Here's What It Takes to Make a Great Company

People love listening to stories about making it big, and there are no shortage of success stories in the world of global business. There's TSMC, which has grown to become the most important producer of semiconductors. There's Hermès, which has been a power player in luxury consumer goods for over a hundred years now. Or how about Starbucks, Berkshire Hathaway, Renaissance Technologies, or Ikea? The list goes on and on. But what actually makes a company great? And why do some businesses succeed where others fail? The Acquired podcast has become a must-listen for their study of some of the most interesting companies in the world. In this episode, we speak with Acquired co-hosts Ben Gilbert and David Rosenthal, about what makes a business truly great. Read More: The Five Habits of Highly Successful CompaniesCompanies to Watch in 2025Only Bloomberg subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 0:59Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:39Tracy Alloway?

  Hey there, Odd Lots listeners. It's Tracy Alloway.

• 1:42Joe Weisenthal?

  And Joe Wasenthal.

• 1:43Tracy Alloway?

  We are very excited to announce that Odd Lots is going to Washington.

• 1:48Joe Weisenthal?

  That's right. For the first time, we are going to do a live public Odd Lots recording in our nation's Capitol. That's going to be March 12th in Washington DC at the Miracle Theater. And guests will be announced in the coming days, but in the meantime, you can find a ticket link at Bloomberg.com/oddlots.

• 2:10Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:26Tracy Alloway?

  Hello and welcome to another episode of Thought Thoughts Podcast. I'm Tracy Alloway.

• 2:31Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:32Tracy Alloway?

  Joe, you told me you read a fiction book last year, right? Just one.

• 2:38Joe Weisenthal?

  I read it. So I read too much nonfiction, like a lot of dudes, I think. It's, nonfiction is very bro coded. My goal for 2025 was to read at least one novel and I did it. I already satisfied my goal. It's not even the end of January yet. So back to reading random history and philosophy and all that stuff.

• 2:57Tracy Alloway?

  Very, very ambitious, your one fiction book. Can I make a suggestion for another fiction book you should read?

• 3:03Joe Weisenthal?

  Please.

• 3:04Tracy Alloway?

  So there's a book by Margaret Atwood called Oryx and Crake, and it's sort of a sci fi thing. But I think about it quite a lot nowadays because she has this vision of society in the future. And in that society, companies are the most important part of it. It's not about countries anymore. It's all about what company you work for. And the companies are kind of the ones providing all the social services like healthcare and housing. Basically, you're a citizen of a company instead of a country. And I kind of think about it a lot because I feel like we're sort of moving in that direction where companies are becoming

• 3:44Tracy Alloway?

  more powerful. They're becoming more interesting in many ways and more important to society than ever.

• 3:51Joe Weisenthal?

  I'm looking it up right now. I hadn't heard of it. It came out in 2003. Maybe at that time, it was sort of seen as futuristic. But in 2025, it does not even sound futuristic or controversial at all. And we could go on about what that means. But I just like basically accept the premise that that's true now in 2025.

• 4:11Tracy Alloway?

  Okay, great. So you have your second fiction book to read. But the reason I bring it up is because I think we should do more on these stories of companies in general. And so I am very pleased to say that we do in fact have the perfect guests to discuss this. I'm very excited about this. I'm a fan of their podcast. Lots of people are fans of their podcast. We're going to be speaking with Ben Gilbert and David Rosenthal, the co hosts of the Acquired Podcast. So Ben and David, thank you so much for coming on Thought Thoughts.

• 4:40Speaker 04

  Thank you for having us.

• 4:40Speaker 05

  Great to be here. Thanks for having us.

• 4:42Tracy Alloway?

  All right.

• 4:43Speaker 04

  Tracy, I love that intro.

• 4:44Joe Weisenthal?

  Yeah, it was so good.

• 4:45Speaker 04

  What a career she has had.

• 4:46Tracy Alloway?

  Oh, thank you.

• 4:47Speaker 04

  Oh, my goodness.

• 4:47Joe Weisenthal?

  Tracy and I were talking about like, who should start this one? And I was like, Tracy, you do it. And I was much better than what I would have done.

• 4:54Tracy Alloway?

  Well, thank you, everyone. That's very nice. Ben and David, maybe give us the elevator pitch for the podcast just before we begin.

• 5:02Speaker 05

  Well, Acquired is a 10-year-old podcast that started, like many company journeys, in obscurity with nobody listening and slowly doubled year over year over year.

• 5:13Speaker 04

  We can't relate.

• 5:14Speaker 05

  It is now. I bet, I bet. Yeah, we're now fortunate to be one of the top few, often the number one tech podcast on Apple and Spotify, which is a little funny because we study these companies that are very often not tech companies now. But we look at companies like TSMC and Mars, the company behind M&M's, IKEA, Meta, Hermes, Costco, and we really try to, through conversation, David and I tell the entire history of the company from founding to today, analyze it, and really try to answer the question, why did the company that we are studying work and work at such extreme scale?

• 5:51Speaker 04

  And Tracy, it's the reason we do it is literally, just like you said, you know, the institutions that these companies, the biggest companies, you know, around the world have become are, you know, they're quasi-governmental at this point. You know, you could make an argument, they're more important than government. Somebody said to Ben a few months ago, when talking about Acquired, you know, in 200 years, I don't know if people are gonna know the name Joe Biden, but they're sure as hell gonna know the name Mark Zuckerberg. And we're like, whoa, that's, that's a crazy idea, but might be true.

• 6:23Joe Weisenthal?

  Yeah, I mean, I can't, there are a bunch of random presidents from 100 years ago that I certainly, I couldn't name, or if I could name them, wouldn't know anything about them. Going back to Tracy's fantastic intro, you know, there are sort of two things, I guess, about companies, which is, one is, I guess, the business model, the product that they sell, you know, you build something and then you try to sell it for more money that you built it for. And then there is this sort of like, the internal empire, and there's the culture, and there's just the way they work. And these are fundamentally sort of like, different questions. Do you, how do you think about like, what a company is? Because I get, there really, per Tracy's intro, there are multiple ways to describe it. Like, what is a company?

• 7:07Speaker 04

  That is, you know, we typically spend four to six hours on an episode trying to answer that question.

• 7:16Speaker 04

  You know, it's, uh, uh, what we've tended to find is the only pattern that tends to really exist across these greatest, biggest companies in the world is that they are each totally idiosyncratic in some really, one or multiple, really, really, really important dimensions. And so I think I would say, you know, for, for those incredibly successful, you know, institutions of our time, what they are is they are something unique that no other institution, you know, company, corporate, governmental, otherwise can, uh, well, TSMC that we just covered, uh, we just interviewed the founder, Morris Chang, in Taiwan, which was an incredible

• 8:01Speaker 04

  experience. You know, they make all the leading edge chips in the world. So, you know, to the extent that computing and compute is important in our world, like all of it flows through TSMC. There, there is nobody else in the world that has the capability to make the incredibly powerful chips at the leading edge that they do.

• 8:22Speaker 05

  I think our episodes tend to hinge on this question. In what way is this company singular? Because nothing gets to $500 billion, trillion dollar scale without being the only one that can do X. And in TSMC's case, they're the only company that doesn't ever compete with their customers. They're purely a foundry. They're, they are not also a chip designer and they're the only ones capable of doing what is the, the current technology generation two nanometer process, the most sophisticated leading edge chips. And almost every big company you look at that has been successful over a long period of time or, or reached outlier status is singular in some way like that.

• 9:03Speaker 04

  And TSMC, it's like, it's wild because of that. That is the only thing that matters. There they are in this, you know, island nation of, you know, depending on who you ask, disputed sovereignty. It's insane. There's something like six or 7% of the country's GDP and like, I think like 15% of the stock market, you know, of, of, of the equity value of companies in the country, yet it exists. And yet the world order, you know, at least thus far, has reorganized itself around it.

• 9:33Tracy Alloway?

  So the way I kind of think of your podcast, the analogy that I use is you're the business equivalent of Dan Carlin's Hardcore History. Like, these are long episodes where you are digging very deep into the profile of a particular company. But as you mentioned, you also do interviews, or you weave interviews into your company profiles. And you just did that one with Morris Chang, the TSMC founder. One of the things that really surprised me in that interview was he said he never fired people and never did performance reviews. What did you guys think of that?

• 10:08Speaker 05

  It's really interesting. So David and I got to read an unauthorized translation of his Chinese-only memoir to prepare. And he went into sort of great length in the memoir explaining the philosophy. And the idea is that performance reviews are entirely separate from the idea of who should get laid off if there's a layoff. Performance reviews are specifically about coaching you on how to be a better employee for the company next year. So both the employee and the company benefit. If there is a layoff, there should be an entirely different way of determining where we need to trim to cut budget versus looking at people's performance reviews. And Morris goes so far as to believe

• 10:51Speaker 05

  that in his industry with his business model, you should actually never lay people off. And I think that comes from the fact that, A, if you believe the economy or your industry is going to turn around within 12 or 18 months, you know, it's not actually worth it to lay people off, pay a whole bunch of severance, need to hire people back, need to retrain them. But the other big part is Moore's Law marches on.

• 11:15Speaker 04

  Yeah. If you believe in Moore's Law, you will always need more.

• 11:18Speaker 05

  Yes. And you'll need more people, you'll need more machinery, you'll need more capacity. And the semiconductor industry is so cyclical that part of the way that he believes you can kind of avoid these huge gluts and then, you know, Bubbles, basically this boom and bust of the semiconductor industry is to sort of behave less in this whiplash-like fashion where, oh, no, there's a little bit of an asset bubble and stocks are in a drawdown. So we need to lay off people. Oh, my God. And I think he sort of blames layoff as a piece of the massive cyclicality of the industry.

• 11:53Speaker 04

  Yeah, and he had a really scarring experience around this back when he was at TI, Texas Instruments. So I mean, the crazy thing about Morris, he didn't start TSMC till he was 56 years old. He's not Taiwanese. He's born in China, but then became an American citizen. He had a whole incredible career in the semiconductor industry in America long before starting TSMC. He ran TI Semiconductor Group. And before Intel, and really for the

• 12:20Speaker 05

  Which you might chuckle about, like TI.

• 12:22Speaker 04

  TI, right, right.

• 12:23Speaker 05

  They make those calculators for high school students, right?

• 12:26Speaker 04

  But before Intel, and for the first like 10 years of Intel's existence, they were the pipsqueak and TI was the semiconductor giant. And Morris ran the semiconductor division at TI. And at some point, part of how they really lost the crown to Intel was that corporate, the CEO decided we need to have a layoff for whatever reason gyrations were going on in the stock market or whatever. They ended up, as a result of that, I don't know if they're directly laid off, but as a result, the MOS team, MOS, metal oxide semiconductor, some of the

• 13:01Speaker 05

  Sulfate, I'll look it up while you talk.

• 13:02Speaker 04

  Yeah, which was sort of the next generation of silicon. That team within TI left the company, started a new company called MOS Tech. And then anybody who knows anything about semiconductors knows MOS was like the key technology that Intel leveraged and like really helped expand Moore's Law. And TI just totally missed out on that because they You know, parted ways with this really important group and like, who knows what's going to be really important in the future?

• 13:30Joe Weisenthal?

  So this actually gets to something that is a very recurrent odd lots theme. And of course, when I described what companies are sort of in the theoretical sense, you know, one thing I didn't mention is their preservation of collective knowledge and memory, right? So TSMC may be the best in the world at producing chips, but there is no individual at TSMC that knows how to build chips, right? It's a collective process and there's no one person that stores it all in his head and just can walk across. And you see this in the failings of certain American manufacturers. They do have these layoffs and then they're like out of practice and they get rusty. And we talk about it a lot in the nuclear industry and the plane industry, et cetera.

• 14:12Joe Weisenthal?

  Talk to us, maybe TSMC, but also other examples of the company as this sort of knowledge preserver.

• 14:20Speaker 04

  Totally. Well, TSMC is so vivid in our minds right now because we just were there and we toured the science park, Hinzu Science Park in Taiwan, where not only TSMC, but the whole semiconductor ecosystem is located, like MediaTek's there, ARM's there, you know, Apple's there, like, you know, it's like a, it's like all of-

• 14:37Speaker 05

  Cadence, Synopsys, Qualcomm.

• 14:39Speaker 04

  It's all right there, right together. You are so incredibly correct that there is no one person, there's not even a group of a thousand people who know how to make chips or know how to, what TSMC is. You can't just like airlift. You could take all the buildings, you could take a bunch of people out of there and like, you cannot recreate this. It's a, it is a whole ecosystem contained in one physical location.

• 15:04Speaker 05

  I think it's fair to say it's the most complex process that humankind has created and the most complex product, like the science and technology and R and D that goes into etching a two nanometer wafer for use in whether it's AI chips from Nvidia or, you know, the chips in our MacBooks or iPhones from Apple. That is- You know, there's a joke in the semiconductor industry that this is a technology given to us by aliens. That's how sort of insane it is.

• 15:33Speaker 04

  It is the closest thing to magic in the modern world.

• 15:35Speaker 05

  Yes, I think that's exactly right. And so I think lots of industries have examples of what you're talking about, this idea that the the culture of the company contains this sort of fabric of knowledge that not one person can have, but is blown out to its extreme in semiconductors.

• 16:06Speaker 00

  What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 16:22Speaker 06

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 16:30Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merica Ripple says.

• 16:38Speaker 07

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 16:57Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 17:08Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their Achievements from past jobs and hands on experience matters more to recruiters than advanced degrees with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and

• 17:50Speaker 01

  hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 18:31Tracy Alloway?

  So if we agree that companies are sort of collections of institutional knowledge, more broadly, I guess I'm wondering, like, how much of a role does management play then? Like, are there instances that you've studied where management has made a real, real difference?

• 18:50Speaker 04

  Yes, I'm laughing. Meta, Facebook is like, is such an extreme example of this. Like, yes, Meta, and I'm sure Mark would be the first to say, is just like TSMC, a collection of all the people and knowledge and processes. And if Mark were to go start another company, he couldn't recreate, you know, Meta and Facebook. But there have been so many moments in the history of that company where a decision or a set of decisions made solely by Mark have completely changed its course and enabled it to become, what is it, you know, before this most recent drawdown, one and a half trillion dollar market cap company?

• 19:31Speaker 05

  I would say I draw a distinction between management and leadership. I think management Tends to play a role in stabilizing companies and creating companies that are maybe one, two standard deviations away from the mean on the positive side. You know, how to create good companies and leadership is how to create great companies. These founder-led companies, Jensen and Mark Zuckerberg and Forrest Mars and in the case of of the M&Ms, you know, Snickers Candy Corporation, Bill Gates, in the case of Microsoft, D. Hawk, in the case of Visa. These are people that are visionary, that have an idea of the way the world should work. John Collison has this great quote that when you look around,

• 20:16Speaker 05

  the world is a museum of passion projects. And I think it's the leadership of these like true visionaries that, you know, when they first started, you didn't know for sure they were going to be right or not. But in hindsight, it was it was their leadership, their stubbornness, their stick-to-itiveness, and their insistence that their way of arranging the world around them was correct, that ended up actually shaping the world and creating the biggest companies on earth.

• 20:43Joe Weisenthal?

  You know, I have a question. Since you started off by talking about performance reviews, and here's something that I think about sometime, which is that let's say you have like a Mark Zuckerberg starting Facebook in his dorm room, or a Larry and Sergey and Google in their garage, and they have this cool technology and they're growing. And then it's eventually they hit a point where someone comes to them and says, you know what, we really need to like write an HR manual. We really need to like come up with all this stuff. And I think about myself, that would be the point where like, you know what, I'm selling the company. I hate dealing, I hate dealing with like

• 21:19Tracy Alloway?

  Joe hates paperwork.

• 21:20Joe Weisenthal?

  I hate paperwork. I don't want to like write a manual. I don't want to start having performance reviews. I don't want to like come up with all these like HR policies. This sounds like a headache. I'm curious, though, like because you talk about these visionaries, how do they sort of accept the fact that as they get bigger, certain aspects of bureaucracy, which they probably find kind of annoying to, are sort of must haves with scale?

• 21:47Speaker 05

  I would push back that it's must have. I think it is most common to have it. But I I'm of the opinion that you can accomplish the same set of tasks through process and through culture.

• 21:59Joe Weisenthal?

  But they all have it, right? They all have rules. They all have like manuals. I mean, eventually like they all have a HR department and they have specialization, all that stuff.

• 22:11Speaker 05

  A hundred X more than others. Like you look at Nvidia, and I honestly believe this is true from speaking with Jensen, from interviewing him, from speaking with a number of directs, from spending time at headquarters. It is a pretty unstructured environment with comparatively few people. I think what's Nvidia's headcount, David? Something in the

• 22:31Speaker 04

  I don't know. Compared to the other tech giants.

• 22:34Speaker 05

  Five to 10x less than the other big tech companies. Way less process.

• 22:40Joe Weisenthal?

  Oh, it's small. Yeah. According to 29,000 people, 29,600. All right. Keep going. Keep going.

• 22:46Speaker 05

  And what's Apple? Somewhere in 100,000. Microsoft's like 160, 70,000. I mean, it's a comparatively small headcount company. And I really do think you can accomplish tasks through incredibly strong culture or process. And usually it's the sum of both, but it's always interesting to see which companies are able to lean much more heavily on you would just never violate some tenet of our culture and therefore we don't need rigid process around it.

• 23:13Speaker 04

  And it's funny, you know, it's not, you can kind of go one way or the other or somewhere in the spectrum. So with Jensen and Nvidia's case, clearly that's how he loves to operate. Forrest Mars, the Mars company, was the total opposite end of the spectrum. You know, Forrest was one of the most idiosyncratic entrepreneurs in American history. And because the company's so private and the family is so private, it's not as well known. We did an episode on it.

• 23:40Speaker 05

  By the way, it's a candy and pet company worth probably over $100 billion. Totally privately held.

• 23:45Speaker 04

  Totally owned by the family. 100%. Forrest was so extreme on process. So he just instituted this set of rules that were completely crazy to the outside world at the time, but like Or how he wanted to organize things. And then everybody in the company just fell in line with the rules. So stuff like there are no offices. There's no conference rooms. Well, there are a few conference rooms. They don't have doors on them. They're made of glass. Everybody, open floor plan. This is in the 1930s. Imagine this, like no executive offices, no perks.

• 24:15Speaker 05

  A large bonus is determined if you are on time to meetings or not.

• 24:20Speaker 04

  Everybody punched a time card, including him, the CEO.

• 24:24Joe Weisenthal?

  By the way, Tracy, I can think of another privately owned company with open floor plans and all glass windowed offices.

• 24:32Tracy Alloway?

  Yeah, me too.

• 24:33Speaker 04

  Do you guys punch a time card?

• 24:34Joe Weisenthal?

  We don't.

• 24:35Tracy Alloway?

  Oh, we kind of do. Yeah, kind of.

• 24:38Joe Weisenthal?

  Kind of. Some of this sounds familiar. We don't get a bonus for showing up at a meeting on time. Some of this sounds familiar. Anyway, keep going, sorry.

• 24:45Speaker 04

  And the way that he did this is, again, these were radical, radical concepts for like, you know, pre-war and post-war America and Europe at the time. He just said, like, we are all about performance here. We're all about the company's bottom line. And if the company performs well, you will make an insane amount of money. And so his goal was like, assuming we outperform our targets, everybody, you know, on their salary base should make three times what an average salary for their job would be elsewhere in the industry. And so like you just set up those incentives and you set up those hard rules and you're going to get people to follow them.

• 25:21Tracy Alloway?

  Wait, so I don't know that much about the Mars company other than, you know, M and M's are delicious and all of that. But when you're researching a privately held company like that, what's, what's the actual research process for you like? How do you dig up information on a company where, you know, there aren't as many like public, publicly available documents and financial statements?

• 25:44Speaker 05

  We rely heavily on.

• 25:47Speaker 05

  The, or at least historically, we're now getting more primary source access. But historically, on the writing of great journalists. And so usually there is a canonical book of someone who got close. Like in the case of Renaissance Technology, the ultra secretive asset manager out of Satake, New York. I think that's right, David.

• 26:08Speaker 04

  Yeah.

• 26:08Speaker 05

  There's a great book by Greg Zuckerman called The Man Who Solved The Market. Like, pretty investigative journalism work. David, there's one here in the.

• 26:15Speaker 04

  Yeah, for Mars, there's a book written by Joel Glenn Brenner. She was a reporter at The Washington Post in the 80s and 90s. It's called Emperors of Chocolate. It's so good. She got access to Mars by calling them, calling headquarters every single day for a year. And then finally, they relented and gave her access. It's the only book ever written. It came out in like the late 80s, early 90s. So we used that and then, and then we talked to her. So we talked to her for Mars. We talked to Greg for, for Rent Tech. We, we talked to these people and we say like, okay, like, you know, tell us about this. Like, what was the process of getting access? You know, what are you sure about? What are you not sure about? What do we really need to highlight? What's happened since?

• 26:54Speaker 05

  And David's favorite technique is, even if a company, for example, when we did Nvidia in early 2022, which gosh, what a ride it's been since we covered the company back then. There wasn't a book yet. There was about to be two books. And so that requires sort of piecing together the story over a lot of different ways. David's favorite is finding industry talks that have been posted to YouTube. And so there's usually some mid-level manager that is talking about something like in a, in a presentation, they get all excited because they get to go and present to their peers. There's always gold in there. And I don't think it's like investment alpha necessarily. And I'm not sure it's competitive information where the company's like, oh, we wish this wasn't presented.

• 27:39Speaker 05

  But it really does, if you're trying to understand the story of how the company became successful, really helps you find that.

• 27:44Speaker 04

  And it's often the founders themselves, too. I mean, gosh, in that Nvidia case, there was a talk that Jensen gave at Oregon State University on the steps of OSU. And it was, you know, recorded, I don't know, probably sometime in the 90s, early 2000s. And he's, you know, it's a totally different Jensen. It's a totally different company and he's completely. Candid, straightforward, talking about his journey. And you know, when we found it, it had like, I don't know, a couple hundred views on YouTube. It's this stuff is out there.

• 28:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 29:08Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 29:53Joe Weisenthal?

  There's an obsession among a lot of investors with the idea of founder-led companies. And that's really exciting. Someone who's still there, who still has that original vision. But you know, obviously, a lot of companies are just too old to still be founder-led or companies thrive through multiple CEOs regardless. What what patterns have you realized? Is there a real difference with founder-led companies? Or is this sort of just a survivorship bias? Some founder-led companies have done really well and we remember all of those. Some flame out and no one talks about them, et cetera. I'm curious what patterns or anti-p patterns you observe.

• 30:32Speaker 05

  Okay, well, first of all, it's all survivorship bias. Everything we've talked about so far.

• 30:36Joe Weisenthal?

  Yeah, that was actually gonna be my follow up.

• 30:38Speaker 04

  That is a major caveat here.

• 30:39Joe Weisenthal?

  Yeah, I was gonna follow up. Anyway.

• 30:41Speaker 04

  Past performance is not an indicator of future success here.

• 30:45Speaker 05

  We have not brought up a single company on here that A has failed or B is a middling success. There no, no $10 billion companies have sort of crossed our, our lips this conversation. We have decided on acquired. We love understanding what made the extreme outliers work so well. The great irony is that is not a playbook that you can repeat. You know, it's like holding that lottery ticket up in the air and professing to everyone like the great webcomic at XKCD. There's this amazing comic where he's holding the lottery ticket on a stage saying, I just kept playing. And if you keep playing too, you too can win the lottery. And I, I, I think it is, uh, you know, we, we should wave our arms around and say, if

• 31:28Speaker 05

  you run Mark Zuckerberg's exact decision process.

• 31:32Speaker 04

  You will not become Mark Zuckerberg.

• 31:33Speaker 05

  You will not create Facebook. I mean, that is just, you weren't there at that exact time and that exact place.

• 31:38Joe Weisenthal?

  I always think about those Twitter threads where it's like, this is the daily routine of the CEO. He gets up at 4am and takes a cold shower and then meditates for half an hour and then eats raw oats and then takes his kids to school, et cetera. It's like, man, you're not going to start a billion dollar company by following what you saw on a Twitter.

• 31:55Speaker 04

  Humans are really, really bad at distinguishing correlation from causation.

• 31:59Speaker 05

  Yes.

• 31:59Tracy Alloway?

  That's another

• 32:00Speaker 05

  Now.

• 32:00Tracy Alloway?

  XKCD comic, isn't it?

• 32:02Speaker 04

  Yeah.

• 32:03Speaker 05

  Oh, yeah. XKCD.

• 32:04Tracy Alloway?

  Oh, sorry. XKCD. Dyslexia strikes again.

• 32:08Speaker 05

  It's not the easiest name to remember or pronounce, but I will say though, I think if, if your goal is how do I start a trillion dollar company? How do I start one of the 30, 40, 50 most important, largest, most successful, durable companies on the planet? Founder-led companies have a much higher probability of being that. And as you point out, time has a lot to do with that. You look at Hermes, this is a, you know, what is it 150-year-old company? The original founder is not going to be the person running that. But close control is a key to the success of that business and so many others, where they control their own destiny. They don't have to answer to the whims of shareholders.

• 32:52Speaker 05

  IKEA is another great example. Mars is a great example. It might be a hired CEO in the case of Mars, or it might be a close family member in the case of Hermes. The David, your comment on the sixth-generation family member. But there is a flexibility to adhere to the ethos of what makes the company special that either founder control, family control, or just sort of tight, original shareholder control lets you do in a way that if you're publicly traded, eventually the specialness gets beat out of you. You start believing that the consultants are right when you hire them and they say you should be like everyone else, or that the public equity investors that are trying to compare you against your comps and use the same numbers to compare you,

• 33:37Speaker 05

  but not really understand, actually, the way my business works, you should analyze it in a completely different way because that is what makes it special. You just, you lose the ability to keep your special.

• 33:48Speaker 04

  There's this amazing story from Hermes's history of Jean-Louis Dumas, who was, I think, the third, either the third or fourth-generation family member to run the company. In the 80s, late 70s, early 80s, Hermes had kind of, I don't want to say fallen on hard times, but they were much, much smaller relative to their peers in the luxury industry. And Gucci was on the rise. You know, it was the Tom Ford days at Gucci and they were everywhere. And they brought in some consultants. I don't know which firm, you know, had recommended like, oh, okay, Hermes should basically throw in the towel and follow the Gucci playbook of like, machine production, high volume, lots of SKUs, be everywhere.

• 34:30Speaker 05

  License your brand.

• 34:31Speaker 04

  License your brand, yeah. Things you could never imagine Hermes doing today. And Jean-Louis just said like, Basically no and F you and we will never work with consultants ever again. And we're going to double down on handcrafted, you know, unique history scarcity. And that's what they did. And so they built up, you know, over the ensuing decades, they have seven, eight thousand artisans that hand make the majority of their items in France. Like what other company is, is, you know, a hundred plus billion dollar company where everything is handmade by artisans?

• 35:07Speaker 05

  This was a dead craft. They spent 30 years reviving the number of craft people in the world trained to do this.

• 35:13Speaker 04

  They started schools, trade schools to teach people to do this because it wasn't getting passed on, you know, through generations anymore because all the other luxury companies had moved to machine production.

• 35:22Speaker 05

  I think when it comes down to it, the lesson is the most successful companies are created by leaning into the thing that makes them special, not by trying to be like everyone else.

• 35:35Tracy Alloway?

  I like the idea that in some alternate reality, they listen to the consultants and I in fact have a Birkin bag, but I guess, I guess it wouldn't be as special.

• 35:44Speaker 04

  Yeah.

• 35:45Tracy Alloway?

  All right.

• 35:45Speaker 04

  It would not be special.

• 35:46Tracy Alloway?

  So the other thing that people are obsessed with, in addition to founder led companies is the idea of disruption, right? And disruption is certainly in the news right now, given the, um, the deep seek sell off and stuff like that. And Joe and I recorded an interview with Howard Marks a little while ago. And one of the things he talks about is how there's no guarantee that the big or best companies of today are going to be around forever. So if you go back and look at some businesses that were big in the S and P 500, like back in the sixties, they aren't there anymore. So names like Kodak or Avon, remember the Avon lady?

• 36:26Speaker 05

  Oh, yeah.

• 36:27Tracy Alloway?

  And Simplicity Pattern was in the S and P 500. That's a company that made patterns so people could make their own clothes. Like it's kind of hard.

• 36:35Speaker 04

  Sears robot.

• 36:35Tracy Alloway?

  Yeah. It's hard to imagine that now, but in the podcast, you're, you're discussing successful companies, but how do you view, I guess, a company's longevity? Like what factors determine whether a business is sustainable for decades versus being just a flash in the pan?

• 36:53Speaker 05

  It's funny. Not only is this a great question, it's actually the most important question. Because if, let's say something compounds at a fixed rate, and let's even say that rate is low, it's a 5% per year growth company. What actually matters is your growth in years 28, 29, and 30 on a 30-year horizon.

• 37:14Speaker 04

  How long you're going to compound for?

• 37:15Speaker 05

  And it's if, whether or not you're able to grow 10% this year in year two, or three, or four, and wildly exceed your targets, that's completely irrelevant versus can you survive till year 28 and do 5%, 2%, you know, like modest growth at scale?

• 37:32Speaker 04

  Or in this case, 109, year 190, you know?

• 37:36Speaker 05

  Yes, yes. And we've experienced this at Acquire. It's the craziest thing that, you know, last year, we grew from 500,000 listeners to a million listeners. Okay, it's 100% growth. That is high growth were we a public company. It's kind of like middling, pathetic growth if you are an early-stage startup. And yet, the fact that it happened in our 10th year is actually the thing that matters. I wouldn't have cared, I would take that over growing at 800% in year two, any day. And so you're getting at the core ethos of like, what really matters when you're creating something very valuable in the world is the out-years of the compounding. Now, to actually answer the question, David, you look like you've been thinking about it.

• 38:16Speaker 04

  I love what you did there, buddy. You did the setup, and then you're like, oh, so the really hard thing that like, if you actually knew, you would probably be the greatest investor.

• 38:24Tracy Alloway?

  I'm going to remember that for this podcast. You're like, Joe, Joe, you look like you have something to say.

• 38:29Speaker 04

  Oh, boy. Oh, boy. I think it's, you know, every company, without fail, I mean, look at this deep-seak crisis right now, is going to face crises on some, you know, irregular pattern, you know, you don't know when they're going to come over X many years, but like, if you're in business long enough, you will face crises. I mean, we have faced crises with our little two-person company here. And then it's just, you know, can you navigate that crisis and emerge on the same or better, you know, compounding trajectory that you were before?

• 39:00Speaker 05

  And to your point earlier, David, that this, okay, I'll try to really answer the question. Every company is special in some way, singular in some way. And the thing that gives any individual company its durability is different and related to its specialness. So for Hermes, it's

• 39:18Speaker 05

  The uncompromising commitment to craftsmanship and the durability of their products and protecting their brand and making the hard choice over and over and never, never making the easy choice such that it is instilled in the psyche of generations of customers, like customers who pass things down and word of mouth that they have this, this extreme premium luxury associated with their brand that, you know, if they made little trade offs like, ooh, let's, let's juice the price, let's raise Birkenbag prices 50% this year, or, oh, let's have a whole bunch of these get made in this machine that kind of looks saddle stitch, but isn't saddle stitch.

• 40:00Speaker 05

  These would trade off against their sort of durability over time, but that's not the way every company does it. Like Microsoft, for example, does it through product bundling, the fact that they now have so many pretty good pieces of software that they can bundle together and sell in one enterprise agreement to a company and have a full solution versus needing to have the best individual widget to do the task for any given thing. This turned out over time to be an incredibly durable business model that, you know, really didn't exist before Steve Ballmer sort of invented it in the late 90s.

• 40:40Joe Weisenthal?

  I just have one last question, you know, obviously if you're talking about the great, and this is something that we talk a lot about on the show, but if you're talking about the great companies today, there are great companies in luxury, they're great companies in pet food and candy, but the vast majority of them are going to be big tech giants. Those are the biggest, most successful companies in the world. And then to your recent point, what's really extraordinary to me, and I think to investors, is how big they still compound in the out years. So we're talking about companies that in many cases are more than 40 years old and yet still growing at just extraordinary clips, given their size.

• 41:25Joe Weisenthal?

  Is this truly sort of ahistorical? Like if we looked at like, you know, if we looked at the really big companies 30 years ago or something, you know, you have like oil companies or General Electric, et cetera, and they were big and they were doing really well. But they had slowed down quite a bit by the time they had like gotten to the whatever the equivalent is. And it seems like we're really in sort of uncharted territory by the speed with which these tech giants specifically can still grow at their level of maturity.

• 41:58Speaker 04

  Yes. This is the consequence of Moore's Law. Moore's Law and what we like to refer to as the Merit's corollary to Moore's Law, which is Michael Merit's, who is a longtime partner at Sequoia, invested in Google, Yahoo, and Stripe, among others, and a journalist before joining Sequoia.

• 42:17Joe Weisenthal?

  Hope for us all.

• 42:19Speaker 04

  Yeah, hope for us all. The folks probably know, you know, Moore's Law, but in this case, you know, the relevant interpretation of it is that the both demand and supply for computing power, you know, writ large, forget any specific, you know, definition of it, but like the ability to compute things will double every 18 to 24 months. And that spiritually has held true since, gosh, what, 1968, maybe? And so we're many, many years down the compounding curve of that, and it is still relatively true. The Merit's corollary to it is that as long as Moore's Law holds, the world will find uses for that increased

• 43:02Speaker 04

  compute power and demand for it. And so if you believe that, the market size for computing technology writ large is going to grow. If you look at like the entire technology market, it's going to roughly grow at the same pace as Moore's Law.

• 43:19Speaker 05

  Which is exponential.

• 43:20Speaker 04

  That's the reason. It's exponential, and it's 60-plus years into compounding at this point. And the world has never seen anything like it.

• 43:27Speaker 05

  And so I think if you take big tech writ large, it probably is true that big tech will continue to get bigger than ever because the market cap of technology companies in some will continue to follow the Moore's Law curve. However, I think it's a little bit disingenuous because I Every 10 years or so, we have a new entrant to big tech who is surfing the wave of the most recent.

• 43:55Speaker 04

  New market created by.

• 43:56Speaker 05

  Exactly, exactly. And so whether it was mainframes, or mini computers, or the PC, or the internet, or mobile, or AI, like each one of these brought one, or two, or three brand new entrants. And we sort of liked, we called them FAANG, and then we called them MAMA, and now we call them the Magnificent Seven. But like, these are actually different companies. And Nvidia was not a part of the conversation even three years ago.

• 44:20Tracy Alloway?

  Can you give us a scoop and maybe tell us what you're working on next?

• 44:24Speaker 05

  David hinted to our listeners, what was your specific hint? A different type of TikTok?

• 44:31Speaker 04

  Not that kind of TikTok. Yeah, we do little hints on our emails when we release episodes. We do a little riddle of what the next episode is going to be. Yes, a different type of TikTok is our next episode. But we've got some.

• 44:44Tracy Alloway?

  A watch comes in.

• 44:46Speaker 04

  Rolex.

• 44:46Tracy Alloway?

  Yeah.

• 44:47Speaker 04

  Rolex.

• 44:47Tracy Alloway?

  Rolex.

• 44:47Speaker 04

  That's my guess.

• 44:48Tracy Alloway?

  Yeah. All right. Well, Ben and David, that was so much fun. Thank you so much for coming on Odd Lots. And yeah, everyone go listen to Acquired and Odd Lots. Listen to both of us.

• 45:00Speaker 05

  Oh, we should say, way back four years ago, when we first did our TSMC episode, there was a great Odd Lots that we both listened to that was an interview.

• 45:10Speaker 04

  Yeah, with Tim Culbin.

• 45:11Speaker 05

  Yes, with Tim to talk about TSMC. And in particular, I think it was the relationship with SMIC, the Chinese competitor.

• 45:19Tracy Alloway?

  Oh, thank you.

• 45:20Speaker 05

  Love Odd Lots. Thank you so much for having us on, and thanks for being a part of our research process.

• 45:24Tracy Alloway?

  Oh, that was so much fun. Thank you.

• 45:39Tracy Alloway?

  Jove, that was really fun.

• 45:41Joe Weisenthal?

  Well, I love talking to other podcasters.

• 45:42Tracy Alloway?

  I know. It's very easy because you can kind of just let them talk.

• 45:46Joe Weisenthal?

  I know. They're really good. That was really fun. I like the point, the sort of acknowledgement that like none of, it's fun to listen to these stories of amazing outliers, but none of their playbooks are going to work for you, probably.

• 45:59Tracy Alloway?

  Right. Well, here's where I, I almost think that looking at corporate failures, like bad businesses is kind of more useful in some senses. Cause if you're trying to identify, you know, things like survivorship bias and other heuristics that we might all have in our heads, you kind of need to look at where people failed as well as where they succeeded. But anyway, I did actually learn a lot from that. So the, the point about TSMC and the idea of, well, when you're in an extremely cyclical industry, maybe, yeah, don't do layoffs. Maybe you don't want to lose a bunch of institutional skill and knowledge every like three or four years and then have to rebuild it.

• 46:41Joe Weisenthal?

  This seems like something that has really plagued a lot of big American manufacturers. And I guess that, you know, obviously TSMC is a publicly traded company, but it does seem like this idea of sort of being able to ignore outside investors and the importance of close heldness within a company. And so obviously there's private companies like a Mars, but then there's companies like a lot of the American tech giants where the founders have a different class of share structure that gives them like 10 times more votes than the other public. And it does seem like to some extent, for better or worse, probably for corporate performance, often the better, that the ability of the founders

• 47:25Joe Weisenthal?

  say, no, we are really not going to do anything and you are never going to vote us off the board or whatever. We are not going to change how we do things. In many cases, that seems to be an advantage.

• 47:38Tracy Alloway?

  Never go public, never do performance reviews, never write a employee manual.

• 47:44Joe Weisenthal?

  They all have employee manuals.

• 47:46Tracy Alloway?

  Yeah, that's true. That's true. All right, shall we leave it there?

• 47:49Joe Weisenthal?

  Let's leave it there.

• 47:50Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 47:56Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guests, Ben Gilbert, he's at Gilbert, and David Rosenthal, he's at DJ Rosent. Follow our producers, Kermit Rodriguez at Kermit Armin Dash, O'Bannon at Dashbot, and Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots. We have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 48:24Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about what makes companies successful, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 49:06Speaker 08

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• 49:42Speaker 09

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