Expert: Lawrence Lam – Investing in Founder-Led Businesses

HOSTS Alec Renehan & Bryce Leske|7 October, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

Bryce & Alec interview Lawrence Lam, Managing Director & Founder of Lumenary Investment Management. Lawrence runs a global equities strategy focused exclusively on founder-led companies. The fund invests in founders who own and run their companies, consisting of 10-20 founder-led companies, with an emphasis on emerging products and services.

For listeners who want to keep in touch with Lumenary, visit their website.

Lawrence publishes newsletters sharing interesting founder-led companies he comes across. Subscribe here.

If you want to let Alec or Bryce know what you think of an episode, write to them here

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Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I'm joined by my equity buddy Ren. How's it going? 

Alec: [00:00:30] I'm very good. Bryce I'm excited for this episode. You know, we love speaking to expert investors here at Equity Mates, and one thing that I've learnt over the journey is that there's plenty of different strategies to make money and investing. There's a lot of ways to make money in the markets, and we've come across an expert investor who has a pretty fascinating strategy that I'm really excited to unpack. So looking forward to this episode, 

Bryce: [00:00:53] it is our pleasure to welcome Lawrence Lam to Equity Mates Lawrence. Welcome. 

Lawrence Lam: [00:00:58] Thanks, guys. Thanks for having me. Glad to be an Equity Mate. Yeah. Three founders. Three Mics. Here we go. 

Bryce: [00:01:05] Let's do it. So Lawrence is managing director and founder of Luminary Investment Management, running a global equities strategy focussed exclusively on founder led companies. The fund invests in founders who own and run their companies, consisting of 10 to 20 founder led companies with an emphasis on emerging products and services. And it is that lens that we're going to be talking about today. Understanding the strategy around investing in founder led. But before we do Lawrence, we always start with a bit of an overrated, underrated game. So Ren, let's kick it off. 

Alec: [00:01:38] So Lawrence, we want to touch on a few topics or themes we may not otherwise get to in the episode. So if we start at home in Australia, overrated or underrated, the ASX 200 index?

Lawrence Lam: [00:01:52] Overrated. You've got 40000 stocks globally. Australia represents 2000 of those, and of the 2000, you're saying that you want just the 200 of the 2000. So why would you limit yourself to 0.5 percent of the entire investment universe? 

Bryce: [00:02:13] Yeah why would you. Overrated or underrated? The Nasdaq 100 

Lawrence Lam: [00:02:16] overrated. I'd be targeting the Nasdaq 300 to 600 instead. They're the ones that are underrated and they will be the next Nasdaq 100. So if you want to jump on the Nasdaq 100 now, it's a bit like jumping on the Melbourne Demons right now. But it's the fact the Demons last year and not now. 

Alec: [00:02:37] So Lawrence, where you know, recording in a context where there's a lot of concern over in China, around Evergrande and their real estate market and what that could mean for the global economy so overrated or underrated? Those fears about China's real estate market clearly overrated. 

Lawrence Lam: [00:02:55] China is a global rising power. There is no denying that investors play the long game. You want to participate in that, right? There's a lot of misconceptions about China. You know, perhaps maybe it's it's that I understand the culture better than most. Who knows? I'm not sure. But the fact remains that China is continuing to rise. We will look back in a few years time in a decade's time, and we'll say this as, hey, it was a great opportunity to enter into the China market and we've done that ourselves with with my funds. Stocks are 50 percent, 60 percent discount not only from Evergrande, but also from the education reforms, the tech reforms. There's a lot of opportunity and a window is opening up in China, for sure. 

Bryce: [00:03:39] Mhm. Well, on the theme of property overrated or underrated, the Australian property residential market 

Lawrence Lam: [00:03:45] underrated, underrated as a essential tool in the toolkit. The beauty of property is you have the ability to use financial structuring. So when you have low rates and high property valuations, some may look at it and say, Well, that's that's just risk off, you know, take money off the table. But actually, when you think about if you already have a bit of property in the market, it's a great opportunity to revalue your property reiki and lock cash for retail investors. You know you've got access to offset accounts and you have that cash available for deployment and then not to mention the tax deductions that are available with property. So no personal financial advice. But but it's an absolute essential tool in toolkit, especially when you factor in that ability to structure and enhance your portfolio with which gearing. 

Alec: [00:04:35] Yeah, yeah. Yeah, I like that answer. I think commonly we get the response around is the market overvalued? Is the market undervalued? But I like that lens that you talk around the structuring of your personal finances. Lawrence, final question for this game. You know, if we're touching on hot topics in investing markets at the moment, we have to touch on this one. Overrated or underrated bitcoin? 

Lawrence Lam: [00:05:00] Underrated. It's Gold 2.0. Highly uncorrelated. It's an effective hedge. And we saw this during the pandemic last year. You know, there was a bit of a drawdown, but you compared bitcoin to gold and equities. I use the analogy of a salad. You can't just have all leaves in a salad. You need a bit of meat and bitcoins that meat, it's highly uncorrelated and it's an effective hedge. So the way I would enter into bitcoin is for for a lot of investors is to wait for the crypto ETFs that are about to launch. I mean, ASIC's doing a review at the moment, but if you're concerned about the risk of exchanges, crypto ETFs are coming. 

Alec: [00:05:36] Yeah, it feels like ASIC in Australia, the SEC in the US. There's been a long time of review for these ETFs, so hopefully we see them in the market soon. But Lawrence, we we really want to focus on your founder led company strategy, but I guess we want to hear a little bit about your investing background and how you came to this strategy first. So if we start at the very beginning of your investing journey, can you tell us the story of your very first investment? 

Lawrence Lam: [00:06:08] Yeah, sure. My first investments, actually during uni managed funds, boring stuff. I knew back then that I wasn't an expert and I needed the expertise of professionals. But my first real direct investment was I remember it quite vividly because it was a Saturday morning. It was a Masters class that I did a weekend lecture. Mr. Hart, if you're listening. Thanks for thanks to the face of getting me down this path, you know, he taught funds management the subject at Melbourne Uni. Now what he taught was value investing in a real life application. And in particular, it wasn't the boring stuff, the cigar bat stuff like Buffett and Graham, what they talk about, where you're picking up companies at discounts. He talked about value investing, applied to rates, closed end funds and infrastructure assets so distinctly different. Now I remember first hearing about that when he talked about it and then spending the rest of the weekend researching looking for these discounts. So the weekend? Was lost the following week, I remember coming across and I see Argo investments. And that first feeling when you find something that is actually quantitatively at a discount and we our says, you can actually quantify it. And Argo themselves quantify it for you. It's a thrilling feeling. So that was my first foray into a different slant on value investing. But and then it got me down the whole rabbit hole of Ben Graham and securities analysis and all the other shows. But definitely the rates now. I say closed end funds infrastructure assets back then were not as popular as they are now, and those discounts did exist. Mm-Hmm. 

Bryce: [00:07:51] So any career you spent a fair bit of time with a bit of time as an investment banker. What did you learn about markets during that time? And was there anything that you think retail investors often got wrong about the markets? 

Lawrence Lam: [00:08:04] They missed the importance of the human side of business. And by that, I specifically mean the power of motivation and incentives, because as as retail investors you're often thinking about, is this a good company is a good management quantitatively fundamentals. The numbers are good, the ratios are good, but you often missed the human side of business. And during my time in investment banking, I saw a lot of behaviours that most retail investors probably don't saying. And some examples of that analyst's recommendations when investment banks are writing papers on companies, there's vested interest to play, but a benefit from buying the stock themselves or another. Another team will look at that. But the sales team, when they're trying to sell these recommendations, how they're benefiting is through transaction volume and flow. You have to realise looking at it from the inside that there are a lot of incentives that aren't necessarily aligned to the end investor. So when you read that report, you think, Oh, it's a great company, but you've got to also understand what's sitting behind that and the motivations behind that classic example, again, is annual bonuses even in everyday companies. Now you say salaried CEOs, big bonuses, three or five year contracts done and dusted, shake your hands. I'm done. Get my bonus, get out again causes misalignment. So the analogy I like to use is I want to get into a plane where the pilot doesn't have a parachute, and I don't want to get to that plane with that guy that's not getting off at the next stop over. And I'm on the long haul flight. I don't want that. 

Alec: [00:09:39] I like that analogy, and I think that leads nicely into this founder led company investment philosophy. But you have they are the definition of pilots that are strapped into that plane and landing it or crashing it. But I guess before we get into the details of the strategy, how did you develop the strategy? You know, how did you go from looking at rates and infrastructure assets trading at a discount to your, you know, your career in investment banking to developing this philosophy? 

Lawrence Lam: [00:10:09] So in terms of my philosophy, I sort of say different grades of returns. So it's a bit like, you know, sugar levels and G, you get these short, sharp returns. There is quick, easy, but they're not sustainable. So everyday salaries, bonuses that you get paid. It's like the fires lit by by paper. They'll go out quickly, but they're easy to get. Then you have these long, slow burning returns. So investments compounding to an extent, even in your everyday life, your health, all these things actually give you sustained returns over very long periods. Your health, relationships, your reputation, societal values, their fires with heavy locks. So when I was progressing through my career and universe back, you get paid a lot, but equally at the same time, the short shot for good bonuses, good salaries. But you're not actually compounding yourself and building those returns over a long period of time. When I started personally investing, I really started off in the Australian market. I looked at a lot of ASX listed founder led companies organically over time, just from a value investor lens, and then slowly, slowly evolved more into the global level to the point where I threw my career also saw a lot of different types of companies, but I wanted to take it global. And that's how I started Luminary four years ago when I said, there's a strategy here where you're looking beyond just our shores, but globally picking a team of founders like a sports team that has the best ideas, the best companies and the greatest hunger to succeed. 

Bryce: [00:11:47] So before we jump into the nitty gritty of the founder led strategy, we will just take a quick break to hear from our sponsors. So, Lawrence, you've kind of touched on it a bit there, but it's worth starting at the top to define sort of a founder led company. And then also, are you able to explain why you think they make such good investments? 

Lawrence Lam: [00:12:09] If I distil the founder led strategy to its core, it's chefs who eat what they cook, and that's what that's how Warren Buffet turns it. It's the chefs that they cook, that eating the entree, the man in the desert and then to bail you halfway through the meal. These are companies led by founders, you know, those who have accountability, ownership and influence over the destiny of that company, whether it be good or bad, you know they will be there and they will cop it on the chin. So examples of what I'm looking for when I look for Fratello companies, it's equity ownership percentages. It's management position CEO, CEO or senior management or directorship CEO chair. And often, sometimes a little bit underrated. Is the name on the logo a lot? You say that a lot with a lot of European satellite companies. It's actually their name. And that is incredibly powerful because as I mentioned before, it's about reputation for that. Ideally, you hit all of those metrics and they're all high, but you're not often going to find a really great company at a really great price. And he'd for it's it's quite rare. So what do you want to aim for? Is as many of those as possible? The challenge for a lot of non-financial ED companies is the Equity Ownership Management Board, that triangle of relationship. There's often gaps and misalignments, as I mentioned when when I had my going through my career, I witnessed a lot of those misalignments and it's, you know, they often try to fix it with with money, bonuses and incentives. It's not a money problem, it's a behavioural problem. And so for investors, if you're invested in a in a bureaucratic non-financial ED company, you'll suffer over the long term because you don't have that alignment with the ultimate managers, owners and directors. So the way to solve that isn't actually to try and try and fix the company with these bandits bonuses and things. It's actually to bypass those opportunities altogether. Why would I invest in that type of company when I can get a manager who's actively involved, cares deeply about their business and is thinking about it over the long term? So what do you want to do is you want to harness that hunger in alignment? It's a powerful combination and you want to invest alongside them. And you know, back then, it's a lot easier than trying to swim against the tide. The other way,

Alec: [00:14:30] I like that idea of a triangle of equity, ownership, management and board in terms of like strict definitions. Do you do you have any sort of rules of thumb that you use is like a percentage equity ownership that you want to say a founder retaining to consider it as an investment? Or is it more about the founder being involved in the management team day to day? Like where's the, I guess, the edges of your definition of a founder led business? 

Lawrence Lam: [00:14:56] I'm looking for for equity ownership. I'm looking for voting rights. You know, oftentimes you'll say companies split into Class I and Class B, where economic ownership is very distinctly different to voting rights. Look, if a management board positions family holdings, as I said, I'm looking for things that hit all of that in terms of the main important things. It's actually not the absolute number or the absolute static position of those metrics. It's the direction in which they're changing. So what I mean by that is let's take Facebook Amazon as an example. Mark Zuckerberg has been selling down his economic ownership in Facebook since heavily since 2020. He retains a very high voting percentage, but his economic ownership is getting lower and lower. For me, that's a red flag. For me that's saying, Hey, you should review Facebook. And same with Amazon. And even if you look at a company like Virgin Richard Branson, he's really just the face of it. I don't think he has much ownership in Virgin anymore, and of all the various entities, I would look at the direction of change as opposed to more the absolute metrics. 

Bryce: [00:16:03] Is there a minimum, though, in terms of equity holding, you want to see sort of founders have? 

Lawrence Lam: [00:16:07] Yeah, I like to say at least 10 percent, I mean any any less than that, and you're kind of approaching your territory if you're just a passive. Having said that, if you're at, say, eight percent and you're CEO and your chair. Well, that's a distinctly different, distinctly different situation than if you're just holding 10 percent and you're not involved at all. So it's all those metrics combined. 

Alec: [00:16:28] The next question is around how many of these companies actually exist? You know, I guess both in Australia, but you're a global investor. So around the world, what's the size of the opportunity set here? How many businesses meet that definition of found a lead? 

Lawrence Lam: [00:16:44] Credit Suisse have done some research on this, and there's a if you Google Family 1000 research, you know, they claim that a thousand of these family led or founder led companies. I go through forty thousand. Stocks globally, I'm seeing around 2000, and that's through all geographies. Asia included, China included, and there's a huge, diverse Ren, so you can range from the very same type, just IPO type of companies through to the generational, very long lived companies in Australia. Two to three hundred. There's a lot you just have to look. Obviously, the more concentrated in the lower end, the smaller end of the market, but there's about two to three hundred. So my process is you look at the whole world, forty thousand I screen to five hundred based on quality and found a lot of the side of 2000 globally. I rule out a lot of those just on quality. And then from 500, I go to 50 on a qualitative filter and then I'll do 50. I'll wait until the price is right before 10 to 20. End up in the portfolio and the 10 or 20 is not static. So you mentioned I mentioned before monitoring all those metrics and the direction of change is the change is unfavourable. I recycle out of that company and put the capital elsewhere. 

Bryce: [00:17:57] So perhaps it's worse than sharing a few examples of founder led companies that are either in the portfolio ones that you admire. Yeah, we'd love to kind of hear from that set that you've whittled down. What's exciting you at the moment?

Lawrence Lam: [00:18:10] There's a lot out there and for different reasons. So in terms of generational runways, what Peter van der does is doing at Adyen, which the Netherlands based company. They're going to be around for decades, but there's a real big opportunity in the aggregation space. And what they're doing is aggregating payments. So you think about all the payment methods that people have title Afterpay globally, not even Visa, MasterCard. So in China, they use WeChat Pay, Alipay. It becomes very cumbersome for companies to manage all these payment options because they want to sell globally, and it's hard. So what I didn't have done is they've aggregated all these payment systems into their platform, dealt with all the regulation that with all the security issues as well and all of retailer needs to do is just plug into that. In return, we'll take a clip of every single transaction going through their customers like eBay, Nike, Etsy, all those types of companies. That is a company in our portfolio. I think it's got a huge generational runway in South Korea. Kim Beyonce, who is the founder of Kakao. They are the WhatsApp Spotify Group of South Korea. If you go to Korea, you cannot live without Kakao. He'll be around for decades to come. In terms of who I admire in terms of founders philosophies, I can't go past my Cannon-Brookes and Scott Farquhar, Atlassian. They're paying themselves minimum wage. They literally paying themselves seventy seven thousand a year. And you see that often in founders that truly believe in the long term. Warren Buffet is the scientist himself. 100000. You've got time changes in South America. Marcos Galperin at Mercado Libre, the Amazon, a South America. He fought through some very tough battles over coming Amazon and eBay in South America and a rival as well a local rival. He did that very interestingly through his tech stack. He deliberately didn't outsource a lot of his technology. He insource that, in fact. And that's how he outlasted all his competitors. Locally, you look, I'm a huge fan of what Andrew and Roger Brown have done at eighty four four-wheel drive accessories, roof racks, hugely underrated company that just keeps plugging away. And who would have thought that, you know, starting a bull by a company in your garage can end up being a global brand? It's it's truly an amazing story of what they've done. There is very inspirational for a lot of founders. 

Alec: [00:20:37] We've had eBay suggested by a few experts on on the podcast and on our Watch this Wednesday show and always been so interesting that it's getting another mention here. I think my big takeaway from that list of five companies you just mentioned is, you know, people will often think about founder led companies as small companies, maybe recently IPO'd. But some of the companies there are massive, you know, Atlassian and Mercado Labour are $100 billion companies, at least. So it's probably a good reminder that when we're talking about a founder led strategy here, we are really covering all all parts of the market. 

Lawrence Lam: [00:21:13] Yeah. And I think if I can run through the context of the evolution of founder led companies, it used to be back in the day that it was very hard to create a standalone company by yourself. Hard infrastructure, you need to build factories, you need to have salesforce humans on the ground. That was back in the day. So people like Walmart, Nike, Marriott, you know, those types of companies, when they succeeded, their degree of difficulty was super high. Then locally, you had, you know, Westfield Aristocrat, Visa Race Plumbing, both those types of companies. The game has changed. It's now much easier to go viral to go global. The tools are available to to build a very capital light business that can sell and. Grow very quickly. We've seen that with Afterpay locally, we've seen that with even Facebook, very young company. And then a lot of up and coming satellite companies in China. Tencent is one. You've got Alibaba, and they're even younger than the American counterparts. So all the tools are there. And that's where I think the value is for for satellite investing. And that's the evolution of it. 

Alec: [00:22:18] With this investing strategy, I'm sure there comes some unique risks. You know, you're really focussed on on the people and the founders. So I'd love for you to sort of explain that. Are there any unique risks and how do you manage them being concentrated on this strategy of founder led businesses? 

Lawrence Lam: [00:22:38] Definitely. As I mentioned, the direction of influence very important. So are they selling down? That's the key flag that try to let investors should look for. I mentioned Facebook. Zuckerberg is selling down Afterpay sold down an ASX company. Dicker data sold down recently. Now you want to be on top of these announcements when they happen, and there will be the usual spiel that people gave. I want to diversify my personal investments. I want to, you know, buy a new house or buying new mansion, whatever it is. But the fact remains that it's a red flag over the long term. So even though Afterpay have sold down and they're still there, you have to be mindful over time that that could change. Then I look for for things like their motivation. I'm looking for that the the salaries, the extracurricular stuff. I really don't like founders that start over self-promoting and over marketing themselves too much. That's shows to me that they're their focus is shifting. And then, of course, you look at intercompany transactions as a due diligence process that's outlined in every annual report. You would have avoided companies like we work if you look through the intercompany transactions. And then lastly, you know, for some of the older founders succession planning, I was in Korea interviewing a founder, and he was saying that he lamented the fact that his daughter was not interested in his business. He said she just wants to be a K-pop star. She has. She has no interest in enjoying my company, and that's probably the price you pay when you're working so hard. So that's an important factor as well a risk factor. 

Alec: [00:24:13] Succession planning on the idea of selling down. You know, the if we take Atlassian as an example, Mike Cannon-Brookes and Scott Farquhar have a, I guess, a systematic way that they sell down stock, and they've been very clear to the market that at certain points, they will be selling down. And that's because they are taking minimum wage from as a salary and, you know, their wealth is tied up in Atlassian shares. Do you view that selling down the same way you might view, I guess, more of a surprise announcement that that a founder has sold out? 

Lawrence Lam: [00:24:46] Yeah, it's definitely an American style where you have the two circles of three five one. Basically, it's a it's a document that outlines your plan to sell down, and that's. So it's programmed in and that is nowhere near as bad as this, as a as a voluntary sell done for obvious reasons. And you got to recognise that companies like Atlassian, they're not paying dividends. So, you know, the only way that the guys that can extract value is either through salary or also sell down 10b5 one plans are quite common for a lot of founders in the US. It's distinctly different to European and Asian founders. You know, the culture there for Europeans and Asians is that are seldom they hold on to it quite tightly. It's more of a dynastic mindset, so you get a full spectrum from the American guys who like to flip like to sell lot to start the next thing. On balance, the guys are lasting quite quite fair. You know, I'd rather than pay themselves minimum salary and say them sell down than someone who pays themselves two to three million dollars and also settles down. That's my take on it. 

Alec: [00:25:53] You mentioned succession planning there, and I guess that's a really interesting one to touch on because some of the companies you mentioned so far, you know, like the Wal-Marts, the Nike's were founded led for a long time, but the founders no longer run those businesses. What do you want to see in succession planning? Do you want to see it stay in the family? Or, you know, if it's if, do you want to say, I guess, a professional CEO or someone who's been in the company for a long time step in. But then the founder and the founder's family taking a back seat? 

Lawrence Lam: [00:26:26] Yeah, that's a very common model in Europe, especially. You have holding companies where generations hold on to the company and they run by professional managers for Lumenary, for my sons. That's beyond my interests. So when they get to that point, the moments the Nike's the Marriott said, we were a former investor, Nike, but we've since disposed of that stock. But when you get to that sort of age, it's I think there's a lot better opportunities elsewhere. And as I said, the universe is big, so. You compare companies like Identical last year and even and you compare those to the older generation founder led companies. For me, I'd rather look at at the first generation founder who's still hungry, who's still highly motivated. And there are plenty of those. 

Bryce: [00:27:10] You know, there's obviously a changing dynamic here. How has your approach and philosophy changed and what's the general trend? I guess when it comes to these family companies, we're seeing less and less of an opportunity. Feels like the Start-Up space in Australia is only growing, you know, more IPOs coming to market. How do you see this playing out over the next sort of 10 years from your portfolio point of view? 

Lawrence Lam: [00:27:31] Well, I think for more, the mainstream names are done. It's a little bit like when we talked about the Nasdaq 100. Yeah, the Facebook Amazon's Alphabet's the Afterpay is the square's, you know, it's too obvious. It's too well, Covid the edge that a lot of investors in this space will have is to look for the up and coming first generation founders. Mm-Hmm. So I used to focus a lot on the second third generation, more of that kind of value mindset, the older companies industries. I've realised it's too commoditized and too mainstream. What you really should be focussing on are the first movers, and the reasoning is because the market has changed, the tools to grow are available. This ability to go viral is available to anyone, and you really want to then harness that hunger and drive so it is possible to game change and go global much faster. These days, you look at companies like Zillow, HelloFresh, Spotify, Doc, Check, these are all companies that have just sprouted in the last 10 years, and that's where the evolution of this fad of LED investing will head. 

Bryce: [00:28:41] Did you get in an Afterpay? 

Lawrence Lam: [00:28:42] No, no, no, no. I I actually don't hold any in Australia at the moment at all. Out of the 11 stocks, and I'm very globally focussed. I just think there's a lot more opportunity globally, and I really want to see companies that, you know, don't don't end up being acquired. I want the runway to be extremely far along. 

Alec: [00:29:04] Yeah, yeah, yeah. On that theme of it's never been easier for companies to start and go viral and, you know, expand globally from the comfort of their computer. Are there any companies that you're watching now that you think really embody some of those traits that you've that you've previously seen in the likes of Spotify and companies like that? 

Lawrence Lam: [00:29:27] I think in the advertising space, really fascinating space. There's a few shadow led companies I am looking very closely at at the moment and it's not Trade Desk, but it's that's that's again, to too obvious. The advertising space is changing very quickly. The cookies is dying. Chrome is has now. A lot of browsers have now announced that the cookie will be dead by 2023. And this opens up a lot of opportunity. So where this change, where there's challenges, that's where these founders really come through. So advertising platforms that facilitate a digital style of buying and selling media assets and even just through the pandemic, now you look at how differently we are now consuming media podcasts are on the rise. Connected TV, CTV TV, they call it over-the-top media is on huge growth trajectories, and at the moment you're paying for a subscription on Netflix, you're not seeing any ads. But as the market evolves, there's a huge opportunity for ads to be placed to change that pricing model where some people might choose. I don't want to pay subscription, but I'm happy to see that. And that's where this automation of advertising and buying and selling of media assets will change. But in terms of names withholding for now, OK, so for now? 

Alec: [00:30:58] Fair enough. Fair enough. Well, we'll have to keep an eye on your fund and see if any of that if you mention any names. Yeah, it's it's a fascinating strategy. And I think, you know, from when I first was thinking about founder led companies to now thinking about some of those names that are actually talking about their their names that have really driven returns in markets, you know, Afterpay has been one of the best performers of the last few years in Australia. Atlassian, Mercado, Labour, I like they are their companies really on the forefront of some innovation. And if you think back in history, Walmart and Nike and stuff were much the same for past generations, so it's fascinating strategy. If people want to find out more about the strategy, are there any particular resources you used to build your knowledge, any books or anything? And then on the flip side, is there any way they can jump on to read more of your work and find out more about the strategy? 

Lawrence Lam: [00:31:53] Yeah, website is the best. Plans to keep in touch, Luminary Invest. Dot com. I publish a newsletter showing how to let companies interesting ones I come across on a quarterly basis so I can just subscribe to that study. in terms of box of resources, you know, I I read a lot of fiction these days. I find that it helps with my empathy and it allows me to be in the shoes of not only historical figures, but people in different industries. So I find that helpful. If you talk about non-fiction, you know I'm more interested in psychology these days. Influence by Robert Cialdini is a great book in terms of biography. Shoe Dog by Phil Knight, the founder of Nike. Fascinating book that almost borders on on fiction. It's that unreal and that inspirational for the pure finance nuts. I really like academics because I find that they don't have a have a vested interest in what they write. So basically Bruce Greenwald value investing. Peter Lynch has written a book. He's retired now, but one off on Wall Street is a fascinating book about how the everyday person can get an edge over Wall Street. For those that are insufficient, catch a Montecristo oldie, but a goody. Alexandra Duma just amazing tale of imagination and going through challenges in one's life and overcoming those. 

Alec: [00:33:20] There's some, some good recommendations there. Bryce's go to recommendation whenever he's talking books is Shoe Dog by Phil Knight and given its founder led company its very on theme for today's interview. So we'll jump into the final two questions, then in 60 seconds or less. What's the best company you've ever come across? 

Lawrence Lam: [00:33:43] Look, there's a lot of really good companies I've come across. If I was to pick one, the very best is Hermes. The French luxury brand, I am in awe of their longevity. And if I talk about the grave difficulty, a lot of people talk about growing fast, being the coolest company, being the coolest tech. I think longevity is the hardest thing to achieve as a company and as is a company that's been around 200 odd years. It's a really old company, but still growing at an incredible rate and still fragile. It still owned by descendants of Hermes. 

Bryce: [00:34:21] Wow. How have they managed to sell used handbags for one hundred and one thousand six hundred twenty nine dollars? I'm looking online here. It's just it's just it's incredible. It's incredible. Seriously strong. 

Lawrence Lam: [00:34:33] Yes, it's crazy. But yes, you know, those are the companies I admire, the ones that that that are just been around for for centuries and will continue to be around. It's probably the best company for me. 

Alec: [00:34:47] Well, I'm just so yeah, their share price chart, what I listed in nineteen ninety three at just under six euros and they're now over a thousand or one thousand two hundred euros. That's compounding for you. 

Lawrence Lam: [00:34:59] Yeah, in a in a in a retail market, you know, to be so dominant with the brand. And that's that's the power of time and chipping away at things and that mindset. 

Alec: [00:35:10] Yeah, it's fascinating. So Lawrence, final question that we always like to in these interviews with. If you if you think back to your younger self when you were just starting out, you know, investing, you were doing your masters course and spending the weekend looking for undervalued losses and rates. What advice would you give to your younger self? 

Lawrence Lam: [00:35:34] I would tell myself in February 2008 and February 2020, just cash it all out, cash it all out, cash it all out and come back in two months later, wouldn't we all? And I seriously I'd I'd tell myself to take advantage of my strengths early on. My evolution has come from a really strict value, value based, rules based style and as such have overlooked a lot of opportunities. I was very black and white, two black and white and two too closely following of what others did you know through my sort of reading about their experiences and reading their books and things like that. But the key to investing is actually to learn from their mistakes before you so you don't need to make your own, but to adapt your own strengths into your style. So I would advise myself don't try and invest like a 60 year old fund manager. You know, at 60, you've got advantages being younger. What work for them back in their day doesn't work now. Market conditions and human advancement changes and the game changes constantly. So play to your strength. For me, that's next generation founder led companies. It's understanding emerging products and services, using them being customers of these products and services under. Adding broader geographies beyond Australia and the U.S., it's looking into Asia and Europe, going broader and deeper than other people. And that's my game. That's where my advantage lies, and that's what I would tell myself to do. 

Bryce: [00:37:07] Awesome. Thanks, Lawrence. Great way to finish the episode. And it's been truly fascinating. It's a strategy that we haven't spoken about in detail on the show before, so we very much appreciate you coming on and sharing your insights and your time with us today. I know that a lot of the community would have really enjoyed that conversation. So an absolute pleasure. And we thank you. 

Lawrence Lam: [00:37:28] Thank you, guys. I'll be keeping a close eye on your podcast and wishing you all the best and a successful future and founders yourselves. 

Alec: [00:37:35] Thank you very much. Appreciate it. 

Bryce: [00:37:38] Hey, thanks for listening to this episode of Equity Mates. We love hearing from you, so drop us a line at or even better, go to your podcast player and leave a five star review. Also, a reminder that the Equity Mates content train doesn't stop when you've run out of episodes to binge. We've got a brand new website, a Facebook discussion group where on Instagram, YouTube and slowly making our way as an influencer on Tik-tok. That's Ren. So come and say hello and join the community. We'd love to welcome you. Until next time,

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