Will Thorndike - The Power of Long Holding Periods

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:44)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management.
This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:11)
I first spoke to Will in 2017 about his excellent book, The Outsiders and his career in private equity.
I titled that conversation, How Skilled Capital Allocators Compound Capital. In many ways, this conversation continues where that one left off. Through the lens of his new project, a podcast called 50X, we explore the power of multi-decade holding periods and the shared characteristics of businesses that are able to compound returns at high rates for abnormally long periods of time. Please enjoy this discussion with my friend Will Thorndike and if you haven't subscribed to 50X, I highly recommend doing so.
So Will, we have the benefit of being able to talk about probably five or six different things today in your life of investing in business building, but I wanna begin with a project that you and I have worked a bit on together, a new podcast that you've released called 50X and a firm in support of that effort called Compounding Labs. I think people that know you really well have certainly read The Outsiders and may know a little bit about your investing career as well in private equity as one of the primary investors in search funds. They could certainly listen to our first episode together to get a deep dive on those two things, but maybe take the idea of The Outsiders and describe to me how that work, what that work did to your mind, to your investing mind, and why and how you're continuing that concept with 50X.

**Will Thorndike** (3:30)
The Outsiders project was just enormously energizing for me, and it was a combination of a chance to work with a really talented group of young research partners, these Harvard Business School students who I worked with in their second years at HBS. And the process there involved, the key to those chapters was the depth of the research, the depth of the analytical work. And sort of the model that we evolved there was, we had a full year, full academic year of research.
In the first semester, we did a very deep analytical dive on each of the outsider companies and their peer groups. And then in the second semester, we used that research as the door opener to get in and have conversations with all of the living CEOs, many of whom were famously reclusive.
And everyone alive who'd had anything to do with those companies, board members, former management team members, key advisors, key employees of different business units, competitors, et cetera. It was a very rich experience. Rules we used for inclusion in the outsiders centered on performance relative to the S&P and relative to the peer group over very long periods of time. So the test was the average tenure of those eight CEOs was 20 years. The idea was to see their performance across two full business cycles.