Alumni
OPC weekend 2014
Steven Koltes OPC ’74 and his family, son Troy, daughter Kalya and wife Corinne, traveled to the reunion from their home in Switzerland.
hired two individuals, one a Scot, one a Dutchman to add to myself, an American, and a bunch of Brits (not many – we were about seven in total at the time). It was like a bad joke: the Scotsman, the Dutchman, the American… It really was like a bad joke, because we were diametrically opposed personalities. Nobody could ever have predicted that we would like each other let alone be able to manage a business together. Twenty-seven years from that date we are still running the same business together as co-chairmen. If one of the three of us had not been thrown into that cocktail, I am absolutely certain that we would not have got to where we are today. So again, these very small events that led in surprising directions. But what’s the point of talking about luck? There’s not much we can do about it. We certainly don’t want to advise our kids and grandchildren to go get lucky because they could take that the wrong way. It’s all out of our hands. But is it really out of our hands? In my business the received wisdom is that good investors are lucky and great investors are very lucky, but both make their own luck. How can someone make his own luck? Well, our business is buying companies, good companies, and trying to make them into better companies. When we are reviewing a project, we look at what we call the “three Ps”: people, price, plan. These are the principles we adhere to. What we mean by that is we want to find the best people in the whole world to run that company, we want to buy it at a price that does not overstress the managers or the company, and we want a plan that is simple and understandable, with milestones and benchmarks so you can see where you are going. If we get those three Ps right, and we let go – step back to see what happens, our experience in over 300 acquisitions over 25 years is that they always do much better than we expected. So in a way that’s how we create luck, good or bad (of course, I am giving you the good example). We create our own luck by setting things up the right way, sticking to our principles and letting the mixture patiently do its thing. Patience, in my view, is luck’s best friend. It’s a virtue that has been lost on all of us. Let’s face it, starting with me and everybody in this room, we have all lost a little bit of our ability to wait. We live in an era of three-minute attention spans and three-second communications. It
is very hard to be patient. But patience is the friend of luck. If you set things up the right way and you let them work their magic, if you stick to your principles, it pays off. But you have to wait. I’m going to close with an example of patience paying off. It’s taken again from the investment world, from my capitalist hero Warren Buffett. I was saying to my wife once, “If I had not met you, and he had been a lot younger, and he hadn’t lived in Omaha, Nebraska, and he wasn’t quite as unattractive, and he was a woman, I think I would have proposed to him.” But I never got that opportunity, although I have had the opportunity to meet him, and it is quite an extraordinary experience. In any case, in 1964, Warren Buffett set up his company called Berkshire Hathaway. If in 1965 my parents had looked at what he had done over the year, thought it was a pretty good job and invested $10,000 in his company, by 1968, the year I entered Penn Charter, their $10,000 would have been worth $17,000. That is a return of almost 20 percent a year. Pretty good. You could have forgiven my parents if they had thought, “We have another kid going to private school, it costs $2,000 a year, that times six is $12,000. I’ve got $17,000 now when I only had $10,000 three years ago. ‘Good instruction is better than riches’ so we’re going to take it out of Berkshire and put it in the bank to pay for this tuition.” But if instead of doing that, if they had waited patiently, seeing that this guy really knows what he’s doing (all of his companies are mini-cosmoses of what we do, setting things up and letting them run), if they had been as patient as he is, their $10,000 investment today would be worth $70 million. Same $10,000, same 19 percent-a-year return. Just a lot more years.
“Patience, in my view, is luck’s best friend. It’s a virtue that has been lost on all of us. Let’s face it, starting with me and everybody in this room, we have all lost a little bit of our ability to wait.” I would like to thank the board, and Darryl in particular, for this award. I must say, when I got it, I had to explain its importance to my wife, who is Swiss and went to public school and doesn’t really know what these sorts of things are like. It is very meaningful for me, so thank you very much. I’d like to thank Pete (Davis) in particular as president of the Alumni Society. He has done a fantastic job as the head of our little class of ’74, which is a very active class due greatly to his incredible engagement for this school. And I’d like to thank Darryl, Pete, Jack and Perry Canfield, if Perry’s here, for a very remarkable gesture they made last September by arriving unprompted at our mother’s memorial service. These sorts of gestures are what really set this school apart and give it the spirit that it has. It’s these kinds of things that make us all, everybody in this room, a little bit luckier than average. Thank you. PC
Fall 2014 •
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