In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner shares some of his favorite quotes. He talks about the origin story of The Motley Fool, a belated April Fool's prank on the company's 27th anniversary, and disruptive innovations.
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This video was recorded on June 30, 2020.
David Gardner: 27 years ago, this week, I went down to Kinko's, printed out 1,000 copies of a paper newsletter, trundled over to the post office and the first edition of something called The Motley Fool was sent off to friends and family. It costs $48/year and not many people subscribed. Well, fast-forward to today, 27 years later, as we publish this week, it's The Motley Fool's birthday. And instead of asking you for $48/year, this podcast costs nothing, hasn't for five years, asks simply for a different form of investment from you, an investment of your time.
This week we return to one of our longest running series, it's Great Quotes Vol. 12 on our birthday. Only on this week's Rule Breaker Investing.
And welcome back to Rule Breaker Investing. So good to have you with me this week. Here we are, recording on the final day of June, but you'll be hearing this on the 1st of July, so Happy July! And certainly, for those of us in the United States, this is a special week, every week, it is our nation's birthday. It's also The Motley Fool's birthday this week, as I mentioned at the top, June 30th is traditionally the day that we associate with the formation of The Motley Fool, because it was the day that I was at Kinko's, and then to the post office, sending off 1,000 copies. It was just about exactly 1,000 copies.
I remember how I got 1,000 people on my list. Well, our cousin had recently gotten married in North Dakota, of all places, and so he gave us his wedding list, and I had my high school graduation list, my class, and Tom had his. And we just, kind of, brought together as many lists as we could and just mailed off our newsletter, it was called The Motley Fool, a phrase that I pulled from Shakespeare just nights before; we went with it.
And as those subscriptions came in, $48/year, we noticed two things about them. First of all, they tended to be just from our parent's friends, nobody else. Really, I'm not sure any member of my high school class wanted to pay me $48 for my thoughts on the world or on the stock market at that time. So, result No. 1 was most of our subscribers were our parent's friends. And as we've often said, they were pretty much just feeling sorry for us, as we think now in retrospect. That's what got The Motley Fool started.
The second result from this was, well, within the following few weeks, we would receive 35 subscriptions. Yep, 35 X $48 isn't a lot of money, but we were just starting it out of a labor of love, it wasn't about the money, certainly, at that point. But we did think there would be more love coming to our labor of love. And we really only got 35 subscriptions after sending out what we had labored on for the previous month and sent out to everybody that we thought might love us in the world and only 35 people came back, and I was bemoaning it a little bit at a cocktail party that following week. And a gentleman at the party said, OK, so how many did you send off? I said, well, 1,000. He said, well, you got 35 back, that's a 3.5% response rate, that's an amazing rate. I work in the direct marketing industry, 1% is standard, so you should be pinching yourself. And I [laughs] sure didn't feel that rewarded for it.
Eventually those subscriptions would go higher, in part, because we began to answer questions, money questions on America Online. We were just paying customers ourselves back then, Tom and I, and a Motley band of a few friends, but we began to answer people's questions there. And say, hey, and if you'd like a free copy of our newsletter, happy to send you one. And so, we began to introduce The Motley Fool to the world through America Online. And months later, when we played an April Fool's joke, satirizing penny stock hype, which we wrote about in our first book, The Motley Fool Investment Guide, all of a sudden we had some national articles calling attention to what we were doing with our Motley Fool newsletter and our Motley Fool account on America Online. AOL then asked, hey, you guys want to go out for lunch? It looks like you live in Northern Virginia. They were just reading about their paying customers in Forbes and The Wall Street Journal, and the prank that we had pulled. And well, the rest, I guess in some senses, is history. A small piece of internet history, but something that looms large now, 27 years later, as we think back.
And so, after sending out that newsletter, the final day of June 1993, we launched on America Online on August 4th of 1994, just about a year later. And as I've sometimes thought, in retrospect, how amazing this was, from that standing start of this day 27 years ago, within three years we were on the cover of Fortune Magazine. In a lot of ways that shows the incredible ascent that Tom and I and our small band of Fools experienced those first few years of our company.
And it's amazing to think back on it, but it's so much more fun today than it was back then. And it's so much better known and, I think, better appreciated in the world than we were back then. It's so much more fun to be alive in 2020 than it was in 1993. So, nostalgia is cast aside.
If you do follow us on social media, you may have seen our new logo that came out a couple of days ago. Yep, we debut that to the world on Monday, June 29th. And as some people figured out, I think probably most of my listeners would have figured out, those were jokes, those were not going to be the next Motley Fool logo, they looked awfully like some strange riffs on some of our favorite companies. So, Monday morning the initial Motley Fool new logo, looking a lot like Monster Beverage came out and people didn't think much of that one, and so we swapped in a different one, as our marketing and branding department started to react to the internet, and we came up with one that looked, well, looked a lot like Netflix in some ways. And then that one didn't take very well, so we came out with one that looked almost like its own thing, it was pretty bland. It did have a distinctive mark from Amazon on it though. And then by the end of the day, we've thrown up our hands and decided just to combine all three into an epically overwrought logo [laughs] that combined the logos of several companies and had us trying to explain ourselves in social media.
This was initially going to be our April Fool's joke of this year, but at the time, an April Fool's joke didn't seem appropriate, and so we did something different, that some of you may remember, this year for April Fool's. But we parked it, and we had been scheduled to release our logo and everything back then a couple of months ago, but we patiently waited and decided this week was the time in line with The Fool's birthday.
So, sure enough, yesterday, Tuesday, June 30th, we did come out with our new logo. We're excited about it. Hey, it's just a logo. It's the same purpose statement, we haven't changed that much, but it is a little bit more visually dressed up. I think it's a little bit more current, modern, feels like a lot of fun, I'm very excited to have rebranded.
And Shop.Fool.com is the site where you can find some of our swag, if you're interested in a Fool shirt, mug or cap.
So, it's a very busy week, and I admit I'm somewhat distracted this week by all of these Foolish festivities and a lot else happening in the world and I'm due to go to the beach at some point later this month, so I've got to plan a podcast or two ahead. So, this is all my way of saying that I decided to go to great quotes.
And we've done 11 of these episodes in the past. In fact, the last edition of Great Quotes Vol. 11 was on March 4th of this year, more than three months ago; you'll remember, I hope. It was the listener edition, I asked you to send in great quotes and you did, and I pulled five, and we had fun together on March 4th. Well, this is Vol. 12, I'm going to go back to searching for quotes myself, which I've done.
And most of these episodes in the series have been five quotes each, and that's what I have for you today, but since I'm a little distracted and it's summer, I think we're going to go shorter form. I've got the quotes lined up. I'm not exactly sure what I'm going to say about them, but I know one thing, it's going to be about five minutes per quote; that's what I'm shooting for. So, without further ado let's get started.
Great Quotes Vol. 12 quote No. 1. Well, this one comes from somebody I never studied in college, but ever since I first came across this quotation, years ago, I thought how perfectly it fits into Rule Breaker Investing and the Rule Breaker mentality. I never did study Arthur Schopenhauer, the German philosopher who was born in the late-18th century, not long after the American revolution. One of those people who lived, I don't know why I'm expressing this in American terms, maybe it's because it's America's birthday this week, but he lived just short of the American Civil War. He lived long enough that we have a photo of him. So, somebody who's born in the 18th century, but there's a photo of him right up there on his Wikipedia page, you can read more about him.
He is credited in many ways for his realistic pessimism. Now, that's not something that fits that much with how I think about things, which is I'm more of a rational optimist myself. But, boy! Do I love this quote that I get to share with you right now, and here it is, of course, this is the English translation. "Talent hits a target no one else can hit, genius hits a target no one else can see." And ever since I first came across the quote in my reading, I think, 15 years ago or so, I thought, isn't that a perfect description of Rule Breaker companies and Rule Breaker Investing?
Well, let's talk about talent first. And talent is always a dear commodity in this world. True talent is really special. And all of us are developing talents, and not every talent needs to be talented and not every talented person needs to be the best. Talents are something that we try to gain over the course of our lives and improve on. And some of us have a lot of them and some of us have a few. And of those few, we might be world-class. Some of us are very focused people, and some of us, like me, are hopelessly spread out. But talent hits a target no one else can hit.
So, whether you're thinking of somebody like Tiger Woods, who hits golf scores and golf balls in a way that nobody in history has really ever done before. Or lesser talents, like you think about a talented musician who might work in your local pub. "Talent hits a target no one else could hit." That's talking about great talent.
A target that no one else can hit, means you're kind of a one of a kind, and yet, Schopenhauer takes it one level higher, he then says, "Genius hits a target no one else can see." Now, why do I think about Rule Breakers when I hear that line? The reason is that, first of all, most of the great companies that have popped up over the course of my lifetime, the really great companies, have been doing something that either the world had never tried before or the world had never thought of before.
And often it looks pretty silly, like you think about how Netflix started, mailing people DVDs through the mail. Yep, you kept something called a "queue" which was on the Netflix site. You had your queued-up list of the next video they could mail you. And it seemed quite silly to the world when you thought about Blockbuster being just a few blocks away from everybody, why would you be mailing back-and-forth DVDs to Netflix, until you thought about it a little bit more, because when I first heard about it, I thought it was silly too, but when I thought about it a little bit more, I realized Netflix was changing the business model of the industry. Before that, Blockbuster and its ilk, your local video store, was very transactional. You went down, you had to spend some time to go down to the store, you spent maybe sometimes 45 minutes to an hour just looking over the racks, looking for what you'd see next. You'd find it and you'd pay for it and then you'd probably return it late and pay a late fee for it before you went back and got your next one. It was transactional. And Netflix flipped everything on its head and made it a subscription service. And the entire industry, which no longer exists, of video rentals, these days we call it streaming, and it's all subscription-based. "Genius hits a target no one else can see."
The companies that come along and do things differently end up being the great stories that we tell our kids and grandkids about when we think about new technologies and new businesses that showed up over the course of our lifetimes. And darn it! Did we own shares of those companies, think about Tesla, think about what Elon Musk has done with an electric car. "Genius hits a target no one else can see."
I remember, speaking of Netflix, there was a documentary called, Who Killed the Electric Car, that was popular for a while on Netflix. Turns out the electric car, good news, wasn't killed, it showed up, and these days, it increasingly looks like where the world is headed in really good ways. They are better cars and ultimately, they lead to a better world. You may fully agree with me on that, you may strongly disagree, one thing we can definitely agree on is that Tesla has been an incredible stock, up 30X in value over the last nine years; let's not even talk about Netflix and its returns, and so many other great Rule Breakers that looked so silly at the start, and then only later, once we got past the present and we got into the future could we start to realize that those visionary CEOs were coming up with ideas that no one else could see, and they hit that target.
And the more you and I can study that, follow that, and through the miracle of the stock market, be invested in that, be invested in the genius of others, what a great cooperative game it is, the game of the stock market, when you and I can own pieces of the company started by the geniuses of our time. Thank you, Arthur Schopenhauer, "Talent hits a target no one else can hit, genius hits a target no one else can see."
Alright quote No. 2. This one I first came across in one of David Allen's books. So, if you're a David Allen fan, the author of Getting Things Done, the GTD movement, you can google "GTD" as an acronym on the internet, if you haven't done that before and don't know what it is, you'll realize it stands for Getting Things Done, which was a wonderful book published in the early 00s. I think it was around 2003. I read it at the time and it gave me a much better sense of how to be organized and productive as a person, it really changed me in my mid-30s, when I was trying to balance all kinds of things, young kids, full-time business, etc. I realized I needed to get more productive, so I started turning to David Allen and Getting Things Done.
He's been a past guest on this podcast. You can google, "David Allen Rule Breaker Investing," and hear me interview the founder of GTD. In one of his books he had this otherwise nondescript quote, but I pulled it because it feels very present here in 2020. And it's by W.E. Channing. I have to admit, I didn't know who W.E. Channing was, so having googled it, I see here he was the foremost Unitarian preacher in the United States in the early 19th century. His dates are actually very similar to Arthur Schopenhauer's. Channing was 1780 to 1842.
Anyway, here's the simple quote. "People are lonely because they build walls instead of bridges." You know, two themes that come to me from 2020, among many themes, this is going to be one of those years, people are talking about years and years later. What you and I are living through right now will be remembered for a long time in lots of different ways, not just by us, but by people who come after us; what were the things you did, what were the things you said.
Two of the themes that come to me in 2020, one of them is loneliness, lockdown, distancing. The phrases that we're using, the language made lonelier by things like sports disappearing. How much time did I spend, and will I again be spending [laughs] watching baseball, watching basketball, watching sports, not just watching them by myself, but with friends and family and then talking about them at the water cooler or the convenience store the next day, maybe with a friend, maybe with a stranger. Sports is missing.
So, a lot of the things that kept us company; sports, other people, our co-workers. I think a lot about my co-workers at The Motley Fool. We had a fun event at The Motley Fool this week. In conjunction with our new branding, we all got free swag, we got a ball cap, we got a t-shirt, and you could simply drive and line up in your car around the block at our Alexandria, Virginia offices to go grab a hat and a shirt. And I suspect I wasn't the only one who was largely there just partly to see others, to see friends and check in again with people that I might have zoomed with a lot over the last few months, but hadn't seen in-person for months, people who've been, in some cases dear friends for decades. "People are lonely ... " W. E. Channing, " ... because they build walls instead of bridges." Loneliness.
The second theme though that I'm thinking about is the importance of unification and togetherness. That really stares me in the eye here in 2020. And I've been feeling this for years now that we need more forces that bring us together as opposed to those that divide us apart. I'm sorry to say that the very nature of politics, where we start naming states based on colors to draw big distinctions and where people who tend to be one party say they don't like the other party or people in the other party or the opinions of the other party. And they arrange themselves, they make themselves players in a binary play, a good and bad play.
And yet, this week, where we celebrate America, we are all Americans. And I really am not interested in people trying to pit you against me or me against this group of people, I'm really interested in the forces that bring us together; I like bridges, we got enough walls. Thank you, W. E. Channing.
Quote No. 3. This one comes from one of those investing greats. Yep, we are an investing podcast and from time-to-time on my great quotes volumes I've dedicated the entire podcast to somebody like, for example, Warren Buffett. I did a Warren Buffett, My Favorite Quotes From Buffett edition, a long time ago. So, yes, investing will always come in and intrude probably on these great quotes episodes. And this one is from Sir John Templeton. Now, this is somebody who lived during our lifetimes; he's no longer living. He lived a very productive long life. He was, by all accounts, a very good man.
And this is what he said at one point, and I'm quoting, "How wonderful it would be if we could help our children and grandchildren to learn Thanksgiving at an early age. Thanksgiving opens the doors; it changes a child's personality. A child is resentful, negative or thankful. Thankful children want to give. They radiate happiness, they draw people."
Well, I don't think I need to keep celebrating too much either The Motley Fool's birthday or America's birthday, I've referred to that enough already, but I think it is a week of giving thanks. And I hope that it's not about weeks or holidays that have us giving thanks, I think Templeton is talking about the importance of gratitude, a spirit of gratitude, and making sure we inculcate that spirit on our children.
I'm really happy to say that my parents did that well for me and, I think, my siblings. It wasn't a regular practice, it's not something where we had a gratitude practice or anything like that. Maybe it was just that I had such a wonderful childhood that I just felt grateful for it. One of the first times I came across gratitude in a corporate context; this one really jumped out at me. Early days, when I discovered conscious capitalism, and certainly Whole Foods, one of those companies, through its Founder John Mackey, who is today on The Motley Fool Board of Directors. Whole Foods is one of those conscious capitalism progenitors, one of those early and even present-day leaders. And one of the things that they always did at Whole Foods, and I'm sure continue to do, is they end their meetings with appreciation. And when I first heard this, it sounded a little bit hippy, a little bit funky out there to me, my straightjacketed East Coast upbringing, it sounded a little bit out there. Of course, John Mackey, if you've seen any pictures of him back in the day when he first started Whole Foods, [laughs] he was truly a hippy, he'd be the first one to say so.
But this isn't really a hippie practice, or if it is, hippie is good. Because every one of their meetings, they kind of conclude the end of that meeting by saying an appreciation about somebody else over the course of that hour. Something that you did in that meeting, something you didn't do, a reflection about the world at large, appreciation. And while I don't think it happens at the end of every single meeting, every single time at Whole Foods, it's certainly made an impression on me. And we've done it some for Motley Fool Board Meetings and we occasionally do it in different Fool contexts, and maybe you do too.
And I think a lot of us who are religious in whatever way, shape or form, probably have gratitude factors into that in a big way. But turns out it's not just for church, gratitude is for life, and as Templeton points out, it's such an attractive attribute. Thankful children want to give, they radiate happiness, they draw people.
And I know I've made a lot of it in the past month, because we celebrated Five Stocks For America a few weeks ago. I thought some about what I consider to be an American core value, and that's "kindness." And often I link kindness to gratitude. I also link kindness to forgiveness; this is something that I think is really important in the world at large. I know a lot of people talk about cancelling culture and are worried about that. And I would be worried about it too. And one of the best ways that we can get past that is to forgive. And forgiving is kind and it's grateful. So, yeah, kindness.
And here's a thought, there was a preacher named Morris Boyd that I used to see in New York City, a very talented Northern Irish, he had an amazing accent. And one of the things he used to say in so many words was, "We love our children into loving." I could say, we, in this case, we thank them into thanking. So, one of the ways to make your children more grateful is probably to be grateful to and for them.
"We love our children into loving, we thank them into thanking." The more that we're kind to others, the more it's likely they'll be kind to others themselves.
Alright. Am I stuck in the 19th century? I don't know what it is, but quote No. 4, maybe this week's podcast is a love letter to the dearly departed Arthur Schopenhauer, but once I started thinking more about Schopenhauer's quote, I started reading deeper into Schopenhauer. And then I came across a wonderful book called Completing Capitalism, which quoted Schopenhauer. So, here we are, we're going to rock a second Schopenhauer in this edition. Here it is, love this one.
He wrote, "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." Just those two quotes from Schopenhauer on their own might be all the Schopenhauer you ever need to read, but both of them so keenly insightful, so eloquent. I realize I'm presenting them in English translation, but let's look at that one again real quick. Truth goes through three stages. First, it is ridiculed. Well, we talked earlier about how when new Rule Breaker companies show up, or the visionaries who have the idea before they even have a company. And have you ever met one of these people, somebody who had a great idea, but it was just an idea? And then you watch them turn that into a product or into a company, but you knew them when it was just an idea. And it's not uncommon when you first hear something that sounds a little out there, like appreciations at the end of a business meeting, to ridicule that. Truth passes through three stages and new truths, especially disruptive innovations, disruptive truths, culturally, are initially, as Schopenhauer reminds us, ridiculed.
And then second, violently opposed. Now, why would that happen? Well, it would happen, in part, because they've begun to take root. What was initially ridiculed turned out to have some legs and kept running and started to gather followers and become real. And I realize, in this case, Schopenhauer is talking about violent opposition. Now, I recognize that there has been some violence in the United States in 2020 around protests for different reasons. The good news, from my standpoint is, since I don't like violence, it's been very limited and I trust it will remain that. It does get the headlines. We see some images, I see them on Twitter, videos here and there of some shocking things. I always remind myself though that that's a tiny minority of what's actually happening or in some cases not happening. But if it bleeds it leads, gets the headlines.
So, I realize Schopenhauer says, it's violently opposed. But in this case, I'm thinking of the figurative word "violence," I see it all the time in capitalism. I see somebody come up with a better idea that threatens the powers that be. Let's think of a recent example, how about Zoom, [laughs] Zoom Video. I mean, video conferencing has been around for a long, long time, and Skype well predates Zoom, but Zoom had the right product at the right time, incredible timing for the company. And also, it just worked, whereas even previous video conferencing partners that we had at The Motley Fool, we had discarded in favor of Zoom because it worked better. So, I want to make it clear that I truly do think Zoom is the superior product.
But what seemed initially ridiculous, that we could run our whole company for weeks or months off Zoom; and some others have managed to figure out how to do this as well. And for a lot of businesses, like, restaurants, it's simply impossible. But what seems silly initially, begins to take root. And then Zoom stocks start zooming and people think that stock is overvalued. And I'm happy to say, I did still recommend it even as recently as a few months ago and it's done wonderfully since then. So, I'm reminded as a Rule Breaker that we're benefited from never thinking you're too late and allowing big transitions happening in technology and culture to take place over time and be part owners of them and not feel like you had to own Amazon back in the 1990s or the 2000s or even the 2010s, you've done pretty well if you just bought Amazon earlier this year. Anyway, those truths get opposition, and sometimes that opposition is violent.
But then third, and this is the surprise, the surprise ending at the end of this quotation. "Third, it is accepted as being self-evident." And I think that's where some of the cynicism and maybe pessimism of Schopenhauer shows up, because I think he's cynically reflecting that we humans, once we've been through all of those first two stages then it all seems so obvious in retrospect. And maybe we even forgot how we got from there to here. We simply accept things as being self-evident.
I've seen that a lot with some of our best stock picks at The Motley Fool. These days it seems so obvious to have owned Apple or back when I picked Marvel and it got bought by Disney, and people were saying, Disney overpaid for Marvel, that was a crazy, crazy investment, and we on the Marvel side of the table -- and I know I've got a lot of former shareholders listening to me right now, we were saying, you guys just bought a great company out of my portfolio, now I have to have Disney. I like Disney, but, boy! Do I wish I could keep owning my Marvel, Activision Blizzard, Nvidia, which I talked a lot about last week, the incredible journey of Nvidia stock for anybody who's held it for a long period of time. It all seems so self-evident, and then we start calling them big tech companies and we think that they should be, in some cases, broken up, like it was all inevitable.
Every single one of the companies I just mention, we've watched grow up over the 27 years of The Motley Fool. In many cases, from small acorns that may not have even existed. I do not think that Google [Alphabet] existed when we mailed off the first copy of our newsletter. And these days some people think, well, it was all so self-evident that those companies would become so powerful, but really, no, every one of those companies, in fact, every great stock that you or I have ever bought was started by somebody who had a dream. They dreamed it and they built it, and the great ones were with Schopenhauer, hitting targets that no one else was seeing. It was at no point self-evident except in retrospect, 20/20 hindsight, Monday morning quarterbacking. Quarterbacks didn't exist when Arthur Schopenhauer wrote that, isn't that self-evident?
And quote No. 5. Well, this one gets a little bit of a preamble. The quote stands on its own, but let me just say, first of all, that 12 years ago, this year, my dearly departed mother left this earth. Tom and I had an amazing mother. And she loved literature and art and music. And she was an artist herself. She loved turns of phrase. There was Irish blood in her which appreciated Irish poetry and that loved a good turn of phrase. And so, we were raised by a mother who impart with pepper a good Mark Twain-ism or something from Yates into our family conversation, maybe at supper or well raking leaves.
And one of them came back to me in these last few weeks. It's from the jazz great Eubie Blake, African-American composer born in 1887, died in 1983. Yep, Eubie Blake lived 96 years. And mom just loved this Eubie Blake line, you know, he was asked near the end of his illustrious career. He received the Presidential Medal of Freedom, he got all kinds of honorary doctorates, Dartmouth included. He wrote the song, I'm Just Wild About Harry, which runs through my head.
And Eubie Blake was asked at his birthday, he was in his early 90s at the time. This is a line that had been said by others before, but I just love the line. This isn't the quote, nope, this is just a little extra Eubie for you, this is a bonus quote. "If I had known I was going to live this long, I would have taken better care of myself." [laughs] Which is a wonderful sentiment coming from, I think, a 92-year-old that particular year.
But far more memorably, and uniquely, near the end of his life Blake was asked, what's the secret to success, how did you live so long and do so many good things? And I think my mother loved this so much that she eventually put it into one of her paintings, but here it is, Eubie Blake to close. "Be grateful for luck, pay the thunder no mind, listen to the birds, and don't hate nobody."