During his recent interview with Tobias, Bill Brewster, who runs Sullimar Capital Group demonstrates how Phil Fisher’s scuttlebutt can still be used to find great opportunities today. Here’s an excerpt from the interview:
Tobias Carlisle: Let’s talk about Ubiquiti. What’s the story there and how did you find it? How did you value it? How do you think-
Bill Brewster: Well, that was one that my buddy had told me about it. He’s out in Silicon Valley, he used to be with the NSA. He’s pretty plugged into that whole, I guess, community of coders and whatnot. He was like, “Look, man, I’m just telling you that every single small business out here uses Ubiquiti.” I was like, “Well, why why does Cisco not just kill him?” He thinks, or thought at the time that it was a fundamental organizational principle that Cisco is more enterprise driven. Ubiquiti’s strategy is to get product out cheap, right?
Bill Brewster: Robert Pera is the founder. He’s an old Apple guy and he left. His whole strategy was like, “Rely on the internet and rely on distributors.” I said, “I don’t you know if I believe this.” A short report comes out, I’m reading the short report, and I start looking around my house and I realized that my wireless network runs on Ubiquiti. I had paid somebody to come set it up. I have all these wireless access points, and I just started calling people. I started with the sales guy. I was like, “I gave you a fair amount of money. Now, you’re going to give me some intel right?”
Bill Brewster: Then I just kept asking people for leads. I probably talked to, I’d say, six to eight people. I mean, probably six, if I’m really thinking about like real conversations. But I just asked them, I’d say, “Why are you guys selling this product?” Right? Almost invariably, what came back is, “It’s stable, and it’s cheap and our customers like it. We make money and we don’t feel like we’re overcharging.” I said, “Okay, well, why not Cisco?”
Bill Brewster: They were at that point, still installing some of the more expensive equipment was Cisco equipment. They’ve since transitioned. But it just got me really interested that the story was, “We’re not marketing, we’re B, to B, to C.” Every one of the people that I talked to, like the story checked out. Then, when I looked at that, I mean, there was a short overhang on the stock, and I just didn’t really buy that. He gave an investor day. People hated it. I loved it. I mean, sometimes people want to have like an abnormal result in a normal package.
Bill Brewster: I think when you’re looking at a lot of these entrepreneurs, like if they’re socially awkward or something, I mean, they’re not normal, right? I mean, this guy has created a multi billion dollar company, like he’s not going to be like you or me, probably.
Tobias Carlisle: I’m pretty socially awkward, Bill.
Bill Brewster: Yeah, well, you might be the next billionaire. I hope you are, Toby. People would tell me that I’m socially awkward too and here I said so. Well, I should but I digress.
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