Ben Gilbert: evaluation

Transcript context

…I'll tell you to second what Andrew is saying, if you go back to my youth, in the 50s, when I was a young man in the 60s and 70s, you just didn't have the feeling that the world was changing. My thought model for the world at that time, looking back at it, is kind of a consistent backdrop, like on a stage. The actors do their thing in front of the backdrop, but the backdrop doesn't change. There are cycles, ups and downs, excesses, corrections, and all these things, but the world hasn't changed much. Comic books were a dime for my whole youth. But today, everything changes every minute. Here's a question then. Should companies be worth less? Because if the future is more uncertain, and it's more likely that things get disrupted, and moats are less permanent than they've ever been, shouldn't we consider less future years of cash flows? Like everything, it's a double edged sword. On the one hand, you just made the point that without minding the ship, companies are much more potentially disreputable. But on the other hand, that means if you have competitive advantages, and you continue to mine those advantages, and you use them to enter adjacent markets, launch new products, or going after other markets, geographically or whatever, there's much more value creation to be had. I think the ability to leverage your advantages and build more for the companies that are really doing so has probably never been higher. By the way, with the internet, you can address global markets. We just talked about newspapers where you can address the town next door. One of my favorite writings on investing, it's not actually about investing, but it's this guy, Brian Arthur. He wrote something called Increasing Returns in the New World of Business. That was in the mid 90s. He made the observation that with the new world, with the new distribution models of things like the internet and whatever, the best companies could continue to get bigger and bigger, whereas you were sort of kept out more in the old world, so you would have diminishing returns to scale over time. By the way, that couldn't have been more right. If you look at markets over the subsequent couple decades and you have companies like Apple, Amazon, Google, and Microsoft, that just continues to get bigger and bigger. I think a lot of that comes from the fact that they're just continuing to dominate more and more of various markets.…

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