The Munger Way

Alice Schroeder named her Buffett biography "Snowball". What a wonderful analogy for compounding! In this article I describe how I build my snowballs aka. startups. A wonderful snowball ( flickr )   The maths of rolling a snowball Imagine a snowball on top of a hill. The ball is sunk into the snow coverage. Without a force pushing the ball to one side, it will not move. As we push the ball to one side, the ball moves and collects snow. As more and more snow is collected the ball grows bigger. This growing process absorbs some if not all of the pushing force. So, if the ball is too small, too slow or the hill not steep, the ball has not enough energy to support the growing process. Than the ball will just stop rolling. If the ball has more energy than the growth process requires, the ball will further accelerate thereby increasing its kinetic energy. As the ball has more kinetic energy it can accelerate the growth process.     The growth process creates fric...

I love the products and services of Alphabet and its subsidiary Google. I love android; I love gmail; I love search! As an investor I love the business model and market leadership! A few weeks ago, Google re-names itself to Alphabet. The new name transports the idea of their much better than google, which is just the name of their search service. Alpha-bet describes betting on alpha or first grade ideas. As they re-named the company, the management shifted from the slogan "don't do evil" to "do the right thing". This cultural shift will hurt the company in the long run! Alphabet/Google-critics argue, that without the "don't do evil" motto, Alphabet is now officially evil - why else changing the motto? The Alphabet management argues that a positive definition of their motto will yield to better results in efficiency, compliance and obeying the law, while allowing flexible motto definitions for each business unit. "Evil" is bette...