Steve Mandel - Investing Behind Change - [Invest Like the Best, EP. 235]

My guest today is Steve Mandel, founder of Lone Pine Capital, one of the most successful hedge fund and investment firms of this generation. In our conversation, we discuss how the investing business has evolved since Steve’s start in the 1980s, why it’s so difficult to drive alpha by shorting stocks today versus 20 years ago, and why Steve still loves to get into the guts of a business. Steve shares his lessons through a variety of great stories, which made this such a fun experience. Please enjoy my conversation with Steve Mandel.   Before we transition to my interview with Steve, I’d also like to highlight the newest Colossus show, Business Breakdowns. If you like Steve’s idea of getting into the guts of a business, this is the show for you. Please find a list of our episodes at joincolossus.com and subscribe to Business Breakdowns on your preferred podcast player.   I hope you enjoy my conversation with Steve Mandel.    For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ------   Invest Like the Best is a property of Colossus, Inc. For more episodes of Invest Like the Best, 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: @patrick_oshag | @JoinColossus   Show Notes [00:03:36] - [First question] - His first encounter with Walmart [00:05:51] - What about Sam Walton made him worth idolizing  [00:08:14] - The juxtaposition of business to management quality [00:10:57] - Why a career in retail influenced the lens he sees the investing world through [00:11:23] - What bad company culture in retail looks like [00:12:33] - Aspects of Walmart’s culture that could be applied to other companies [00:13:54] - Defining the core essence of retail company culture [00:15:02] - How long it used to take for a stock to properly reflect new information [00:16:40] - The nature of edge and what it looked like back then [00:21:09] - Investing behind change and assessing trends [00:23:06] - Scars and stories from just how vicious short markets can be [00:26:32] - Thoughts on building an enduring firm and how it’s evolved over time  [00:32:14] - The process and decision to remove himself from the day-to-day operations [00:33:55] - Lessons learned over time about what separates good from bad analysts [00:34:42] - Where to start looking when getting into the guts of a business [00:36:31] - What is most exciting when you’re inside the guts   [00:39:19] - Interesting aspects about payments today writ large [00:42:15] - Broad trends around change in consumer trends  [00:43:02] - How he views software businesses looking forward as an investor [00:45:14] - Great managers and their emphasis on analyzing their competitive advantage [00:48:02] - Ways that pace as a variable has changed in importance [00:49:27] - What he thinks we’ll look back on as silly in how markets currently operate [00:50:33] - Whether or not all markets becoming 24/7 will be a good thing [00:51:59] - Big iconic business stories that newcomers should study [00:56:06] - Whether or not business building is an art form [00:57:38] - Key levers that typically always matter for a business [00:59:53] - Other major aspects of the world that are important to consider [01:01:13] - How his personal motivations morphed over the years and what has changed [01:02:55] - Valuable lessons learned about the inputs and outputs of education [01:04:15] - Advice for would-be future investment analysts [01:05:46] - The kindest thing anyone has ever done for him