If one company materially outperforms its peer group that is worthy of study. The 8 companies and CEOs profiled in the book each fit that pattern. [1:35]
All 8 were first time CEOs. As a group, if you were trying to describe them you would not use the traditional CEO’s adjectives of charismatic, strategic, and visionary. Instead, you’d use words like pragmatic, flexible, opportunistic, dispassionate, rational, analytical. [4:03]
Henry Singleton is an interesting case. He outperformed the S&P 500 by 12 fold during his 30-year career. [6:20]
Corporate America— as a group— is a completely ineffective repurchaser of its shares. They have a perfect record of buying high and selling low. [Henry Singleton was the exact opposite of this] [9:30]
There is this distinction that Warren Buffett has between something that is simple to understand versus easy to actually do. In late 2008-2009 it was a scary period. Corporate America generally focused on husbanding resources given the uncertainty. Buffett’s actions were entirely different than that pattern. He was aggressively deploying capital. That is easy to understand but requires a certain temperament to be able to actually implement it in really difficult times. [11:55]
These CEOs did not spend a lot of time on investor relations. They didn’t view that as a good use of their time. [20:45]
[The CEOs in the book] were iconoclastic. They possessed a strain of independence. They were comfortable doing things different than the peer group. They were rooted in deep analytically based convictions. They did their own analytical work. They did not rely on internal finance teams or external consultants. They were focused on optimizing value per-share. [26:52]
If I was asked to name an outsider CEO among the technology CEOs of the last 25 years Jeff Bezos would be my choice. I believe he is optimizing for per-share value 5 to 10 years out. He can afford that time frame because he owns a large percentage of the company himself. [29:45]
It is very interesting to hear how a CEO talks about their business and how they write about it in their annual report. [I agree. I have read every single shareholder letter written by Jeff Bezos and Warren Buffett.] [34:05]
[Outsider CEOs would optimize for the single metric they thought was most important] Example: We are running our business to optimize for one thing: recurring free cash flow per share. They moved to a single metric that was differentiated from what others in the industry were doing. [35:56]
Charlie Munger once referred to CBS as prosperity blinded indifference to cost. [You want to avoid this.] [39:10]
Full video here: William Thorndike: "The Outsiders" | Talks at Google
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