Simon Kold，《寻找伟大公司》作者：什么造就伟大公司

With me today is Simon Kold. Simon is the founder of Kold Investments and the author of On the Hunt for Great Companies.

It’s going well. Thanks for having me on. I’m a longtime fan of this show, so I’m happy to finally be here.

I appreciate the kind words, and I appreciate you coming on. Having you on to talk about On the Hunt, we’ll get there in a second, but before we do, just a quick disclaimer: nothing on this podcast is investing advice. That’s always true, but maybe particularly true today because we’re talking about Simon’s book, which lists a who’s who of great companies in the world. I don’t think I have positions in any of them, and I’m not sure whether Simon does; we can try to disclose that when we get there. Just remember that we’re talking about the book and aren’t here to present financial advice. Do your own work and diligence.

Let’s quickly dive in. You’re on the hunt for great investments. The book has 15 chapters going through different examples of what makes a great company, followed by examples of each concept. One that comes to mind is the chapter on value capture, which I really want to talk about. You discuss how different companies capture value, using airlines as an example of a poor one and luxury as an example of a good one.

But before we get to all the examples, I’d love to start with why you wrote the book. What was the purpose of it?

I found a note on my computer a while ago that was 6 years old, where I had already outlined the ideas for this overall framework for empirically evaluating business quality. You have Hamilton Helmer’s 7 Powers framework, which is sort of a framework for moats. I wanted to have a broader framework for overall business quality.

The idea to start the book really came about when I started writing the first chapter in January 2023. I’ve always dreamed of writing a book. In my early 20s, I used to do stand-up comedy in Denmark. I was on television, went on a national tour, and did all kinds of things, but I had a failed dream to write a book back then.

Some of the stand-up comedy shines through in the book. It’s more on the dad-joke scale, but there are a lot of them.

Unfortunately, in the audiobook, the delivery of the comedy isn’t as good. If people want to check out the book, I’d recommend the physical book rather than the audiobook.

Let’s go through a few things. The first thing I want to jump into is Expeditors International. You have a section on authenticity of communication as an indicator of management passion. Is that the section you’re remembering?

Yes, it’s on authenticity of communication as an indicator of management passion.

There’s the famous Expeditors letter where the CEO goes through a lot of things. One of them is that he hosted all the executives at his house and paid for everything himself, which would be very rare for a company.

But the most famous piece of that letter is that everyone at the company is incentivized and everything has a profit structure. That includes the parking lot. If you work in the parking lot, you have an incentive structure. Nobody gets to park for free; everybody pays. You get paid when the parking lot does better, and you get a bonus.

He talks about how the people in the parking lot are constantly hustling. They collect bonuses, the parking lot never has a “We are full” sign outside, and they’ll take anyone. They’re bringing cars in and trying to get not just the employees to park there, but employees from across the street as well.

That’s a very famous example in value-investor circles. Expeditors did great over that time frame, but when I look at it, I think, “If I were an employee there”—or let’s use Google as a counterexample. Google famously gives its employees everything: dry cleaning, lunches, dinners, and so on. If I were a Google engineer and the person at the parking lot were hassling me for an extra $2, distracting me from my engineering work, adding time to my day, and leaving me annoyed, I’d wonder whether that was the best way to run a company.

It seems like it would create a lot of tension and distraction. If you’re trying to maximize value, and you’re working in the parking lot, that might be great. But the value of the parking lot is going to pale in comparison to the value of Google’s search engine. Is it really the best way to have everyone incentivized around these small items?

I don’t think that was the point I was making. I used this snippet from an 8-K filing as an example of very authentic management communication, where you really feel the person behind it.

I discuss different determinants of management passion, and I thought this was a really great example to show people that this is someone who totally deviates from the norm. There was no earnings call; they simply posted this written Q&A with a question about the legend of whether the CEO paid for his own parking. He then went on this wild detour about all these topics, including his opinion about corporate America.

I thought it was an example that really deserved to be in the book.

I hear you, but I want to push on that point because it’s one of the things I get curious about with books like this. You’re looking for great companies, as are the authors of Good to Great and The Outsiders. It’s really interesting to study those companies, but I get curious about the dichotomies and the exceptions.

I look at the Expeditors example, and it’s such a famous one because it’s such a great letter. But then I look at many of the individual pieces and think, “There are a lot of companies where not only would that not work, it would actually destroy value.”

I’m not disagreeing with you. My point in that section wasn’t that you necessarily should have a hustling culture. The point was that, when you’re trying to determine management passion, there are a range of determinants to look for. Authenticity of communication is one of them.

I also mention the example of Masayoshi Son, and I have an example with Ringkjøbing Landbobank, a Danish regional bank. These are 3 different examples of communication that totally deviates from the norm as an example of passion.

These people have a willingness to be made fun of by others by deviating from the norm. That’s the example with Mr. Rose, the example with Masayoshi Son, and, to a lesser extent, the example with Ringkjøbing Landbobank. I’m looking for deviations from the norm when I’m trying to determine whether there’s something interesting there.

Let’s ask that question in a slightly different way. Warren Buffett writes great shareholder letters, and there are many companies that write letters in Warren Buffett’s image. Some quote Warren Buffett directly, some allude to him, and others simply write in his style.

One side of me wants to think, “This person gets it. They’re part of the tribe.” But the other side thinks, “I’m about to get pantsed by someone who says they worship at the feet of Warren Buffett’s shareholder letters, shareholder value, and frugality, and then suddenly they’ve decided to buy a Bitcoin miner for 500 times EBITDA. They’re paying themselves a big bonus, and the stock is down 90%.”

How do you differentiate between someone who has genuine passion and someone who is simply imitating the style? I like that you use Masayoshi Son as an example, because he has experienced both the highs and the lows.

I talk a little bit about that in the chapter on capital allocation, and we also discussed Thorndike’s book, The Outsiders. You now have a generation of CEOs who have clearly read The Outsiders and are imitating some of those behaviors. There’s a risk there.

You can see it in the example of Mike Pearson at Valeant. If you use the framework from The Outsiders, he scores very well. Some of the world’s best investors invested in Valeant and got burned on that stock, probably because they used this method to evaluate people.

There’s a risk of imitators. I recently met William Thorndike and told him there was a side effect to the book. On the one hand, you educate CEOs about how to become better capital allocators. On the other hand, you educate them about how to pretend to be good capital allocators.

I’ve argued for a while that investors got so focused on spin-offs—and I think the pendulum has now swung the other way—that companies realized they could spin off almost any division and there would be a group of investors who would buy it and give it a multiple it didn’t deserve.

Part of the reason to buy spin-offs is that they’re supposed to be the cats and dogs of the company. But companies started spinning off the terminal cats and dogs, and people bought them because spin-offs worked. Those businesses were given big multiples, and management teams were using them to get rid of bad assets.

As investors pick up the tricks, CEOs pick up the tools to trick investors with those tricks.

You mentioned Valeant, which was interesting. The moment I saw it in your book, I knew I wanted to ask you about it. Valeant is a famously negative example. It effectively went bankrupt and was a disaster in many ways. One of the negative things you say about it is that Mike Pearson was intensely focused on creating shareholder value.

I also thought about this in the context of value capture, because Valeant is a great example of capturing too much value. But everyone looks for CEOs who are focused on maximizing shareholder value. What separates Mike Pearson’s intense focus on maximizing shareholder value from someone like John Malone, or any other CEO who cares about shareholders?

That’s a difficult question. I have a small section where I discuss the different stakeholder groups. The counterargument would be that some of the examples in The Outsiders probably lean more toward shareholders. Mike Pearson is simply an extreme case where it tilted toward the wrong side.

I personally try to look for people who are genuinely obsessed with customers and really care about employees. They’re passionate about what the company does in an internally motivated way, which isn’t exactly the same as maximizing the per-share cash flow of the company.

I don’t think you maximize long-term per-share value by aiming directly at it. You aim at creating great value for your customers, being a good citizen in the world, taking care of your employees, and thinking rationally about how you can maximize shareholder value. That’s how you actually get there.

There are clues you can look for in the way management behaves.

What are some of those clues?

Are they obsessed with the company’s products? When they talk about the company’s products, do you think they’re personally using them? Are they genuinely interested in those products?

Employee retention is another clue. I can’t obtain employee-retention data without doing additional diligence or requesting it, but one thing that’s easy to do is look at the management team. I used Apple as an example in the book. Look at how the management team was composed 5 years ago by reviewing the annual report from that time, and compare it with today.

If there’s a lot of consistency in the people there, there must be some reason they like to stay. That can be a rough proxy for employee retention before you really spend time on a company.

Can I pause you there? This is another one I’m always obsessed with: the exceptions to the rule. I noticed that a few pages after you wrote this, you used Marc Benioff as an example. For 15 years, he tried to find his successor at Salesforce and had multiple people come into and leave the co-CEO role.

Salesforce has been a great organization, and Marc Benioff is clearly passionate. But it was interesting because I think it was only a few pages after you said to look at the Apple example, along with a few others, where the management team had been there for a very long time. Then, 2 pages later, we’re talking about Marc Benioff, who has had constant churn at the top.

Disney probably doesn’t qualify anymore, but if we had been recording this 4 years ago, we would have looked at Bob Iger and his struggles with succession. Again, I find the exceptions interesting.

There’s a tendency, including for me, to have a bias toward founders. We equate founders with something good, and I think that’s a huge mistake when you generalize from anecdotes about winners. There’s a significant survivorship bias, so that generalization is probably not statistically valid.

I discuss some specific things to look for when evaluating founders. One example is comparing the compensation package of Brian Chesky at Airbnb with Marc Benioff. They’re both founders, but Chesky has a very unusual arrangement in which his RSUs vest over a very long period and then go to charity. Benioff, despite owning a massive piece of the company, still receives a very aggressive compensation package.

The other thing is turnover. I showed how the management team was composed at 3 different points in time. There was more or less 100% turnover twice, except for some of the other co-founders. Benioff also tried to transition to a co-CEO twice, and both attempts failed.

Despite that, if you look at some of the other aspects of passion, I think he scores very well. It’s not binary—passionate or not passionate. It’s difficult.

Investing is more art than science, and one of the things that breaks my brain is reading a book like this, where there are 15 chapters and each one discusses something you should look for. You list a rule, and I immediately think of an exception to that rule.

You also give the example of project IRRs versus buybacks. If you remember the specific story, you can give it, but I can give it if you don’t. Do you remember the story you gave?

What do you mean—the specific story of my meeting with the company?

Yes, yes. I don’t want to say which company it is because it’s anonymized.

I had a meeting with the chairman of a listed company that was clearly valued very low, and we were pushing for buybacks. They had just put out a 3-year plan, and it was very easy to do the math. If they hit those 3 targets and you assumed a low multiple—I think I used 12 times in the example—I made a slide showing the per-share value if they did buybacks then versus if they didn’t, and showed the delta.

Before presenting this to him, I asked what the hurdle rate was for new investments. He said around 8%; the cost of capital was 8%, with an additional premium depending on risk. I then said, Wait a minute. If you bought back your shares, I think you could make an incremental 25% IRR on the capital you bought back. I could see that the idea had never occurred to him.

I’ve had similar meetings with companies. To make the numbers simple, the stock trades at 10 times earnings while they’re investing in a project at 20 times earnings. I would tell companies that the opportunity cost was too great and that they needed to direct their cash into buybacks. Of course, companies then change their assumptions on the investment so that it looks like they’re doing better.

I had one CEO tell me that if they started buying back their shares, they agreed they’d be buying back stock at 10 times earnings while investing at 20 times. But their stock had traded at 30 times the previous year and was trading at 10 times that year. If they stopped capital allocation on the growth side and bought back stock, they would be cutting out growth not just then but for the next 3 years. They might have to fire people, empty the warehouse, or idle it. These investments take time to build—if it were a new house or apartment building, it would take years. If they stopped then, they couldn’t turn it back on in 6 months when the stock was at 30. They had to weigh whether a buyback right then, where they might get only 1% of the shares before the stock went up, was worth stopping everything else.

I don’t know whether I agree with him, but it was a thoughtful way of taking me out of my spreadsheet and showing the real-world implications. If they’re building at 20 times earnings, we might still think it represents an 11%, 12%, or 15% weighted IRR, which is above their cost of capital, so they’re creating value. I threw a lot at you with that story, but I completely agree with what you said. It was the first really thoughtful answer I’d had from a company, so I wanted to present it to you.

I agree with you. I’ve had a similar discussion with company operators in a less extreme case than the one I used in the book. It was clear that the company had a 15% hurdle rate on projects, and they might adjust the hurdle rate slightly up or down depending on where they saw the share price. But they never stop investing; it’s more of a margin optimization, like you and I trimming our positions—or not, if we let them run. This was an extreme opportunity to create a lot of per-share value, and in hindsight it would also have created a lot of value if they had done it then.

Let’s move to value capture, which I thought was the most interesting chapter. You discuss how a company could be underpricing, capturing too much value, or somewhere in between. Whenever you talk about companies that are capturing too much value in the short term, it gets my brain spinning.

I’ve lost money on companies that trade for 6 times earnings because I think they’re cheap, only to discover that they were overearning. You mention cable companies in the 1990s, which were overcharging their customers. Often, the customers don’t churn because the company is a monopoly. But when prices are too high, the company creates an opening for someone else to enter. In that case, Netflix comes in underneath them.

I’d love to hear more about how you think about that.

I presented it primarily as value-extraction risk, rather than focusing on the upside from pricing power. A recurring theme throughout the book is criticism of people who are too obsessed with heuristics—metrics like return on capital, price-to-earnings ratios, and so on.

Those metrics are a good starting point, but you can do better. There’s much more nuance to the situation than those heuristics suggest. The intended reader for the book is probably a young professional analyst early in their career, someone looking for a complete overview of how to evaluate business quality.

Suppose you’re looking at a company that has just raised prices aggressively. What do you see in the data? You see a company with a historical growth rate that’s too high and not representative of the underlying economics, margins that are too high, return on capital that’s too high, and a multiple that’s too low.

Based on those heuristics, you conclude that the company is growing, highly profitable, and cheap. But you’re being misled by those metrics. I use the analogy of tapeworms and honeybees. A tapeworm extracts value from its host without adding anything, and at some point the host will die or take measures to get rid of it.

A honeybee, by contrast, is a net positive to the ecosystem it’s part of. It extracts only a small amount and is under-monetizing. Its metrics should perhaps be “honeybee-adjusted,” because they don’t represent its true underlying earnings power.

When I think about overearning and over-extraction, I think of Valeant and the specialty-pharmaceutical companies in the mid-2010s. They bought drugs that were selling for $100 per dose and said, “These are life-saving drugs. Companies haven’t exercised enough pricing power on them.”

They would take a drug that was selling for $100 and raise the price to $100,000. Their argument was that if the drug saved someone’s life, the patient would pay $100,000 rather than go without it. I’m being a little loose, but that’s close to what happened.

When I look at Valeant, one thing that has always broken my brain is the contrast with companies such as Constellation Software and TransDigm. They make their living by buying businesses and raising prices. Constellation Software talks about buying vertical-market software businesses, and one of the beautiful things about those businesses is that they can raise prices by 2% every year.

They argue that the businesses are underpricing because they improve their software and become more deeply ingrained in their customers’ operations. TransDigm is similar. The government is the buyer, they’re a sole source, and TransDigm can sometimes raise prices by 5 times.

Why does what those companies do work, while what Valeant did didn’t? They’ve been great companies, although maybe they’ll be less great in the future.

I don’t know those 2 companies well enough to comment on them specifically. I have a lot of experience looking at online classifieds, where there have also been many companies that raised prices significantly.

I’ve had discussions with investors who argue that a company has pricing power because it raises prices every year. I criticize that a little bit in the book. You could make the same point about luxury brands. Just because you’ve raised prices a lot and exercised your pricing power, that proves you had pricing power. But it doesn’t necessarily mean you still have all of it, because you’ve already used some.

There’s another company that may not have exercised its pricing power. Perhaps there were industry crises or consolidation, and there’s no proof that it has pricing power because it hasn’t raised prices. But it could still have pricing power. It isn’t as simple as saying, “These companies are raising prices, therefore they have pricing power.” Clearly, they’ve had pricing power, but they’ve also used some of it.

I’m more comfortable with companies that have been hesitant to monetize because they’re aware of network-effect dynamics and don’t want to damage those dynamics. In recent years, it has become normal for online classifieds to raise prices significantly, and I’ve become less interested in that area than I was 5 years ago.

Another example you mention is airlines. Airlines create enormous amounts of value for everyone except themselves. Warren Buffett famously said not to invest in airlines, and then in 2018 he bought a significant position.

You also point out that this was similar to railroads for 80 years, until the industry consolidated. What makes that switch happen? I can think of many industries that create tremendous value for everyone but themselves. If you can identify one before it makes that switch, you can potentially be like Buffett with the railroads in the mid-2000s.

I’m not making that direct connection between airlines and railroads. I’m personally interested in Ryanair, for example, and in the dynamic where European airlines continue to consolidate. I think there’s a chance that it could become a similar situation, but who knows how it will play out.

There are differences. An airplane is a physical object that can be moved around. It’s dangerous to use arguments from analogy in investment analysis. I have a chapter in the appendix about logical slips—ways to slip on a banana peel by relying on defaults or analogies.

People say, “This is the Airbnb of a particular industry,” or “Alibaba is the eBay of this industry.” Those analogies can be dangerous. You need to be mindful of the actual differences between the companies and industries. I think there are some significant differences between airlines and railroads.

You have a line in the book that really resonated with me: “I’d rather hug a cactus than invest with a long-tenured executive at a chronically underperforming company.”

I’m a sucker for the argument that a company is cheap. The management team has been there for 20 years and has destroyed value, but I think, “It’s so cheap this time will be different.” I feel like Charlie Brown, with Lucy holding the football. I just wanted to mention that the line really resonated with me.

That line came after I discussed long-tenured executives and looked at their career paths. That’s back in the chapter on passion. One thing I always do is look at the career paths of the people in management.

I like to see people who have been in their roles for a long time and preferably at the company for a long time. If they’ve switched companies, ideally they haven’t switched industries. If they’ve made a recent switch, preferably it was a promotion into the role, where you can see that they had a long history before taking it.

I generally think being with the company for a long time is good. I just wanted to point out that it isn’t always good. It’s good if things have been going well.

I think that chapter comes right after the chapter on value capture. It’s the chapter on industries with staying power. Anyone who has read about the Lindy effect knows the idea: Industries that have been around for a long time are likely to remain around for a long time.

A big part of that chapter is the example of brewers, which I think is interesting right now. Let’s call it alcohol in general. Alcohol has been around for at least 4,000 years, probably longer. I wonder about alcohol companies today.

Many of them sold off in the second half of last year. There’s a lot of research emerging about alcohol. Ten or 20 years ago, people said that a glass of red wine a day was good for you. Now there’s evidence suggesting it may not be good for you at all. You also have GLP-1 drugs, younger generations drinking less, and alternatives such as marijuana becoming legalized. If we’d been having this conversation 50 years ago and there had been Zoom, your background would have been filled with smoke—you would almost certainly have been smoking cigarettes the entire time. If we were having this conversation 20 years from now, I wonder whether I might say that today at most 1 in 30 of my friends smoke, while 8 out of 10 of my friends drink at least casually; maybe 30 years from now I’ll say only 2 out of 10 do.

How do you think about change in an industry with staying power? One of the most dangerous things is investing in something that’s supposed to be like an AAA bond—very stable—and then having everything go to hell underneath it. That’s how you get big crashes. I wanted to ask about that particular Lindy example in the current state of the market.

There are multiple examples of staying power. What I try to do in that chapter is break it down into several different determinants, piece by piece. What are the components of staying power?

Something that is as culturally rooted as beer scores well. If you look at the pace of technological change in the industry, the biggest change in brewing came with the invention of electricity. Fundamentally, fermenting grains is still the same process.

I compare it with the semiconductor industry and other industries. If you look at the adoption curve—the S-curve—alcohol has a very elongated adoption curve. It’s culturally rooted. There haven’t been rapid changes in how it’s distributed, either.

I think brewing scores very well on many of the determinants outlined in that chapter.

You could say there should be substitute products that take demand away from beer.

That’s possible. You make the point that if something causes objective harm, then, all else equal, it’s less predictable in the very long term. You could make the case that something else will eventually substitute for it because it doesn’t have the same harm.

That’s the point you’re making here. But I’m not necessarily arriving at a conclusion about beer. I’m saying that if you use the framework for staying power in my book, brewers score very high.

I completely agree. I’m just thinking about how brewers and soft-drink companies have long been considered the kinds of investments you can buy and sleep well at night with. I can imagine several different worlds in which that changes.

I’m not saying that beer will necessarily be around for 100 years. I use it as an example to show the contrast in technological change compared with semiconductors.

I also show the S-curve of in-ground pools. I think I compared the S-curve of elevators with the piano sales from the 1890s.

You compare it to the piano sales from the 1890s. I love that.

The point is simply to illustrate the different shapes of these adoption curves.

The last question I want to ask is about Costco. You mention Costco a few times in the book, and it hits on pricing power and economies of scale. There’s one particular aspect of Costco that I find fascinating: the Kirkland brand.

You mention Kirkland in the book, but you don’t discuss it in detail. Why do you think the Kirkland store brand works so much better than almost any other private-label brand?

I don’t know Costco well enough to answer that. As a European, I mention a lot of U.S. stocks, but Costco is such a good example of the point I make about value extraction risk.

If you look only at Costco’s metrics, you see a company pricing its products at a level where it could potentially charge more without necessarily eroding its competitive position in the short term. If you’re looking only at heuristics, you aren’t seeing the full picture.

I love that point. For years, whenever Charlie Munger said Costco was overvalued, I would think that Costco might be a great market hedge. The stock traded at 50 times earnings or more, and now, as we speak, it’s closer to 60 times earnings. At one point it traded at 20 times earnings.

I would think, “Interest rates go up, the multiple comes down, the economy gets rocky, and the multiple compresses.” It seemed like a great trade. But one thing I’ve come to appreciate is that you can’t judge Costco on the short-term metrics.

A friend once told me that there was a BJ’s 10 minutes from his house and a Costco 45 minutes or an hour away. He was still tempted to pay for a Costco membership, even though BJ’s was much closer, because he wanted to go to Costco once a week.

When he said that, it clicked for me. Costco is simply much better than everyone else. I’m not entirely sure why, but if Costco raised its annual membership fee from $100 to $150, its earnings would increase by roughly 33% overnight because its earnings are largely membership fees. I don’t think it would experience much churn.

It’s one of those situations where you can’t judge the company on its short-term metrics. If Costco raised the membership price, the value of the company would change dramatically.

I’m very interested in this dynamic in the context of companies that are still building their competitive advantages. Take a 3-sided network-effect company. If you interview employees and ask what would happen if the company raised prices, it’s very clear that raising prices would damage the adoption curve on all 3 sides.

The rational thing to do is to wait 10 years until the network effect is so powerful that you can monetize it. You may already be a kind of monopolist, but it’s a strange type of monopolist that can damage its own network-effect position.

I’m interested in those situations where, if you look only at the heuristics, you don’t see the full picture. You think, “Is this company really that great?” But if the adoption curve continues on all 3 sides, suddenly there will be significant pricing power.

In Costco’s case, I assume the competitive advantage has already been built, although I don’t know the company well enough to say that with confidence.

Those are all great points. You also have some interesting material from the early 1900s about AT&T and the telephone network. There are some very obvious network effects when you read them, but you included quotes I’d never seen before. They were useful for thinking about both network effects generally and the early days of telephone networks.

You can go online and find the early AT&T chairman’s letters from the 1900s. There are a lot of great points about network effects, and they’re very clearly defined. It’s really interesting.

I think we’ve walked through most of the chapters in the book. I also liked the discussion at the beginning about being a hunting dog versus a dowser.

You have a line about senior dowsers who are so senior and high-ranking that they don’t need to do real work. People bring them ideas, and they can overturn someone on a whim based on past experience.

I know a lot of portfolio managers like that. I try not to talk to them as much anymore, but it’s clear they aren’t doing the work. You mention something to them, and they say, “That reminds me of JPMorgan in 2007.” You’re thinking, “This is the fourth thing I’ve brought to you that reminds you of JPMorgan in 2007, and none of them have been banks.” At some point, you’re stretching the analogy. I don’t think you’re really looking at the individual businesses.

The whole idea of the book is that all these aspects of quality have already been described in other books. What’s the value added?

The value added, in my view, is coming up with these “let’s sniff around” boxes. How can you implement all of these ideas in your day-to-day analysis as an analyst working in the weeds?

The opposite is someone who thinks about things a priori, comes up with a theory, and then validates it with anecdotal evidence. That’s the dowser. To exaggerate the point, you have to make fun of the senior dowser.

The most original part of the book is probably the checklist in the appendix, which helps you self-evaluate your own investment analysis and reasoning. Ultimately, an investment thesis usually consists of 4 or 5 things that need to happen. Those arguments typically follow standard forms of reasoning, and the checklist helps you criticize your own reasoning.

I find it very helpful, and I think it’s probably the most original part of the book. It’s also the first appendix, with all the pictures of people walking along paths and getting ready to slip on banana peels.

I appreciated those pictures as well. On the Hunt for Great Companies is Simon Kold’s book. I’ll include a link to the Kindle version in the show notes because that’s probably easier for people to purchase. Simon, this has been great—I appreciate you coming on, and maybe at some point you’ll have to come on and tell us a little more about that 3-sided network company you’ve got.

Thank you. Thank you so much.

A quick disclaimer: Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser.