Acquired

Howard Marks & Andrew Marks: Something of Value

We sit down with legendary investor Howard Marks of Oaktree Capital and his son Andrew who, while less-well-known, is also an incredibly accomplished investor in a very different arena: early-stage VC. The purpose of the conversation was to discuss their joint work together on Howard’s all-time most popular memo, “Something of Value”, which made the then-shocking argument that Value and Growth investing are not diametric opposites but rather two sides of the same investing coin. We of course dive deep into that, and also cover plenty of fun Oaktree and investing history, as well as Andrew’s favorite topic: selling (or not selling, as the case may be). This is not one to miss! If you want more Acquired, you can follow our public LP Show feed in the podcast player of your choice (including Spotify!): http://pod.link/acquiredlp Links: The Original “Something of Value” Memo: https://www.oaktreecapital.com/docs/default-source/memos/something-of-value.pdf Howard and Andrew on Oaktree’s “The Memo” podcast: https://www.oaktreecapital.com/insights/memo-podcast/the-rewind-something-of-value Sponsors: Thanks to Vanta for being our presenting sponsor for this special episode. Vanta is the leader in automated security compliance – making SOC 2, HIPAA, GDPR, and more a breeze for startups and organizations of all sizes. You might say they’re like the “AWS of security and compliance”! Everyone in the Acquired community can get 10% off using this link: https://bit.ly/acquiredvanta Thank you as well to Brex and to Tiny: https://bit.ly/acquiredbrex https://bit.ly/acquiredtiny Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

DRDavid RosenthalhostBGBen GilberthostHMHoward Marksguest

Aug 30, 2022·1h 34m·Watch on YouTube ↗

📖 CHAPTERS

1. 1

   Welcome: Value vs. Growth Investing, Father–Son Dynamic

   Ben and David introduce Howard Marks (Oaktree) and Andrew Marks (TQ Ventures), framing the episode as a friendly clash between value/credit investing and growth/venture investing. They also set context for the co-authored memo “Something of Value,” which became Howard’s most-read memo.

2. 2

   Sponsor: Vanta — Operating with Discipline in a Down Market

   Vanta CEO Christina Cacioppo discusses how to run a company assuming fundraising may be frozen for 2–3 years. She shares tactical planning approaches, especially tying hiring to revenue predictability and capacity models.

3. 3

   How “Something of Value” Was Written (and Why It Resonated)

   Howard explains how the pandemic forced the family together, creating the conditions for intense investing discussions that became the memo. They describe how their different temperaments and frameworks produced productive tension rather than a formal debate.

4. 4

   Andrew’s Evolution: From Classic Value to Modern Growth Logic

   Andrew traces how he moved from valuing present cash flows to valuing reinvestment, maintenance cash flow, and returns on incremental capital. He connects traditional value concepts (owner earnings) to tech-era drivers like R&D and high-return sales investments.

5. 5

   Amazon as the Bridge: Optionality, Founder Betting, and Cash Flow Reality

   The conversation uses Amazon to show why simplistic “value vs. growth” labels fail. Andrew emphasizes founder-driven optionality (AWS was unforeseeable) and the importance of analyzing cash conversion and free cash flow, not just income statements; Howard notes Oaktree’s credit focus and “too hard pile.”

6. 6

   Rigidity Is the Enemy: High Yield Origins and the Nifty Fifty Lesson

   Howard recounts discovering opportunities in high yield when institutions categorically avoided low-rated bonds “regardless of price.” He contrasts this with the Nifty Fifty era’s belief that great companies had “no price too high,” illustrating how mispricing arises from prejudice and consensus thinking.

7. 7

   DCF, Disruption, and Why the Backdrop Now Changes Constantly

   They argue that every equity investment is a bet on discounted future cash flows—meaning even “safe” companies require assumptions about the future. Rapid technological change compresses durability, making disruption (newspapers, Xerox) a constant risk and forcing deeper analysis than surface-level metrics.

8. 8

   Bigger TAMs vs. Faster Darwinism: Why Both Can Be True

   Ben presses on a tension: global markets expand opportunity while disruption increases uncertainty. Andrew argues the same forces that raise competitive risk also enable outsized scale and adjacency expansion; Howard likens it to turning up Darwinism—winners and losers faster, more dramatically.

9. 9

   Markets Evolve Like Games: Information Ubiquity and Harder Edges

   Andrew uses poker to explain how profitable ‘simple strategies’ get arbitraged as players learn—mirroring markets becoming more efficient. Howard expands: mispricings come from ignorance and prejudice, and as knowledge compounds, easy edges from public data shrink, increasing the premium on judgment.

10. 10

    Why Andrew Chose Venture: Probabilistic Bets and Future-Driven Skill Fit

    Andrew explains venture isn’t necessarily ‘inefficient,’ but it matches his strengths: long-term qualitative forecasting and high expected-value, power-law outcomes. Howard contrasts this with his own conservative temperament and credit orientation, emphasizing the importance of aligning strategy with personality.

11. 11

    Building Investment Firms: Culture vs. Focus, and Doing What Suits You

    Howard describes Oaktree’s founding advantages (experienced team, alternative-investing tailwinds) and culture-first approach, with a division of labor between fundraising and investing. Andrew describes TQ’s opposite path: avoid becoming a large manager, optimize for world-class returns, founder relationships, and time spent investing.

12. 12

    Judgment, Second-Level Thinking, and Hiring for ‘Smart Eyes’

    They explore how judgment is the irreducible core of investing and can’t be fully systematized. Howard ties it to second-level thinking and being ‘differently and better’ than consensus; Andrew emphasizes frameworks, rationality, self-awareness of bias, and humility. They also discuss assessing others’ judgment in hiring and founder selection.

13. 13

    When to Sell: ‘Unbuying,’ Compounding Certificates, and Opportunity Cost

    Howard and Andrew debate selling—often driven by regret avoidance rather than fundamentals. Andrew distinguishes between “buy $1 for $0.50” (sell at fair value) and rare compounding machines worth holding for decades; both emphasize opportunity cost and grounding decisions in thesis, fundamentals, and the evolving future.

14. 14

    Oaktree’s ‘Exit’ with Brookfield + Howard’s Memo Origin Story and Where to Find Them

    Howard explains the Brookfield transaction as an ideal partnership that preserved Oaktree’s independence while providing liquidity options. He then shares how his memos began in 1990 from a lesson about consistency and avoiding bottom-decile outcomes—and how “bubble.com” made him an ‘overnight success after ten years.’ They close with where to read/listen to memos and how to reach TQ.