This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Wise. Wise helps individuals and small businesses move money across borders. It offers significantly faster and cheaper international transfers than traditional banking routes because of its innovative closed-loop system. Twelve years after its founding, Wise serves six million customers and earned close to £1 billion in income last year. Investors currently value the business, which is listed in London, at £6 billion.To break down Wise, I’m joined by former payments exec and now investor at Sydney-based TDM Growth Partners, James Revell. We cover the broken system of correspondent banking, which has led to slow, opaque, and expensive transfers and then explore how Wise has counter-positioned itself to take advantage of this large market. Please enjoy our breakdown of Wise. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.  ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes [00:02:27] - [First question] - Overview of Wise, their key product, and core competency [00:04:17] - The founding story of Wise and the road leading to today[00:09:18] - Wise’s size and scale today compared to 2011[00:11:07] - Their competitive advantages and how it informs their goals [00:19:24] - Exploring Wise’s closed loop system and why their model can’t be copied[00:21:28] - Unique characteristics of their business model that allows them to capture such robust margins[00:25:32] - Overview of Wise’s unit economics and their revenue model[00:34:49] - Interchange fees and how Project Zero guides the business[00:36:44] - Why their lower take rate doesn’t destroy the industry [00:38:24] - Ways Wise’s business model can’t simply be copied and replicated [00:44:35] - Thoughts on who their true competitors are[00:48:10] - Their customer acquisition flywheel [00:49:49] - Float, increasing net margin, and how they contribute to durability[00:53:55] - Key risks associated with Wise when evaluating the business[00:58:35] - Reasons behind the decision to raise money as a direct listing in the UK[01:01:03] - How people looking at Wise should think about margins over time[01:03:32] - Lessons for builders and investors when studying Wise’s story  

Today we will be diving into Chipotle, the fast-casual food chain known for its burritos. It was started in 1993 by Steve Els, an entrepreneur who is actually a classically trained chef and dreamed of opening a fine dining restaurant.  He started Chipotle to earn cash for that dream, but the well-known chain took off and made TexMex fast-casual food an American staple. Over the past two decades, Chipotle has expanded nationwide to over 2000 owned and operated stores. Its significant growth is tied to its simple restaurant decor and efficient operations. Nevertheless, the beloved fast-casual chain was plagued with a series of foodborne illnesses from 2015 to 2018. Since then, the chain has been adapting rapidly to regain the trust of customers nationwide.  In this breakdown, we discuss Chipotle's origin stories, its hypergrowth, its focus on simplicity and innovation. We'll also go into details around how they navigated COVID and their national food safety outbreaks.  To help me break down Chipotle, I'm joined by Zack Fuss, an investor at Continental Grain and an expert on all things food and restaurant-related. For the full show notes, transcript, and links to mentioned content, check out the episode page here. -----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:13] - [First question] - What is Chipotle[00:04:24] - Chipotle’s scale compared to its competitors[00:05:36] - The origin story of Steve Ells and Chipotle[00:06:47] - Carving out the fast-casual restaurant niche[00:09:02] - Unique themes that have been carried into today[00:10:22] - Unit economics in fine dining versus fast-casual dining[00:11:56] - Gross margins and their similarities across establishments[00:14:53] - An ideal payback period for a restaurant[00:16:00] - What allows for Chipotle to have such an optimized payback period[00:18:29] - Owned and operated versus franchised [00:20:49] - Pros and cons to franchising or being an owner-operator  [00:22:11] - Key factors to consider when choosing to franchise or not[00:23:31] - Chipotle taking $350 million in growth capital from McDonald’s[00:25:58] - Differences between McDonald’s and Chipotle’s food[00:27:08] - The E Coli outbreak in late 2015 [00:28:17] - Sweetgreen, Cava, Zoes Kitchen, Noodles & Co.[00:30:09] - Pershing Square’s investment in Chipotle post-outbreak [00:31:51] - Technology and its effects on the restaurant industry[00:33:39] - Digital orders and profit margin variance[00:35:53] - Launching a Digital-Only quesadilla menu item[00:36:33] - Internet aggregators, dark kitchens, and future food tech trends[00:39:52] - How Chipotle beat out Qdoba[00:41:32] - Blaze Pizza, Tasty Made, Panda Express [00:43:38] - Dark kitchens and network expansion[00:45:01] - Lessons builders can take away from Chipotle’s story[00:45:01] - Lessons investors can take away from Chipotle’s story

Today, we will be diving into Costco. Costco is a favorite business story and model for many operators and investors. It was founded in 1983 in Seattle, and it has grown into a juggernaut with over $169 billion in sales and almost 60 million members globally. To me, Costco is the best example of doing one thing for customers and getting better at it constantly for decades. To help me break down Costco, I talked to both Zack Fuss and Chris Bloomstran. Zack is an investor at Continental Grain, a 200-year old family-owned business that is focused on investing and operating businesses throughout the food and agriculture ecosystem with assets across the US, Latin America, and Asia. Chris is President and Chief Investment Officer of Semper Augustus Investments Group and a long-time shareholder in Costco. In this Breakdown, we'll start with Zack by diving into the Costco business model, examining the relentless focus on efficiency that separates Costco from its peers, and exploring the secrets behind its private label brand, Kirkland. I'll then talk to Chris about Costco's growing international opportunities and the lessons that operators and investors can take away from studying the business and founder Jim Sinegal. I hope you enjoy this Breakdown of Costco. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:03] - [first question] - The fundamental equation that makes Costco work[00:04:02] - Dynamics of a shared scale economy business[00:06:45] - Jim Senegal’s devotion to perfecting one model for decades[00:10:10] - Examples of how far Costco is willing to go to provide value for its members[00:12:27] - Analysis of a private label strategy, and why Kirkland is such a success[00:15:35] - Key differences that separate Costco from their competitors[00:18:19] - An open-source retailing relationship with suppliers[00:21:10] - How they maximize sales per square foot over time[00:25:45] - Thoughts on leverage in unit-concept stores and why Costco doesn’t use leverage to accelerate growth [00:28:02] - Lessons that can be learned and applied to other businesses   [00:30:47] - How Costco approaches international expansion[00:33:54] - Why Jim Sinegal is such an exemplary CEO

This is Zack Fuss, an investor at Irenic Capital. Today, I’m joined by Matt Newberg of HNGRY to help us break down DoorDash, the popular food delivery service. DoorDash was founded in 2013 by 4 Stanford students who saw an opportunity to make it easier for people to get the food they love delivered to them. Today, DoorDash’s three-sided marketplace serves as one of the largest local delivery companies in the world. It serves millions of customers and partners with hundreds of thousands of restaurants across 27 countries, run-rating at over $50 bn of gross merchandise value. We will discuss how DoorDash is working to build the infrastructure for local commerce; expanding its offering beyond restaurants, introducing a vertically owned convenience channel, ghost kitchens, and advertising to build a durable competitive advantage and work towards a sustainably profitable business model. We hope you enjoy this breakdown of DoorDash. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. -----Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt Show Notes[00:02:52] - [First question] - The size and scale of DoorDash and the industry today [00:04:35] - Early growth and business history[00:08:33] - Unit economics of a DoorDash order[00:11:37] - Creative ways DoorDash is maintaining margins and driving growth[00:13:33] - Optimizing delivery operations to minimize overhead[00:16:45] - White-labeling versus first-party logistics[00:20:03] - How restaurants maintain their own margins and customers while using DoorDash[00:23:04] - Overview of their recruitment and labor model for delivery drivers[00:24:36] - Implications of new legislation treating delivery drivers as employees[00:27:51] - Positive and negative impacts of DashMart, ghost kitchens, and automation[00:30:53] - The importance of ghost kitchens and how they work[00:36:23] - Automation and its role at DoorDash[00:39:15] - Virtual brands in the restaurant industry[00:43:18] - Advertising sales models on DoorDash and similar apps[00:45:20] - What ads look like on these apps[00:46:22] - How grocery store profits from slotting fees translate to delivery[00:47:33] - Main takeaways from studying DoorDash as a business

My guest today is Zach Fuss, an investor at Continental Grain, a 200-year-old family owned business that is focused on investing and operating businesses throughout the food and agriculture ecosystem with assets across the US, Latin America, and Asia. Prior to his work at Continental, Zack was an analyst at Tiger and Citadel. This is a must listen for those interested in any aspect of the food ecosystem but also understanding value chains more generally. In our conversation we cover where profits tend to sit in a specific value chain, how legacy food businesses are creating their 2nd acts as digital businesses and explore what makes Domino's Pizza so interesting and special. I hope you enjoy my conversation with Zach Fuss.  For the full show notes, transcript, and links to mentioned content check out https://www.joincolossus.com/episodes/93129089/fuss-breaking-down-the-food-ecosystem  Invest like the Best is a property of Colossus Inc. For more episodes of Invest Like the Best go to https://www.joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here - https://www.joincolossus.com/newsletter. Follow Patrick on Twitter at @patrick_oshagFollow Colossus on Twitter at @JoinColossus Show Notes[00:03:42] – [First question] – Key components of the food management business[00:05:12] – The most defensible businesses in the food chain[00:07:51] – Law of conservation of attractive profits in the food business and food delivery[00:11:05] – Legacy food businesses and ones that have adapted well to changes today[00:15:42] – Dark stores and cloud kitchens[00:17:11] – Breaking down the Domino's Pizza business[00:19:45] – Being a Domino's Pizza franchise owner[00:21:03] – Why they offer such high returns to franchise owners[00:23:22] – The tech company aspect of Domino's Pizza[00:25:25] – Same store economics for an owner[00:28:15] – When Domino's Pizza realized their food was not great[00:29:45] – Why Domino's Pizza owns the delivery and won’t go on other platforms[00:32:47] – Most portable pieces of Domino's Pizza business[00:34:03] – Parts of Domino's Pizza history that are intriguing[00:35:51] – Build once, sell many times[00:40:09] – Lessons from the best retail businesses[00:43:26] – Has it become harder for smaller companies to win with larger ones being more nimble[00:46:39] – Watching the alternative meat companies flourish[00:49:49] – Interesting trends in the food space[00:51:22] – Global trends in food that we can learn from[00:54:04] – Impact of Covid on the food industry[00:57:44] – Businesses outside of stores that he finds fascinating[01:00:08] – Why he’s impressed by Chipotle[01:01:48] – Approaching buying a franchise[01:05:30] – Creating a new QSR business and differentiating from the pack[01:07:58] – Frontiers that he’s interested in today[01:10:17] – What he is saying in the competitiveness in public equities[01:13:48] – Kindest thing anyone has done for him