Michael Mauboussin Master Class — Moats, Skill, Luck, Decision Making and a Whole Lot More

**Ben Gilbert** (0:00)
Yeah, dude, we should see if any listeners want to create some cool animation for the intro music for the YouTube channel.

**David Rosenthal** (0:09)
Oh, are we going to open source it to the fans?

**Ben Gilbert** (0:13)
We got to do it.

**David Rosenthal** (0:17)
Is it you? Is it you? Is it you?
Is it you?

**Ben Gilbert** (0:31)
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund PSL Ventures.

**David Rosenthal** (0:45)
And I'm David Rosenthal and I am an angel investor based in San Francisco.

**Ben Gilbert** (0:50)
And we are your hosts. Well, today, we interview one of our heroes, Michael Mauboussin. We've referenced his work on many episodes before. He's given talks that have been my carve outs. And as many of you know, Michael is the head of Consilient Research at CounterPoint Global, which is part of Morgan Stanley Investment Management. At mid-year 2021, CounterPoint Global had assets under management of approximately $180 billion.
And for those who don't know Michael's work, boy, are you in for a treat. David, I think it's fair to say he's your favorite investor's favorite investor.

**David Rosenthal** (1:32)
I love that.

**Ben Gilbert** (1:33)
Yeah, he's done mind-expanding research on a ton of topics. And today's show, of course, has a lens on how to interpret all of Michael's work over the years in the context of today's unprecedented macroeconomic environment.

**David Rosenthal** (1:47)
I like that. Unprecedented. Good phrasing.

**Ben Gilbert** (1:50)
This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (1:55)
So Crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. NVIDIA is one of their major partners, and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (2:21)
Yes, we talked about that on our ACQ2 episode with Crusoe CEO Chase Lockmiller.

**David Rosenthal** (2:26)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (2:44)
Yep. Obviously, it's a huge benefit for the environment and for customers on costs since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (3:00)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure who need to build their data centers close to major traffic hubs where the internet happens because they are doing everything in their clouds.

**Ben Gilbert** (3:17)
Yep. If you, your company, or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusocloud.com/acquired, that's crusoecloud.com/acquired, or click the link in the show notes. As always, this is not investment advice.

**David Rosenthal** (3:37)
It's advice about investing, but not any specific investment.

**Ben Gilbert** (3:43)
Yes. No doubt it'll be educational, entertaining, and Michael's an absolute riot, so without further ado, we'll get into it.

**David Rosenthal** (3:51)
Well, Michael, when we all met at Capital Camp, hosted by Patrick and Brent the other week, we knew we needed to find some excuse to get you on this show and discuss all the big ideas that you've had over your career.
Untangling skill and luck, measuring moats, decision-making, complexity theory. But we thought maybe the best place to start would actually be Expectations Investing. One, because you and your co-author, Al Rapoport, just published a revised edition of the book. But also, too, it's kind of thinking about expectations. Probably a good frame for the current market. So let's dive in on that.

**Michael Mauboussin** (4:28)
Well, thank you both, David and Ben. Great to see you guys. The story is very quickly, is I was a liberal arts major in college. I went to Wall Street. I had no idea what was going on. I took no business classes, by the way. My father, I take that back. My father made me take accounting for non-business majors. I got like a C in the class out of the generosity of the professor's heart. But I was out there just Wall Street, and I think even the venture world and even corporate world filled with rules of thumb and old wives' tales of how things work. I was swimming in all this.