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    #362 Li Lu

    en-usAugust 26, 2024
    What did Andrew Carnegie believe about controlling costs?
    How did Li Lu's childhood impact his future success?
    What lessons did Munger and Li demonstrate for entrepreneurs?
    How did Lee Liu find solace during his childhood?
    What mantra guided Li Ka-shing's research methods?

    Podcast Summary

    • Cost Control, PatienceControlling costs is crucial for business success, as emphasized by Andrew Carnegie and the founders of Ramp. Patience and turning small opportunities into significant gains, as demonstrated by Li Lu, are valuable lessons for entrepreneurs and individuals.

      Controlling costs is a crucial aspect of business success, as emphasized by various entrepreneurs on the podcast. Andrew Carnegie believed that profits and prices are cyclical, but costs could be strictly controlled and any savings achieved were permanent. This idea resonated with the founders of Ramp, a company that offers tools to help businesses control their spend. Meanwhile, the book "Moving the Mountain" by Li Lu, who had a successful investment partnership with Charlie Munger, tells an extraordinary story of Li's difficult childhood in communist China. Despite his hardships, Li's determination and resilience set the foundation for his future success. The importance of patience and the power of turning small opportunities into significant gains, as demonstrated by Munger and Li, are valuable lessons for entrepreneurs and individuals alike.

    • Authority's impact on childrenFear and brainwashing used by teachers can instill inferiority and fear in children, but curiosity, courage, and the desire for knowledge can help them challenge authority figures and gain confidence.

      "Night at the Fissues" by Shusaku Endo explores the theme of authority and its impact on children's development. The book portrays teachers using fear and collective brainwashing to control students, instilling a sense of inferiority and fear in Lee, the protagonist. However, Lee's curiosity, courage, and desire for knowledge help him challenge authority figures and gain confidence. Despite his difficult upbringing, Lee's experiences shape him into a resourceful and determined individual, demonstrating the power of resilience and the importance of seeking truth. Additionally, the book highlights the harsh realities of poverty and political persecution in China during that time, adding another layer to Lee's struggles.

    • Power and LossThe book explores how those in power can abuse it, leaving families vulnerable to hardship and loss. Liu's personal experiences with loss and the importance of family drive his determination to succeed.

      That the book explores the themes of family, loss, and the abuse of power. The protagonist, Liu, grows up in a community where those in power, such as the neighborhood committee and the government, often abuse their authority, leaving families like Liu's vulnerable. Liu's own father, a coal miner, is trapped and killed in a mine explosion, leaving his family destitute. Liu is shuffled between various families and feels unwanted, leading him to develop a strong desire to learn and support himself and his mother. Despite the hardships, Liu's determination and resilience ultimately lead him to success. Another important theme is the impact of loss and the importance of family, as Liu's family collapses and he is forced to find new ways to survive and thrive.

    • Childhood Trauma, InequalityDespite facing childhood trauma and witnessing societal inequality, Li Lee found solace in discovering his father's hidden talents and accomplishments.

      Li Lee's childhood was taken away from him prematurely due to unfortunate circumstances and the harsh realities of society. He was forced to grow up quickly and observe the cruelty and inequality around him. The Tangshan earthquake added to his trauma, as he witnessed the death of his family and the continuation of inequality even in supposedly equal communities. Despite these challenges, Lee found solace in understanding his parents' past and discovering his father's hidden talents and accomplishments. However, the harsh realities of life continued to confront him, as he witnessed the brainwashing of the masses and the blatant disregard for equality by those in power. Through it all, Lee remained resilient and continued to seek knowledge and understanding.

    • Li Ka-shing's upbringing and educationLi Ka-shing's challenging upbringing and dedication to learning fueled his intense work ethic and success. Early experiences emphasized the importance of education and competition, shaping Li's mantra of 'accurate and complete information'.

      The drive to learn and understand the world around him, fueled by his challenging upbringing, played a crucial role in shaping Li Ka-shing's intense work ethic and success. This became evident during a pivotal conversation with his father, where he discovered the importance of education and competition. Li's dedication to learning and reading set him apart from his peers, as seen in his top performance in a national college entrance exam and his pursuit of multiple degrees at Columbia University. The contrast between Li's determination and the unpreparedness of the Columbia MBA students highlights the significance of a strong foundation in knowledge and understanding. This early experience instilled in Li the mantra of "accurate and complete information," which guided his research methods and business practices throughout his career.

    • Power of Knowledge and ReadingReading and knowledge can broaden one's perspective and lead to personal growth, even in difficult circumstances. Non-conformity and free inquiry are essential for intellectual development.

      The power of knowledge and reading can open up new worlds and broaden one's perspective, even in the face of limited opportunities or difficult circumstances. Lee Liu, the protagonist in this discussion, found solace and education through books, leading him to form a secret reading group and eventually pursue his dreams in the United States. As Charlie Munger once said, "as long as I have a book in my hand, I don't feel like I'm wasting my time." The importance of non-conformity and free inquiry was also emphasized, as Lee's teacher recognized his potential and encouraged him to seek knowledge in an environment that suppressed questioning. Despite the challenges and violence he faced, Lee's dedication to learning and personal growth ultimately paid off.

    • Tiananmen SquareLulu's escape from China after being a fighter in Tiananmen Square led him to start a new life in New York and rebel against oppression. Founder's Notes offers resources to learn from entrepreneurs' experiences.

      The events at Tiananmen Square in 1989 led to a life-altering experience for Lulu, as he went from being an unwanted child and a fighter in the square, to a criminal wanted by the Chinese government. Faced with oppression, Lulu chose to escape and start a new life in New York at the age of 23. The book ends with him fleeing China and beginning his journey in the United States. This harrowing experience shaped Lulu's perspective and drove him to rebel against oppression. Additionally, Founder's Notes offers a private podcast feed and a searchable database of notes and highlights from the books discussed on the podcast, providing subscribers with a powerful tool to learn from history's greatest entrepreneurs on demand.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

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    #363 Li Lu and Charlie Munger and Warren Buffett

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    I sent a friend this text: I'm working on another Li Lu episode but this one is about his remarkable investing career. Can be summarized by: 1. Studied Buffett and Munger. 2. Did that. Last episode was about how Li Lu survived one of the most horrific childhoods imaginable. This episode covers how he thinks about investing and entrepreneurship—in his own words. 

    Sources: 

    The forward to the Chinese edition of  Poor Charlie’s Almanack written by Li Lu 

    Li Lu's Colombia Business School lecture 2006

    Li Lu’s San Francisco State University lecture 2012

    Graham & Doddsville interview with Li Lu 

    13th Colombia Business Conference 2021 

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    Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

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    Build relationships with other founders, investors, and executives at a Founders Event

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    Join my free email newsletter to get my top 10 highlights from every book

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

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    Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

    ----

    Build relationships with other founders, investors, and executives at a Founders Event

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    Join my free email newsletter to get my top 10 highlights from every book

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

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    Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

    ----

    Build relationships with other founders, investors, and executives at a Founders Event

    ----

    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    Join my free email newsletter to get my top 10 highlights from every book

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

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    Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

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    Build relationships with other founders, investors, and executives at a Founders Event

    ----

    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    Other books mentioned in this episode: 

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    Bloomberg by Michael Bloomberg.

    Born of This Land: My Life Story by Chung Ju-yung.

    The Bugatti Story by L’Ebe Bugatti.

    Sol Price: Retail Revolutionary by Robert Price. 

    How To Make A Few Billion Dollars by Brad Jacobs.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

     

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    Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

    ----

    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

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    Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more

    ----

    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here

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    Join my free email newsletter to get my top 10 highlights from every book

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

     

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    What I learned from reading What I Talk About When I Talk About Running: A Memoir by Haruki Murakami. 

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. 

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    (3:01) No matter how mundane some action might appear, keep at it long enough and it becomes a contemplative, even meditative act.

    (4:00) Pain is inevitable. Suffering is optional.

    (4:00) The hurt part is an unavoidable reality, but whether or not you can stand anymore is up to the runner himself.

    (10:00) You can't fake passion — someone else, that really loves the job, will out run you. Somebody else sitting in some other MBA program has a deep passion for whatever career path you're going down, and they are going to smoke you if you don't have it yourself.  — Runnin' Down a Dream: How to Succeed and Thrive in a Career You Love 

    (12:00) What’s crucial is whether your writing attains the standards you’ve set for yourself. Failure to reach that bar is not something you can easily explain away.

    (14:00) Big ideas come from the unconscious. This is true in art, in science and in advertising. But your unconscious has to be well informed, or your idea will be irrelevant. Stuff your conscious mind with information, then unhook your rational thought process. You can help this process by going for a long walk, or taking a hot bath, or drinking half a pint of claret. Suddenly, if the telephone line from your unconscious is open, a big idea wells up within you.  — David Ogilvy

    (16:00) If you absolutely can't tolerate critics, then don't do anything new or interesting. — Jeff Bezos

    (16:00) So the fact that I’m me and no one else is one of my greatest assets.

    (19:00) Failure was not an option. I had to give it everything I had.

    (19:00) My only strength has always been the fact that I work hard and can take a lot physically. I’m more a workhorse than a racehorse.

    (22:00) I was more interested in having finished it than in whether or not it would ever see the light of day.

    (26:00) I’m the kind of person who has to totally commit to whatever I do.

    (29:00) The entrenched professional is always going to resist far longer than the private consumer. — James Dyson

    (34:00) You really need to prioritize in life, figuring out in what order you should divide up your time and energy. If you don’t get that sort of system set by a certain age, you’ll lack focus and your life will be out of balance. I placed the highest priority on the sort of life that lets me focus on writing,

    (37:00) You can’t please everybody. If one out of ten enjoyed the place and said he’d come again, that was enough. If one out of ten was a repeat customer, then the business would survive. To put it the other way, it didn’t matter if nine out of ten didn’t like my bar. This realization lifted a weight off my shoulders. Still, I had to make sure that the one person who did like the place really liked it. In order to make sure he did, I had to make my philosophy and stance clear-cut, and patiently maintain that stance no matter what. This is what I learned through running a business.

    (40:00) The reason we're surprised is that we underestimate the cumulative effect of work. Writing a page a day doesn't sound like much, but if you do it every day you'll write a book a year. That's the key: consistency. People who do great things don't get a lot done every day. They get something done, rather than nothing. — How To Do Great Work by Paul Graham. (Founders #314)

    (41:00) When you follow what you are intensely interested in this strange convergence happens where you're working all the time and it feels like you're never working. — How To Do Great Work by Paul Graham. (Founders #314)

    (43:00) No matter how strong a will a person has, no matter how much he may hate to lose, if it’s an activity he doesn’t really care for, he won’t keep it up for long.

    (44:00) Nobody ever recommended or even desired that I be a novelist—in fact, some tried to stop me. I had the idea to be one, and that’s what I did.

    (45:00) I decided who I want to be, and that is who I am. — Coco Chanel

    (46:00) Once, I interviewed an Olympic runner.  I asked him, “Does a runner at your level ever feel like you’d rather not run today, like you don’t want to run and would rather just sleep in?” He stared at me and then, in a voice that made it abundantly clear how stupid he thought the question was, replied, “Of course. All the time!”

    (47:00) I pity the poor fellow who is so soft and flabby that he must always have "an atmosphere of good feeling" around him before he can do his work. There are such men. And in the end, unless they obtain enough mental and moral hardiness to lift them out of their soft reliance on "feeling," they are failures. Not only are they business failures; they are character failures also; it is as if their bones never attained a sufficient degree of hardness to enable them to stand on their own feet. There is altogether too much reliance on good feeling in our business organizations. —  Henry Ford’s Autobiography

    (50:00) If I used being busy as an excuse not to run, I’d never run again.

    (51:00) Focus and endurance can be acquired and sharpened through training.

    (54:00) Exerting yourself to the fullest within your individual limits: that’s the essence of running, and a metaphor for life.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

    #356 How The Sun Rose On Silicon Valley: Bob Noyce (Founder of Intel)

    #356 How The Sun Rose On Silicon Valley: Bob Noyce (Founder of Intel)

    What I learned from reading The Tinkerings of Robert Noyce: How the Sun Rose on Silicon Valley by Tom Wolfe. 

    Read The Intel Trinity: How Robert Noyce, Gordon Moore, and Andy Grove Built the World's Most Important Company by Michael Malone with me. 

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. 

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    (1:00) America is today in the midst of a great technological revolution. With the advent of the silicon chip, information processing, and communications, the national economy have been strikingly altered. The new technology is changing how we live, how we work, how we think. The revolution didn't just happen; it was engineered by a small number of people. Collectively, they engineered Tomorrow. Foremost among them is Robert Noyce.

    (2:00) Steve Jobs on Robert Noyce: “He was one of the giants in this valley who provided the model and inspiration for everything we wanted to become. He was the ultimate inventor. The ultimate rebel. The ultimate entrepreneur.”

    (4:00) When you read biographies of people who've done great work, it's remarkable how much luck is involved. They discover what to work on as a result of a chance meeting, or by reading a book they happen to pick up. So you need to make yourself a big target for luck, and the way to do that is to be curious. Try lots of things, meet lots of people, read lots of books, ask lots of questions.  — How To Do Great Work by Paul Graham. (Founders #314)

    (7:00) Bob Noyce had a passion for the scientific grind.

    (10:00) He had a profound and baffling self-confidence.

    (15:00) They called Shockley’s personalty reverse charisma. —  Broken Genius: The Rise and Fall of William Shockley, Creator of the Electronic Age by Joel Shurkin. (Founders #165)

    (25:00) What the beginning of an industry looks like: Anywhere from 50 to 90% of the transistors produced would turn out to be defective.

    (33:00) Young engineers were giving themselves over to a new technology as if it were a religious mission.

    (41:00) Noyce's idea was that every employee should feel that he could go as far and as fast in this industry as his talent would take him. He didn't want any employee to look at the structure of Intel and see a complex set of hurdles.

    (43:00) This wasn't a corporation. It was a congregation.

    (43:00) There were sermons. At Intel everyone, Noyce included, was expected to attend sessions on "the Intel Culture." At these sessions the principles by which the company was run were spelled out and discussed.

    (45:00) If you're ambitious and hardworking, you want to be told how you're doing.

    (45:00) In Noyce's view, most of the young hotshots who were coming to work for Intel had never had the benefit of honest grades in their lives. In the late 1960s and early 1970s college faculties had been under pressure to give all students passing marks so they wouldn't have to go off to Vietnam, and they had caved in, until the entire grading system was meaningless. At Intel they would learn what measuring up meant.

    (49:00) When you are trying to convince an audience to accept a radical innovation, almost by definition the idea is so far from the status quo that many people simply cannot get their minds around it. They quickly discovered that the marketplace wasn’t just confused by the concept of the microprocessor, but was actually frightened by its implications. Many of my engineering friends scoffed at it was a gimmick. Their solution? The market had to be educated. At one point, Intel was conducting more seminars and workshops on how to use the microprocessor than the local junior collage’s total catalog of courses. Bob Noyce, Gordon Moore, and Andy Grove became part of a traveling educational roadshow. Everyone who could walk and talk became educators. It worked.  —  The Intel Trinity: How Robert Noyce, Gordon Moore, and Andy Grove Built the World's Most Important Company by Michael Malone. 

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

    Be like Gareth. Buy a book: All the books featured on Founders Podcast

    #355 Rare Bernard Arnault Interview

    #355 Rare Bernard Arnault Interview

    What I learned from reading The House of Arnault by Brad Stone and Angelina Rascouet. 

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    Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. 

    Get access to Founders Notes here

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    (3:00) While other politicians were content to get their information from a scattering of newspapers, he devoured whole shelves.  — Young Titan: The Making of Winston Churchill by Michael Shelden. (Founders #320)

    (7:00) Arnault had understood before anyone else that it was a true industry. — The Taste of Luxury: Bernard Arnault and the Moet-Hennessy Louis Vuitton Story by Nadege Forestier and Nazanine Ravai. (Founders #296)

    (9:00) Arnault is an iron fist in an iron glove. — The Taste of Luxury: Bernard Arnault and the Moet-Hennessy Louis Vuitton Story by Nadege Forestier and Nazanine Ravai.

    The public conception of Sam as a good ol’ country boy wearing a soft velvet glove misses the fact that there’s an iron fist within. —  Sam Walton: The Inside Story of America's Richest Man by Vance Trimble.

    (12:00) People often ask me, “When are you going to retire?” And I answer, “Retire from what?” I’ve never worked a day in my life. Everything I’ve done has been because I’ve loved doing it, because it was enthralling. — Am I Being Too Subtle?: Straight Talk From a Business Rebel by Sam Zell. (Founders #269)

    (16:00) “I am not interested in managing a clothing factory. What you need, and I would like to run, is a craftsman’s workshop, in which we would recruit the very best people in the trade, to reestablish in Paris a salon for the greatest luxury and the highest standards of workmanship. It will cost a great deal of money and entail much risk.” — Christian Dior to Marcel Boussac

    (17:00) Arnault believed that luxury brands could be larger than anyone at the time imagined.

    (20:00) Arnault said this 35 years ago: “My ten-year objective is that LVMH's leading position in the world be further strengthened in the luxury goods sector. I believe that there will be fewer and fewer brand names capable of retaining a worldwide presence and that those of our group will be among them as we will provide them with the means for growth.”

    (25:00) There are huge advantages for the early birds. When you're an early bird, there's a model that I call surfing—when a surfer gets up and catches the wave and just stays there, he can go a long, long time. But if he gets off the wave, he becomes mired in shallows. But people get long runs when they're right on the edge of the wave, whether it's Microsoft or Intel or all kinds of people, including National Cash Register. Surfing is a very powerful model.”  —  the NEW Poor Charlie's Almanack: The Wit and Wisdom of Charlie Munger. (Founders #329)

    (25:00) One thing I learned from having dinner with Charlie was the importance of getting into a great business and STAYING in it. There’s a tendency in human nature to mess up a good thing because of an inability to sit still.

    (25:00) The incredible career of Les Schwab: Les Schwab Pride In Performance: Keep It Going! by Les Schwab. (Founders #330)

    (30:00) Dior in his autobiography: It is widely, and quite erroneously, believed that when the house of Christian Dior was launched, enormous sums were spent on publicity: on the contrary in our first modest budget not a single penny was allotted to it. I trusted to the quality of my dresses to get Christian Dior talked about. Moreover, the relative secrecy in which I chose to work aroused a positive whispering campaign, which was excellent (free) propaganda. Gossip, malicious rumours even, are worth more than the most expensive publicity campaign in the world.

    (31:00) Munger: “There are actually businesses that you will find a few times in a lifetime, where any manager could raise the return enormously just by raising prices-and yet they haven't done it. So they have huge untapped pricing power that they're not using. That is the ultimate no-brainer. Disney found that it could raise those prices a lot and the attendance stayed right up. So a lot of the great record of Eisner and Wells came from just raising prices at Disneyland and Disneyworld and through video cassette sales of classic animated movies. At Berkshire Hathaway, Warren and I raised the prices of See's candy a little faster than others might have. And, of course, we invested in Coca-Cola-which had some untapped pricing power.”

    Charlie Munger: The Complete Investor by Tren Griffin

    (33:00) The benefits Arnault receives from owning commercial real estate: He makes money from his own stores, from leasing space to rivals—and from the appreciation of premium real estate. When LVMH buys a building, it takes the best storefronts for its own brands and often asks rivals to move out when their leases expire.

    (35:00) Arnault is all about details. He has 200,000 employees and he’s paying attention to details about landscaping in the Miami Design District.

    (36:00) If we lose the detail, we lose everything. — Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World by Richard Snow. (Founders #347)

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