One of our favorite events at Fool HQ is FoolFest, when our members get the chance to gather together and learn about investing face to face with their favorite Foolish folk. And Motley Fool Answers co-hosts Alison Southwick and Robert Brokamp think you'd all enjoy it, too. That's why, for this podcast, they're skipping their usual witty banter -- heck, Bro didn't even show up in the studio -- and instead sharing one of the conference's highlights: Chris Hill's interview with the fraternal fellows who founded the Fool in the first place, Tom and David Gardner.

In this segment, they explain the ways their investing approaches have changed, talk about some ridiculous conditions that individual investors used to have to accept, and reminisce about a few of their favorite Foolish memories.

A full transcript follows the video.

This video was recorded on July 24, 2018.

Chris Hill: Over the last 25 years what's one way that your investing approach has changed? And that can be something small, or that could be something that you believed in your core as an investor 25 years ago that today you just no longer believe.

David Gardner: For me, it goes back to my Yahoo! story, I think, Chris. When Tom and I started the site online on AOL [keyword: FOOL], we were basically picking stocks right out front of America. Anybody could join America Online and come see what we were saying you should do.

And when you have people doing that, you have the ultimate scorekeeper in the sky. It is everyone else's attention. And since we're very numerical in what we're doing, it can be totted up and we're saying we think we'll beat the market. We think that you can, too. In a world that it seems like people don't really believe that, let's do that.

And then we look back on the ones that really hurt that taught us something. So for me one year in I got this conviction that Yahoo! was going to be a good stock. And spoiler alert -- it ended up being a very good stock for quite a while.

This is 1995. Yahoo! is at $29 and I had calculated my own valuation for it. I had it at like $25.60, or something like that, so I was waiting for Yahoo! to get to $25.60. It never did. What it did, though, is it got to $2,560 without my [or maybe your] money on it and that was the last time I decided that I'm going to sit there and decide that I have the valuation in my head that's superior to the market's and I'm going to insist that the market conform to what I believe should happen so I can get rich. That changed me forever into saying, "It's about buying greatness. It's not about my DCF out to the second decimal."

Hill: Tom?

Tom Gardner: I would say first find people that you believe in so much. I mean this in the public markets since that's primarily where we're investing. We think of it with entrepreneurs and start-ups, but I mean it with companies of any size and in the public markets. Find people that you believe in so much that you wouldn't feel bad if you lost money with them.

I often will say that to the CEO because, of course, it fires them up a little bit more not to be that person. But I think the quality of the leadership team. What you can learn from them. Finding investments where, again, if they lost you money you would learn so much because you believe so much in them that something else must have gone wrong that you could learn. So I think really starting with the people has been a big change.

And then the second one was just listen to my older brother. That's it.

People are like, "Wait! He's your older brother? You look like you're 20 years older than him!" I tell this periodically, so some of you have heard it before, but it delights me every single time. There was a day where our awesome team in Member Services -- on the phone lines talking to all of you and making sure you're set up correctly with your services -- all came barreling out of their area laughing.

I was like, "Wow, what happened? What happened?"

"Well, this gentleman called, and we were trying to make sure he was hooked up correctly. We were asking him what service he subscribes to and he couldn't come up with a name. So he's sitting there struggling and then he just said, 'I can't remember the name. It's the one where the father and son are picking stocks.'" It gets such a great laugh it's almost like I made it up, but it's true.

Hill: I know from years of working with you and also just from talking to you over the last couple of days that you don't do a lot of looking back over the last 25 years. You're both much more interested in the next 25 years than the previous. That being said, I would be remiss if I did not ask at least one question about the past 25 years, and Tom, I'll start with you.

When you think about the changes in the world of investing -- when you think about the last 25 years and all the changes that have happened in the investing world -- you don't have to say it, but I'll say it. Some of those changes for the better are in part because of the work of the company that you and David built. What stands out as the most ridiculous to you?

T. Gardner: The most ridiculous good or bad change?

Hill: For good. Like, wow! Here's how ridiculous the world of investing used to be. And I'll just throw out as an example -- when I talk to younger people in the office -- and that's when I talk about Regulation Fair Disclosure. In the year 2000 the SEC, by a very close vote, voted in favor of what was referred to as Regulation Fair Disclosure. It was this radical notion that public companies should disclose meaningful information to all investors at the same time. And sometimes when I'm talking to younger people at the office about that, they look at me like I'm insane. Why wouldn't that always be the case?

T. Gardner: Yes, that only won by one vote and we're thankful to Arthur Levitt, the head of the SEC then, who really was an advocate for that and thank you to all of you. Typically the SEC when they reach for comments from the general public on an initiative will get seven, or eight, or 10 notes submitted. I think we sent 1,300 notes from The Motley Fool to the SEC. In doing all that, Arthur said [and said it in USA Today] he felt that that's what caused us to get that extra vote. So thank you for that reference, Chris. I'm going to go in a slightly different direction. Just a recent memory. We were in London traveling to open Motley Fool Hong Kong, which is very exciting for us, and in London [we met] with the owner of a Premier League football team, who's a phenomenal Fool [it's Crystal Palace if you follow football].

I'll just say that he was laughing at something that we hear frequently. It's not a big deal in life, but it just is funny. He said, "The wealth managers or wealth advisors I work with. When they ask me where that stock came from and I tell them The Motley Fool, they laugh at you guys. Like, it can't be real. Why are you doing that?"

I think I still remain very excited about bringing more transparency of performance. What's laughable to me 25 years ago is that there really was no scorekeeping going on and I think we can do a better job helping you keep score. I know a lot of you have passion for tools like My Scorecard tools and improving that, and we really want to do that.

I just think the scoring system has gotten so much better. I don't think people were comparing their returns to the index funds. In fact, I think a lot of people were talking about index funds under the random walk theory and saying it's impossible to beat the market.

I think one of the things that's helped Vanguard is our community saying, "It's not really bad. It's that that's a great place to start." And for a lot of people that's a great place to end. A totally tax-efficient, essentially free way to buy the entire market. And because people weren't keeping score, they didn't realize how much better that is than so much of the shlock that's offered by the financial services industry for investors.

But you shouldn't stop there. It's not like you can't beat the market. That's a terrible argument for a host of different reasons. It's just, "Wow, what a great baseline for everyone to use and we try and beat it."

Hill: One thing from the past 25 years that strikes you as particularly ridiculous from the world of investing?

D. Gardner: It's understandable. Looking backwards and seeing it from our vantage point now, it looks ridiculous, but at the time it made sense. As a stock market aficionado from my teens [because my dad got me started early], I had the opportunity to start figuring out what are the tools out there that could make me a better investor. And one of them was a little guide. It was a little booklet published by Standard & Poor's called the S&P Chart Guide.

The S&P Chart Guide I subscribed to. It came out on a quarterly basis. It had about 500 stock charts of the S&P 500. Maybe more like a thousand. I see some people nodding, because maybe you were a fellow subscriber. It was $50 a year, so it was not terribly expensive, but that was the only way back then that you could actually see the stock chart of stocks over the last year.

Now, if you wanted to pay up for something like Value Line [which many of us will know] then you could get it, but it's amazing to think that we were subscribed on something that would only come once every three months for $50 to see where stocks had been over the last year. And these days, obviously, we get it all for free, in real time, for far more than 500 stocks and did I mention for free.

So yes, looking backwards that's just for me a microcosmic view of many other things that were true back then. A big truth that Tom and I recognized early [maybe earlier than the rest of our industry] is that the internet could be the best friend of the investor, and it was often being portrayed as antithetical to investor interests.

Merrill Lynch, which isn't still an independent company today, used to say that the biggest threat to America's investors is the internet. And we, instead, put out a press release a day or two later and we said we think actually the biggest threat to American investors is Merrill Lynch.

Hill: "What is your most memorable moment from 25 years of Fooldom?"

D. Gardner: [Laughs] I thought it was going to get easier as we went. I'll give two. One is the very first time The Motley Fool was ever printed in The Wall Street Journal. I will never not still love that moment. It always gets me back in touch with before all of this, and all of the things that have happened over the last 25 years when Tom, our friend Eric, our small team, and I [with a newsletter for our parents' friends] got The Motley Fool referenced in The Wall Street Journal. We thought that was hilarious. And really, to get back in touch with that now 25 years later, how awesome is it that we're creating a financial enterprise of I hope real consequence in this world and it's bearing the name The Motley Fool. I mean, to me that says good things about the future.

I always go back to that first time that we pulled that phrase from Shakespeare and thought that would be fun to do that. It shows up all of Wall Street's wise men. It just undercuts all of the pomp and circumstance and three-piece suits and all the rest. And arrogance. Let's be fools. That's the first time that happened with The Wall Street Journal.

And then my other moment -- I mean, there's so many moments -- and I appreciate the question. I think it was April Fool's day. Was it 2014, Tom, or 2015 when we fully paid off external debt?

T. Gardner: 2014.

D. Gardner: Fourteen. Thank you! April 1 -- 4/1 -- April Fool's Day 2014 we became a fully autonomous corporation with no debt. And I know some of you know this story and we're not going to go back over it now, but at one point we looked at it and we realized that we had nine figures of debt to pay off. Not that we couldn't have done it other ways, but we actively chose to buy out our VCs and the money that had been invested in us in order that we could become our own thing and make our own decisions as a private company that had no outside ownership.

And so for about five, six, seven years [Chris, you were there and many other Fools in the room were there with us all the way through], we took all of our cash flow and we just paid it out. We had no R&D. We didn't have anything that we could do. We could be scrappy and innovate in little ways, but we had no R&D. All of our cash flow going out the door. And now, for the last three years [and you're starting to see what this looks like], we're starting a venture fund. I'm looking forward to talking with some of you about that this afternoon. We have a lot of new enterprises that we're contemplating, some of which we're enacting.

We're going to try and make the world more Foolish, and I think a lot of it goes down to "Let's pay off the $100+ million of debt." And my brother Tom, more than anybody, has had that vision, and has enabled our enterprise to do that. And that is a pretty awesome thing. So those are two memories that I appreciate in our first 25 years. Of course, I'm much more interested in the next 25 years for our portfolios and certainly for our business.

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