Letter #80: Todd Combs (2023)
Investment Manager at Berkshire Hathaway and President & CEO of GEICO | Meeting Munger, Buffett, and Joining Berkshire
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Today’s letter is a transcript of a conversation Todd Combs had with the hosts of the I am Home podcast, a podcast run by three team members of Nebraska Furniture Mart. In this podcast, Todd discusses his path to Berkshire and the two main points on his journey there, developing a relationship with Charlie Munger, “interviewing” with Warren Buffett, being “unknown” and trying to keep his privacy, adding value at Berkshire from the moment he joined, making mistakes, how he thinks about investing, probabilities, and compounding, his earlier careers at Stone Point and Progressive, how he spends his time, what he reads, how he does diligence, shorting, understanding businesses, insurance, incentives, the Berkshire Hathaway Annual Meeting, “networking”, March Madness, luck, the qualities that have made him successful, future generations, family, and what makes a home a home.
Todd is one of Berkshire Hathaway's top two investment managers and the President and CEO of GEICO, where he is responsible for all insurance operations. He started his career as a pricing analyst at Progressive Insurance, then joined Keefe, Bruyette & Woods as an insurance analyst. After that, he headed up financial services at Copper Arch Capital, before starting Castle Point Capital in 2005.
I hope you enjoy this talk as much as I did!
(Transcription and any errors are mine.)
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Transcript
Host(s): Home is where connections are made, memories are formed, and ideas are born. And no one knows home better than NFM. Thanks for tuning in to I Am Home, the podcast that goes deeper than trends and dives into what it means to make your house a home.
Host(s): Tyler Wisecup here from NFM headquarters with NFM for lifer, Becca Sudbeck. [Hi, Tyler.] Hey, Becca. And Hilary Woltemath, visual display General Manager. [Hey.] Hey, Hilary. And today we're thrilled to bring you a thought leadership episode featuring Todd Combs of Berkshire Hathaway and GEICO fame. Very exciting. So we're bringing out our special thought leadership host Amy Myers, our Chief Marketing Officer.
Host(s): Hi Tyler.
Host(s): Hey, Amy. Again, this is gonna be a really awesome episode. But before we get to that, let me tell you why we're even doing this podcast. And that's because NFM is more than just your everything home store. We're in the business of improving lifestyles, because your home life should be your best life. Learn more at nfm.com And we're on with Todd Combs. Hey, Todd.
Todd Combs: Hey, thanks for having me.
Host(s): Of course, of course. At this point, I would like to introduce you and kind of get the audience to know a little bit about you. So we put together a little bio, and feel free to like, correct us if we get anything wrong here, but I think we did okay. [crosstalk]
Todd Combs: Right out of the gate.
Host(s): So Todd Combs is a multi billion dollar investment manager with Berkshire Hathaway Incorporated. He's also President and Chief Executive Officer of GEICO. Before joining Berkshire Hathaway, Todd formed Castle Point Capital, an investment partnership he founded in 2005 to manage capital for endowments, family foundations, and institutions. He holds degrees in finance and multinational business operations from Florida State University, and an MBA from Columbia University. Personally speaking, we like to try to like dig a little bit and Todd, it's like, we're getting not a lot out there. So... I got this information from your high school days. You were a member of Speech [got a wonderful haircut], yeah, they love that photo out there, Phi Beta Chi clubs. And then I was finding out from Becca, you're into running, you're a biking enthusiast. So we've got a little bit of that going on as well. And then lastly, Todd, you also serve on the JP Morgan Chase board of directors and all sorts of other things. So, that's just a little bit about you. Anything important that we missed?
Todd Combs: No. Wife and kids, we'll probably get to that in the Q&A. But I think you're forgetting a minor in psychology. Can't leave that out. So...
Host(s): We've got questions related to that. So well... I'll turn it over to Amy to jump into questions.
Host(s): Thank you, Tyler. So I wanted to start with what I'm calling your Berkshire Hathaway origin story [Yeah, sure]. And that journey...
Host(s): It's like a superhero kind of thing, it's really cool.
Host(s): It seemed like there were two kind of main points on your journey to there. And the first was when you were at Columbia, and Warren came and spoke and you didn't meet him at the time. But that idea that he said to read, is it 500 a day or 500 a week?
Todd Combs: A week. Definitely want to clarify that. 500 a day is a little over the top.
Host(s): And the second is when years later when you did that cold call to Charlie Munger. And where that went. So can you talk about both of those stories? And how that happened?
Todd Combs: Yeah. So I'll start with the first one, which is, I didn't really meet Warren because as you said, he came and spoke to a professor's legendary, value investing professor at Columbia, Professor Greenwald, who's this larger than life figure. And he would have, is the... it was, he's now since retired a couple of years but, is the preeminent value investing course, really anywhere. And he'd have the first half of the class, he would talk about value investing and a variant. It would be case studies, Bud versus Coors. He didn't do this, but it could be GEICO versus Progressive, GM versus Ford, etc. You get it. And then the second half, he would have over kind of 12 or 15 weeks, legendary speakers come in. And so it was everybody from Marty Whitman and Michael Price and Seth Klarman. And they always finish with Warren. And so there were, I think, I'm going off recollection here, about 65 of us or so in the class in the value investing program. And so Warren came and spoke. That would have been the fall of...I'm taking this back now, to 2001, I think. 2001 because I graduated in '02. So I think it was the fall of '01 right after 9/11, if I remember correctly. And he came and spoke, and you'd fire away with questions, just like he does at the annual meeting. And the very last question I remember that, was that somebody said, how do you spend your time? And he had brought in this kind of rumpled accordion folder, just, it was a complete mess. I remember that. It was just, had papers everywhere spewing out of it. And he said, "Well, I read newspapers, and this and that, and they kind of had a follow up of like, No, but how do you actually really spend your time? You can't read 12..." And he turned around, and he picked this accordion folder up and he said, "Why read? I just read. I read and the compounding of that knowledge accrues over time, and because it never goes away, there's no decay rate, and so forth and so on." And he said, "I don't know, what is this about 500 pages or so." And he said, "Each and every one of you can do it, it's free. But most people don't, because they get distracted." Kind of used his Socratic method then to go into why focus is so important. And from that day forward, that really had a huge impact on me, it was a real epiphany for me. And I thought, it was almost like, took it like a challenge. He definitely didn't mean it as a challenge, but I took it that way. To be like, I'm going to start doing this. And so, I started from then. At first, I was very meticulous about it, like counting the pages and everything. But you get, and now... there's only one or two things that I'm still reading today that I had started back then, because you evolve and so forth and so on, but it's still about the same amount, give or take. So, yeah.
Host(s): You actually took action from that, which I think is interesting.
Todd Combs: Yeah, yeah. Yeah, I think that--and he meant it that way. Like, if you... a lot of you can, you can either approach things actively or passively. And I think that a lot of people can take it passively. And probably a lot of people that were there that day, they certainly all remember Warren, I don't know how many would actually remember that comment. And then how many actually acted on it, I don't know. But I think that, there was a lot of fame around this 10,000 hour rule that Malcolm Gladwell kind of made famous, actually happened to have been a Florida State professor, K. Anders Ericsson, if I remember his name correctly, that came up with that. But the real point was, in the 10,000 hours, people became kind of stuck on that. To me, the point was active versus passive. So whether you're learning to play golf, or you're trying to get better at running, or cycling, or investing, or whatever you're trying to do, if you do it actively versus passively, you pull those things forward, and you create a tighter feedback loop on your mistakes and your learning process, and it becomes more iterative. That's what I took away from it, at least.
Host(s): And then second big point. So that kind of changed your trajectory on like, how you thought about yourself, and how you read and educated yourself, but then the cold call, if I'm understanding right, if I got this... reached out and said, would love to meet. Tell us about that story.
Todd Combs: Yeah, it's, there's a lot I could say in that. So I had been running, as I started my own fund in October of '05. I had run it through the global financial crisis, and I was pretty fried. We had done quite well, but it took everything out of me. And I was working 100+ hour weeks, sleeping at the office, etc, etc. And I knew it like, it was part of my dream was to always run my own investment partnership, but, and the process, and the journey of going through that and doing it yourself, painting your own portrait, so to speak. And I had done that, and I had lived in dog years during that global financial crisis. Everyone did, to be clear. It wasn't just me. But it felt--those five years... and there were amazing ups and downs, and throughout the whole thing, and we did quite well. But as I said, it took everything out of me. And what I had experienced at that time, at Progressive, and running insurance, and obviously I'd followed Berkshire for a long, long time. And so, to me, I had this, again, kind of an epiphany one day that... well if I know insurance, and having seen what Warren and Charlie did with float, and so forth, that's a much, much better way to do it for permanent capital and not having to post monthly results and not... I love my LPs, but not having to constantly kind of live up to those expectations and standards, and just kind of changing the dynamic quite a bit. And so that was my plan. And I had some phenomenal partners that were also experts in financial services and insurance in Stone Point Capital. And so I kind of knew that I was going to go that route. And then the question was, How? And so I thought, Well gee, I really, I had obviously had always wanted to meet Charlie. I held him in such high regard and I was going to be on the West Coast. I no way, shape, or form, thought I'd actually get to meet him, to be clear. And I didn't have any in or anything like that. I just called and talked to his assistant for a little while. And the funny thing that I recall was that she was really trying to vet me for what I wanted, because of course, everyone's always trying to sell you something. And so she didn't believe me at first, I got her to believe me. And so a couple days later, I was in a meeting out there, Experian, the credit bureau was a big position of mine. And I got an email from her and said, "Charlie can meet tomorrow morning at the California Club at 7am." And so my wife and I were staying at the Montage in Laguna at the time. And so I left and went up, and we... Charlie and I met for six hours. It started at 7am, they cleared all the breakfast, they brought lunch, they cleared the lunch. And it was... it was obviously, and I really had no agenda or anything other than we talked about life, we talked about family, we talked about the sciences. I remember, we talked a lot about the universe. I had this book on me at the time that I read on the flight out there called Just Six Numbers. And it was about how the universe can only exist in this way because gravity has to be, if you take it out 60 digits or whatever, it has to end in precisely the way that it does, or else the universe doesn't... And so we talked, like, for 45 minutes or something about that. And at the very end, maybe the last hour, we talked about investing, and he's like, "By the way, what do you do?" And I told him that I was... what I wanted to do, which was, I had a half... a little over half billion dollar fund at the time, which could have been a lot larger, but we didn't take in fund of funds money, we didn't have European fund to funds, etc, etc. And I... and he said why? And I think that really struck him because most people, if you could be a billion or a billion a half dollar fund, you do that instead of having half a billion. So I remember, I didn't mean for it to strike him that way. And I wasn't... but that struck him. And then we, that started a conversation around my insurance background and looking to do something kind of with permanent capital and so forth. And...
Host(s): What was the why to that? Why you hadn't done that?
Todd Combs: Why hadn't I... well, why... why hadn't I already done the insurance company thing? Well, a couple of reasons. One, I was still building up my personal capital, because I worked at a fund for three years. And then this fund for five. I was building up my track record from running this fund. And then three, in no particular order, was trying to survive the global financial crisis and do the best I could for my LPs. So I didn't really have any time. And this was the fall of... no, sorry, spring of 2010. It was before the summer. And then, so we met for six hours or so. And Charlie said, "Stay in touch." And I thought he was just being nice. And about a week later, I was back in my office in Greenwich, Connecticut, and he called me out of the blue, completely out of the blue. And I picked up. I thought maybe it was a prank and Costco had reported earnings. Of course, Charlie's a huge Costco fan. And so we talked about... and I had, even though I was running a financials fund, I was so into investing, I would look at companies outside of financials. And so I had just, serendipitously, had looked at their report, their quarterly earnings that day. And we talked about Costco for a little while. And then he had a bunch of questions that he had for me that he hadn't kind of gotten to the first time about investing and life and stuff like that. So he said, "Next time you're out here, we should meet again." So one thing led to another and we ended up, I met him again on the West Coast, and we met at his house. And we would catch up over the phone. And we probably did that a dozen times or so before one day he finally said, "You should meet Warren."
Host(s): Were they all marathon sessions? Like the six hours, or did they tighten up a bit?
Todd Combs: They weren't all six hours. They got... we got them tighter. We got them down to two or so hours, maybe two to three hours, or something like that.
Host(s): That's a significant amount of times. 12 times, a couple hours, yeah.
Todd Combs: Charlie, for me, it was just... it would just fly, because Charlie is just such an, obviously, fountain of knowledge and a true Renaissance man. I mean, you can literally talk about anything. In fact, that book, Just Six Numbers, we started talking, and he said, "They forgot the seventh thing..." And almost any book I mentioned, he had either read or read five books related to it or something like that. But I guess the important thing to know, for your listeners, or what have you, is that, and they're no... it kind of goes back to my original auspices for calling him. I didn't even know why, there was no pretense as to why I was meeting him. So the 12th time we were talking, and he said, "You should talk to Warren", I was really thinking, I had these top names in my fund, like Experian and MasterCard and Visa, and so forth, that were quite, there were a lot of analogies to names that Berkshire would... with that Warren would own. And so I was thinking all along... In fact, even up to the point he said, "Go talk to Warren", that, and when I flew out to see Warren, that it was about, they were really interested in one of these and names, and that was kind of, and including when I first sat down with Warren, and I don't want to trump your question, but we started talking about Experian. And I thought an Equifax had done on the market, and he had done the Marmon deal, and it was all part of that same thing. So I totally assumed that was the reason for all these conversations, having no... so I never felt like I was interviewing, I guess, is what I'm saying. They were just conversations. We were just having intellectual conversations.
Host(s): And what's the difference from your first cold call to the...?
Todd Combs: Oh, from reaching out to Charlie to Warren? It was probably, good question, a couple months. Three months, four months?
Host(s): A lot of meetings in a short amount of time.
Todd Combs: Yeah. Yeah. But so fun. There were conversations.
Host(s): When you came to meet Warren in Omaha, you had no idea that that was even a possibility?
Todd Combs: No, none. No, none. Which helped me, because otherwise, I would have been too... I was listening to a podcast recently, I think it was Julia Louis Dreyfus of Seinfeld and Veep fame, and she was talking about, and they were talking about bombing auditions. And when you really, really want the part is exactly when you don't get it because you choke. And so no, under no circumstance... I was nervous, don't get me wrong, I'm not saying I wasn't. But I honestly to God thought it was coming to talk about... and I knew my stuff when it came to the names I owned, obviously, so I felt comfortable there. But that's why I thought I was coming for. Yeah.
Host(s): And then it was at that meeting that he ended up offering you the role...
Todd Combs: Yeah, it was the first meeting with Warren...
Host(s): Like, you got an offer...
Todd Combs: That was about a seven hour meeting. And came around 9:30 or 10, and we sat in his office for a couple hours, literally didn't talk about stocks at all, we talked about life and family, and I was born in Peoria, Illinois. So there's a lot of Midwest connections and so forth. So we talked a lot about that. And he said, do you want to go to lunch? And so I had no idea how long it would be or anything. And so at this point, I was like, Great. We get to go to lunch. And he talked a lot about Berkshire, and past, the present, the future, etc, etc. And then, that was a couple hours, give or take, and then we got back to his office. And he's like, "When's your flight?" And I said, "Don't worry about that." And so we got back, we sat in his office for a couple hours. And that's when we really start talking about stocks and names and how I think about investing, how he thinks about investing, and he'd pull out, he'd throw out random names, and how would you think about this and that we went through my top 5-10 list, etc, etc. And at the very end, he pulled out Lou Simpson's contract, and Lou had retired from Berkshire, I don't know, maybe six months before that, a year before that, something like that. And that's when he... and this is... this just goes to show, even at, I guess I was 39 at that point, maybe how still naive I was. He said, "We're thinking about bringing in a manager, would you have anyone in mind?" I said, "Oh, yeah, I can think of two or three people for you." And then he kind of looked at me, like, is this guy playing games with me? [You missed the tone of...] Totally. Totally. Like black and confused sometimes. But yeah, he said, Well, I was thinking about you, and that just... I would have never... So that, even after six hours, I still didn't get it, I guess is the point.
Host(s): So where did your head go from there? Because that's such a change in your mindset in the moment.
Todd Combs: Yeah, I mean, we had, our oldest... my wife is April and our oldest was in second grade at the time. We had pretty good roots, deep roots in Connecticut at the time. And I still had my fund, I had partners, I had LPs, I ha obligations. And now I thought about some of that, because, to the aforementioned insurance company and changing the structure and so forth. But your mind races, obviously. And, so... and Warren was fantastic with the whole thing. This is so Warren, this tells you everything, like you see... what you get is what you see. He says, "We know, don't make any rash decisions." It might have been a Wednesday, it was some weekday, Tuesday, Wednesday, something like that. He said, "Go home and think about it." And then, "Let's connect early next week. Come and hit me with the tough questions." And I think he would have been 80 or so at the time. And so he called, and I was out doing some yard work, actually, on a Sunday, and I came in, and April was talking. I thought it was my father and so I go back to... you see where this is going. It was Warren. He called to kind of talk to her. He knew exactly how to... so... and then when... so we... I did. I hit him with the tough questions, and he had, he was always very open, always very honest. Again, you get what you see. And then, I guess the point I want to make here is that... so great that when I joined Berkshire, he said, "Why don't you in April come out Thanksgiving weekend, if you don't have plans?" And we had... and he took us out to dinner and yeah, it's just like you're part of the family. So yeah.
Host(s): Quick decision then?
Todd Combs: It was... Yeah. Over three to five days or something like that. Yeah. Yeah.
Host(s): And so when... because I was reading about like the announcement. So, Monday, October 25th. I don't know how much time that was between when you and...
Todd Combs: It was probably pretty short, within two to four weeks or something like that, as I recall. My memory is a little fuzzy with it, but something like that.
Host(s): So, it's suddenly announced on that Monday, press release goes out, and you're sort of the head fake candidates. You were unexpected. And they're digging high school photos of you to post. What... did you feel that instantly? Like, were you getting calls and... what was that like?
Todd Combs: Yeah, it was harder on my wife than it was on me. Because I told her, like, this could be, there's gonna be a lot here. There's gonna be... It's gonna feel like a wave. And I think she, at first, she'd be... if she were sitting here, she'd admit, she didn't fully realize maybe the ramifications of it. And then when you have reporters, we were not on a private street, we were on a public street. It's a very nice public street, but it was still a public street. And so when there's Bloomberg reporters, and they're like parked outside taking pictures, and you have young children, it just feels invasive, like everything... there's all kinds of psychology around this. When it's your world, you see everything through your world. And even though in retrospect, I don't want to say it wasn't a big deal, like it comes and goes, it passes, etc. In the moment, it felt quite overwhelming. And you want to protect... our kids were quite young, they were pre K, K, and second grade at the time. And so it's just a lot to go from zero to a million right away like that. And so, and we in no way shape or form were prepared for it or anything, but you get through it, and it's all fine and innocent at the end of the day.
Host(s): How long did it last, that sort of intensity of media?
Todd Combs: Probably... it was at least over a month, because I remember then we had, Warren sent me the board materials. And we had the board meeting in late 2010, around the holidays, here in Omaha. And I remember he asked me to sit down with Carol Loomis. And I said, "Well, part of our agreement was no media." And as I recall saying, he said, "Well, I think this will help, actually, with the other situation." And he of course was right. And so it... and I was relatively well-known in the investment community, but then there's this much... you're always a fish in some fishbowl. So I was... if you had asked almost any LP, Family Foundation, etc, etc, they would have known me or the fund or whatever, but I was not Seth Klarman, I was not, etc, etc. I wasn't that name that had been bandied about, I think David Einhorn's name...
Host(s): Interesting. Largely unknown, largely unknown.
Todd Combs: It's very flattering. [crosstalk]. Which I was perfectly fine with. I actually take some level of pride in... So, I would've preferred to stay relatively unknown, to be clear, but that was not an option at that point. You feel like a lot's outside of your control. But then you have to just have to get over like it doesn't matter.
Host(s): Still, using your high school picture, I thought that was hilarious.
Todd Combs: And I was not happy with my father, because I had told everyone and April had told all of her friends, as long as you don't confirm anything... and they had a kid go by my father's house, and pretend to be a neighbor and confirm my picture. And he thought it was a neighbor that... he didn't know it was a reporter. They didn't identify [That's pretty underhanded... poor dad]. I was not happy with my father for a few days. The thing my wife was the least happy with was they put a picture of our house with our address on... I think that was Businessweek, if I remember correctly. But with, again, with kids and everything, it just... there's a lot of weirdos out there, so...
Host(s): First couple days. So you're... you started at Berkshire Hathaway. And I read an article that said that you were looking immediately for how you can add value.
Todd Combs: Yeah, no, that's true.
Host(s): I think that's like such a good universal way of thinking about it though. Because you were like, Okay, Warren knows how to pick stocks, like, what do I bring to it? And everyone has that, to some extent, going into a role, and that mindset of like, figuring out how you add value, I really thought that was an interesting way of approaching it. How did you do that? And where did you end up finding that? And how did you get through that?
Todd Combs: Yeah, well, you can't let... you have to be comfortable in your own skin, and you have to be comfortable with your own abilities. And you can't try to do it the way anyone else has done it would be the advice I give my kids and I try to give students. And if you try and change your swing, it isn't going to work. And so, that probably took me... I thought a lot about it leading into day one. And I kind of wrestled with this and that and the other, because Warren had me Lou Simpson's portfolio. It was, as I recall, it was two and a half billion or something like that. And it still had Lou's names in there. And Warren said, "I know some of these, I don't know others." And I said, "Okay, do you want to talk through them?" And Warren said, "No, it's yours, you do whatever you want with it." And so I thought, Well, did he really mean that? If you start down that path, you just second guess everything. And so I then made a resolution to myself that I was going to do it my way. And it's the only way I know. And I'm going to succeed or fail that way. And I knew, and I had enough confidence in myself, having run a fund during the GFC, etc, etc, we had good results, that I knew this area well, and I could do that. And so MasterCard, and Visa were my first names that I bought. And we had some restrictions, particularly around insurance companies and stuff like that, like I owned a lot of Chubb...and when you own insurance, it's restrictions around owning insurance companies within insurance companies and stuff like that. But for the most part, got to do whatever I wanted in whatever amount I wanted, etc, etc. And so then that led to then thinking about names, and this was within, it was a good lesson, or story with Warren, or parable, which is, we were going to lunch once, twice, sometimes more every week. And he was very much into, obviously talking about Berkshire both again, past, present, future, and also kind of like, Hey, as you're out there looking for things, like we can acquire the whole thing if you really like it. Like, think big. Think big. Like, we have to think big to move the needle and so forth. And so that... like lessons like that are invaluable, because without someone reinforcing that intuition that you already have, and having someone to reinforce the intuition, but also have the guardrails to reinforce that intuition to know I can swing, and if I strike out, that's okay. That's a hugely important lesson that I try and still fast forward to today at GEICO and so forth, and support exactly if, look, if you're gonna have a $3 billion position in something, and you believe that big in it, like, we should think about the whole thing, and so forth. And so that led, serendipitously, to looking at acquisitions, both large for Berkshire, and then tuck ins, as we call them, for the smaller operating companies. And then also, then, that led to... so one thing leads to another leads to another as it always does in life, and then that led to working a lot more with our operating subsidiaries when they'd have questions that they didn't want to bounce off Warren. And then that leads to... we're incredibly autonomous and decentralized as everyone knows... so that led to things like pooled purchasing, pooled health care, which then led to Haven, and things like that. So one thing leads to another leads to another. So that's kind of how... you just keep... yes, you keep your head--if you worry... so what I try and stress kids, students, GEICO, etc, is like, if you just keep your head down and you focus on the process, things will take care of itself. Don't--I feel like sometimes where people can get off, or spun up or whatever, or off the rails, it was when they focused on the outcome instead of the process, and they're trying to... not even, sometimes it's shortcuts, but sometimes like, Oh, I want this outcome, now how do I back-solve for that? Instead of just focusing on doing your best, keeping your head down, one foot in front of the other, boom, boom, boom. There's different methods for everybody, but that's what works for me.
Host(s): Which is actually kind of how you ended up in the role in the first place.
Todd Combs: Yeah, no, exactly. Yeah, I'm consistent.
Host(s): But if you do that, like you keep your head down, and then eventually, you still get, usually the outcome that you were wanting anyways.
Todd Combs: Yeah. Yeah. Not always. That's the key. Yeah. Two steps forward, one step back sometimes.
Host(s): Did you have big swings that didn't work? Any that jump to mind?
Todd Combs: At Berkshire, or anywhere?
Host(s): Anywhere.
Todd Combs: Well, yeah. I mean, you always have... I mean, look, I mean, I think that the story of Berkshire, I mean, look, Warren's very open about the mistakes, Dexter, etc, etc. We've been fortunate most of them have been small, but you absolutely get things wrong. No question about it. Both personal, business, I mean, nobody's perfect. And if you try and be perfect, it's another thing I always tell the folks at GEICO and students and everyone else is, if you think you're batting a 1.000, first of all, you're probably fooling yourself. Second of all, you're probably... think about the opportunity cost and all the things that you're missing. So you should be, and I think that when Warren talks about this with philanthropy, is you want to be striking out a lot. So you want to be pushing the envelope, you want to be... I think of it like concentric circles. So I knew financials quite well. Banking, finance, insurance, etc. And then, okay, so I don't go from that to then suddenly something completely far field like technology, let's say. So you build concentric circles. So the first one, I had done stuff with industrials, particularly industrials that had finance arms. So it's like, okay, CAT, Harley, GM, etc. Okay, well, let's,... if you can understand their finance arm, understanding the industrial aspect of it is generally simpler and more straightforward. And then you build out concentric circles from there, and on top of that, etc, etc, etc. So again, you just take one step at a time, and you're gonna make mistakes along the way, but you hope they're small to medium mistakes, and not... I think of it, again, like, you try and avoid path dependencies. And I think people tend to underestimate path dependencies. So you can say, Oh, well, this thing has... people almost always overestimate, not only their own abilities, but also the the complexity that's involved in a task. And they can say, you ask anyone, what are the odds of that success? And they might say, 90%-95%. When you break it down into its constituent parts, and then you ask them, if there's 20 things, and it's a multiplicative formula, and you ask them what the odds are, for each one of those, it might also be 90% and 95%. Well, guess what? Multiply 90% by 20, and you're way under 50%. So you try and think in terms of those. Then you break it down, and you chunk it out. And that's at least helped me to avoid, mostly, really, really big mistakes. Yeah.
Host(s): Interesting. Okay, can I jump back a bit on this one?
Todd Combs: Go wherever you want. It's your show.
Host(s): Back to the beginning, because I'm fascinated with some of the early, like, the early relationships and careers that can be important later. And you particularly, you're out of college, I think you started with the securities, and then you went to Progressive. And you're a pricing analyst. Pretty... still pretty junior in your career, but you have a relationship with Charles Davis, who's a director at Progressive. That's a big company, it's a big role. And that relationship ended up being important later in funding your own shop.
Todd Combs: Although I didn't know him when I was at Progressive.
Host(s): Oh, that's what I was... because I was wondering, like, how did you make that connection? So you didn't know him then?
Todd Combs: No. I did not know him. I can answer the question about how I made the connection if you want.
Host(s): Yeah, because I was like, how did... how did you meet... how do you nurture that relationship? But it was later.
Todd Combs: It was... Yeah. So the way that I met Chuck and Steve, Steve Friedman, who ran Goldman in the 90s, was that they were... it's not Stone Point Capital, they were... it was MMC capital, MMC is Marsh McLennan, the big broker. I think they're still the, along with Aon, the two largest insurance brokers in the world. They had a private equity arm that Marsh created due to capacity constraints when large hurricanes would come through, and so forth. And this goes back to, I believe, Hurricane Andrew in Florida and so forth in the early 90s. So, they... and this goes back to the Spitzer investigation of the insurance industry. They had... they caught wind, obviously, still being part of Marsh McLennan at the time. Marsh, the brokers, the insurance companies, everybody was in Spitzer's crosshairs. And so, they were... and this is all public, they then reached out. They were looking for the new, the next CEO at Marsh to get out of, just like AIG and everybody else, to get out of Spitzer's crosshairs. They were looking at Steve and Chuck, and they were trying to get a gauge of what their future looked like, both as being part of Marsh and whether... what Marsh's future looked like, and so forth and so on. So anyway, long story short, they reached out to people they knew in the industry, and said, who's really, really on top of this? Almost like an investigative reporter type. But then I had been on it for maybe two, two and a half years at that point. And I'd been short Marsh and Fannie and the GSEs. And Steve had happened to be on the board of Fannie as well, because there were some Goldman connections there. And so anyway, their contacts had put them in touch with me on... so we met originally, again, not unlike Charlie and Warren, kind of serendipitously. Hey, we hear you're the... they call it the "axe" in investing on Marsh and the Spitzer situation. So we sat down and had a couple of meetings on Where do you think this is going? How severe is it? Etc, etc, etc. So that's how we originally met. And then that led into discussions around Marsh was my biggest short, Fannie was my--was 1B, and then that, Fannie ended up, completely unrelated to Steve, to be clear, to have a lot of accounting improprieties. And I was a couple years in front of that as well. So we had a good discussion about that. And then that ultimately led to them saying, We've never found anyone we wanted to start a fund with, but we want to do it with you. And I was looking to leave the fund that I was at at the time. I'd been there for three years, I had my own track record, but I was... if people thought I was unknown when I came to Berkshire, I was really unknown then. They don't know what unknown was. So that led... that's how that whole relationship, the genesis of it was.
Host(s): Okay. That's super interesting. Similar to I think a lot of people at Berkshire Hathaway, you read a lot, you consume--you've kind of talked about that. How does that happen now, though? Because you've got multiple roles, and, are you still hitting your 500 a week? And where? Are you podcasting it?
Todd Combs: I am. It's just different. It's just different. No, well, I do. I do listen to a lot of podcasts. But no, I don't count those. Not cheating. So now, I would say, 80% or 90% of it is GEICO. I mean, certainly, 100% of my time is GEICO, it adds up to more than 100, to be clear. But, it's, during the day, I'm 110% GEICO. It's... and I probably get through, I mean, I don't count, but it's well over 500 pages a week of GEICO material. And that's a different kind of reading, because you're going through specific roadmaps, tech plans, etc, etc. I just went through a 16 page, very, very detailed deck with API's and roadmaps and so forth. But, versus reading a 10k, reading a transcript, reading an annual report, a trade magazine, etc. But I do the investing stuff at nights to relax. On the weekends, Warren and I meet oftentimes on Saturdays and so that's when I do the investing stuff. So it's, I probably read more, it's just a very different composition now. It's just the nature of... there's similarities, but there's a lot of differences, obviously, between investing and operations.
Host(s): Anything you've read in the last year or so that you'd recommend? Last year, Ted gave us Trillion Dollar Triage which was great. We did a book club, internally, on it.
Todd Combs: Well, investing wise, or just anything?
Host(s): It's pretty general.
Todd Combs: Well, the movies coming out soon, but one of my favorite books that I've read in the last... this might've even been more than a year ago now, was Killers of the Flower Moon. And DiCaprio... and it's on... I think it's on Apple TV. It's coming out right after the annual meeting. And I haven't seen the reviews for it yet, but I gotta believe it. The book is one of the best books I've ever read. It's... I couldn't put it down. And it's about the origins of the FBI and going to the Osage Indians in Oklahoma. It's just absolutely phenomenal. I used to be able to get through about... it was about a book a week. I'd nail pretty much 48 books a year for quite a while there. And last year, it's a struggle now to get over 12. It's just such... my... I'm literally maxed out in every way, shape, or form. And any marginal time obviously goes to the family. Then what rolls over goes to cycling or running. [Marginal time, chuckles]. Yeah, right. Over and above. My equity tranche. But, no, I've got a long, long list of book reviews that I could, I mean, there's so many, but it's... now, I used to have a really challenging time, if I started a book, I'd feel like I didn't really fully appreciate sunk cost apparently at the time, I would feel the need to finish it regardless. And now if I can only get through 12, if I'm a couple chapters in and it's a dud, I move on. I still read... the one thing I still read that I've always read from those days at Warren at Columbia is Jim Grant's Interest Rate Observer. It's a phenomenal publication. It's very widely followed on the street. He's a phenomenal writer. I think a lot of people now read Matt Levine on Bloomberg. I gave it to Warren a couple of years ago, and his writing's, very pithy and witty and so forth, and now it's just, everybody reads it. And he kind of becomes the go to source on whether it's Silicon Valley Bank or what have you.
Host(s): Do you read anything you think nobody else reads? Or maybe you don't want to share that? Maybe that's...
Todd Combs: No, no, I mean, look, I don't think a lot of people read... I bet, and I don't mean this... it's gonna come off the wrong way, so I don't mean it come off this way, but I think most people would probably be surprised how few people actually read annual reports and 10ks and so forth. I think that... and let alone trade magazines and so forth. Like, I still read trade magazines and they're a phenomenal source of information. I mean, if Becca is quoted in a furniture... a trade magazine, like, Okay, now you know what she says, what she believes. She's likely to call you back because she... you've got a lead in, etc. And so I've used that for 25 years plus, to get information just as a journalist would.
The difference in quality of work between those who actually read filings and those who don’t are quite obvious. For an example of in-depth work, see Speedwell Research, whose research process begins with reading the most recent 10k and S-1 front to back, looking through the disclosures of everything in between, and every single earnings call transcript from the time they IPO.
Host(s): So, you call. So you might read something [absolutely], someone says a quote. You might just follow up with them, pick up the phone and say...
Todd Combs: I used to do it myself, to be clear, and now I have analysts to do it for me. But I miss doing it myself, also, to be clear.
Host(s): And people pick up and just talk and...
Todd Combs: Yeah. It's surprising. I mean, 9/10, or something like that. It's really... and that's where you get... that gives you the... there's... in investing, there's a quantitative and there's a qualitative. And I always--like if you're really thinking about it, there should be two courses. And I think Warren has said this, too. It's how to value a security, that's kind of relatively easy, the math is not complicated. And that's the quantitative. The qualitative is the really, really unique part that, that's the secret sauce. And you can compare it to being a chef or something like that. And you can give two chefs a recipe, and the master chef is going to cook it very differently than I would. And so when Warren and I were talking about [crosstalk]. Yeah, right. And it matters. Like, that's where details matter. And so when Warren and I were talking about stocks, acquisitions, whatever we talk, it's 95%-99% qualitative, qualitative, qualitative. And that, that comes down to all the stuff that he talks about in terms of moats, barriers to entry... all the stuff, you're not getting that necessarily in a filing or an annual report. You get a sense for it, it's a starting point, but you want to work, essentially, inside out. And I think, what I mean by that, is starting with the details. And then those details form the foundation from which you can build upon that you then gain a qualitative understanding. And I personally feel like too many people start outside in. And what I mean by that is they're starting with a narrative. They're starting because they heard something from someone, or they saw it on CNBC, or they read a research report, or what have you. And if you start with any narrative, one of the real cognitive dissonances that we can all have, our blind spots, is that then you start forming all of your opinions based on a loose narrative that you formed, that was completely erroneous to begin with. So if you were... it's no different than the scientific process. You don't start with a narrative and try and prove it, you start with the facts and build it from there.
For more in-depth thoughts on how to get a better qualitative understanding of businesses, see this piece on investing philosophy and research process
Host(s): I saw where you said you try to... like, not look at... you try to clear the noise of the narrative because it... [I don't... yeah]... until you've done your own research to build your story.
Todd Combs: I don't even look at the market cap of a name. So a game that I've always played with myself is like, look at the name, do your work, build up what you would buy that entire business for. And 80%-90% of the time, you're within a 20% of what the enterprise value or the market cap trades for, but sometimes, just completely... and MasterCard is a good example of that, I think it came public for three or three and a half billion, and I didn't... I purposely didn't want to know or... and did not know, or hear that at the time, and I valued at like 30 or something like that.
Host(s): Are those the ones you're looking for?
Todd Combs: Yeah, exactly. And then when I was shorting, vice versa, like, Well, this thing isn't worth anything. And yet it's trading for 100bn or something. That way, you avoid the anchoring effect that way. And once you're anchored, you're anchored. You can't kind of undo it. The genie is out of the bottle.
Host(s): Yeah. And then it's just a variance on whatever that...
Todd Combs: Totally. Yeah. And you start double questioning yourself and say, Well, they think this, and why don't I think that? And now you're just wrapped around an axle. Yeah.
Host(s): I read where you talked about the importance of understanding the parts of the business that are dying. Which was super interesting, because I think we're always focused on the growth and what's new and what's [crosstalk]. But I'd love to hear any more of your thoughts around that of... and I think that's from the--your... I think you were talking about that from the business side, like the CEO side versus the investing side.
Todd Combs: Yeah, I don't know where I said that. I don't remember, but I would say a couple thoughts come to mind. One is, every business has a golden goose. Doesn't mean it's one golden goose. Sometimes you have multiple golden gooses. But I think an error that people make is that not... God knows I've made this myself, is you look at the whole thing versus really getting down, again, into the constituent parts, into the details, and saying, Oh, well this makes that work. And because this makes that work, this then makes everything else work. So it's... there's a domino effect or a compounding effect or whatever. Every business is similar. It can be similar but also different. And so really understanding that, and then also, conversely, understanding where the risks are, that people don't appreciate. And so, one of the things I remember both Warren and Charlie and I discussed in our first meetings was... in fact, the first book I gave both of them is this book called Ubiquity, by Mark Buchanan. And it's about power laws and fractal laws, and how kind of low frequency, high severity, and the further up you go on severity, it's not linear. We all tend to think linearly about life and about risk. But in fact, it's much more about a power law, which is a logarithmic type function. And so, when you double a severity, generally the frequency goes down by a larger factor, almost with anything, whether it's catastrophes like hurricanes, or war, or anything. It could be good things too, by the way. So looking for that and thinking about that in a business in terms of where they're taking risks, where they're essentially, and the words that I remember both stuck with Warren and Charlie were, having way out of the money puts. A lot of people have...
Host(s): Can you say that again?
Todd Combs: Yes, sorry. Selling way out of the money puts. And so you can, if... and you can do this in life. It's essentially like borrowing from the future or ignoring a risk, is having--selling a way out of the money put, you'll win 9/10 times, or I'm making things up. But that 10th time, you get tattooed. You lose everything. And I think the closest analogy is how Warren and Charlie talk about the insurance business. And I think, most specifically, maybe even last year, Charlie maybe was the one who commented what the brilliance of Ajit is not the premiums that he's grown and the money that he's made, and so forth and so on, it's avoiding selling cheap out of the money puts. That's where the real rubber meets the road, because anyone can do that. And you see it in banking all the time, you see it in finance all the time. You see when hedge funds blow up, banks blow up, etc. They're essentially selling way out of the money puts. They're betting that something extreme doesn't happen. And sometimes, look, we all make mistakes, but oftentimes, the risk is right there. It's very obvious. It's just they've completely mispriced it, or they've not even thought about it or taken into account. Sometimes it's greed. It's time horizons get arbitraged. And obviously, Charlie talks about bankers having--you get paid annual bonuses versus taking 5+ year risk. So I've always been really, really fascinated with that. And my mind has always worked very much that way. And so when I look at businesses, look at companies, I look for those. And then--so I start at the edges. And so I look for those--where are they taking those risks that are laying below the surface? GE Capital is a very poignant example that everybody is aware of. And then on the other end, you look for the... you look for asymmetries, basically. You're looking for asymmetric risks, you're looking for asymmetric upside--that is also been unaccounted for. Yeah. Does that makes sense?
Host(s): It does. Yeah. Thank you. Yeah. I didn't have the full part about it. You want to move over to the Berkshire... Tyler?
Host(s): Yeah. [The reason we're here?]. One of the main reasons we're here is the Berkshire Hathaway conference coming up. Its theme this year, the 70s. You were born in 71. How much influence did you have on the theme?
Todd Combs: None. Absolutely none. No. I actually, honestly, didn't know that was the theme. I just learned that [crosstalk]. You learn something new every day. I checked that box today.
Host(s): Well, we asked Ted this last year, but there's obviously a huge buzz about the annual event every single year. 10s of 1000s people make the trip into Omaha for it. How exciting does it feel for you and the rest of the Berkshire Hathaway team every year? Is this just something that you're actually like, jazzed and ready for?
Todd Combs: Yeah, for me, I have a lot of friends, and sometimes family, that come in for it that it's always great. We have people stay with us, and friends that I've known for decades, and so forth. Last year, both my best friend from Colombia, as well as the best man in each other's wedding, came in, stayed with us in our house, and so forth, which was fantastic. And there's a lot of people that are friends, acquaintances, that you only get to see maybe once a year, that are coming from overseas, Australia, Asia, etc, etc, Europe, that it's a chance to see them, and kind of a one and only touchpoint that's better than over the phone. And then, now that I'm running GEICO, we have 30 or 40 people that come in, that are on the floor, sales service professionals that are there to help existing and new customers. And then I also use it as an opportunity to have an... even though Warren comes out twice a year to GEICO, it's the only subsidiary does that for, I also use it to bring a dozen or so of our senior folks out. It's kind of a reward, and a treat. So last year, it was all my direct reports. This year, we went through a big reorg about six months ago. And the people that were really instrumental in getting that over the line, I'm bringing out, we're having dinner Saturday night together. So it's a win all around.
Host(s): Love that. We've talked a little bit about your networking, and I'd love if you can speak to like... you seem to value these relationships, these things that you've had over years. Can you speak to how you approach networking? Because a lot of things... I think a lot of people look at it as a chore, but it seems to be not your approach at all.
Todd Combs: Yeah. No, I almost have a little bit of a negative... like, when I hear the word networking, I have a little bit of... and I don't want to offend anyone, like a... not a vitriolic reaction, but a negative reaction. Because there's, again, there's like process [crosstalk]. Yeah, that there's some motive, and that you're--like a sleight of hand. So I guess I'm gonna sound like a broken record, I go back to like the process versus outcome thing. So I don't look at... I don't think I've ever actively used the word networking. I just, I have friends and people that I enjoy. And then there's people that you interact with, and one thing leads to another. And sometimes it does, sometimes it doesn't. And so I just look at it that way. And one thing leads to another. And I think, sometimes as people get older, they can narrow their world. And one of the things, I've learned a lot from Warren and Charlie and others over the years, but one of the things I've really learned from Warren, is, he's absolutely spectacular about keeping a very wide, what I call aperture. But then also, you only get so much time. So focusing your time on the people that you enjoy spending it with, and who are kind of, make you feel good, and are happy and accretive, accretive in a happy sense, not a monetary sense, to be clear. That's what... you'd much rather do that, and then you don't repeat the people you don't want to spend time with than try and create a narrow aperture, so to speak. So I've tried to learn something from that.
Host(s): The wide aperture, and the idea behind that, you think is just being open to talking to a wide amount of people from different industries and areas?
Todd Combs: Within... there's always... time is valuable. So I mean, there's always a trade off there. And I'm introverted, to be clear, I'm a pretty introverted person.
Host(s): You wouldn't know from your...
Todd Combs: Oh, then I had it well, because I'm quite introverted. I like sitting in a room and reading and so forth. I do enjoy people, but I probably don't go out of my way as much as I should, that's a blind spot of mine, to initiate things. But once it's initiated, I feel like I have a decent read. I'm sure most people feel like they have a decent read for other people. And I'm pretty good at either reinforcing those or cutting it off or whatever. And then it just builds over time. You meet friends through other friends, and so forth and so on. And people tend to be pretty like minded.
Host(s): Did you participate in the Berkshire Hathaway March Madness?
Todd Combs: I did. Yeah, we had... I forget exactly how many people at GEICO, we got pretty good participation. It was... we have about 35,000 employees. And it's... I don't want to quote it exactly, but it was tens of thousands that we had participate in. We get pretty good participation from the subs. I remember one day Warren came down, and with COVID, all these dates get skewed, so I used to keep pretty locked in on these things, but I don't know when our first one was, 6, 7, 8 years ago, or something like that. Any he kind of... he would come down five, six times a day or whatever when I was in the office every day before I was running GEICO and before COVID. And he said, "This is what I'm thinking about. What do you think the odds are?" And I said, "Well, it's actually pretty, relatively easy to calculate the odds, because you've got a pretty good history on 1 versus 16, 8 versus 9, etc, etc. And I did a pretty quick calculation on it. And I think Ajit and Don Wurster did as well. And we were all pretty, pretty close. I mean, I don't think anyone's ever won the entire thing. Not a perfect pool. And as you guys know, there's a lot more competition today than there's ever been in terms of this. It's a lot flatter. So you have more upsets, obviously, which then extends the odds even more and so forth and so on, but stuff like that's fun.
Host(s): I think it's really fun. How did you do?
Todd Combs: Oh, I did terrible. I was out--I don't know if it was the second game or the third game, but I was out. Whatever the first upset was. It's impossible. I don't think it's meant to win, it's just meant to be fun.
Host(s): Absolutely. Well, one of the things that we're curious about, obviously, we've talked a lot about your Berkshire career. When you think about what you've achieved in your career overall, starting your own hedge fund, Castle Point, all the accomplishments of Berkshire, now CEO of Geico, do you think the 18 year old Todd would believe you if you went back and tried to tell him. "Hey, here's this thing..."?
Todd Combs: Oh, hell no. No, no, no. Absolutely not. April and I talk about this sometimes, I mean, because we've done it together. And you never accomplish any of this on your own, to be clear. So one of the really really amazing feelings, I think, that, and this is going to sound cliche or cheesy or something, but I mean it, is the feeling of gratitude that you have when you accomplish... a) when people see something in you that maybe you don't see in yourself. When I--my first outside investor, that invested when I started my fund, and they had absolutely no reason to take a chance on me versus giving money to any one of the other names that the media likes, is, I mean, you'll never forget that. And so, and the people that mentored me and brought me along, and so forth, and so on. So I mean, you don't even remotely... you're really... you're just, you really are standing on the shoulders of others, as much as that sounds like a cliche. And so no, under no circumstances would I have ever even remotely believed any of it. I remember sitting at Progressive in the 90s, back when you still kind of had to buy mutual funds before index funds were big. And I was in... I think they were like Dean Witter, or Morgan Stanley funds, or something like that. And of course, you had to have a broker, because that's the way things were done. I remember asking for the prospectus. And apparently, no one really ever looked at those things. And I read it, and then I actually read the background on each of the managers, and they all had MBAs from Columbia, Harvard, Ivy League schools and so forth, and I remember asking my broker, I said, Oh, I love securities, and I love investing, and so forth. What would it take to do that? And he basically said, Oh, you've never--you've no chance in hell, kid. Just forget about it. So, little do you know, so again, you just... one thing in front of the other. And I remember thinking at that time, I started studying for the GMAT and I loved my job at Progressive, and so forth and so on. And I had a pretty good career trajectory going, and Glenn Renwick who went on to be the CEO shortly thereafter, we were kind of three doors down from each other. He was, to be clear, many many levels above me, but it was... it was not an easy decision, even getting into Colombia, to forego that known income. It was a burden on my wife, who was working at the time, moving to New York, etc, etc. We pushed back having kids for two years. So there's sacrifices along the way, too. And so, I guess to come back and answer your question, No, under no circumstance, I've been very... and there's a lot of luck. To be clear, there's a lot of luck involved. If I didn't call Charlie, if a million things that had to have happened the way that they did... when I got to... this is an interesting tie in to Berkshire, when I started at Columbia, Progressive back then did not have public calls, etc, etc. And so I was pretty tight with many of our general managers, because we had rolled out credit and telematics and so forth, and I was fortunate to be in the right place at the right time and spearheaded a lot of that. So I was going to business school. We had some general managers who had gone to Chicago, Columbia, Harvard, etc. And they said you should talk to Weston Hicks, who was, at that time, he was the number one II-rated insurance analyst at JP Morgan. And so, here I am... if you told me then I'd be on the board of JP Morgan, and Weston went on to be the CEO of Allegheny, which, of course, we just purchased last year. And Weston took the time to meet with me, knowing full well I could not in any way... I knew a little bit about Progressive that he wanted to fish around about, but I mean... he said, Oh, he put me in touch with these guys at Blue Ridge Capital, which was one of the big Tiger Cubs, and said they're really doing a lot in insurance right now. And you know insurance, and they know investing, and so it was the way you look for win-wins and so forth. And that one thing led to another led to another led to another and so that's... that's been the story of my life.
The Tiger Cubs refer to funds started by former analysts at Tiger Management, which was founded by Julian Robertson
Host(s): Do you think though, because I get what your point is on luck, but at the same time, and we're tracing back like okay, you ended up with this cold call to Charlie, but did you have 50 of those sort of, where you put... you had took an action to put yourself in a place where things could happen for you. And then, because when you trace it back, you only see the one. But my thought is, my guess is, your luck came by putting 30 of those out there, or 1000 of those out there.
Todd Combs: Yeah, I won't lie. I'm a hard worker and I have a lot of grit. I've got a lot of blind spots, and I've got a lot of weaknesses, but I have those qualities. And so there's that, probably Mark Twain saying about preparation is your best luck or something along those lines. And so there is absolutely... look, I had to have the substance when I met Charlie, or when I met Weston, or when I met the guys at Blue Ridge, etc, etc. I was very green in many of those instances. I remember Weston actually saying, "Oh, you want to be an investor? I'll put you in touch with a hedge fund." And I honestly didn't know, and he said a Tiger Cub. I didn't know... I didn't know what a Tiger Cub was. I mean, I'd been a pricing analyst at Progressive. I knew about investing, I didn't know what a Tiger Cub was. That was three standard deviations away from where my knowledge base was at the time, but... [concentric circles right there]. And for people will be patient enough with you. So I mean, it's both. It's both, for sure.
Host(s): But you had to have a... I'm sure there are situations where no one did call you back. [Oh, for sure]. And you were in a room that you didn't get... but you put enough of those out there and...
Todd Combs: Yeah, one of the things I worry about with this... it's easy to always say like, to be dour about the generation or whatever it is, sometimes I worry that we're making our generation too soft, because we can make things so easy on them. And that we don't build up enough grit. And look, that comes with having a society that's more wealthy and is moving along, not that everybody is, by any stretch, but look, that's where you get... I don't... I think grit... it's the whole marshmallow test, going back to Stanford and everything. I mean, that's like the one thing that I think they've statistically proven, has a correlation with success in life, is that ability to not have that marshmallow. And you get two if you wait 15 minutes, or whatever that number was. But having grit goes a long--I think it was Angela Duckworth, wrote an entire book and so forth on it. But you make your own luck, too. There's definitely some of that, for sure. For sure.
Host(s): We got to ask you about a home. That's our thing.
Todd Combs: My wife would argue my home is work.
Host(s): Well, speaking of her, you met her at FSU. [That's right]. I imagine that you've moved quite a bit. You've mentioned Connecticut at one point, obviously from Florida, Connecticut, here. How have you and the family made all these new places feel like a home?
Todd Combs: I think... I'm going off top my head, which is always dangerous. I think we may have moved, for some reason I'm thinking 16 times. It's a lot, it's a lot. We met in September of 92, in a class at Florida State. And we got married in May of 98. And so we've known each other over 30 years. She was... so our oldest is a sophomore in college and is turning 20 next month, and he will be the same age as when April and I met. It's crazy. Like, just to, even for those words to come out of my mouth. So we've moved, now, we rented a lot, every two years, and that kind of thing. We didn't own our own home until the home that I then owned when I accepted... when I started my own fund and started the Berkshire job. So that was '02 or '03 or something like that. Not because we couldn't afford it, but just because we were renting, and so forth. And so... but sorry, I missed... what was the second part of your question?
Host(s): The second part was about how do you make those places, all those 16 places that you've been to, feel like a home?
Todd Combs: Oh, well, it's her, to be clear. So many people say the better half, I say the better 99%. [That's a good line. I'm gonna steal that]. Yeah, yeah, I highly recommend it. Especially when it's true. No, there's the old saying, happy wife, happy life. So I talked to her about... well, to use Berkshire as an example, to stick with that. And so I was flying out once every other week or something like that to come, and I would say the week, Warren and I would talk etc, etc. This is 2011. And then Michael, our oldest, was in second grade, and he started... so here's a great testament to April. She says, "Let's go out to Omaha for the summer just so we can all be together." Huge sacrifice for her. We've got a house on the water, we love Connecticut, we got her friends, etc, etc. But she wanted the family to be together, and so again, it comes back to sacrifice. This is not only my sacrifice. It's her sacrifice. And so she comes out, we spend the summer together, she sees how great it is. We make fast friends etc, etc. And then one thing leads to another, and before you know, she says, "Why don't we move out here? The schools are great, great sense of community. Omaha is amazing." And we were very, very fortunate to have people like Warren and his daughter, Susie, and so forth, that introduced us to lifelong friends of theirs, like the Blumpkins, and then you meet people like Rory and Becca, and so forth. So yeah, again, one thing leads to another. And that makes it a lot, lot easier.
Host(s): Yeah. Well, we have to ask, you moved to Omaha. Did you buy from NFM?
Todd Combs: I did. Oh, yeah. Absolutely. As Becca and Rory know, our entire house is NFM. It looks like this showroom right out here. Even the TV.
Host(s): Do you have a favorite? Any favorite products?
Todd Combs: Favorite TV? [crosstalk]. We just got a... I should know this, but April... is either... do you guys sell 90 inch? It's either a 90 or... yeah, it's great. I remember when 32 used to be big.
Host(s): My grandpa has a 42 inch TV... [crosstalk]. And now they're like double that.
Todd Combs: Totally. So we have... I don't know, let's call it a 90 inch TV that we just got from NFM.
Host(s): You have time for one more?
Todd Combs: I got all the time in the world. Fire away.
Host(s): Okay. Well, GEICO has had some great commercials over the years. [Oh yeah]. I think they really pioneered that approach with the gecko.
Todd Combs: Yeah. And using humor.
Host(s): Yeah. Do you have a favorite, either mascot from GEICO or commercial?
Todd Combs: Oh, boy. It's supposed to be like your children. It's like sacrilege to say, This is my favorite. But just between us, obviously, the gecko is the favorite. And that guy's just so adorable. And then I would say the ones that come to mind actually, like I'm a big fan of Hump Day. Hump Day, Wednesday, hump day. And I'm a big fan of caveman. And then, there was the one with the pig rolling out the window with pinwheel. I'm a big fan of that one too. And we have a whole new line coming out soon called Frenemy that I don't want to spoil it for our marketing department, but I just saw them this week, and they're absolutely fantastic.
Host(s): Perfect. Well, Todd, thank you so much for joining us.
Todd Combs: Thanks for having me. This was a lot of fun!
Host(s): This was a real masterclass, I think we learned a lot. Welcome back anytime.
Wrap-up
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