Video Transcripts

Mistakes We’ve Made

Filmed on October 7th, 2021

Henry: What have we learned by our own mistakes as advisors, mistakes that maybe we’ve made once or twice, or some that we’ve repeated, in some cases, for decades.  Linda, I’d like you to take this.

Linda: I think that the mistake that I make over and over again, even though over the years I’ve tried to train myself to become more rational and dispassionate, I still allow, because I’m a human, emotions to get in the way of my rational investment decisions.  Not only in my personal investing, but in the way I advise my clients.  No matter how much training I do mentally, it still happens.

Henry: But that’s also part of your great strength which is the empathy which clients feel because clients…I’m using the word “clients,” you have such a strong bond with people that it transcends that.  That’s not something that the rest of us can say, we can aspire to it but it’s a difficult thing to do. 

I think there’s another set of mistakes that we’ve made over time, and there are exceptions, but finding a fantastic idea and then stepping into it with just a small commitment.  It’s hard to find a great idea.  Over the years, we’ve seen some real classic businesses highlighted for different reasons.  Bobby, years ago you pointed out all of the partnerships that you saw Nike establishing, or Starbucks, or the role that a company like Ecolab plays in major businesses that they partner with on all of the services they offer.  We own them, but at the time, we made them very small positions.  I think it’s hard to have enough confidence sometimes to do it the right way.  The right way is that you find a gem, buy a gem.  Don’t’ just chip off a tiny little piece of it.  Own it.  That’s something that we have gotten better at, but I think that’s because of you guys.  Linda and I have been so protective, that I think that we needed to learn from you.  And that is a very important part of the growth of Northstar.

Jeff: Similarly, on the business side, I come from a traditional financial academic background, and some changes that I’ve had to make as the world changes is figuring out new ways to value businesses.  Some of these new software based companies are just very different from what you may have learned in a textbook about a manufacturing company in the 1950s.  So just thinking, “ok, what’s a new and effective way today to look at how this business can grow” because it’s so different than any other business has been able to in past eras.  So just reviewing that, reassessing my process and our process to think with a different lens.

Linda: We’ve had to think about capital allocation of business in a totally different way, and you’ve definitely helped us with that.