Words from Bruce Greenwald's "Final Lecture"

1. One of the most important things to teach people is to learn what your own mistakes are. You have to understand that you’re going to make them again and again. You have to learn about who you are. That’s hard for kids who come in thinking they’re sophisticated investors by the time they’re 26 years old. It’s a mixed benefit that they’re more sophisticated.

2. The hardest challenges are not industry challenges, because where industries are a challenge, it’s almost always where somebody like Amazon has come in and grabbed share.

Well, if somebody can come in and grab share, it’s not a stable market yet. In disruptive industries, before the disruption settles down, there are not going to be barriers to entry because the customers are not going to be captive since the product is changing so much. And the market is going to be changing so much that it’s very hard to secure scale.

3. So, I think the hardest thing for people to get their heads around is management and what they can do to you.

Especially if they don’t understand where their competitive advantage in business is. When that plays out, a guy who used to be a good manager, like Michael Dell, is not a good manager while the industry changes.

It’s the interaction of the management with changing circumstances that’s hard to chart.

4. There would be hiccups along the way, especially when a company goes through a manufacturing transition. But from our perspective, we had a cheap, cyclically depressed company with secular tailwinds and a management team focused on the things they could control, such as improving their competitive advantage in manufacturing and making money in all parts of the cycle.

It took them six years to fully implement the changes. The cycle kicked in about two years later, and Deere was making so much equipment that it took longer than expected to slow production to retool their factories.