Cliff Sosin
speaker
323 appearances
1 recordings
1 series
first heard Apr 2025
last heard Apr 2025
Cliff Sosin’s voice in public audio — every appearance, attributed to the second.
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You know, in any market, there's a sort of fixed number of rental companies and they own a certain amount of equipment and their ability to change that in the short term is constrained. And therefore, you know, it's a Corneau oligopoly. And it's also a good one because elasticity of demand is demand is very inelastic. Turns out nobody said like.
You know, I see the price of man lifts is down 100 bucks this week. I'm going to rent one. And at the same time, nobody ever said like, I'm not going to build my building because the price of man lifts is up 100 bucks this month. I hope that got to your question.
But basically, you can think about there being many of these things, like these concepts that you can then kind of follow to their conclusions. And of course, life is complicated. And every company has like often a whole confluence of these things. And what you're really looking for is a business where you have a sort of a bunch of these things that are working together.
With the cruise ship industry, like the idea that it takes a long time to build a cruise ship and you can't just snap your fingers and have another cruise ship is fairly invariant to technological change in society. I guess maybe there's some future state where we can like, you know... Print them out. Print them out. But like for now and for the foreseeable future, this is going to be fixed.
And so... you're looking for relatively sort of technological change in variant advantages and layered and interwoven that kind of give you the business. And then from there, I have a friend who jokes that... A good value investors, you know, memo is like 20 pages about the business and one page on the valuation. So like from then from there, it's like, I don't know, like, is it cheap?
Does it make a lot of money relative to the price? Is it going to grow a lot relative to the price? You know, these are pretty trivial calculations.
Oh, so you're asking how do you find the gold on the ground? The answer is yes. It's hard. There's nothing, I keep coming back to that, but there's nothing about investing that's not hard. We look for, I hired a Stanford professor to assemble all of the economics models in all of the courses in Stanford and then just walk me through all of them to make sure I hadn't missed any.
And I picked up a few that I'd missed or forgotten about. I would try to read broadly. Then, of course, you study companies one after the other. And in various companies, it'll sort of click for you that something is happening.
So this is just a different place. This is out of psychology. It turns out that there's a meaningful psychology literature that's been built up in animal studies and people and all the rest, which basically says this idea that when you give...
you know, mammals, something that stimulates their reward systems, your brain, for lack of a better term, sort of captures the context in which it was received. And then, you know, if it likes it, tries to replicate that context. And you can, the sort of evolutionary reason why this makes sense is self-evident. And
What makes that interesting is that it turns out that the strength of these secondary reinforcers is proportionate to the power of the stimulus, as well as it's proportionate to the... inversely proportionate to the time lag between when the stimulus comes and when the pleasure sensors get stimulated.
So if something makes you feel good three hours after you got it, your brain kind of doesn't know where it came from. If something makes you feel good within a moment of when you got it, then your brain knows exactly. And what's interesting about that is this is called secondary reinforcers because you create these associations
between the stimulus and other things that are in the context that it was received. So you can make rats prefer cocaine that's given to them with a certain color light. They'll continue to seek out that light even when you deprive them of the cocaine. Okay, cool. That's a neat thing to know about the human brain. Where do I see that applied? Well, if I were to rank
by margins, the consumer packaged goods industries, I think the ranking might look something like this. You'd have the nicotine cigarettes at the top, and then you'd have like dip, and then you'd probably have Coca-Cola, and then you'd probably have coffee, and then you'd probably somewhere have like
candy and then you'd have like sugary sweets like um uh you know cookies and stuff like that and then you'd have like tomato sauce and bread and then you'd have i don't know water right something like that it's probably a rough like ranking well it turns out that if you go down that same list and you ask, what is stimulating people's pleasure systems?
Well, in the case of nicotine inhaled through a cigarette or a vaping product, nicotine is incredibly powerful. And the respiratory system is a very fast delivery mechanism. So you get this very rapid stimulation of people's pleasure sensors. And lo and behold, it creates these very strong secondary reinforcers, which make people very brand low.
If you ever watch smokers, they're not only smoking the same brand, they're smoking at the same time in the same place every day. It also helps that nicotine is addictive, which creates a trigger for a habit, which is a whole other brain function piece where you're kind of making and following habits.
You know, if you go down the list, caffeine is a good stimulator, but, you know, it's not as potent necessarily as nicotine. More importantly, you're taking it through your stomach. And by the way, dip goes through your lips. So it's pretty fast, but not as fast as cigarettes. Caffeine soda has sugar and caffeine.
It goes through your stomach, so it's slower, but it still creates a fair bit of, the association isn't that far apart. Then you get to things like cookies. The cookies mix with fat and stuff, so it slows it down. The sugar's mixed with fat and stuff, so it slows it down even more, but it's still pretty potent. It's obviously a sweet.
You work your way farther down, you get to your savories or whatever. Here, yes, these are things people really like, but the sort of stimulation is much weaker. It's more time lagged. And as a consequence, people, they have a preferred tomato sauce, but in the end, it's much less brand loyalty than, say, a cigarette.
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