Inside Dan Sundheim's Bets on Anthropic, OpenAI, and SpaceX

My guest today is Dan Sundheim, the founder and CIO of D1 Capital Partners. Anyone

that loves investing in markets has surely heard Dan's name before. I think you'll very quickly realize that he is one of the most passionate investors operating in the world today. That D1 operates across markets, both across sectors and public markets, and having invested

today. That D1 operates across markets, both across sectors and public markets, and having invested in some of the most valuable and important private markets companies like SpaceX, OpenAI, and Anthropic is just a testament to how universal Dan's curiosity is about companies, and markets. I find Dan to be one of the quickest, smartest thinkers about just about

markets. I find Dan to be one of the quickest, smartest thinkers about just about any company. When we recorded this conversation in his office in Miami, I spent the

any company. When we recorded this conversation in his office in Miami, I spent the next hour talking to him about name after name after name. And I could not believe the deep clarity and understanding that he had about a small private markets company, then a big public markets company and technology, then another public company that was an industrial. He could move all over the map. And it's incredibly clear that he spends

industrial. He could move all over the map. And it's incredibly clear that he spends all of his waking hours studying markets and studying companies. The takeaway for me from this conversation is how good you can be when you are as passionate about what you do as Dan is about investing. Please enjoy this great and wide ranging conversation on all things markets with Dan Sondheim. I want to spend a bunch of time

talking about public versus private. You do both. You started investing in privates more than 10 years ago. You were kind of one of the pioneers of this. You've got

some amazing, huge private positions, SpaceX, SpaceX and lots of others. Draw the contrast today in 2026 of the difference in how the two markets feel. Curious a lot of things here, like how you think about valuation differences, what one tells you about the other, you know, the business of privates versus a public equity hedge fund. Like I

want to go into kind of all of it, but at a high level, what is your feeling on the difference between the two markets? changes over time so like it depends where you are in a cycle um i'd say right now i think that there's a lot of interesting opportunities in late stage privates it's a moment in time there's some you know companies that are uh you know you've never seen these

are some of the largest companies in the world by market cap are private right now and not only are they large and private they are innovating in a way that's gonna change the world, right? So this moment is particularly interesting. I think

that in general, private markets are less competitive. There's obviously the core skill set of analyzing businesses is the majority of what creates value, but there's other aspects of it too. Oftentimes there's no disagreement among private investors that a certain company is excellent. But that company has to want you to be an investor

in the company. So it's competitive from the standpoint of being able to create a situation where you can invest in the best companies. But in terms of just pure how difficult is it to generate returns by assessing companies, I'd say the public markets are the most competitive in the world, even though they are less efficient than they

were before. It's still, you have more people in more

were before. It's still, you have more people in more places looking at information in companies, where on the private side, just by definition, you have fewer people looking at every situation and less capital. One difference that equalizes a bit is that you don't have this

dynamic on the private side of people doing things that are economically irrational because they're focused in the short term or their business model is not consistent with investing based on long-term insurance value, where you have in the public markets. In the

private market, every time we're looking at a business, everybody's doing the same thing. We

could talk to other firms that are investing in the same company. Their research may be different than ours, but it is all trying to get at the same answer. That's very different than the public market. So there's fewer people competing, but they're all doing the same thing. Whereas the public market, there's tons of people competing, but they're all playing a different sport. If you think about the

key companies in your private portfolio today, Anthropic, OpenAI, companies like SpaceX, Ramp, et cetera. What does that group teach you? Like, what do you think you see coming that maybe the public markets don't fully appreciate yet that don't have that same exposure to these great private businesses? As long as I've been doing private and

public investing, at some points in time, there is synergy. But I'd say if you go back to when we founded the firm, 25% of the time we looked at a private company, there was some synergy with what we were doing on the public side. Now, because of AI and because of there's so much innovation happening in the

side. Now, because of AI and because of there's so much innovation happening in the private markets, the synergies are just greater than I've ever seen before in that I think if you're going to take a view on public companies that are deeply impacted by AI, which eventually will be almost every public company, you should have an

opinion on where is the technology now? Where is the technology going?

What are the implications of it? And investing in those companies gives you that perspective in a way that I've never seen greater synergy. When you first were considering your initial investments in OpenAI and Anthropic, did you pattern match their businesses or their business models on anything that you had seen historically? Did they remind you

of anything? They were very different in that when we first invested in OpenAI, I

of anything? They were very different in that when we first invested in OpenAI, I wouldn't say it was contrarian at all. To some extent, we invested originally at the $125 billion round. So I don't think people were entirely sold on LLMs as a business model. But if you want to invest in LLMs as a business model, OpenAI

business model. But if you want to invest in LLMs as a business model, OpenAI was kind of the, you know, it was the one. Whether you invest in LLMs or didn't invest in LLMs was debated quite a bit. I mean, I think there was a lot of uncertainty about the ultimate business model of these companies. So that

was what we had to figure out. Anthropic was a different situation. When we first invested in Anthropic, a number of people that I spoke to who I think are very smart drew the analogy of Uber versus Lyft or why are you gonna invest in the second player? In most industries, investing in the second player is not the path to glory. The way I viewed

it was, it was incredibly difficult at that stage to say who was gonna be first and who was gonna be second. And

the pattern recognition, to answer your question, for me, on Anthropic was, just reading Dario's essays and listening to him on podcasts. When I look back at my career and look back at the companies we missed, like Amazon in the early days, and I think, what could I have seen? If you look at their income statement, you would have seen a sea of red, you wouldn't have seen anything. The only

telltale sign was reading Jeff Bezos' 1997 shareholder letter, which was like, just the clarity of thought and his understanding of what he wanted to achieve and how to create value for shareholders was greater

than almost any public CEO I dealt with. And if I had read that and almost ignored everything else, it would have been a really important sign and very profitable. Dario struck me Like that.

It wasn't that the models at that point were so differentiated. I think they were considered to be one of probably maybe at that point, five, six, seven players that could ultimately be important. There's still a lot of debate around LLMs as a business model, but I felt like he was incredibly skilled.

and extremely focused. I place a lot of weight, rightly or wrongly, on clarity of thought and the ability to communicate as a CEO, like what you want to achieve and how you're gonna achieve it. And especially in written form, because taking the time to write something down, you actually really have to go through everything you plan to do and express it in a way that

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would you frame the debate today about LLMs as a business model? Now that we know a bit more. Back then it was like, are these businesses going to ever generate an economic return? Like, I think one analogy was, AI will be huge. So was air travel. Airlines were not a good business, right? There's nothing

huge. So was air travel. Airlines were not a good business, right? There's nothing

differentiating about one airline from the other. And so therefore, you know, just returns go down to the cost of capital. Obviously, we took a different view, but that was like a 65, 35, 70, 30 degree of confidence in that at that point. It was more about like the skew if things played out like we thought and the business models were actually moated would be huge. I think at

this point we're in a different place in terms of the debate that's important. If

you want to look through a positive lens, businesses have taken slightly different lanes and have excelled at different things within AI. So OpenAI has been great at consumer and has had good traction enterprise. Anthropic has been incredibly successful in coding. There was a thesis when we first invested that like APIs or the business

coding. There was a thesis when we first invested that like APIs or the business of having other software companies plug into your other developers plug into your model would be commoditized because they could just one day use your model, one day use your model, just be a great to the bottom. I think that debate is more

or less irrelevant because You've just seen with Cloud Code and even OpenAI's API business, like these are durable businesses and yes, can you switch? You

can, the same way you could switch AWS or Azure, but it's not worth it for a lot of businesses to do it and there's sufficient differentiation among the models.

If you look at the underlying margins of these companies, They are not the margins that you see in a commoditized industry. The gross margins are quite high. The competitive

landscape, I think, is not heavily debated. At this point, you probably have four or five LLMs that will be relevant in the long term. I don't see that changing.

Not that there's not sufficient talent out there, it's just that the capital required to get into this business is too great and these companies are too big at this point and then you kind of get like the snowball of, you know, the more capital you have, the more compute, you get better researchers. It can be very difficult.

So the competitive landscape is not really in question. I don't think anyone would say that these business models are commoditized. I think the real debate is these are extremely capital intensive businesses. Capital intensive to a degree that we've never seen before in the history of business. And the question is, you're spending a ton of capital and the ultimate return on that capital is unknown. So it's not like a normal

business that builds a factory and kind of knows what they're gonna sell. You are

spending tons of capital to train a model and the question is, Do the scaling laws work such that the returns on that capital continue to be attractive, which means that you will be able to attract more capital and build better models? Or are you going to get to a point where everyone

looks back and says, we raised too much money, we spent too much training models, we didn't get the economic return? Or I think equally likely, if not more likely, people would say, ultimately you will get the economic return, but it just happened slower than you would have thought. Like enterprise adoption just didn't take

off as quickly as you thought. And therefore the problem is like when you are this capital intensive as a business, it introduces financial leverage and operating leverage to a degree you don't see in normal businesses. So you don't have the luxury of, you know, uh, or three years of things going slower

than you otherwise would expect. The scaling laws, the returns on capital, and the speed at which these tools and AI is adopted throughout the economy are the questions. Is there anything that Netflix or something like that could teach us? That's

the questions. Is there anything that Netflix or something like that could teach us? That's

another business that comes to mind where there's a crazy amount of capital that was spent to build an asset and then it gets amortized over a bigger and bigger user base. That's turned out to be a great stock and one that I know

user base. That's turned out to be a great stock and one that I know you've owned a lot. Is there any analogy between those two that's interesting to you?

When I was speaking to the executives at the LLMs, the way I framed this is I said, look, I said, I think your business is some kind of combination between Netflix and Spotify. Netflix in that, unlike other tech companies, you are spending a ton of money upfront to train these models.

Once these models are trained, you go sell them at extremely high incremental margins, you don't know what the revenues are gonna be from that fixed asset that you've built.

But to the extent that you've built that asset, you wanna sell as much as possible so that you can get the cash flows to build the next model and so on and so forth. And that's very similar to Netflix in that they invested in content. And when you're an early mover in this kind of fixed asset business,

in content. And when you're an early mover in this kind of fixed asset business, you invest heavily, you get the capital to invest heavily, You get the revenues, you spread it out over an increasing number of people. You invest more in that fixed asset and that just kind of has a flywheel effect of generating more revenue,

more content, more revenue, more content. And eventually you get to the point where it's almost impossible to compete because It's just a first-barred advantage is too great. Yeah. If

you were to say, like, what is an important difference of Netflix versus these models is Netflix's content was differentiated. The models are more similar than they are different in that, like, you know, at any given time, OpenAI may have a better model, Anthropic may have a better model. But a lot of the expertise

and innovation gets disseminated pretty quickly. So these models are not terribly different. And

that's where the Spotify analogy comes in, in that I think if you're Google or you are OpenAI, the differentiating factor will not necessarily be that Google gives you a better answer. Like if we were just like to query Gemini or ChatGPT on something, I don't think it's the

case that we would say definitively one will give you a better answer over time.

However, the personalization matters. And the first mover advantage is like the more that these models know about you, how you live your life, your health, all the things that are important to you, you build up this history and it becomes very sticky. The music on Spotify is no different than Apple Music or Amazon Music, right?

sticky. The music on Spotify is no different than Apple Music or Amazon Music, right?

Theoretically, it's a pure commodity. What makes Spotify have pricing power? What makes it differentiated? Why would people be incredibly upset if you said you had to you know,

differentiated? Why would people be incredibly upset if you said you had to you know, not use Spotify anymore, it's because it's personalized. It's because they've tailored the service to take a product which is a commodity and personalize it to the point where you're willing to pay a premium for that commodity. If you were giving advice to

the executives at these companies and telling them what to lean into and what to look out for over the next five years, I'm curious what you would say because The scaling laws are so interesting in the sense that the models keep getting unbelievably better and that probably means the revenue available is like, who knows how big it could be, it could be the whole world. But the cost keeps going up by

orders of magnitude. The Colossus II data center is like this unfathomably big thing. It's

like two gigawatts of power. It's crazy. What advice would you give them based on everything you've learned about these big, massive businesses? The really interesting thing and challenging aspect of these businesses, the LLMs, is that the models they are building now and especially in the future can be applied to almost

any aspect of the economy. You can take these models and you can make consumers' lives more efficient by having them be personal personal assistance, you could solve physics problems, you could help with drug discovery, you could make enterprises more efficient. The TAM is certainly not the problem. Focus is gonna be

more efficient. The TAM is certainly not the problem. Focus is gonna be a question mark. On the one hand, the more end markets you go after with a fixed asset, the better, right? Because you're just getting, you're spreading that cost over more end markets and having more revenue, which then can be reinvested. I think the

flip side of that is that I rarely have seen any company succeed trying to go after multiple end markets at the same time.

Usually you have an A team, that A team is focused on one thing. Your

culture as a company is oriented towards either consumer or enterprise.

They have just different, even Amazon, which you'd say is like the example of a consumer company that got into enterprise, they got into it like seven years later, even after they went public. So trying to do everything at once is tempting because if you're successful, you're effectively just advertising that fixed asset over more revenue streams.

At the same time, you risk not being the best at any one thing.

So that is the trade-off. And I think that, I'm not sure we have the final answer. I think right now, the market has gone through periods where they thought,

final answer. I think right now, the market has gone through periods where they thought, You know, Anthropik was Lyft and OpenAI was Uber and now, up until recently, the sentiment on OpenAI was more negative. I think OpenAI has taken the strategy of let's do everything. Let's, you know, we're going to go after Apple

hardware, we're going to go after robotics, we're going to go after enterprise consumer. Science,

they've been very successful in a lot of ways, but that's hard. I'm sure there are companies I'm not thinking of, but I can't think of many examples where that's been successful. I understand the temptation to do it, and obviously the difference versus

been successful. I understand the temptation to do it, and obviously the difference versus history is that the smartest people in the world are all going to work at these companies. So if anyone's gonna pull it off, they will. Anthropa took a different

these companies. So if anyone's gonna pull it off, they will. Anthropa took a different approach and just said, we are going to focus on enterprise. They tried consumer early on, but it became clear they didn't have traction. So then they just went all in enterprise. And they've had a lot of success with coding in

in enterprise. And they've had a lot of success with coding in enterprise. And because they've now taken a market leading position,

enterprise. And because they've now taken a market leading position, generally sentiment is that Anthropic is winning and they are like kind of now the Uber, if you want to use that analogy. I think this is going to go back and forth over time and people like- It's one of the most fun things to watch. Yeah, people probably get carried away in both directions, but I think those

to watch. Yeah, people probably get carried away in both directions, but I think those are the biggest differences. I would probably err on the side of focus, but I do understand the economic rationale for trying to do as many things as once. The

only thing I, early on we invested in opening AI, this is probably a year and a half ago, I said to them, like, you have to do ads. I

said like, yeah, you have to do ads. I understand, I've seen it so many times. People in Silicon Valley, the idea of ads is like, they're

times. People in Silicon Valley, the idea of ads is like, they're allergic to that. I have this amazing pure technology product that you want me to like, Tainted with ads and like you see Anthropics, Super Bowl commercial. That being

said, even the companies that were the most adamant about never getting into ads like Netflix, if you go back and just listen to what Netflix was saying even 15 years ago, it was like, you know, getting into ads, even read would have been like, you are out of your mind. We would never do that. Ultimately, they did it. And to me, it's like, if you're going to do it ultimately, one, you

it. And to me, it's like, if you're going to do it ultimately, one, you can't, really compete against companies that are using ads if you're not very hard if you're ultimately going to do it you might as well start earlier because you have to build a culture around you know it just takes time i don't think it's a big deal at opening i waited um but i was probably you

know rightly or wrongly i was pushing for ads sooner than they've chosen to do it. I think now they're probably going to get it right. I'm so curious what

it. I think now they're probably going to get it right. I'm so curious what you think is going to happen to the hyperscalers now. I saw this news report the other day that Anthropik's considering securing 10 gigawatts now of their own power, which just makes me think, okay, they're going to have the power. Like, why don't they just, the scale's going to be so big, why don't they just create their own

clouds effectively? The hardware might be different, more focused on inference, et cetera. Does that

clouds effectively? The hardware might be different, more focused on inference, et cetera. Does that

jeopardize what these business models would be? I think people have thought of it as pretty damn good. at the hyperscalers, do you think the future is different as a result of AI? I do. I mean, I've kind of thought this for probably about a year now, and I wouldn't say I, we're not, there's nothing conclusive, I'd say, but am I more confident in it? I am more confident in the thesis that

the hyperscalers are a worse business model going forward. Now it's interesting because usually when you say something is a worse business model, you're implying that growth is going to slow, margins are going to contract. I actually think you're going to see the opposite.

I think that AWS, Azure, maybe Azure doesn't accelerate, certainly GCP.

I think these businesses are going to accelerate for a while just because they are, you know, you know, their customer bases, Anthropic, OpenAI, are growing at an enormous pace.

And as they get to be a bigger part of the business, the growth is accelerating. The problem is, is that you went from a dynamic where AWS, Azure,

accelerating. The problem is, is that you went from a dynamic where AWS, Azure, to some extent GCP, their customer base was like every corporation in the world. And

therefore, they had fragmentation and they had the benefits, massive economies of scale that no single company could get And it was a very good business. The problem going forward is that I think that

good business. The problem going forward is that I think that economically it's highly unlikely that LLMs are not very concentrated in the hands of like four or five companies. Those companies right now You know, they are obviously, as we discussed, they're investing a ton and they are, you know,

cash flow negative. And therefore they're looking for compute anywhere they can get it. But

if we're correct, and if anyone who owns these companies is correct, at some point in the next five to 10 years, they will be generating enormous amounts of free cash flow. When that happens, I think that they are likely to insource the compute.

cash flow. When that happens, I think that they are likely to insource the compute.

Every year, AI is going to be a bigger percentage of the workloads. at any

hyperscaler. And so if you roll out like 10 years from now, I think that the majority of the workloads will probably be AI. The LLMs will probably be providing a lot of those workloads. And I think that it will make economic sense to take it in house. Right now, I think that they look at

the hyperscalers as more of a financing mechanism. These are well capitalized companies with big balance sheets. But I don't think these companies are better than them at building data centers. Like building CPU clusters is different than building GPU clusters. Running inference on GPUs is very different than workloads on CPUs. And I think

clusters. Running inference on GPUs is very different than workloads on CPUs. And I think the LLMs are actually better at inference than the hyperscalers. And then you have this whole dynamic of NeoClouds. And I think that the initial view for most public investors was that this was like pure overflow capacity.

There weren't enough GPUs and these things would be dead as soon as Microsoft got their GPUs. I certainly would not make the case that they are fantastic businesses, but

their GPUs. I certainly would not make the case that they are fantastic businesses, but I don't think they're going away like people thought. So I think they're better at running GPU clusters than the traditional hyperscalers are. And I think there's a lot of interest from NVIDIA and other chip companies to

make sure that their customer base is diversified. VIA is a very big balance sheet and they want to keep these players in business. So over the next 10 years, I think these hyperscalers, AWS, Azure will grow fast I think the margins, my guess, will be challenged, both because the businesses are getting a lot more

capital intensive, because AI is capital intensive, more capital intensive than traditional workloads. And also

the customer base is getting more concentrated. Meta is not a hyperscaler, but they insourced all their compute, because why would they pay? I mean, they're just too big to use somebody on the outside. If you think about the last couple of years, probably the best thing you could have done is just be long the AI build out in all its various forms. And maybe that will remain true going forward. But it

seems like the market a little bit is starting to think now ahead to the other implications of AI software. You know, we're talking like the week after software got absolutely decimated in the market and everyone thinks, you know, because of cloud code and the amazing experiences that they're having with cloud code, like software businesses are just screwed.

I'm curious how you're starting to think now, beyond just the AI build. Okay, it

seems like AI is a thing, like it's gonna be here. Now the rest of the world has to start to absorb this technology. How are you thinking through that?

Maybe I'm super curious what you think about the software, you know, sell off, but even more broadly, like the real economy now has to start to swallow this new technology. I'm so curious how you think that's gonna happen. It is incredibly difficult

technology. I'm so curious how you think that's gonna happen. It is incredibly difficult to know. And I don't think that's because I don't have perfect information. I think

to know. And I don't think that's because I don't have perfect information. I think

it's just, these models are improving at a rate which is exponential and understanding how that makes its way into the real economy and the implications is difficult. I think

that you probably want to use a few frameworks. It really comes down to like which companies do you think will have a moat in most circumstances. It's fairly straightforward to identify moats that are protected from digital LLMs, like, you know, just the proliferation of digital intelligence. Once you get into

robotics and other areas, you start to have to question the moats around some other traditional industrial companies and, you know, also just like the moats of globally, how do countries that were arbitrage and labor due relative to developed economy. So I think there's gonna be

phases of this. The first phase is the software. And

that's really because like cloud code entered the zeitgeist and it's like all of a sudden, people receive cloud code and all of a sudden they just see on Twitter that people are saying like, oh, I created a CRM system in like a day.

And I was like, oh my God, this isn't good. That's kind of where people are now. We wrote in our letter at the end of the year, I said

are now. We wrote in our letter at the end of the year, I said like, look, the build out is still going to be a thing in terms of like, you know, places to invest in the public markets, but it's increasingly going to become which companies are affected. And it's going to become, there haven't been any shorts in AI. There's been, there was like, basically no shorts prior to 2026 really. Like

in AI. There's been, there was like, basically no shorts prior to 2026 really. Like

if you wanted to just say like, I'm gonna short something because of AI, you didn't make a lot of money doing that. In our letter I said that there are going to be a lot of shorts, some longs because of AI. And

software's the first one. The market tends to swing to extremes. My guess is that software will have to evolve, will probably be a worse business model going forward. But

I think The same way that like Walmart evolved with e-commerce and yes, was that, would they have all is equal, prefer that e-commerce never happened? Probably, at least at the beginning. It required an enormous amount of investment, their margins took a hit, they had new competitors. I think that'll

be the case with software too, where Companies that have really great distribution and great business models and are systems of record for companies. One of the things I do is I ask the LLMs, I said, are you designing your own ERP system? And

they said, no, we're buying a new ERP system from this company. Quite teller.

At least you're protected at least for a few years if they're not doing it yet. So I think systems of record are going to be difficult to displace. I

yet. So I think systems of record are going to be difficult to displace. I

think companies, while... You know, it's neat to create software for small productivity enhancements. If you really want to run your entire business on something like an ERP

enhancements. If you really want to run your entire business on something like an ERP system or a CRM system, I think it's gonna be quite a while before people are just gonna be vibe coding ERP system. But I don't think that you can just sit back as a software company and say, we're a system of record, we'll be fine. You're gonna have to integrate AI and find ways, the same

way Walmart integrated e-commerce into their business model. And it was painful for a long time and probably on the other side of it. But this is like, I'd say fairly low conviction because Everything about AI's impact on the economy is inherently low conviction. I

think everyone is likely underestimating how much these models are going to improve. And to

really think about what's going to happen, you have to almost not think like an investor. You have to think like somebody who's into science fiction. Can you imagine a

investor. You have to think like somebody who's into science fiction. Can you imagine a version of the story where this is all just overblown? Like, is there any... coherent

potential future where five years from now we're just like, actually these things weren't that big of a deal and, or they were much less of a big deal than we thought they were going to be sitting here today. The only way that would be the case is, and even this I think would, that argument wouldn't hold, would be if scaling laws just totally stopped. Peter out, yeah. But even if scaling

laws stopped, even if these models got no better, I think you probably have three years of just, people learning how to incorporate AI into their daily life or their companies. Certainly, it wouldn't be good for the businesses if scaling laws stopped. I still think you'd have pretty profound changes within the economy.

And betting that scaling laws are going to stop is a really low probability assumption. I mean, there's just nothing to suggest that's the case. In fact, everything suggests

assumption. I mean, there's just nothing to suggest that's the case. In fact, everything suggests the opposite. And I think it's difficult to really get your arms

the opposite. And I think it's difficult to really get your arms around what that means, right? Because we went from like, this is like an interesting like chat bot that's like Google to like, oh my God, like, you know, these are going to be solving problems that humans can't do. We're already almost there. I

have a 12 year old son who's interested in investing. I think your son's interested in investing. We've talked about before as well. What do you tell him about the

in investing. We've talked about before as well. What do you tell him about the future of this profession given these tools? Like, Surely it applies to us too. And,

you know, we may be smart now, but. Elon Musk says like, you know, I think a line he's used is it's better to go through life being an optimist and be proved wrong than the pessimism you prove right. So like to be young and to be interested in something and be dissuaded because. You're just obsolete. AI is

going to be better than you. I think it's like a very self-defeating mindset. It

is likely that at some point in the future, everything that we do is, uh, you know, arbitraged away by AI? For sure. I mean, I think that that would be naive of me to say no. Do I think that's happening anytime the next couple of years? I don't. What do you tell someone to focus on? Like, you

know, first of all, people are not gonna, unless someone's really interested in something, they're not gonna be good at it. So, you know, it might be the case that like being a plumber or being an electrician is like the most, you know, moated job in the world. But if you don't want to be, and nutrition doesn't help very much. So it's hard to tell your kids, don't do this or don't do

very much. So it's hard to tell your kids, don't do this or don't do that because it's gonna be irrelevant. I saw a podcast recently with a Google researcher who left and he said, oh, I don't even tell my daughter to study. It's just like, go out and have a good time. I think that's a

study. It's just like, go out and have a good time. I think that's a very destructive way of going through life. You should go through life thinking that you want to achieve things and that you're interested in things and you're curious. same

way as if this doesn't exist. And if it turns out that whatever job you envision having no longer exists, then you'll have to adjust. We talked with John and Daniel about the GameStop story. We can touch on it here too. I'm curious though what you most learned about yourself during that period of time when lore

has it that, I guess it was February of 21, so January was GameStop, that you went to your team and basically said, look, the way we're gonna calculate your comp this year is not gonna include January. Like that was just a completely insane period of time. And so you took certain steps to like create stability in the business or whatever. But in such a stressful period of returns, I'm just curious what,

yeah, what you learned about yourself or what it was like emotionally to go through that time. It's incredibly difficult. Like, you know, I mean, there are, I never wanna,

that time. It's incredibly difficult. Like, you know, I mean, there are, I never wanna, you know, come across as like, too exaggerative about my experience, because there's people who go through a lot worse things in life. But as an investor, I'd say that was about as bad as it gets. We went from being top of

the world, everyone thinks we walk on water, to being like, everyone thinks we're going to go to business. I have a lot of pride in what I do, and I don't need to be celebrated, but I also really did not like you know, having our firm and our performance track through the mud. Now, granted, it deserved to be, you know, treated that way because the performance was very bad. It

also is a bit lonely in that like, you know, there's, during GameStop, there's probably one or two other people who are going through the same thing you had.

I found it helpful to go back and like, read and listen to Ken Griffin's interviews in 2008 and people that I respected. But it's lonely. It's a matter of testing your resilience. First of all, we never came close to going into business. That

was just nonsense. For me, I never was going to quit because even though we had made some mistakes, I deeply believe that we were still good at what what we do and that we have something to offer the world and that

we could be excellent again. I was confident in that, but GameStop was, it changed, it was the beginning of a change in the market structure and on the retail side. And so I knew we had to adapt to that. I didn't

know exactly how that would play out. By that point, by 2021, 2022, I've been doing the job for 20 years, right? I never really had severe adversity, probably because at some point, like Andreas was just like, he was just very quick to risk manage. But I never really had that. And so like, I thought to myself, like, am I really gonna be like the guy who quits the first time?

Like, you know, there's a severe bump in the road. I think the analogies that people gave was like, you know, one day at a time, it was like Bill Ackman was like, look, every day try to do something that like makes things a little bit better. Cause it's not like something that when you have that kind of a drawdown, nothing I do, even if I hit the ball out of the park

for like three months, like investors would be like, he's just volatile and crazy. And,

you know, if I slowly and methodically did it, some people would just give up because they'd say, you know, this was just, too crazy, like we don't believe in him. So it's impossible to disprove the negative narrative in the short term. It takes

him. So it's impossible to disprove the negative narrative in the short term. It takes

a lot of time, years. And so acknowledging that like this was not going to be something that you changed overnight. You know, people's perception of you as investor, people's perception of D1 as an attractive place to invest capital, that was not going to change overnight no matter what I did. It was really

like looking inwardly at the team, making sure that we were all on the same page, that we were, you know, what we were trying to achieve, and that no matter how many people outside might doubt us, like we were gonna do it. Or at least we were gonna try very, very hard. Was there

a specific one moment in the whole experience that most stands out in your memory as particularly salient, whether it was on the difficult side, like, you know, emotionally difficult, or on the resilient side, like a, you know, a decision that, you were gonna forge ahead, does any one moment stand out? The moment that stands out is, I mean, there are different moments that like, you know, emotionally just kind of like hit

you in different ways, like news articles and friends calling you saying, are you going out of business or, yeah, a lot of that. And obviously like those things are, you know, were painful and something I had never had to deal with before. I'd

never tried to be a public figure and all of a sudden it became, I think the most important moment was we do semi-annual investor dinners with our LPs. That's our primary form of communication. We write letters periodically, but we do these semi-annual dinners where over a period of four nights we meet with all of our LPs. Four straight dinners. Yeah. It was June of 22, beginning of June

of 22. we were, the peak

of 22. we were, the peak of our drawdown, trough of our drawdown was at the end of May of 2022.

And these dinners were scheduled for like June 3rd of 2022, right? And

Jeremy, the president of our firm, he said to me, he said like, we can't do these dinners. Like, this is gonna be a bloodbath. And to me, it was like really clear. I said, no, like this is, we have to do these dinners.

And this is the most important time know to go out there and speak to our investors. The message was that we were going to do things differently. Not in

our investors. The message was that we were going to do things differently. Not in

that the stock selection all that was going to be the same but the portfolio construction was going to be done in a way that was much less risk prone and the analogy I gave was like we're gonna hit singles and doubles.

It might take us longer to get back to the high watermark because singles and doubles are not fireworks but We feel like what we've gone through in 21, 22, tough enough that even if the right positive NPV thing would be to just keep taking a ton of risk, and obviously usually the best time to take a ton of risk is when you've lost all the money, emotionally I would not be able

to go through this again. So we just said, look, we're going to run the business differently. We very much understand if this is not what you signed up for

business differently. We very much understand if this is not what you signed up for here. Although I think at that point people were not like, yeah, I've really signed

here. Although I think at that point people were not like, yeah, I've really signed up for them to take on more risk. I think most of them were happy to hear it even if they didn't believe in it. We really went about managing the firm differently. And so that was a pretty pivotal moment just looking in the eyes of all the investors and feeling pretty

horrible in every way. But there is something invigorating about turnaround. And, you know, when you're going through something like GameStop and like there's the

turnaround. And, you know, when you're going through something like GameStop and like there's the world collapsing and there's nothing you can do, it's like, okay, like that's a very uncomfortable position. When you actually, even if things are really bad, when you have a

uncomfortable position. When you actually, even if things are really bad, when you have a plan and you believe in that plan, it changes the perspective entirely.

And I really did believe in the plan and I believe in the team. And

so all of a sudden I felt like, Okay, everybody else may doubt us, but I believe it. And we are now the start of a mission to dramatically improve our returns, improve our firm, and earn back our reputation as being great investors. Assuming some did, what do you think of the people that redeemed

from D1 during that time? I don't harbor any ill will. I mean, look, I think that the act of redeeming is like to some extent we deserved it, right?

I mean, obviously I appreciate it much more when people stayed. I always start out these dinners, even though it was the worst time, I say like, ask me anything, criticize me, like it is my job to deliver for you. If I don't do it, like, you know, it's on me. Ultimately think that when you screw up in business, capital follows returns and,

when you deliver poor returns, capital will leave. We had a lot of great investors that stuck through it. And I deeply appreciate that more than I resent people redeeming. It's pretty asymmetric. Most software companies try to maximize your time on their app to juice engagement. Ramp does the exact opposite. Ramp understands that no one

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technology as a true partner, not just a software vendor. They've helped firms 5x in scale, enabling faster growth, smarter operations, and a competitive edge. Visit ridgelineapps.com to see what they can unlock for your firm. Can you do great investing in your experience, you know, meeting others without having like a pretty, narrow band of excitability versus despondency. For better or worse, I've always, from the first day I got

the job, had a lot of confidence in what I was doing. I never stepped in and said, I'm just better than everyone else. I'm gonna be the most important head. That was never it, but I always, when it came down to looking at

head. That was never it, but I always, when it came down to looking at a company and making a decision, I felt confident in it. And when I felt confident in the analysis, I generally am pretty balanced.

Is it possible for somebody to have a very volatile personality but train themselves to deal with the ups and downs of markets? I think the answer is yes. I think there are some hedge fund managers that have been like, you know,

yes. I think there are some hedge fund managers that have been like, you know, are truly, you know, generationally great. And you hear the stories of early on, they were just like throwing things at people on the trading floor and yelling and like, you know, and ultimately they ended up being great. But you have to be able to like, not let that emotion influence your trading. Yeah.

If you think about the future of the world, given the crazy changes in technology, we haven't talked about SpaceX yet, that's a whole different dimension of like an incredible technology curve that's going on. That's a huge position for you. You mentioned earlier the importance of being optimistic. Where are you the most optimistic and what parts of the world and its progression gives you the most pause or things you have

your eye on to be, if not worried about, keep your eye on? I'm most

optimistic in economic growth. It has to be the case that if you believe in scaling laws and you believe in AI, that economic growth will be very powerful. I

mean, this is the ultimate productivity tool. And what productivity does is it allows you to grow while having disinflation, which is like nirvana for markets.

So I'm very bullish on that. And then there's implications that flow from that, which are more macro, which is something we don't do. But that can cure deficits. That

can do a lot of great things. Economic growth does a lot of great things for everybody from hedge fund managers and CEOs to people who are in lower level jobs. It just... If a country's not growing, it's hard to have a better standard of living. That's my more optimistic take. The part

of me that is more uncertain is that I think that we, as humanity, I just think we've never encountered something that we're about to encounter. And

so with that kind of profound change, like we're going from the smartest animals on the planet, we were never the fastest or the strongest, just we're smarter.

and other animals, we're no longer going to be the most intelligent beings on the planet. And so what are the implications of that? I'm not really sure. I think that there's a lot of negative externalities in that I don't think

sure. I think that there's a lot of negative externalities in that I don't think humans, as much as People like Dario, who I respect a lot, might say like, well, we're just gonna give everybody a check and like everybody just kind of live off universal basic income. I just don't think humans are wired to just collect a check and like, you know, go around and like, you know, play sports all day.

Like humans are wired to create relationships, to, to create value, to work, to coordinate with other humans and achieving things. And I just don't think you're going to have a great society if it's just a bunch of people living off of checks that come from the government as a result of this massive economic boom. One of the most interesting stories you've told me before was this

time when you made, I think, similarly sized investments in Rivian and SpaceX at the same time. Can you tell that story, both big, big bets? Obviously, SpaceX has, you've

same time. Can you tell that story, both big, big bets? Obviously, SpaceX has, you've got this huge position now. I love that story of like, this style of big bet private market investing and exciting technologies and then the way things can go. And

if you could bring us back to those moments of decisions, those are huge checks that you wrote into those companies. I would love to hear that story. The thesis

was that EVs were going to dominate the auto market and that EVs were an entirely different kind of automobile, like in that they were software. and it was the equivalent of the iPhone versus

software. and it was the equivalent of the iPhone versus Motorola and Nokia. The same way Motorola and Nokia were not able to move into smartphones, because that was hardware, not software, there'd be few companies that would be able to do this successfully. Ultimately, autos are a bad business. It

could be software autos, hardware autos. It's a bad business, and it's a really tough business to scale. and very capital intensive. The manufacturing didn't go as smoothly as it could have. The cost of delays in manufacturing when you're ramping up and burning a

could have. The cost of delays in manufacturing when you're ramping up and burning a lot of cash are quite significant. The technology I think was always good and not getting up the manufacturing curve very quickly meant you didn't get the scale fast enough.

And I really believe that scale in EVs is gonna be important, which is why Tesla's kind of, one of the reasons why Tesla's won You know, the IPO was great. It looked like a great investment. But ultimately, I don't know what

great. It looked like a great investment. But ultimately, I don't know what our ultimate return was on Rivian, but it wasn't what we planned for when we made the investment. The bad ones tend to be more obvious faster.

The great private tech investments, I think, are sometimes slower to prove how great they are because you have these amazing founders who are just... you

know, constantly making decisions which take the business in one direction or another. And

ultimately, the compounding of those decisions takes time, but leads to great outcomes. SpaceX

was pretty obvious to me that the launch business, at a minimum, was going to be a very good business. What they had achieved, I thought, was just like from an engineering perspective, like insane. So to me, if I could buy a company that had achieved the most amazing engineering fee I'd ever seen at some multiple of revenue with very little cash burn at that point. I didn't know what was going

to come, I just knew that the SKU was very good. Because if they had achieved that, then who knows what they could do in the future. What do you think about that business today? So much has changed since you first invested. What's your

updated prognosis for it or thoughts about it? The initial prognosis was just always that they were going to be a low cost provider of launch. I think the success of Starship, and we're not, I wouldn't say we're fully there, but I think we're pretty much there. Caught the goddamn thing. Yeah, you caught a skyscraper with chopsticks, it's

pretty good. To prove full reusability and scale, okay, there's more to come. Starship is

pretty good. To prove full reusability and scale, okay, there's more to come. Starship is

a game changer, which you know, we knew about fairly early on, but didn't know if it would work. What that means, very simply, is that the cost of launching everything goes down dramatically. And the engineering that they've done with the satellites to harness solar power and be able to deliver really high-speed bandwidth has surprised me to the upside. There's a lot of software that goes into that too,

just given these networks of satellites are all communicating. The ramification of that, I think, is that the, telecom market globally is now the TAM. Whereas before it was like, okay, like you live in, you know, whatever, and like, you know, you don't have cable to your home. So it's like, you get this startling thing and like there's boats and there's

home. So it's like, you get this startling thing and like there's boats and there's planes and there's people living in the lower. I think that the cost, they've come so far down the cost curve. I think that in a relatively short amount of time, like months, few years, they are gonna be dramatically cheaper than any other form of delivering broadband. You just said how much you love shorting stocks.

What is it about it that you like? Because you just don't meet that many people that are focused on this or really that good at this anymore. My wife

begs me all the time to stop shorting stocks. Anytime she looks at me and she's like, uh-oh, this is like a short. It's a bad business, and so you have to be intellectually stimulated by it. And most people in the market are just not fundamentally based, period. And even if they are fundamentally based, they're not interested in shorting, or they pretend like they're shorting and they kind of short indices or

whatever. Very few people are doing it. There are tons of people

whatever. Very few people are doing it. There are tons of people investing in things that are just based on stories, like because of social media and because of Robinhood and And so there's just endless amounts of shorts if you have duration and if you take a fundamental view. Why do you think markets are less

efficient now? I think it's just the people transacting in the market or the

efficient now? I think it's just the people transacting in the market or the nature of the institutions transacting in the market. So if you go back 10, 20 years ago, mutual funds, long short hedge funds, they were a big part of the market. Now it is a lot of passives. a lot of retail investors,

market. Now it is a lot of passives. a lot of retail investors, the people who are making investment decisions, they're not based upon long-term considerations of intrinsic value. Quants, even

intrinsic value. Quants, even multi-manager, long short funds, while they are focused on fundamentals, they are by necessity, they are short-term oriented. The majority of the time, the moves you see in the short term are exaggerate the true change in intrinsic value of

the company, which makes for a less efficient market. One of the things that interests me a lot about you is, I'll use the word like loyalty. So Jeremy's been your partner, he's one of your best friends from growing up. The guy runs your family office, your director of research, lots of your key partners you've known a really long time and are good friends of yours. I think you met your wife in

college. I did too, so that always perks me up when I hear that example.

college. I did too, so that always perks me up when I hear that example.

Can you say a little bit about the role of, like how you feel about loyalty? I know these people the best. And so I've just dealt with them through

loyalty? I know these people the best. And so I've just dealt with them through so many different things in life and I have a lot of confidence in their competence. So to me, there's a lot of people that I love in life that

competence. So to me, there's a lot of people that I love in life that for different reasons and are wonderful people and would be loyal. but they have to be really competent at the job. This is a very intense job. So the bar is extremely high and the people that I've hired that are friends of mine forever, I'm just confident clear that bar by a lot. But when you are able to

find people that you know for a long time and liked you before you had any money or any signs that you'd ever have any money, that is a different kind of relationship. For me at this point, I don't, like most of you, like, I don't know. Like, do they nice to me because, you know, they think I can do something for them. You know, they're a group of people

in my life that have always been there. And that, you know, I, you know, they will be close, close, close to me for the rest of my life. And

like, do you send, I can work with those people? Great. Now, you know, but as I said, they have to, One of the things that you do is for your portfolio host is like group chat that's just full of your thinking on what's going on in markets. And one of the things that struck me the most about this is just how prolific you are in it. Like you're just thinking and writing

about this shit at all hours, like all the time. Clearly like this is the thing that you just love and are passionate about. What has been the impact of that, like constantly communicating with the people that you care about? about markets. I asked

the question because I just want to encourage, give examples to encourage other people to do the same because I think it can be so powerful. Look, when you're investing in a company privately, there is obviously a financial aspect to it that's the driver.

But there's also a relationship part of it, in that you are signing up to hopefully help that person grow their business, be with them through ups and downs.

And when you're doing the initial investment, you spend a lot of time together. But

then it's very easy for me to go months without communicating with the CEO on the private side if nothing's happening. I don't like that.

I like to be, if we have something that we can offer people and they can just opt in, they can read the stuff I write or not read the stuff I write, it is a way to broadcast, communicate with people that I want to be in touch with and I want to know us better as a firm, know me better as a person, know us better as a firm. I find that

like now, even if I haven't spoken to a CEO in like three months and I call them, it's almost like they feel like they talk to me every day, right? It's the same way like when you meet someone on Zoom during COVID, you

right? It's the same way like when you meet someone on Zoom during COVID, you don't really, you never met that person in person. I know that being a founder is lonely. Like you are kind of like going through all kinds of issues and

is lonely. Like you are kind of like going through all kinds of issues and so being around other founders almost universally the feedback I get is that they founders like to be around other founders because there's the only people that can sympathize and understand everything that they go through and so by having a bunch of them together

in a chat it's helpful for to us for a business perspective but I think it's also just Group therapy would be too strong of a word, but I think it's nice for them to know that these other people are part of this community that they're in and that they want to reach out to these people, they can, and they hear these people's perspective. And some of these people are world leading experts

in areas like AI that are going to be impactful to companies that are not experts in AI. So just getting that input, I think, is really helpful. You know,

we have a network of a lot of companies, a lot of industries, being able to share the insights, not just my insights on markets, but having companies share insights with each other and seeing like, you know, how the world is impacting companies is, I think, you know, useful. Do you care whether or not D1 has enterprise value as a business? Is that something you think about? It's something that I've started to

think about, you know, more recently. I think the answer is no. Look,

money to me is a scorecard. And I want to have the best score. It

is a really great positive externality of being a good investor.

And maybe I will just be so intellectually interested by the idea of being a CEO that I want that go from being 10% of my job to 30 to 40% of my job, and that's how you create enterprise value. I'm just not there right now. And I want to... deliver amazing returns, I think that'll be

right now. And I want to... deliver amazing returns, I think that'll be very, you know, that'll be financially more than compensatory. And so

like, maybe one day, but I don't think hedge funds are a good business. Our business is horrible. It's amazing cash flows. The

cash flows really well, has no terminal value. I told this to my companies I invested. I'm like, you have no cash flows and tons of terminal value. I have

invested. I'm like, you have no cash flows and tons of terminal value. I have

tons of cash flows, no terminal value. So we're good together. We can kind of arbitrage that. I think there's other businesses within asset management that have value. I definitely

arbitrage that. I think there's other businesses within asset management that have value. I definitely

do not ever aspire to having hundreds of employees or something like that. And that's

kind of what you need to do to have enterprise value. Why do you care so much about the scorecard? Like where does the competitive drive come from? This is

what I've devoted my life to, right? And so if anything you devote your life to, you want to be great at, or at least having an impact that is tangible and measurable. I could be a family office right now, and there's plenty of positive things about being a family office. The drawback is like, We're not in the arena. I'm very collaborative with other investors. It's not like I'm sharp elbowed,

but being out there, like being able to prove that we can be great, not just me, like our firm can be great is invigorating. And I think I'd be kind of bored if I was just like investing my own money. And going

back to some of the history, I want to start with something I've never heard you talk about publicly, which is the early writing you did in Value Investors Club and specifically the Orthodontics of America shortcase that you wrote about. I'd love to just hear the origin story of how you found Vic, why you started doing it. I'm

very interested in this idea of how much can come if you do some great posting online. This is a very early version of this. So maybe just tell us

posting online. This is a very early version of this. So maybe just tell us the story of Vic and that early passion for stocks. It was 2002. I was

working at a private equity group within Bear Stearns. I always had an interest in stocks, but I didn't have the tool set to analyze stocks until I got there and I kind of deeply understood accounting and finance. And so I started just...

looking at stocks of my own. The only way to really get exposure to investment ideas written up by hedge fund managers or investment managers was this site called Value Investors Club. I applied, you had the send in idea. I applied and like every

Investors Club. I applied, you had the send in idea. I applied and like every week you'd have like, I don't know, tens of ideas posted by people anonymously and you could read them. I would just consume everything. So it was like reading about Merger R or like, long ideas, short ideas. Every week they paid $5,000

to the best idea. And I

just got inspired by all the stuff I was reading and decided to try to find some of my own ideas. Did a few that were probably not particularly successful. Some were, some weren't. They were like really deep value, kind of like trying to buy cigar butts. you know, probably by a dollar for 50 cents.

After maybe six, 12 months, I had a portfolio of things I'd written up on Value Investors Club and I decided I wanted to go work at a hedge fund.

And the first thing hedge funds ask you to do is talk about investment idea.

And so I had all these investment ideas. One of the hedge funds I went to interview at was a spinoff of SAC that did healthcare. I had no particular interest in healthcare, but it was just where I got an interview. Back then, hedge funds weren't as big of a thing. And they said to me, we want you to do a case study for the interview. And the company is called

Orthodontics Centers of America. For me, this was like not like a task, it was like something I was really excited to do, because I had never had my work shown, given to somebody who was a professional. I went home and I spent like, I don't know, maybe like hours and hours like going through the financial filings and trying to build a model with it. And

I was pretty good at accounting. It kind of was like a puzzle that just made sense. I really tried to get deep into the financial statements and nothing reconciled,

made sense. I really tried to get deep into the financial statements and nothing reconciled, nothing made sense. And I couldn't figure out what was going on.

And I kept going through and going through it. It hit me that what they were doing was kind of the simplest form of accounting fraud, which is just capitalizing expenses that should have been expensed in a big way. There are other things too, but that was the most egregious. I was able to effectively prove that

without, obviously, it wasn't incontrovertible proof, but it was pretty close. Just by building up all the unit economics as they said they were, comparing them to the unit level economics that you could actually decipher by going through their financial statements. And it was clear I did a write-up that was about, I don't know, six pages long. And before I went back to

do the follow-up interview where I presented my case study, I was like, you know, I think I'm onto something here. let me post it online first and I'll get some feedback. I wasn't allowed to trade stocks because I was working at an investment

some feedback. I wasn't allowed to trade stocks because I was working at an investment bank. So I wasn't short the stock, I wasn't allowed on the stock. Value Investors

bank. So I wasn't short the stock, I wasn't allowed on the stock. Value Investors

Club is done anonymously with a tag name. So I posted online. Within,

I don't know, a few hours, the stock started to go down.

And I was like, that's cool. Like people are noticing, there were a couple comments online. The market closed a few hours later, whatever.

online. The market closed a few hours later, whatever.

I'm watching online, there's some more posts being like, this is really interesting. Has anyone

double checked these numbers? There's people commenting. Next day, stocks start to crater. Stock's down

like 20%, 30%. I started getting calls from people working at mutual funds who own the stock. Because even though it was anonymous online, I had told friends of mine

the stock. Because even though it was anonymous online, I had told friends of mine at hedge funds, I'm like, you should look at this stock and short it. I

think it's a fraud. And they had told other people. And so I started getting calls at Bear Stearns, people at T. Rowe Price and Fidelity being like, what's going on? And I was like, I wasn't supposed to be, you're working at an investment

on? And I was like, I wasn't supposed to be, you're working at an investment bank. The last thing you're trying to do is supposed to be posting about companies

bank. The last thing you're trying to do is supposed to be posting about companies that are fraud. I didn't even know if they were a client. So the stock just got halved. I went back into the interview to present the case study. At this point, they were just like, what did you do? And I was like, look, I was like, you told me to look at

do? And I was like, look, I was like, you told me to look at this. I thought I was a fraud. They're like, did you tell anyone that like

this. I thought I was a fraud. They're like, did you tell anyone that like we told you to do this? I was like, no, no. They're like, you sure?

And I'm like, yeah, yeah, yeah. Nobody knows. Nobody knows. And they're like, okay. They're

like, we basically thought you were going to come back and tell us that they were going to miss earnings. Like I didn't want to do healthcare. So I didn't work there, but I now had this you know, write up that could go around to, you know, different hedge funds. Most of them already knew about it because they would short it. They were short it after the write up. That's how I got

my job. So you go, you end up at Viking. You're there for a long

my job. So you go, you end up at Viking. You're there for a long time. You're the CIO. You've got an incredible track record while you're there. If you

time. You're the CIO. You've got an incredible track record while you're there. If you

think about the moment that you decided to go start D1, what was it? Like,

bring us back to that moment to go hang your own shingle and build this thing. I started out as a banks analyst. Oh, I understand. That's what I did

thing. I started out as a banks analyst. Oh, I understand. That's what I did for the first couple of years. I still had a value bet. I think most investors who love investing start out with a deep value bent because it's, you know, if you want to read about great investors historically, most of them were deep value investors, Ben Graham, you know, Buffett. I was working for somebody named Tom Purcell, who's

an amazing investor. I realized that Tom was an awesome mentor, but I realized that, you know, Tom was very well equipped to generate returns in financial services for Viking. And so if I wanted to grow my career, I had to move it to other areas. And so gradually I took

on other sectors, like starting with healthcare, industrials, TMT, and yet the nature of those companies was different than banks. That was

a learning process. It was just like, years of covering different companies and different industries.

And the deeper you got into what created value in TMT was different than what might create value in industrials or healthcare. So it was like, to me, if you love investing, my time at Viking was amazing because I was able to get exposure to every industry almost. By 2016, I was managing

just over half of Viking's capital, somewhere 55, something. of Viking's capital. And I'd started out in 2002 being an analyst with no portfolio. And so I'd gone from no portfolio to portfolio to eventually CIO to managing more than half the firm's capital, which was an abnormal percentage historically for Viking. Viking's usually more diversified

by it. It was pretty clear to me that from a business perspective, it was

by it. It was pretty clear to me that from a business perspective, it was not in Andreas' best interest to have one person manage more than half the capital.

I don't think that would be even good for LPs. And so I kind of recognized that I had pretty much achieved what I could achieve at Viking. Over time, I'd be probably managing a smaller percentage, almost

Viking. Over time, I'd be probably managing a smaller percentage, almost regardless of how well I did. I've always had a mindset of like, I want to, I want to grow, I want to get better, I want to achieve new things. And I kind of felt like there wasn't that much more for

things. And I kind of felt like there wasn't that much more for me to achieve as Viking. And I was 40, I started a fund relatively late in life. And I kind of recognized that at some point you just wouldn't have

in life. And I kind of recognized that at some point you just wouldn't have the energy to go do something. Like starting a fund is obviously a big endeavor.

And so I felt like I had the energy and so everything kind of came together. What interests you about art? Like it's something that obviously you care a lot

together. What interests you about art? Like it's something that obviously you care a lot about. You've devoted some time to understanding. What is it that attracts you? I've always

about. You've devoted some time to understanding. What is it that attracts you? I've always

had more of a leaning towards humanities than STEM, which is like, you know, unusual and certainly tech and somewhat finance. That is why I perhaps look at my job as more art than science. The science is very simple. The DCF I could learn how to do it 25 years ago and it doesn't change. The humanity

side interests me and art is certainly one aspect of that. And I am particularly interested in aesthetics. I like design, I like

that. And I am particularly interested in aesthetics. I like design, I like architecture, I like art. To me, it's just beauty.

And there's beauty, like you go to the beach and watch the waves, that's beauty.

There's beauty in the world and Art is one example of beauty. There's usually a story behind it and there's people behind art. Art is important because it is created by people. And I think the bold case in art would be like, as everything else is like automated and in infinite supply because it's being created by AI, art created by people

reflects emotion and oftentimes what's happening in the moment just in the world when they're making that piece of art or what's happening in their life. If you apply the same aesthetic idea, the beautiful idea, what is the most

life. If you apply the same aesthetic idea, the beautiful idea, what is the most beautiful business you've ever seen? Or just like the best business you've ever seen? I

think that the best businesses are usually low cost producers of something that's like very durable. And I think people underestimate like the ability to provide a given product or service sustainably at low cost and where there's a a positive feedback loop of like low cost drives more volume which drives low cost. And

I think that like, I could say like a bunch of businesses which are really great like Moody's or S&P, those are great businesses, don't get me wrong. But, you

know, something like where the cost advantage is so substantial and so impenetrable, like SpaceX with, you know, launch or Costco with, you know, you know, groceries. The only way to win in most businesses is to provide a great product at a low cost. And so like the

businesses that do that at scale and build a moat around it are amazing. Amazon's

like e-commerce business is amazing. There's so many amazing businesses, very few monopolies. And when

they are a monopoly, usually what happens is they tend to get lazy and, you know, the returns aren't as good. What parts of the world do you think are underappreciated right now? Like when I look at your top 10 holdings, I actually like didn't recognize a number of the companies. Lots of them are not in the US, they're international. Where's your eye right now that you think the world is not paying

they're international. Where's your eye right now that you think the world is not paying enough attention to? It's hard to say Europe in that like Europe is economically stagnated, so I'm not sure anyone should pay attention to it other than if you are a pure fundamental stock picker, it's an easier market. I think there's really interesting things happening in Asia. just as globally as

politics change, like you saw what happened in Japan, and for the first time Japan's probably going to become a military power at some point in the future again, and that has all kinds of implications. I think there's a lot going on within defense. I think there's obviously AI. Geographically,

defense. I think there's obviously AI. Geographically,

Europe is always the most inefficient. I think Japan and Korea are probably... pretty

inefficient as well, a lot of retail investors, some really great companies that happen to be, like Japan and Korea were not well positioned for the last 20 years because it was just like digital companies, but when it comes to like actually hard assets and good engineering, Germany, Korea, Japan have a

lot of companies that have excellent physical assets in engineering.

Is there anything else that we haven't talked about today that you have on your mind or you're especially passionate about, things you're thinking about in the world? The thing

that troubles me the most, frankly, is I think we are on a collision course with China over semiconductors. And I'm not sure, I think there are ways to get out of that. But none of them are easy.

the extent that we don't figure that out, I think we're going to have something akin to the Great Depression. It's very straightforward in that Taiwan produces 90-something percent of the most advanced semiconductors, and everything we use is semiconductors. So I would say it's almost as if you went back 50

semiconductors. So I would say it's almost as if you went back 50 years if there's only one country that produced oil. Oil was that important. We went

to war over oil even though you could get it all over the world. Taiwan

produces all the leading or vast majority of the leading semiconductors. And that

is what powers everything. And that supply chain is fragile. It's not like it's easy to replicate. It's easy to destroy. If that supply chain were to get

to replicate. It's easy to destroy. If that supply chain were to get screwed up or disremediated, we would have an incredibly bad economy on the order of like depression type economy. And

I think that probably a lot of people in government understand this. I've heard Scott Besson talk about it. I think people understand it. But there are some scenarios that are okay for the global economy. But

There is no scenario I can think of where everybody's happy. China's happy, Taiwan's happy, and the US is happy. Somebody's going to be unhappy, either because the economy collapses or because their sovereignty is handed over. What do you hope happens that we build fabs here? What I hope happens is that we replicate the

supply chain over time in the US, and we work something out with China where they see a path to integrating Taiwan. If we

replicate the supply chain, the risk is that we're probably less likely to defend Taiwan, in which case China will attack Taiwan anyway, right? Bad for Taiwan, fine for the US, China achieves its objectives. I would like to see the world avoid depression, and that's gonna require, I think, some understanding of

we need 10 to 20 years to replicate this supply chain. Over that period of time, China will not screw up the world economy by being very aggressive with Taiwan.

And then eventually, there's a path where China feels comfortable that they will be able to reintegrate with Taiwan. Otherwise, you're kind of Usually when dictators say they say something and they say it like religiously, you should believe them. Like when Putin talks about like the glory days of the Soviet Union,

believe them. Like when Putin talks about like the glory days of the Soviet Union, like he may not have the capabilities always, but like as soon as he did, he acted on it. And dictators usually do. And so like every time Xi makes a speech that's of any importance in China, he emphasizes Taiwan. And so we can

pretend like this is gonna happen in some time that's not relevant. But

it's so important that an AI just raises the stakes so much that it would affect everybody. Zach told me to ask you what you've learned or what you like about the Real Dictators podcast. Oh. Basically just this.

I like history. I like history and these like, sometimes it's just like, Listening what's happened in history and like how many horrible leaders are and how like Charlie Munger say like, you know, tell me where I'm gonna die so I never go there It's like learning, you know learning about like bad things and you know, so you don't go there to me is it's interesting and whether it's like Communism or you

know fascism, it's just like all of these things are still possible and relevant in modern day. And we see seeds of them. And we see seeds of them. And so just understanding how things have played out in the past, and it

them. And so just understanding how things have played out in the past, and it tends to repeat itself. Communism starts, but communism without dictatorship doesn't work because eventually people realize it's not good, and so then they want to change. And the only way it doesn't change is if you have a dictator who's

change. And the only way it doesn't change is if you have a dictator who's really benefiting from from all this, and so like, that to me is like interesting, just because the world, a lot more things have gone wrong in the world than right. In our lifetime, things have gotten right, technologically, geopolitically, but over history, more things

right. In our lifetime, things have gotten right, technologically, geopolitically, but over history, more things have gotten wrong. Good leadership can be as impactful or more than bad leadership. You've

worked with a lot of, invested in a lot of great leaders. I'm wondering specifically around CEOs, but broadly about leadership. What have you decided are the, like what are you looking for in a leader? Real passion. like real passion, like a strong competitive streak, like in desire to win, deeply engaged in the business, like somebody who like knows the details, like when you talk

to them, and somebody who people want to work for.

And that could be because they like the person personally, or it could be because they don't necessarily love the person You know, day to day, like Elon Musk, I'm sure in the factory is not like, you know, all giggles, but like people are like, I'm going to learn more by working with this person. Buffett always says like the business is more important than the leader because eventually like I kind of disagree

with that. I think if you look over 30 years, sure. But over any period

with that. I think if you look over 30 years, sure. But over any period of time, like businesses are just people. And if you have amazing people, they make great decisions and bring great people and You know, my investing time frame is like more like five to ten years max. And I think people are more important in that time frame, especially in technology businesses. I think it's come through today that you

are clearly one of the most passionate stock pickers, stock people, markets people that's active today. And mostly I like these things just to be inspirational to other people that

today. And mostly I like these things just to be inspirational to other people that might want to do the same thing. So it's been so much fun to do with you. I ask everyone the same traditional closing question. What is the kindest thing

with you. I ask everyone the same traditional closing question. What is the kindest thing that anyone's ever done for you? With my wife right now, I was a pretty bad guy. boyfriend in college and that like I was busy doing other things and

bad guy. boyfriend in college and that like I was busy doing other things and I just like I was not very attentive I was not like you know somebody that like you'd want to like necessarily marry and I kind of um and we broke up and I remember like I sat down with her and I said like you know we went to get a drink and just to like catch up as

friends and I said I got a job at Bear Stearns and I just remember like she just started crying because it wasn't like the easiest thing for I got I was fine, but it wasn't like I was Goldman Sachs just knocking down my door to get me to go. I didn't really work for the first three years of college. She just started crying tears of joy, and I was like,

of college. She just started crying tears of joy, and I was like, wow, this person who I really didn't properly appreciate how much they cared for me, how devout they were, and how much they were rooting for me. You know, to me, like, it wasn't an act that was kind, it was just a gesture that I was like, I was kind of taken aback

by. And immediately I walked out and I was like, I'm gonna marry that girl

by. And immediately I walked out and I was like, I'm gonna marry that girl because like, you know, like, and I'm gonna be better going, I'm gonna be a better boyfriend slash husband going forward. I love that story. I haven't heard like a specific moment quite like that one in 500 times I've asked this question. So an

awesome place to close. Thanks for your time. Awesome. Thank you.

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