Joys of Compounding
Episode 18 The Art of Compounding
Joys of Compounding

Episode 18: The Art of Compounding

Joys of Compounding

Episode 18

The Art of Compounding

Mitch Rales is the co-founder of Danaher. We cover the formula behind four decades of compounding success, why benchmarking and continuous adaptation are essential to building a winning organization, and the fishing trip that inspired his philanthropy.

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(00:00:00) - Welcome to The Art of Investing

(00:04:32) - The Philosophy Behind Glenstone's Creation

(00:11:57) - Benchmarking and Continuous Improvement: Lessons from Danaher and Glenstone

(00:20:22) - The Influence of Mitch’s Father and Upbringing

(00:27:43) - Transforming Danaher During The George Sherman

(00:29:39) - Embracing Long-Term Vision and Patience

(00:35:47) - The Role of Leadership in Navigating Change

(00:41:21) - Danaher's Evolutionary Journey: From 1.0 to 4.0

(00:55:37) - Building a Culture of Internal Growth and External Innovation

(00:57:42) - The Art of Successful Acquisitions and Integration Strategies

(01:02:03) - Seeking Leadership Qualities and Business Traits for Long-Term Success

(01:05:14) - The Journey from Personal Experience to Philanthropy

(01:12:10) - Investment Philosophy: Concentration vs. Diversification

(01:28:46) - Operational Expertise as a Catalyst for Company Growth

(01:33:17) - Identifying and Supporting Talent in Business

(01:42:02) - The Impact of Secular Trends on Long-Term Investments

(01:48:53) - Revitalizing the Washington Commanders

(01:56:36) - Engaging with Fans and Building a Winning Culture

(02:04:16) - The Importance of Long-Term Vision

 

The Art of Compounding

Introduction

Rick
Our teacher today is Mitch Rales, one of the most iconic business builders and philanthropist of our time. Having cofounded Danaher 40 years ago, alongside his brother and best friend Steve, the Rales boys have strung together a track record of compounding that might even make Buffett blush. Consider that Danaher has annualized at over 21% for four decades, resulting in an 1,800x multiple on invested capital. And while the numbers are mind-blowing, the story of how it all went down is even more remarkable.

In this conversation, you'll learn from Mitch about the key inputs to his outlier success; why greatness is a journey that takes an unusual time horizon; the role that benchmarking plays in standing up any winning organization; why it's essential to cultivate learning agility and embrace transformational pivots over time in order to adapt and thrive in an ever-changing landscape; how an uncommon commitment to continuous improvement and long-term thinking, both at the individual and corporate level, have fueled one of the most impactful companies of our time; and also, the qualities that Mitch looks for both in leaders and businesses he looks to support.

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