This newsletter was formerly called Carolina Stories. It has always been a training ground to test ideas and connect with others. In the spirit of continuous experimentation I’ve decided to tinker with the format. If the new focus doesn’t meet your expectations, please feel free to unsubscribe. I look forward to learning alongside you.
The Obsession Torch
My legs started teetering at mile 17. The cramps started in my hamstrings then also locked up my calves in the 70-degree heat, heavy humidity, and 20 mph headwinds—not the conditions I would have picked for my first marathon. Yet with each sluggish step and every primal scream, I felt an addictive surge of purpose. I loved exploring my limits.
One year ago running was an unpleasant way to rack up steps, burn calories, or improve pace. Then somehow after a few months of consistent training, I became that runner—wearing short-shorts, opening Strava more than Twitter, and comparing everything to running.
Life’s greatest rewards often come from long-term commitment and deep dedication. But modern society is flooded with distraction, FOMO, and envy.
The perfect partner is one swipe away. A better investment is a click away. And more engaging content is just a tab over.
Playing for Keeps
Similarly, public market investors struggle with a constant flow of information and a 90-day shot clock. But the most rewarding game is played over decades.
Warren Buffett first purchased Geico in 1951. Jay Hoag invested in Netflix in 1999. Nick Sleep invested in Amazon in 2005. And Antonio Gracias invested in Tesla in 2007.
These are billion-dollar outcomes. More importantly, the power laws extend far beyond the dollar signs. Hall of fame investments are filled with stories, knowledge, and relationships.
Geico executive Lorimer Davidson spent a Saturday morning teaching Buffett about the insurance business. Jay Hoag doubled down on Netflix shortly after Reed Hastings’ Qwikster flop. Nick Sleep discovered Scale Economies Shared. And Antonio Gracias slept on the Tesla factory floor alongside Elon.
Exploring Network Effects and Founder Mode
Author and coach Josh Waitzkin describes this focused learning process as "Making Smaller Circles" in his book The Art of Learning.
In Making Smaller Circles we take a single technique or idea and practice it until we feel its essence. Then we gradually condense the movements while maintaining their power, until we are left with an extremely potent and nearly invisible arsenal.
That’s my approach to investing research. I want to spend less time seeking and chasing and more time obsessing over a single idea. I want to compress knowledge until the essence of a company crystallizes.
Ironically, depth over breadth is also a powerful sourcing engine. If I spend a few months plunging deep into a single company, the research inevitably leads me to the next idea.
My hope is this Substack experiment becomes a laboratory to immerse myself in specific companies, topics, or ideas. Recently I’ve been captivated with Brian Chesky’s strategy at Airbnb. Smaller Circles can help refine and internalize the nuance of concepts such as network effects, super apps, and organizational design. More importantly, I hope this project evolves into a vehicle to learn from other investors and industry experts.
The Tradeoffs of Learning in Public
Charlie Munger popularized the concept of commitment and consistency bias in his excellent speech on The Psychology of Human Misjudgement, “Of course if you make a public disclosure of your conclusion, you’re pounding it into your own head.”
But Munger wouldn’t shut up about Costco. At the 2011 annual meeting, Buffett joked about this infatuation:
Charlie and I were on a plane recently that was hijacked. The hijackers picked us out as the two dirty capitalists they had to execute but they didn't really have anything against us so they said that each of us would be given one request before they shot us. Charlie said, ‘I would like to give once more my speech on the virtues of Costco–with illustrations.’ The hijacker said, ‘Well that sounds pretty reasonable.’ He turned to me and asked, ‘What would you like Mr. Buffett?’ And I said, ‘Shoot me first.’
Munger continued to talk about Costco in his final interviews before he died in 2023. Is this hypocrisy? I don’t think so. Munger understood he speared a world-class business and the biggest risk would be to sell. He was leveraging commitment and consistency bias to stay invested despite a nosebleed valuation.
If I’m right about Brian Chesky and Airbnb, I certainly don’t want to flip it for a 50% gain and miss out on the multi-decade potential. If I’m wrong, the project will likely be a stepping stone to the next company that grips my energy and attention.
Additionally, some critics may accuse me of “talking my book.”
Well, CAA founder Michael Ovitz said it best, “No conflict, no interest.”
Very excited for this.