Todd Combs - Investing, The Last Liberal Art - [Art of Investing, EP.1]

[MUSIC] >> Hello and welcome to the Art of Investing. I'm Paul Buzer, and I'm Rick Berman. >> We're your hosts. Art of Investing is a series of discussions devoted to exploring the joys of compounding in all its forms. Any episode, our guests will be some of the world's most compelling people from across the vast range of human achievement. >> This show is brought to you by Pine Grove Studios in collaboration with Colossus. The hosts of the show, Rick Berman and Paul Buzer are the co-founders and co-CEOs of Sated Grove Holdings and co-CEOs of Sated Grove Management Company. All opinions expressed by any of Rick, Paul, or their podcast guests are solely their own. Do not reflect the opinion of either Sated Grove Holdings or Sated Grove Management Company. This podcast is intended for informational purposes only and should not be relied upon as the basis for investment decisions. Sated Grove Holdings are clients of Sated Grove Management Company, may maintain positions and securities discussed in this podcast. [MUSIC] Our guest today is Todd Holmes, Investment Officer at Berkshire Hathaway. In this episode, Todd will share lessons learned across the full arc of his career, beginning in the halls of the Florida State Regulator and all the way through to the great planes of Omaha, Nebraska, home of the Eternal Compounder. Warren Buffett and Charlie Munger are two of the greatest business minds in history and also some of the best judges of talent and character. If I were to sum up this class into a single topic, it would be exploring what these two investing giants saw and Todd to select him out of the almost 8 billion other people in the world. Todd is a compounding machine and a terrific storyteller, full of insights and advice that all of us can benefit from. He's also just such an offentic guy which made this class especially energizing. A special thanks to our friend Andrew Carianne of Emmith Value Partners for his help prepping with this session. Andrew's a gifted value investor in his own right, and it was really fun to have him stand in as our TA for this session. [Music] Todd, welcome back to the Art of Investing. Probably the question that preoccupies me the most is, how did someone in their late 30s gather enough experience and know how for two of the greatest investors, two of the greatest company builders in history and Charlie and Warren to come to you and say, Todd, please come join us. We're going to leave everyone on the cliffhanger. We're not going there just yet because we need to actually unpack your story Todd. There's a lot that we like to do in the Art of Investing to think about and when we think about the joys of compounding to go as far back as we can go for you. We'll get into the Florida State years at some point here, but even before college there's this story of a young man born in the heartland of Peoria, Illinois, who then, like Rick and me, becomes a sunshine state transplant and then finds himself in Sarasota. Pre-college, what were some of those formative experiences or sliding door moments that you think helped to form who you are today? Well, thanks for having me. By the way, this is always fun. It's a great question, but it's a tough one because there's always so many things. It's always coming down to your parents to some degree. I had great, great parents and they got divorced when I was 12 and they were both always very, very driven on education. My mother, especially because my mother could have been a CEO in her own right, didn't go to college because she didn't have an opportunity back then as it wasn't the same as it is today. So I think she wanted to channel all those missed opportunities in her life in many ways into mine. So I should never forget coming home one time with an A-Mine S and I think I got grounded and all kinds of stuff. So she was very, very militant. Now that's called Tiger Mom or whatever. So she was the original Tiger Mom. I was always really good with math and science and history. I didn't know I wanted to go into investing when I was 11 or 12 or whatever. I stumbled across it because I was always above average at a lot of things but not great, great at any one thing. So that's where investing is actually called the last social science and last real art. So you have to be pretty good at a lot of things because you're only as good as your weakest link in your blind spot. So certainly my parents were very formative in that. Even my first job was a regulator. At the state of Florida Bank of yours finance, I had friends that at that point in time was the big eight. Now it's big four. And those were more prestigious jobs but I actually got a lot more experience and critical experiences working with the SEC and the FBI and things like that. In that two and a half years investigating fraud, there's so much serendipity that comes into it. One of the last things I worked on there was a huge insurance fraud where we did end up several federal judges were involved and went to prison and so forth. And I unraveled the thing. I just was absolutely fascinating. And then I was telling a couple of friends after all that it happened and several of them worked at progressive insurance and really love their jobs and I said, who loves your job, especially an insurance. So then I applied to progressive and most of her claims jobs, they give you this math exam and they're like, no, no, you need to go over here and what would today be called data science back then that term really didn't exist. And so one thing just led to another one another and then I slowly got more and more interested in investing over time as you find your way. So always very big I was a nerd. A couple of things to stand out to me about that. We had David Senra of the founders podcast really studying some of history's grades including entrepreneurs but also world leaders etc. And when he was with us in class, we talked a lot about the notion of a customary yourself to hard work and it sounds like the role that your parents played in your mom maybe in particular that still that discipline the other element we spoke a lot about that seems to place such an important role and particularly for investors is cultivating a curiosity and just curious when you were younger do you have writing reflections on that curiosity starting to run wild or you said you weren't looking for city service preferred by yet but how was that curiosity being directed? Yeah, again I would say it comes back to my parents a lot of credit here because it was very much and I was the first person in my family to go to college so my father didn't go either even though he would have had the opportunity he went in the military and so it was always well why does that exist so it's that question don't take any for granted can remember being two or three or whatever they'd be like well why is a sky blue why is this why is that and so that constant curiosity and then yeah you're right that's a great answer actually combined with very very hard work if you have a lot of curiosity in your hard worker and you have moderately decent judgment and intelligence and clarity of thought those things you'll go a long long way because that's how you get the compounding over time people usually rise to their level of complacency and that's pretty generally true that doesn't matter whether it's investing or in a big company or whatever if your dream is to make it to manager and you're perfectly fine there that's pretty much where you're gonna stop and that doesn't mean the opposite is true that doesn't mean if you got 10,000 people all want to be CEO or whatever that they're all gonna achieve it but people create their own limiting factors you hear that in sports you hear that in business and so forth I think people don't appreciate that enough the year of sports a lot where people you see it whether it's tom Brady or Sepcus famous cyclist and so people underestimate how far you can push yourself and that is absolutely true and a lot of it's mental 90 plus percent so the earlier you start on those aspects curiosity and hard work and so forth you're not gonna figure it out overnight there's no easy path there's no shortcut there's no backdoor but I do feel like you can figure it out over time where you just keep pushing yourself even if it's 1% more like Charlie says if everybody just went to that a little bit smarter every day think about that compounding effect over time so for sure my parents you get lucky with a couple teachers here and there you see something and yeah those are two very very good points you can't have enough curiosity and enough grit I would say before we get into the insurance time of your life and past and while a virgin's on sacrilege to talk about Florida State here on Notre Dame's campus we'll keep it narrow too we can't skip this chapter because before Warren and Charlie came and said come join us there was somebody else who you found your wife April had Florida State can you talk about what that was like and then any other formative experiences during that critical time because we're here with a group of college students nearing the end of that time but what was it about the undergrad years that was so special for you well look there's nothing better than undergrad when you're 52 like me and you look back most people I know most of my friends will say that was the best time of their life regardless whether they went to Florida State University of Florida Miami Notre Dame et cetera et cetera it is just the best time of your life so I still have a lot of friends that I stay in touch with from FSU as you mentioned I met my wife there it was best time of my life for sure and I've had a damn good life but a lot of friends a lot of fun and we had a great football team then it's one of the national championship I senior year I was friends with several of football players and the psychology professors were absolutely phenomenal I actually thought they tried to recruit me into the PhD program at the time and I seriously considered it I really thought that that was something that I wanted to pursue but there's a lot of psychology that you actually apply because you're trying to decipher human behavior and so forth and investing the finance programs didn't really really resonate with me at the time I took them because I wanted to make money and it wasn't out of a passion I did have a passion for investing but it not really fully blossomed yet but I didn't have a passion for finance I liked international business better but I like psychology even better than that there's a lot of serendipity one of the tensions that we've been exploring a bit been focusing in on that 20 something era where on the one hand you clearly had these multiple interests and you were at least in hindsight developing yourself as this multidisciplinary. Yeah, I didn't realize it at the time. And yet at the same time, there does seem to be often this tension of a requisite to focus. I think more and more you can look at education systems, particularly those overseas. But I think even more and more in the US, there's this pressure I think that a lot of us feel that we need to start pretty early in life to extract the things that are not number one. But maybe if you have any observations on that and just how you navigate, continuing to round yourself out and hold on to these different interests start to connect dots, and yet also experience depth of expertise. Yeah, that's a really, really great question to show how all over the place I was just to extend to your thought. For a while, I thought I wanted to be an astrophysicist. So in Florida State, actually, there's a really good astronomy program too. So I took all these astronomy courses and I was in the planetarium. I remember midnight on a Friday or something like that. So I was a little bit all over the night. I thought I wanted to be an architect. So I took architectural classes. I wasn't to be clear good at any of the stuff. I was just 19 or 20 trying to figure my way out. But there's this absolutely phenomenal book. I think it should be mandatory reading. Actually, it's called "Range" by David Epstein. And there's lots of podcasts. But basically, the giant takeaway from the entire book is that specialists, you're absolutely right, that society and capitalism, quite frankly, has pushed people to specialize earlier and earlier and earlier. And whether it's sports, whether it's pretty much any field, I've gone and they can measure all this now. Specialists start out faster. So there's this immediate gratification that you get. This goes back a little bit maybe to the Tiger Mom stuff where it's like, oh, I have specialized, specialized, specialized because you come out of the gate really quick. But you also platot much earlier. In generalists start off much slower as you'd expect, but there's a later, it's like delayed gratification and almost in every scenario. And he goes through some really interesting examples of great athletes who didn't start in that particular sport because they were better for having been in these other sports. And I think that there's no better case even though he doesn't give an investing example, given the nature of investing and how it requires all this multidisciplinary. I think it's the perfect example actually. And that goes hand in hand with curiosity because I think if you're super curious, and again, it's not raw IQ points or anything else. It's just if you're really, really curious, you're going to have a lot of different interests. Now the balance there, obviously, and I'm sure we'll get to this is your circles of competence and not being all over the place. When you actually act on those things, you have to know, think in terms of confidence intervals. Okay, well, I can be curious at astronomy. It doesn't mean I know what the hell I'm doing. I can be curious in these things, but you got to recognize whether you're in a learning phase or an action phase. So one of the things that strikes me too, and we will come back to this because, by the way, you've already said the magic word compounding once. We're going to come in and bow the ring every time. We're obsessed with the equation. You start with the principle of something. And by the way, it extends as we've talked about, well beyond just compounding capital, but there's something that you want to build upon that you find something you're really curious about. And then there's a velocity vector, some growth rate that you're attempting, obviously, enhance, and then there's duration piece. We talk more about that. But what strikes me with a lot of those great athletes examples, a Roger Federer, I think started out playing as much soccer as he did tennis. A lot of Gretzky's early hockey was done in very unconventional form, not actually on proper rings, but almost more like alleyway type hockey. Shini. And it strikes me that time horizon comes into play. Somebody who's trying to be number one in the next three years at something probably can't afford to focus on range, but it's 20 or 30 years that your time horizon is that's when the synthesis of a lot of these things that don't seem connected start to come together in a form of alchemy, at least it seems outweigh with great athletes, certainly seems outweigh with some of your friends and mentors that will eventually get to and more and Charlie. And I'm hearing that same thing. There is a sense of urgency in the lives of these people. They do want to get somewhere, but there's also balancing that a patient's that where I want to go is going to take some time and to achieve any level of true greatness really requires a degree of patients to let that formation occur. Yeah, I think Charlie has this way of boiling all this another great point. Life, investing, all these things are simple, but not easy. And it's like supposed to be easy. Anything worth doing is not supposed to be easy. And I do feel like sometimes people want that in fact most people want that short term gratification. And they want the reveal like, oh, what's the code or the loophole or whatever and it just doesn't work that way. It works differently for everyone too. There's no magic formula per se. But if Peter Bernstein who he wrote against the gods, you know, really this big risk guru always said, it's much easier actually to predict the long term than the short term. So if you've got that Norr star that's 20, 30, 40, 50 years out, you can miss a lot on the way. You don't have to get the trajectory exactly correct as long as you're two steps forward one step back most of the time, it'll all be perfectly fine. It's much, much harder to hit the short term with precision. You've almost got to like invert that thought process that is again, a little bit embedded us in society. As you think about that next phase after the late nights in the planetarium, then drawing your architectural masterpiece. Why business school? Why did you end up choosing Columbia? What was it there if you go back to Rick's description of the compounding equation? What inputs were you looking for there on your growth to some sort of master? It slowly started to figure things out a little bit by the time I was 26 or 27. I was way behind you guys to be clear. So I was at progressive at that point. I'd been there well when I decided to apply to business schools. I was there probably about three years at that point and we had become progressive and enormously successful. I was responsible for 40% or so of the company's premium as a, again, what we would call today a data scientist. We had brought in a lot of general managers as we became a Fortune 500 company and legitimate and so forth from Harvard Business School and Chicago and Kellogg and so forth. So I would work with them hand in hand on the P and L. So I started figuring out and I was investing also on the side myself. People laugh at this back then. They was all in the mail. The internet had just kind of come around to public use with AOL and everything. This was like 90s, dial up and all that stuff. So you get these mutual fund perspectives as I immediately go to the back actually and see who ran it and what their background was. And invariably they always went to some Ivy League MBA, etc. So I was like, okay, and I was interested in insurance, but I was always looking at other stuff too. So I was getting more and more interested in investing and I was doing it myself because I knew insurance and insurance was arcane and Byzantine. So I was like, I think I've got an edge on some of this because I would see what other companies were doing just in the depths of what I was doing a progressive and then I'd look at their stock and I'd be like, that seems like it's didn't really necessarily know what a short was at that point, but I like that seems like I would bet against that company and sure enough. So you'd start to triangulate and figure stuff out. And maybe I could be okay at this and I thought, okay, well, it's married April and 98 and I went to Columbia in 2000. I back solved because it was making a pretty good money at progressive and I was moving up quite well. Glenn Renwick went on to become the CEO and we were three doors down from each other. He was a general manager at Florida at the time. This is when the company grows rapidly. You get sucked along. So anyway, long story short, I thought I solved and said, well, I do actually really love progressive and insurance. I think it's interesting. I know I can do well at that, but I'd like to also try my hand at this other. So that's how my mind works is it's a lot like investing. How do I protect my downside and then take a shot at this upside to see if I A could be good at it B if I like it. And normally those two things are correlated, obviously. It's hard to love something you're not good at. So anyway, long story short, I got into a handful or so of the business schools I wanted and I thought, okay, well, Columbia had the best investing program then and I think still now. So I said, okay, this is where we want to go. I talked to April, talked her in moving to New York and then I talked to progressive and I said, this is what I'm thinking I want to do, but I had an open ticket to come back. So that was protecting my downside and I would have come back as a product manager and I would have missed out on two years of exempt, not the end of the world. So it all worked out and then to make a long story short, talk about serendipity, progressive didn't do calls, which everybody did calls back then and guidance and everything else. So a couple of these general managers who wrote my recommendations and I become quite close with said, how do you turn a negative into a positive? There should be a whole book on that actually because progressive doesn't do these calls. You should talk to these people on Wall Street about progressive because they're dying for this information. So this guy, Weston Hicks was the number one I.I. insurance analyst at the time covering all these insurance companies. They put me in touch with him and he was absolutely fascinated. I thought, why is this guy so interested in my little pissant job and it was about progressive and he says, so what do you do? Why'd you leave? And I said, I want to be an investor and he says, oh, there's these guys at these tiger cubs that are really doing a lot of work on the insurance industry right now. They would be fascinated in your experience. I'm like, really? I find this incredibly hard to believe anyone to be fascinated in this. But brain new investing inside now, they were phenomenal. So Julian Robertson started tiger and then all these guys spun out. They're all called tiger cubs. So there were four big ones. Blue Ridge Viking, Maverick, and Lone Pine, and they all had their own specialties. And these guys, so he's like, "I'm going to put you in touch." I knew insurance. I could tear apart. They're called stat, statutory blanks and yellow books and all this geeky nerdy stuff. And they knew investing, but not this stuff. And they were short. These companies, like Conceico and Reliance, then they were right, obviously. They did all go bankrupt, but they couldn't really prove it to supersize the positions. And so I get in there and I'm like, "We're the stat blanks and where are these things?" They're like, "What? What are you even talking about?" So I'm like, "No, you got to pull this and this and this and this." And so I'm like the detectives that could show them the map and the terrain and tear it all apart. And I'm like, "Oh, yeah, this is a total fraud." And did it, and I'm triangulating all this stuff, putting the puzzle pieces together. They were right. They just come out from a completely different vector that they're intuition and experience because they were such good investors and figured out. That was the first week. They clumbed. I talk about complete and utter block. And then Weston went on to become CFO of Chubb and then C.E. of Allegheny, which we just acquired weaving Berkshire last year. So talk about full circle and small world and everything. And I still talk to Weston and we're friends. And then these guys, I ended up with a Blue Ridge Capitol and Pete Dantaker was their fig specialist. He went to Princeton and he was a Morgan Stanley banking analyst for a couple years. He became a real, real mentor of mine, just a truly, truly phenomenal person who took so much time with me. It was a complete one way door. I was getting everything from Pete, giving basically nothing back. After these stat lengths, they could have just ditched me on the side of the road, which is probably maybe what I would have done. But no, they took me out of their way and then that led again, one thing after another, after another. And then I graduated a clomino too and they literally said here are five places that eat a fig person. So I knew at that point for my regulatory days, I knew banking and I knew insurance. I didn't know specialty finance. So then I went and took, there's a whole, especially finance series of courses at NYU at the time which I took at nights and on weekends to get the certificate to be able to tear apart credit card securitization so you could literally do it. The course was really built for people who were going to work in an investment bank actually doing these things. But I wanted to be able to do it as an investor and they couldn't believe it. And I was the only person that was an investor there and I was like, I can't believe all these investors aren't in this course. I do want to take a couple minutes for the benefit of the class to unpack the tiger story, the bluer's story a little more detail because it contextualizes really the history of long-term equity hedge funds over the last 30, 40 years. One of the things that strikes me about that story and of course if tiger is known for anything that starts with this insatiable desire to draw talent to the organization and then to support that talent in other aspects. So it doesn't surprise me that they were probably looking for forms of talent of numerous kinds but the minute they saw that you had this expertise and insurance rather than say, oh, you didn't go to this investment bank and you didn't work at this private equity front. They latched onto that. They knew you could be helpful to them in that context. And we often talk perhaps it's incorrect but it's a bias that we have about the value that can accrue to a young person who does eventually want to become an investor to begin in some sort of an operator's capacity to actually work for a business of some kind. And again, I think it comes back to this dynamic of time horizon. If you're in a rush, you just want to go immediately to work for private equity or public markets. And I'm a product of that. My first job was going directly into the buy side but time and time and time again, we unearth these stories of people who because their path waxed and waned through various operator roles, you began working for the state regulator of Florida and then progressive, you actually, again, all in hindsight, you had something very powerful to bring to one of the world's best investors. And I think it's just particularly as we're in a tight job market right now and there are certain aspects of the investing world. They're actually contracting from a labor standpoint. I think students should be encouraged to appreciate that there are lots of avenues here that you can explore particularly across working for corporations. That's a very, very good point. I was very jealous of my friends who were getting hired by Accenture and Anderson Consulting in PWC, etc, etc. They didn't make me offers and I was jealous. Now as it ended up, as we'd sit around talking about our jobs or whatever, I got far, far more experience from wherein it doesn't look good on a resume or anything like that. Their jobs looked far better on the resume and they made slightly more than I did, but you can find ways to compound even a non ideal situations. I learned a lot more. I would go into American General Finance, which ended up being owned by AIG or Prudential or Barnet Banks, which was the biggest bank in Florida. I got acquired by Bank of America, Raymond James, etc. Here I am. You're the regular. You're the boss, actually. So I would be able to sit down with the CFO of these huge, huge companies as a 21, 22-year-old literally no nothing kid, and literally just fire away with questions for hours and hours and hours on end until this CFO is like, where's this going? I'm just learning. But you've got full pretty. And my friends at the big eight weren't able to do that. They were in very, very siloed niches. So looks great on the resume, but here they were looking like the accounts payable or the accounts receivable collections that rooms to go. Really? I spent the day with the CFO of Raymond James. They're like, what? Yeah, that's not fair. And same thing, a progressive. That was that dreaming of working in an insurance company or anything like that. And then it ends up being this data science field. And I had one small little state and we ended up rolling out credit for the industry, telematics. I have my name on patents. So one thing just kind of leads to another leads to another. I think people try to back solve sometimes. And obviously the McKinsey's and the Goldman's of the world want you to perpetuate those thoughts. And that often it's like being so bad example here, but you could use Alabama football. I am not an Alabama football fan to be clear. But of course their goal is to get five five star offensive lineman, five deep. But that doesn't mean that's the right thing for them. It's a GP LP problem, as I call it, the general partner, limited partner. What's good for the GP is sometimes not good for the LP. Of course, that's what Alabama wants. That's what every football team wants. It doesn't mean it's good for the fifth string offensive lineman. You might be far better off going to somewhere else you can start and you don't have to be five deep and etc. etc. So there's trade offs there too. And I think too often times people just say, oh, I want that because it's going to look good. And it's a short term long term thing again, right? What looks good on the resume is a short term thing. But what actual experience are you getting at the end of the day and how tangible is it? Because that's what matters. Okay. Let's geek out for a few minutes on Blue Ridge and Tiger because we spent a lot of time collectively back in our prior jobs, writing these case studies on what we called forces, investors who had compounded in high rates for at least 15 years and Paul authored a case on Tiger. We spent a lot of time with Julian with members of Julian's family with all the Cubs. I wrote a case on Steve Mandel and Lone Pine. I was just starting a case on Blue Ridge working with John on that just as our little R&D project was shut down. This is an extraordinary snapshot of history into the investing world. And as I said before, Tiger today is known more for the Cubs that it produced and the Cubs that the Cubs produced. And there's probably like a third or fourth generation of that. And we spent some time in preparation talking with some of our friends out of Blue Ridge, Pete, of course, David Greenspan and Roberto Mignone, who probably was just setting up Ridge around when you intern. I think he was the first Blue Ridge. He was. He was the first tire of John's and Pete was the second and he spun out like a year before I started working with them. They're all great guys. Amazing. Amazing guys. Yeah. A number of them. Chris Hanson is another one of Allen Capital that have all become mentors of ours and have shaped us as investors. But let's go back to Tiger. Tiger was founded in 1980. Prior to that, Julian served in the Navy for a long time. And I think when he first transitioned out of the Navy, he worked for a kid or pee body. The brokerage services for a very long time. And there's a lot of interesting tidbits again. We talk about range before starting Tiger, but after leaving kid or pee body, Julian moved his family to New Zealand for a year or two and actually wrote a novel during that time. Clearly, an individual who was interested in a variety of subjects and a variety of disciplines. Another fascinating thread that maybe we can pull on is we get a little bit more into the Berkshire story is the Tiger model is sort of if we were going to simplify this known to have looked for these investments to buy to go on that were a quality management great business models, good valuations and then sort of short the opposite. That's an oversimplification. But one of the things that was interesting to us in our research with Julian is when we asked Julian and God rest his soul, he passed away a number of years ago, but when we asked Julian where his investment philosophy took shape, he actually like Warren started as a cigar butt investor. And maybe some of that was a product of the times, but I do find it interesting the time and time again, it seems like there is this natural arc for the investor who sticks with it enough toward quality and toward situations, companies that are more likely to endure. And he said another thing, which was that his investment philosophy evolved immensely over that time, but it was probably mostly shaped by his mentees by the talent that he attracted like Steve Mandel, like John Griffin. And so John served for a long time as the president of Tiger Management before starting Blue Ridge. And certainly one of the key elements that John carried forward in Blue Ridge was this sort of insatiable desire to draw talent to the organization and then to empower that talent in right away. And you see that where there was always some level of specialization like you said, peed in financials and Chris, my very first trip to India, gosh almost 20 years ago, was shaperone by Chris Hanson because he had four blu-rige had cultivated a real edge in investing in India and yet these people were all evolving and focused on numerous fronts. And by the way, I just want to talk for a second about the track record because we talk about the power of compounding for 20 years Tiger was around and there's a lot of talk about how and why Tiger shut down literally the same month that the NASDAQ bubble burst in March of 2000. But for 20 years, they compounded at 30 percent, which obviously sounds exciting. But if you do the math on that, I think the rough math on the multiple on capital is well over 200x. So this is an extraordinary, extraordinary track record that is very much worthy to be studied. Of course, blu-rige went on to I think have almost another similar iteration 20-year legacy. When we spoke with David and Pete about you coming in and teaching, they both had a similar question. It was really directed at of course, the brochure you're not very focused on short selling. But you did hone that craft and you were quite good at it and just curious how as you look back on the way that you invest today and the way that maybe even you operate yourself as an executive, what that tradition of short selling and that experience, how that shaped you as an investor today. This is one of the few things Warren and I disagree on. I think we probably agree on 99 or 99.9%. Ian Charlie both had such a miserable experience short selling. In fact, this is a great story. First time I met Warren in his office got a certificate from Obama with the metal owner. He's got his certificate from Dale Carnegie class. But then he's got this Western Union certificate and I'm looking at these. Some of them are obvious. What is this? Any laughs and he says, "Oh, that's when I quit short selling." And he and Charlie had figured out in 1956 or whatever it was that Western Union was completely an absolutely insolvent. Basically, the pension hall was greater than the market cap, the enterprise value, etc. etc. So they short it and the stock goes up. And so then they actually do a report and send it out to friends. Stock goes up. They send it out broader. Stock goes up, etc. And from even where it is from then to today has probably been a thousand bag or a hundred bag or something like that. So he's just like, "I don't understand." And that was not the only unsuccessful short. That was the final straw. So that's one take on it. My take on it to your question is I think that it's absolutely for me. Again, everybody's different. Absolutely positively fundamental to my being and how I think about investing today. So even though we don't short at Berkshire, it doesn't keep me from thinking about, "Oh, this thing is a sure you're looking at a name. I look at over 200 acquisitions a year that come into Berkshire." A lot of them. I would say, "I'll tell bankers at the time half-flip at late just to give it back to them." I'd short that. So when I look at names, there's absolutely nothing wrong with saying, "If you think it's worth more, you think it's most of the time and most things are roughly approximately fairly valued." I don't know if it's 10, depends on the market, 10, 20% of the time you're like, "Oh, I'd short that." And having that to me, there's what I told Warren. So we've talked about this before. You don't look at half of a balance sheet. I'm on the board of JP Morgan. And so you could look at that balance sheet. And if you're only looking at the asset side, it's $2.5 trillion. And you say, "Oh my God, this is amazing. $2.5 trillion of assets, et cetera." It's the same thing if you just look at the liability side. There's two and half trillion of liabilities and equity. And you'd say, "Oh my God, this thing's like a catastrophe. How could you possibly own this, et cetera? Well, you have to look above." And that's how I view short selling. Now, there's no different than long investing. And my humble opinion is very, very, very few people know what they're doing. You don't have a primary care physician go do brain surgery. So it's very hard. There's no question about that. There's no question that it's, quote unquote, easier to compound your capital on the long side. You can go buy the S&P index and do perfectly fine. And never have to analyze a stock or become an expert. And there is no equivalent on the short side because it is that much harder. I always felt you had to be about 85% correct on the short side to make money. And I think that's pretty fair. You have to be damn damn good. But that helps you. If you don't become myopic or dogmatic or solve for the lazy narrative or any of that stuff, it very, very much helps you on the long side. Both to identify compounders, to identify weaknesses and notes. Because the same thing you're looking for in a short, a broken balance sheet, a collapsing mode, a CEO who's pulled forward all the benefits to the short term. All of those things you should be looking for on the long side too. But you're not looking for it as a short. You're just looking at it for intellectual honesty. And then wherever the answer falls out is where the answer falls out. That's how I think about it. And it's no more or less more and wouldn't disagree with that. He just say that's not his expertise, which is also one of his superpowers is to say that's not my core competency as I can. But you don't realize you are doing that. Because when we talk about companies or acquisitions or whatever, we'll say, well, it's not worth anywhere close to that. The difference is he would say I wouldn't necessarily take action to short that. And I would say, well, then you could look for precipitating events. He just doesn't care about that, which is fine. One of the things that I continue to hear from great short sellers is how it naturally keeps you intellectually flexible. Absolutely. And you go into evaluating a company and you initially are leaning toward thinking it's a short or thinking it's a long and actually you come out on the other side. But just that you have that aperture to look at both tends to generate this continual openness to whatever you find. One other dynamic that sacks a deck against short sellers is that your upsides capped. The stock can only go to zero. Although I do remember when we did the case on Lone Pine, there was a couple of years as a NASDAQ burst at literally the Lone Pines of the world and the Blue Ridge of the world had short these way overpriced text stocks. And they were reinvesting into the short and doubling down. Their ROIC was actually above 100 percent for a few years. It was just an extraordinary time. But curious on that point, do you happen to recall the first time that you came into contact with Buffett or Munger in their teachings? Oh, sure. Well, it would have been, let's see, I graduate of Florida State in 93. It would have been, I think it was probably one of my last finance courses at Florida State. And Berkshire was not well known at that point. The professor, it was a value investing type course and they showed Warren's track record, Berkshire's track record. And then they had a SREEDA couple as probably the last five years of letters or something like that. And I remember distinctly obviously Coca-Cola and et cetera, those names. So I was not familiar with it at all up until that point to be completely honest. I was at 22 at that point. And then really the lesson, it wasn't so focused on how to replicate that. It was really about the magic of compounding that eighth one to the world and all of that. That's the first time I remember. And then my first two stocks that I ever bought were that year as well. That was Pepsi and Plum Creek Timber. And I do remember thinking, oh, this Plum Creek Timber would be a name that that Berkshire company would probably be. I ran like, oh, just a little seat. Of course Warren had Coke and this was Pepsi. And Pepsi had a higher dividend than Coke at the time I remember that too. So I remember already drawing a comparison track. So 93. Todd, I recall Warren saying, and I think it was in the 2021 Berkshire letter that every college student should focus their career search on their area of greatest interest. And aim only to work with high quality people while putting money aside as a motivating factor. What other advice would you have for young people in their careers? Well, it's a great question. Again, there's no formula. I just go back to my experiences. I thought, what the hell am I doing working as a regulator? I thought I should have gone to a better undergrad. At the time, this banking crisis had rolled through Florida late. So talk about about economy. In 89, nobody was hiring. And sorry, 93, 89 was my high school. But 93. And it was the SNL crisis is generally listed as 89 to 92, but Florida got it late. But same thing I mentioned early with insurance or whatever. So you find, if you're intellectually curious and you're hardworking, you will find plenty and plenty of plenty of opportunities. But I think the mistake that people make is trying to back solve for it and say, oh, I want to work. I don't want to pick on McKinsey. But you don't want to want to work at McKinsey because I'll make a lot of money and I'll look right in a resume, et cetera. That's the antithesis of what Warren means with that quote. I always told our kids, if you want to be a painter in Paris, if you want to try and take the extreme, and Warren, this is my favorite part of his letters where he always takes the extreme. If people think this is true, then if you take it to the extreme, is it still true? And oftentimes it falls apart, which means this actually isn't true. So that's why we always saw our kids. Literally whatever you want to do in life, you don't solve for money, you don't solve for prestige or adulation or anything like that. And that takes time and maturity and growth and also changes over time too, because we all evolve. Nothing is static. So then again, if you invert the concept, I think people tend to think very statically, oh, I'm this and this is what I'm going to solve for. But then there's a lot of research, obviously every single person that is probably innate in us somewhere in our DNA massively underestimate. rates, how much their life is going to change going forward. Every single person at every age of your life, I would be doing it now and you do it when you're 40, 50, 60, 70. It doesn't get better or anything. You constantly think, "Oh, I recognize that there's been a lot of change and I realized that I'm different than I was, but now I'm set." People don't realize that it's constantly wet cement. They think that the cement is dried and it doesn't. And that's a freeing concept. Neil deGrasse Tyson talks about the universe. There's some people who think about the enormity of the universe and they fight it depressing. And then there's other people who think about the enormity of the universe and it's very freeing and liberating and optimistic. I tend to be in that latter category. Certainly Warren is. So I don't know. I think there's no magic for you. You just have to be open. It goes back to Rick's County. You have to be open to experiences and curiosity because you literally may not know. I remember taking people would find this actually surprising probably. I remember sitting at Columbia where I said earlier that I knew I wanted to be an investor, taking one of these personality tests and I'm an INTJ. What does that fit best with in terms of preventing like, because I thought, "Well, public, I've been working with the Blue Ridge guys. Maybe I should think about private life. Maybe I should think about ventrication." So going through all this stuff, you have to remain open to the fact that you can be wrong, the fact that things can change because they do. We talked about LPGP dynamics, short selling, being willing to be optimistic and take a risk. What was it like, golden castle point? The next phase. That might have been very different than the beauty of undergrad. A lot of other ways because it was hell in some ways too. But there's something about baking your own cake. And you guys are living it now. The adrenaline and the sheer joy and the fact that you may absolutely make mistakes, but they're your mistakes. When I think of castle point, and there's a great story with Steve Friedman who used to run Goldman Sachs and when we met, and we can get into that if you want, but how it actually came to be. But when I think of it, and this is the purity maybe that I try and maintain, I ended up with five analysts, were over half a billion, which was a big find back then. And now it's peanuts. But I had five analysts, the CFO and an admin that happens to me exactly. Say to gross balance sheet. So she all right. Well, it's not peanuts. So roughly does. But it's all opinions. Yeah, that's right. That's exactly right. The purity of it. My favorite where my mind immediately goes when anyone mentioned it. It's the first six months. It was just me. And I printed off 24 securitization documents that are hundreds and hundreds of pages long. So countrywide and Washington Mutual had long beach mortgage. And I literally had them all over my office. And I would sit there until late hours that I going through these things back to my NYU securitization course and an Excel spreadsheet figuring out which tranche of these securitizations was going to get blown through. And it's called the Fultch Grim class. So you want to find the Threat Grim. And then you assign a confidence interval I did to which I thought would be the Fultch Grim class for these securitizations. And that's a weird doc. That's a weird individual that wants to go do something like that. So that's where my mind immediately goes. It wasn't to the first big investor that we got who was phenomenal. Who's great. That was exciting too. But those were just consequences that in my mind felt were outcomes of that process. So I always, always, always love the process. That's where my mind goes. It wasn't the first big investor which was 60 million. It wasn't the one that got us over half a billion. We had all these European fund of funds. We could have had a billion billion and a half. It wasn't all of that adulation. It wasn't the first hire that I made. It was going through the securitization documents and finding not only the Fultch Grim class but then finding, oh my god, these financial guarantors are wrapping this stuff. And first time I found AIG was buying this stuff in the back door and doing negative basis trades. So it's the puzzle. It's figuring out the puzzle. That's where I get giddy thinking about Castle Point. And I figured it out. And not a lot of people had at that point. Fun story actually that maybe 10 people know. So now a lot more. So the big short, I'm friendly with Michael Lewis, the author. We have dinner when I got to Berkeley and stuff. He's literally one of the five smartest people I've ever met in my life. He is unbelievably brilliant. So there was a call that we had. We being there was Seth Clarman and there were 22 of us on the call when there was a securitization group of hedge funds within Bear Stearns that was going under in '07. And they were going to screw us and we were Seth and 20 what others we were on the other side of this thing being short. So Seth called me one day and we didn't know each other super well at the time. And he says, I hear you're in this as a what are we talking about? Anyway, long story short, we had a call with the SEC that we organized to say this is absolutely illegal. What Bear Stearns is trying to do. And if you allow this, we're going to take it all the way to the Supreme Court. If we have to, this is extremely bad precedent. The punch line of the story is that Michael Lewis got that list somehow. I don't know how I didn't ask him. I don't want it out. But he calls me one day randomly. I had never spoken to Michael and my assistant Michael Lewis say anyway, we talk and he says you are on this call and did it. Where is this going? He said, I'm riding a book. This is the big short. He says, I'm riding this book about this stuff. And so we talked for about probably 45 minutes about all this stuff. I didn't talk to reporters or anything like this. This is a solve off the record. So we get to the other guy says, okay, this is great. You seem really great. I'd love to meet you sometime et cetera. And I said, I do not want to be in this book. I don't want any attention et cetera. He says, oh, don't worry. You're not going to be. He says, you seem too normal. I'm just going to get a really nice guy. You're really normal. Anyway, this is really interesting backstory actually to be like one small little piece of that. So it's fun. It's funny. Todd, you mentioned Steve Freeman. I'm just curious for everyone who thinks that someday they might want to take that entrepreneurial leap. Just tell us more about that decision. Like, did you feel ready? No. I was already at all. I've never really been ready for anything in my life. That's probably one take where everybody should ride down. When people see things in you that you don't see in yourself, that's amazing. And that was true with Steve. That was certainly true with Charlie. That was true with Warren multiple times with Warren for Berkshire. I started as an investor with lose portfolio to an half billion. Then he comes down one day, like six months into the job. And he says, why don't we double it? And I was like, whoa, whoa, whoa. And he's like, no, you're fine. And I wasn't ready for that. I wasn't ready for Haven. I wasn't ready to then go into looking at 200 acquisitions here. I sure as hell wasn't ready to run a 40,000 person company. But I met Steve Freeman's just super quick story. So would they know the name Elliott Spitzer? Probably not. So he did this whole investigation. And Marsh McLean ends the biggest insurance brokerage firm in the world. They had the huge private equity firms. Then they go over start this private equity firm that was part of Marsh. And it was all based on financial services. So anyway, Spitzer comes in. Holt Greenberg was running AIG. His son was running Marsh. Spitzer thinks he finds all kind of collusion. He ousts basically the CEOs of these companies and says, or I'm going to indict you. He can't have that. The board's kicking out. So they went to Steve to say, we want you to run Marsh. So he calls this insurance guru and says who knows more about Marsh McLean and this is a good short story actually too. I've been short Marsh for two years. Two years waiting for all this to happen. And I had uncovered it through a whole bunch of stuff that's in the longer story. So it finally happens. And I was short AIG too. So these things happen in this insurance guru knew that I was short. So he tells Steve you've got to talk to Todd. He's the so-called acts on all of this stuff. So I get a call one day from Steve Friedman. He's a legend et cetera. And he says, can we have breakfast? I don't know what the breakfast is for. I show up. He asked me all about Marsh McLean. And if I take this job, what am I get myself into? So I walk him through what I know. So that's not even the punchline though. We get to the end. Steve is on the board of Fannie Mae. So he says, okay, this is great. You know, we talked about Marsh for two hours. He's leaving. He says, by the way, are you sure anything else? I was so naive. I didn't know that Steve was on the board of Fannie Mae. And I said, oh, Fannie Mae's 10 times worse than Marsh. He turns, he almost fell over. He's determined of the board. He turns three sheets away. He grabs the table because he thinks I'm messing with him. He's like, what? And I said, oh, Fannie Mae's a complete accounting fraud. I was like, there's going to be people that go to jail prison over this. He's like, you know, I'm on the board. And I was like, no, I didn't know that. I said, I would get the hell off that board like tomorrow. So he's like, can we have breakfast tomorrow? I said, yeah, we'll do it again. Sure. So we talked for like four hours. I walk him through all of this derivatives accounting and all this arcane, Byzantine stuff. He asks to excuse himself. He's a lawyer. He's excuse himself for the meeting. And he left the board that night at five. Then he comes back call me the next day and said, we want you to start a fund. And we've been looking for somebody for seven or eight years. And so it's funny how things work out. That's an amazing story. And we are gradually inching closer to those faithful conversations. first with Charlie and then Warren that led you to your migration all the way to the great plains of Nebraska from New York. Well, let's come back one more time to that compound interest equation because I think we've hit on some really important tips for finding your P, which obviously traditionally stands for principle. What I think what we're saying is that it can really be considered your passion or your purpose. Whatever that thing is that you're trying to compound and that process of discovering your P for all of us is just such an important part of our personal journeys and you've given us some great ideas there. I think the main message I'm taking away is just let your curiosity go. Let it run free and just try to keep up. And then we have the R, the rate of return or the velocity vector, the growth rate. How do you actually get better at something? How do you over the course of time speed up your growth? And I've heard you in the past advocate for active learning versus passive learning. Today, we've talked a lot about developing your aperture for a strong work ethic. And now this idea of cultivating range, I think that's just such a killer insight. Okay, so now let's turn to that third critical variable. And I think again, we could be completely off on this, but I think Paul and I tend to feel this is both the most important and also the hardest one to harness. And that is the TX opponent, the time horizon or the duration of compounding. Now the world is full of people, particularly investing, I think, that just seem to find their thing or something at least do well for five, six, seven years. But then for whatever reason, things just drop off. And on the other hand, we talk about Berkshire as being the eternal compounder. It's like a company that just continues to grow, thrive. It's like a redwood that just defies the traditional laws of nature. I love it taught if you just have any reflections, whether it applies to Berkshire or even just in your own life, how do you keep it going? How do you extend the T in order to get to those out years where I think it was back in the 60s when Warren first wrote about this, where the joys of compounding are really unleashed? Well, it comes back to purpose. There's a reason Tom Brady kept wanting to play because you're good at it, but you're good at it because you love it. And I'm not comparing myself to Ray with that. I didn't thought about how to bite sound, but you could take anyone who's really, really good, fettered and want to retire. Joke of it done want to retire. They want to keep doing it because they love it. Like Novak, he's just one as 24th Grand Slam. He's breaking every record there is. And I recall I think it was actually just before he won the S open where he was asked about how he continues to keep it going. And his answer basically came down to the fact that he really just loves hitting a tennis ball. Like he just doesn't want to stop the fundamental act of hitting a fuzzy yellow ball because it brings him to much joy. And actually, I think there's a lot of professional tennis players out there who just don't love that fundamental act of hitting the tennis ball like he does. When you see it with any sport, you hear the stories about Larry Bird or Steph Curry being in the gym, the first one in the last one out, et cetera, et cetera. You can only drive yourself or push yourself so much if you don't love it because it needs a super, super, super competitive world. There's a million people that want to be Jogavid, Chautambrei, or Steph Curry, or Warren Buffett or whatever. So yeah, grit and pushing yourself can go a long way. But in a world where a million people are trying to do this, if 0.1% of them just absolutely love it so passionately that they're going to bet about it, thinking about it, they're waking up thinking about it, et cetera, et cetera, et cetera. You're not going to be able to compete with that if you don't love it to your core. And so that comes back to your question about why it's so important to fight. If you're back solving for the narrative of I want to be rich or famous or have adulation or these things, it's totally short term. It's a femoral, it's transitory. You may be able to fool yourself for some period of time. It's more linear. You're never going to get the log scale to compete with the people who really, really truly love it. So that's why it's so important to find your passion. And I think in that vein, I'd say it's super, super important to take a lot of risk when you're young. I think that's really, really important. I did because I had nothing to lose to be clear. I think that the hardest thing to do actually is to force yourself to take that risk when you either come from privilege or if you have a foundation that's much higher, you have downside. So that's why it's important to take risk when you're young because as you get older, you have more downside risk. So you've got nothing to lose at your age. You take the risk and you can massively screw up and nobody's going to hold it really against you unless it's fraught or something like that. I mean, you take intelligent risk. Don't take stupid risk. Comes back to the specialist versus generalist thing. Society, no one tells anyone that. They all want you to take the safe path and it's again a GPLP problem. But if you could think about it. Charlie and I talked to other people and I talked to a lot of you out of a million mistakes to make in your life, what would you do? You pull them all forward to like yesterday. Get them all out of the way when you're 19, 2021 and that in theory, you'd never make another mistake if you could. So how do you do that? Well, you've got to widen the aperture massively at the beginning and then as you learn, you bring it in. And then that's also, by the way, not coincidentally, a great way to find your passion, too. I always tell folks at Geico, what do you do with a jigsaw puzzle? You dump out all the pieces and you start with the edges in the corners. You don't start in the middle and build your way out. So that's another way to think about it. And I think too many people, I just see it day and day out with 40,000 employees. Everyone wants to start in the middle. And it's like, well, wait, what are the facts? What are the assumptions? You start here and work your way in. So you go outside in and not inside out. With the time we have left, we've finally arrived at that moment. The cold call to Charlie. Again, one of the things that just strikes me as so unusual about your story here is how so few entrepreneurs ever leave beyond your period of life and go, what would be perceived as backwards to working for someone else and particularly go to work for such a large organization. My guess is that there was some kind of Berkshire Clause hidden, at least in your own subconscious, contract with yourself. So maybe we'll have a few minutes to unpack that, but I know you've talked about the original motivation for reaching out to Charlie. Initially, you know, you would come through the GFC. You would done very well for your LPs, but it was just a really difficult, just a very intense period. And you were looking to make a pivot to begin investing with a more permanent capital structure. Do you mind just elaborating a bit on that? Well, I always wanted to make money to be clear, but I had done that. And so I'm very much about what you want is nuclear fusion. You want to be putting in less units and getting more units out. So I felt like I had done that or some version of what I was comfortable with, with Castle Point. I wanted to run a fund that was over half a billion. I wanted a track record that generated a lot of alpha, et cetera, et cetera, et cetera. We had done all that and I was quite frankly burned out because the joy was slowly decaying. And I had great LPs, I had great partners, I had great team. So it was just 80, 100 hour weeks. And monthly reporting is not fun, even when you're doing well. And so I knew insurance and I thought, this is crazy. I made more money than I was ever apron. I were ever going to spend, et cetera. Why not buy an insurance company and have the permanent capital and do exactly what I love and eliminate, keep the assets essentially philosophically speaking and get rid of the liabilities. And so that's what I was going to do. And I thought, well, I'm going to do this regardless. Oh, by the way, Charlie's 90 or he was probably 86 at that point. And so he's not going to be around much longer. And so in my mind, I'm thinking this at the time, you know, that's exactly. That's all I give him a call and I was going to be out in LA anyway. And I thought, no way in hell I'm going to meet him. But why not try? So called him up and long story short, talked to his assistant for a little while. And it was funny. She said, what do you want? Because everyone's always wants something. And I said, I really don't want anything. There's no ask, there's no reveal. I just want to meet him. And so she's like, well, there's a bunch of other stuff that happened that had up. We knew a common person, which I didn't know. She didn't know we had never talked before. And then she checked with that individual. Oh, yeah, Todd's great, et cetera, et cetera. We had a mutual investor. And so we had presented after each other at this investor's investor day, which I never did. It's the only time I've ever done that. And so talk about again, total serendipity. And he told me, it was Dave's Mark Nelson of Caledonia in Australia. So his presentation was right after mine. And he was really pissed because ours were so similar. And he said, you remind me of the young Charlie Lunger. And I said, well, that's a hell of a compliment. So he said, I'm actually flying out there. He'd been friends with Charlie for a long time. April was pregnant with our second child, Connor. And so I couldn't go. And so I said, I'll take a rain check. So that was actually the seed that had planted it of why you wouldn't call me. to begin with. So anyway, ends up Charlie emailed me the next day and said, I can have breakfast at 7 a.m. at California Club. So we ended up talking for like six hours, which was exhausting to try and keep up with someone like that the first time. For him, it was like just tittin tennis balls or whatever. But for me, I was obviously very, very nervous. Yeah, I imagine it felt like trying to return an anyotic serve or something. Yeah, I know I was just whiffing constantly, but I'll never forget it. In that at the end, he said, we'll talk again sometime. And I thought, yeah, sure. And he called me week later. And we talked on the phone for a couple hours. And they said, next time you're out here. So obviously, I found a reason to get out there again. And one thing led to another, we talked probably a dozen times before we really didn't get into investing that much early on at the vault. And then finally, he's like, what are you going to do? And so I told him and he said, well, you should talk to Warren. And I was like, Oh, yeah, well, that'd be great. And I figured at that point, I saw no idea that he was vetting me or anything like that. I thought it was over one of these names that I owned in my portfolio that they were going to acquire. And I thought that's why I was flying out to be Warren. I had no idea, which is a great way to interview people actually, because then you have no air, you have no false pretense or anything. It's just a conversation using your framing of being scared to start your own thing and feeling like that. Maybe in this situation too, eventually accepting the job, you said that it's really fascinating when people see something in you that you don't see in yourself. What did Warren and Charlie see in you? Oh, I don't know. That's a tough one to answer because anything I say is going to sound I would say a couple of things. Maybe anecdotes. Maybe eroys better. Charlie and I at one point, this is the first meeting we had the BP one spill horizon. I think I was called it just happened. And somehow or another we got on that topic. We even talking about the universe. And we're talking about I just read this book just six numbers. And it's out these six numbers have to be exactly the way they are for the universe to even exist. And I remember this gravity goes out like 60 digits. And the last digit is a six. This is all I remember. And if that digit is seven or five, the universe doesn't exist. Can't get out of its own way or it blows apart. And Charlie, he's like, oh, I just read that book too. And I'm like, what? Who knows about this book? It's probably sold like a hundred copies. And so we sat there and talked about that for a while. Anyway, we're all over the place. Somehow or another we come to deep water horizon. And I said, yeah, what the issue there is, you could talk about mismatched time horizons because CEOs are only in the seat for four years. So why are you going to spend this money when it's a one and a hundred probability? So I was talking in insurance terms. And I said essentially what they did was they sold a really cheap out of the money put. It's one of a thousand things I said. And Charlie's like, what did you just say? And I thought, oh shit, I said they essentially sold a deep out of the money put. And he's like, huh, that's brilliant. And I'm like, I don't think it's that brilliant. And he's like, no, it really is. He's like, that's exactly what they did. And I said, it's like the Ford Pinto or rather Ford Pinto. They didn't want to spend two cents for this thing that kept the car from exploding. And so then every time these cars got rear-ended, they basically exploded. And they could have fixed the problem with a two-cent part. And the deep water horizon part was $2 or something ridiculous like that. It's just utterly ridiculous that a company wouldn't do that. And not always the right thing to do. I'm not saying that that's a unique insight necessarily. But the way that I phrased it and the thought of insurance and frequency and severity. And then we ended up talking about this book ubiquity by Mark Buchanan, which talks about its power laws and the trade-off between frequency and severity. And yada yada yada. So I would say a little bit of that is just the way that you think. And then with warrant, we used right into stocks from the beginning. And my portfolio was not dissimilar. I owned a lot of US bank or Pion Wells Fargo and I owned MasterCard and V sent him. And we got right into it. And it's like, why MasterCard instead of American Express. And so I laid it on it. I have my opinions when it comes to that stuff. And I said, well, I think MasterCard's better for these reasons and did it. And then warrant was great. He's very intellectually honest, obviously. And so where they'd say, well, under what scenarios would that be wrong? And under what scenarios would AMX be better? And so there's a scenario where that's the case. No, this is absolute. And same thing with US bank or Pion Wells and on and on and on. We're Charlie and I hit it off on science and principles and philosophy. Weren't I really hit it off on just capital allocation like risk assessment and upside downsides and things like that. So an insurance too. We talked about progressive. We talked about Geico. Weren't asked me is progressive better than Geico? By his first and I said, yeah, they are. And he pushed back a little bit and I said Geico is better at marketing and branding. But progressives a data company. And data is going to win in the long run. And I said, neither one are super great at technology. And obviously, I didn't know the tech stack of Geico like I do now. But I said, here are the weaknesses. And here's what I would be doing. And this is what progressive has done better, et cetera, et cetera. So I think you appreciated the Candidness because when you're CEO or especially Warren or whatever, everybody kisses your ass. Everybody tells you what they think you want to hear, et cetera, et cetera. And I just didn't care really. I'm a reverent in that regard. This is my opinion. Take it or leave it. I don't care. I don't have to agree with you. I'm not here to agree with you. And you're not a little group of me. I was just my opinion. I could be wrong. But it is what it is. So that honesty, I guess it's the least genuine and authentic. It's really interesting. You say a reverent because I think I've heard Charlie say that one of the things that he appreciates the most about Warren is his reverence is some people probably view that term as like more of a negative trait. But I see how it can really reinforce being an independent thinker. And how that can make you a really good stop partner for somebody. And also just a great investor. All right. Unfortunately, I think this is going to have to be our closing question. And it actually comes from our mutual friend Pete Daniker. Now Todd, when you joined Berkshire, you had the opportunity to not necessarily moved Omaha. But you chose to. So I'm just curious, reflecting back on that more than decade that you've now been there. What's it been like just being down the hall from Warren Buffett daily and maybe more importantly to have him and Charlie Munger, not just as your mentors to keep learning from, but also just to have them as your friends. Well, that's a great one to finish on because he almost can't put it in words. Most people would maybe have a hard time understanding because they just think of Warren as Warren or whatever. And Pete deserves almost all the credit here along with my wife. Obviously, the serendipity of just being there, you can't script it, you can't pre-solve for it. So you really want to see the old saying about you find out a lot about people in the worst of times. And so most of the time things are fine. There's the day to day. But what happens when the rubber hits the road and it's tough. And so when the circle situation happened and I'm the only one there, at a very small office, we didn't even have any other investors on the only investor there. Everyone else is back office, treasury, controls, etc. And internal audit. And so Warren comes down when we talk about that situation, we were talking five, six times a day, sometimes he'd shuffle down. And I'd be like, oh, he's what's going on. Well, we got these three deals came through this morning and they're all shit. And here's why and this one, can you believe they're trying to sell this company that sells radiation and did it or this or that or the other. You just have fun talking through that. And then Warren, of course, tell a story. I was looking at I own direct TV at the time and I was looking at charter was coming out of bankruptcy. And there's a million stories like this. This one's just fun. And he says, oh, and I just read cable cowboy and I said, cable boy, that's a super tough business. And I said, yeah, I view it and we had talked a lot about the railroads. Now the railroads have been a really shitty business for a hundred plus years. And then boom, this one thing changed. The Uber's all been a really terrible business for a long, long time. And then this one thing just flipped and the whole dynamic flipped. And I said, I think that might be the case with cable. So he says, I did some work on the cable in the 60s, all these files, rows and rows and rows and rows of files. He said, you should go and look. So I did went through all that stuff. So then we got a lunch. We talk about it. And that helps give you a historical perspective. I was born in 71s. I didn't even know this stuff in the 60s. And so it just one more data point, one more context to the whole thing. So all that a million stories like that, but it's like a three-dimensional hologram. It wouldn't even really be the same if I were. And it would be like, there's the noise in the signal. It ought to be noise. And so you get a very, very clear signal when you're right there and actually the person. Well, Todd, this has been just amazing spending time with you. If we think about the compounding equation, finding your purpose, growing as fast as you can and doing for a long time, you're the embodiment of this in so many ways. And you are a human compounding machine. Wow. You're still so early on. And so it's just going to be so fun to see how this progress is over time. And thanks for spending this time. Listen, I appreciate you guys having me at Notre Dame's a special place. Thanks so much for showing up to class today. For more art of investing episodes, and to explore all of the resources we mentioned today and more, check out StayGrowV.com. That's StayGROVEY.com. That's it for now and we'll see you next week.