Business Breakdowns

This is Zack Fuss, an investor at Irenic Capital, and today we are breaking down Intuit. Started by a former Procter & Gamble employee in 1983, Intuit has grown into the premier platform for consumers and small businesses to manage their finances and pay taxes. Along the way, it has fought off significant competition from the likes of Microsoft and others, and delivered handsome returns for its shareholders. In recent years, it has spent over $10 billion adding Credit Karma and Mailchimp to its platform of services. To break down this $100 billion market cap business, I’m joined by John Feeley, Deputy CIO and a Portfolio Manager at Findlay Park. Please enjoy this Business Breakdown of Intuit.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:19] - [First question] - What Intuit does and their various offerings

[00:04:14] - The size and scope of their business lines and customer bases

[00:06:20] - Power to the People; How Intuit was founded 

[00:09:47] - Evolving from Quicken to the core franchise of small business accounting and consumer tax  

[00:13:30] - The value proposition of their products and their economic models 

[00:17:43] - Whether or not Intuit’s offerings have a network effect similar to Microsoft Office

[00:21:56] - The barrier to entry for competition and what makes them so defensible 

[00:26:04] - High level overview of the financials of the business

[00:30:22] - The competitive advantage of their culture and managerial style 

[00:34:49] - Capital allocation historically for the company 

[00:37:09] - The commercial imperative to acquire Credit Karma and Mail Chimp

[00:40:18] - Why acquire Mail Chimp given how different it is from their existing offerings

[00:43:06] - Potential risks for Intuit given the stride towards tax simplification  

[00:45:31] - The key drivers of their growth beyond their expected GDP percentage 

[00:49:45] - Lessons for investors and builders to take away from Intuit

This is Zack Fuss, an investor at Irenic Capital and today we are breaking down Trader Joe’s. Trader Joe’s is not a typical grocery chain. Their stores offer less choice, very few brands, constantly changing product lines, and no online option. Yet, they are adored and highly profitable. Their NPS score is industry leading and from what we can tell, despite offering lower prices, they generate more revenue per square foot than any dedicated grocery in the market.

To break down Trader Joe’s, I’m joined by Cristina Berta Jones, a long-time ecommerce and grocery investor who is now building an online supermarket business called Picnic. Together, we unpack the elements that have made this private grocery chain so successful for such a long period of time. Please enjoy this business breakdown of Trader Joe’s.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:16] - [First question] - Comparing and contrasting Trader Joe’s to conventional grocery stores and supermarkets [00:06:05] - Where Trade Joe’s fits into the food retail market and their size and scale

[00:09:36] - The different sections of a store layout and what it feels like to shop there

[00:11:47] - How many stores there are and how that compares to other large scale food retailers

[00:13:17] - Some of the most interesting parts of the history of Trader Joe’s

[00:15:15] - How Joe applied his market observations to building the company 

[00:21:12] - The evolution and success of Trader Joe’s private label brand

[00:24:31] - Differences between US and European grocery markets and overview of what a hard discounter is 

[00:28:25] - Unique and different strategies on slotting fees and trade spend

[00:31:23] - Reinvesting their overhead savings to offer lower prices to their customers

[00:33:04] - Success despite not being a store where one does a full basket shop

[00:34:08] - The way that the pandemic and delivery services impact grocery stores 

[00:37:17] - The crossroads many grocers face between physical and online stores

[00:41:43] - What makes Trader Joe’s defensible 

[00:44:51] - Trader Joe’s approach to shrinkage and having better margins than their peers

[00:47:05] - Self-distribution and what separates them from their competitors 

[00:48:30] - Lessons for builders and investors from Trader Joe’s story 

Today we are breaking down Polaroid. For 30 years, Polaroid monopolized the instant photography industry, producing one Nobel-caliber breakthrough after another. As their products dazzled, sales grew from just under $1.5 million in 1948 to $1.4 billion in 1978. Today, the business is a shadow of its former self but the lessons from its history and especially from the founder endure. Edwin Land is not the most familiar name in business history, but he has had an outsized influence on the world in which we live. In particular, he was Steve Jobs’s hero. To break down Polaroid, I’m joined by David Senra, who studies history’s greatest entrepreneurs through his Founders podcast. David is uniquely qualified to distill the lessons and secrets behind Edwin Land and his life’s work, Polaroid.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:04] - [First question] - How unique Edwin Land was

[00:08:58] - What he was like and how he solved the problem that lead to Polaroid

[00:13:20] - Defining what a polarizer is at a high level

[00:16:36] - How scope of ambition can overcome humble beginnings

[00:18:59] - The story of the instant camera and how much of a leap forward it was  

[00:26:11] - Revealing the Instant Camera; The marketing side of Polaroid beyond the initial magic Land created

[00:31:40] - Why they were so successful in building a four decade moat around their patent

[00:34:59] - Living in the space of the important and the impossible 

[00:38:50] - Optimism as a moral duty that we can take away from Land

[00:42:59] - Lessons from the aftermath of Polaroid after Land’s death 

[00:48:02] - What the story of Polaroid most represents that is useful for entrepreneurs

[00:49:52] - A Triumph of Genius

This is Matt Reustle and today we are breaking down the historic General Electric. Honestly, approaching this episode was a unique challenge. Today’s GE barely resembles what was once the largest company in the world. So rather than purely focus on what’s remaining, we decided to use a lens of “then versus now”.

To break down General Electric I am joined by Josh Aguilar, a GE Analyst at Morningstar and enthusiast on all things capital allocation. It’s a theme we revisit throughout the conversation on GE's time as a conglomerate, and its rise and fall.

If you’d like to hear more on the early years of General Electric and particularly Thomas Edison – make sure to check out our newest Colossus teammate David Senra and his podcast Founders. David conveniently dropped a new episode on Edison this week, and after my conversation, you’ll hear a preview of that episode. So stay tuned for that, after my conversation with Josh. Please enjoy this breakdown of General Electric.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:04:05] - [First question] - What GE looks like today compared to its peak

[00:07:42] - The reasons why GE lost so much of its power

[00:15:14] - How much of their success can be attributed to being propped up by leverage  

[00:17:18] - The strategy they’re operating with today and the businesses within GE

[00:24:05] - Drivers in the decision to split up their business and end the conglomerate era

[00:25:34] - Would they have made disposals if they were operating from a strong position 

[00:27:15] - What their capital allocation and free cash flow will look like going forward

[00:29:38] - GE’s centralized thought process of the past and their management style now

[00:31:14] - Exxon Mobil: An Aging Energy Empire

[00:32:23] - Driving factors behind their decision to transition towards green energy

[00:34:36] - How the margin profile plays out and competitive dynamics of renewables

[00:35:16] - Thoughts about conglomerates and what will work in the future 

[00:37:07] - What could lead to GE’s success in the future over the coming years

[00:39:43] - Main takeaways from his analysis of GE

[00:43:52] - Clip from Founders about GE’s founder, Thomas Edison

Today, we’re breaking down a global semiconductor company known as AMD. AMD isn’t the biggest and hasn’t always been the best chip maker in the world. But as cyclical and structural changes take place in the semiconductor industry, AMD serves as a great proxy for what’s going on and why.

To break down the details, both behind the company and the industry, I’m joined by Jay Goldberg, a semiconductor industry consultant at D2D Advisory and Partner at Snowcloud Capital. We explore the rise of custom silicon, AMD’s competition with Intel and Nvidia, and whether or not chip making is a good business at all. Please enjoy this breakdown of AMD.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:27] - [First question] - Where to start when it comes to understanding semiconductors 

[00:04:21] - Why semiconductors were created in the first place  

[00:04:57] - Key milestones and players in the semiconductor industry 

[00:07:35] - What are the factors that determine who wins and loses

[00:08:37] - The semiconductor industry map today writ large

[00:12:05] - How the changing geopolitical landscape affects power in this sector 

[00:14:15] - Why we can’t just throw unlimited money at this problem to solve it 

[00:15:30] - Whether or not chip businesses are actually defensible and good businesses

[00:17:37] - Differences between CPUs and GPUs and how everything we do uses them

[00:22:56] - AMD’s history with CPUs and GPUs and how they’ve evolved over time

[00:26:55] - Why there is such a high barrier to enter and disrupt the chip design market

[00:31:54] - A future where we transition to specific and specialized use-case chips 

[00:35:36] - Companies like Google and Apple building their own in-house chips

[00:38:55] - Other industries where this dynamic exists outside of semiconductors

[00:41:57] - The scope and economics of AMD today 

[00:44:26] - What’s important to know about AMD and Intel’s capital allocation strategies

[00:47:28] - What he’d focus on if he was the capital allocator for a big chip company

[00:48:55] - One major lesson that this industry has taught him about investing

[00:50:28] - Major lessons about AMD and the world writ large that isn’t addressed yet

This is Jesse Pujji and today we are breaking down CrowdStrike, the cybersecurity provider. Founded in 2011 by George Kurtz, the former CTO of McAfee, CrowdStrike differentiated from firewalls and anti-malware by building a platform that actively predicts threats rather than blocking attacks that have happened before. Today, CrowdStrike serves over 18,000 customers globally and is valued at $45 billion.

To break down CrowdStrike, I’m joined by Roneal Desai, a senior public market investor focused on enterprise software. In our conversation, we discuss how CrowdStrike reinvented cybersecurity for the cloud era, why the pandemic and remote work drove a paradigm shift in the industry, and how the company helped the DNC identify Russian hackers during the 2016 election. Please enjoy this breakdown of CrowdStrike.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:29] - [First question] - Overview of what CrowdStrike is

[00:05:28] - The size and scale of CrowdStrike today 

[00:07:10] - Customer use-cases before and after CrowdStrike

[00:08:45] - What software would have been used prior to CrowdStrike 

[00:12:17] - How many customers could there be and who CrowdStrike is taking share from

[00:16:41] - What their prior estimates lacked in terms of TAM 

[00:17:17] - Whether or not Palo Alto Networks is a true competitor

[00:19:33] - The criteria used for deciding which service is better than the other 

[00:21:16] - The early days and founding story of CrowdStrike and their structural advantages

[00:27:30] - What about COVID opened up an opportunity for CrowdStrike’s growth

[00:29:44] - The P&L and the special parts of the business that show up there

[00:34:21] - Strategic acquisitions and product expansion

[00:39:21] - What’s behind their distinctive growth 

[00:40:54] - Other noteworthy aspects of their gross margin and R&D 

[00:44:17] - Distinctive aspects of their sales and marketing strategy 

[00:50:00] - What their unit economics looks like today

[00:52:35] - Key factors that would contribute to the bull case for CrowdStrike in ten years 

[00:54:14] - Why a security company would become the integrated layer  

[00:55:47] - Biggest risks and threats to CrowdStrike over the next decade  

[00:57:41] - Lessons for builders and entrepreneurs  

[00:59:05] - Lessons for investors

[01:00:09] - Where to go to learn more about CrowdStrike

This is Matt Reustle and today we are breaking down the Swedish industrial giant, Atlas Copco. With a market cap hovering around $50 billion US dollars, Atlas Copco is a dominant player in the air compressor and vacuum pump markets. It has returned 40x over the past 20 years for its shareholders and to break down the business I’m joined by Stephen Paice, Head of European equities at Baillie Gifford. Baillie Gifford has owned this business for 4 decades and Stephen still has the handwritten research notes from the mid-80s so we thought it was a proper fit. 

We cover the rich corporate history, including how one family - the Wallenbergs (also referred to as the Swedish Rockefellers) - have played such a major role in the history, we get an overview of pneumatic energy and the importance of the air compressor market, and we explore what makes this corporate culture so noteworthy to both insiders and outsiders. Please enjoy this breakdown of Atlas Copco.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:12] - [First question] - What makes Atlas Copco such an interesting business 

[00:03:52] - What they’re selling and who they’re typically selling to 

[00:06:02] - Whether or not there are alternatives to air compressors

[00:07:03] - What a vacuum pump is and how their industrial vacuum business works

[00:08:55] - Metrics used to measure how Atlas Copco is a market leader 

[00:10:25] - Some of the key milestones of their corporate history leading up to today

[00:17:51] - How much the Wallenberg family owns of Atlas Copco today

[00:18:48] - Walking through the income statement

[00:21:47] - Service regularity and overview of revenue generated through service 

[00:25:35] - Cost profile of the business and how their supply chain works

[00:30:19] - Anything unique that contributes to their 6-7% revenue growth

[00:31:55] - What the consolidated business margin works out to

[00:33:23] - TransDigm; Being able to allocate 30-40% of free cash flow towards acquisitions in a fragmented market

[00:35:16] - What the bull case for Atlas Copco is

[00:39:46] - A metric he typically uses when thinking about these types of businesses 

[00:40:47] - The most interesting and surprising takeaways from Atlas Copco

This is Jesse Pujji and today we’re breaking down ChargePoint. ChargePoint is the clear market leader in the United States for electric vehicle chargers. Founded in 2007 by five technical founders, the business has ridden the wave of EV growth and has manufactured some 40% of charging points in the US. 

To break down ChargePoint, I’m joined by Mark Tomasovic, a principal at Energize Ventures and a previous guest on our show. We discuss the challenges of a commoditized business, how ChargePoint is leading the EV land grab, and why the US is at a particularly interesting point for EV adoption. Please enjoy this business breakdown of ChargePoint.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:16] - [First question] - What ChargePoint is

[00:03:26] - Their size, scale and revenue today

[00:04:21] - The history of ChargePoint and the EV charging sector 

[00:06:25] - How the industry has evolved and important metrics to understand 

[00:08:18] - Who the main players are in the EV charging infrastructure layer

[00:10:46] - The role auto manufactures play and their relationship with this world

[00:12:05] - Tesla’s closed wall network and ChargePoint’s open network

[00:13:05] - Competitive advantages in the EV charging landscape

[00:15:45] - Whether or not sales and marketing is unique to ChargePoint 

[00:16:47] - Other unique arrangements that will unlock the pace of their land grab

[00:18:37] - The various lines of P&L and how to think about them

[00:19:34] - The three levels of chargers and costs associated with them 

[00:21:52] - What goes into their gross profit margins and cost of revenue 

[00:22:50] - How their gross margin compares to their competitors

[00:23:41] - What they’re trying to accomplish with their high R&D spend

[00:24:49] - What they’re investing in and betting on for the future by spending cash

[00:25:38] - Expectations of future growth for the next couple of years

[00:26:46] - Growth over the long-term trajectory and the car to charger ratio

[00:29:14] - Their main flywheels that give them a competitive advantage 

[00:30:53] - The big buckets of customer segments and end point leverage

[00:32:09] - What the life expectancy of a charger is

[00:33:13] - The regulatory environment writ large 

[00:34:39] - Bull case for ChargePoint over the next five to ten years 

[00:37:36] - Reasons why ChargePoint might not succeed over the next five to ten years 

[00:38:58] - Lessons for builders and investors when studying ChargePoint 

[00:39:51] - Learn more about ChargePoint; energize.vc

This is Dom Cooke and today we are breaking down the freight railroad business, Union Pacific. Union Pacific is interesting for a number of reasons. Its first tracks were laid in a time of horsepower, over 150 years ago. It operates a duopoly in the West of the US with Burlington Northern Santa Fe, a rail owned by Berkshire Hathaway. And despite being capital intensive, it earns higher operating margins than Microsoft. But above all, it is a crucial link in the global supply chain, moving much of what the US economy is built on. 

To break down this $140 billion railroad operator, I’m joined by Matt Reustle, the CEO of Colossus and a former transport analyst. Please enjoy this Business Breakdown of Union Pacific Railroad Company.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:01] - [First question] - A general overview of the transportation sector

[00:05:38] - What a Class 1 railway is and what the railway industry looks like

[00:07:40] - Is there cartel-like behavior and collusion between railway companies?

[00:12:24] - What a rail network consists of at the unit and asset level

[00:17:48] - Whether or not consumer railroads are independent from freight railroads 

[00:18:57] - Interchange when goods are transferred from the east coast to the west coast 

[00:20:17] - Who Union Pacific’s customers are, what they move, and their business writ large 

[00:25:35] - The Box; Whether or not all transport volume in 50 years will be intermodal

[00:26:37] - How they determine the rate they charge customers  

[00:28:41] - Ways that geography impacts what is being transported 

[00:31:28] - The income statement and economics of rails through the lens of UNP

[00:36:11] - Improving efficiency and ROI while not having to submit to customers 

[00:40:12] - How different policies affect railway margin profiles 

[00:41:56] - Operating ratios and why they’re the metric most referenced for performance

[00:44:38] - The nature of cyclicality and its driving forces 

[00:48:15] - Thoughts about capital allocation given being high CapEx and their free cash flow

[00:52:27] - How inflation and current events lately positively and negatively affect UNP

[00:54:16] - What would make him nervous as an analyst looking at UNP in the years ahead

[00:56:33] - Talk or plans to electrify and migrate away from fossil fuels 

[00:58:22] - Lessons learned from UNP that could be applied to other industries and investing

This is Zack Fuss, an investor at Irenic Capital Management. Today we’re breaking down the world’s largest luxury business, LVMH. The LVMH story is deeply reflective of the vision of its 73 year-old founder and architect, Bernard Arnault. Today, the business generates €75 billion in sales across its 75 brands and 3 sector focuses. With a market cap of €350 billion, LVMH is not only the largest luxury business in the world but one of the largest businesses in the entire world. 

To break down LVMH, I’m joined by Christian Billinger, the chairman of Billinger Förvaltnings. We discuss the paradox between scarcity and scale in the luxury industry, analyze some of the company’s high profile acquisitions, and delve into the history of this conglomerate’s famous founder. Please enjoy this breakdown of LVMH.  

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:30] - [First question] - How LVMH came to be and Bernard Arnault’s history

[00:08:56] - Spread of revenue and margins across their various brands

[00:13:38] - What it is about their business that has allowed them to achieve such tremendous scale given the scarcity of luxury goods

[00:16:06] - Examples of Arnault reinvesting in the business for the long-term

[00:17:04] - Ways all of their brands and different verticals work together to create value

[00:18:56] - What the general view on success is after Arnault steps down 

[00:21:19] - Key factors that allow luxury houses to enjoy handsome returns on capital historically

[00:23:17] - What he’s noticed about luxury brands and their ability to redeploy capital 

[00:26:25] - How their capital allocation strategy manifests in their financial profile

[00:28:24] - The Arnault family’s control over LVMH

[00:31:48] - The evolution of the industry in Europe and the strong getting stronger 

[00:33:58] - Cultural differences internationally that allow some countries to thrive in luxury brands compared to others like the US

[00:36:17] - Thoughts on the influence of the Chinese consumer on European luxury houses

[00:40:30] - What has characterized their M&A strategy historically

[00:44:08] - Overview of their recent acquisitions and what it means for LVMH going forward

[00:47:46] - Their go-to-market strategy to acquire customers and build the brand

[00:48:11] - Some of LVMH’s vulnerabilities and risks 

[00:50:44] - Key takeaways for investors and operators when studying LVMH’s story