Special: Invest Like the Best on Acquired

Transcript from https://podmenti.com/t/36113a5a91991368

Sweet.
Nice.
That was great. You guys do awesome.
Awesome preparatory work.
That's by far the by far the best one I've done, by far.
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them.
I'm Ben Gilbert, and I'm the co founder of Pioneer Square Labs, a startup studio and venture firm in Seattle. And I'm David Rosenthal, and I am a angel investor and independent advisor to startups based in San Francisco. And we

Now you'll notice this is a very abnormal episode for us. I didn't say a number, we didn't talk about a company in the intro. David, what is this episode that we are doing today? We have a very, very special guest episode we've been looking forward to, uh think all of us to doing for a long time. We have Patrick O'Shaughnessy.
CEO of O'Shaughnessy Asset Management and also host of the Invest Like the Best podcast, one of our very favorite shows here at Acquired. And
So excited to have him on. So Patrick is a master interviewer.
as we all know, and he gets these amazing guests, talks all about their businesses and their stories. Other than I think like the the old episode you did with your dad
The uh your audience doesn't get to hear about you. We want to hear about your business. What is this O'Shaughnessy asset management thing? How did you come into this? You were a philosophy major, now you're running a quant fund, you have a venture fund, you've built this amazing podcast empire.
We're gonna dive all into it. Welcome, Patrick.
Thank you guys so much for having me. I'm always
hesitant to do any of these'cause I'm scared of of boring people with the same stories, but there's a mutual admiration society here of of all the podcasts I listen to. Yours is the most regular, so it's an honor to be here. Thank you for having me.
Thanks for joining us. Well, before we dive in,
If you love acquired and you want to hone your own craft of company building, you should join the acquired community of limited partners. You'll get access to the LP show where we dive deeper into the fundamentals of company building and investing, in addition to our LP monthly calls, where we talk with all of you directly, and of course our book club and Zoom call with the authors.
So if you aren't already an LP, you can click the link in the show notes or go to acquire.fm slash LP and all new listeners get a seven day free trial.
All right listeners.
Now is a great time to talk about a new partner of ours here on Acquired, Lagora.
The agentic operating system that is redefining how the world's best legal teams work.
Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Lagora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?
So the founders did exactly what great founders do.
operate with obsessive customer focus.
They embedded inside a massive law firm.
For months.
They sat with the lawyers just watching how the work really gets done.
And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legor's Bet Here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work.
and do higher value work. And this means that the pie can grow even as each individual task takes less time.
And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.
And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Lagora numbers essentially
speak for themselves. When they have a head to head pilot with their top competitor, they win seventy percent of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries.
And crazily, they went from one million
to a hundred million in ARR.
And about.
Eighteen months.

truly insane numbers. And that is the real test.
Plenty of things demo well, but the question is whether a busy associate actually reach for it during crunch time, or whether a partner trusts it before going into a conversation with a major client.
If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at Lagora.com slash acquired.
And just tell him that Ben and David sent you.
And now on to our special with Patrick O'Shaughnessy of Invest Like the Best.
All right. Well before invest like the best.
There was well, actually not before Invest Like the Best, as we'll get into. The first iteration there was
O'Shaughnessy Asset Management, of course, where you are the CEO. But before that there was O'Shaughnessy Capital Management. Uh and that was started by your dad, right, Patrick?
It was, yeah, in nineteen ninety.
I guess technically in nineteen eighty seven. So it goes way back. For the first several years it was a research firm, not an asset management firm. That might be a theme we refer to back and forth today, which is the the combination of open research and open ideas and asset management and how the two interrelate.
Uh, but technically it was nineteen eighty seven, but began as an asset management firm in ninety five, ninety six.
You guys hadn't, I think, still have a close relationship with RBC, right? The Royal Bank of Canada?
We do, yeah. So the Royal Bank is it's a fascinating business, an incredible business that most people probably won't know. Um I've I've actually been lucky to be more places in Canada than probably all but a few Canadians love the country and and love that company.
They they're our largest, our longest standing client. They actually are the only outside owner of our business. They own a a minority stake in our business. So a deep, long partnership with them has been a common thread through my career. There's an interesting story, maybe we can come back to about uh a pivotal role they played in the first couple of years of my career.
Um in in the times that I did get to see all those tiny corners of Canada. That's amaz we okay, we definitely got to put a pin in that and come back. So Osana C
Capital management and the the kind of
core insight is I understand it that you're
Dad had was
That there was
academic research around quantitative methods for investing and for screening and identifying
equities, I believe equities are maybe all types of assets to invest in. And he was really a pioneer in kind of putting that
I mean, I guess is it fair to characterize it as like a data driven approach to the old Ben Graham style, Graham and Dad value investing? Is is that a fair way to characterize kind of the insight that he had?
Yeah, I think a common misconception about
quants in general where I would count us is that we're we're value investors. We're not slaves to value. It just happens to be one of those things that has worked really well historically. Um there are other things that are very different from value that work too. But the original work was shockingly simple. And oftentimes this I find this is the case that
No one had just gone to look at data to see what kinds of stocks with what kinds of attributes tended to do well. The the original version of the research was literally the dogs of the Dow strategy, which is nothing more than taking of the 30 Dow stocks the 10 stocks that have the highest dividend yield.
Buying them, holding them a year, redoing that same rule set a year later with a single trade.
And he was I think the first person to bring that research all the way back to the inception of the Dow thirty. And what he found was uh look, this incredibly arguably stupidly simple strategy did better than the Dow itself.
And and that the two pillars of that were the discipline with which it was implemented. Um so you never deviated from a very very specific process or rule set.
And and just buying stuff for a lower price. And, you know, of course, that strategy, like like any strategy that gets discovered, tends to fade in its significance, but not necessarily go away. So that was the original research that I think, you know, kicked off our entire
Journey as a company way back in the 80s with an incredibly simple by hand, you know, microfiche collected data set going back to the 1920s.
What's the first time Microfiche has come up unacquired?
Powerful set of stuff you can find. If you're willing to just go grind and put in the work and and find differentiated data sets.
maybe we'll talk about this too. You know, it's it's often not the modeling exercise that matters. It's the information that you're able to
access, clean, you know, normalize and and control.
And uh not a lot of people were at the library looking through microfiche.
Yeah. So this is library. The other
To my mind at least kinda like key
piece of of even like super early in this first iteration of the firm
that you guys I think were pioneers in is
Is marrying
this you know, investing
And your approach and this whole quantitative approach.
With
media and evangelizing too, right? So like invest like the best that we all know and love today is
The second iteration of Invest Like the Best, right?
It is, yeah. It's it's um I I catch a lot of flack for the title, like it's some corny, you know, rhymey title, which which I suppose it is, you know, on face value. The reason I named it this was so my dad's first book he's written for. Uh his first book was called Invest Like the Best.
And the whole premise, so this this actually predated what became O'Shaughnessy Capital, was that he was hired by large pension funds.
to effectively model their managers, the famous managers of the day, the Peter Lynches of the world, for example, the John Templetons.
And what he did was create
Like clone portfolios by
super simplifying their investment strategies into a rule set. And so the idea of the book was extract lessons from
the behavior and investments of very famous successful managers and have it as a tool that you can carry with you or even use directly in your investing. And so I just thought, oh, that's kinda cool. You know, I'm basically gonna do a version of that where
I'm talking to people because I'm interested in getting them to share portable lessons with me and everybody else. So it would be kind of a neat tip of the hat to my dad's original research. I thought about that for about two seconds, you know, it just popped into mind and that's how how how it got named. But yes, there's a lot of continuity here around
a commitment to
uh I always call it learning in public. I feel like that's becoming a a cliched phrase, but I can lay claim to using that that that very early on, but I do believe deeply in the power of doing that.
So that first iteration
Capital management.
ends up bare stars ends up acquiring it. It becomes
I think the the
linchpin and biggest part of Bear Stern's asset management.
Yeah.
Right before obviously before the financial crash in two thousand eight.
There's an intermediate step which is actually quite interesting, which was uh in the late nineties.
the team that was out of Shaughnessy Capital
began to build a business called Netfolio. Netfolio was a version of like if Motif Investing and Wealthfront had a had a baby, uh it would have been Netflio back in the late nineties, sort of an idea that was inevitable, but just ultimately too early for its time. So that whole team was building a, you know, a effectively a robo advisor
in the late nineteen nineties.
was a part of that whole boom and bust cycle. I mean, it was like the quintessential story of tons of money. Targeted at consumers.
targeted direct to consumer. We'll come back to that when we talk maybe about Canvas later on, um, because we're doing something very different. But again, returning to our technology roots. If I was to credit any two
patterns that are in common between me and my dad, even though he we never really talked about this. It was just sort of implicit. It was this love of technology and this love of open research.
It definitely uh carries through.
So I mean with today
If I go to wealth front, it's very set and forget. I pick basically the amount of risk exposure I'm open to and it does all the rebalancing for me. With Netfolio, did it bring in that idea of the clone portfolios? Like could I invest like my favorite value investor?
You know it never got far enough where
all the different product ideas came to fruition. At at first it was very simple versions of the same screens that were being run out of Shaughnessy Capital Management, which was all around the quantitative research that team had done, and largely from a book called What Works on Wall Street, which was sort of the the book that created the asset management firm, which is kind of an interesting directional story.
And that was about it. I think the plans may have been to expand types of strategies and and make it more and more customizable, which I think would have been a powerful concept, the one that we're playing with today, but never never quite made it there. So so it its chassis was fairly straightforward, but it wasn't passive, like like Wildfront and Betterment are just
you know, low cost index rebalancing. It did offer active strategies.
So
Then obviously two thousand eight.
Happens.
It was like February two thousand eight.
A few months before Lehman.
So then
You guys.
Take the practice and spin it.
Back out a bear. Right. And that's
The birth of
What we all know today, Oshon is the asset management, right?
Yeah, and I can now speak to this from experience, not from from story,'cause now I'm now I've entered the picture. So we actually left in the year before the the March blow up two thousand eight blow up of Bear Stearns in the summer of two thousand seven. So technically the first day of OSAM was July third, two thousand seven, which we called OSA. OSAM Independence Day.
It was just um sometimes luck of the Irish helps. We definitely were were lucky, m maybe in more ways than good. The plan had already been in motion long before the the two structured high grade credit hedge funds that were sort of the canary and the
Great financial crisis coal mine began to blow up.
Patrick, you were graduating in two thousand seven as well. Yeah, I literally graduated two months earlier.
Oh my gosh. I so I did too.
I started working in the analyst program at UPS in the TMT group there.
And God, I remember when whenever it was when those hedge funds blew up and JP Morgan acquired the assets of Bear for two dollars a share, somebody taped a two dollar bill to the road. Do you remember this, the revolving door on uh Bear's headquarters in Midtown?
I remember hearing the news in March, again, like I started
and I guess sounds like you two started our careers on Wall Street
thinking like, wow, this is a great place to be. Markets seemed to just kinda go up. You know, I I didn't really have the two thousand, you know, s stain on my brain. My awareness of the market was oh two to oh seven, which was this just like up into the right scenario. And the first several months was more of that in my career. And so I was
Very green. I hadn't studied you know, we'll talk about it I hadn't I hadn't studied finance or business. I really didn't know anything.
I saw saw the the shit hit the fan. Um, so the the famous thing that I remember because we knew so many bear people.
was thinking that someone had screwed up the price, that it wasn't two, it must have been at least twenty dollars, right? Like
There's no way it could be two dollars. And so I'll never forget I'll never forget that that image of the two dollar bill plastered up against that that beautiful Bear Stearns building, which, you know, was part of the deal when Lehman acquired Bear that, you know, just that building alone was like a billion dollar building.
and they got it for nothing. So what a wild and I looking back, you know, it was uh the aftermath of the of the crisis was was really hard for me because it forced me to learn so much so quickly in in a very stressful environment with clients that are angry and upset about you know losing a lot of money.
ultimately I was formative. I'm glad that I started my career with that sort of event, better than having one, you know, l late in one's career or or after a rosy period.
What does that look like when you
take the firm and sort of spin it out of Barristern structurally? Like how do you
do something entrepreneurial like that with existing
assets of an asset management firm.
So it's complicated. The way that we ultimately did it was highly unusual, where we had a as as divorces go, had the friendliest of possible divorces with Bear.
There was literally a period where, you know, an asset management track records are everything. And so
Track records break if they're not continuous. So we actually had portfolio management team members as dual employees of Bear Stearns and O'Shaughnessy Asset Management. 14 people, not including myself, left bear.
and were the sort of foundation foundational team for OSAM.
I spent a big chunk of my you know that early summer
Call you the first hire.
I would I'm technically the first employee, yeah. Well
Uh, also the first intern at first, although that didn't last long.
So I spent a lot of my time transferring clients over. Um, you know, we had billions and billions of dollars and thousands of accounts and it was a rude awakening for what business is is like and all about. It was as friendly as it could be, meaning they helped us make it continuous and and a good experience for the clients, or as good as we could make it. It's interesting to
Basically start a business that's already a a a fairly large going concern.
But nonetheless have to treat it like a brand new business with all the all the trouble that that that that that entails. But it was a great education for me. Again, I hadn't studied this stuff, so I had I had to learn by doing and I treasure those early days, even though it was stressful and hard.
Okay, my my plan here was to get right into the business model of of sort of OSM, since I think a lot of our listeners are not finance native, but we've touched a few times on your education now and and how you didn't sort of come from this
Take us through how you decided what to study in college and
Did you intend to
Go into the family business or not.
So I I'm a big believer that hardship early on often shapes someone's personality and character later on.
And one of my hardships early on in life was was completely self imposed, which was I was a horrifically bad student in high school. I I moved from a very small, very small class size school
in eighth and ninth grade to a uh enormous four thousand student public high school in Connecticut for high school.
I had this realization that I could do effectively no work and and get bees.
That was a big change for me and basically meant I got to play more video games and hang out with my friends more and play Frisbean soccer more. So I did all those things.
Probably more valuable to your life and career now, right?
I mean, again, like I I never look back on scars with regret'cause they sort of form they sort of form things later. So
I
assumed through stupidity and some arrogance and and entitlement that I would get into the University of Notre Dame, where my family has a long deep history.
I didn't and I also, because I have had that thought, didn't apply to other schools that were safety schools. I applied kind of only to reach schools. So I I was I was rejected by each of those schools.
on the same day. So I got, I think, six, you know, of those small envelopes that no college applicant wants to get um all at once. I ended up going to
a regional school that had a compatible curriculum with Notre Dame so that it would be easy for me to transfer there. When I went to that smaller school, which was in Minnesota where I'm from originally,
I took the opportunity to reverse that course. I studied really hard. I declared as a history major. I was always interested I was always w interested in things. I just hated being told what to read or what to learn. And what I found in the first philosophy class I took at that school, the University of St. Thomas in Minnesota.
Was that philosophy let me
guide my own education in a very distinct and unique way.
And I just fell instantly in love with it because I the the professor was basically saying, go read anything you want and make an argument to me. I was like, Oh, that's that's like what I do anyway. Like that sounds that sounds great.
And and so when I went to Notre Dame, which at the time had the best I this wasn't by design, it was just luck had the best philosophy department.
arguably in the world, despite being a a religious school, it had an unbelievable I'll call it secular philosophy department.
With some incredibly famous philosophers as my professors. And that was my education. My education was.
Twice per семесте по клас.
Read a ton of stuff on a topic.
Synthesize it and write a paper.
And that was my schooling.
I just loved that way of learning because it was so s like I said, so self directed. So that was the background story in in philosophy that sort of
reignited or maybe even arguably ignited a love of learning that I you know I still have.
I just love the topic. I I could talk about it all day. I still read a lot of philosophy. I think it's a great way to build a foundation for how to think.
I'm very lucky that that that that whole story played out the way it did, even though at times it was it was pretty rough and stressful as a as a teenager.
Wow.
What a great way also to prepare you for like the other part of your career now that like
nobody could have seen coming at that point. I mean I guess podcasts existed. I remember downloading some to my iPod in college, but like I was I was very shy, you know, like as a kid, I I actually think I've completely changed. I'm not shy at all now. But I was very shy and certainly like on the personality test would would test highly introverted
God, if you had told me I'd be doing this kind of thing in ten years when I was, you know, eighteen, I would have told you you're out of your mind.
But uh yeah, sure enough, here we are. Things change. Wow.
Coming out of Notre Dame, like w had you been thinking all along, I'm interested in
All this stuff my dad does in finances and like I might do uh like
Yeah, how did you end up
being employee number one at this
Start up.
The truth is I didn't think about it at all and I delayed and procrastinated this decision. I kinda thought I would go to law school
Just because I liked arguing. I liked constructing arguments. I liked the competition of it.
Um I liked
being like a truth seeking missile, you know, above all else. So that was kind of my default path that I would, you know, have a summer off and study for the Elsats and maybe go go go become a lawyer.
And
I just got lucky, right? The timing was just right that
the business was getting set up and I couldn't argue with the logic that it would be pretty smart to watch and help a business get set up. Like that's valuable experience no matter who you are.
And so I just jumped on it and that was it. There was no more magic to it than that.
I don't think I actually even really read my dad's work or books, or we never even talked about it at home until after college. So
I when I say I knew nothing about investing, like I knew nothing about investing when I graduated. Like I didn't know what an equity was. And and I I I had never I joke all the time, like I had never used Excel. Like I didn't even know what that was as a tool in in college. Uh again,'cause I'm just reading reading and writing, basically. Which is uh amazing given
Like your dad tells stories of bringing piles of computers with him on family vacation to back test models against historical stock market trends. Like what was your view of that growing up?
My view that was that he was at the house where we were body surfing and boogie boarding and you know in the waves and I didn't much care. Yeah, again, I I I think a gift that
that any parent can give their kid.
Is
tremendous support and care for their interest without imposing
one's own interests onto their children.
And you know, that's something that I'll
emulate and repeat with my kids.
So yeah, we we just we weren't bludgeoned with it. It w it wasn't dinner table conversation. It was
Maybe that's strange now looking back on it, given that's what his all his mind share was going to, but but yeah, we were just uh we were at the beach while he was doing that.
Yeah, it's so funny. I can relate so much to I mean obviously very different, but so much of the story, you know. Yeah, when I showed up
Man, for uh analyst training. Well, analyst training was fun, but
My first couple months at UBS. French literature in college? French literature, yeah. Arguably philosophy, although I did more uh like theater and stuff.
Man, I'd never used Excel either. I just got hammered. Like I was uh bottom of the class, like for a long time. Uh just that learning curve. But but like you said, like, you know, coming in with a fresh mind and
Just having that
It's a stretch to call it adversity, but like
Hey, you gotta sink or swing, you gotta learn this stuff and like
having a liberal arts education and being prepared to learn
Yeah, I just think like it served ended up serving me super super well. And
Um, sounds like you too.
I I think the best thing that can come out of any early education is just the feeling of what it's like to enjoy learning in whatever whatever area that happens to be.
It opens the door for you to be a high slope learner in other stuff. Like if you're if you're curious and let that be the
the pull mechanism versus some sort of push mechanism, which as I mentioned, just doesn't work for me. I think that's the skill that really matters. And you can figure Excel out if it's a means to an interesting and curious end for you and any other tool that we have at our fingertips. So I think becoming a high slope learner and like getting the experience of how fun that can be.
is really the o the only truly valuable thing that
college or some other formal education can bestow on you.
Man, you're reminding me of the I had this moment. I remember sitting in college physics freshman year.
I sort of went the engineering route, but
When I was sitting in that lecture and I remember connecting the dots between
how orbit works and why I can't throw a baseball very far.
And understanding how that manifested in the equations we were learning. Like this this teacher, this lecturer weave the most amazing narrative between
the practice theory and those two concepts and putting them together. And I just remember like I still remember the high that I had from the flow state of
What a pleasure it was to learn that.
In a lot of ways, I think all three of us are constantly chasing that in
How do we learn something new in such a complete and
um well illustrated way that it's it's thrilling and enjoyable to learn.
Could agree more. I mean, th that's what everyone should be chasing early on in life, I think.
Yeah. Well and always. Okay, so speaking of learning.
You had to learn. Educate her us and our our listeners too.
What is the
This business you were setting up.
O'Shaughnessy Asset Management. Like how does an asset management firm work? Period, and and how how do you guys work?
Well the thing about
traditional asset managers is it's
In many ways, the simplest business model on planet Earth and and one arguably one of the best if you do it right. So it's literally as simple as.
You take control over other people's assets.
You are given discretion to trade.
their assets on their behalf.
This could be wealthy individuals working with a financial advisor, it could be a huge pension fund, it could be a
um a corporate pension plan, whatever whatever that might be.
And you're given discretion over the assets. You're hired to
transact and trade and invest on their behalf.
And traditionally in a long only context, you're paid a a percent of those assets that's quite small, you know, sub one percent of those assets these days as an annual fee for your services. And it's just a management fee. And in hedge funds, there's the extra layer of usually carried interest, like you would see in venture capital firms.
But the big long only managers that just buy stocks on the long side, uh, just to hold them.
will charge some flat asset management fee. And that's the entire business, right? So it's it's a function of how much you manage.
And the beautiful thing about it is that it's recurring. So it's very SAS like in that sense. It's a recurring revenue stream. Also
There are no accountsable, right? So you you tend to strip the the fee that you're generating directly from the asset uh base that you control itself. So it's a very, very it's an incredibly simple model. So you obviously want to design strategies that can accommodate some assets, maybe not too much in assets, because any strategy starts to die as it gets too big.
But in public markets, this can be billions and billions of dollars. And that's it. That's the entire business model. So the the functions of the business are just like any other business. There's product, which is the investment strategy that's run by a research team, a chief investment officer, you know, in our case, a team of quantitative researchers building predictive models to buy stocks.
Um, that's the research function or product function. And then there's the distribution side of the house. So people talking to those investment advisors, telling them about our strategy, convincing them that we're better than you know the next guy, maintaining relationships, telling them about performance, all these sorts of things. And then there's the sort of operations and support functions.
Inside the business like any other business. So
It is in many ways the world's simplest.
business model, and arguably one of the oldest, too. You know, financial advice of one shape way, shape, or form has been around literally forever. And that's how our business was structured, you know, out of the gate. Uh nothing nothing complicated. Was there or is there also
the equivalent of a carry component, a a performance component, or or is it all just the
The asset management fee.
It totally depends on the firm. Some some charge a uh performance uh incentive fee above and beyond the performance of a certain benchmark. So let's say you're hired to manage US stock portfolio, if you beat the S P by 10%, you get to keep, you know, two of that 10% on a dollar basis. So sometimes managers charge that way.
the much more common is just a flat asset management fee a minute that's based on assets, but you can contractually do anything you want and sometimes
Bi sometimes big investors like to pay zero management fee.
and a generous incentive fee so that basically
The only time you make money is if you do your job and and beat the broad market.
Why do you think it is that historically it's been common for long only public asset managers to be fee based and venture capital private equity hedge fund managers to have such a heavy performance component?
Well, we could debate that the latter part of that statement these days, but I I think it's just capacity, right? The reality is that
If you were to give me in our, you know, US large cap strategy a billion dollars, we'd execute it in a day or two and we wouldn't move the stocks that that we're trading. I mean, think of the challenge of putting a billion dollars to work in in almost any venture context. Um, it's incredibly hard to do. There's just not enough capacity to go around.
And therefore you you need you need to incentivize the managers
with potential reward. And because the capacity is capped, you need to have that be something like an incentive feel like carried interest. So
There's a lot that we could talk about in this space and and the alignment of incentives and how this should work. You could argue that someone that gets paid carry should not get be able to get rich on management fees. Obviously in practice, that's that's not always the case and usually not the case for successful firms that get rich both ways. But that's the primary driver is that
I you know, a a strategy like ours in public markets could accommodate billions tomorrow with no marginal real marginal cost to us and without affecting the market price.
I mean we've seen this experiment play out over the last ten years.
in the private markets and in particular in the
quote unquote venture flavor of the private markets. Like billions of dollars have come in.
And they have impacted the market hugely.
Yeah, they've massively, massively increased prices.
And like you say.
it's hard to efficiently put a billion dollars to work in certainly private companies, but particularly venture. And like, you know, that that's why we got two and a half years of joking about the Softbank Vision Fund every time anybody was bringing out venture returns because
You know, they have a blunt instrument in in deploying these billion dollar checks. There was one firm, yeah, that literally
Impacted the whole market.
I won't name names, but you know, I've heard
from founders who have taken South Bank money
about the absurdity of the process of
diligence that went with that and
I just think it's crazy. I think I think that amount of money to put it to work you have to be cutting enormous checks and doing so fairly liberally. So it's no surprise the impact it has on prices. Wait, absurdly a lot of diligence or absurdly not enough?
Absurdly not enough.
If you're if you're thinking about
even the biggest hedge funds and the amount of work they would do to deploy
say a billion dollars into a business. It is crazy. Like I I I live more in the circle of public market analysts, um, even though now we're, you know, I'm I'm spending a lot of my time in the early stage markets, but sometimes I feel like I'm an alien on a different planet because
the the sort of work done on companies is just so different. Um Charlie Songhurst described this as the East Coast versus West Coast mentality. He's one of the best. And and and I I think that the right answer is somewhere in between those two mentalities, but
Yeah, I think there's a lot to be learned from each for the other. Um, the West Coast has had a nice run here. So you know, it's hard to argue with with the way they've been doing things given the results. But but I think the public market mindset applied to private markets is a powerful concept, but in in the context of some of the biggest venture investors, I don't think
Um, I wasn't there, so I can't say for sure, but I don't think the same degree of rigor was applied to the work being done.
All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta.
AI has scrambled the whole security picture.
It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done.
But in an AI first world, that doesn't hold up anymore.
Yep, your risk surface changes every week now.
A vendor turns on an AI feature or someone writes in a new model without telling IT.
And your posture is different than it was last week, let alone at your last audit.
Banta's own research found that around seventy percent of companies have this quote unquote shadow AI running with no security review at all.
Right.
And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap.
And the way that they close that gap is Vanta Agent.
Think of it as a GRC engineer, that's governance, risk, and compliance, except that it's software and it doesn't sleep.
It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.
In half.
Which is exactly why more than sixteen thousand companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake.
All stay audit ready and catch the risks that crop up between audits across every vendor.
Every AI tool.
The whole environment.
And that's the real value.
Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust.
We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years.
So you can get$1000 off Vanta at vanta.com slash acquired. That's V-A-N-T-A.com slash acquired for a thousand dollars off.
And just tell them.
That Ben and David sent you.
Well, thank you for illustrating sort of the vanilla asset management model, particularly for long only public funds or long only public managers. How does
Oh, Sam.
deviate from that and how has it sort of deviated over the years?
So I would say the major deviation
has happened in the just the last couple of years, which is
our move to become much more of a software business.
So
We still are an asset manager in the sense of the business model. We we charge people an asset management fee.
based on the assets they have with us.
But the the way that we're accessed and the way we deliver our product, I'll call it.
is now heavily through a piece of software that we call Canvas.
If I'm good at anything, it's it's just collecting really good ideas and applying them liberally without a lot of second guessing from the smartest people I can find. And so
In in many ways, what we've done with Canvas is just borrowing some of the best lessons I've uncovered and we've uncovered as a team over the last three or four years. Chaithan, uh, who we both know really well, had a huge hand in this, uh, which he knows and I've told him several times in terms of our go to market strategy, so many others uh a heavy hand in how we thought about product.
Um but I think of us today as as a software business that happens to monetize
through asset management. Happy to walk into the origins there, but I would say that's the that that's the primary deviation between us and the the every man asset manager.
Patrick, you're on acquired. Please walk us through the origins of that.
Happily. So
When I was kind of
In the early days of the podcast.
The podcast was nothing more than
an open search for me.
after having really honestly maxed out my abilities as a quantitative researcher, the lack of statistics background caught up to me. I did a lot. I'm proud of the work I did, but
you know, the team that's on our team today would even the ones that are very young absolutely run circles around me five times a day in terms of the actual work being done. So I had to find some new way to add value and and what what I agreed to do with with a couple of my friends was to do this very openly. And I tried like six or seven different things, different formats for doing this.
The podcast is the one that stuck. And I was basically just looking for areas that interested me. You know, what what what could I find that was uh applied to our business, I could understand, I felt like I could intelligently apply. And most of that ended up being around the world of software.
So I got especially enamored of
the early Amazon web services story.
And the story of Andy Jassy and and his TA stint.
which is this this program at at Amazon where
the senior team has sort of like a always not maybe not always, but often have like a s a shadow staff member uh called a technical assistant, a TAP. Started at Microsoft under Bill Gates.
Right.
And Jassy was was Bezos's TA for, you know, in two thousand three or whatever year it was.
And and then had this brilliant insight of wow, let's repurpose the infrastructure we've built for our retail business and turn it into Amazon Web Services. So I talked to a lot of people at Amazon and I I I just like getting on the phone with people. Like I I find I'm pretty good at getting
getting to the people with the right information and just getting them talking.
And so I got a lot of context around how this worked in the early days.
And I thought, holy crap, you know, we have the same, obviously much smaller scale, but we have the same general type of opportunity. We're a quant firm, so we've built all this crazy infrastructure, ripping third party vendors out one by one over 10 years, rebuilding a software solution internally to help us do our jobs. We had a full-time dev team that was just building internal tools.
And so the question became well
If this had a beautiful front end skin on it, you know, what would the product be? What would it look like?
Let's go through that exercise. And we kind of poked and prodded on a couple different things and settled on the final model that we call Canvas, which does exactly that. It literally is our internal tools as a service to let you design extremely customized investment strategies.
through a through a web based portal, which we then do all the trading and implementation on, all the reporting on for the benefit of uh generally high very high net worth individuals through their financial advisors. So what we work on is is software.
So it's
Obviously.
Client facing like end.
And easers. Our client are the advisors.
So it the people that use Canvas
Are themselves advisors?
Correct.
So let's I'll I'll make up a you know firm RIA uh registered investment advisor firm, um, we'll call it uh John Doe Capital. So John Doe Capital has five advisors, some support staff, they manage a billion dollars for 10 families. Let's just say they're really very wealthy families.
Those families have outsourced their investment function to the advisor. They trust them. They they trust them to oversee their
their their states and their investments.
Those advisors typically today don't don't pick stocks themselves. They used to, well, way decades ago. Um, then they move to picking mutual funds, then to managers, it's it's evolved. But usually they outsource the function.
That could mean hiring Vanguard to do it very low cost. It could mean hiring an active manager like us.
And they make that decision based on a lot of research.
What we do basically is say, well, we're gonna do all that, but you don't you don't just get to pick like option A, B, or C. Instead you get to design exact the strategy that you want.
that's specific to the circumstances and preferences of the end company. Of the actual in end investor, we'll call them. And that might be
particularities around their tax preferences or around uh what kinds of stocks they're willing to own, what sort of risks they have in their life, like per arguably if you're a uh a Facebook executive, you maybe maybe you want to route some of your investment risk in different parts of the economy, not not double down on the same sector.
So there there's all these sort of variables. Everyone's life's a little bit different and preferences are different. And this software allows advisors to show their clients something very unique, um, that's that's totally tailored to them. This is awesome. Like
It truly is a AWS story.
Like you guys were serving clients yourselves.
And now you're serving
Clients yourselves and
Other advisors who are serving clients.
Correct.
And and our goal is to is to make the advisor, you know, central here, right? So that
Much like uh
You know, again, maybe Shopify's another interesting example that I've thought a lot about with merchants
as the as the North Star versus customers as the North Star that Amazon has built its business on.
And you could think of advisors sort of like
us building for merchants. We're building a platform that they can build an entire business on top of.
And at the same time provide a really interesting solution to their clients.
And so Patrick, I have the sort of vertical versus horizontal conflict question here brewing in my mind. How did you think about whether you should
sell licenses to Canvas to OSAM's competitors or not?
So it it's an interesting and ongoing question.
I don't have a great answer to this. I like one definition of a of a platform, which is that
You're not using the same tools to compete against your clients.
And there's a tension here. Like another one of my favorite little ideas from my podcast history was uh an observation from Keith Reboy, then at Cosa, now at Founders Fund, when he said all the money he had made in his career was building
tools for the equivalent of merchants, let's say.
having the merchants be too slow to adopt them and then using the tool vertically integrated to compete against the legacy merchants.
Open door. I always have these opposing views in my mind, but we have a long history with the RA community.
We love working with them. We were one of the first firms in the late nineties to work with that community. It's a fast growing segment of wealth management. And we generally like
The wonky stuff.
And are less good at the end client experience and the rest of the package. You know, we're not interested in estate planning.
in particular. We're interested in investing. And so I think the role that we play
um is the right role to serve RAs and and advisors as our primary clients in that part of the business and not the end user. It's one of those perennial questions and decisions like when you have a powerful product
It's a luxury to to wonder, you know, what what all could we do with this. But I think ultimately the more you get distracted, the more you lose focus, the worse product you create.
This is the perfect transition to uh talking about the other thing you built over the past couple of years on your own and within within O Sam. So your Keith or Boy episode.
Fun acquired history here.
So good.
At the end of it, you were I think you've stopped doing this as much, but you were asking you have your you're the kindest question, but you you also ask people for book recommendations.
Have you stopped doing that or do you or do you keep do are you still doing that? I have stopped doing it mostly because I uh don't read books anymore for the most part, which is a strange departure given I used to read, you know, a hundred a year. But because I've lost interest in books for the most part
um nonfiction books specifically, I actually don't ask the question anymore. Uh you should ask what what podcasts you should listen to. Exactly. So Keith's answer to the books was
Seven powers.
And Keith was like, Hey, there's this book in this guy, Hamilton Elmer.
Best kept secret in Silicon Valley.
This is a fantastic book. And so I listened to that. I picked up the book.
I was like, Ben, you gotta read this book and uh and we reached out to Hamilton and uh rest is history. I was like, Really, David, I've never heard of it, like I don't know. And he's like look, Read Hastings says it's the best business strategy book and he's like
the best business strategy practitioner in the world. And I was like, okay, fine. It is amazing to be just flashing back, what was that, six months ago? And uh
Oh my god.
Wow. I mean just just to pile on there, I mean I was introduced to Hamilton through Daniel Ack, and I think I think that Daniel's the best
strategist that I've spent personally spent time with and he says the same thing about Hamilton, so or something similar anyway. So uh that's two pretty good ringing endorsements there, albeit from a very similar business model uh in Spotify and Netflix. Well one trying to be the other pretty quickly.
Yeah, yeah. So uh anyway, uh yeah, it's seven powers is is is something I think about a lot.
It's now a whole section on the acquired show, which we're gonna make you go through for O Sam in a minute. But okay, so like
Invest like the best, man. How did this
happened. You wro you wrote this you've talked about your philosophy of growth without goals, which maybe you can get into here in a minute.
This thing has taken on a life of its own. How did it start?
Some of its timing, right? Like it started in two thousand sixteen, so
before this like mega boom of podcasts. You know, I think sometimes better just be early or have the right timing than good. And that was definitely a component of it. I was probably one of the
One of the first couple what I would call high end investing podcasts.
And it was just lucky timing that my friend Jeff Graham
Um, who had just written a book
I think it was called Dear Chairman, which was a
A story of eight different
Activist investment campaigns in public markets, including the letters were written by the investor to the chairman. I mean, it's an awesome book.
And Jeff was kinda marketing the book and I can't remember who asked who, but
We decided that we would record like an audio version of of the major topic covered in the book. That was the first episode. I told my producer Matthew that I would commit to doing seven of them. Again, because I if I don't have a habit, I don't do well. So I figured seven was like seven weeks felt like long enough.
And the second episode was with Michael Mobison.
and who was a a recent research friend I'll call him at the time.
and a legend in the in the research and equity investing business.
And it just sort of took off. I it was one of those things that I think
had product market fit in week two.
And
Steadily has grown ever since.
Turns out
on the internet, like the more focused you are and the more wonky and niche you are, the bigger your audience is. Um, because I think the internet rewards the edges of distributions. And I just happen to be really interested in one of those edges, which was like deep, wonky business and investing discussions.
And so I've just done it ever since. And and for the longest time, I never really had any goal with it.
I just wanted to talk to interesting people and let my own curiosity guide me to the next guest or let the past guest guide me to the next guest.
And uh it grew organically from there. I never marketed it. I never did anything but tweet out a link to it.
Um still for the most part, although that's changed recently a little bit, uh don't do anything extra.
And that's kind of the whole boring story, to be honest, guys. Like there's not there's not a whole lot more to it than that. I wish I should probably start making up like like all these founders do. I should make up a much more like mythical origin. Yeah, I just happened to be downtown one day in New York, and that's where Just Officers were and we recorded the
episode and then and the rest is history.
How did you decide on seven and how did you decide I'm gonna find a producer like right out the gate before I even know if I'm doing this thing or not?
I tried to edit the first one myself and literally got forty five seconds into it and said, No effing way am I doing this. Um so I I d you know, I asked on Twitter for somebody. I got lucky that the my producer Matthew Passy was was
around answer or something and and he's been my partner this whole time.
So I've never touched the, you know, production or engineering side of this whole thing. Just just I just have the conversations. That's my role.
Seven weeks, I've no idea. I probably made it up. I pr it probably felt like enough that it wasn't
A crazy commitment.
Uh, but also enough that I actually had to
Think about
you know, five more people after those first two and go get them and sit down with them and actually put in some effort.
and to see if it worked. And and by the third episode I was like, Oh, I'm gonna do this the rest of my life. Like this is so much this is so much fun. And talk about a cheat code as a way to get ideas and information. It's like
I always joke now, like books should be one tenth of their length, most of them.
And you can get
multiple books equivalent of insight in a single hour conversation. Um so why not just do that? Especially if we can go get the best people in the world. Um so
It's pretty concurrent with
This whole
New strategy in building Canvas, right?
Yeah, it preceded it. Um so twenty sixteen, uh was the fall of twenty sixteen when I started the podcast. I took over Osam in two thousand eighteen. So there was a bit of a gap.
And then we really started building Canvas in earnest.
in late two thousand that the very end of two thousand eighteen. So we built it very fast. And I sort of think about it like
having APIs at our in at our fingertips. Like we had already built so much of the core infrastructure, so it was really just
tapping into the infrastructure. So even though people saw it and they're like, Holy crap, you built this in three months, we said, Well, really we built it in like 10 years, but we were able to move very quickly. And part of the reason for that was the lessons I was picking up.
Um, and my team was picking up along the way in those first two years. And with the podcast, was it an intentional strategy to attract capital for OSAM or then later on to attract customers for Canvas?
Never.
I don't believe
Intentional marketing.
almost ever works. Like it I f I I feel like the the best marketing is like a
How did this happen, sort of question, you know, after the fact.
And and the podcast remains.
you know, a critical marketing asset for everything I and we do.
but it's never with the mind towards that. Like I'm never thinking, ooh, what can I, how can I like subliminally design something to get people to, you know, call us on this. It's never ever like that. I think of it very much as brand versus direct response marketing. So no, never, it was never part of a a strategy session or something like that. And never will be.
Um, because w we just know that that would that would pervert the whole reason I think it's interesting in the first place. And your listeners would see right through it. I mean this is w one of the biggest group in the world. Exactly. The the biggest key tenant that David and I have about acquired is assume the audience is brilliant.
And not only will you then attract brilliant people, but it forces you to play at a higher level so that you get to keep engaging brilliant people.
Yeah, I I think that's so important. Like
The second
People smell sales. Like it has a stench.
and I never want to fall in that trap, so it will remain
driven by what's interesting to us.
Not.
What we think
other people want to hear or not some
backdoor into a a a business outcome that we're trying to achieve.
Are there moments you remember from the last four years that were like
Either like something happened at a particular show or particular guest that moved the needle in a big way
Or where you just like were like, Holy crap, like this is
This is bigger than I realized.
I I try to not
check the metrics too often. Because when I wrote a a book when I was I was pretty young, I wrote a book when I was in my like mid to late twenties.
And when it came out on Amazon, I remember checking the stupid Amazon
um like ranking like so many times a day. It's like crack for authors.
I hated that and I was like, you know what, I'm not gonna do that this time. So I would check
After an amazing episode that I just knew was awesome, I would check just out of curiosity.
And for sure there was like
a steady organic growth rate with step function changes.
And I I actually called this the Mobis and Bounce because I've had Michael on I think four or five times now. And every time I do, there's like a
Ten percent.
audience that then doesn't disintegrate. So he's he's my growth hack along with a with a few others. But yeah, I tried to
I tried to stay away from all that because again, like that's one of those feedback loops where I would feel like the listens were driving my thinking on what to do next versus just my curiosity. So I I've really tried to stay away from that as much as I can, especially recently as the numbers have gotten very big. And and just to just ignore it and and trust that if I
If I'm curious, it will come across. If I'm doing something by rote, that will come across because the audience is so smart. So just don't do that.
Yeah.
At the same time, it has taken on this life of its own.
You're doing a bunch more stuff.
Around it.
Can you tell us about what's next but for the show?
And
how it's bled into
The investment business as well for you.
Sure. So
You know, Covid's been
with all its misery for so many people, we've I've tried to take it as a
as a personal blessing.
As in as many ways as we can. You know, the first of those blessings is the time I get to spend with my family now and and not I was traveling a lot for work and
You know, I'm I'm at home. I'm sitting in my home office right now. My my kids are I can kinda hear'em in the background and I get to see them and my wife, Lauren, all the time. And that's the first blessing. The second is
It just made I think it made it's made everyone realize the parts of what they were doing that were wasted effort or
If not wasted things they just didn't really enjoy doing.
And I I just believe that enjoyment aligns with good outcomes for the most part because you just have more energy for stuff. And if you have more energy, you have more persistence to get through hard times and so better outcomes are possible. So I I kinda asked the question, like, what would the perfect alignment be between my own enjoyment and curiosity and and and effort?
in the business and
I think the way that shakes out is
What I'm gonna do the next twenty or thirty or forty years, whatever it is.
is just try to be like a cartographer. Just try to map
the best knowledge in the business and investing world.
in a pretty formal way. And and again, I think probably my legacy as a quant makes me think about everything like, what does the database schema look like for something like that? Like what is the atomic unit, like if I'm writing data to a knowledge database, like what is that
What does a unit of data look like? How does the database structure? You know, how is it accessed? What front end do I build on top of it? Like all these questions that I think anyone in software would understand.
Trying to think about what I do through that same lens.
And that's gonna be my primary focus. Now that manifests in a couple ways.
I like to be radically open with this stuff, so I'm gonna publish a lot of those learnings as we go. Uh we're probably gonna open source that database in some in some interesting way. We are just in the process of launching our first early stage investment uh vehicle called Positive Sum.
that I'll be spending a ton of my time on because it aligns so cleanly with this same exploration. So I kind of think about it as I'm just gonna do one thing, like I'm just gonna find interesting things to learn about.
I think I'm pretty good at getting to the best people in the world.
On those topics.
And ca somehow convincing them to share the lessons they've learned.
And just try to mimic like
Be be a human version of these companies like uh, what's a good example, like a Shippo or something, which is an API that sits on top of a bunch of of other APIs, right? Like I just now, I'm a good router. So when I get a question,
I'm lucky I get to a I get to rather than answer it, which who cares about my answer, I get to go ask the smartest person in the world on that topic what the answer to that question is. Um and do it pretty quickly. And and so I'm trying to be a router, not not a
originator.
And
That's gonna be my goal and it's gonna manifest
inside the business in a lot of different ways. I mentioned the new fund.
Uh the podcast will be expanding.
Um, I'm I'm gonna try to convince ever more of the calls that I do for my normal job to be recorded, which is kinda weird and radical, but
I I think really helps the general public, as long as we're not doing any harm to any company or any individual, uh, which we're very careful about, or revealing sensitive information or anything like this. But but I think that there's a there's an opportunity to just hit a button.
a little more often than not when having normal conversations that anyone would have in the investment business as they're doing diligence and research.
and uh be radically transparent and and hopefully
create a lot of value for other builders out there in the process.
to sort of paint a use case, which is like a thing that I often do as an investor when I'm hearing a startup pitch to try and echo back what I'm sort of conjuring up in my head.
You could imagine a situation where you're doing research on
Businesses where there are scale advantages and where you can with a very large audience amoritize the the cost of something and you stumble upon Spotify and what they're doing with podcasting, you stumble upon Netflix to keep the examples we've been talking about this whole episode. And then there are a few ways to click a play button.
where you get to hear various conversations between you and Daniel where we can sort of hear different insights about how he thought about that strategy from different times you've communicated with him. Is that sort of how you're thinking about it?
Yeah, I think there's a question of what
What format does this take that
becomes really user friendly and useful.
I've built them in part of products that no one wanted to use and I don't
I'm I'm I try to be very allergic to that. So we'll
We'll iterate around this.
I know for sure that capturing these lessons in a more formal way is gonna be, if only for our own benefit, very valuable. Because when I'm when I look back at a given episode, you know, I even did it in preparation for this talk, just like looking at the episode title and saying, what lesson
Did that episode contain? And it's it's amazing for many of them. Like I could just go through them right now and just tell you, like here's what I remember. And it's an incredibly powerful tool. It's easy for me because I'm the one that had the conversation. I think it's harder if you're listening. You know, like for a few of your episodes, I could say, yep, here's the lesson I remember, but it sure would be
reinforcing and powerful if I could tap directly into that good stuff more directly and and with more control. And so I think your example's a good one of
Oh, I found this interesting. How do I keep pulling on the same string within the same ecosystem? So it's two tasks, right? Fill that database with good stuff and find like incentive structures to keep writing good data to that database, and then find a way to make it navigable.
for interested people through technology and software.
You you called yourself your vision and what you want to do here being a a router going forward. To my mind, that actually I think undersells a little bit
What?
You've already been doing and the opportunity to
Do going forward. This listener said, um
to me once he's like, Hey, you know what you guys are, you're knowledge curators. Like all the knowledge is out there. Like it this is the thing about the internet. This is the thing about acquire. Probably the thing about you too. Like all your guests have been on other shows. Like they're they're have interviews in other formats. They're on YouTube, um in various talks
The knowledge is out there.
What you're doing is you're
Curating it and packaging it.
in the best, most consumable
Form.
Does that resonate with how you're thinking about things?
Yeah, there's there there certainly is a curation aspect, right? Like as as the amount of information and knowledge explodes due to the internet.
all of a sudden it becomes valuable to to be able to compress that or or curate it in in a helpful way. So that's
one hundred percent the part of it. But but part of it too, I guess, is a is helping
others frame things in a novel or different way than they have in the past. Like
If I'm trying to get better at anything
It's
having just a really low tolerance for repetitious content.
with a person. Like when I'm interviewing somebody that's done a lot of interviews
My goal is to have as much of it be novel.
And and to have their reaction be like, Huh, like never thought about that question before as often as I can. And I find the best way to do that is
I'm just easily bored and I I've consumed so much content.
that if I've heard something before, I'm just bored. Like then I then I feel like I'm wasting my time. And so I have I by having a low tolerance for for that sort of stuff.
I I think that's the second function. It's curation and sort of like eking stuff out that hasn't been explained or revealed in that specific way before. And so that's kind of what I'm trying to do and and be selfish about it. Like ultimately, if you're selfish in solving your own problem, that's usually a good
a good policy. And you sometimes the questions I'm asking are, I'm dealing with some problem in one of our businesses and I don't know how to solve it. And so I ask somebody that's really good how to solve it. And then and then you find something great. Yeah, exactly. All right. Well I have a I have a management question on this. So you have these like
multiple concurrent initiatives. You've got sort of the codifying business knowledge and making it more navigable. You've launched an early stage investment fund, which is a completely different operational animal and decision making framework than uh public
long only equity investing. And then you've also got, which I think you should pitch listeners on the this new podcast that by the time this is out, this will be launched, um, that I think will be right up a lot of people's alley.
First, what is that? And second, how on earth do you manage to do these three things concurrently while also running a a large existing business?
So I I it's it's the most common question I get and
The first part of the answer is that
I work very hard.
And have a lot of energy for this stuff, and sometimes
having more hours.
That are productive in a day is is an advantage.
So that's part of it. The the second is
I'm just ridiculously open about what I'm doing. So you know all my stuff, as does everybody else. I don't have any other stuff.
What I generally find with with my in my relationships with other very successful people is they also have lots of other stuff that you just don't know about. So so there's there's a little bit of like transparency making it seem like I'm doing more than others when in reality that's it's really not the case in my experience uh of highly curious people who just tend to do a lot.
And the last piece of it, which is probably the most important and maybe interesting, is
The way I think about it is I actually only do one thing. And it just happens to show up in a lot of different like outcomes or side effects.
And that one thing is is this scout.
function like I am out trying to find
What is the next interesting useful concept, idea, market area?
person, um product, you know, whatever that can be
emulated, borrowed, copied, uh mimicked, whatever it might be.
in in a productive way for
that people that use us for something. So
That takes the form of handing lessons off to my team at OSAM. Um, I work with a senior team there that I've been with for 14 years each, all four of them. Um, so we, you know, we know each other intimately well. They're all more talented uh in in most ways, except for you know, my talent maybe is the scout function. They're all more talented than me in every other way.
So, you know, work closely with them and I'm I'm handing them stuff. That's part of it. In on the venture investing side.
You know, I would actually argue that my trading in public markets is awesome preparation for um the time I'm now spending here. It is different. It's much more qualitative than quantitative, but quantitative still matters a lot.
And what what I'm finding when I'm talking to founders, especially around series A.
And especially if there's a data component.
or a modeling component to a product, which these days is more and more common.
The kinds of questions we're able to ask them about that.
They look at us funny, like they can you can tell they've never been asked.
The question.
by other operators and practitioners like we are.
And so I just think it all feeds on each other.
to let us ask better. It's all about
asking better questions at the end of the day. That's the one thing I do. Like just
Ask better questions.
and ask them of the right people.
And sometimes that manifests as a a lead investment, a participating investment, an angel investment, uh an idea for a product, a podcast episode, like whatever it might be, those are the byproducts.
Those are not the things themselves. The thing itself is
Get better.
I guess I'll call it the art of conversation. Get better at asking questions.
that lead to interesting
Revealing answers. That's it.
And that's really the only thing
I try to focus on doing.
And then just build systems.
You know, solve problems with technology, not with people, right? So that the my my friend Leor Avidar, uh the founder of Lob and now Alt, I love that answer that he gives.
to that question of what's a technology company. It's it's a company that solves problems with technology. So we versus people. So we we solve problems that way and and try to build really efficient systems that let us do more of the thing we're good at, which in my case is I think asking good questions.
Well, the good news for you, and you probably already know this, but that was what Don Valentine said the number one most important job to be a great venture capitalist is is learning to ask the right questions and then learning to listen to the answers.
I don't think it's much more complicated than that. Like there's a lot of then
Once you open the right door, then there's a lot of work that still has to happen. You gotta you have to underwrite the data, you've got to channel check, you've gotta do, you know, you gotta do all the hard work, you have to do the work.
But in my case the work is the most fun part, like
If I find a company that's interesting, going and talking to the ten most relevant industry
companies or players in that space.
is kind of the most fun part.
And you know, a question I've been asking is like, what if I recorded those conversations and and shared them in some way, shape, or form and not not be too obvious, maybe publish on a lag and again never do any harm.
That's what everyone does in investing. They're reading stuff, they're looking at information, and they're talking to people. That's it.
And then they're synthesizing everything.
So I'm gonna do the same thing, but what if
I'm just radical about the way in which
I share the positive aspects of those things.
So that others can benefit passively.
And everyone's the better.
And that's the question that I'm trying to answer. Well, and here's the thing, you do it the right way.
It benefits the companies too, right? Like you have a platform
Like
XYZ person at XYZ firm.
Does that.
And post it on the internet. It's like okay, well, may probably they would to start getting followers and traffic and fans and it it w it w would work. You could build it up. But you can make an argument to founders, like
No, hey, like we're we're gonna put this stuff out there. Like you're gonna get a flood of attention to your company from customers, from talent, from follow-one funding,
It all starts to work in this.
Well, hopefully working this flywheel, right? We we literally call it the flood, and the the flood is typically the call we get the next day from

With some sort of with some sort of expletive.
Saying like
What the hell, like who is his audience? This is crazy.
Another way to frame this would be
Just try to be the muse, right? Don't try to be the
Don't try to be the visionary or the or the hero. Just try to be the muse that that gets other
people talking about interesting things.
'Cause everyone then likes that. Like that's why people listen to acquire.
They're there because you guys love this stuff so much.
and you put a lot of effort into it and you're there to learn.
And so they get to as well. And then they're motivated to go.
apply those learnings, call that person, you know, engage with that company, whatever the case may be.
Whether that's as a customer, as capital, as talent, um, you know, or or as a fan, like it it's it's a powerful flywheel that gets spinning.
And it speaks to, you know, it happens to also be a competitive advantage. Like
You know, we were gonna talk about seven powers.

One of my favorite questions is what is hardest to replicate about any given person, company, thing?
And good I mean, with I don't know how much money it would take to replicate
acquired. I don't think you could do it. You could it it it's its own thing. So and that's true of the best media properties, right? They're they're very unique. So
that comes from curiosity and authenticity. So if you ride that and let it ride you know, this is five years deep now. Like it took it's the five years to be an overnight success story, right? Like the number the numbers are enormous now, but
The the number was five hundred and seventy one people on the first episode, um for me for me. So that's a great stuff. I think ours was about twenty eight.
Yeah, I mean it's all it's all compounding, right, at the end of the day. So so it it ends up it ends up being a competitive advantage, which I think is an important point. It shouldn't be the reason you do it, but it it is a it is a nice side effect.
Yeah.
All right listeners.
Now is a great time to thank our longtime friend of the show, ServiceNow.
If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is uh no longer the hard part.
Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making.
AI security for an enterprise at scale is not a small concern. Like the risk
Are real.
Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why Service Now built the AI control tower.
Yep. AI control tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with
Any AI, not just theirs.
Every device on your network, every permission across every system.
Every AI agent visible and secure in one place.
And ServiceNow can do this because they've spent more than twenty years building the operational backbone of the enterprise, the workflows, governance, approval, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security. ServiceNow
already runs more than a hundred billion workflows annually and trillions of transactions for more than eighty-five percent of the Fortune five hundred. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.
And in a future, that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is
Who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out service now.com slash acquired and tell them that Ben and Davidson you.
Should we jump into uh
Into seven powers?
You tell me. I'm game. I love this I love this framework, so listeners.
Probably to both of our shows no, you know, Hamilton Hellner's seven powers that he's identified of he would characterize p a power as both a benefit and a barrier. Like it's probably closest to the concept of a moat, you know, the Warren Buffett classic uh defensibility moat uh concept. But it but it's also
It's like it has to provide a benefit to customers and a barrier to
Competition of all types from coming in and eating.
And so the seven he's identified are counter positioning.
Scale economies, switching costs, network economies.
Process power branding.
And cornered resource. And importantly here, the point I always try and make is this is what
entitles you to generate profit in your business that doesn't just get arbitraged away by competition.
Yeah. And in fact that is his he has a strict.
mathematical formal definition of power
And it is long term differential profit margin.
So Patrick, the very easy question to you is in your uh a web of businesses, and let's start with uh OSAM to keep it simple.
To where do you derive power?
We're definitely gonna have to extend our end time here'cause I you guys could get me going on this for a long time. You know, I'll just throw out examples and and this was maybe one case where
Several years ago, probably three years ago, I did literally sit down, as I think probably everyone that reads Seven Powers does and say, Okay, which one of these can I do? Wh which one do I already have?
Or which one can I engineer? So you know, I'll just tick through ones that I think are are relevant for one of the things that's going on in my world. So
I I do think brand is is like the most straightforward one that I don't need to spend a lot of time on.
Which is just like
High quality, low variance outcomes. Like that's how I think about brand. Like can you can you just consistently deliver something really high quality so that.
You build trust with people.
You know, trust takes time, therefore it takes consistency. There needs to be a high
minimum quality bar. Uh I love that phrase from Toby Ludke. I think about that a lot.
If you can do that consistently with whatever it is that you do, you will build a good brand over time. Like the logo doesn't matter, you know, all this other stuff.
really matters less than just
consistent high performance at a certain thing.
And and in many cases you can airdrop a brand. Maybe it's possible. Maybe Dollar Shave Club did it. I think arguably that wasn't a a good business. It had really low low retention and um, you know, maybe wasn't
It was an amazing story and that like everyone wants a hack to like create a brand instantly and it did. It was yeah, there there are exceptions, there are hacks, um, which uh can be very useful. I'm not discounting them. But I think a hack should be on top of some steadily compounding trust equation with the end audience. So I do think we've established
a brand. You know, what exactly it is, we could argue over, but I won't say a whole lot more about that. And the barrier there is just I think time. Like you you know, if you want to establish the same brand that you see today,
Okay, well, we're five years ahead or ten years ahead or twenty years ahead, depending on which of the brands you're talking about. So I think time is a is a ultimate barrier to entry for
Some of the highest quality brands. I love that. Brand is
Uh in in specifically those terms of high quality, low variance.
And time.
You think about of course, like we've talked about a bunch on on
our show and yours too. There's persistence in venture capital. What does that persistence do to? It's it's due to brand power of the top firms. Well what does that brand power do to? It's due to
High performance.
Low variance.
Over time. Right.
Um so so that's the first, maybe my favorite, and I know it's Hamilton's favorite too, because he he's always said that to me when we've talked about it, is counter positioning.
And here I just think it it is that radical transparency of the research process. I joke with a lot of my friends who run investment firms that have that classic mysterious website that's just a logo and uh you know an info at email address and nothing else. Basically the digital velvet rope.
Which which I love. I'm close with a lot of these investors and and indeed oftentimes they are literally the best investors. And so I respect the hell out of almost all of the people that have that website.
I joke that one of my goals is to convince as many of those people as possible to come on.
this podcast on my podcast, which I've done many a time, and have many more in my sites on long sales cycles. But I do think there's an incredible counterpositioning there. I won't pick out a name, but
How am I gonna
As an investor now, uh, say with positive sum, how am I gonna beat one of these illustrious, incredible
like w firms with track records and crazy brands and everything.
It's to do literally the opposite of that, right? To be the most open, the most
non proprietari
investor on planet Earth.
Where I'm externalizing
all the things that you're normally buying from them. Like if you get one of these great investors to be on your cap table, you're you're accessing this thing in their brain that they've built up over time. And I'm just saying, no, actually forget that. Like you're not getting my brain, you're getting the
positive side effects of me externalizing that process in a radically transparent way. I think it would be very hard for most of those firms to
completely change their
their attitude on this topic.
To say nothing of their behavior, like they're just they've been doing a certain thing a certain way for a long time.
So um so that would be counter positioning. Do you think that that O Sam today
has counter positioning, or do you think it's actually that it's vulnerable to counter positioning and that it's more of the sort of incumbent that derives its power from
P what do you think? Branding and maybe scale economies?
So I think it's very counter positioned because
To be able to build canvas.
You basically need a heavy
quant background. Like firms that don't have that skill set.
This is a seriously complex problem that that we're solving. I mean it is
It is non trivial to build
I mean each of these
Things require a complex modeling exercise. They all have to integrate. There's crazy optimizations that happen. There's there's quite a lot of like compute understanding that that is required to make things happen fast. Like this is a really complicated problem.
most of the firms that I would get scared.
to hear that they're not launching a Canvas competitor.
are the most well-known quantitative hedge funds, not long only firms. And they have a different business model. And their whole thing is that they're proprietary
you know, research and insight and data that isn't shared. So it's like the Bezos thing when he, you know, was asked about c you know, other big tech competitors and laughing saying, you know, those guys are used to software margins. Like I'm a retailer, you know, like it it's it's an advantage sometimes to not be as fat and happy and have lived on
A different business model.
And so I think
We're very counterpositioned with Canvas specifically against the firms that would most scare me to be competitors. Um and and it's a lower margin business, so I'm not worried about them. We're we're not as up to speed on
probably who those current people are in the but like talk about like ten years ago if SAC is like
We're building canvas.
That would terrify you. But like they're not gonna do that because they make their money from
Performance there, headphones. I'll use a salacious example and SAC actually wouldn't be one of them, but like like the most obvious example would be like Renaissance technologies, right? Like that it's the most extreme example because it's absurd, right? They charge five and fifty or whatever it is and have and and still and still produce uh, you know, forty, fifty percent returns annually on their own capital. Like
They're not launching a Canvas competitor. Um but they could, and it would be awesome. That's the sort of thing I mean. Like
the the most sophisticated and advanced
research shops, quantitative research shops.
just doesn't make sense for them to do this right now.
And we'll have at least a few years head start.
The other one I think about is you're gonna get me going down all these now.
There's kind of a fun one in in Cornered Resource, which
Hamilton also acknowledges is the least common of the
Seven powers, but nonetheless is an interesting one.
Which is through a program that we call research partners at OSAM.
Which is a very simple trade. We effectively give away our entire
um data, library infrastructure, and access to our team to independent researchers.
in order for them to do their own thing at their own pace.
Um in whatever way they want.
Where the trade is we own we own the intellectual property that gets created. For the most part, these are
Retired engineers, uh, people in completely different fields.
Uh the most famous of them is an anonymous guy on Twitter who's I think probably the smartest person I've ever met in my life.
Uh, not modest, uh Jesse Livermore is his name, although modest a very close friend, and actually uh next week's podcast guest. So Jesse as he goes by.
is has an engineering background of sorts.
uh very technical background. Again, literally the smartest
human being. Like if I could stick a human being on
understanding a complex problem, it would be him.
And he does these like months long deep dives with our data.
And teaches us as he goes.
And because we offer so much flexibility and we offer this data set for free, again, the thing that most firms like us keep as the most proprietary asset.
They become contractors with us.
And as a result, we've captured some of the most interesting people like this.
In the world, and I think have the best value proposition to them. So that's a super tiny example of a cornered resource, but we have benefited tremendously from.
those research partnerships. And this is the one where I'll I will admit to
thinking about that program because of reading seven powers. So actually the power came before the implementation, and that one's been a smaller scale success, but but a huge success nonetheless.
I thought you were gonna say the podcast was a corny resource, which in your case may may be fair because you're obviously the CEO and and uh you know major owner of the firm, but
One of the things I love from
the book and and Hamilton's work is that people are not cornered resources. It has to be like a like what you're describing, like a people are not cornered resources because somebody else can hire them. Like they're arbitrageable. It has to be non arbitrageable. And I love this.
It's it's like a corner resource plus counter positioning that you've you've built this uh this practice up.
I I would argue I don't know which you maybe you guys could tell me which where you would put this power, but the
I think of this more as just a flywheel than a power, but there's gotta be something in there. So
And and traditionally like this flywheel would would normally manifest as scale economies.
But maybe it's network effect here.
On the podcast side, it's something like
Every week.
you get more listeners who are incredible who can have a positive impact on the guest.
Which then helps you get
ever more interesting guests who then help you grow the audience and and and you spin that flywheel.
And therefore
the best guests are just going to
every week have a better reason to do yours instead of someone else's with their precious time.
And you just have to be patient with that. Like I always talk about it like someday, you know, I'll have I'll have Bezos and and and Elon on like back to back weeks. Like I'm just I'm convinced I will. Like I know how compounding works and maybe it's two years from now, maybe it's five years from now, but like it's gonna happen. That's I think something that is a
very hard to compete with. What power it should be assigned under, I have no idea.
But it's something to do with that kinda growth flywheel that
that I again no amount of money I don't think could buy.
Yeah.
I've always thought about it not as a flywheel, but uh uh and I think this is a Ben Thompsonism laddering up.
Where once you sort of have someone on some rung, then they become a part of the way that you're able to describe the show to the next great guest.
Well let's move on to Playbook. We've touched on
Several
sort of playbook themes here. And I think we should introduce a couple of new ones and kind of surmise uh surmise our takeaways where if you wanted to uh run a playbook similar to what Patrick has done over the various stages of these different businesses, kind of w what would it be? David, I'm curious, you've got one here that we haven't touched
specifically on but I think it's just an awesome observation.
There was a really interesting exchange on Twitter. I think Ben, you sent this to me.
He texted us me when it happened a couple of weeks ago of uh Taylor Pearson and and Austin Reef from uh Morning Brew uh talking about
The
Investment business.
Camera Calph is specifically VC or the investment business period. Obviously period for our purposes here.
really becoming the media business. And I think you know, referring to you, Patrick and others as well. You know, um you know Turner Novak's done such a great job building a platform for investing on Twitter, you know, Blake Robbins, Matthew Ball, so many people. And then Austin responded
It's not just the investment business, every business is turning into the media business in some way, shape, or form.
Wasn't premeditated, it sounds like for you necessarily, Patrick, but like um H how do you think about that?
Yeah. How do you think about this?
You know, very often I think
Observations like this.
Are
benefit from hindsight and th it happens to be a strategy that just has worked for a lot of people in the last five to ten years and therefore
feels tempting to go do the same thing.
I don't know how long the runway is for this, like
You know.
Learn in public.
orientation in the investing business or just in general in businesses.
I think there's always an opportunity to
have a content mindset.
I love Red Bull as an example that, you know, Red Bull's just a content media business that happens to sell this weird drink. I think that's really neat. And and there are some businesses that just
really the thing they actually do well is the media thing.
And then the product is just like a value capture mechanism versus usually it's the other way around, right? We think of businesses as a product or service and then figure out how to distribute it or market it. So I do think that the internet has created this funny inversion where
with no gatekeepers to reaching the end audience.
It behooves you to create media or content.
Because that's the way they're gonna notice you. Like you have to stand out. And the way to do that is to be, as we discussed earlier, at the tail of a distribution in some way. Don't be the Walter Cronkite solution that that pleases the most people.
the most average amount. Like that's a recipe for death on the internet. Go study mischief. Go study the extreme
Version Red Bull. Go study the extreme versions of this that are sort of unapologetic about their uniqueness.
and and then do your version of that thing.
I think it needs to just feel natural. That like if you're having a strategy session about this once a week, it's probably gonna suck. Like you you can't
You can't engineer your way to a good version of this. I think you just have to like make a decision to be public about
your thinking process.
And have a really high
I'll use Toby's phrase again, have a really high minimum quality bar for what gets shared. Like I
I
type and delete a lot of stuff. I write a lot of stuff that never sees the light of day. I like there needs to be
That curation filter.
For people to continue to trust you.
So if you can do all that.
Power to you. I think it's a great way to reach
whoever your end audience is. I'm always hesitant when everyone's starting to agree that
the one right way of doing things is X, Y, or Z because that's happened to work.
Like any distribution channel, you know, Facebook in the early days was super cheap and it's not now. Ditto Google, ditto everywhere. So so this was a really quote unquote cheap acquisition strategy for the last five or ten years. Whether or not it will be in the next five or ten is an open question that I don't have the answer to.
Yeah.
Really interesting thing.
is once you're at scale. So this is contrasted against Facebook and Google. Once you're at scale, this channel continues to be
cheap, at least relative to new entrants. And I think you you've definitely seen this with your podcast. We've seen it with ours, where because we had a call it four year head start on the podcast Mania and planted our flags in our our respective niches and said, This is the thing we're weird on the internet about. Come join us. Like
if we had to sort of pay per listener
Uh and and we were doing that, you know, against anybody else who wanted to start a podcast for the same sort of reason. Like
we don't have to do that because there's just so much organic goodness that comes out there from building that brand that's compounded over the years.
Yeah, I think a great question to ask too is like
Do I
Personally.
already consume anything like what I'm contemplating putting out there.
And when I started the podcast, the answer to that question was no, that it it didn't exist.
And it certainly didn't exist in the channel that I was gonna do it in.
And so I I just think like
If you can just have that filter
You know, everyone was joking about these LinkedIn stories yesterday. When I when when I saw that, I was like, Ooh, like like I don't follow anyone on LinkedIn stories and I'll bet you that I'm going to in if it succeeds as a product in two years, there's gonna be some, you know, some star there that
has currently has zero zero followers in that in that venue. So when I see that sort of thing, I get kind of excited.
'Cause it's it's novel and, you know, early. Whereas right now, like I think it's an interesting question, if I were to launch this podcast with episode one tomorrow, would I get anywhere? Maybe not.
even though the quality is good. So I do think that like you want that mindset of
Do I already consume a lot of stuff like this?
And if the answer is yes, like
Good luck.
Um, and if the answer is no, you're probably on to something.
I mean that's a like
Uh.
Perfect playbook for
our discussion thus far. One thing I want to make sure we do
Is give me you know, you're not starting with episode one tomorrow. You've done four years of episodes. We talked about this before the show. Um
What are some
Playbook themes.
You've learned from
your guests in your episodes over the years. Like as as you look back
The top things that have influenced you that have come out of
your your episodes, uh what stands out.
God, I could literally just
I could rapid fire some off to you. I'll just do that. So
I'll just go down a mental list here. Um Chaith and Pudigutta taught me that
In enterprise
Software
You wanna take
What he calls the go slow to go fast approach of
Picking
very carefully your early customers.
and then patiently building for them.
Well beyond what feels comfortable.
Meaning don't
go get new customers beyond the original cohort.
Before you
let the product mature because you then make a much stronger product that fits the market better.
and can handle the scaling. Like one of the things that we've lived with Canvas. I mean, we literally just, Chain told us to do something and we just did it.
W with Canvas. So we didn't I didn't question it. It made sense to me. It was I would have done the opposite naturally, which is like go up and to the right as fast as possible. As many customers as possible.
And thank God we didn't, because the system any system is fragile, right, in the early days, and it needs to have that slow organic growth.
One of my all-time favorite book is The Systems Bible by John Gall. And but one of my favorite lessons from that book is you can't just airdrop a complex system and have it work. It's gotta have evolved from a simple system. And so there's incredible wisdom in Chahan's advice.
to sc go very slow in the early days with enterprise software specifically.
and and reach product maturity. That's one example. I'll never forget when I I messaged Bill Gurley, Chaith and his partner, and and uh someone had raised this idea of creating a marketplace for obituary writers.
And the idea was uh can you
Can you have obituary writers on one side and living people on the other side that commission the writers to write, you know, a really high quality, like retrospective obituary type thing on their on their life because newspapers no longer really did this as much um as part of as part of cost cutting. And I thought, wow, that's kinda and and the stories were amazing. Like
I read a couple of them that that the person with this idea had produced and I was like wow like that I would definitely buy that.
And I s I said message, you know, girly and think it's one of the smartest guys on so many things, but marketplaces is one of them. And so I'm I remember messaging him and saying, you know, what do you think? And he just drew this little chart conceptually.
Which was um
On one axis, the producer penetration. So what percent of obituary writers do you have signed on?
And on the other axis was
the benefit to consumers.
as you so basically conceptually think about it as does the service keep getting better as you penetrate deeper into the supplier pool? So that line should look straight.
And I think he said once you penetrate it a certain amount, the marginal supplier's not gonna make the service better and that's gonna happen pretty early. So you're gonna get this little bump and then a flat line. That's not a good marketplace business. And so like he then talked about that concept on your episode, right?
I think so, yeah.
And so like that little concept of
J just that little plot in my every time I see a marketplace now, that's the very first thing I think of.
I've had benchmark guys on and girls on recently, so I'm I'm thinking about them, but
Chain's idea that that
Open source as a business model is not about saving an RD. It's about building differentiated distribution among developers.
Matt Ball's idea in media that
If we reach a metaverse, it's not about
you know, ready player one. It's about the interoperability of
of the systems that let you move value through the system. So there's no there's not these like walled gardens. It's it's creating like a like a common layer
a portable layer of information and value that would ultimately represent what a metaverse is. Charlie Songhurst's idea that
the best way to think about labor is to search in uncompetitive markets that, you know, Silicon Valley is a terrible place to look for labor, but that's where everyone looks for labor. That you should probably be looking in, you know, Bulgaria or something like this, um, because there's talent everywhere and
And yeah, just on the internet, and we've seen this having gone fully remote. So go go to uncompetitive places when you're looking for stuff. I could do this all day. I love Katrina Lake's idea.
That you know, the next that
Legacy e commerce. She's she she's the CEO of Stitchfix, that legacy
E commerce was all about
Speed, convenience, and price.
and that the future of e commerce will be about personalization. It's the same concept
We were talking about earlier, where early internet was the explosion of information. Now it's like it's too much. We need to curate it down.
you know, Daniel X idea about seeing around corners as a company scales and having that felt experience of
what you're gonna need if you're growing thirty percent a month.
in six months is is
not what the human brain is designed to process. Thinking about
what a scale up looks like and and getting around those corners.
As early as you can. There's this amazing story that a woman named Kat Cole, who was the chief operating officer for Focus Brands, which oversees Cinnabon and
uh uh several other, you know, Carvel, Jamba juice, several other related big food brands. She told me this story about these guys, she was a Hooters waitress as her first job, and these guys kept giving her a hard time about chicken wings because they would order 50 and then insist when they ate ate all the bones that they'd only been given 45.
They would give her a hard time every Friday.
And so finally one Friday, as they were nearing the end, she just showed up with 10 extra wings.
and sort of gave them hell about it.
all the guys buddies, you know, chastised him and and from then on they tipped well, they thanked her, you know, she she just like she completely like inverted this whole thing on them.
And I find that that
I've seen that a lot of ways, like this inversion.
To deal with
challenging people by going right back at them is incredibly powerful. I could probably do like a whole nother segment on everything Sarah Tavill has taught me. I mean like everything she puts out is like a a toolkit to be, you know, messed with and thought about. And maybe the last one I'll close with is
One of my all time favorites, which is um another venture investor named Josh Wolf, who runs Lux Capital.
And his idea of the directional arrow of progress.
Which
is I think, you know, one of the most
obvious ideas after the fact that you can encounter, which is basically just like a lot of these technology trends.
are plotting and you can sort of see what's gonna happen based on what's happened in the past. In my world, like
The cost of a commission for a trade in a brokerage account is a great example of this. Like you can just see technology making that cost go down every couple of years.
And Robin Hood's genius was, they said, Let's extrapolate this directional arrow to its endpoint. And
Go to zero. Uh let's jump the line.
So I think jumping the line.
on these directional arrows of progress is a really interesting way to generate business ideas. Uh and in many ways that's what we're trying to do with Canvas. We've learned so much from covering
China Tech. Well Chinese companies, period, but China Tech on acquired. And that's one thing that really strikes me as a difference about the Chinese
Start up.
tech and venture ecosystem is like that's the primary thing that I think people think about over there. Like what's the trend?
What's like what's the plot and where's it gonna end up?
That's not as common here in the West, but should be.
When you meet these people
I'm I'm choosing one just for uh I realize that wasn't brief, but but like trying to just distill something down.
you know, there's ten of those per person often. So
I mean that's the most fun part of this whole thing is just trying to pull extract these ideas. Patrick, you really should start some kind of like knowledge platform to to explore ideas with passion like that. Great idea. I might take you up on that. I love it.
Well Patrick, I teed you up earlier to tell us about a new uh podcast.
Lay it on us.
Yeah, so starting uh I guess it will have already come out when when this comes out on Thursdays, it'll be on the same feed as uh as the Best Like the Best Podcast.
We're we'll call it like a mini series or a sub series, which is gonna be called Founders Field Guide.
So from from that point forward, Tuesdays will be for conversations with investors and sort of miscellaneous other Thursdays will be for conversations with founders and CEOs and and builders. Maybe builders is the right word. It'll it'll often be a founder.
What's interesting about this
Is that
It's often quite hard to get investors talking, and that's a fun challenge. It's not hard to get founders talking. So the access and the depth of conversation so far has been exemplary. And I think we've already recorded maybe eight.
you know, there's just gonna be a a wide, wide range of really interesting private and public markets CEOs and founders that join us for that.
And the whole idea will be
lessons from building. Their stories, sort of portable things that they
that we could take away for other people.
and and trying to again like draw the lines between concepts and and and industries and and ways of building things that are valuable to people. So we're really excited about that. It'll be every Thursday. Um and then who knows where we go from there. I think we'll we'll end up publishing a lot of audio content in a variety of different ways.
as we as we do this learning process ever more transparently and in public.
That's awesome.
Can't wait to listen.

Well let's move to grading. As acquired listeners know, well, A, we're not gonna let Patrick out of here without doing some grading. But B
for
acquisitions and
companies and and deals that
is more of a history, we will render a grade, uh a definitive grade on on how it's gone. For situations that are still fluid, we
predict uh scenarios in the future and paint the
A plus versus the F scenarios five, ten years out. I think it'd be fun to do both of these with Patrick here.
So the first spin on this is
Looking at
Your own
tenure over the last couple of years.
As I would say, I'm CEO and what you've done.
How would uh how would you grade yourself?
I think there's just always room for improvement. I think
We have a platform now.
That
has an extremely bright future and has a very
large potential future.
It's still very early.
We we don't share how much we're managing on that platform. It's a significant amount.
This is Canvas. Canvas, yeah.
That has put us in a position, again, that's just different from most lonely asset managers. That's a sleepy business to be in. Like more of the market is just hiring Vanguard. So
I wouldn't really want to be playing in that space.
long term. So I think
You know, we're in a position now
That
We can benefit from technology versus being disrupted by it. And therefore
There's there's some points for that.
Bye.
As with everything, it's all about execution and we're in the very early days. So I think I'll give us a a tentative B plus to give us lots of room for improvement. But because we have established something that we can really see building on for decades to come, um, I think that's hard to do. And and the team, to be clear, not me, the team has done that building.
in insane fashion over the last eighteen months. It's kind of wild what they've built with a relatively small team.
And uh How many engineers do you guys have?
So it's a um I'm like ashamed to admit it because we're trying to build this team out a lot. You know, it's it's full time engineers, maybe five. I think people that see it think we have thirty. So uh these people are absolutely cranking. The research team are very technical. So that's been a huge help and they've been a huge part of this as well. But it's a team that's gonna grow a lot.
To help us put some shape to the Canvas business and you don't have to talk in numbers at all, how do you price it and how does that compare to the pricing of a traditional asset manager? And then how what's the sort of scaling factor on that?
Yeah, so uh it's incredibly simple pricing, um, which I think people like. It's dynamic. So it depends on the settings you choose.
And all we're doing is we establish a minimum fee, which is very, you know, very competitive with whatever and low. So we won't go below that minimum fee. So if the settings are the most vanilla, we'll still charge that that that number.
Above that
It's simply a prorated version of our normal fee for our services. So if you're allocating more.
kind of away from the very basic public market index portfolio.
We do some of that too, a lot of that. Um but if you're allocating away from that, the more different you get, the higher fee you pay. And it's a sliding scale up to a a a max where even the max is is lower than what a lot of long only asset managers would charge. So it's it's dependent on the settings you choose.
Um we don't charge for extras, you know, like everything is included in one uh asset base price.
Clients have really liked that because it puts them in the driver's seat of
if if if fee is a really important variable to them.
it's under their control and and we're a platform that fulfills that we don't dictate the terms. So they can decide themselves and that's worked really nicely. And and in terms of scale, you know, again, we talked about this earlier, the reason there's no performance fee in this is
If you told me we had to ingest a hundred billion dollars to use an absurd number
into this platform. We could do it over the next year and and in in many cases it would be a
It would be a crap ton of work. But in many cases, you know, we would still end up owing a modest amount of these huge public companies.
um and and hopefully not affecting their prices. So so it scales extremely well to very large numbers, and that's how we think about it.
Two.
Alright, so
The future.
What's the A plus scenario?
For OCM and you over the next five years.
What's keeping you up at night? What's the nightmare half scenario?
Um well you know I guess the F scenario is the easiest one to think about, right? That everything just stops working and we've you know, the the software fails or or there's large errors or, you know, uh technical problems or team problems or whatever.
And others just do a better job than we do. Again, everything's execution. So that scenario is that we fail.
and no one uses our service. It's very hard for me to imagine a failure scenario in
I'll call it the media side,'cause I'm just gonna keep doing
this unless I get sick or infirmed or something like
I think it will work to some degree.
I guess the failure would be status quo, right? That it just doesn't change from what it is today. It doesn't help people any more than it does today. It's no more interesting. It's no more navigable, as we talked about earlier.
But I can assure you that's that that F scenario is not gonna happen. Th that would be F.
A plus is hard for me to talk about because of this growth without goals idea that I sort of live by, which is
I really don't think about this sort of thing. We don't have five or ten year goals.
Personally for me, they're wrong and dangerous.
I'm much better putting one foot in front of the other and having really strong habits that we can hang our hats on.
And so I try to engender that in our
businesses as much as I can.
Um, the furthest I'll go is to th I was a video game player growing up. The furthest I'll go is
is think about them like boss battles. Like what like what's the next boss that we face?
And uh that's always very present and near term and and and objective. And that's about as far of a goal as I'll set or or or try to reach.
Uh, the rest is more about principles and we've talked about all those things already. So public learning and
clear value delivery, uh customization for investors, a technology, flexible technology, chassis and platform.
Um, those are all key things that I just want to keep getting better at. What that looks like in 10 years, I honestly have no idea. And I won't let myself speculate or think about it because I just think it gets me off course.
Okay, well we got one last question for you.
That
Of course.
We have to ask.
Patrick.
What's the kindest thing that anyone has ever done for you?
So it's so hard to answer. I've I've done this a few times where I've been asked the question and
I've always wanna give a new answer, right? I try to optimize for novelty.
So the the most common
Answers to these questions are
People
Making a bet.
on other people
early in their lives.
That or something, you know, family support.
I love those answers. Like whenever someone mentions
some, you know, big wig making a huge bet on a twenty something year old.
uh with no real evidence of prior success.
That just that makes me feel really good.
And that happened to me
God so many times.
The true answer is something my cousin did for me, which people can listen to in other podcasts.
Um, he introduced me to
uh my wife and my best man and several others in in a really interesting fashion in college where
You know he's my cousin, so he was obligated to bring me out for one night, but he brought me out for like six months straight and just
made it his personal mission to
Get me set up socially.
And and my marriage resulted, so
Extremely thankful to him. Uh his name was Tim.
And then just the ongoing kindness of my family, my wife, my kids, my my extended family. Those are the answers that are kind of
Uh they're the real answers, but they're kinda boring. I've given them before. So
I'll come up with with a unique one that's business related.
So actually we referenced it earlier and then we didn't circle back and so I'll close the loop.
So this has to do with the Royal Bank of Canada.
So
When I was twenty, let's see.
When I was twenty three or so.
This is right after the
financial crisis had happened, the market had crashed.
Like I said, they were our largest client.
Um we manage money for everyday Canadian citizens, right, through mutual funds.
And in many cases, sixty percent at the worst case in the worst time, sixty percent of their money was gone.
And we were the ones that were responsible for that money. Now the market obviously was down a lot, but so were we.
That was painful. I mean that
So what happened was I was sent around
All over Canada.
We had all hands on deck and and I was
I was a free resource, so I was tasked.
with
Effectively going and explaining to a a large chunk of
Canada as a whole.
Why we suck so bad.
And you're a little twenty three at this time? I was twenty three. Uh as I mentioned I was
Introted though.
I was always uh
a good public speaker. And so that's part of the reason they sent me. But I was green. I mean I
I was really scared about.
being asked questions that I couldn't answer because I didn't know the strategies well enough.
I went on like a three week tour.
And uh so the the kindest thing I think was
This group that I traveled with from the Royal Bank.
Um, I'll do a special call out to a gentleman named Bill Hill.
Uh, Bill was the one who was the head of uh a major group there at RBC at the time. He was with me the whole time and and then it was a rotating band of other people.
He took a big risk doing this. There was no other twenty three year olds uh explaining
Performance of this magnitude at this scale.
to a whole country at the time.
I was legitimately scared. Like I
I was really worried flying up to this trip. I brought like way too many suits, and he made fun of me for having like a carry on suitcase, and it was an ordeal. And Bill
w it really held my hand through that whole process, coached me up in an extremely positive way after every presentation.
I probably gave fifty presentations to rooms of like fifty to a hundred and fifty people.
And every presentation
He would let me suffer through the bad parts. There was one time I tried to quote
Like
a German philosopher and I forgot the qu I forgot the quote.
in m in the middle.
And he let me suffer through it. He didn't like try to come save me, like he let me get through it and then coached me afterwards.
You know, if he ever listens to this, he'll be surprised that this is my answer, but it was very formative for me.
of just like gutting something out.
Getting better.
Realizing that like you just gotta keep going.
and learning a lot in a very compressed period of time because of that pressure. So
Um, he didn't have to do that. He took a big risk by doing it. He I could have sucked for all he knew and and thankfully I didn't, but I I grew up a lot in that.
you know, in that short period of time. And so I'm I remain very thankful to Bill and the whole RBC team for
for kinda holding my hands through that process.
I can't imagine getting fifty presentations about
About that uh
to rooms of fifty to a hundred people.
Yeah.
You're right.
Indeed. Yeah. Everything after that was was uh was a little a little more straightforward, but it was good uh good trial by fire.
And a great kindness.
I love it.
Well, Patrick, I normally wrap the show up by letting folks know that if they like acquire and they want to go deeper, they can become an LP. Why don't I turn that over to you and and if you're open to it, let people know why they might think about that.
Yeah, I I'm um a wholehearted supporter of this thing. You know, it's so simple, right? Which is
This little
deeper dive into what you guys have built.
that
I think, at least from my perspective, is actually even more enjoyable than the main show. It feels special to me because I know that it's a group of people like everyone listening to it has opted in and gone the extra mile to support you guys a little bit, but also is just hyper curious and and the episodes
are as good or better than the main ones, to say nothing of all the other stuff that that comes with being an LP. And so it's one of the best like little small chunks of money that I spend. And I know a ton of these LPs um that have done the same because I've I've sent them there. And I would just encourage everyone listening to check it out. It's not a it won't break your wallet, but
But it will definitely expand your mind if you're interested in these
topics that we've been talking about today and how businesses get built and how this how this investing business works. I think it's awesome. So uh you you didn't coach me on this. That's that's entirely my opinion. And I highly encourage everyone, go become an L P
Well thank you for uh taking that ball I passed you without letting you know that the pass was coming. So it's like a LeBron assist there. I believe. I believe in the LP. Thanks, Patrick.
All right listeners.
Now is a great time to talk about one of our favorite companies, Statsig.
Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI powered experiences at scale.
Yeah.
In the
crazy speed of today's AI world. Shipping fast is just table stakes now.
It's basically trivial to build and deploy your app constantly.
The real advantage is how quickly you learn what changes actually created value for customers.
And how fast you can use that signal to guide what you ship next.
This is where StatsIG comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.
So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started.
Well, thanks so much, listeners. If you like the show, feel free to subscribe. If you like Patrick's show, uh and want to tell folks, hey, this is where you can get more uh background on Patrick, feel free to share it from your favorite uh local social media hilltop or with a friend or co worker. Go subscribe to Invest Like the Best. It is
Absolutely safe to say I've learned more from Invest Like the Best than any other podcast.
And it is the one that I have the highest
percentage likelihood to listen to any given episode just because I know and I have deep trust that if Patrick is having someone on, I am going to learn something radical and new. And if I even if it's a person I know like Jan or that I've heard on 10 different talks because I'm obsessed like Michael Mobison, there's always going to be the reason that you decided to have that person back on. So
It's an amazing show. I know many of you already listen, but but check it out if you don't.
Amen.
Guys, thank you so much for having me. This has been awesome. I really appreciate it. Yeah, yeah. All right, listeners. Well with that
We'll see you next time.
See you next time.