David Rosenthal: belief

Transcript context

…Right, in different forms. When the businesses do become enormously cash flow positive, it's not a problem that you took on leverage. In fact, it only multiplies your returns. Levering your returns is a great way to increase your IRR, which is effectively what he did. What we don't do on Acquired is tell the stories of people who were wrong in their leverage, did a bunch of crazy stuff, and then went out of business. In fact, most of the time, nobody cares about those stories. We don't even know of them to tell them. Enron was this unusual example. There are famous, huge catastrophic blow-ups, but most blow-ups are small and insignificant. I suspect most stories involving leverage end in the blow-up, not in the great success. Right. The most interesting thing is a story like LVMH is the story of compounded. He was 1 of 10 that survived the first chapter, and then he was 1 of 10 that survived the second chapter. Suddenly, he's an outlier-ish, 1 in a 7 billion case of a person who managed to turn a very small amount of money into the most money in the world. Of course, we're going to tell that story, but someone was going to accomplish that story. It was going to happen to someone. I think about this a lot on Acquired where we're like, wow, yet another very, very unlikely set of circumstances. It's like, should we learn from the lessons? Or was this going to happen to someone, so you make up at survivorship bias? Make up the fact that, well, if you did all these things that they did, you too can become like that?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.