In his epic commencement speech to the USC law school grads in 1994, Charlie Munger mentions “scale” 24 times.
The advantages of scale are “ungodly important”, he points out.
Benefits of scale include reducing costs, raising prices and testing new markets.
In a beer business, for example, Anheuser-Busch operates at such a higher volume than Anchor Steam beer (based in San Francisco), that …
You know the story of the man who wanted to know where he was going to die, so he could make sure not to go there?
That’s a favorite story of Charlie Munger’s to explain the concept of inversion.
Munger credits mathematician Carl Jacobi (who famously said: “Invert, always invert”) who recommended working through math problems in reverse.
As A Margin of Safety wrote in Invert, Always Invert, an example of inversion (working through a problem backwards) came from University of Florida professor Jay Ritter who looked at the problem of whether to invest in Facebook around the time of its IPO. …