What Are the Drivers of Gross Margin?

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Will Barnes and Will Oliver are two fantastic individuals I met through Latticework and got to know by bonding over our fandom of Charlie Munger. They are the co-founders of In Practise, a company that conducts interviews with executives and sells them to investors looking at the companies and building conviction in their portfolio. They conduct one-to-one interviews in pursuit of finding the best investment opportunities for their clients. During our conversation, we talk about how they came to start their business, how it is structured to authentically align with themselves, and tactics they employ in conducting interviews.

To kick off the conversation, I ask about who their heroes are and both Wills talk about their fathers as well as Munger and Buffet, and then we transition into how they met and came to start In Practise. They both worked for Third Bridge, an expert network that connects mainly investment companies with operators in private one-to-one phone calls, and they came together to build the content side of the business. They fell in love with the work, and seeing a niche in the market for a more affordable solution for smaller hedge fund managers, they spun out from Third Bridge and formed In Practise.

We discuss how they are building a system to understand what quality means in a business and how they build conviction for investors. We talk a bit about Dee Hock, the founder and CEO of Visa, and how he has inspired and influenced In Practise. Their core offering is a library of interviews; they first aim to get their client up to speed quickly on the workings of the company they are interested in and then to delve into what really matters, and the next part is the analysis phase in which they offer investor dialogs about the company. Moreover, they are aiming to build a community for learning founded on trust.

We explore how they approach the interviews of executives and the balance between noticing patterns but also allowing the interview to go where it flows. They must understand the business and what the customers care about but also have to be willing to really listen. Will Barnes emphasizes the importance of the line of questioning rather than just the questions and says the epiphanies often come when the original hypothesis was wrong. They walk me through a couple of company examples, Naked Wine and Burford, and what really matters in them. To wrap up, I ask about the companies they can list that they believe to be in the hundred highest quality public businesses in the world today and about their project of In Practise 40 years out.

Links:

In Practise

In Practise on Twitter

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