Lesson 16a: Identifying Intrinsic Value

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Right, let's chill out today and take a load off and have a chat. It's been kind of a wild sprint to the year, and I don't know, you might be able to... it's like 6 30 here, I can see the first bits of light coming up, so we may get some of the sunrise. We got our WISP wallpaper behind us, which is rad, like shout out nature and animals, even on the inside.

All right, let's get into it. Intrinsic value. How do we identify this? If you look this up online, there's a very financial related definition, like present value, free cash flows, like okay, I don't... I didn't go to business school, I don't have a finance or econ degree, and so how do I identify intrinsic value in a person, in a business, in an asset, in an object, in some type of media, right? Like how do I identify something before anyone else can identify that? And it really comes down to taste.

You hear people talk about taste online, which is just another word for intrinsic value. It's like they haven't really linked the two, but it's two sides of the same coin, and I'm here to tell you that taste is something that you can refine over time, and the problem with this like finance definition of intrinsic value is it's like, oh, projecting future cash flows, but you don't know. Us humans are like so bad at identifying stuff, like we're always wrong in the short term, and over the long term, things get so much more valuable, different, crazy than we could ever imagine.

I mean, here we are in 2026, squarely living in the future, in the world of sci-fi, like we've got autonomous rocket ships that are going up and down in and out of outer space by a private company who just acquired a social media company. What? Who invested a lot in artificial intelligence. What? By one dude who's damn near a trillionaire.

Like what? That kind of money doesn't even exist, Dr. Evil. And so taste, though, is often found more in like art critics and design and fashion, and taste is this, it's this vaporous concept. But what is it? How do you identify taste? And I'm not talking about like a trend chaser who's like, oh, you know, I found that song before anybody else or like, wore that thing before anyone else or like started that trend.

I'm not talking about that. Because taste isn't vapid in that way. It's not.

It's sturdier. Right? So like, just because I discovered something, because I discovered Jackson Pollock back in the day, in the mid 1900s, doesn't mean I was off to the next one, you know, a week later. Like, because I had taste and I liked his stuff, I continue to like his stuff over time.

And the rest of the world, over time realized that, oh, hey, like, we like that stuff, too. And then, oh, wait a minute, the dude's gone. There's no more we can get.

And so the price shoots up because demand keeps going up. As the years, minutes, hours, seconds go by, as the world wakes up to like how unique and rare this was. But in the moment, you don't see that because it's all over the place.

So like, for example, your favorite creator who makes something, like, it seems like, oh, yeah, they're just going to keep on making it. No, you've got to like, wake up to the fact that like, today, you have an opportunity, you're living through a unique time, where someone's creating something unique. And you better like, get that thing now.

Because once they stop, like they can just stop today. And it's done. It's like game over.

And you can't get it anymore. That's inclusive of like a manufacturer, a service provider, an advisor. That's inclusive of like a musician of an artist.

It's, you just, it's gone. So what is taste and what is intrinsic value? And it really is, you've got to get rid of the noise. You've got to get rid of everything in a quiet space and be like, what do I actually like? What am I actually pulled towards and attracted to? What makes me feel something? The intrinsic value of the material is strong.

It has unique properties, like titanium, for instance, is not going to say hypoallergenic, it's softer on the skin than stainless steel. So if you wear a stainless steel watch, which actually became very popular over the last couple decades, it's not as friendly to you as a human being as titanium. So you've started seeing some manufacturers start creating like grade two, grade five titanium in objects that we wear on our skin.

Why? Because it's safer, it's friendlier, it's just as strong as stainless steel. However, it's lighter. And so because of these properties, it's better.

It's just as strong, it's lighter, and it's friendlier to the human condition. That's intrinsic value on its own. And then I take those properties and I apply it to something where there's built in demand.

And then you have something that goes above and beyond. And over time, humans are a weighing machine. And over time, little by little, one person by another, and then influencers tack on to it, and then they talk about it, and the people who watch those influencers talk about it.

And then you influence the influencers who influence the influencers. So if you search backwards, not the celebrity, not the athlete, not the big brand, and you step back and go, where did they get that? And then you say, oh, there was somebody that created it. And then where did they get that? And where did they get that? And you go to the source.

You find the source. And the source is a few, a handful of individuals on this planet that are doing things that change things for the better. There's only a few of them.

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They are the influencer of the influencer of the influencer of the influencer. When they speak, when they write, when they create something, the ripple effect over time and across our society is gigantic. But you don't hear their names.

You don't know who they are. Because we've been awash in celebrity. We've been awash in advertising spend.

And so you miss intrinsic value. And you think surface level is where it is. And I'm here to tell you that in this new world we're living in, you got to break free of that noise and you got to go find source.

So let's talk about, I gave you an example of an object and how that's better. Let's talk about humans. How do you identify taste? How do you develop taste such that you can identify a human that has strong intrinsic value? Because the human is the one who creates the things.

Right? On this planet. Look around. Aside from nature, everything you see around you was created by mankind.

Other than nature. Who created nature? Beats me, but you know, a lot of people on this planet have ideas. So we're not going that far.

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How do you identify, how do you develop taste on humans? We've talked a lot about this. Strong core values. But what are those core values? It needs to be something that rings true to eight billion people.

It's something very deep. Freedom is a very strong core value. A freedom to be yourself and being in yourself without like.

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You can't be a serial killer, right? Like I'm not talking about that level of being yourself. At some point you can go off the deep end and you're like really hurting other people and the planet and animals. And like that's not for us.

Those are weak core values. Strong core values is like, no, they've actually separated themselves from all of this noise. And they said, you know what? I'm just here to think about something real.

And it's like, I've spent the time, money, energy, figuring out who I am, figuring out what I like, what I'm attracted to, and then figuring out the ones who like are creating things in a unique way and doing it with like positive core values at its core. And that's how you identify it. And the way that like you can find the opposite of that is like weak core values.

Because they're on two different vectors and trajectories. And weak core values is by all costs, I will become powerful. By all costs, I will become rich.

By all costs, I will influence the world for my political or religious or whatever belief systems. And I'm not here for that. Like just money at all costs, power at all costs, control at all costs.

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You've got to let go of money, of power, of celebrity, of influence. You got to just let it all go. And you got to just be yourself.

And that's the coolest, most attractive, lowest vibration state that's safe. And safety attracts others. I'll give you an example from over here, the animal kingdom.

Now, in this crazy world we live in, there's deer outside this window. And I've seen family of deer, mama deer, papa deer, couple baby deer. And they, they're actually pretty friendly, because we're not like out here hurting them.

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And so it's crazy, because you've gotten really close, like right off my back porch here, they're within five feet. Now, granted, they're a bit on edge, like they're kind of, they're watching. Right? And, and I'm not doing anything.

I'm just hanging out and chilling. And my vibration state is really low. It's kind of like this mode, like minus the talking.

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And it's safe. And so we're just kind of vibing. And then they kind of do their own thing and kind of walk away.

And I'm doing my own thing. Like I'll be on my phone or whatever, or type in, and it's like, oh, okay, like this dude isn't here for, to like destroy us. And so I've started, you know, I can't go through all the bread.

Instead of throwing away bread, I've actually started tossing some of the last few pieces in a loaf after it's starting to, you know, get a little hard or whatever, out the back. And so there's birds, there's animals, and like, why not? Like, I'm not going to throw it away. We should feed them.

So don't feed the animals. Why? We're animals. Don't feed us.

So that's intrinsic value on people. How do you identify intrinsic value in companies? Well, it starts with the people. The people run companies.

You take away all the people, and the company ceases to exist, notwithstanding some of the AI agent stuff that we think's coming, you know, pretty soon. But companies also have a way of developing a culture. And it's a tough thing to put your finger on.

Over the years, I've developed the quiz question. It's the interview question when they ask you, do you have any questions? And you could say, what's your culture like? And they're like, oh, it's, you know, blah, blah, blah. You can't get the answer by asking that question.

You have to answer a different question. How are decisions made? There's a question. How are decisions made in your company? Is it one dude or gal who has, like, the hammer, and it's like, no, this is the way it's going to be done? Is it we all get in a room, and there's 20 of us, and it goes around, around for months and months and months, and we can't make a decision? Is it fast decisions? Is it slow decisions? Is it collect a bunch of data decisions? Is it collect just enough data decisions? Is it over-analysis paralysis decisions? Is it we never make a decision because we just can't, and it's too much, like, waffling? Who makes the decision? How long does it take? What do you use to make the decision? And in that room, is there yelling? Is there fighting? Is there listening? Is there beating it up from many angles? Is the decision the thing in the center, or is it I take personal ownership of decision, and if you attack decision, you attack me, and I become defensive, and so is it the person that's the owner of the decision, or is it the decision in the middle of all of us that we're beating up and trying to identify the right path, and then putting in another decision, and then devil's advocacy, right? So those are the things that you sort of decide on, because then those get encoded into software, into AI agents, so those value systems, those decision principles, those operational mechanics get encoded into machines.

Those machines then make decisions on behalf of people, on behalf of customers, and you can see how this sort of ripple effects. So once again, you got to go to the core source. How do you make decisions in a company? And then you also look at the product, and the product, I find too many financiers are just looking at like straight up, tell me what customers think, and CSAT, and like look at like all the financials, and get all the GL codes right, and like what's the rule of 40, and that's fine, like the last thing that they never talk about is product.

They think product is just like, oh, what's your SDLC process, and like, you know, do you run Scrum or Kanban, and like you just like ship some stuff, okay, and it's just like glorified like ticket handling from, yeah, I heard some stuff from customers, and I just passed that directly on. That's not product. You think that's what Apple and Steve Jobs did when they created the iPhone, is they're just like shuffling papers around, like listening to customers, and like, come on, that's not product.

Great product is like, there's a bug on Apple TV where I can't hear the thing, or it hitches, and it restarts, and like it frustrates the out of me, and I use this product every day, and I'm livid because this is interrupting. I'll Apple watch, right? I'm wearing headphones. I'm wearing these guys.

I'm going for a walk, a run, a workout. I'm wearing my AirPods Pro, the little earbuds. I'm working out, and then I'm running my activity tracker because I want to check the time.

I want it to capture my heart rate, you know, the whole thing, VO2 max, and inevitably, what's happening? I'm in the mode. I'm in the zone. I'm vibing out to music.

The adrenaline's pumping. I'm in the middle of a great set, and then, there goes the music, and now, all of a sudden, I got some voice talking to me about, congratulations, you've just hit a mile, and like, this is walk 330, and I'm like, what are you, and I'm like shaking my head. I'm hitting the button.

I can't get rid of it, and I'm out of it. That is not a great product. That's not a great product.

The hardware is a great product, but you interrupted me. You put an ad in the middle of me working on my health, on me working on my confidence, on me working on my spirit, on me working through ideas, right, on me developing new things that can help the world, and you screwed me. That's not scrum.

That's not an SDLC process. That's great or bad product management, and you better get in there, and you better take that out. It's not just like, throw AI in.

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Like, that's the difference between like, artistic product, and like, a really shitty product. You're interrupting the magical moment where the technology slips away, and you're in a human experience. The technology enabled a human experience.

It didn't interrupt my human experience, and that's the critical piece. That's what's critical here. So, intrinsic value.

People are losing their minds about AI. It's another ingredient, but if you're just, if you're in a restaurant, and you're shoving your like, treat down a customer's throat, like, they're not coming back to that restaurant. If you're shoving AI down my throat, I'm not coming back to that restaurant.

However, if you use an ingredient to make this experience, the ambiance, incredible, and that heightens my experience, oh my god, you've got to taste this. This is, this is, this is like, the best thing I've ever, oh my god, like, try that. You have, I'm full, I can't, seriously, and then you're like, okay, fine, holy Jesus, this is incredible.

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That's intrinsic value. That's intrinsic value. When we first invested in Apple, because they made the iPod hi-fi little speaker system that you could put your iPod in over the top, and take the front off, and it looked amazing, had batteries, a plug-in, great sound, base off the charts, like, would light up an entire, like, complex of homes and apartments, like, for better or worse.

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I didn't look at cash flows. Granted, I knew the company, and yeah, they were strong financially and operationally. I didn't look at that to make an investment.

I made an intrinsic value assessment, not on the present value of future cash flows, because I couldn't have predicted the iPhone. I couldn't have predicted the AirPods Max, or the AirPods Pro, or the Apple Watch. I mean, later, I could have, because, you know, I put the iPod Nano on a strap with headphones up here in my ears, and worked out with it.

So yeah, I could have predicted the headphones, the watch, going running, being free, while also enjoying my music and tracking my health. That I predicted. I made an assessment and an investment based on the intrinsic value of the people, and the value system, and the incredible product they made, and knowing that they had the ability to do it again, and what they were going to create in the future was going to far outweigh this thing that they just created today.

And that's the intrinsic value. That's the assessment. And what happened because of that? I'm the best hedge fund manager of all time.

Of all time. And I'm private, so you never heard my name. Like, come on, like one decision.

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And where did that decision come from? Wasn't from business school. Wasn't because I went worked on Wall Street. It's because I understood intrinsic value.

I understood product. I understood core values, because I grew up in the Midwest. Like, and that made me make a confident decision, and hold that decision, and recommend that to my friends and my families.

Not as investment advice, as you should really take a look at this. And what happened? Well, there was friend who worked in a hedge fund, and on Wall Street. Ah, they're overvalued.

Like, who's going to buy Apple at 80 bucks? Like, they're not doing anything interesting. Like, they're not making a ton of money. Well, guess what? He invested in oil, and he lost his fucking shirt.

So, I love you, bro. But you didn't look at intrinsic value. You looked at it through a finance lens, not a product lens.

So, once again, I'm just here to tell you that unless you're developing your taste, your intrinsic value, aesthetic taste, but deeper than just surface aesthetic, core values, operational systems, technology, product management principles, artistic capability, the ability to be different, stronger materials, fighting for the user, better for the planet that we live in, weighing machines, pace layers, strategy, right? Like, all of these things come together in a super cycle format that forms the basis of what everyone just overuses this term of flywheel. It creates duration. So, if your investment committee as a person, as a board, as a business, as an LP, as a family office, as a group of actuaries sitting around a table, like trying to debate this stuff, and you're getting lost in all these, like, work streams that you got to add up and all these details, take a pause, man and lady.

Just take a pause. Take a step back and ask yourself for a split second, how do I feel? How does this feel? Am I attracted to this thing? Am I buying this thing? Do I feel love for this thing? Is there something deeper going on here that over a long time horizon, like a lot of the world is just going to wake up to? Is there just something that I wake up, I just can't stop thinking about it? Like, there's something here. There's an essence, a soul, if I may, that can't be described by a bunch of numbers or writing on a piece of paper.

It's a feeling. And what is a feeling? A feeling is all of these sensory inputs that you've taken in through a lifetime, processing through your eyes, your ears, your nose, your mouth, your sense of touch, your analytical capability. And the output of that is something.

It's a vibration and a wavelength that is the culmination of all of these things and have risen up to give you a pull or a push away. And that pull, when you see something and it stops you in your tracks, and you're like, Oh, my God. And I got something like stay tuned, because I'm so excited.

I've waited 30 years for something like this. And I came across it. And I have the perfect example.

And I'm going to give it to you soon. And I'm really excited. And you have no idea.

Well, maybe you can kind of guess what it is, but it's not going to be obvious. And it's that and it's a representation of that. And so I'm going to do one on this from this lens of intrinsic value to prove a point.

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And I'm probably going to hold on to this thing for the rest of my life. Because of that, because I waited so long to find the exact right puzzle piece. And when it fits, you got to trust, you got to just trust in something that that fit is incredibly rare.

It's so rare. And you got to have enough like wherewithal and self reflection to identify that and go and there'll be another one. There ain't gonna be another one.

I'm telling you, I waited 30 years when you come across that puzzle piece. And you're like, I don't know, there could be like this weird edge that doesn't quite fit. But you were like, oh, shit.

Like you got to just jump on that sucker. Because like, it's not going to be around forever. That's what I've been telling you from the beginning of this video.

Like, it might be gone, it might get hit by a bus tomorrow. There may never be another one in existence for all time. Only with a specific set of things in this 14 billion year old universe at this exact moment.

Everything came together precisely. It has never happened before it will never happen again. And that is the rarest thing on the planet.

So if you found that puzzle piece, you better go get it with everything you've got. Because it's not coming back around again. And then you hold on to that puppy.

And then you blow it up. And then you tell the world not necessarily about the puppy, but about why that puppy is incredible. Because it's so unique.

There's only one of these puppies. And one of these puppies is actually more of a cat. But you know what I'm And look, the sun came up.

So that's pretty cool. All right. We've gone almost a half an hour and you're you guys are just like sick of hearing me blast off about like, nothingness.

And I'm just shouting into the wind here throwing bottles into the ocean. And it's just a drift in the sea of the internet. So yeah, like, you can pop your head up like I'm not going to destroy you.

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Like, if you got cool stuff to share and show and you like want to copy some stuff like dope. Let's do it together. Let's here's what I want.

Here's what I want. This is the intention for everyone out there listening to this today, or in 50 years, if I'm still kicking, right? Like find me message me. What is something only you and I can do together that could never existed before that only we can do together.

That's frickin neat. That gets me out of bed. Let's do that.

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Let's figure that out. Not some like crap collab where you just like slap a logo on somebody else like no, I'm talking about ground up. Like original og hyphen, original, underline, incursive, and then like a little star over the top.

Okay, something like that. And then, and then we'll go do more of that. All right.

I think that's it. I think we're out of here. I'm gonna go enjoy the day.

I gotta do conference calls. I gotta log in and like do work and do that sort of thing. All right.