of June. We're recording today on the 20th of August. So there was still two months of procrastination and what you much more generously describe as lingering. So, there was no shortage of that either. >> Yeah. And it's a very good letter.
14:19 You kindly sent me a draft of it, and we'll discuss it more as we go along. I'm curious, you graduated from Cambridge in 1996, and you began your career, I think, in 1997 at Goldman Sachs Asset Management in their graduate trainee program, and then you end up joining this small German bank in Frankfurt, I think, in 1998 as a sell-side analyst covering the telecom sector.
14:41 And I'm curious, in some ways, coming from this somewhat modest background that wasn't particularly money oriented, were you intensely driven to make money? Were you going into this business because it was intellectually engaging? Were you going into it because you wanted to get a degree of independence and security? I'm just curious what was driving you, because I think your views on what investing is, as we'll discuss, evolved a great deal over the years.
15:07 What was your attitude towards money and investing in business when you started out? >> Yeah, I think I always latently had the ambition to be financially independent. Still do for that matter. It was never my ambition to be super wealthy, but the idea of being independent was a very important one to me.
15:26 So when I finished my studies, it was always completely clear to me that I was going to go out into the world and try and make money. I think some people graduate with other ideas, but unfortunately I didn't have anything more noble than that to offer. And when I meet some young people today, they're incredibly thoughtful about where they go to for their first job. And unfortunately, that wasn't me either.
15:47 As an ambitious young person, Goldman Sachs was then and probably still is today the number one brand on Wall Street. And so that's where I set my sights on working and got a place there, which in hindsight was not the best outcome for me. I think I didn't get on particularly well there.
16:05 What makes Goldman Sachs successful is it's an enormous machine, and machines need cogs and not independent thinkers. And it was a complete mismatch, and so it was an early punishment for not being thoughtful. >> So what happened? >> Nothing particularly bad. I think the way these large investment banks worked then, probably not all that different now, is that they want to hire the best people, but I think that's not because they have high-end work for them to
16:33 do. It's because it reflects positively on their brand. But when these smart young ambitious people show up, the more senior people in the organization like to do the thinking and the interesting stuff. And so you start at the bottom of the food chain, more like working the photocopier all hours of the night. And that was definitely not how I envisioned my life panning out.
16:56 So it ended up being a clash between me and my superiors, and that was a battle where there was only ever going to be one winner. >> I've never been very good either with superiors or with copying machines. So I think both of us ended up doing very independent-spirited stuff. So I think one of the early experiences that was very formative for you as well is that you came of age as a young investor in the early 2000s amid the dot-com bubble bursting, >> and I'm wondering what you learned in those early years, because for one thing you did not start
17:27 with a big nest egg that you were investing. Can you give us a sense of >> that early stage of your evolution as an investor, because you were totally self-taught really? >> Yeah. It was an incredibly formative period for me, the dot-com crash, for multiple reasons. So I was around 30 at the time that happened.
17:48 So I'd been in the financial services industry for a few years by then. And I would describe myself up until the dot-com crash as being a financial analyst. So I knew how to build a spreadsheet and analyze a company and work through the motions. But when the dot-com crash happened, that's when I would describe myself as becoming a value investor.
18:08 And so what is the difference? When the dot-com crash happened I had a lot of time on my hands. I was sitting at my desk in the office and the phone was no longer ringing, as no one was interested in the telecoms industry. So I had time on my hands, and a lot of the companies that I'd previously been tasked with analyzing, they lost 99%, sometimes some of them went even to zero. They all lost nearly all of their value. And as a know-nothing investor, I was looking at these stocks, and many of them were trading at a small fraction of the
18:39 cash that they had on their balance sheet. So it wasn't unusual for something to have maybe 10 million market cap, but 100 million of cash on its balance sheet. So even with the little knowledge I had at that time, I could figure out, if you could buy something for 10 million which has 100 million of cash, then that's got to be a good deal.
18:56 And so that's when, A, I really started to get into value investing, but B, the returns in that period were really spectacular. Not because of me being a particularly good investor, but just because the opportunities were just so incredibly rich. So even though I probably only had at the time a few thousand euros, if you're doubling that, potentially more than once or twice a year, then that starts moving things in the right direction very very quickly. >> So you got really addicted pretty quickly,
19:29 right? I also remember you telling me at one point that you read The Intelligent Investor and that was revelatory to you. >> Yeah, that was revelatory from an analytical perspective, but also in terms of the importance of collaboration. So I shared the office at that time with two very good friends of mine, Vidar and Wolfgang, with whom I'm still in close contact today.
19:52 And at the time I thought I was onto something and was keeping it to myself. And so they were a little bit confused, at a time where no one really had anything to do, I was working like an absolute ninja. And they asked me what I was up to. I said, "Oh, nothing. Don't worry, don't pay any attention to me." And then they were a little bit persistent.
20:09 They could see that I clearly was doing something. So I told them these incredible opportunities I'd come across, and of course then started collaborating. And I remember one day Vidar came bouncing into the office and said, "Rob, I've just been given this book and I read it and you're not going to believe what it says." And he had a copy of The Intelligent Investor.
20:28 And there's one chapter in The Intelligent Investor where Ben Graham describes how after the great crash of 1929, these former high-flying companies were so despised by investors many times they would trade below their net cash. And so I just was completely blown away by reading something written 50-plus years before describing what I was experiencing in this supposed modern world with internet companies and stuff.
20:55 So that really got me fixed onto value investing as well. And of course once you've read The Intelligent Investor it doesn't take you too long to come across Warren Buffett. >> I think it's also striking that from a pretty early date you were very concentrated, and even now I think you typically only have about 10 stocks, right? >> Yeah.
21:18 >> Tell me how you came almost accidentally but fortuitously to be a very focused, concentrated investor. >> Yeah, it came completely naturally as opposed to being a top-down idea. So I was concentrated in those days because, A, I didn't have a whole lot of cash. So when I saw a really amazing opportunity, I wanted to focus the cash I had on that opportunity.
21:41 But B, there's only so many hours in the day, and especially in the early years, I didn't have much of a mental network or mental watch list of companies to follow. It wasn't as if I had a thousand companies on my radar in any case. So if you combine having a few very good ideas with a limited amount of capital, I think it comes very natural to invest in a concentrated way.
22:06 And if we were to fast forward the story five or six years, when I received the seed capital to start the fund, the one piece of advice I was given by my mentor Norman Rentrop at that time was just continue doing things the same way you do it. Don't change anything. And so it was great advice, and I'm sure most professional money managers read about diversification and how you have to have a nice big diversified portfolio and all that kind of stuff, but I didn't have to unlearn that lesson because I never learned it in the first place. >> Can you tell us a little bit about Norman Rentrop, because I've met him
22:34 a bunch of times, both in Omaha but also at Value X events in Klosters, and he's an intriguing guy. I don't know him well, but I know that he played a very very important role in helping you set up RV Capital in Switzerland in 2006 and then the Business Owner Fund in 2008. >> That's right.
22:57 So if we fast forward to 2006, where I moved to Switzerland and decided to set up RV Capital, the first call I made was to this gentleman I'd met a few months prior called Norman Rentrop, whether he would like to become my first client, and fortunately he said yes. And so that really set me off to the races. At the time I had two small children, and when you set up a company and you start with zero, then the biggest challenge is always getting the first client.
23:21 So that was an incredible boost for me. But in terms of who Norman is, he's an entrepreneur based in Bonn, Germany. He started a professional publishing business, which is where most of his wealth came from. But when he was 40, he decided to step back from the business and become a full-time value investor.
23:42 And as he tells the story, the first thing he did when he decided to do that was catch a train from Chicago to Omaha to go to the Mecca of investing. And apart from being a great investor, he's been a great mentor to me, but also to many other people. He organizes a value investing conference for German speakers in Omaha around the time of the Berkshire Hathaway meeting.
24:05 And is probably the person more than any other who's supported the growth of the value investing community in Germany. >> And around that time, I think in 2006, so exactly when you were starting to launch your own firm, you visited Omaha for the first time, and you've been many times. I think the first time we met was in Omaha this year when you came to an event that you were hosting there. Why was that first experience of Omaha and the Berkshire annual meeting such a life-changing formative experience for you? >> Yeah, life-changing
24:44 is probably a term that gets overused, but for me it really was a life-changing experience. It was obviously May 2006 when I went, and I set up RV Capital in August 2006. And I think it's fair to say that probably wouldn't have happened if I hadn't been to Omaha that year. I think at the time I was in a job where I was learning a lot.
25:06 I liked the people I worked with, but it had the one drawback that I didn't really have any agency. Other people made the investment decisions. My job was to do the analysis to put them in a position where they could do that. And by this time, I'd had a considerable amount of success managing my own money. I had achieved a degree of financial independence by this time.
25:27 But what I above all wanted to do was to be the decision maker, the person who was the one deciding which stocks to buy and sell. And I couldn't do that where I was working at the time. And what really gave me the nudge to set up my own company to be able to do that was going to Omaha, seeing the incredible role model that Charlie Munger and Warren Buffett have given to people, experiencing all these like-minded people around the AGM who are also passionate investors. So that really was what gave me the inspiration to go
25:56 and do it. >> [Host promotion: Intrinsic Value Conference, New York City, September 19, and the Investor's Podcast mastermind community.] Hey folks, quick but exciting update here. On Saturday, September 19th, Daniel, Kyle, and myself will be hosting the Intrinsic Value Conference, New York City. This will be a full day of value investing talks, stock pitches, and panels in Midtown Manhattan as part of a bigger weekend with our mastermind community from September 18th through the 20th.
26:19 And we're hoping to make it something like Value X and TED talks [music] combined. And so members of our mastermind community, both the inner circle and our intrinsic value mastermind, will have spots reserved at the conference as part of their membership for free, plus private community dinners on Friday and Saturday night and breakfast on Sunday.
26:39 And for everyone else, there's two ways you can join [music] us if you're interested. A general admission ticket gets you full access to the conference itself, a stock pitch presentation from Kyle and an intrinsic value portfolio with Daniel and me, plus guest speakers that we'll be announcing in [music] the coming weeks.
26:59 Or if you want the full experience, our VIP ticket [music] package gets you all-day conference access plus a seat at our Saturday night exclusive dinner with William Green and the rest of our inner circle community. And it will definitely be one of the more special evenings we host all year.
27:17 So, if you've ever wanted to spend a weekend talking shop with serious investors in the financial capital of the world, this is it. Find tickets and the full agenda at theintrinsicvalueconference.com. And if you'd rather join us as a member and get the conference plus the full weekend [music] included, apply to the intrinsic value mastermind at theinvestorspodcast.com/mastermind-application.
27:45 [music] All the links are in the show notes below. Hope to see you in New York. >> When you saw their emphasis, Warren and Charlie, on values and purpose and doing the right thing and all of that, and you had come from this background where it was just, I just want to make some money so I can live decently.
28:08 Did that have a slow burn effect on you? Did you start to think, oh, actually there's a different way of operating? I remember Nick Sleep's partner Zak said to me that for him, going for the first time with Nick to Omaha, he just was like, oh, this is unbelievable, this isn't a casino, here are these guys who actually own real businesses, they're not just charlatans trying to pick your pocket and scrape off lots of fees. And I'm wondering, did you start to see there was a different type of capitalism that you hadn't necessarily been aware of?
28:38 >> Yeah, I think that was almost a religious-type revelation in that respect. I really loved the sense of purpose which Buffett has and Munger have built Berkshire Hathaway with, and the sense that it's not just about the financial returns but helping people and creating a community. And for me, as financially motivated as I was in the early years, it was really about independence as opposed to building a huge nest egg, and so I think at some point I would have achieved that independence and probably
29:10 lost interest. And what I think opened my eyes in 2006, and what makes the investing challenge for me still interesting today, is that sense of there being a higher purpose to it than just simply compounding capital. >> You started the Business Owner Fund in 2008 and I think you started with seven or eight million euros and maybe seven investors.
29:32 So, it was more of a club in a way than a big swaggering hedge fund that the world was going to stop and notice, oh, this guy, we're going to send him $5 billion to his startup hedge fund. And you were pretty much, I think, working out of your home with no Bloomberg terminal. And then almost immediately, I think the market starts to implode.
29:50 I think, if I remember rightly, you set it up on September 30th, 2008, and a couple of weeks later Lehman goes bankrupt. And so I'm wondering what that experience was like as a young fund manager, suddenly seeing the global economy collapsing, suddenly seeing all these firms collapsing, and in some way being totally detached from it all, because everyone else is working in the big office buildings in New York and LA and the City of London and the like, and you're just sitting there with your wife and kids. [laughter] >> Yeah. I set things up in a very unconventional way when
30:21 I started RV Capital. So as you mentioned, there were no employees, there was no office, there was no Bloomberg terminal, and that wasn't because of any master plan. That was simply because I wanted to keep my outgoings to an absolute bare minimum. So it was really just a financial motivation. But an interesting thing happened when the world imploded after the Lehman crisis in 2008. And I was just sitting in our guest room, I think, at the time, reading annual reports, comparing prices to value.
31:00 And I very much imbued the thinking of Ben Graham and Warren Buffett, and Ben Graham's core idea is this idea of Mr. Market, that sometimes Mr. Market gets very depressed and becomes very irrational and then prices get very cheap, and when that happens you buy. And I found it very easy to remain on an even keel in this home environment where there was no one really around me apart from my wife and kids, who of course were oblivious to what was happening in the world and just going about their day-to-day. And so a lot of people were very fazed in that
31:29 environment, but to me it made total sense. It's what Ben Graham had explained would happen every now and then. And so fast forward a few years later, where the fund became bigger, had I wanted to I could have built more of a traditional infrastructure, but I realized that it was an advantage being set up in that way.
31:49 So what started more out of necessity became a setup which I really had out of conviction that it was the right way to do things. >> Yeah, it's really interesting. In some way you lucked into a lot of great truths about what works, right? Having a little bit of emotional detachment, having this intellectual background in understanding Graham and how the market works and that you needed to use the market >> instead of just being whipsawed by it, and having a good emotional ecosystem with a family that
32:20 you loved and >> it's interesting, right? There were so many ingredients that you somehow got right almost more through luck >> There's another thing which was also really through luck in that period. So when I started the fund I thought, okay, well now I'm a fund manager, I better go out and find some clients.
32:43 And so for the first, I don't know, half year or so I would cold call people asking if they would give me a meeting so I could present my fund to them. And the funny thing that happened is that a lot of the time people actually said yes, and why wouldn't they? They found it entertaining to have a young enthusiastic young man explain his best ideas to them.
33:04 But invariably, or in fact always, after the meeting they would say something along the lines of, oh, we can't invest because your track record is too short or the fund is too small. And I was like, did we really need to have a 2-hour meeting to establish that my fund is only 10 million AUM or whatever? So really, like a small kid throwing their toys out of the pram, I was like, okay, I'm not doing any more marketing. This makes no sense and it doesn't work anyway. And in hindsight, that was exactly the right thing to do anyway, because that allowed me to concentrate just on managing the fund and creating a great track record.
33:40 And of course, that's ultimately not only the right thing to do, but also draws the right people into your ecosystem. But to your point, I stumbled on that by luck as opposed to having a master plan. >> One thing that really struck me as I was going deep into my research over the last few days: one of the few really in-depth interviews you've ever done was with Manual of Ideas, run by the great John Mihaljevic. And this is back in 2009.
34:07 So very early on, and I was really struck that you said in that interview that your ambition from the start was to deliver a 15% annual return over a very long time period. And here we are 18 years later and you've done exactly that, a little bit better than that. >> Should have aimed for 20. >> I know. What made you think that was possible as this young, slightly naive whippersnapper? Why did you think that 15% was the, I mean partly this relates to hurdle rates and the like.
34:36 So can you explain what actually was behind this idea? >> Yeah. So I don't want to take any credit for this being my own original thinking, but I can explain how I thought about things back then. And when I first started, in that phase of the dot-com companies I was investing in, in a very mechanical way based off of price to book, price to earnings, with quite a naive thinking that the lower the PE or the lower the price to book, the better the value it is. And I recognized quite quickly that there was
35:07 actually very little predictive power whether a company trades at two times or five times earnings. In both cases, they're very very cheap. The crucial thing is actually whether those earnings are real and how good of a business it is subsequently to when you're buying it.
35:28 So I really wanted to incorporate that into my valuation framework and get away a little bit from this more traditional value thinking around P/Es and price to books and that kind of stuff. And what I landed upon was this idea of what I call the owner return. And I targeted an owner return from investing in a company without there being any change in the multiple.
35:48 So the thinking was, if I was to own 100% of a company, how would I think about the return I get on a year-to-year basis? And I think if you own 100% of a company, there's no market for that company because you own 100% of it. But the way you would think about its value is, A, obviously how much cash does that business return to you each year? If it returns 5%, at the end of the year you're obviously 5% richer. And how much does the earnings power increase every year, increasing longer-term cash return potential. And so I thought of the sum of those two as being the owner return.
36:19 And what I targeted was always a 15% return. That could have been a 15% dividend yield, that could have been 15% earnings growth, or more typically some kind of mixture of the two. And A, I thought that would be a very respectable return if I could achieve it. But B, it also got me a little bit out of this idea of thinking too rigidly about multiples and that kind of stuff.
36:45 >> You've written in the past about your evolution as an investor and how you went roughly through three big phases. And so the first phase you said was looking for great prices and the second was looking for great businesses. And then I think what's really interesting, which I want to home in on a lot in this conversation, is the third stage, which is the great manager stage, where you started to focus really intensively on managers you could trust and who you admire, who are talented and have integrity. And I wanted to read a quote that I think is just really valuable,
37:19 that comes I think from one of your Q&A sessions at your annual meeting, but I may have stolen it from somewhere else, I'm not sure. I think this is a really valuable insight. So you said, "I've discovered for myself a niche of managers where I think the odds are just massively stacked in my favor.
37:36 And that's managers who've turned the business into their life work. So oftentimes they're the founder, but sometimes they're just people that have spent their whole career there. Sometimes they might even be someone that arrived a little bit later but clearly buys into the culture in a very powerful way, and that is the kind of pool that I fish in.
37:54 I think it's a very very rich pool, especially for a concentrated fund like me." And I just think this is a hugely important insight. I wonder if you could unpack it for us, because I think this lies at the heart of what it is you do. >> Yeah, thank you for that quotation. I think the deeper point of that is people often will ask, "How do you judge a manager? They're such good salespeople who are very well practiced in meeting with investors like us.
38:18 How on earth could you separate the good from the bad from the average?" And I would argue you can't. If you were to put 100 managers in front of me and say divide them into the best versus the worst, I would be no better than average and quite possibly worse. But I do think there is a small cohort of managers who do make the business their life work, completely aligned, completely dedicated, and when you do find those the odds are just massively massively stacked in your favor. So I do think I've occasionally been able to spot that type of
38:51 manager, and when I do I would tend to bet on them. >> You gave a really interesting series of talks at the value investor conference in Omaha, three different talks over probably 2014, 2017 and then probably 2024, I think. And so I've been going through these quite carefully over the last few days, and one thing that really struck me was you quoted something from Snowball, the biography of Buffett, that I thought was really interesting, where you quoted the book saying Buffett saw himself in Ajit Jain, who quickly rose in his esteem to share Mrs. B's
39:31 pinnacle, and you mentioned in that speech that Ajit had no background in insurance and that Warren said, I just liked the guy. Talk to us about the significance of that, because I think there's actually something really quite profound going on there. >> Yeah, I do think it's an incredibly profound idea.
39:53 Obviously because it's true, but more importantly when you're trying to beat the market, because it's overlooked. A lot of investors are very reluctant to place any weight on something which isn't based off of hard facts and quantifiable, and obviously if you work in a large organization that's essential, because how else can you communicate your ideas to everybody else? But I do think certain emotional responses you have to certain situations can also be incredibly powerful indicators, and if you're working on your own in a very small team I think you can lean into
40:25 those insights. But obviously you can't if you're in a larger organization. And one of those is simply that visceral reaction of liking someone. It might sound a bit airy-fairy, but to the extent you've spent your whole life thinking about business, meeting with people, talking with people, having good experiences, having bad experiences, that immediate reaction of liking someone obviously is based off of patterns that have developed over decades and has to be an incredibly powerful indicator.
41:00 And I thought it was very interesting that Buffett said the main reason that he hired Ajit Jain was simply because he liked him. On one level you could say, well, that's a very superficial reason to hire someone. But I think at a deeper level, it is probably an incredibly powerful indicator that he saw in him values and qualities that he knows he himself has.
41:24 >> It's so interesting to me, because here I am covering this investing business that's supposed to be incredibly rational and full of objectivity and the like. And when I think of the people who I invest with, they're people like Chris Begg, who I just really really like. I mean, I think he's incredibly smart and thoughtful, but I also just really like him.
41:44 And Josh Tarasoff, a close friend of yours, who I just really like as a human being. They're both people I want in my life. And I interviewed Nima Shayegh on the podcast recently and I'm just like, I spend so much time thinking how am I going to rustle up cash from here for my wife so I can invest with Nima, because again I just really like him, and so it's interesting.
42:02 >> I can echo: all three are wonderful people and dear friends of mine as well. >> Yeah, they're quite special, and look, if I had more money I would want to invest with you too, and so I think in some weird way I feel like I'm almost collecting people as much as investments. And then I think about this: there's a wonderful guy in the Richer, Wiser, Happier master class, very talented French investor based in London, who I had dinner with recently, and he said to me that he would never invest with a friend, it's just too dangerous, because what if it goes wrong? And
42:33 he's a really really smart, successful property investor, and so I wonder about this. And then Chris Davis talked to me at one point where he said he had some rule where he said you should never do business with a friend before the age of 40, and after the age of 40 you should only do business with friends, once you had enough pattern recognition.
42:58 How do you unpack this? Because there is something about it >> that feels very soft and not objective in a business that's supposed to be objective, and yet we were given these tools of intuition and instinct, and I don't know, unpack it for me, because I can't really unpack it. >> Well, there's one really crucial thing and that is that you tend to like people who are similar to yourself.
43:21 So, it means you need to cultivate in yourself the qualities you're looking for in other people, and you see that the whole time. Not to undervalue it or anything, but some people might think the coolest thing in the world is if someone drives a Ferrari. So if they see someone show up in a shabby car, they're like, "Who's this idiot?" And they see someone else show up in a nice bright red shining Ferrari, like, "Wow, that's the guy."
43:45 And so, if you're the person that deep down values more superficial things, whether you like it or not, you're probably going to be drawn to those people that exhibit those qualities. And if you're someone like Warren Buffett, who values integrity and [r]ationality and investing acumen, you're naturally going to be drawn to people like Ajit Jain.
44:08 And so the big lesson that people like us should take away from that is we really need to cultivate the values in ourselves that we're hoping to find in other people, because we're automatically going to be drawn to them whether we want it or not. >> Yeah, I think that's a really valuable insight.
44:27 My scoring system before I interview someone: there are things where I have things in italics, I have things in bold, I have things underlined, and then the trifecta is if it's in italics, bolded and underlined, which is the case with this quote from your speech in 2024, where you were talking about your 2017 talk and you said exactly that. You said if you want to find managers that have the values which you think are important, you better live by those values, because if you don't, you won't be able to spot them.
44:54 And I just wrote next to it, huge insight, discuss. [laughter] >> Sounds like one of my university professors now. >> But I think once in a while I stumble upon something and I'm like, "Oh, this person's figured out something that's actually deeply true >> and important and not necessarily obvious."
45:16 And I think it's a curious thing that instead of just looking for people who are honorable and have integrity and who you're going to invest with, you're like, well, I better actually work on that in myself. >> It's a very interesting insight. >> And of course, there's no ban on then doing analysis afterwards to make sure your initial impressions are correct.
45:36 You mentioned the journey, though. There's one other little anecdote I'd love to tell about how I came to the focus on the management. So there were three stages to my investing. The first was very much this very mechanical, rigid, quantitative focus, and I realized very quickly that there was more to investing than that.
45:56 So the understanding that it wasn't just about whether something was on a two times P/E, it was also whether it was a good business, that realization came about very quickly, as some of the businesses I invested in those very early years, most did very well but some went to zero because they were frauds or the business didn't work or whatever it might have been.
46:14 So that was a quick burn, but it was a much slower burn to realize the importance of the people. I think initially the insight was, well, people can really damage a business in a negative way, if it's a fraud or if they're incompetent or whatever it might be.
46:37 So I realized early on in the journey that it should be something I should look at, and I should try and avoid the bad people. But really recognizing that it's not just that you have to avoid the bad people, it's not even that you should be trying to find the good people, it's that the biggest priority should be the people. And what led to that was the realization that we all have this conceit that we're great analysts and we do more diligent work than everybody else and understand business better than everybody else.
47:02 But the reality is when you analyze a company, no matter how diligent you are, you only really see the tip of the iceberg, that bit of the company which is poking its head above the water. But what really determines the investment success is what's going on beneath the surface. And my experience was, where you had good people at the top, everything beneath the surface was at the very least not terrible and oftentimes a lot better than you expected.
47:29 And where the people weren't great, the surprises were always negative. So I came to realize that I better be betting on the right people rather than the wrong ones. And I think the reason it took a bit of time to come to that realization was because I had to get rid of the conceit that I could achieve everything just through intellect and analysis.
47:52 >> You're often asked how you identify these outliers with these exceptional qualities. And it's actually an incredibly difficult thing to answer in certain ways. I remember Chris Davis saying to me at one point that Charlie said to him, "Yeah, never invest in a company where the CEO has good hair," which reminded me of my experiences as a young journalist interviewing Jean-Marie Messier, I think it was, from Vivendi, who had incredible hair, and Vivendi did not do well. What are you looking for that gives you a sense
48:26 that the manager loves the business, is deeply, when you look back at say the founder of Trupanion or Mark Zuckerberg or so many of these CEOs that you admire, what are the tells that they're giving you a sense that they're all in? >> Yeah, I think that you can narrow the universe down pretty quickly just through the mechanical method of basically rejecting all the companies where the management is a revolving door of MBAs, which is the rule rather than
49:03 the exception. So I think that whittles the universe down pretty quickly. But then once you get to the businesses which are either run by the founders or very tenured managers, often connected to the original founding team, that's when it gets tricky, because sometimes you see these funds that will just say, oh, we just invest in founders or whatever, as if that solves the problem.
49:28 But not all founders are great. Some lose interest in the business, or they sell their stock but still feel like they're entitled to the economics, or the world moves on and what made them successful originally is no longer what makes the company successful today. So I think you can whittle the universe down pretty quickly just through mechanical methods, but then there's no substitute for thought and analysis once you get down to that short list. >> I was really struck, I was listening to your Q&A session back
50:01 in 2022 at your annual meeting, and Dennis Hong, who's a very good fund manager in his own right, very smart guy, asked you about your interactions with management and what you hope to get out of meeting with them, because obviously there are lots of fund managers who don't believe in meeting CEOs because they're such good salesmen, and you disagree strongly with that.
50:19 And there's this lovely quote where you said, what I really want to do when I sit down with a CEO is try to figure out how they tick, what motivates them, how they think about the business, what their long-term plans are, what the story of the company is, how it came to be the way it is, because understanding the past is often the best way to understand what the future will look like.
50:36 And then you said, but often it would be going for a walk with them or meeting them at your home, so often in these non-business settings. And then you said, "And the single most important thing I look for is whether I like the person."
50:53 And you mentioned that you actually like it when they're a little bit scruffy and introverted. You're not really looking for charisma. I thought that was really interesting, that it's not necessarily the guy driving a Ferrari and wearing the $6,000 bespoke suit. >> Yeah. I think some investors get frustrated that they don't get a whole lot out of a meeting with a CEO, because they ask about the market opportunity and the entry barriers and all that kind of stuff, and they probably get
51:21 the same answers that have been given a million times before, and none the wiser at the end of the meeting. What I try and do is just take a manager a little bit off piste and try and hear about how they think about the world and, above all, what their motivation is.
51:38 And I do think people generally reveal themselves, not necessarily in a negative way, but sometimes they just have completely different interests in the business and their biggest dream is to go off and do something else or whatever it might be, and absolutely nothing wrong with that. But I do think if you are fortunate enough to get to spend the time with the CEO of a company, the time is better spent just rambling a little bit and maybe going out of the meeting room and talking about completely unrelated topics to the company itself, just to
52:07 get a sense of their values and how they think about the world. >> One thing that really interested me is your major investment in Carvana, which has been a roller coaster I think over the last eight years or so. And this is such an interesting example of a divergence between what most people say about the management, or at least not most people, but there's always been controversy around the management and short sellers who were maligning management and the like.
52:39 And you're pretty close to Ernie Garcia, the co-founder and CEO. And I was watching yesterday an interview that you did with him and was just really struck by his character and his intensity and his drive and fierceness. And can you talk a little bit about that, because in some ways I think your relationship with him is revealing about what it is you're looking for, and also your independence of mind.
53:10 The fact that you were able to see something in him that maybe the market and conventional opinion wasn't seeing. >> Yeah. To my dying day I will never understand why Ernie Garcia is the polarizing figure he is. He is just, to me at any rate, so obviously the absolute epitome of the kind of founder building a business into his life's work that I just can't for the life of me understand how anyone could reach a different conclusion.
53:39 And I understand you might not like the company. You might not think the business model works, although I think that particular bugbear has been put to bed by now. But that you could question his motivation and his integrity, that is just a complete and utter mystery to me.
53:58 >> There was also a really interesting revealing story about a chin-up contest that you've told, which, as a journalist, I'm always looking for these little anecdotes that [laughter] are revealing. Can you talk about that story? >> Well, my dear friend Cliff Sosin should be the one to tell this story because it's really his story.
54:15 But the way he told it to me, and maybe I'm embellishing the details a little bit, is that Cliff is someone who takes very good care of himself, as indeed does Ernie. And they both being competitive types, they challenged each other to a chin-up competition. And Cliff did however many it was he did. Let's call it 15. It may have been a different number.
54:35 And the way he told me the story was Ernie started strong, but by about number five or six, he was clearly struggling, and Cliff thought he had this very clearly in the bag. But Ernie somehow managed to dig out another 10 chin-ups just to avoid losing. >> There was something lovely in your conversation that I wrote down where, as you retold this story, Ernie said, "I'm not going to lose to Cliff."
55:01 >> [laughter] >> And I think that gets at something, right? That sense that you're looking for people who are all in, who have fierce commitment. And you told another story once, I think, about the growth rate at Carvana and whether it would just be like 20% or more or whatever. And what did he say about that? >> Well, that's a story where I'm the protagonist, in contrast to the other one.
55:23 So that's maybe a better one to tell. Obviously Carvana went through a huge crisis in 2022, and then going into 2023 it was clear that the business had managed to turn a corner, but the question then on everyone's mind was when was it going to start growing at a meaningful rate again, and what would that growth rate be? And so at the various analyst calls and investor meetings everyone was peppering Ernie with questions about when it was going to start growing again, and he was very
55:53 disciplined, sticking to the script of, we're going to wait until the economics are nailed down and then we're thinking about growing again. And I wasn't trying to be particularly clever or catch him out, but in good faith I told him a story I once heard from a CEO, who explained to me that there's a right rate to grow. It shouldn't be too fast, because then it puts too much strain on the organization, but of course it shouldn't also be too slow, because that creates an opportunity for competitors, and the right
56:20 growth rate in his opinion was 20%, the Goldilocks growth rate, not too fast, not too slow. So I told this to Ernie and he looked at me with a complete look of contempt and said, "The reason that guy only grew at 20% per annum was because he wanted to be home by 6:00." >> That's great. [laughter] >> So he gave away that it wasn't going to be 20%.
56:44 >> There was a moment, I think, in a chapter that I wrote on high performance habits in my book Richer, Wiser, Happier, where I said something really really simple after spending a lot of time interviewing people like Jeff Vinik and Peter Lynch and Will Danoff, these fiercely driven stars from that generation at Fidelity, and I said something like, sometimes the secret of success is nothing more mysterious than the fervency of a person's desire.
57:13 And I think it's one of those things that's so simple that it's really easy to overlook the importance of it. If you have someone who just has such fervent desire, and if you combine that with talent, obviously you need the talent, but it's very hard to stop those people. >> Yeah.
57:32 Although what I've come to realize is you can't create some theoretical laundry list of the qualities needed for a great leader. It tends to be the case that founders form the companies and then the companies form the founder. So what tends to make the company successful, by definition at least for those that are successful, is the qualities that the CEO exhibits, and they're not necessarily uniform across all CEOs.
57:58 So at one extreme you might have someone like Steve Jobs, who by all accounts treated people pretty shabbily, but I guess deep down people must have realized it was coming from a place of passion rather than just wanting to hurt people. And at the other end of the extreme you have these leaders who themselves are more or less without ego but have this tremendous ability to bring people together.
58:22 So it can work at both extremes. The key thing is the leader is suited to the organization and vice versa. >> Mark Zuckerberg at Meta obviously has always been a controversial figure, and you've always been a huge admirer of his. >> Yeah. >> And people are also always very critical of Meta about the social ills that it's causing and the like.
58:46 And I'm just curious how you view it, because a lot of what you do seems to me about exploiting misperception, looking at the facts in a somewhat dispassionate way and trying to exploit misperception. How do you view the world as having got Mark Zuckerberg and Meta wrong? >> Yeah, there also, to me, that's a rabbit hole we probably shouldn't go down in the interest of time.
59:12 But there too it's a mystery to me why someone like Mark Zuckerberg, who so obviously has almost an impossible job balancing all these competing interests, and clearly from a wealth perspective doesn't need to do it but still does, I would argue from a place of passion, it's a mystery to me why he is the controversial figure he is, but I realize a lot of people would disagree with that.
59:35 So, no need to go down that rabbit hole. But the one observation I would make is I think generally people are quite negative about business in general, and the bigger the business is, the more negative they are about it. So I remember when I was a kid, the big bugbear at that time was Nestlé of all companies, and Nestlé I suppose at the time was one of the largest and most successful companies, still is pretty successful today, and people were convinced that the reason there were all these starving children in Ethiopia and Africa was because Nestlé was sending powdered milk there and the kids were losing
1:00:08 the ability to be weaned off their mother, and then Nestlé was withdrawing the milk or whatever the conspiracy theory was at the time in order to then make a profit, and it's absolutely ridiculous. Even today Nestlé doesn't make a meaningful amount of its revenue from Africa, certainly wouldn't have done back then, and to the extent it sent powdered milk I'm sure it was with the best intentions. But there seemed to be a readiness then of people to
1:00:37 think the worst of the largest companies, and that is still the case today and probably always will be. >> You've spent a lot of time thinking about and talking about moats and the nature of moats and what types of moats are best and worst, and when you think about your big holdings like a Carvana, which at one point was down 98%, and then it's good in the end, and you think about Meta and what they embody in terms of moats, >> what are the, you're a little bit iconoclastic in your view of what makes for a good moat. >> Yeah, I think my
1:01:15 thinking around moats has evolved also over time. So I think if you'd asked me 10 years ago, I would have said moats are good and the bigger the moat, the better. And today I have a more nuanced thought on that. I think moats are not always good.
1:01:33 They can create complacency, and especially in industries where there's rapid change, that could be an active disadvantage rather than an advantage. And also moats prevent you from adapting and changing as the world evolves. And so what I've come down on is I'd rather actually a company maybe has a slightly narrower moat but where it keeps them on their toes and forces them to continue adapting.
1:02:04 And more importantly, that moat should be expanding and moving in the right direction rather than narrowing. So I would much rather see a company with a smaller moat which is getting wider, as opposed to a larger moat that's getting smaller. >> Another really controversial move of yours in recent years has been, I guess since 2024, this massive investment in China, where there's been a little bit of churn in the companies that you've owned.
1:02:30 But when I looked the other day, I think about four of your top 10 holdings are Chinese. >> Yeah. It's about a third of the portfolio. >> Can you talk again about the misperception there and the opportunity, and also something that's very distinctive about your approach, which is that you travel a lot. So you're going to these places and you're >> seeing with your own eyes what these places are like.
1:02:52 What have you seen in China that makes you think people have got this wrong? >> Yeah, as you point out, William, I've always been passionate about traveling. And the great thing about managing a global fund like I do is that I have an excuse to combine my passion for traveling with my passion for investing.
1:03:14 And I've tried to get to most large international economies over the last 20-odd years. But the place that I went back to more than any other was China. I just find it an absolutely fascinating place, like anywhere with its good sides and its bad sides, but where above all it's a country where I feel it's moving very rapidly in the right direction, and from an investing perspective what makes it interesting is that the perception for most of those last 20 years, perhaps even still today, has been very negative. So if, as an investor, you
1:03:46 see, whether it's a company or an economy, whatever it might be, if you're positive about it and the rest of the world is negative, then that's an exciting setup. So I have been traveling to China every year for probably the last 15 or so years, but of course there was a hiatus during COVID where you couldn't travel there for a few years because of the restrictions, and so I think I was one of the first investors to go back there pretty much as soon as the
1:04:14 travel restrictions were lifted. I went there and wrote a postcard actually about the visit, and what really blew me away was just how rapidly that economy had developed. I think there was the perception that it was a good place to produce commodities cheaply but devoid of creativity, devoid of innovation, devoid of world-beating companies.
1:04:36 And when I went back there in 2023, it was completely clear to me that the complete opposite was the case. There was a lot of innovation. The society had moved along very quickly. The cities had become much more beautiful than they had been beforehand. And it was also producing a lot of world-class companies, not just in manufacturing, but in the consumer internet, in e-commerce, really pretty much across the board.
1:05:01 And so that was what really got me interested in it. >> And why, of all of the things that you've played with there, all of the things you've explored over the years, have you ended up with Luckin Coffee, which is a pretty new position, I think, and Tencent Holdings? I think you used to own Prosus as well, >> which is a way to invest in [Tencent] at a discount.
1:05:24 And I think H World Group and Yum China Holdings. Why are those four so appealing to you? What's the common denominator? Because I know you also sold DiDi Global, I think, at some point in the last few months. >> No, I still have that, but it might have slipped out of the top 10. So maybe that's why you were thinking that.
1:05:44 But no, so I'm very conscious when I invest in China that I don't speak the language. I only go there once or twice a year, and so there's one and a half billion people on the planet who are better positioned to invest in China than I am. And the way I compensate for that is really just trying to keep it very simple.
1:06:04 Not trying to find any under-the-radar companies doing complicated things. I just apply the same criteria I apply to any investment. I'm looking for passionate founders, and all of those companies are still run by their founder. I'm looking for wide moats.
1:06:20 I think all those companies very obviously have wide moats, and I'm looking for attractive valuations, and that's the reason above any other why I feel confident investing in China today, is that it's still a market which is very much out of favor, and you can get very obviously good companies growing nicely at incredibly attractive valuations.
1:06:43 So all of those companies you mentioned, I would expect the earnings growth to be at the very least 10% in the coming years, in many cases much more than that, and most of them are returning at least 5%, if not more, of their capital in terms of dividends and share buybacks per year. So I get very comfortably to the 15% owner return that I target.
1:07:04 >> I wonder if we could talk a bit about your business partner Andreas, if I'm pronouncing this right, who's not a China fan, which I think gets to something really interesting: that a few years ago, I think for regulatory reasons because of FINMA, the regulators in Switzerland, you decided you needed two people.
1:07:21 And so you have this really interesting relationship with this co-managing director of RV Capital, this German guy, Andreas. And I've been watching with great fascination your conversations with him over the last few days, because he's really brilliant and really profoundly eccentric, and your relationship is very unusual and very central to you.
1:07:44 Can you just start by telling us a little bit about him? Because he's just a hugely impressive guy. I feel like he's this big brain that just happens to be sitting on top of a body, but he doesn't really need the body at all. >> Yeah. Well, RV has its own LLM. Anthropic calls theirs Claude and we call ours Andreas.
1:08:04 And no, Andreas is a dear friend. We met actually in Omaha, probably in 2006, that first time I went there, and really hit it off, and have remained in constant contact ever since, regularly, as guys do, probably talking mainly about business and stocks and that kind of stuff as opposed to maybe more touchy-feely topics, but that's the level we really connect on. And you mentioned in 2022 there was a change in the law in Switzerland, and as a result of which we had to apply for a
1:08:39 license, and the advice was we had a much better chance, RV Capital had a much better chance, of getting a license if it was two people rather than one. And so really we just formalized what was happening in any case, which was we always collaborated, and he joined RV Capital as a co-managing director, but it really wasn't that much of a change. We'd always worked together prior to that. And I think what makes our relationship, or probably any relationship, incredibly productive is that there's enough overlap that we have
1:09:09 plenty to talk about. We have the same priors when we start a conversation. We agree broadly on what a good investment looks like and the type of things we want to do, the type of things we would avoid. But within that, there's enough difference that we can constructively disagree on stuff.
1:09:29 And China is one area where Andreas is certainly more negative than I am, although I do think if you were to ask him, he's potentially coming more around to my point of view rather than vice versa. >> It's curious. There was a conversation you had with him where you were interviewing him about his background, and he's clearly a brilliant guy, right? Who's a brilliant mathematician very early and published a book at some absurdly young age like 17, and basically only manages his own money, and from what I could understand at one point he had two-thirds of his
1:09:58 money in one stock and later had like 28% in Facebook, and so he's never worked for anyone and makes all his own decisions and has most of his money in like six stocks. And I thought one thing that was really interesting was that you guys were using each other as a sounding board over the last 20 years.
1:10:21 And yet actually you would buy stuff for the fund without telling him what you were buying, and he would buy stuff without telling you what he was buying. And so it's a really unusual relationship where you're collaborators and sounding boards, but you actually have total independence. So you're nominally co-managing directors, but actually you're super independent. It's a very unusual relationship.
1:10:43 But yeah, >> I wonder if you could talk about what that reflects about how important it is to maintain independence, but why it's useful to have a partner. >> Yeah. So, we are the co-managing directors of RV Capital, and from an operational standpoint we take care of the more administrative side together.
1:11:05 But when it comes to investing, I have the Business Owner Fund, which is my sole responsibility, and then he manages his own money, and in the meantime has some external clients as well, and there it's entirely his responsibility. And in terms of how that relationship works in practice, I always viewed it as there being two stages or two parts to making an investment or coming to an investment decision.
1:11:32 The one is the research/brainstorming phase, and there you just want as much input and influence as you can possibly get. If you have an idea, you want to run it by as many different people as possible. Try and surface as much disconfirming information as you can. And in that respect, Andreas is an incredible person to riff about a company with.
1:11:54 But when it comes to actually making the investment decision, I think it's super important to make that by myself, and it's not because I don't trust Andreas or value his feedback. It's more that I actually in some respects don't trust myself. I don't want to be making a decision because I think other people think it's a good idea.
1:12:15 I want it to be very clear in my mind that I'm making that decision because it makes sense in my own mind. And so by very deliberately not asking Andreas or anyone else for that matter whether they think it's a good or bad idea beforehand, it allows me to be very disciplined in making sure that it comes from an inner conviction rather than an outer one.
1:12:34 >> There was a very interesting observation that he made in that Q&A that you did with him, where I'll quote you a couple of lines from him that I thought were a really helpful revelation, where he said, "What I've increasingly flocked to was companies where I just admire what they're doing. Excellent companies usually are excellent from all perspectives.
1:12:54 It's rare that I find a company as excellent from reading the reports, looking at the products and so on, talking to potential customers, and then meet management and I'm disappointed by them. That's almost never happened. I can hardly think of any instance where this happened." I just thought it was a really interesting observation, that when a business is high quality, you see that quality in every part of it.
1:13:20 What do you think? I mean, that's presumably something you've discussed a great deal with him over the years. >> Yeah, I would see that comment in the same spirit as the conversation we had a few moments ago about management and liking managers. Andreas is someone who's been investing primarily his own money for 30-plus years, and when you do that obviously you see these patterns that resonate very strongly, and for him one of those patterns is, when he sees excellence in a product or an aspect of the service of
1:13:49 a company, then that sets alarm bells ringing in his head, or positive alarm bells, that that probably resonates with prior investments he made which have done very well, and so I put that under the heading of where intuition is an incredibly powerful indicator of a deeper truth.
1:14:14 >> When we spoke back in June, you said to me, "This is the weirdest market I think I've ever seen, apart from maybe the late '90s." And you said, "Because the S&P 500 makes a new high every day, and yet most of the things I look at are 50% below their highs in many cases, trading at very low valuations. And it's really just one small corner of the market, with semiconductor hardware, which seems to be driving all of the gains.
1:14:37 It feels like actually quite a good market for me in places like software and internet, places where you've traditionally been strong." >> Can you, and this is also something you wrote about in your half-year letter that just came out this morning, can you talk about this, because I think it gets at something really really important about, as you frame it in your shareholder letter, this debate about value versus momentum >> and this odd current reality of, as you put it in the letter, a momentum-driven market that's hyper-focused on short-term sentiment. >> Yeah, maybe it was a little bit hyperbolic of
1:15:11 me in June to describe it as the weirdest ever. I mean, after COVID or after Lehman Brothers, they were also pretty weird as well. So I'd maybe temper that a little bit. But the underlying message I would definitely stand by. It's the weirdest market in the sense that >> most markets are up a little bit, not hugely.
1:15:30 It looks like a very normal stock market year, decent gains, but you poke under the surface and you have just a handful of stocks that have gone to the moon, and then everything else, which almost feels like we've had some kind of financial crisis or something, the share prices are down so much.
1:15:50 So, it is a strange one, but as a long-term owner of businesses trying to buy great businesses when they're cheap, it's an ideal market. Sometimes you're really scratching around for an idea, whereas especially in March of this year in the software space, the question wasn't can I find a software company I want to own, it was which of the 20 or 30 which are down 60, 70% from their previous highs should I be buying now. >> And what was it that led you to Constellation Software, which also, as I
1:16:22 discussed with Chris Begg on the podcast recently, was also the thing that he bought in the SaaS apocalypse, if I'm pronouncing that correctly? I think you bought it in early March. How does that embody what it is that you try to do? >> Yeah. Where to start? I think a theme that's run through our conversation today is really trying to bet on people who are making a business their life's work. And I really feel that's very much the case at
1:16:56 Constellation Software. Now obviously the founder Mark Leonard was forced to step down for health reasons, but from what I understand is still very much a presence at the company. But above all, I think within the company it's filled with leaders, and in many respects filled with founders.
1:17:15 So the new CEO, Mark Miller, he actually started the company which was the first company that Mark Leonard bought when he started Constellation Software. So you could almost make the case that the current CEO is more of a founder than the actual founder. That would be an exaggeration, because obviously what makes Constellation the company it is is the acquisition engine that Mark Leonard built and all the other stuff.
1:17:42 But I think the point is a valid one, that it's really a company which is full of owners and full of people that deeply believe in what the company is doing, and that's exactly what I look for. And given all that makes software great, one of the drawbacks of it is a lot of the companies tend to have very egregious stock option programs, way too much stock-based compensation, way too little owner earnings.
1:18:06 That was also something that made me lean towards Constellation Software as opposed to maybe some of the alternatives. >> I was very struck in reading your latest shareholder letter where you were also talking about, it's very much related to this, you were saying it's never been my goal to hunt for outsized winners. If the odds of picking one have lengthened from 100 to one to 200 to one, so what? That was never the game I was playing.
1:18:33 Instead, I aim to find a small number of durable businesses that can grow their intrinsic value by 15% or more per year through earnings growth, capital returns, or a combination of both, and buy them when they're cheap due to a temporary setback. I thought that was a really interesting distillation of what it is you're trying to do, and why actually, in a weird way, a momentum-driven market like we have at the moment may actually make life better for you. Can you unpack that a little? Because it seems counterintuitive.
1:19:01 It seems like a terrible time [laughter] to be doing what you do, and yet if you have the time horizon maybe it's a great time. >> Yeah. I wrote in that letter, when I started investing, I thought you had to out-think and out-wait everyone else.
1:19:21 Out-think, because there are a lot of smart people out there all trying to find those great companies, and out-wait, because to the extent a mispricing comes along it would be pretty infrequent. And if you look at the market today, I think both of those things are inverted. Most obviously, share prices go down 25% in a day in a heartbeat when earnings are a little bit less than the market expects or some other obviously temporary thing goes wrong, but things are so momentum-driven that everyone figures, oh, everyone's going to
1:19:51 sell because this thing has happened, so I'd better try and get ahead of the crowd. And then everyone else is thinking that. So, it spirals downward. So, I think that idea of out-waiting is no longer the case. And then also on the out-thinking: you can get up to speed much more quickly than you could in the past on companies, thanks to artificial intelligence and chatbots.
1:20:13 And in theory that should be making it more difficult to do good fundamental research, because these tools are available to everyone. But in practice I almost get the sense that because it's become a commodity, people are just ignoring it, because they feel, well, what's the point if everyone else has the same access, and the focus instead seems to be on trying to find that small number of companies which are going to be the next Nvidia or the next Google or the next Micron, to take a more current
1:20:41 example. And of course there will be a handful of companies, if we were to speak in five or 10 years' time, which will have been the outsized winners, and I'm pretty sure that I won't have owned any of those. But there are an awful lot of companies which don't have the potential to be a huge winner, but will still provide very satisfactory returns in the next 5 or 10 years.
1:21:09 And those are the companies I'm focused on, and those are the ones which I think paradoxically it's getting a little bit easier to buy. >> How difficult is it actually to maintain that valuation discipline at a time like this? I mean, you see people like Terry Smith, right, who I interviewed on the podcast at one point, who has been much derided for suddenly embracing momentum and the like.
1:21:31 And it's a quandary I often wrestle with, right? Because as you've pointed out in the past, the market changes. And so what's worked for the last 10 years is not necessarily going to work for the next 10 years. So you're having to adapt as the game changes, and at the same time decide, well, actually, is the value of a company always going to be the sum of its discounted future cash flows? Is that like a law of physics that you can live by, or has something fundamentally changed? How do you think about that? >> Yeah, I think about
1:22:03 things in a slightly different way. I'm not trying to observe the market and derive what I think will work based off an empirical observation and then adjust accordingly. I work more from a first principles basis, and that first principle is I deeply believe that a company is worth the cash it's going to produce over its lifetime.
1:22:25 Now obviously it's not easy to predict what that cash is going to be, and that's where it becomes more of an art than a science, but as a basic rule I think that's about as close to a law of physics as investing will ever come. So I think that is the lodestar, irrespective of whether people are into ESG or not into ESG, or into growth stocks or not into growth, whatever, all that stuff I leave to other people to do their thing in that respect.
1:22:53 >> So, it seems like in some ways obviously you need this intellectual framework to be a successful long-term investor, but you also need a very good temperament, and at the same time you need an ecosystem that's going to support you >> operating in this slightly countercultural way.
1:23:19 Can you talk a little bit about how you've set up your ecosystem, whether it's with the type of shareholders you have, having your family around, having your friends, being part of a community, but not so much a part of the community that you get swept along by everyone else's views? How do you set up an ecosystem that actually supports this kind of rational, long-term, patient approach? >> Yeah, I think that really goes back to the environment you work in.
1:23:46 And as we talked about, what seems like quite a long time ago, towards the beginning of this conversation, I stumbled into it rather than really by design. When I started working I was working from home, and it really brought it home to me after the Lehman crisis. I went to this conference, it must have been around January, February 2009, so really at the height of the crisis, and I noticed people were really going up the wall with fear. I was sitting around this table over dinner with a bunch of other investors, and as is normally the case when a bunch of
1:24:16 investors sit down together, normally you throw stock ideas back and forth. So I threw out a few ideas, and then people just stopped me in my tracks and said, had I not seen the memo that the world is about to end? Why on earth do I want to talk stocks when we should be talking about filling up the larder with food and preparing for an economic breakdown? So the reason I think I kept a cool head in that period wasn't because I have a particularly stronger constitution than other people.
1:24:44 It was just I wasn't exposed to all of the insanity out there. And today I'm not as insulated as I probably was then, as I have a larger network. I'm probably a little bit better known than I was then. But fundamentally it's still the same. You can see where I'm doing this call now today.
1:25:04 It's the office I have at the top of our house. Once this call finishes, I'll be going to have dinner with my family. So, no one's going to be beating me up this evening over whether I should be owning more momentum stocks or anything like that. And I think that's the secret. You have to work from first principles as opposed to an empirical observation on what's working, and you have to create an environment where you're not being permanently harried by people to do things differently or in a way that doesn't make sense to you.
1:25:32 >> In a way, I think the greatest trial by far you've had in your years as a fund manager has been in 2022, when the fund was down 47.6% and Carvana was down about 98% and was a big holding, and people were saying it was going to go bankrupt and the like, and then on top of it you had this medical emergency that July >> and I'd love to talk a bit about that, if you could take us through what happened, but also give us a sense of what you learned from the experience, because it was such a surreal experience.
1:26:06 >> Yeah, it was a traumatic year in many respects. And initially it was a traumatic year from an investing perspective. So I always knew there would be years where there'd be a big drawdown. The fund started in the wake of the Lehman crisis.
1:26:28 So I'd seen firsthand, multiple times actually in my investing career, how sometimes markets go completely haywire. So I wasn't shocked that the fund went down 50%. But what I was shocked by was that the market overall, it was a bad market, but it wasn't a terrible market. And that drawdown was in large part due to missteps that I'd made. And that was tough to realize. I knew it wasn't entirely the reason.
1:26:52 I knew some of the stocks was really just the market going a little bit haywire, but in others I knew I'd messed up. So that was something I hadn't prepared mentally for, and that was something that I certainly didn't enjoy. But then in July of that year, I had a medical emergency where unfortunately I broke down, started throwing up blood.
1:27:10 Apologies for the gory details for the listeners. And was rushed into hospital and received that information nobody ever wants to hear, that they found a tumor in your stomach. When I heard that, I assumed it was more or less game over.
1:27:33 Now, thankfully, it turned out it was a tumor that, whilst cancerous, was very treatable. So, happy to report it was less serious than what I initially thought, and I've made a full recovery since then. But nevertheless, for a period of a week or so, I really did think it was game over.
1:27:49 And intuitively you would think, oh my goodness, not only having a bad year investing and that comes on top, the one crisis must have compounded the other, but actually the one crisis really helped to put the other one in perspective. When faced with, as important as investing is and as important as building a great track record is, life and family and friendships are much more important, and so when faced with the prospect of losing those it really helped to put the disappointing business development
1:28:18 into perspective. >> Do you think it's changed you in an enduring way? >> No, I don't. And you might be surprised to hear that. But in that week where I did think it was game over, and I had a chance to reflect on things from the perspective of them coming to an end, I realized how deeply I, obviously above all loved my family and friends, but I really deeply enjoyed investing, the companies I was investing in, and I had in my mind an idea of how they were going to develop over the years.
1:29:00 In the case of Carvana, I thought the market was wrong. I thought it was a great company which had great things ahead of it, and the biggest sense was one of sadness that I wasn't going to see how that played out. So what I realized during those days was that I was in the middle of a movie, and actually really enjoyed that movie, and I was sad that I had to leave the theater just when it was getting interesting.
1:29:24 So when I did get a second lease of life, there were a few things that I changed, obviously with maybe a greater consciousness that time is not infinite. There were certain annoying things I tried to get rid of in my life. But in broad strokes I realized that I was actually really enjoying the movie I had the privilege to be the starring actor in, and was hoping that I could get on with playing my role as the star of the Rob Vinall life, as opposed to that being confined to the archives of Hollywood's older movies
1:29:55 where the actor has long since passed. >> What did you get rid of? >> Just silly things. For example, it's a very trivial thing, but as you ask, my email inbox would always be filled with hundreds of completely pointless emails at the beginning of every day, and it would take me about 10 minutes just to delete them all.
1:30:16 So 10 minutes of deleting pointless emails, if you times that by 30 years, that's an awful lot of man-days or even man-months that you lose. And so one thing I did was just create all these filters in Gmail so that most emails don't land in my inbox anymore. They get immediately poked into a folder. It was silly things like that, as opposed to really big radical changes in my life. I was quite happy with the big stuff.
1:30:36 >> Did it change your perspective at all on what relationships to go big on and which to filter out? Because you have a big circle. It's very interesting, because there is a part of you that's super independent and a loner, and another part that's really really sociable, and I wonder how it clarified your sense of who you wanted in your life,
1:31:05 how sociable to be, how available to other people you should be. >> Yeah, funnily enough, I had a different reaction in that respect to what I read or hear from other people. So, I think a lot of people after an experience like that say, "Okay, there's this core of family and core of friends.
1:31:25 That's where I want to put all of my focus, and everything else is a distraction. I want to get rid of it." For me, that was not the reaction. Clearly, I value my family and my closest friends more than anything else. But what I found was I really enjoy actually some of these looser connections, people that I perhaps only see once a year but always enjoy it, or sometimes just someone providing a service, a gardener or whatever.
1:31:52 I enjoy those friendships and those interactions as well. We always ask each other how everyone's doing, and it's probably not the deepest conversation in the world, but it's all part of the tapestry that makes life rich for me. And for me the conclusion was also not to go into a shell and just close off those maybe more peripheral relationships, but also to lean into those as well, because they also make life rich.
1:32:17 >> It's interesting to me that such a central part of your life in a way is this annual meeting, this gathering that you have every January in Engelberg in Switzerland, where obviously all of your shareholders, the limited partners, will come, but then also a couple hundred other people will come, and the tickets sell out within seconds, not that there's a sale price, but they just get >> Well, yeah, I was going to say sellout is a slight exaggeration when it costs zero, but I appreciate the [laughter] sentiment. >> And I'm curious, because you
1:32:48 mention on your website, you describe RV Capital as a purpose-driven company. And you say it aims to make its investors, companies, and fellow investment managers more successful by being a thoughtful and engaged partner. And you say RV hosts all three constituencies at its annual gathering.
1:33:09 Why is this gathering that you've done now for more than a decade such a profoundly important thing to you? >> Yeah. So I do work on my own, or I did at least until Andreas joined, but we still work in separate offices, but sometimes people perhaps assume I'm a hermit or a misanthrope. The opposite is really the case.
1:33:32 I love friendships. I love interacting with people. I love the close friends, but I also love some of the looser friends, as we just discussed. The reason I set things up the way I do is because I realized that I couldn't be successful as an investor if I was surrounded by a bunch of other people.
1:33:49 I'm a strong character, but not an alpha character. I describe myself as beta plus rather than alpha. So, if I'm surrounded by a bunch of other people who've got very strong ideas of what should be in the portfolio, I would probably let them overrule me. So, to the extent I am a good investor, that would probably not be a particularly good outcome.
1:34:09 But at the same time I do think it is valuable to have a wide network, especially when you're in that more sparring phase of either generating new ideas or running existing ideas by people. So I have always had a very wide network and I am a very sociable person.
1:34:27 And parallel to this, I wrote a memo about 15 years ago just providing advice to young investment managers on how I set up RV Capital and some of the lessons I learned and some of the traps I think they should attempt to avoid. And because of that combination of writing that memo, which meant a lot of young folks started reaching out to me about advice on starting a fund, plus the wider network as a whole,
1:34:56 what I found 15-odd years ago was I was getting almost overwhelmed by the amount of people reaching out to me wanting to meet and hear my story and talk and get advice and all this kind of stuff. And so a good friend of mine, Michael, gave me some advice at that time: why don't you just do a meeting and get everyone together in one place? And that was incredible advice, because I love the meeting.
1:35:20 It's become a great event in our family calendar. All the family participate, as we don't have a whole lot of employees, as you've probably gathered at this point. And I love meeting with people. I get to tell my story once rather than individually to everyone. But more importantly, I think the connections people make there are probably more valuable than whatever they hear from me.
1:35:39 So, it really is, I think, a win-win type event, where people that go there are just incredibly passionate about it and there's an amazing energy about the event, and I wouldn't miss it for the world. >> It's also lovely that you make it available on YouTube, so that you have quite a lot of groupies who you don't even know personally.
1:35:59 I think who are just quietly learning from you. So, there's a generosity of spirit I think that infuses it. But I think also what really strikes me, I really enjoyed watching the videos because I think if people watch them, there's a kindness that you exude and you're very inclusive.
1:36:18 You're very humble in the way that you take the questions and very open but very inclusive. When people ask a stupid question, you say, you know, I'm probably not understanding this correctly. There's a real generosity of spirit that infuses the whole thing. It's lovely to watch. >> Yeah. Well, I appreciate you saying that.
1:36:37 I think part of the reason that is the case is I've always viewed investing as a journey of trying to learn, and that might sound like a bit of a cliché, but if you think about the first five or six years, I wasn't managing an external fund, I wasn't managing external money, I was managing the little amount of savings I had and doing my absolute best to find good investments and avoid bad ones, and in that kind of situation why on earth would you not want to learn? There was absolutely zero ego at that point. If I thought I'd made a mistake,
1:37:06 I wanted to hear it immediately, not a month later after I've lost money on it. And so that spirit very much has carried forward to today. And I don't think it's because I'm a particularly or unusually humble person or anything like that.
1:37:25 It's simply because the spirit the fund is run in is just trying to learn and avoid doing dumb stuff. And so I'm just really acting in my own best interest. >> When you looked back over the last few days, as you started to jot down notes for your upcoming letter that you'll write about what you've learned over the last 20 years since you're now coming up to that anniversary, or just passed that anniversary, since you founded the company in 2006,
1:37:54 is there any particular lesson that has hit you with some force that we haven't discussed that you'd like to give us a sneak preview of here? [laughter] >> Oh, you put a lot of pressure on me now. >> Be profound right now, Rob. >> No, to the extent it exists, maybe I'll, if you don't mind, hold it back for the 20-year letter. [laughter] >> Really? All right. So, you're playing hard to get.
1:38:20 [laughter] >> It's interesting to me that in terms of your own trajectory, right, this has been a journey of discovery, as you've described it, and you're now, I think, 53, right? And so you've come a long way since those early days that we started off by discussing when you were in this small town >> on the coast of England. >> When you look forward to the next hopefully 20 years of the fund, what's your sense of what the vision is now for the future? Because you've never really been maximizing for assets under management. That wasn't your
1:38:50 measure of success. You wanted independence. You wanted to be wealthy. You got wealthy. You got independent. You're following all of these entrepreneurs and managers who make their business their life's work, and this is your life's work in many ways. How does that apply to you? How do you see your life's work and the future of it, and what it is you're trying to build and create? >> Yeah, I view it in two ways.
1:39:14 The performance side and what I'd maybe term more the purpose side. And from a performance perspective, I feel like I'm in an incredibly privileged seat. I'm reminded of, I think, the early Olympics a century ago, and the person that won the 100 meter dash, or whatever it was called then, probably won not because they were particularly fast, but because 99.
1:39:41 999% of the population weren't financially in a situation where they could be an amateur and train for athletics and that kind of stuff. So, they won more because of the position they were in as opposed to their ability, without wanting to take anything away from their achievements. You can only beat what's in front of you.
1:40:00 But I do see a strong analogy to the situation I'm in today, where how many people get to run a fund of my size and have an opportunity to put down a long-term track record? It's maybe hundreds, but it's probably not thousands. To the extent I'm given this opportunity to put together something really exceptional, I'm conscious that it's an incredible privilege, and I don't want to blow it.
1:40:20 So that would be the part on the performance side of things. But then there's the purpose side of things, and what I've realized is there's this incredible opportunity to help people. And that's what makes it, I would say, more meaningful, because if it was just about being the one with the best performance, that would be a very egotistical thing of, oh, look how great I am and how much better I am than everybody else. And that's
1:40:48 definitely not the way I want to live my life. And where I see the purpose is the three constituencies I mention on the website. I have a lot of young people that reach out to me that want to become investment managers. I love helping them and giving some pointers on the way to go. I have a lot of investors who, unlike you, William, lots of great investors,
1:41:09 if you weren't invested with me or Josh or anybody else, you would have 10 other good options. For most people, that isn't the case. If they weren't with me, they would be in the clutches of some private banker trying to sell them structured products. And so what I love about the relationships, especially with my less sophisticated investors, is not only have they had a great performance, but they've also had peace of mind that their money is working for them, and they're not going to wake up one day and find that all of their money
1:41:38 has landed in the bonus of some private banker. And then the third constituency is the companies. I don't want to overstate my influence on the companies. I'm certainly not an activist, but what I would view myself as is a fan, and I'm a fan of the way they do things, which obviously I consider to be the right way of doing things, otherwise I wouldn't be invested, and so I actively encourage them to stay the way they are, to continue doing things the way they do, and I like to think that on
1:42:09 the margins that also moves them in the right direction. >> And Rob, one final question. I know you've thought a lot about this question of how not to let the money bend your kids out of shape. You have, I think, two daughters and a slightly younger son, >> and I know this is something you discussed with Charlie Munger at one point, and my sense is that you didn't really agree with Charlie's view of this.
1:42:34 Can you just talk a little bit about what he said when you had dinner with him about the issue of money and children, and how you think of it yourself? >> Yeah. Well, actually it wasn't at the dinner. I think it was at the shareholder meeting. So, I'd encourage people to look up the clip, as I think it's online now. But there's this Indian gentleman who stands up in front of 20,000 people at Berkshire Hathaway and explains how when he came to the US he had nothing, and studied during the day and then cleaned dishes in the evening,
1:43:01 and then he managed to, I'm extemporizing a little bit, but that's the spirit of the story, and then he managed to get enough money together to start a company, and this company became successful, and now he's this wealthy entrepreneur. And then the question: how do I instill the same hunger I had in my kids? And the audience collectively holds its breath: this is an impossible question. What possible wisdom can Charlie
1:43:29 have to share? And in his classically deadpan way, Charlie says, "You're just going to have to learn to fail gracefully." >> That's great. And what are you planning to do? How do you not screw up your kids? >> Well, my postscript to that story is, well, let's see how my kids turn out.
1:43:51 It's still a little bit early for that. But what I have observed at other families is that you can be in a very wealthy family and still have incredibly driven and balanced kids. And the two examples I would draw to that: Ernie Garcia at Carvana, his family was already very very wealthy before he set up Carvana. And as we discussed, you couldn't imagine a more driven person than him.
1:44:14 And then also I've had the privilege to meet Will Lundin, the Lundin family. It's an underrated family, one of the wealthiest in the world. They have lots of publicly listed holdings, so it's a secret hiding in plain sight in various commodity and energy companies around the world.
1:44:34 And yet Will too, he's a younger guy, probably early 30s, but you couldn't imagine a more humble, but at the same time a more driven person. I dearly love Charlie, but I would respectfully disagree with his assessment that you have to fail gracefully. >> Ah, on that note, Rob, it's been such a great pleasure.
1:44:54 And I have to apologize also because I mispronounced your surname at the very start. And so, as I said to you before we started, I always leave in my mistakes and [haplessness] [laughter] displays of haplessness. But I should have said Rob Vinall, not Finale, right? >> Yes. But you're entirely forgiven. Ever since I've lived in Germany, I tended to pronounce it myself Vinal, as it's much easier phonetically for people to understand it here. But yeah, the correct pronunciation is Vinall. So, thank you for that. >> All right.
1:45:17 Well, it's been a great pleasure, and one of these days I hope to convince you guys to let me into your annual meeting. It sounds like great fun. But come see me in New York. It would be lovely to chat soon. >> You're very, very welcome. >> All right. Take care. Great pleasure. >> Okay. >> Cheers. >> Thank you really. Bye-bye. >> Thanks for listening to TIP.
1:45:35 Visit theinvestorspodcast.com [music] for show notes and educational resources. This podcast is for informational and entertainment purposes only and does not provide financial, [music] investment, tax or legal advice. The content is impersonal and does not consider your objectives, financial situation or needs.
1:45:52 [music] Investing involves risk, including possible loss of principal, and past performance is not a guarantee of future results. Listeners [music] should do their own research and consult a qualified professional before making any financial decisions. Nothing on this show is a recommendation or solicitation to [music] buy or sell any security or other financial product.
1:46:08 Hosts, guests, and the Investor's Podcast Network may hold positions in securities [music] discussed and may change those positions at any time without notice. References to any third party products, services, or advertisers do not constitute endorsements, and the Investor's Podcast Network is not responsible [music] for any claims made by them. Copyright by the Investor's Podcast Network.
1:46:23 All rights reserved. [music] [Trailer for another episode follows; not part of this interview.]