Alex Behring and Daniel Schwartz - Inside 3G Capital - [Invest Like the Best, EP.458] | Invest Like the Best with Patrick O'Shaughnessy

3G Capital's Alex Behring and Daniel Schwartz discuss their concentrated investment strategy of deploying capital into a single, deeply analyzed business per fund. They emphasize the rarity of truly great businesses and the importance of rigorous downside risk analysis, highlighting how technology-driven disruption has reshaped their evaluation criteria. They prioritize businesses with strong customer relationships to avoid disintermediation, citing Hunter Douglas as an example of a simple, well-positioned business with enduring demand. The discussion covers 3G's unique capital structure, the value of integrating operating and investing experience, and the firm's commitment to fostering young talent through early responsibility and mentorship. They also reflect on lessons from Kraft Heinz, stressing the need to understand business quality, and share insights on building a culture of ownership and urgency.

Outlines

Part 1: Investment Philosophy, Strategy

Part 2: Long-Term Relationships, Hunter Douglas

Part 3: Firm Culture, Operational Lessons

Part 4: Case Study: Tim Hortons Acquisition

Part 5: Talent, Mentorship, Urgency

Part 6: Case Study: Burger King, Franchise Model

Part 7: Kraft Heinz, Skechers, Platform Potential

Part 8: Operational Tools, Market Outlook

Part 9: Future Outlook, Personal Reflections

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Alex Behring and Daniel Schwartz - Inside 3G Capital - [Invest Like the Best, EP.458]

Invest Like the Best with Patrick O'Shaughnessy

Part 1: Investment Philosophy, Strategy

00:003G Capital's Investment Philosophy: Concentration, Ownership, and Operational Expertise

3G Capital's Investment Philosophy: Concentration, Ownership, and Operational Expertise

04:03The "One Investment Per Fund" Strategy: Origins, Rationale, and Psychological Impact

The "One Investment Per Fund" Strategy: Origins, Rationale, and Psychological Impact

07:57Defining a "Great Business": Adapting to Disruption and the Importance of Customer Relationships

Defining a "Great Business": Adapting to Disruption and the Importance of Customer Relationships

11:23Capital Structure and Incentives: House Capital, LP Base, and Long-Term Investment

Capital Structure and Incentives: House Capital, LP Base, and Long-Term Investment

Part 2: Long-Term Relationships, Hunter Douglas

13:35The Long Game: Building Relationships and Understanding Businesses Over Years

The Long Game: Building Relationships and Understanding Businesses Over Years

17:04Hunter Douglas: A Case Study in Business Criteria and Competitive Advantages

Hunter Douglas: A Case Study in Business Criteria and Competitive Advantages

Part 3: Firm Culture, Operational Lessons

20:34Why Aren't There More Firms Like 3G? Staying Small and Attracting Top Talent

Why Aren't There More Firms Like 3G? Staying Small and Attracting Top Talent

23:58Alex Behring's Experience Running a Brazilian Railway: Operational Challenges and Leadership Lessons

Alex Behring's Experience Running a Brazilian Railway: Operational Challenges and Leadership Lessons

26:36Finding Inefficiencies and Building a Culture of Ownership

Finding Inefficiencies and Building a Culture of Ownership

29:02Zero-Based Budgeting and Decentralizing Decision-Making

Zero-Based Budgeting and Decentralizing Decision-Making

Part 4: Case Study: Tim Hortons Acquisition

31:47The "Burger King is Run by Children" Article and the Tim Hortons Acquisition

The "Burger King is Run by Children" Article and the Tim Hortons Acquisition

34:21The Initial Rejection and Subsequent Pursuit of Tim Hortons

The Initial Rejection and Subsequent Pursuit of Tim Hortons

39:03Sealing the Deal: Board Dynamics, Franchisee Concerns, and Warren Buffett's Insights

Sealing the Deal: Board Dynamics, Franchisee Concerns, and Warren Buffett's Insights

Part 5: Talent, Mentorship, Urgency

41:43Empowering Young Talent: Meritocracy, Mentorship, and Maximizing Success

Empowering Young Talent: Meritocracy, Mentorship, and Maximizing Success

44:59Building a Pure Meritocracy: Valuing Talent Over Tenure and Giving Early Opportunities

Building a Pure Meritocracy: Valuing Talent Over Tenure and Giving Early Opportunities

47:22Lessons from Mentors: Vision, Leadership, and the Operating Model

Lessons from Mentors: Vision, Leadership, and the Operating Model

49:23Injecting a Sense of Urgency: Hiring the Right People and Clear Communication

Injecting a Sense of Urgency: Hiring the Right People and Clear Communication

52:21The Pitfalls of Incentives: Avoiding Base-Driven Awards and Prioritizing Meritocracy

The Pitfalls of Incentives: Avoiding Base-Driven Awards and Prioritizing Meritocracy

55:00Finding Young Talent: Word of Mouth, Cold Calling, and Passion for Projects

Finding Young Talent: Word of Mouth, Cold Calling, and Passion for Projects

Part 6: Case Study: Burger King, Franchise Model

57:00Burger King: The Brand Was Bigger Than the Business

Burger King: The Brand Was Bigger Than the Business

1:00:20Fixing Burger King: Focus, Partnerships, and Franchisee Relations

Fixing Burger King: Focus, Partnerships, and Franchisee Relations

1:02:31The Franchise Model: Aligned Entrepreneurs and Free Cash Flow

The Franchise Model: Aligned Entrepreneurs and Free Cash Flow

1:04:28Taking Burger King from Zero to Two Billion in France: The Story of Olivier Bertrand

Taking Burger King from Zero to Two Billion in France: The Story of Olivier Bertrand

Part 7: Kraft Heinz, Skechers, Platform Potential

1:07:06Lessons from Kraft Heinz: Underwriting Business Quality and Customer Concentration

Lessons from Kraft Heinz: Underwriting Business Quality and Customer Concentration

1:08:51Skechers: The Third Largest Sneaker Company in the World

Skechers: The Third Largest Sneaker Company in the World

1:11:13Skechers' Impressive Growth and Diversification

Skechers' Impressive Growth and Diversification

1:13:59Skechers: A Long-Term Home for a Founder-Led Business

Skechers: A Long-Term Home for a Founder-Led Business

1:16:31Platform Potential: Hunter Douglas vs. Skechers

Platform Potential: Hunter Douglas vs. Skechers

Part 8: Operational Tools, Market Outlook

1:17:55Zero-Based Budgeting: A Tool for Understanding and Improving Businesses

Zero-Based Budgeting: A Tool for Understanding and Improving Businesses

1:19:48Ownership Mentality: Applying It to Both Cost and Revenue

Ownership Mentality: Applying It to Both Cost and Revenue

1:21:13Capital Markets Today: Valuations and Investment Environment

Capital Markets Today: Valuations and Investment Environment

1:22:54Technology's Role: Improving, Not Disrupting, Businesses

Technology's Role: Improving, Not Disrupting, Businesses

Part 9: Future Outlook, Personal Reflections

1:25:19Misconceptions About 3G: Business Quality and Humility

Misconceptions About 3G: Business Quality and Humility

1:27:213G's Future: A Great Home for Founder-Led and Family-Controlled Businesses

3G's Future: A Great Home for Founder-Led and Family-Controlled Businesses

1:29:16The Benefits of Thinking Long-Term: People, France, and Family Businesses