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A conference talk became The Outsiders
Why the talk began
Every other year, the investor's firm, Housatonic, hosted a conference for its CEOs: the current ones, alumni whose companies it had exited, and the ones it was courting for future roles. The group took over a small resort in the western third of the country. Headliners included Jim Collins, who presented his Good to Great research before it was published, and Michael Lewis, who came a couple of times.
Harvard and Teledyne
About 20 years ago the investor volunteered for one of the more practical talks, read about Henry Singleton, and decided to dive deep into him. The primary material sat in the Baker Library at Harvard, so he teamed up with a Harvard Business School student. The first semester was a deep analytical dive into Teledyne, Singleton's company, and its peers among the conglomerates of the 1960s. In the second semester they interviewed everyone alive who'd had anything to do with the company. Singleton had died about five years before they started.
Teledyne was a famously reclusive company, like many of the companies in the book. The key unlock was a deck that was not standard analytical work: the people who read it decided it was interesting enough to give their time. They met with Singleton's former president and COO, George Roberts, among others at the company, plus Arthur Rock, and Charlie Munger was generous with his time too.
A book takes shape
The student then suggested a talented classmate for another independent study the next year, and that one covered Capital Cities. One project a year became a rhythm. After about the third or fourth, a book seemed possible. From the first project to publication took about 10 years.
Why was Teledyne so unusual?
Teledyne was founded in 1960 and grew in its first decade by buying dozens of businesses. Henry Singleton later stopped acquiring and bought back a large portion of Teledyne's own shares. The company also paid no dividend until the late 1980s.
Why did conglomerates boom in the 1960s?
Companies with high stock prices could use their shares to buy businesses valued at lower multiples of earnings, which lifted earnings per share. Litton Industries, ITT, and Teledyne were among the best-known examples. Antitrust enforcers began scrutinizing conglomerate mergers in the late 1960s. Many conglomerates were broken up in the decades that followed.
How did Arthur Rock connect to Teledyne?
Rock and Tommy Davis formed one of the first venture partnerships, Davis and Rock, in 1961, and Teledyne was among its early investments. Rock had earlier helped arrange the financing that launched Fairchild Semiconductor. He later helped found Intel and served as its first chairman.
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