Kelly Granat - Investing At Lone Pine - [Invest Like the Best, EP.414]

23:50So that's the Thursday meeting. So again, all of this conversation is meant to foster dialogue, debate, like people sharing their points of view, asking hard questions, pushing each other. That's the essence of sort of our process, right? And then when we're ready to transact, it's, you know, collaboration with the trading desk, which has five people on it, to your resources question. and the questions there are, you know, what is max position size, liquidity? You know, we've already had the conversation as a PM group and with the analysts around like, you know, how does this compare to the rest of the portfolio?

24:27What's the, you know, what's the IRR? We've gone through the numbers. How does it, you know, price target, one-year price target, three-year price target? What are the near-term factors we want to be thinking about, if any? So that's all the conversation that's happening before we actually begin to put an order in. So that's sort of the upward flow of ideas and research and like structure of how we do things. The other thing that happens on Mondays is, and this is all day Monday, is that Dave and I have sector meetings with all of the teams on every other week basis. That meeting is everything from what are you working on?

25:01What are you trying to figure out? What resources are we deploying to help figure out those questions? To its earnings, who's reporting this week? What are we expecting to hear? What would make us sell? what would make us add, what could surprise the market, either way kind of thing. So that's on Mondays. That's sort of the structure of how we work as a team. And the portfolio is helped, I think, by something additionally new, which is we have a risk function now that we didn't have going back, you know, five or seven years ago, which is somebody who used to run our fund of funds, which we had back in the day and shut down a number of years ago, who has built an incredible expertise and knowledge base around studying managers.

25:42And so when we shut down our fund of funds, we said to him, Frank, why don't you come study us and help us get better? And so he's gone back using a lot of the new tools that we referenced earlier to think about, you know, where do we get ourselves in trouble? Where have we made a lot of money? Helping us understand the mistakes we make. What are the patterns around those mistakes? What are the patterns around the huge successes? How do we trade? Do we add value by trading? I mean, all these things that are sort of portfolio analytics. And then also he's sort of our external lens on factors and, you know, all the things that we have to talk about now that were never a thing in the parlance of running a fund 10 or 15 years ago, but that, you know, are again, never prescriptive, but another set of tools in the kit.

26:21And he is sort of the, where that resides. And so we meet with him and the risk team periodically and are getting reports sort of constantly to make sure we're thinking about, gee, there's a bunch of unearned alpha and these three names, you know, the multiple has just gone from 15 to 25 times, like, do we still love it here? Should we be trimming it, right? So again, never prescriptively, but just another set of prompts and tools to think about balance in the book and where returns are coming from and how the composition is evolving. As you approach this whole thing, I'm curious if there is a fixed or fixed-ish investment philosophy that has always guided you, that you feel like no matter what happens, even in rapid pace of change, will continue to guide you.

27:02Like, is there something that's unchanging about the philosophy and maybe just like articulate? Sure. I mean, I don't think we have a guiding principle around it. I would say the way that we discuss it internally is how much exposure do we want to this theme? And I think what's challenging about this one is it cuts across a number of different things, right? There are companies that are not leaning into this technology, that are not benefiting from the proliferation of this technology today, who will, and who are probably uniquely positioned. There are others who are, you know, in the AI as a problem for their business category, right?

27:37There's several industries that would fall into that camp. I think we keep having the conversation of how much exposure do we want because there's a recognition, like we saw in the valuation bubble bursting of late 21, 22, that there are nuanced bets here that are distinct, but that if there's a problem in AI, so to speak, and we can define what that may look like, these are all going to trade like one stock, right? And so what is the drawdown we are willing to sustain or endure if and when that happens, right? And so that's, I think, the risk framework on top of this is the most exciting dynamic thing.

28:13And we can all, you know, talk for hours and hours and days about all the opportunities it's going to create. And then I think there, nothing is a straight line, right? And so I think there's the, this is the benefit of having done this for a long time is that there's, it's two steps forward, one step back, right? And so the deep seek thing last week was interesting, right? In terms of being like, oh, whoa, what is this? And what does this mean? And what does this mean for LLMs? Did they have access to GPUs? Like, what do we know? What do we not know, right? And I think we're still trying to answer those questions.

28:41And I think there was a knee jerk reaction from the market. We will have more of these, right? That is just part of this. And so that's not our reason to not be involved. But it does make you think about sizing. And we always want some measure of balance in our portfolio. And we want several things that we're excited about that have idiosyncratic drivers that some of which may be tied to AI, some of many of which are not, right? And there are many thematics in our portfolio that we're super excited about. And our job is to think, to be thoughtful about portfolio construction and make sure that all of our eggs are in one basket or things that we believe are discrete bets, then ultimately trade like one, right?

29:16And so that's part of our challenge. Another way to think about it is there are certain investors that I would argue are playing a different game. And there are certain investors that are playing the popular game best, right? Like they're sort of competitors in an existing game. Where do you think Lone Pine falls in that spectrum? It's a really good question. Somewhere in the middle. And I think we want ultimately the flexibility to pivot, right? I think that's what we've learned and experienced over doing this for a long time is that there are certain market backdrops that are conducive to certain styles of investing where you want to be more concentrated.

29:53There are certain backdrops where you want to be less concentrated. There are times to go big on a bet when we feel like it's really underappreciated. There's times to recognize that a lot of what we're excited about, the world's excited about. And so you probably shouldn't be as big as we were. And so I would say the flexibility to recognize when we're in a very short-term oriented market or when there's duration, Right. And part of that, and I think one of the things that's changed is if I rewind the clock to 10 or 15 years ago, sitting in our research room and around internal meetings, we didn't talk about macro at all.

30:26Like it was just like we're fundamental investors. You know, we are focused on what's happening inside of sectors, who's winning, who's losing, who are the best teams, who's executing. And to do that in 2025 and ignore macro is it's not possible. So I want to be clear, macro is not prescriptive in terms of what we do, but it is a tool in the kit and something that has to be considered. And so there are moments in time when it feels like the market is extending in duration. And then we can reflect some of that and how we're positioned and how we're constructing the portfolio and how we're sized in certain things.

30:59And there is times, and I would argue we're in one of them right now, where there's a lot of uncertainty and appropriately so. Right. And so the market is it feels much more short term oriented, much more data point driven. You know, the tariff thing over the weekend is a good example. And there's a bunch of announcements. And then some of that gets walked back on Monday. And so how does this all get implemented and executed, I think, is an open question. And so in that type of environment, you're going to see more knee jerky type reactions to things. And that's just an awareness. We're not going to radically alter what we're doing or how we're positioned.

31:32but it's just, it sort of focuses us in different ways. Can you, maybe the tariffs is a perfect excuse because it's sort of like happened and then unhappened, you know, very quickly. Or maybe unhappened. Yeah, maybe unhappened, who knows? But it's like a live thing. Just bring us into the room as much as you can on, okay, the announcement comes out, like what literally happens at Lone Pine? Like who is talking to who about what in what settings leading to what decisions? Like give us like a super zoomed in example here of how you process some big piece of news. So we all see the news starting to come out towards the end of last week.

32:05And over the weekend, Dave, my co-CIO and I, who I also refer to as my work husband, we've worked together for 21 years, so a long time. We're emailing back and forth like, okay, so now what do we do, right? Like this is, these are big announcements. These are big numbers. We started to see the responses from some other countries in terms of what they're saying. I mean, to be totally frank, the conversation's like, I'm not really sure what we're supposed to do about this. I mean, right? Like, are we going to, like, radically alter our portfolio? I mean, is this even going to go through? What's going to happen on Monday, right?

32:37And we are in a moment right now of obviously very elevated. We're in an announcement cycle that seems to be accelerating with pace, right? And so we sort of had a back and forth a few times over the weekend. Okay, does this change anything for us? Let's come in Monday and see what happens. So Monday morning, we sit down as a PM group every Monday and every Thursday. And we're talking, obviously, all the time. and Steve joins that meeting. And we sort of went back and forth and said, okay, what does this mean? What are the industries that are, let's assume it goes through. Let's play this out both ways, right?

33:09Let's assume it goes through. What are the industries that this is a huge problem for? And we sort of tick through what some of those are, autos and others, right? What will the retaliatory actions look like probably? So we'll walk through that. And then the other side is like, let's assume that this law gets walked back, right? and how much it's going to get. And things are trading at crazy levels in the pre-market on Monday morning, right, that are theoretically exposed to these level of tariffs. We walk through that. And so the net of that is a lot of conversation and decision to do nothing.

33:42I mean, literally zero orders came out of this conversation, right? And that's not uncommon, but like for an event and a news cycle that is meaningful and somewhat anticipated, I would argue, and also I think with the approach with the appropriate amount of skepticism in terms of what ultimately gets implemented, a lot of debate, not doing anything about it, right? And so I think it's a conversation that's live, right? And so I don't want to like all of this, you know, all the AI stuff, these are all very live conversations that, you know, live inside of meetings but are constantly being, you know, pushed forward via email and constant communication that we're all in.

34:20um so this one i would say is consternation what are we supposed to do about it not going to react live and learn like let's keep let's keep falling what is it that gives you personally the energy is it is it discovery is it a sense of understanding is it a great company a great product a great mispricing like what what is the thing that like is your fuel or energy source searching for? So it's some combination, I would say. For us, a lot of our process revolves around people. So it's the people who are running the businesses. And I think that companies are in some ways like families. There's a very distinct culture that characterizes and underpins companies and that matters immensely, I think, for how a company operates, functions, hires, retains, grows, invests, all of the things that drive sort of ultimately how they perform and execute.

35:15And so getting to know the people, what motivates them? Are they looking around corners and thinking about the thing that can disrupt them? Are they trying to disrupt themselves? Are they attracting and empowering the people that they are hiring into their companies and retaining them by giving them a lot of responsibility and a lot of autonomy and a lot of voice and decision making? So I think that's where it starts for us. And one of our favorite sort of themes in investing, which is not a sectoral theme, but sort of a change theme is around new people, right? You change people, you change company.

35:47And so there are lots of examples in our history of businesses that are good to great businesses that we feel have been undermanaged. And then somebody comes in who we know from a prior life or a prior existence, or we do a bunch of work on that person if we don't and get super excited about their ability to transform. And to me, nirvana is when you have a company that is so deficient in a certain functional area, And then you bring in a leader who is an expert in that functional area. And it's like, that's magic. And we've seen this a bunch of times. And so those opportunities, I think, are super interesting.

36:20Two, I would say, is just companies who are innovating at such a rapid clip. And you see what's happening from a product pipeline perspective, right? They have a great monopoly incumbent business, ideally, right? Or something that has incredible unit economics. and they are using a lot of that profit and power to invest and plant seeds in a bunch of other areas. And you see some of those seeds starting to come to fruition in terms of new products, new lines of business, new distribution channels, whatever it may be relative to the company we're talking about. And seeing that secret sauce is not just the single thing that made them great, but their ability to then recreate and innovate at scale, I think is super exciting to us.

37:03Is something like Starbucks the perfect example of the first thing you said where it's sort of this story that people are worried about, skeptical about, there's things going wrong. And then I don't know him, but by all accounts, the new CEO is like some mega all-star person. So is that like the kind of general gist of the - It's a very good example. Yeah. Another one from our past, which we did really well with and which was a great example of this was Ulta when Mary Dillon took it over. This was at the time a small company. I think it was maybe the$3 billion market cap when she joined. And she was a consumer products expert, marketing expert.

37:40And this was a largely membership, loyalty-driven business around cosmetics where almost the entire employee base is female that had great product curation but not a great culture inside the company and really hadn't built a great marketing muscle. and she came in and added all of that to the sort of the formula and the new economics of the business. They always had great four walls as a retailer, but really added something different to sort of the go-to-market and the proposition to the customer and how the company was run, who she hired, and that's a great example of a very strong business that could be managed even better by somebody who had the expertise that they lacked.

38:20How did you know? In her case, as an example, is it kind of arm's length? Are you spending lots of time with her direct one-on-one? So we knew her because, again, we track people, right? We follow people who we think are great. And when we owned McDonald's, many years ago, she was a CMO. So I met her for the first time at a meeting at corporate headquarters, where they roll in five or six different executives. And she came in, and I didn't know who she was. And she spoke and answered a bunch of questions and was super thoughtful and insightful. And she walked out, and I was like, who is this person?

38:51And I Googled her and saw her background. and she used to work in CPG, which tends to be great training ground for analytical thinkers. And then we kind of followed her. And I knew Ulta and we were sort of dazzled by their four-wall unit economics and done a bunch of work on the company. But the execution had been uneven, I would say, prior to her arrival. And there were things we thought were missing in terms of sort of how the business was being run. And so when the board announced her hiring, we were like, oh my God, this is kind of perfect because she's exactly the right leader for the opportunity that this company has and has the right skills to kind of really lift what's happening here.

39:31What would be the other end of the spectrum like a Buffett ham sandwich business? Not to pick on them, but Visa or MasterCard, where the business model is just so ridiculously good that I'm sure they're awesome. I don't know them either. But you never hear about people at Visa or MasterCard. It's not like a cult of personality. It's like we just have the best business. Right. Like, how do you process something like that with your people centricity? How do you think about a business that's just so damn good? You know, you probably still want to always have to be room for them in the portfolio. Right.

40:00Because those are the great compounding businesses. I mean, we owned both those companies at their IPOs and had meaningful positions. And, you know, with the benefit of hindsight, never should have sold. I mean, they would have gone to very large positions over time. So, of course, they would have trimmed. But look, that's why a portfolio was such an interesting entity, because it's a balance of a lot of different things. And so the people thing is hugely important for us. And we always want to know who we're lined up with and what their incentives are and all the things I mentioned. But there's also a lot of room for owning just fantastic businesses that, to your point, whether you have an A-plus CEO or an A-minus, I'm not sure it really matters that much on the margin.

40:35We just want to make sure we're not paying too much for them, right? So that's, I think, always the key, too, in those situations as we want to own a stable of great businesses, particularly when there's a moment of dislocation or a question of doubt about something or there's a perception of a competitive threat that we think is sort of being overplayed in the market. Those often give us the opportunity to own great businesses at more reasonable prices. But those, I think, are really about understanding the internals of the business and what drives the business and the duration of what we think the opportunity set looks like for that business to just own them.

41:08Right. And those are a different flavor. What's so interesting is the idea of following people applies to you too. You're in the midst of a big succession. And, you know, it's so interesting because in, in this business, you can count on kind of a few hands, the number of like really successful transitions that have happened at firms like yours that are less like big industrial complexes and more like small teams. What, what works, what has worked, what's been hard, like the degree to which you're willing to kind of share the nitty gritty detail of it. Good, good, bad, and ugly. I'm curious how it's gone and how you've thought about it.

41:41So, look, it starts with Steve, our founder, and how he set the firm up when he started it, you know, 27 years ago, which was with an orientation to succession. And I think that's the first really differentiating aspect of our company versus many of our peers is that he was focused from the beginning on the company outliving him. And, you know, he comes out of the Goldman Sachs partnership back in the day. And I think that was in many ways the model in his brain of like, you know, you do well, you rise up, you own a lot of the company. And then ultimately, as partners, you go, you know, go limited in the case of Goldman or you start to give away your equity to the next generation.

42:15Right. And that's what his vision was. And that, by the way, extends not just to the investment team, but to the entire company. You know, it is the responsibility of every functional leader in our company, whether you run the tax department, HR or IT, to understand and be mentoring who your successor is. right? And that's the culture of the firm and has been from the beginning. And so Steve has been steadily handing off portfolio responsibility by sector kind of within the first couple of years of launching the firm with the view that there will be moments where it is clear that there are certain people on our investment team who know more about this sector than I do, who are effectively making all of the decisions anyway.

42:52And so let's deputize them to actually make those decisions, right? And have the insights. And so that's been the culture of since the beginning, you know, what we have been doing with, you know, him officially stepping back to really just kind of a chairman type of role, and Dave and I taking over as co-CIOs, was to really transition what we call kind of a 2.0 of Lone Pine. And that's been, if I'm being honest, a heavy lift, right? Because, and that is a function to some extent of, you know, how we were set up at the beginning, and then how much the market has changed, right? We had a great group of investors who were with us from day one, who were largely kind of North American endowments and foundations and some high net worth, you know, family outsourced, family office types and high net worth people.

43:37And they gave us money day one and they just compounded for a long time. And so our orientation was heads down, put up numbers. We didn't really have an outbound effort and nor were we open for the first almost 15 years of our existence, right? We didn't really launch a bunch of new products after the Long Only launch in 2004. Or we had a quick stint with a long-only emerging markets product that we quickly realized didn't scale, and we folded that into our long-only business and haven't really come up with a new product since then. And so there really wasn't a need to have a big outbound effort, right?

44:07And so we've always had an investor services effort, which is great. But that's one example. Two is the emergence of a lot of technology and a lot of products and capability. We built all our systems homegrown because when we launched in 1997, a lot of this stuff didn't exist. That was off the shelf, right? And so there's been an opportunity to modernize how we do things from a process perspective, I think, across a lot of different parts of the organization. Three, I think, given the nature of collaboration that we talked about earlier with regard to sector coverage and how we work together, that's a slightly different human in terms of who's going to be good in that type of role and who succeeds, who communicates really well.

44:46There's always obviously a premium on communication in our industry and the ability to synthesize a lot of information into a couple of key questions. But people who are collaborative, who are really team oriented, who are creative in terms of, you know, tools they employ to do fundamental research. The premium on those is even higher, I would argue, than it was before. And so I think we've evolved over time the types of people we hire. We've learned from who's really succeeded inside of our culture and who hasn't done as well and tried to kind of evolve how we think about the types of people we want to bring into the organization.

45:19Dave and I are very focused now on kind of the next generation, right? You know, I'm 50, Dave's, I believe, 54, maybe he's 55, I'm not sure. If I'm in this seat in 10 years, that's probably not the best outcome for our LPs, right? You know, there is, I think, a life cycle of doing this. And Dave always says, and I think this is right, you know, when I'm less excited to jump on the plane to Singapore for two days, it's kind of how I know, right? I'm still excited to jump on the plane to Singapore, and so is he. So we're in the right seats. But we're equally focused on who is the next generation, how do we expose them to the things they need to get exposed to, teach them how to manage people, how to think about portfolio, how to learn the areas outside of the areas they cover and that they've grown up covering.

46:00They've proven themselves to be very successful analysts. How do we develop them to become great portfolio managers? And so that's a big part of our time now, which is different for me than probably five years ago. And then the last piece is obviously just shoring up the organization for a different world, right? And so whether that means different strategies around products, we've had kind of a one size fits all. We are a long only firm. We are a long short firm. What does that mean in 2025, right? What a hedge fund is or what it represents to the market in 1997 looks pretty different than what that term means today.

46:37Today, it probably means more like a pod shop, right? That's what a hedge fund is. We're a long short fund, right? And a long only fund. And we're fundamental investors. And that means something different in 2025 than it did in 1997. We never had a PR effort. We never had a website until a few years ago, right? We wouldn't do things like this probably five or 10 years ago. It wasn't the culture of the company, but the world's changed. And so the onus is on us to communicate our story, communicate how we've changed, how we've grown, what we've learned, how we've developed, what we're focused on, right?

47:08And so that's a different orientation for a firm that culturally was set up to be, let's just perform and everything will take care of itself. Yes, we absolutely need to perform. That's jobs one, two, and three. But there's other things we need to be doing to continue to develop and grow our business. I would love to hear the very first time you remember feeling your competitive instinct in your life, like going back as early in your life as possible. My sister will laugh at this. She listens to this. So I was probably six years old. And And my parents belonged to like a little pool club at our town.

47:47And they played tennis. And I had started to play and didn't take lessons and wasn't allowed to take lessons until I was older. But the way to be able to play on the backboard at our little pool club was there was competition. Like you get access to the backboard. You had to beat the people who were waiting around to play on the backboard. And so I figured this out. and I'm watching these two boys who are, I think, like 10 or 11 play each other. And whoever wins gets to practice for 20 minutes and someone else, the next person gets to challenge them. And so I'm like, I'm going to challenge this person, right?

48:18And so watching, like sitting, waiting for my turn to play, like my heart rate just started like escalating. And not because I was nervous, because I was excited. And then I beat whoever I played. And that moment of like winning and like internalizing that I now had access for myself to the backboard for the next 20 minutes until the next person was going to challenge me was something that made me feel very energized and excited and a feeling that I wanted to replicate. Has it always been excited? Has it ever been nerves? Sure. Of course. So when was the first nerves? Oh, when expectation comes along, right?

48:54When you realize you're actually good at something or could be good at something or have potential, right? And so... Was that tennis too? Tennis too, for sure. right because um i think i was this height probably when i was 11 years old so so i was i had very high rankings when i was very young and um that pressure of being seated in a tournament right you go to a tournament and you're the first seat and it's like everyone's gunning for you right that's anxiety provoking for sure did you have experiences where you sort of broke through an understanding of what you're capable of like where where something happened and on the other side of that thing, you like almost like a snake shedding its skin or something like you up leveled your own assessment of yourself that happened in competition?

49:43Indirectly. Yes. I would say it wasn't in a match or in a particular setting, but, um, I burnt out in junior tennis. So my, you know, I started playing nationals when I was 10 years old. I played every summer until I went to college. Most weekends were spent traveling to tournaments around the tri-state area. Thanksgiving, Easter bowl, every summer. Like it's, it was a lot. And I think they've since scaled back. Like they don't, I don't think they have the 10 and under category anymore, but they did that. Um, and when I got to my junior year, the end of my junior year of high school, I was just, I was done.

50:21Like I just was so burnt out. I didn't really want to practice for three hours every day after school. I was interested in other things. I was interested in school. and at the time the NCAA rules for tennis I'm not sure if they've changed because now they're different I feel like for every sport but coaches weren't allowed to call you until July 1st every junior summer and I'll date myself by saying that we had an answering machine with a cassette at the time and so I didn't want to go to nationals that summer and I said to my mom like I'm just done I don't want to go I don't I just I'm done with the sport like I can't play anymore I don't want to do this and she said I've never made you do anything in your entire life but I'm actually going to make you you go because you've worked so hard for the last 10 years at this sport and you spend so much time and put so much of yourself into it.

51:06Let it do something for you. It's going to get you into college. And if you never want to play again, that's fine. But like, I'm going to make you go. And I went and I kicking and screaming, but I did, I went and I played and I got home from the tournaments and you know, our cassette tape was broken from all the coaches that had left messages for super exciting. And then I literally did not pick up a tennis racket for my entire senior year of high school. I applied to Harvard early. I was lucky enough to get in. I got recruited and I played basketball for my high school and softball for my high school because I love sports and I love to compete.

51:37And I went to college with a very different orientation, which was, we'll see how this goes, right? Like, I don't, I don't know how I'm going to play. I don't know how I'm going to feel. I don't know how being on a team is going to feel relative to being such an individual sport. And it's a great story for me about just seeing something different from an experience, which was it really became about the team. Like my freshman year, we were terrible. I played first singles. We were last in the Ivy League. I lost most matches that I played. So as did we as a team. And it really became about rebuilding the team and the camaraderie of the people on it that provided me such like enjoyment and so much fun and such an important part of my college experience.

52:15And so tennis became for me something very different in college I didn't think was possible. And so I saw the opportunity to reshape something for myself that was so seminal and it becomes so almost toxic by the time I was finishing high school to something that was such a gift of, and some of my closest friends in the world came from that experience. My best friend on the planet, we met when we were seven. She played at Yale, I played at Harvard, you know, so there's so many things tennis has given me and has shown me so much about kind of the kind of person I want to be and taught me so many lessons about not just competing, but independence and hard work and all of the things that I would like to instill in my daughters come from that experience and then allowing it to become something else for me.

52:55I love that moment with your mom. What was the kind of the same question, more investing centric? What was the first formative experience you can remember that made you realize that both the competition and the pursuit of excellence that you seem to care a lot about was possible in this field? You know, it's funny, I think it takes a while in this field to figure out if you're any good at it, right? And so in the first handful of years that I worked in public markets, I definitely got more things right than wrong. But I wouldn't say I came out of that feeling like I got this, right? When I got to Lone Pine, I was super excited about being in a culture of excellence and a culture of research.

53:37That was really what drew me to the firm. And I knew Dave because we overlapped on a bunch of investments when I was in prior firms. We shared meetings and wanted to see companies together and really got to know each other and figured out that we thought about the world in a pretty similar way and were attracted to the same types of industries and companies. When I got to Lone Pine, I worked a lot with him and Steve was obviously sort of this super impressive, you know, figure who loomed large over the research department given obviously his tenure and his success. And about a year into being at Lone Pine, the person who had been working most closely with him on consumer left the firm to start his own firm.

54:13And Steve comes into my office and he says, all right, so you're taking over all this, all the stuff, you know, retail, luxury, all the hotels, casinos, all these things. And you're going to, we'd be working mostly with me. And I was like, okay, this is super exciting and super intimidating. Um, and I remember, um, a few years into working with him, there was something, I forget, I think it was the gap. Um, Glenn Murphy was running it and he was in the process of turning it around at the time. And I'd done a bunch of work on it. It was a pretty controversial idea because people thought the gap was sort of a mature business and the brands were all starting to lose market share and so forth.

54:49And I went into his office and the way things work with Steve when he used to be a portfolio manager was it was sort of a conversation. There wasn't a memo. There wasn't a deck that you put together and presented to an investment committee. You'd go into his office and say, hey, I want to talk to you about X. And you'd sit down and kind of hash it out. And then like usually if you're effective, you walk out and like he puts the order in, right? Just turns around at his little desk and puts the order in. And so I go in to talk to him about the gap. And I said, Hey, I want to talk to you about the gap.

55:14And he's like, it's a short, right? And I was like, I actually think it's pretty interesting. And he's like, he makes a face like, are you crazy? And so I walk him through my thinking. And he's like, asked me a bunch of questions. And it's a 20, 30 minute conversation. At the end, he looks at me and he's like, yeah, that makes sense. And he turns around and just writes the order. And I was like, okay, maybe I actually know something because he knows more about this whole space than anybody on the planet in our world, you know, who's living and investing actively at that moment in time in the public markets.

55:40And like, I just convinced him and it ended up being right, which was great. But more importantly, I think just the confidence to come in and take the other side on something, again, somebody who I had so much respect for and then be right in that name was just like a tiny example, but I think illustrative of how this job and is so much about confidence and how you're feeling and it's cumulative, right? And so So yes, I'd had success, but that moment was sort of stands out in my brain. And I joke internally at Lone Pine and I say this with intent and intention because I want the analyst to challenge us all the time.

56:15That's how we all get better is like I kind of made a career of disagreeing with Steve. Right. And like, look where I'm sitting now. So I think it kind of worked out. I want you to do the same. Yeah. Right. That's so cool. If you think about the leader, business leader, that is the most driven to win that you've ever gotten to know about or know personally well? Who comes to mind? I want to pull apart like the pieces of drive to win and then apply it to the people that, you know, on your team and also that you recruit. I mean, it's probably Mark Zuckerberg. And what do you see? Like, what does that teach you?

56:45Like, what is it? Huge focus, big bets, willing to be wrong and pivot quickly when realizing that they are wrong. Meta.

56:58It's having, knowing when to be bold and when to be humble.

57:05Attracting, challenging, you know, motivating a really talented organization.

57:14And vulnerability. And when you think about all those characteristics, how do you suss them out in someone that might come work for you, especially if they're young. I'm like, there's not like - I say all the time that, you know, what I can glean from a 30 minute interview is pretty limited in terms of someone's ultimate ability to do this job well. So that's why we have a summer internship program for MBAs because it gives us kind of eight to 10 weeks to evaluate them and vice versa, right? To figure out if there's a fit, how this person works, how they think. So for me, I look for a couple things.

57:51It won't surprise you to hear that I love hiring competitive athletes who have competed at a high level. I don't care the sport. It could be an instrument. That's great too. But people who understand hard work, failure, disappointment, achievement, what that all feels like. Two, people who have had to juggle things in their lives, right? So they had to work a couple jobs while they were in college. They had some sort of misfortune in their life, a relative, a sibling, something that's happened to them that they've had to pick themselves up and work through. People who are interested in lots of things because they're curious, right?

58:31People who love to learn. That is ultimately, we said this earlier, like foundational, I think, for being successful in this job is never being complacent and thinking that you know more, but recognizing and being humbled by the fact that there's always more work you can do. But a companion skill to that is knowing when you know enough to make a decision, right? Because I think you can get into, you know, analytical paralysis around like there's more to do, there's more to do, there's more to do. And like we're in the decision-making business, right? And so that balance of curiosity and pursuit of knowledge and learning and growth, the self-awareness to admit when one is wrong, which is an incredibly important part of what we do, and the willingness to take some level of risk or offer some kind of contrarian thinking that often can position us really well to make money.

59:23Who do you view as your competition? Is it firms? Is it just the whole market? It's so funny because the firms that we're always lined up against in the press are some of my closest friends and none of us view it competitively at all. In fact, several former guests on your show are super close friends of mine. And in some ways, I view our competition, honestly, as ourselves. Like, we need to be better and do better. And I think that's the bar we hold ourselves to, is that we, you know, have the unique position of having been around for 27 years, which is increasingly rare in what we do. And obviously, being a directional, fundamentally oriented public equities firm, with duration is increasingly rare at scale, I would say, relative to when I first started in the business.

1:00:16And so I don't think of the pods as our competition. I mean, the market is obviously we're benchmarked in one of our products. And so that's obviously our competition and how we evaluate ourselves. But, you know, I think we had many years of very, very strong performance. We're sort of hopefully back on that track now with, I think, a lot of learnings and a lot of insights from mistakes we've made and a lot of growth that we've all experienced as an organization. And so I don't have like a target on my wall of XYZ firm or someone's numbers that I'm tracking to say, oh, we did better than that person.

1:00:50It's actually sort of the opposite, which might be counterintuitive, is that I root for a lot of my friends. And when we do work on something and someone else calls us and they own it or they do work on it, we pass and it works and they do well. I think that's awesome, right? We want the industry to do well. We want people who leave our firm and start their own firm to do well. That is good for the industry, right? And that matters. And so I don't have a zero-sum game attitude towards our industry or root against certain people. I really don't. I feel like having done this for a long time, part of what makes this really fun is the relationships of 20 plus years of going to see companies with the same people and exchanging ideas and debating ideas and challenging each other on our thinking, and then getting to know their talent, people who work for them, who've done the deep dives on a bunch of different names and introducing them to our talent, all of us getting on Zooms and hashing it out.

1:01:43Like that's what's really fun about doing this job is that network. And that has surprised me, I think, when I first entered the industry many years ago, I thought it would be more sharp elbowed and competitive. And instead, it's been the exact opposite. And maybe it starts with how we were talking earlier about sector coverage and my initial peer network being outside of the firm. So you sort of find like-minded thinkers or people that you respect or who you think ask good questions in meetings with companies to then have conversations with about the sector. And then that grows up into, you know, these become friends.

1:02:16So that's been a real surprise, I would say, about the industry and maybe a little bit of a wander from the question that you asked. But it's one thing I think is super interesting and maybe not really well understood outside in. I'm curious how much more or less you feel like leadership matters than early on in your career? Like a couple of the examples you've given is that a single person can really massively alter the trajectory of a business, even a very established one with lots of features that are independent of the person. There's the like great person theory of history versus the sort of, you know, less emphasis on the individual.

1:02:50Has the point on that spectrum that you personally lie changed over time? Like do you believe more or less in leadership, I guess? More. More, just because I've seen so many reps, right? That's the business. We're in the pattern recognition business as a field, I would say. And what's also interesting is to see it across industries, across geographies. Like, you know, we used to be big investors in China many years ago and seeing how a lot of the entrepreneurial businesses there, the Tencent, the Alibaba's got built, and the leadership inside of those companies, Meituan. I look at something like Mercado Libre and what Marcos has built there over time and the team largely being the same since inception.

1:03:30And like they've executed against competitors who came in and tried to disrupt their markets were much bigger, you know, well-resourced, much bigger global companies and defeated them. And I just, there's something to the magic that happens when you have, I think, strong leadership, great teams, you know, a lot of collaboration across those teams and a lot of like ups and downs that everyone experiences together that is creates so much resilience um i just i've seen that play out time and time again and it and you know it's interesting today's actually investing climate with we've been saying this a lot like with the cost of capital coming back and largely going to persist we can debate at what level you're seeing just winners and losers across industries in ways that we have not seen for a really long time which is super exciting obviously for us as, you know, really actively engaged research-oriented investors who both own stocks and short stocks because execution's mattering, right?

1:04:31And the free lunch of the zero interest rates and there's money for everyone almost forever, it felt like for many, many years, that era is over. And so you see it across all kinds of categories. And you see, you know, whether it's Boeing versus Airbus or, you know, Hermes and LVMH versus Caring and Burberry, or, you know, we can go DoorDash versus everyone else in that space, basically, right? Uber versus Lyft. And, you know, there's so many examples of winners and losers getting way more pronounced. And a lot of that's strategic decision. A lot of that's leadership, honestly, and execution. And I think those things are all really, really tied together.

1:05:15Maybe just like bullet lists, like enumerate the things you seeing the winners of those pairwise examples you just gave doing versus the losers. Because in some of those categories, like some airline, you know, some aircraft manufacturers or something, it's not like they're pivoting to some random, like they're still making airplanes. Right. Uber's still driving people around. Right. Lyft is too. Yeah. So what is, yeah, list those things. Like what are the winners doing in a real cost of capital environment that the losers aren't? So I think it's a bunch of things. Number one, there's really clear strategy in terms of what are we focused on, right?

1:05:53I think so many companies have eight different initiatives that are simultaneous, and there's a lack of understanding when you talk to people inside of a company of what actually matters. What are we driving towards, right? That's one. Two, there's a culture of accountability and measurement, right? Some companies have it. It seems so obvious, right? Like people are bonused off of a certain thing. They do, you know, forward-looking plans and budgets every year, and they hit them or they don't. But there's some companies that are religious about, you know, having those be thoughtful exercises and accountable exercises and ones that are not, right?

1:06:27And I think that shows through a lot. Three is companies who treat their consumers well, whether that's a B2B enterprise, a B2C enterprise, is when you talk to customers, and we do this all the time as part of our research, you hear how they are treated, and it is different. There's someone for them to pick up the phone and call. Their needs are being met. They don't feel like they're being aggressively raised, like their price is not being used as a weapon against them. They're being serviced. it's just different. There's, again, back to accountability and sort of a level of operating standard that is the expectation of how things are done.

1:07:06I think the other thing is there's a long-term orientation that I think some companies lose their way around, particularly when you have a lot of turnover and the amount back to people and you have a lot of turnover, incentives get set, whether that's tied to a stock price or the metrics that drive compensation and people's incentives are not aligned, right? And that doesn't promote long-term strategic thinking or orientation. That filters down to the culture. So now people are cutting corners. They're trying to make numbers, make budget. That's a very different way to live as a company than it is around, we may miss a quarter, but this is the right investment to make, right?

1:07:45And so companies that I think do a good job of balancing short and long-term, one, and two, are able to communicate to the market a consistent level of execution, right? We joke a lot internally that, and I say this a lot to management teams, every time you open your mouth to report your quarter, your stock's up or down 20%. What that tells me is you are not doing a good job communicating your business. You don't have good visibility around your business because you are surprising the market every time you speak, good and bad. That's not like multiple enhancing for your company over time, right?

1:08:19And so that comes from the internals of how a business is run. What are the incentives? What are the metrics? What's the culture? What's the retention? And all of these things, I think, are such important glue that distinguish the better executors from the poor executors. Do you think the best that do it understand the concept of cost of capital really well and drive it? And if they do, what do the best do to drive down the cost of their capital? I think of it like from the perspective of like trade-offs in a budget meeting, right? And so in the era of zero interest rates and the market, the public markets for years, rewarding growth at any cost, I think the disciplines inside of a lot of companies really went away and everyone was just motivated to find new ways to grow, regardless of the cost.

1:09:07And what is clear in today's era, and you have seen this from a lot of the big platform companies, particularly in the internet space, there is just a new religion around cost where when you sit in a budget meeting or even an engineering meeting and you are putting forth two or three initiatives that you want to get funded, you are being asked how to fund them from your budget, right? Which is just a very different orientation of this is not an open pie that is limitless in terms of dollars that can flow to you. And if you want to do something, you have to like, you know, it's like a Sophie's Choice, right?

1:09:44It's like one of the things that you've already been approved for needs to be sacrificed because then you're going to feel the pain and it's going to really pressure the decision making around solving for the best thing or the best two things, right? Or if you want more resources on a project, like convince me why, right? That cultural orientation to me is sort of the business translation of driving down cost of capital, right? People understanding that there are costs associated with every resource inside of a company and how to think about those in a way that is personal, right? I always say that when we look at our budgets every year for our third-party data sources and all the things that our analysts want to use, there's a lot of nice-to-haves.

1:10:22But what are like the must-haves? And I always say to our management team, what if we made them pay for them themselves? What would they actually keep? And what would they say? You know what? This is a nice-to-have I don't need to have, right? And we would actually force different thinking around what's, let me look back, what's actually informed the decisions that I've made and has helped me make better decisions versus like an input that was one of 10 that didn't actually change anything from me. Right. What has been the worst period of returns that you've experienced at Lone Pine? And what, like, tell me about that era and what you learned from it.

1:10:53Sure. I mean, we'll put aside the financial crisis because I think that was just like a universal thing. For sure, it was the end of 21 and the first few months of 22. And we learned a lot. You know, tell me everything. So, you know, referencing what I just said about a period in time where the market was consistently rewarding the best positioned companies who had great unit economics, but were investing meaningfully ahead of their growth rates. And the market was forgiving and encouraging, actually, of that level of investment, such that many of these companies were funding extraneous things, burning cash.

1:11:35That didn't matter as long as, you know, the growth rates were continuing to accelerate and people were comfortable that the underlying unit economics were sound, right? So what happened, I think, was a lack of accountability around valuation and no near-term valuation support because everyone was looking at multi-year out, normalized, you know, margin structures to then discount back and say, this is a fair price to pay for an equity. Instead of looking at if something changes and something goes bump in the night, you know, on a next 12 or next 24 months earnings or cash flow basis, is their valuation support.

1:12:10And the regime changed, I think, very quickly when people started to realize, ourselves included, that the Fed was behind. And we started having this conversation in the fall of 21, really in the spring of 21, owning a lot of these businesses that were the leaders. And by the way, with the benefit of hindsight, from a 2025 perspective, are the winners, right? A lot of the companies we owned, they were the right ones to own, we just paid too much for them, right? And when the regime changed, and it was clear that we were going to need to be getting into a hiking cycle quickly and aggressively, we pivoted, but not quickly enough, right?

1:12:48And so we took some of that high growth exposure down, that had been some of the most profitable exposure for us on the prior 24 months, but not enough and not fast enough. And so when we came into 2022, you know, as you remember, like, it was just kind of the market was down. And it was super quick. And it was like a reprice mechanism that happened very, very quickly. And we weren't quick enough to react. And to the point earlier around believing we owned different bets and payments or e-commerce or software, when the regime changed, none of that mattered. And that nuance was lost. And they all traded like one stock, right?

1:13:22And so we had too much exposure. We had lost balance in the portfolio. And part of that, I forgive to some extent because the market had been rewarding that for many years prior, but we didn't act quickly enough and respond quickly enough to a conversation we were having as well as the market was having at the same time around sort of a different regime from a macro perspective, an interest rate perspective. And so that was the huge mistake. We spent, you know, a lot of time internalizing the lessons, studying all the mistakes, you know, points in time when we had this conversation and didn't make change earlier, a year earlier, 18 months earlier, and that was the right decision.

1:14:03And then the conversation we were having at the time and this decision to move some capital, but not enough and not quickly enough and really memorialized, I think, a lot of that thinking and learning around reinforcing that there are lots of ways to make money in the market. And we just got really narrow in our purview, I think, and lost the perspective on balance. And so I think the changes we made, in the first quarter of 22 and sort of resetting the book to a much more balanced book that has lots of different flavors of things in it. Again, not top down prescriptively, but I think really prioritizing that in a different way.

1:14:44And going back to, honestly, a lot of sectors where we had a lot of domain expertise, where we'd had a lot of success historically that we kind of got away from because, you know, the sex of the high growth, internet oriented kind of tech stuff had been so intoxicating, I think, for not only ourselves, but a lot of investors who are attracted to growth businesses that are creating value. We didn't own NVIDIA. It wasn't three stocks that drove the whole portfolio, and they're across a number of different industries. And so the breadth that is driving our performance is very Lone Pine-esque to me, and something that we got away from.

1:15:16And that's the mistake, I think. A couple of decades into studying companies, Can you describe the perfect business? I mean, it's all the things we're all searching the globe for, right? We want incredible leadership, really strong in economics, a really good moat around a business in terms of something that is different, incredible value proposition to the customer, whoever it may be, the ability to grow organically without investing meaningful capital, and a huge runway for growth that can last for many, many years without being disrupted if we're doing our jobs, right? And in terms of the management team of the company that's running it.

1:15:56And maybe like an adjacent question is the perfect investment, because I suspect that when one of those exists, the world kind of knows it. Correct. And it's priced. So I think it's change in leadership. It's a new product that the market doesn't appreciate fully in terms of its capability, how big it can be, how accretive it is to margins and returns, how little capital it requires, ways to leverage the core IP of a business in new channels, in new products, the value of distribution to the earlier conversation and how that's underappreciated in certain businesses and the ability to flow other products, other services into that.

1:16:39Or, you know, sometimes it's just the benefits of scale. The companies get to a certain size and then their market power step functions, right? And what they can, and then that somehow improves the value proposition and the flywheel of what they're doing in a way that the market doesn't fully appreciate. And we see this now, I would say like in the alts space, for example, where these businesses are now, you know, they're all mostly public and that's new. Like Apollo or KKR. Yeah, KKR or Aries. And their ability to offer unparalleled customer service, product innovation, opportunities for talent development, new channels of growth is just it's spinning on its own in terms of this flywheel, right?

1:17:23In a way that I don't think anybody could have really anticipated. And what's interesting about these is, you know, the bare case on them because they're a new asset class as public companies is we haven't really been through like a big cycle. So how will they perform? And then the other piece I think the market struggles with is how do you value the carried interest part of their revenue model, right? Everyone can value management fees and make a projection around how AUM will grow. But what do you pay for that, right? And so that's interesting to me because we can do work on that. We can have a point of view on that.

1:17:53We can look across cycles, look across products, how they're growing, and think about how funds perform and have a thoughtful, analytical answer to that question. But there isn't an answer to that question yet. And these are still under-owned relative to like all of the big, you know, institutions that have to index, that have to own these things and will continue to have to own them in bigger size as they grow. And so the idea of like a new asset class is sort of interesting to me, even though it's, you know, Blackstone's in public for a while. But all these companies are newly public in the last decade.

1:18:24And I think the world is still figuring out how to analyze and value them as public companies. I love the idea of the investment opportunities coming around change. I was with John Zito from Apollo, who was just made co-president of Apollo last night. And it's so interesting because, I don't know, probably the stock price of Apollo doesn't really reflect all the things that John might do in the future. Amazing guy. And so it's getting into that changing thing where the opportunities come from for Limpine, it sounds like. I'd love to apply that idea to a couple different sectors. So you mentioned kind of a broader purview, getting back to some of the things that made the firm originally.

1:18:59obviously Steve was a consumer analyst and retail analyst. And so, so, so cool to talk to him about that space. What would be like the top three, would you say outside of like big TMT, which we can talk about too, but outside of those big companies, what are like the top three sectors that you find yourself spending your time in now? We own a lot of one-off ideas in, in non-bank financials. So the alt is one example of that. But we have a number of positions of single stock, not thematic companies that are doing really interesting things. One is around transformative M &A at scale. One is around product innovation.

1:19:41One is around AI that's not an AI business, but is using AI to thoughtfully do things inside of a sector. So that's an area where I feel like we typically don't do a lot with the banks, not an area where we feel like we can really add value. There is regulatory risk and all the, and we don't think, you know, those are not sort of, don't really measure against our quality filter as businesses. But there's a number of pockets inside of financials that we think are not very well covered that are pretty interesting. And we've got a great team doing research there. So I think that's one area. We have been investors for really two decades almost and continue to be in the aerospace market, both OEM and aftermarket, and continue to love those businesses.

1:20:27They have, you know, all of the attributes of businesses we like, great organic growth, great pricing power. You know, a lot of, as people fly more, planes get used more. There's a need for replacement parts. They get specced into planes as they're being built. And so they're typically single-sourced or sole-sourced. And they're super low cost as a percentage of the overall plane. And so they're just recurring revenue businesses with a lot of pricing power and very little capital against those businesses to grow organically. And, you know, I feel like there's a pretty good open-ended structural story around people traveling more and valuing experiences.

1:21:03And so that will continue to, I think, be a very productive area for us. And there's a bunch of different names that we've owned in that ecosystem and will continue to own likely over time. So I think that's another big area. Those are two. I mean, consumer is harder, I would say. Most businesses, we're more active there on the short side than the long side at this point, just because there's just an inherent maturity to, I think, a lot of those businesses. And the ones that are the really scaled winners, even just watching the revaluation of Walmart in the last 18 months, it's been super interesting as they've really emerged as a more consistent executor.

1:21:35And Doug's done a fantastic job, I think, with that business. but that, I mean, Walmart's now trading at a pretty hefty multiple and Costco's trading really, I mean, these are the best, you know, executors in the space and they're really expensive. So I don't, I think the market has sort of figured out that they are the winners. And so less to do there in my mind, in terms of runway for long growth, that's underappreciated or maybe fairly valued relative to the actual level of growth. That's one of the things we debate a lot, honestly, is in areas like healthcare. This happens in certain sectors and also in certain geographies where there's very few companies that have high growth or have exposure to a thematic that the market is excited about because of a geography or because of a sector focus.

1:22:20And we like those businesses too, but they tend to trade at valuations that don't stack up against businesses that we see across the portfolio that are more compelling. So even though we love lots of companies around the world and would love to own them, we're always waiting for like a a wobble or a dislocation or a perceived competitive threat to give us our chance to own them because they don't stack relative to owning more of a lot of the compounding businesses that we love. If you think about the whole industry, what do you think is the biggest problem facing the investing world? I mean, certainly the funds flows of the last bunch of years would tell you that active management is undervalued relative to our understanding and execution of that value, right?

1:23:01The move to passive, this idea that like, just own the MAG-7 and I can do that myself and why do I need you, has become a little bit of a cocktail party chatter at this point. And, you know, we are obviously huge believers in active management and huge believers in the value of doing fundamental analytical work on companies and not indexing. And that the premium for that is undervalued relative to its worth. And I think, you know, part of what makes that, I think, a difficult conversation right now is the short-term orientation of the market and how it takes, you know, we're focused on compounding over a very long period of time, right?

1:23:37We are the largest single investor in our fund. A third of the assets is internal capital. So what I wake up every day really excited to do is compound my money alongside of our LPs, right? I think that's a pretty compelling proposition to a potential client for our firm. And that doesn't happen in a day or a week or a month. And I'm not my investment underwriting doesn't tie to that time horizon. Right. And so we want to be judged over years, not quarters. And we're increasingly in a market that is evaluated by forget quarters, weeks and months per the pods conversation earlier. And a lot of pods, you know, if you don't put up, you know, we laugh at the activity in the market in the last few days of every month, because if you're not having a bad month, you're going to get your capital yanked.

1:24:21So you take risk, right? Or you have to degross or these activities. This never existed, right? Five or 10 years ago, but this is the market forces at work. And so again, great for us, long-term investors, I want to lean in when they're leaning out and vice versa, but the value of doing that and the benefit of that capability, it takes time to reveal itself and isn't going to show itself in a quarter or a year. And I think that's what the market's missing. So say one more click about how the pods work from your perspective and the weird, the weird incentives in there and what it does in markets?

1:24:51I mean, you have inside of these shops 20, 30, 40 desks or pads, as they call them, covering a sector, right? And they all look at the same data and they sit in the same meetings and on the same calls. And of course, they talk to each other because you have a peer network sitting inside your own firm. And so often, and I have never worked at a pub, but have several friends who have still do and have come out of there, you know, you can see how everyone's lined up. And you'll have 20, 25 books long a stock into a print of a quarterly earnings estimate and a quarterly conference call. And the numbers come out.

1:25:26And it was better, but it wasn't better enough because the whisper number, the data was suggesting they were going to beat by three points and then only beat by two points. And so the stock's actually going to sell off. Right? The game of you hand me an earnings release and I'll tell you what the stock's going to do was actually a fundamental game that we were pretty good at a decade ago. Now it's like coin toss. What's the setup? You tell me. What's the whisper number? How are the pods lined up? Are they long? Are they shorted? Because that's going to dictate the trading action the day of. And the opening market reaction versus what happens over the course of the day is everyone's covering the short because it was bad, but it wasn't worse.

1:26:00Right? And that's like, this is what happens all the time. Right? And so that requires different muscles from us in terms of how we position ourselves and respond to that. But I think that's what is happening. And these people are on, they have drawdown limits of where they can draw down on a monthly or quarterly basis. Their capital gets pulled. And that's the lives they lead. And so what you see in market action in terms of reactions to events is a function of those incentives and those structures. This has been so incredibly fun. It's so neat to hear how the whole machine works and just about your career and the competitive nature and the tennis.

1:26:40It's just an amazing, amazing story. I always ask the same traditional closing question. What is the kindest thing that anyone's ever done for you? So the summer after my freshman year of college, I taught tennis at a camp in Florida and there was a golf camp at the same resort. And I became friendly with the golf pro and we'd meet after I was done teaching for the day. And he taught me how to play golf that summer, which I don't play anymore, but I did at the time. And at the end of the summer, the last night we had dinner together before I went back to school and he said to me, can I tell you something?

1:27:11And he was probably, I was 18 and he was 32. And he said, you know, you are so driven and you're so intense. And I just can tell that like, I'm super excited to follow your life because it's going to be really interesting is my sense. He said, but you're also an incredibly soulful person and your relationships clearly matter to you. He said, so my piece of advice for you would be figure out who in your life matters to you. figure out what matters to them and then show up for them in all the ways that matter to them. And that will be a rewarding life for you. Because he's like, I think he got the professional part down, which was super sweet.

1:27:48And so I take that to heart and work really hard on relationships and the people that show up for me to be there for them, for the things and for the people that matter for them. One follow up, because a beautiful closing thought. How have you gotten better at that? Like if everyone listening hears that simple method is like, oh, I want to do that. Right. What are the tactics of getting better at that that you've learned? Making sure it's mutual. I think relationships change, people's lives change. I think you recognize, I just turned 50, that some friendships and relationships that have duration in your life are more a function of circumstance.

1:28:23And you wouldn't necessarily choose some of those relationships today. And the ones that are the inverse of that, that are have the duration and are still the most meaningful, are the most valuable. And so it's the concentration theory of both investing in your highest and best ideas and the concentration theory of just the people who are incredibly meaningful to you because they've seen you grow up and seen you grow and change. But then also the last piece or the postscript would be leaving room for new because new, I think, helps us all grow. And we're different than we were when I certainly am when I was 20.

1:28:55And the new is the reflection of, like, who you meet and connect with today, which wouldn't be the same thing as it was 30 years ago. So beautiful closing thought, Kelly. Thanks so much for your time. Thank you. Enjoyed it.

1:29:32Thank you.