Lessons from Will Danoff

i.insider.com/5e32f43124306a1b1c68e1e3?width=11...

This past week, I was on a conference call with a private MSO. State-by-state dynamics were mentioned and the IRO from the MSO mentioned how Florida is “different.” In short, the IRO gloated at Trulieve’s success and how Kim Rivers has done a phenomenal job wrangling the Florida market.

This reminded me of Barry Ritzholtz’s recent interview with Will Danoff, Portfolio of the Contrafund. In the interview, Danoff talked about his meeting with management at ASK Jeeves. Management gloated about Google dominating the search engine market, which eventually led to Danoff to investing in Google, not ASK Jeeves. He said:

Danoff: But I said, can we just step back and explain the lay of the land for search engines.

So, he (ASK Jeeves’ CEO) sort of flippantly said, well, Google is crushing everybody. They have 40 percent market share plus they’re doing the search for I think it was AOL. So, they had 40 percent plus the 15 or 20 percent that was AOL-related search. So, they had 55 percent market share and they were crushing everybody.

[…] So, again, Barry, I don’t know what happened but I just — what’s the key to my success, I just say why or please elaborate. So, I said, God, why is Google doing so well?

Ritholtz: And what was the answer?

Danoff: The answer was they have a better algorithm, they have a larger index. Because they have so much market share, they’re seeing more searches and they’re just innovating faster. And I think as I said, the quote — I would have to check my notes and if you want, Barry, I do have my notes from that meeting.

They are crushing everybody. There is no way we’re going to catch Google. We — our plan does not — we don’t need to beat Google at what they’re doing. We’re going to play in this little niche.

So, again, by that point, Barry, I was already 13 years into Contrafund and I had developed this idea of best-of-breed and I listened politely to ASK Jeeves story for another couple minutes and I excused myself and, in my mind, I was thinking, I want to own Google. I don’t (want to own ASK Jeeves).

Skip to 28:45 for the correspondence.