Business Breakdowns Colossus

Today, we’re breaking down Markel. Markel is an insurance and investing business. It shares the same operating structure as Berkshire Hathaway in that it uses insurance underwriting profits to fund an investing portfolio that includes both minority and controlling interests in public and private businesses. It was founded in 1930 by Sam Markel to insure Jitney buses and today it is a Fortune 500 company with a market value of $17 billion.
To break down Markel, I’m joined by Peter Keefe and Saurabh Madaan. Peter is an investor at Avenir and longtime Markel shareholder, while Saurabh was the Deputy CIO at Markel and is now the founder and managing member of Manveen Asset Management. We discuss why the Berkshire comparison is unfair, how a specific set of values is so deeply embedded in the business, and we use Markel as a lens to talk about capital allocation and the psychology of investing more broadly. Please enjoy this breakdown of Markel.
 
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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This episode is brought to you by Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes
(00:02:34) - (First question) - How they would explain Markel’s unique business model to a friend
(00:04:24) - The values and systems that make Markel stand out
(00:08:57) - Subtleties that differentiate Markel from Berkshire
(00:11:22) - Markel’s stance and perspective in the larger insurance industry
(00:15:31) - The structural factors that enable Markel’s excellence across many different classes of insurance
(00:18:55) - Why this specialized business model is still not widely replicated
(00:20:18) - The disproportionate amount of legacy companies in the insurance industry
(00:22:58) - The evolution of Markel’s investment portfolio and investing style
(00:29:22) - Key differences between Markel Ventures and the public equity portfolio
(00:32:25) - How their decision-making and allocation process differs from traditional funds
(00:36:42) - How their small team is able to outperform the bigger competitors
(00:39:50) - Summoning patience to reap the benefits of holding positions long-term
(00:42:37) - The famous American Tower investment story 
(00:46:10) - How they would evaluate Markel from an outside investor perspective 
(00:53:43) - Key-man risk in Markel’s agile leadership
(00:55:33) - Other risks and challenges they think about with Markel
(00:57:05) - How experience with Markel has informed their perspective on the insurance industry
(01:00:50) - Lessons for builders and investors when studying Markel’s story

This is Jesse Pujji and today we’re breaking down The Walt Disney Company. Disney needs no introduction. We have all interacted with the entertainment empire in some capacity. It was founded 100 years ago as the Disney Brothers Cartoon Studio and over the ensuing century, the business has grown into a conglomerate of entertainment properties that includes the likes of Pixar, Marvel, Disneyland, ESPN, National Geographic, and Disney+.
To explain how the business fits together, I’m joined once again by Ben Weiss, the Chief Investment Officer of 8th & Jackson. We talk about Disney’s famous flywheel, its push into streaming, and why it's such a difficult business to manage. Please enjoy this business breakdown of Disney.
 
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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This episode is brought to you by Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes
(00:02:23) - (First question) - Overview of Disney and their size and scale today 
(00:04:11) - Which parts of Disney’s business are the biggest overall
(00:05:15) - Major milestones across Disney’s one hundred year history 
(00:07:17) - What lead to their decision to buy ABC and subsequently ESPN 
(00:08:00) - Disney’s Original Flywheel; How Disney’s flywheel compounds on top of itself
(00:10:11) - Characterizing their competitors and the markets they play in  
(00:12:58) - Overview of Disney’s theme park business 
(00:15:07) - Fixed costs, growth, and thoughts about volume for their theme parks
(00:17:40) - Their cable business and the drivers of growth and success for it 
(00:20:24) - Whether or not they consider streaming as a part of their cable business
(00:21:33) - Netflix: The Original; What’s different about Disney+ compared to Netflix and why they’re losing money 
(00:23:14) - Disney+ verses Netflix in the competitive landscape 
(00:24:45) - How far Disney can extend their content offering without degrading their brand
(00:27:42) - Overview of Disney’s movie business and its growth levers 
(00:29:04) - Creativity, Inc.; A revenue case study of the Cars franchise
(00:33:08) - Company culture in running an effective enterprise as big as Disney 
(00:35:43) - The recent leadership transition and his thoughts on it as an investor
(00:37:24) - Reasons behind the Marvel acquisition in 2009
(00:40:05) - What will have to go right if Disney became the next trillion dollar company
(00:43:32) - Possible reasons why Disney could fail over the coming decade  
(00:45:56) - Lessons for builders and investors when studying

This is Dom Cooke and today we are breaking down the world’s fastest growing sports league, The Indian Premier League. The Indian Premier League, often shortened to IPL, is a cricket competition that takes place in India every year between the end of March and end of May. There are 10 teams, 74 matches in total, and the competition starts and ends within 2 months. 
 
The biggest sports leagues tend to come with long histories. You can trace the NFL back to 1920, the NBA to 1946, and Formula 1 to 1950. In stark contrast, the IPL and its teams were founded in 2008. This year’s tournament, which begins in a few weeks, will be the 16th in its history. But despite its relative youth, the IPL is already a sporting giant. It has revolutionized the game of cricket and is the second biggest sports league in the world if you measure it on a per-game basis.
 
To break down the story and business, I’m joined by Ed Cowan. Ed played professional cricket for Australia in the early 2010s and is now an investor at TDM Growth Partners. We structured the conversation in three parts. We first talk about how the IPL came to be and its place in Indian society. We then walk through the business model, from both the league and team perspectives. We round out the discussion by looking at the competitive position of the league and what the future might hold. Please enjoy this breakdown of the Indian Premier League.
 
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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This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes
(00:03:05) - [First question] - An overview of the Indian Premier League (IPL) today
(00:05:07) - How impressive viewership numbers are monetized in India
(00:07:41) - How cricket fits in the context of Indian culture and markets
(00:11:06) - The mechanics of T20 cricket and its history
(00:19:33) - The genesis and explosion of the IPL
(00:21:42) - How the original eight teams were sold by the league and seeded by investors
(00:24:44) - The IPL’s conception and the rockier aspects of its startup phase
(00:30:13) - The revenue structure and business model broken down into their many streams
(00:33:44) - How Indian culture influences media deals in cricket
(00:41:55) - How operators have structured the IPL to optimize for media rights 
(00:44:53) - More on league-level economics, costs, and IP monetization 
(00:47:22) - Dynamics of individual franchises within the league
(00:53:36) - The unique nature of the IPL’s auction draft 
(00:55:19) - The infrastructure mod

This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Wise. Wise helps individuals and small businesses move money across borders. It offers significantly faster and cheaper international transfers than traditional banking routes because of its innovative closed-loop system. Twelve years after its founding, Wise serves six million customers and earned close to £1 billion in income last year. Investors currently value the business, which is listed in London, at £6 billion.
To break down Wise, I’m joined by former payments exec and now investor at Sydney-based TDM Growth Partners, James Revell. We cover the broken system of correspondent banking, which has led to slow, opaque, and expensive transfers and then explore how Wise has counter-positioned itself to take advantage of this large market. Please enjoy our breakdown of Wise.
 
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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This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes 
[00:02:27] - [First question] - Overview of Wise, their key product, and core competency 
[00:04:17] - The founding story of Wise and the road leading to today
[00:09:18] - Wise’s size and scale today compared to 2011
[00:11:07] - Their competitive advantages and how it informs their goals 
[00:19:24] - Exploring Wise’s closed loop system and why their model can’t be copied
[00:21:28] - Unique characteristics of their business model that allows them to capture such robust margins
[00:25:32] - Overview of Wise’s unit economics and their revenue model
[00:34:49] - Interchange fees and how Project Zero guides the business
[00:36:44] - Why their lower take rate doesn’t destroy the industry 
[00:38:24] - Ways Wise’s business model can’t simply be copied and replicated 
[00:44:35] - Thoughts on who their true competitors are
[00:48:10] - Their customer acquisition flywheel 
[00:49:49] - Float, increasing net margin, and how they contribute to durability
[00:53:55] - Key risks associated with Wise when evaluating the business
[00:58:35] - Reasons behind the decision to raise money as a direct listing in the UK
[01:01:03] - How people looking at Wise should think about margins over time
[01:03:32] - Lessons for builders and investors when studying Wise’s story  

This is Matt Reustle and today we are breaking down Europe's largest airline, Ryanair. As we do more breakdowns, we start to look for patterns of successful business models that succeed across different industries. Ryanair is another case study in low-cost shared economies of scale. To break down Ryanair, I'm joined by Holland Advisors’ founder and portfolio manager, Andrew Hollingworth. Andrew was an airline analyst for a decade and has written extensively on Ryanair. He's a studier of business models and also joined me for our episode this past summer on Charles Schwab. 
On this episode, we talk about what makes airlines such a difficult industry for investors, how CEO Michael O'Leary has taken a truly unique approach to building this business, and how to frame cyclical versus secular dynamics in the airline market. 
Now, one quick note before we transition to the episode. You'll hear Andrew and I talk about O'Leary's unique PR approach with shareholders, the union, and pretty much anyone that he deals with. If you're interested in that type of dark arts of communication and media, make sure to check out our newest show at Colossus, Making Media. It operates as an ongoing Business Breakdown of our own business, Colossus, and we spend a lot of time studying the world of communications and media more broadly. You'll find a link to that series in our show notes. Make sure to subscribe. 
 
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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This episode is brought to you by Tegus. Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes
[00:03:12] - [First question] - Why airlines have such a bad reputation with investors 
[00:04:20] - An overview of Ryanair and its size and scale today 
[00:05:43] - Unique characteristics about Ryanair’s business model that distinguishes them from their competitors
[00:06:59] - How much overlap there is between Ryanair and Southwest Airlines  
[00:09:10] - What keeps customers coming back to Ryanair
[00:10:49] - What else stands out about Michael O’Leary that is key to Ryanair’s success
[00:12:16] - Michael O’Leary: Turbulent Times for the Man Who Made Ryanair
[00:14:22] - How Ryanair’s business model has evolved against cycles and opportunities
[00:19:29] - What else goes into their cheap seat cost structure 
[00:23:10] - Approaching labor in light of a unionized industry and workforce 
[00:28:07] - The cyclicality of margins and how theirs look compared to their competitors
[00:33:47] - Interesting data on airplane utilization and dynamic pricing  
[00:36:40

This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Constellation Software. Constellation is a conglomerate which owns more than five hundred vertical market software businesses. It was founded by Mark Leonard in 1995 and has delivered remarkable returns to shareholders since going public on the Toronto stock exchange in 2006.
To break down Constellation, I’m joined by Chris Cerrone, a Partner and Portfolio Manager at Akre Capital Management. We discuss Mark Leonard’s genius, why Constellation is the gold standard for employee compensation plans, and how the business has perfected its acquisition engine, which allows it to buy dozens of software businesses each year. Please enjoy this breakdown of Constellation Software.
 
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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This episode is brought to you by Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.
 
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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 | @domcooke
 
Show Notes
[00:02:37] - [First question] - How Chris and Akre came across Constellation Software 
[00:05:21] - An overview of Constellation
[00:08:40] - The origins of Constellations’ 30-year legacy of extraordinary returns
[00:11:57] - A deeper explanation of vertical market software as it relates to Constellation
[00:15:30] - The impressive scale of Constellation despite its niche-targeted portfolio
[00:18:04] - Their incentive structures and their avoidance of stock-based compensation
[00:21:05] - Additional ways in which Constellation stands out, relating to the Rule of 40 
[00:23:20] - The barriers that keep competitors and copycats from overtaking them
[00:28:00] - The three legs of Constellation’s acquisition engine
[00:32:57] - Recent spin-offs of assets as opposed to straight acquisitions
[00:35:45] - How Constellation is planning for the future
[00:38:13] - Why they’re considering expansion towards non-VMS acquisitions
[00:40:30] - Capital allocation and Mark Leonard’s outlook more broadly
[00:43:46] - How the business reflects Mark’s nature and values
[00:47:31] - How much technology risk does the business face?
[00:50:56] - Is organic growth a concern? 
[00:57:40] - Lessons for operators when studying Constellation’s story