Risk VS Reward Career Lessons from Terry Smith CEO of Fundsmith

Welcome to a special edition of the Financial Planner Life podcast, where today we interview a financial services legend, and we hope the first of many. Chris Ball, CEO of Hoxton Wealth, sits down with the CEO of Fundsmith, Terry Smith, and we dig deep on his financial services career, that by the sounds of it, isn't slowing down. We talk about risk versus reward in your career. You see, Terry was an early financial services disruptor. He stuck by his own honesty, integrity, and values to basically make himself unemployable. But it seemed to turn out all right for Terry in the end. Terry shares to us today as well about how to build a strong leadership team, and what he looks for in people that he surrounds himself with. We look at his love for managing people and managing money. But what does he prefer? He also has some excellent advice for the next generation of financial services professionals. This is a wonderful episode and a great insight into a financial services legend. Thanks so much for your time, Terry. You're gonna love this episode. Welcome and thanks, Terry, for coming on. It's great to be talking and great to have you here. Yeah, good. Let's hope you still think that at the end of the interview. I'm sure we will, Dean. So, obviously, you've been telling me you've been to Dubai many a times. How does it compare to Mauritius? Well, there's a lot more concrete in Dubai than there is in Mauritius. Mauritius is due south of here. Seven hours flight, roughly about three and a half thousand miles. Tropical island, 50 miles by 30. Population of about 1.25 million. Second largest coral reef in the world. So it's got lagoons and tourism is the biggest industry, obviously. But it's got a... I don't know what this word really means. It's kind of real. It's not just a sort of desert island. It's definitely like there's mountains and there are industries there. There's light engineering. Probably your sunglasses were made there or your medical tubes might be made there. And there's a financial services sector, which I'm obviously part of. Have you seen many people, obviously, since the elections say they're going to come out or more people come out from the UK? It's been a fairly constant stream, to be honest with you, with people moving over time. There's an expat community there, which is French, South African, English and a few other bits and pieces because it was a French colony originally. Then it was an English colony after Napoleon. It was when we took it. And obviously it's four hours flying time from South Africa and various issues around those countries at various times produced an increase in the number of people. We've seen quite a lot of the silver economy is a big growth in people coming there to retire. Climate's nice. It's safe. I mean, there's no great violence or racial tension or any of that sort of thing. And so, yeah, we've seen quite a bit. Yeah. I imagine you probably see a bit more as... I would think it's quite likely after the budget in October that we could see quite a few more people from the UK see the benefits of living somewhere else. Yeah. Interesting. Yeah. We've seen quite an influx of people into Dubai and a lot of inquiries coming in as a nice place to live, low taxation, safe, maybe not as much as the silver economy, as you said. But yeah, we've definitely seen an influx. So where did you develop your passion for investing? Because obviously you started off with Barclays Bank. Yeah. It was when I was with Barclays. When I was with Barclays, I spent about four years doing all the training to be a bank manager, basically. I wasn't a bank manager. And then they took me out and put me through an MBA course for 18 months and told me to take all the finance options, which I did. And then when I came back, they made me their finance manager. I was in a department reporting to the finance director, running the banks or trying to run the bank's balance sheet, acquisitions, disposals, currency hedging, bond issues, all that sort of thing. And during the course of doing that, then there was no investor relations industry. What you now see in investor relations professionals in companies and so on, it really didn't exist. There wasn't one. And so when brokers analysts who were following banks rang up, they would try and get hold of the finance director. And my boss, the finance director, delegated an awful lot to me. And he particularly didn't like dealing with bank brokers analysts. So I got to talk to all of the brokers analysts on both sides of the Atlantic over that time. And out of that developed that and my job at I started to develop an interest in investment and markets and how they worked. A bit of a funny question, and I can probably guess the answer, but did you always want to be a bank manager? Is that, you know, when you went from school? No, definitely not. No, no, no, no, no. I did a degree in history. And I was offered a fellowship to become a history lecturer in due course, and turned it down for what my professor called vulgar commercial considerations. I didn't have any money. So I sort of went off and did interviews with all of the companies that were out there at that time. And some of them are still out there, some of them aren't, which have passed. I went to the metal box company, which became Caridin in packaging. I don't know what it is now. Marks and Spencer, Unilever, Barclays Bank, the Midland Bank, the NatWest Bank, and so on. And I'm just a bit like this. I chose the one that gave me the toughest interview. That was all that I based it on really. I didn't know whether in making packaging, or Unilever in consumer staples, or Marks and Spencer in retail or banking was going to work, because I had no clue about any of it. So I just took the one where they gave me the toughest interview. I don't know, I just thought, yeah, that's kind of interesting that they were not a pushover. You like a challenge? Yeah, I do. A lot of financial planners start their careers off in banks. Banks have been notorious for, an amazing training ground, give you a really good grounding, lots of learning, great education, obviously big resources at your disposal for that kind of stuff. Have you found things or lessons that you learn in the bank that you kind of still carry with you today, or foundation? What you describe is exactly how it was for me, which is, I took every training course at the bank offered. Every time they said, do you want to learn about law relating to banking? Yes, accounting, yes, whatever it was, yeah. And then they sent me to do an MBA, paid for me to do an MBA. But there were lessons that I learned that do stay with you. I always remember, I think it's slightly technical, but hopefully it'll answer your question. There's a thing called a letter of credit, and they probably still get used, I think they do in banking, which is, you're basically going to buy something to sell from China. Someone in China is manufacturing it, you're going to import it, and you're going to sell it in Dubai or England or wherever you sell. And so there's a sort of standoff, if you like, between, well, he's making the stuff, do you pay him in advance? No, because it might not arrive, or it might go bust. Does he just send it to you and hope that you pay him? No, he doesn't, because he doesn't know. So there's a letter of credit. What happens is, the bank agrees to pay him when he supplies certain things, usually a bill of lading showing that the stuff's been put in a container and shipped. And they are basically extending, giving him the money. But of course, you haven't got the money yet, you haven't sold the stuff. So it's a form of credit to you. They're basically advancing money to you to pay your exporter who's going to sell you the goods. It's been used for a lot more things over the years, but that's the basis of the Bill on London, these things. And there was a thing many years back when I was in banking called the Nigerian cement scandal, which is, there was this big thing where they're building out Nigeria after oil was discovered, and there was this huge gold rush to import cement into Nigeria. And everybody in it was trying to sell the stuff to Nigeria. It was a disaster. There was a lot of corruption. Most of it never got landed because there weren't the port facilities for it. It sat in the ship holds while it was waiting off the port of Lagos, etc. It was a disaster. But anyway, on the way to it being a disaster when it wasn't yet recognizable as well, I was working in banking, and a guy came in, a customer whose company was called Transatlantic Commercial Express. Now, a clue to what you were dealing with was he was running it from his front room in Hackney. But anyway, it's a great name. And he came in, he said, I've got a contract from someone in Nigeria, I can't remember, someone building a shopping mall or something like that, to import X thousands of tons of cement. And I've got a contract from the company in Germany, from Heidelberg or someone, who are going to supply the thousand tons of cement. So what I want is a back-to-back letter of credit. I want one where I get one from the Nigerian guy saying, when I produce the bill of lading, he'll pay me, and then I want you to give one to the man in Heidelberg cement, so that he'll ship the cement. So it's called a back-to-back letter. It's two letters of credit, one on either side, right? Because he wasn't importing the cement to use himself, he was flogging it to somebody else. So he said, will you do a back-to-back letter of credit? So I sort of wrote up a proposal, and I went to see my boss, who was the local director for the region. He said, no, we're not doing that. I said, why? He said, well, he said, with letters of credit, something is always wrong. There's always something wrong with the documentation. The insurance wasn't right, the invoice wasn't right. He said, so it's one of those things where they do get paid out, mostly, but if you're looking for an excuse not to pay, there's always one there. And he said, a back-to-back letter of credit, he said, you would only do such a thing for an undoubted customer, and an undoubted customer would never ask you. I thought, yes, that's a lesson that stayed with me. There are some things which are really tricky, and you would only do them for somebody who is absolutely certain, and such a person would never ask you to do such a thing. So that's that, isn't it? So you just don't do it. Brilliant. And obviously, you enjoyed your time at the bank. Was it tough to leave, did you, you know, as you progressed, or was it just naturally, you know? No, it wasn't. I mean, I jumped ship from the bank into the broking community, where I've been dealing with all the analysts, basically. One of them, eventually, sort of, the guy who was the number one analyst in the UK sat down, and he said, you're wasting your time. He said, look, you really care about what you're doing. You're very entrepreneurial, I think. You're wasting your time. You're going to progress on this sort of escalator up to the ball, or whatever, in the bank, and you'll be okay, but you're going to, it's not really you. You need to come out and try and do things in terms of building your own business, and that sort of thing. How about coming to work with me? I said, yeah, okay. That was it. That was it? That was it. The bank was shocked, because at the time I did this, there was nil turnover in sort of senior management at the bank. They were, you do what? I said, I'm going off to do this, and they said, well, what will you do if it goes wrong? I said, well, call you up and ask for a job back, I imagine. They said, well, what if it's filmed? I said, well, I'll bring Nat West, and I said, for the same job, I don't know. I said, I can't think I'm capable of doing a job, so I don't think I'm going to starve to death if this doesn't work, and I'd like to try it. Yeah. Have you always been, kind of, an advocate for giving things a go and trying? Yeah. I think the one thing that I, more than anything, more than I tried it and I failed, I've got more fear of, I never tried it, and I wonder if it would have, what it would have been like, and if it would have worked. It's more about missing the chance to do things and experience them and feel what they would have been like, is my main concern. Surest way of missing out on an opportunity is saying no, isn't it? So, yeah. Awesome. So, you know, obviously, you were ahead of your time when you started off as a broker, and you obviously, you know, what we would call now a financial services disruptor, and you released your paper, Accounting for Growth, and obviously, that was quite a big risk on your career, and from what it seems like a fairly new career at that point as well, and it doesn't seem like, you know, you were kind of afraid to push against the grain. No, I wrote the report and a book, it was published as a book, I thought it's worth it, not worth very much, so it knocks Stephen Hawking's brief history of time off, number one. I always say, slightly less interesting, who am I to judge? But yeah, I was head of research at UBS at the time. It was a very big risk. They fired me and sued me over it. Clearly, an awful lot of companies that I named in the book were very unhappy, and they made their unhappiness known, and that was the outcome of it all, and it was really quite bad at the time, really bad at the time. I had massive legal bills, the outcome was uncertain, I didn't have a job, and it made me make the leap from working for somebody else to work for myself. Other than that, I would have been in a pretty comfortable job as head of research or something at an investment bank, and I would have gone through that, and life would have been absolutely fine, I'm sure, because, you know, after it had happened, and I'd been fired, sued, and everything else, I was kind of unemployable, and so I went and joined a startup, and that was it. It gave me the impetus to do that. Did you feel at the time, obviously, it's kind of like a sliding doors moment, isn't it, like if I hadn't released it, but as you were getting to release it, was there any ever doubt in your mind that you wouldn't? No, no, not really. I was told quite clearly by the most senior executive of UBS what was going to happen, that I was going to be fired and sued, and that was very worrying. They were a AAA-rated bank at the time, right, and so on, and I didn't have a job to go to, and I had a young family at that time as well, so yeah, but there was never any doubt about what I was going to do, because I just thought, you know, this is not going to work, is it? I'm going to tell people I wrote this book, but we never published it, because am I going to finish that sentence exactly? Yeah. And they're going to say, well, was it wrong? And I'm going to go, I can't comment, I suppose, and it's kind of like, you've lost your credibility at that point. Yeah, and is that super important for you then? Yeah, it is. It's important that, to me, that the people I deal with believe that I'm doing what I say I'm going to do, and that I'm doing it in a pretty honest and straightforward manner. I think that's an important consideration, yeah. So honesty, integrity, core values of yours, yeah. Look, I'm a realist. I work in the stock market, okay? I've ran a money-broking business for a while, you know? The Wolf of Wall Street is a reasonably accurate depiction of events of that period, in my humble opinion. So, you know, I'm not a monk. I'm a capitalist, right? And I always say to people, well, as much as it gives me a very warm feeling to do things right, make money for people, affect their lives very positively, and so on, I want to make money as well. And so I'm not a sort of choir boy, okay? But it's important for me that you do what you say you're going to do, when you say you're going to do it, in a good manner. Or at least try to. Make an effort to try to. Yeah, if you say you're going to do something, do it. Do it, yeah, I agree. Which is actually what a lot of people don't do. Well, a lot of people talk the talk, very few walk the walk. Yeah, interesting. They're going to encounter problems, because you do. And it's how you deal with them that really is the mark of what you're going to do. Yeah. And then, so obviously that was UBS, and then it was Colin Stewart. And then you led a management buyout. And to do that, you had to float the business, didn't you? No, we floated it subsequently to pay off the debt. So what happened was, Colin Stewart was a joint venture between me and a small group of other people, including Mr Collins and Mr Stewart, and a bank, Singer and Friedlander, which was eventually bought by one of the Icelandic banks and disappeared as a result. But what we decided at one point was, we thought, well, we need to own the whole firm. And the only way we were going to be able to do that was to do a leverage buyout, because we had to give them north of £100 million for their half of the firm. And if we went and raised equity for £100 million, then whoever gave the start, it was £122 million, was clearly going to own the majority of the firm, unless we put up £122 million. This isn't going to work. It's a people business. So what we did is we went out and borrowed £100 million, and got £22 million off CVC private equity. And we owned 55% of the firm. I and my colleagues owned 55% of the firm for that, which was quite a big thing to do at the time. And then we did the IPO three years later to pay off the debt and give the private equity guys an exit. So you let your value build up? Yeah, we made, time passes, and this was over 20 years ago. But I think that our entry price in terms of the equity purchase was something like a ninth of a penny or tenth of a penny. And we floated at 350p. So I mean, the percentage return was enormous. Absolutely enormous, which is what happens if you put a lot of leverage on something and get it right. It can go the other way, exactly. Well, the good news is if you get it the other way, it's not a slow death, is it? It's all over pretty quickly. And it always struck me as well, because a lot of people typically like one of two things. So they either like doing the work, or they like managing people. And it seems that you quite like doing both. So you like investing, clearly, and you're obviously very good at it. But then it also seems from your career thus far, that you also like building out big firms and managing groups of people. Or maybe you might tell me that's not the case. But what is it? Is it both, or is it one or the other? That is actually an extremely unusually insightful question, I've got to tell you. You're absolutely right. And I think that, I mean, saying I'm unique is a bit of a bummer. I'm not aware of another fund manager, portfolio manager, who's managed businesses. And I'm not aware of anyone who's managed businesses who's translated to be a portfolio manager. So combining the two is certainly very unusual, and it might even be unique. And I like both, actually. I've enjoyed doing and still enjoy doing both. So there's not one that I like more than the other, particularly, I wouldn't say. Although, bear in mind, all of these are people businesses. And the thing about people is they're capable of causing a problem every hour on the hour. So you have to bear that in mind in terms of the management of people. And management of people isn't always glamorous. I can remember when I was head of research at UBS, I had to deal with the fact that we had a very, very, very large water analyst, lovely guy, Lakis Athanasiou, who used to break the toilet seats when he sat on them. And I used to get, I used to have to deal with complaints about the broken toilet seats. And that's what management's about. It's not glamorous. It's not a glamorous job. But I like both. And I would suggest that I'm a better manager because I manage money for people and invest. I think it makes me a better manager in terms of thinking about investing for the business and how we deploy capital and what we do and profit margins and cash flows and so on. And I think I'm a better portfolio manager because I understand businesses, because I've run a couple of them. I mean, the story I always tell about running businesses is a very good friend of mine, Sir Andrew Cook, who's got a steel castings business in the UK. It was listed as now private. And I defended him in a big takeover many 30 years ago. And he always said about dealing with analysts, he said, oh, analysts, he talked to our analysts. He said, they think that what happens is I come in in the morning and there's two buttons on the wall in my office, a green one and a red one. And I press the green one, which is labeled make money. And then when I'm going home at night, just as I'm putting my jacket, I think, oh, must remember to press the old red button on the way out. He said, it's not like that. I've got to deal with molten metal and strikes and buyers who want to beat me up on price and competition. And it's a messy old business running a business. And I think an awful lot of when they talk about guidance on companies and what's the guidance for the next reporting period. And of course, the honest answer in some cases is I haven't got a clue. That's your job. But that's your job to come up with that. The guy running the company hasn't got a crystal ball. It's tough, isn't it? Because we see a lot with financial planners that a lot of them like the thought of running their own business. Actually, in practice, it is like you said, it's dealing with the real hard bits. I'll tell you other stories about it. I mean, I used to have Templeton as a client, the original Templeton. I used to go to Life of Key in the Bahamas to see them. And the CIO was a man called Holowesco, Mark Holowesco. And when I used to go up to him, he was rather grumpy. Anyway, he then set up his own business, Holowesco, left Templeton and set up Holowesco. And I went back to see him. And I was then presenting my Quest model, which was an online model in the very early days of being online. So there was no Wi-Fi. You just plug in, you know, this sort of thing. And we went to his office, and there was a power cut, I remember that, at Holowesco. And he said, don't worry about it. Get in the car. Took me around to his house. He said, my son's 14. He'll rig it up. And we rigged it up. And I did the presentation at his house. And you want a coffee? You know, what do you want? Why are you here? And I said to him at the end of the presentation, I said, Mark, don't mind me saying this, I hope. You seem an awful lot more relaxed than when I used to come here. He said, it was actually the same story. He said, I get calls about there's a lack of toilet tissue, right? And I'm trying to make decisions to manage money. He said, I hated being a manager in a big business. He said, and I love doing this. I like managing money. I said, and it shows. And it shows. But a lot of managers who run funds successfully want to run their own business, but they don't realise that running their own business involves a myriad of other things dealing with suppliers, staff, regulators, IT, IT security, every single day. That's way beyond the management of money. And they don't like it, or they're not very good at it, or they fail. And it distracts them. Yeah. Yeah. You've got to have a passion for both, I would imagine. I guess. So obviously, you floated the business, done incredibly well. And then didn't you start Fundsmith up at a similar time to when you was just exiting? Well, what happened was I ran Colin Stewart. And then after we IPO'd Colin Stewart, we bought a company called, it was then called Tullet in Tokyo, Tullet Prevost, now TPI Cap, the biggest money broker in the world. And so I basically was running two businesses. I was running Colin Stewart and Tullet Prevost at that time. So my contract was to be CEO of two businesses, owned by the same holding company, but I was CEO of two businesses. And eventually, Colin Stewart was, and when we bought Tullet in Tokyo, it had a pension fund with a big deficit. We knew that, right? And I took over being the investment advisor to the fund. The trustees very kindly agreed to me doing that. And I used the strategy, we used the strategy that we use for Fundsmith to turn that pension fund around. We turned it from assets, which are two thirds of the fund, into assets of 150% of the fund's liabilities in a decade through the investment process. And that was a good testing ground for what we're doing. But Colin Stewart got sold, Canna called the Canadian broker called Colin Stewart. And so there I was with A, an interest in investment, B, the experience of being investment advisor on this pension fund, and C, a contract which allowed me to use one third of my time for something other than running Tullet Prevost. I said, oh, you know what I'm going to do? I'm going to launch my own fund management business using that contract carve out that I had. And so I set up Fundsmith. I wrote a cheque for the first investment in the fund. And I wrote a cheque for most of the capital that we needed to start off. And I started up Fundsmith. I suppose that was kind of on to my next question, which was how did you manage running two businesses simultaneously? But it sounds like you were already doing it before. Yeah, carefully. I had a porcupines make love carefully. I hope. And out of all the businesses that you've run so far, I mean, you might, I would imagine you probably say Fundsmith, but is that the one that you have enjoyed running the most? Yeah. Colin Stewart was huge fun because on day one, there were eight of us in an office. Yeah. And I don't know how many hundred of us there were by the day that we sold it to Canna called, but it had been this fantastically successful startup. This leveraged buyout was nobody done with a broken phone before an IPO. My partner in the business who incredibly people dropped out by Andy Stewart was the longest standing of the partners was just a huge fun guy too. I mean, I had some of the funniest and most entertaining times I've been in business with Andy. He was just hilarious in terms of some of the stuff he would come up with. And so that was great fun. And then talent was interesting as well, because it was a different thing. It was 3000 people in 23 countries. It was quite a big business. And so, you know, it was genuinely a global big business to try and run. And that's a different kind of challenge. And it needed to be changed. It had been running away where it wasn't as profitable as it should be. And it was an industry that needed to be consolidated. So I need to either be bought or buy things. And we did, we bought Prebon, bought the number four competitor. That was fun. But this, you know, the startups are fun if they work, obviously, and Fundsmith has, but it's really in the business area that I'm most interested in. Investment analysis and investment is really the thing that I find that I'm most interested in. And do you use Fundsmith to run your own money as well? Yeah, that's what I invest in. I mean, if we didn't run outside people's money in Fundsmith tomorrow, I would still be running my money exactly the same way. It's what I do is it's not just, I often think with an awful lot of fund managers that don't manage their money that way. You know, they're in a fund management business. They've got funds doing large companies and small companies and international in the US and debt and commodities and everything. Like, do you put your money in here then? Oh, no, no, I run it as best I can. My money over there. And it's like, oh, no, I actually invest in the fund. Yes. I've never taken a single penny out. And I've no intention of ever taking a single penny out. And I would tell people in advance if I was thinking of taking a single penny out so they could decide what they wanted to do as a result. Yeah. And what drives you every day of it? Because you obviously don't have to work. So it must, you know, from outside looking in, it must be, you know, you actually just really, really enjoy it. Yeah, it's what I do. I think that most of us are defined by a few things. I don't know what the few things are. You know, the guy drives a taxi, supports Arsenal, and likes drinking beer, whatever, plays golf, right? Plays golf, watches Arsenal, drives a taxi. And if you take away one of those things, it's problematic. I think you should think very carefully about doing that in life. The people who've got an interest, and if it includes their career and what they do, think very carefully before you give it up, particularly if you are in a position where you don't have to retire. Yeah. Thinking about giving that up is, I think, problematic. My late father-in-law was a miner's son, a very intelligent guy, ended up as a school headmaster, you know, from a generation where that wasn't normal and so on. And he took early retirement at 55. And, you know, there was such a... and his interest was that and rugby, basically. And it was difficult to have a conversation with him in later years because it slowed up so much. And he was a really intelligent man. And I thought, you shouldn't have retired, really, should you? You should have kept going at least for another 10 years and kept doing that. And he didn't. But, you know, I think that's partly what... this is what I do. I wake up in the morning, I read the overnight stuff that's come in, I have a think about things, I talk to Julian, I've worked with Julian for 38 years, I had a research, I talk to him almost every day of my life, right? It's part of what we do. That's nice. And you've obviously got built a, you know, a really good leadership team around you. You must have two great... how did you do that? And, you know, what the kind of traits you look for in your leadership team? I mean, it's a balance. I mean, between... I've got a small group of people who we've worked together for a long time. I've got one of our directors I've worked with for 45 years this year. He was my boss at Barclays, in fact. I'll tell you a story about him if we have time. Julian is 38 years, you know, and so on. I've got a couple of guys who are in the 25 years, Grev, Mark's probably 30 years on. But you can't just rely on that. I've also got new colleagues who come in who become partners who are part of it. If it's just, well, we're just this bunch of old farts who just run this business together. I think I know what the end is. I can write the end of that movie. You need to have new people coming in. And we have. We've got new people like Hugo and Peter and so on, who've come in, who've become partners with us. And I'm very pleased that they have to renew the business. And I'm a believer in delegation. I always tell the story about Thalit, which people... I'm trying to illustrate that. We had a problem in Tokyo where the guy who was managing it wasn't going right and he'd screwed up, basically. And we were run out of Singapore. That was our Asia hub. And so I rang the guy in Singapore and said, well, I'm sorry, you're going to have to go to Tokyo and fire this guy and replace him. And he said, I can't do that. I said, why? He said, well, I've worked with him for 30 years and he's my friend. And I said, oh, that's problematic. I said, okay. I said, what I'm going to do is I'm going to fire Tokyo and fire him, then I'm coming to Singapore to fire you. I said, because I'm not keeping a dog barking himself. I said, I've fired people who are my friends in the business I have. And they say, well, how will our friendship go? I said, that's up to you after this. This is a professional decision. If you want to turn it into a personal decision, then that's up to you. If you don't, I'll see you down the pub. I said, so you've got to be able to handle this. Otherwise you're not a manager, you're something else. And so I think renewing with people, having a core of people whom you can trust, but building a new core of people you can trust over time. That's part of it. And part of it is really delegating to people. And by the way, that does mean they're going to do things you don't like and get things wrong from time to time. And you have to be willing to tolerate a degree of that. How do you do that? Do you have like... With great difficulty. I was about to say, are you kind of very understanding with it or what's your style with it? You know, I would say you really should ask my colleagues about that rather than me. I think I'm better with big disasters than small ones. I get really, really hacked off with small things like the meeting schedule was wrong and somebody didn't do what they should have done and so on. Whereas somebody comes in and says, oh my God, we lost 10 million pounds. I go, it's okay. It's all right. It's just money. We'll survive. They go, what? Because when you get a big disaster, I don't see any point in shouting really. I don't think it's going to make things better. And I think I've probably let off steam a bit on the small stuff. And as a result, I'm able to control to some degree my feelings and so on when we get to the, blimey, that's a big problem. I've actually got to get my thinking cap on. Yeah, well, I've got to do something constructive about this. Otherwise, I'm going to take it from being a problem into a crisis or a disaster. Yeah. Awesome. And if you were starting out again now, what would be one thing that you would do differently? Start earlier. Start earlier, yeah. You did start pretty early. I And is there one piece of advice that you give financial planners or fund managers that are looking to get into the profession? Yeah. I mean, it's a very good profession and they should. It's very positive to think about that. Don't rush. Take your time. Gain experience. Take training and so on. I see people who start businesses in this area and fail. And it's not because they're capable of doing it. It's because they've gone too soon. Go and work for somebody else. Go and take whatever job they offer. Go and accept whatever training they offer. Always be willing to do anything. You know, they say do the photocopying. Do the photocopying. I mean, we've got one partner who literally came in and did the photocopying and things like that. This guy was pretty good. There's Lucy Kelleway, used to write for the FT, used to do, I think it was called On Work or something. She did a column which was about the nature of working in an office and so on. It was kind of light-hearted. But somewhere within that light-heartedness, there were these kind of kernels of, yeah, you're trying to tell us something important here, aren't you? I don't know if I could find it if I look for it. She did an article which said that the sort of the digital age has done a disservice to young people because it's convinced them all that they can be their own boss and found a business and they can't. They should go take a job, right? Some of them may progress through that in due course to being able to found and run a business. Most of them won't, right? And she said, I think it's done a great disservice to people because even the ones who are capable of doing it probably have such a bad experience from going too soon that it's a disaster for them. I mean, I know somebody whose surname name is, who's a son of a colleague and friend of mine who started a fund, which I backed him in a very small way just to get him going, and it's not worked. I think the reason it's not worked is because he went too soon. He should have gone and worked in another fund management business, not ours, because we don't do that. Somebody else's fund management business and got some experience. Yeah, we see that a lot actually in financial planning too, where a lot of people are always in a big hurry to get going, which is great. I mean, obviously, speed is good. You don't want to be a complete plodder, but they miss that whole experience gap and they don't want to learn from other people. And it's a tough skill because in an age where everything is quick and you're everything happening quickly, to have that patience and that virtue to step back and say, actually, I can afford to take five years, 10 years, whatever it is to learn. I mean, the average male life expectancy in the developed world now has climbed into the mid-80s. You can be doing this for a long time, right, if you want. One of the great things about managing money is it's something you can do as Warren Buffett and Charlie Munger have demonstrated into old age and do it better. There ain't a rush. And the trouble is once you've screwed up in terms of going too early, it's more difficult to come back than it is to go the right route in the first place, I think. So it is, yeah, I think that happens. I was told a story this morning, somebody said, it goes back to going to Lyford Quay in the Bahamas to present to Templeton. And of course, back in those days, it was Sir John Templeton, not just Mark Awoska. And he had this thing, I mean, obviously, we're going back way, way, way before the internet age, but he said one of his advantages was, because he was a real long-term investor thinking about things, he said that there, in those days, the newspaper, the Wall Street Journal, used to arrive a day after. And so when there was some bad news, it was too late to panic. He said, I don't know what the news is till the day after. It didn't seem to do him a lot of harm, funnily enough, you know. And how do you feel about all these people, you know, just on that, you know, this day trading mentality, people trying to jump in, jump out? Because obviously, I know that you're a much longer term investor. Well, there's more than one way up the mountain of investment. The way that we manage money is not unique. We didn't invent it. And it's not the only way of doing it. Okay. But if you're going to do it one of the other ways, be it day trading, or momentum trading, or value investing, or so on, that's fine. But I'm going to say a couple of things about it. One of them is, on average, Yeah. Okay. Because day trading, or any of those very high, you know, sort of frequency trading things, are very much like going down to the casino, right? The more you play at the casino, the more money you will lose. Have you seen the movie Casino? Yes. Yeah. The guy who's the punter, who's won big from them, and they put a fault on his private jet to stop him getting back in, get him playing, right? On average, you are going to lose. That's the first thing to say about. The second thing is, you really, really, really need to stick to whatever your discipline is. So, don't be a day trader, or a momentum trader, and say, oh, I really think I should own NVIDIA, because NVIDIA's got GPU chips, and it's going to lead the AI revolution. No, no, no, no. That's not what you do. You own NVIDIA because it's going up. Yeah. The minute it stops going up, stop owning it. Don't try and tell me you now understand something about it, because you've made some money momentum trading. Don't hop from one to the other, right? It's like me saying, I'm a long-term investor. I analyze companies and the markets they're in. I try and find the good companies with great returns and all this sort of thing. And then, yeah, but I think NVIDIA's going up, so I add a few. Well, it might be great, but I'm outside of my discipline at that point, and that's probably not going to end well. And what areas are you investing in at the moment? What areas do you see of interest? We always invest in the same areas. I mean, if you look at our portfolio, you'll find the three big things that we invest in over time, we'll probably continue to do is consumer items. So your everyday necessities and luxuries, you know, when you have a drink, when you eat something, when you go to the bathroom, when you clean the kitchen, when you feed the pets, et cetera. So anything in the consumer area is of interest to us, basically. Medical technology is of interest to us. People who make things that go into bodies, tubes, catheters, artificial knees, robotic surgery equipment, drugs, in one case, in terms of the weight loss drug manufacturer, Novo Noros, and technology. But when I say technology, you've got to be careful, because people think technology just means one thing. It's a broad church technology. So we own automatic data processing, ADP, which certainly sounds like a technology company, doesn't it? And it is. It does payroll processing, right? We own Amadeus, which uses technology to do airline reservations. We own Meta, the old Facebook, which does communications and online advertising. We own Alphabet, the old Google, which does search and online advertising. We own Microsoft, which does operating systems and distributed computing. And we own Apple, which does mobile devices. They're all technology companies, but they've all got quite different drivers, haven't they? The things, the markets they operate in are very, very different. And we own a couple of other companies out there as well. I mean, we own Visa. Visa's a technology company. I know when people say it's a credit card company. Do you know how much money Visa has lent in its entire history to people? Not one single cent. That's what the banks do. Visa operates the payment system. It's a technology business. So technology, people use it as a sort of as if they're all the same. No, they're very, very different. And then we have a tale of things outside of consumer as in the industrial area. Typically, companies, they've got an installed base of equipment that they've sold to people, which gives them a tame market to sell service, spares, and upgrades and things too. So elevator and escalator company. You put an elevator in here from, who's this elevator? Fuji Tech, this one? Fuji. Yeah, there's a 75% chance that you've signed a maintenance contract. The building signed it on your behalf, by the way. They're spending your money, it's even better to maintain it. By the way, it's a legal requirement to maintain it. It's not just I'll do it when it goes wrong. No, you have to have a nice certificate on it, which says it's been maintained. That's where the money is made in this. And there are lots of examples of people who supply things like that testing equipment, elevators, compressors, generators, where once they've supplied the equipment, the money is really made from selling spares, service, upgrades, software, et cetera, et cetera. Like your car. Making the car doesn't make any money. It's the servicing. It's everything that comes after it. And when you started the Fundsmith, did you ever expect it to become what it is today? It's huge. I'm not sure is the answer to that. I realised it could become what it is today because people say you've got £37 billion. That sounds like quite a lot of money, doesn't it? But you know, in global terms, it's minuscule. It's because we all have this kind of bias of where we're from or where we live. We're not in the top 10 funds in America. It's a big world out there. It's a big world. I could take the entirety of our fund and invest a whole lot in Microsoft and not have a disclosable stake. How about that? It's a big old world out there, right? So I knew it was capable of doing this. But then to do it, you need a number of things. You need a good strategy. You need hard work. And then you need the final ingredient, which you must never write off, luck. There are other people with good ideas and good strategies who work hard and fail, actually. You need the bounce of the ball to come your way sometimes as well. Have you found it harder to invest the money as the fund has got bigger? Because I know that's what Buffett says a lot, doesn't he? You know, the more money you have to deploy, the more difficult it becomes. We can't really buy any companies under about $10 billion worth. Because if you think about it, our average position size, given that we've got that amount of money, is probably around about a billion. Which means on a 10 billion company, we've got to own 10% of the company, which is disclosable. And we've got to like it quite a lot, because selling that's going to be quite problematic, isn't it? Because the day we start selling it, everybody will know. And so, you know, there's a large swathe of the world, and some of that swathe of the world that's cut off from us is good. But we can't own it, basically. People have destruction tested using daily dealing, open-ended funds, which is what we are, in illiquid securities. And it can only end badly. Yeah, we've seen that. Yeah, it can only end badly. Awesome. Well, on that note, I know you've got a busy day ahead of you as well, so we really appreciate you taking the time. You've missed out my favourite movie quote. Which was the one that Vinnie Jones... Vinnie Jones at the end of Lock, Stock and Two Smoking Barrels, when the likelihoods are in the pub, and he comes in with a hold-up, and gives it to them. And the guns that they're about to throw off Hammersmith Bridge, the two shotguns, he's given them a catalogue to show that they're Holland and Hollands, or purdies, worth a fortune, worth hundreds of thousands of pounds, and leaves it there. But he turns as he leaves the pub, and he It's been emotional. It's been emotional. And on that note, we'll leave it there. Thank you very much, Terry. Really appreciate it. Thank you.