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The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
”It is impossible to produce superior performance unless you do something different.” — John Templeton
What makes a successful CEO? Most people call to mind a familiar definition: a seasoned manager with deep industry expertise. Others might point to the qualities of today’s so-called celebrity CEOs—charisma, virtuoso communication skills, and a confident management style. But what really matters when you run an organization? What is the hallmark of exceptional CEO performance? Quite simply, it is the returns for the shareholders of that company over the long term.
In this refreshing, counterintuitive book, author Will Thorndike brings to bear the analytical wisdom of a successful career in investing, closely evaluating the performance of companies and their leaders. You will meet eight individualistic CEOs whose firms’ average returns outperformed the S&P 500 by a factor of twenty—in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire Hathaway, General Dynamics, Capital Cities Broadcasting, TCI, and Teledyne. In The Outsiders, you’ll learn the traits and methods—striking for their consistency and relentless rationality—that helped these unique leaders achieve such exceptional performance.
Humble, unassuming, and often frugal, these "outsiders” shunned Wall Street and the press, and shied away from the hottest new management trends. Instead, they shared specific traits that put them and the companies they led on winning trajectories: a laser-sharp focus on per share value as opposed to earnings or sales growth; an exceptional talent for allocating capital and human resources; and the belief that cash flow, not reported earnings, determines a company’s long-term value.
Drawing on years of research and experience, Thorndike tells eye-opening stories, extracting lessons and revealing a compelling alternative model for anyone interested in leading a company or investing in one—and reaping extraordinary returns.
What makes a successful CEO? Most people call to mind a familiar definition: a seasoned manager with deep industry expertise. Others might point to the qualities of today’s so-called celebrity CEOs—charisma, virtuoso communication skills, and a confident management style. But what really matters when you run an organization? What is the hallmark of exceptional CEO performance? Quite simply, it is the returns for the shareholders of that company over the long term.
In this refreshing, counterintuitive book, author Will Thorndike brings to bear the analytical wisdom of a successful career in investing, closely evaluating the performance of companies and their leaders. You will meet eight individualistic CEOs whose firms’ average returns outperformed the S&P 500 by a factor of twenty—in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire Hathaway, General Dynamics, Capital Cities Broadcasting, TCI, and Teledyne. In The Outsiders, you’ll learn the traits and methods—striking for their consistency and relentless rationality—that helped these unique leaders achieve such exceptional performance.
Humble, unassuming, and often frugal, these "outsiders” shunned Wall Street and the press, and shied away from the hottest new management trends. Instead, they shared specific traits that put them and the companies they led on winning trajectories: a laser-sharp focus on per share value as opposed to earnings or sales growth; an exceptional talent for allocating capital and human resources; and the belief that cash flow, not reported earnings, determines a company’s long-term value.
Drawing on years of research and experience, Thorndike tells eye-opening stories, extracting lessons and revealing a compelling alternative model for anyone interested in leading a company or investing in one—and reaping extraordinary returns.
251 pages, Hardcover
First published January 1, 2012
1810 people are currently reading
29829 people want to read
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Displaying 1 - 30 of 700 reviews
April 20, 2018
Extremely repetitive. Every CEO made strategic acquisitions and bought back stock when the price multiple made sense. There thats the whole book. The book also glorifies things like excessively slashing worker pay to increase return to shareholders. For a much better read check out Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar.
January 11, 2016
The Outsiders is about 8 CEOs who have enjoyed far better returns on company stock than their peers or the market due to their ability to allocate both financial and human capital.I really liked this book because capital allocation rarely gets talked about at the C-suite level from my experience. Most of the CEO's I interact with don't have financial or CFO backgrounds, rising through the sales or operations ranks. The result of which is a big disconnect between owners and operators on capital decisions, which as the book demonstrates, have a large impact on returns.
This book focuses on large public companies and the unconventional approaches to generating shareholder returns via share buybacks, divestitures, and equity and debt offerings. These CEO's have the luxury of hiring capable operators and divisional vice presidents who have complete autonomy to run the business for cash flow, freeing up the CEO's to make optimal allocation decisions. At the public company level, it is easier to attract talented operators to run the business. However, for most middle market companies, CEO's are so in the weeds with day to day events, that they cannot take a step back and think strategically. This is not a criticism, merely a result of smaller businesses with lesser budgets to spend on personnel. The CEO's in this book deserve a lot of credit for their success and wise capital decisions, but I think their ability to delegate responsibility and be content to not micromanage is a bigger piece of their success. At the end of the day, optimal financial capital allocation decisions are just math. More of the credit should go to the second layer of managers and the decentralization of org charts by the CEO's.
Really great book, clearly written with 8 great stories.
This book focuses on large public companies and the unconventional approaches to generating shareholder returns via share buybacks, divestitures, and equity and debt offerings. These CEO's have the luxury of hiring capable operators and divisional vice presidents who have complete autonomy to run the business for cash flow, freeing up the CEO's to make optimal allocation decisions. At the public company level, it is easier to attract talented operators to run the business. However, for most middle market companies, CEO's are so in the weeds with day to day events, that they cannot take a step back and think strategically. This is not a criticism, merely a result of smaller businesses with lesser budgets to spend on personnel. The CEO's in this book deserve a lot of credit for their success and wise capital decisions, but I think their ability to delegate responsibility and be content to not micromanage is a bigger piece of their success. At the end of the day, optimal financial capital allocation decisions are just math. More of the credit should go to the second layer of managers and the decentralization of org charts by the CEO's.
Really great book, clearly written with 8 great stories.
September 4, 2019
"Lessons from 8 great CEOs"
I think the mix of stories and principles the CEOs blended together are good. Having 8 CEOs makes it interesting because there's a variety to look at. I do think there's a bit glossed over, but still a positive read for learning.
Here are my notes:
- Greedy when others are fearful
- Investing in the right things in big ways, cut costs everywhere else
- Funding acquisitions with debt
- Think fast and slow: fast with your initial gut-reaction, slow with your analysis
- Concentration can decrease risk
- Always do the math: data driven decisions
- Reinvest your earnings to snowball income, sheltered from tax
- Determine the hurdle rate (minimum acceptable returns for investment) and calculate & rank investments by returns and risk, use conservative assumptions
- Money allocation should be owner led, not delegated.
I think the mix of stories and principles the CEOs blended together are good. Having 8 CEOs makes it interesting because there's a variety to look at. I do think there's a bit glossed over, but still a positive read for learning.
Here are my notes:
- Greedy when others are fearful
- Investing in the right things in big ways, cut costs everywhere else
- Funding acquisitions with debt
- Think fast and slow: fast with your initial gut-reaction, slow with your analysis
- Concentration can decrease risk
- Always do the math: data driven decisions
- Reinvest your earnings to snowball income, sheltered from tax
- Determine the hurdle rate (minimum acceptable returns for investment) and calculate & rank investments by returns and risk, use conservative assumptions
- Money allocation should be owner led, not delegated.
May 4, 2017
It was a well written book, with interesting stories. But as a CEO I do not agree that the entire success of such ginormous organizations have been purely because of their CEOs and how they managed cashflow, decentralized their organization and made smart capital allocations. Business is way more complex than what this book makes it seems like. There numerous internal and external factors that can move the pendulum in different direction.
Although there were interesting patterns in behaviour I don't think there was any proof that this was the reason for success for these organization and in fact I don't think I actually learned anything that I could comfortably apply to my own business.
Needless to say it was an enjoyable read and a well written business book and biography of 8 celebrity CEOs :)
Although there were interesting patterns in behaviour I don't think there was any proof that this was the reason for success for these organization and in fact I don't think I actually learned anything that I could comfortably apply to my own business.
Needless to say it was an enjoyable read and a well written business book and biography of 8 celebrity CEOs :)
April 6, 2016
Its a great book focusing on some live examples of CEO's who have created value for shareholders.
The last chapter "radical rationality" in itself is worth the price of book. Some of the key pointers of this chapter and book.
1. Always do the math- not the detailed spreadsheet one but a simple one pager telling what are the assumptions made and basis that what are the returns expected from the project. The quality of assumptions tells how good or bad this decision is
2. Intense focus on value per share- While a lot of people focus on "value" very few do on denominator. "Mental Model"- companies who buy back when prices are low
3.Independent Thinking- hardly employ investment bankers or a large team on capital allocation decisions
4.Charisma is overrated, though i think Buffet with his one-liners has his own
5.Crocodile like temperament
6. Probably the most important point for me- Consistent Application of Rational and Analytical approach to decisions large and small
7.Long Term Focus- Eschewing short term gains for long term investments.
Other common themes
- all of them focused on cash flow and not earnings
- none of them had fancy offices or corporate HQ's ( mental model)
The last chapter "radical rationality" in itself is worth the price of book. Some of the key pointers of this chapter and book.
1. Always do the math- not the detailed spreadsheet one but a simple one pager telling what are the assumptions made and basis that what are the returns expected from the project. The quality of assumptions tells how good or bad this decision is
2. Intense focus on value per share- While a lot of people focus on "value" very few do on denominator. "Mental Model"- companies who buy back when prices are low
3.Independent Thinking- hardly employ investment bankers or a large team on capital allocation decisions
4.Charisma is overrated, though i think Buffet with his one-liners has his own
5.Crocodile like temperament
6. Probably the most important point for me- Consistent Application of Rational and Analytical approach to decisions large and small
7.Long Term Focus- Eschewing short term gains for long term investments.
Other common themes
- all of them focused on cash flow and not earnings
- none of them had fancy offices or corporate HQ's ( mental model)
May 27, 2015
A better description would be "Eight unconventional CEOs who used share buy-backs to leverage up returns while staying focussed and riding a wave of good luck." I'm not sure it is the best or most useful advice to leaders of companies.
The corporate histories are at least interesting, as they come from various times over the past few decades.
The corporate histories are at least interesting, as they come from various times over the past few decades.
March 14, 2019
I enjoyed the chapters on Warren Buffett and Katharine Graham the most. I learnt more about Buffett’s interesting approaches to corporate governance. Katharine became CEO following the suicide of her husband. She was inexperienced but she trusted her gut. The movie “The Post” only touches on a small part of her multiple achievements. She did it all with poise, class and style. I also got confirmation again that introverts make good CEOs!
September 14, 2020
A clear and crisply written book about eight great CEOs and their skilful capital allocation technique. This book is a good introduction to a completely alien concept and a new framework on growing business.
July 27, 2021
This book can be summed up as the following:
Jack Welch = Virgin
Warren Buffett = Chad
Jack Welch = Virgin
Warren Buffett = Chad
April 29, 2025
Apart from the hilarious fact that Warren Buffet named this book his #1 choice for his 2012 reading list (the longest chapter in the book is about him), this is a phenomenal book.
For a Finance major, and someone who is remarkably interested in learning more about the finance world, this was super cool. I felt like a part of an exclusive club getting knowledge on capital allocation and learning the ins and outs of a successful business.
Overall, this book was phenomenal, and I will be returning to it very often as a great reminder. It was interesting to me to see the parallels between the character and habits of the CEO's who literally work the job that one day I want to have. Their expertise, patience, and remarkably undistracted lives transformed millions purely based off the discipline they had in sticking to a seemingly crazy strategy.
For a Finance major, and someone who is remarkably interested in learning more about the finance world, this was super cool. I felt like a part of an exclusive club getting knowledge on capital allocation and learning the ins and outs of a successful business.
Overall, this book was phenomenal, and I will be returning to it very often as a great reminder. It was interesting to me to see the parallels between the character and habits of the CEO's who literally work the job that one day I want to have. Their expertise, patience, and remarkably undistracted lives transformed millions purely based off the discipline they had in sticking to a seemingly crazy strategy.
August 9, 2023
This book was okay but hard to get too excited about. The chapters were very repetitive — they covered different CEOs in different periods of time but used the exact same narrative arc for each. Some of the stuff the author points out about the CEOs seems unrelated to their performance — couldn’t a charismatic CEO or even (gasp) an Insider do all the capital allocation stuff properly? But most of the other traits seemed relevant and were interesting (decentralized organization, delegate operations and focus on capital allocation, evaluate all investments by return, etc).
August 14, 2018
О чем книга в целом. 8 историй бизнеса и работы выдающихся гендиректоров американских компаний. Критерием их отбора для книги были результаты их работы, которые на протяжении десятилетий в разы превосходили рост рынка. Автор выяснил, что всех их объединяет несколько принципов ведения дел и подробно с примерами описывает каждый из них.
Главный вывод из книги. Все люди изначально склонны делать то, что делают все. Это относится и к бизнесу. У нас перед глазами всегда одни и те же подходы управления от звездных предпринимателей и гендиректоров, которые привели свои компании к успеху на основе всем известных принципов. О них пишут книги и статьи в журналах типа Forbes. Но по настоящему выдающихся результатов в бизнесе часто достигают непубличные, сконцетрированные на своем деле предприниматели, которые разработали свой собственный понятный и простой подход к делам. В результате именно этот нетрадиционный подход привел их к успеху. Надо уметь отстраиваться от шума и ненужной суеты, чтобы в спокойной обстановке докапываться до истиных причин, влияющих на результаты моего бизнеса.
Главный вывод из книги. Все люди изначально склонны делать то, что делают все. Это относится и к бизнесу. У нас перед глазами всегда одни и те же подходы управления от звездных предпринимателей и гендиректоров, которые привели свои компании к успеху на основе всем известных принципов. О них пишут книги и статьи в журналах типа Forbes. Но по настоящему выдающихся результатов в бизнесе часто достигают непубличные, сконцетрированные на своем деле предприниматели, которые разработали свой собственный понятный и простой подход к делам. В результате именно этот нетрадиционный подход привел их к успеху. Надо уметь отстраиваться от шума и ненужной суеты, чтобы в спокойной обстановке докапываться до истиных причин, влияющих на результаты моего бизнеса.
June 23, 2020
Did not finish, after the third chapter it got all boringly repetitive - inexperienced person is put in charge of a large slow company, sells non-profitable assets, acquires profitable assets, makes millions.
As a startup founder, I was hoping to learn something about being a successful CEO, but the the book is all about managing huge companies, and the takeaway messages about acquisitions and buying back shares don't apply at all.
It seems that the author is a fanboy of Warren Buffet, who is always intermingled in the stories of the profiled CEOs before having a chapter of his own. I have nothing against him and he undoubtedly has great talent, it was just tiring to have him pop up in each chapter.
The measure of success as presented by this book is solely financial value per share. I found the lack of vision and creating real value for society beyond maximizing financial returns for shareholders apalling, and scoffed at these praise of how these genius CEOs avoided taxes and smashed worker strikes.
As a startup founder, I was hoping to learn something about being a successful CEO, but the the book is all about managing huge companies, and the takeaway messages about acquisitions and buying back shares don't apply at all.
It seems that the author is a fanboy of Warren Buffet, who is always intermingled in the stories of the profiled CEOs before having a chapter of his own. I have nothing against him and he undoubtedly has great talent, it was just tiring to have him pop up in each chapter.
The measure of success as presented by this book is solely financial value per share. I found the lack of vision and creating real value for society beyond maximizing financial returns for shareholders apalling, and scoffed at these praise of how these genius CEOs avoided taxes and smashed worker strikes.
July 1, 2016
A crisp but brilliant book on the work and achievements of 8 unconventional CEOs, representing companies which have achieved exceptional financial success under their tutelage. All these CEOs came from diverse backgrounds, bringing unique perspectives and views befitting an outsider. However, these CEOs have things in common, which set them apart from the rest. All these luminaries personally supervised capital allocation decisions, made smart acquisition and divestment decisions, decentralized management by empowering executives, focused on cash flow instead of earnings and regularly bought back their own shares. All of them had a deeply analytical mindset and strategic vision for positioning their organizations for the long run. Although the book became slightly repetitive in the middle, but nonetheless, it’s worth a shot.
June 18, 2022
A brilliant book describing some of the best business leaders of the last half century. Despite peer pressure and other challenges, they excelled in resource allocation and rational analytical decision making.
June 10, 2015
Great overview of some amazing CEOs you've never heard of who embraced contrarian viewpoints and completely demolished benchmark returns by focusing on allocating capital.
November 23, 2023
My brain is expanding!! that said I’m on a flight to Miami where I will 100% undo all of this learning
May 7, 2025
So I wanted to give this book a 2 but I realize the reason I don’t like it is not that it wasn’t well written and informative but because the content kind of sucks at a systemic level. It’s depressing that the best CEOs are not those of companies that are committed to improving the lives of customers and their work force like Costco and Dr. Bronners but apparently are those that fought strikes and were creative with capital tax deferrals and stock buy backs? I feel like we have really lost sight of what’s truly important for the pure purpose of increasing stakeholder value…bleh.
The book itself is clear and well structured to talk about the traditional value CEOs are expected to increase but I feel like these business books need to shift to what matters…PEOPLE!
The book itself is clear and well structured to talk about the traditional value CEOs are expected to increase but I feel like these business books need to shift to what matters…PEOPLE!
August 8, 2024
Una de las responsabilidades menos valoradas que tiene a su cargo un CEO es la de 𝘤𝘢𝑝𝘪𝘵𝘢𝘭 𝘢𝘭𝘭𝘰𝘤𝘢𝘵𝘪𝘰𝘯 – el proceso de cómo asignar los recursos de la empresa para generar los mejores retornos para los accionistas. Pensar en esta función clave nos obliga a tener el sobrero de dueño en la toma de decisiones dentro una compañía. Definitivamente, tener la mentalidad de inversionista te convierte en un hombre negocios más preparado para los retos que uno enfrenta.
Por esa razón, el libro The Outsiders (2012) sobresale en comparación con otros libros relacionados con el 𝘮𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵, cuyo mensaje central – usualmente – se enfoca en cómo gestionar eficientemente la operatividad de la firma. Si bien este rol conlleva una dedicación de tiempo considerable y es de incuestionable importancia, la adecuada asignación de recursos permite sembrar y cosechar los resultados de una buena gestión, sobre todo a mediano y largo plazo.
Para medir el éxito de una gestión de un alto ejecutivo de una empresa que cotiza en bolsa, la forma más directa es medir la tasa de crecimiento anual compuesto (CAGR) del precio de una acción en un periodo determinado (ésta debe incluir la reinversión por dividendos, ajustado también por el número de acciones en circulación). Dicha métrica debe compararse con el mismo indicador para empresas comparables (sector) y con el índice accionario del mercado relevante a la que pertenece.
Bajo los parámetros mencionados, el autor desarrolló el perfil de 8 CEOs atípicos que superaron, por lejos, el desempeño del mercado (S&P 500). Con un enfoque metodológico similar a los libros de Jim Collins, podemos extraer varios mensajes que se repiten en estos gestores, pese a que tuvieron contextos e industrias disímiles en algunos casos. Por ejemplo: (i) focalización en el precio de la acción y el flujo de caja de la empresa, por encima de otros indicadores; (ii) descentralización organizacional en la toma de decisiones operativas del negocio, a la par de una disciplina férrea en la centralización de las decisiones sobre la asignación de recursos.
A nivel de rasgos de personalidad, la valentía de plasmar un pensamiento independiente en sus decisiones es el sello distintivo que diferenciaba a estos 8 CEOs del resto de su grupo. Esta característica era acompañada con una alta racionalidad numérica y un desdén por complacer innecesariamente a agentes externos a la firma. Por todo lo anterior, como el título de la obra sugiere, estas personas, por méritos propios, se convirtieron en verdaderos forasteros.
Por esa razón, el libro The Outsiders (2012) sobresale en comparación con otros libros relacionados con el 𝘮𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵, cuyo mensaje central – usualmente – se enfoca en cómo gestionar eficientemente la operatividad de la firma. Si bien este rol conlleva una dedicación de tiempo considerable y es de incuestionable importancia, la adecuada asignación de recursos permite sembrar y cosechar los resultados de una buena gestión, sobre todo a mediano y largo plazo.
Para medir el éxito de una gestión de un alto ejecutivo de una empresa que cotiza en bolsa, la forma más directa es medir la tasa de crecimiento anual compuesto (CAGR) del precio de una acción en un periodo determinado (ésta debe incluir la reinversión por dividendos, ajustado también por el número de acciones en circulación). Dicha métrica debe compararse con el mismo indicador para empresas comparables (sector) y con el índice accionario del mercado relevante a la que pertenece.
Bajo los parámetros mencionados, el autor desarrolló el perfil de 8 CEOs atípicos que superaron, por lejos, el desempeño del mercado (S&P 500). Con un enfoque metodológico similar a los libros de Jim Collins, podemos extraer varios mensajes que se repiten en estos gestores, pese a que tuvieron contextos e industrias disímiles en algunos casos. Por ejemplo: (i) focalización en el precio de la acción y el flujo de caja de la empresa, por encima de otros indicadores; (ii) descentralización organizacional en la toma de decisiones operativas del negocio, a la par de una disciplina férrea en la centralización de las decisiones sobre la asignación de recursos.
A nivel de rasgos de personalidad, la valentía de plasmar un pensamiento independiente en sus decisiones es el sello distintivo que diferenciaba a estos 8 CEOs del resto de su grupo. Esta característica era acompañada con una alta racionalidad numérica y un desdén por complacer innecesariamente a agentes externos a la firma. Por todo lo anterior, como el título de la obra sugiere, estas personas, por méritos propios, se convirtieron en verdaderos forasteros.
August 12, 2020
The bible for CEOs
This is by far my favorite book on managing a business. as a first time ceo, the outsiders provides powerful guidelines for those who dream to beat the markets and build a legacy, while fostering shareholder happyness ;)
This is by far my favorite book on managing a business. as a first time ceo, the outsiders provides powerful guidelines for those who dream to beat the markets and build a legacy, while fostering shareholder happyness ;)
June 2, 2024
To książka specjalistyczna, ciekawa dla tych, którzy interesują się finansami i przywództwem. I takim osobom ją polecam.
January 16, 2020
Good book. The author emphasises the similarities of CEOs that have performed brilliantly in the past.
Some key points I picked out:
1. Good CEOs are differentiated by temperament, not by intelligence. Warren buffet talks about institutional imperative, and the need to be greedy when others are fearful, fearful when others are greedy.
2. It is impossible to produce superior performance unless you do something different - John Templeton.
3. The role of a CEO should be less operational, more like an investor. A CEO should be judged based on his capital allocation abilities and not based merely on size. The best capital allocation are practical, opportunistic and flexible, not bound by ideology or strategy. There are times where buybacks are the best investment for the company if it trades at a discount. Or when shrinking makes sense if trading at an excessive premium.
4. The power of decentralising operational aspects but centralising capital allocation.
5. You are right not because others agree with you, but because your facts and reasoning are sound
I appreciate the effort the author have took to point out the similarities with these outstanding CEOs and compiled it as a blueprint. His metric to evaluate CEO performance is using shareholder returns.
However, it is also important to note how there are CEOs who do not follow this blueprint which I wished the author would have mentioned like Jeff Bezos and many others (even those running private companies).
Some key points I picked out:
1. Good CEOs are differentiated by temperament, not by intelligence. Warren buffet talks about institutional imperative, and the need to be greedy when others are fearful, fearful when others are greedy.
2. It is impossible to produce superior performance unless you do something different - John Templeton.
3. The role of a CEO should be less operational, more like an investor. A CEO should be judged based on his capital allocation abilities and not based merely on size. The best capital allocation are practical, opportunistic and flexible, not bound by ideology or strategy. There are times where buybacks are the best investment for the company if it trades at a discount. Or when shrinking makes sense if trading at an excessive premium.
4. The power of decentralising operational aspects but centralising capital allocation.
5. You are right not because others agree with you, but because your facts and reasoning are sound
I appreciate the effort the author have took to point out the similarities with these outstanding CEOs and compiled it as a blueprint. His metric to evaluate CEO performance is using shareholder returns.
However, it is also important to note how there are CEOs who do not follow this blueprint which I wished the author would have mentioned like Jeff Bezos and many others (even those running private companies).
March 25, 2014
If you want to run your own business, be a CEO, or get some ideas of what you should look for in CEOs of companies you want to invest in, you should read this book.
The eight CEOs Thorndike profiles all excelled in capital allocation, i.e., they knew what to do with the money their companies had.
Sounds simple enough, right? There's no simple template, however, as different circumstances yield different best moves.
He compares each CEO's returns to the results of his/her peers as well as the S&P 500 during their respective reigns. The CEOs all beat their peers by a wide margin and trounced the S&P 500.
Those are great skills to have and understand. This book will give you a leg up.
The eight CEOs Thorndike profiles all excelled in capital allocation, i.e., they knew what to do with the money their companies had.
Sounds simple enough, right? There's no simple template, however, as different circumstances yield different best moves.
He compares each CEO's returns to the results of his/her peers as well as the S&P 500 during their respective reigns. The CEOs all beat their peers by a wide margin and trounced the S&P 500.
Those are great skills to have and understand. This book will give you a leg up.
June 20, 2020
This was a well written book. It was a great experience of having to read about business leaders (read CEOs) and their various iconoclastic ways of handling things. This book highlighted some historical background checks on some of the world business leading firms and the faces behind the brands. As for some of the lessons, I think the explanations on the understanding of capital allocation and thinking carefully about how to best deploy company’s resources to create value for shareholders was fantastic. This is a good read for business owners and enthusiasts alike in which I’d highly recommend.
July 21, 2019
Great book, I enjoyed reading every chapter. Two things surprised me, first is how outstanding was result of those 8 great CEOs compared to peers and S&P 500. All of them made yearly compound returns duoble or even higher compared to markert. Secondly, there is a clear recipe how to create shareholders' value and all of them consistently followed that path for many years, without being influenced by the general crowd behavior. A must read for every investor!
July 17, 2017
Looking to build and lead enterprises at scale? This book is a must read.
Any book that changes the way you think, even just around the edges, should be cherished. This one goes further than that.
Any book that changes the way you think, even just around the edges, should be cherished. This one goes further than that.
March 18, 2017
Reread this gem of a book. This time took extensive notes.
November 19, 2018
Makes me hungry to do some deals!
January 7, 2025
The Outsiders is an easy read on a relatively uncovered topic in mainstream finance literature: capital allocation. Featuring eight CEOs with returns envied by peers and the market alike, this book offers high level practical guidance and critical thought framework not only for aspiring Fortune 500 chief executives but also investors and small business owners.
Each success story is unique in its own regard but some common themes exist throughout. First and foremost is a managerial emphasis on free cash flow over earnings. FCF limits the need for debt/equity financing and/or business unit divestment. These sources of capital can and should be tapped under the right circumstances, but having strong and reliable FCF as a first resort is paramount.
The next theme relates to the right circumstances, or lack thereof. If one's stock is trading at a severe discount based on conservative assumptions, buybacks are perhaps the best allocation. On the flip side, if the same stock trades at multiples well above perceived fair value then an offering might be warranted. It's this simple comparison of multiples (interest rate vs. rate of return in the case of debt) that governs decision making. Related is the pattern of patience. Be fearful when others are greedy and greedy when others are fearful, and even more greedy when the right opportunity presents itself.
Frugality and performance tracking are some less notable but still important themes. Excessive/redundant expenses, including investment banking fees, make waste and limit the wonders of compound growth. On a similar note, dividends are tax inefficient and taxation is theft! Lastly, the ability to standardize performance metrics across business units, stakeholders, strategy initiatives, etc. allows for better decision making and incentivizes internal competition/outcomes.
I'm much better off having read The Outsiders but ultimately feel it's a collection of memoirs rather than a single, cohesive blueprint like the title suggest. The common themes discussed above are certainly rational insights that I'll be mindful of as an active investor and hopeful entrepreneur, but to think I can now do LBOs on the back of an envelope just like Warren Buffett is farfetched.
Each success story is unique in its own regard but some common themes exist throughout. First and foremost is a managerial emphasis on free cash flow over earnings. FCF limits the need for debt/equity financing and/or business unit divestment. These sources of capital can and should be tapped under the right circumstances, but having strong and reliable FCF as a first resort is paramount.
The next theme relates to the right circumstances, or lack thereof. If one's stock is trading at a severe discount based on conservative assumptions, buybacks are perhaps the best allocation. On the flip side, if the same stock trades at multiples well above perceived fair value then an offering might be warranted. It's this simple comparison of multiples (interest rate vs. rate of return in the case of debt) that governs decision making. Related is the pattern of patience. Be fearful when others are greedy and greedy when others are fearful, and even more greedy when the right opportunity presents itself.
Frugality and performance tracking are some less notable but still important themes. Excessive/redundant expenses, including investment banking fees, make waste and limit the wonders of compound growth. On a similar note, dividends are tax inefficient and taxation is theft! Lastly, the ability to standardize performance metrics across business units, stakeholders, strategy initiatives, etc. allows for better decision making and incentivizes internal competition/outcomes.
I'm much better off having read The Outsiders but ultimately feel it's a collection of memoirs rather than a single, cohesive blueprint like the title suggest. The common themes discussed above are certainly rational insights that I'll be mindful of as an active investor and hopeful entrepreneur, but to think I can now do LBOs on the back of an envelope just like Warren Buffett is farfetched.
May 15, 2022
I liked the chapters about The Washington Post, Ralston Purina, and Berkshire Hathaway the best!
The metric you should use to evaluate great CEOs is not overall growth in revenues & profits (which would limit your results to only CEOs of big companies) but instead the increase in the company’s per share value relative to the return over the same period for peer companies and the broader market. CEOs need to do two things well to be successful: run their operations efficiently and deploy their cash. Most focus on managing operations, but the CEOs in this book focused on the latter.
These CEOs shared similar profiles: frugal, humble, analytical, understated, devoted to their families. They placed less emphasis on charismatic leadership and more on careful deployment of the firm resources. On average, these CEOs outperformed the S&P 500 by over twenty times and their peers by over seven times. When their stock was cheap, they bought it and when it was expensive, they used it to buy other companies or raise inexpensive capital to fund future growth… this systematic, methodical blend of low buying and high selling produced exceptional returns for shareholders.
Two comments about this book & Jim Collins’ Good to Great:
1) Both show that a Level-5 humble (but driven) leader is the best kind
2) Good to Great encourages a hedgehog concept for businesses (stick with your core values & competencies) but this book says that successful CEOs are not hedgehogs (who know one thing very well) but foxes, who know many things
The metric you should use to evaluate great CEOs is not overall growth in revenues & profits (which would limit your results to only CEOs of big companies) but instead the increase in the company’s per share value relative to the return over the same period for peer companies and the broader market. CEOs need to do two things well to be successful: run their operations efficiently and deploy their cash. Most focus on managing operations, but the CEOs in this book focused on the latter.
These CEOs shared similar profiles: frugal, humble, analytical, understated, devoted to their families. They placed less emphasis on charismatic leadership and more on careful deployment of the firm resources. On average, these CEOs outperformed the S&P 500 by over twenty times and their peers by over seven times. When their stock was cheap, they bought it and when it was expensive, they used it to buy other companies or raise inexpensive capital to fund future growth… this systematic, methodical blend of low buying and high selling produced exceptional returns for shareholders.
Two comments about this book & Jim Collins’ Good to Great:
1) Both show that a Level-5 humble (but driven) leader is the best kind
2) Good to Great encourages a hedgehog concept for businesses (stick with your core values & competencies) but this book says that successful CEOs are not hedgehogs (who know one thing very well) but foxes, who know many things
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