Special: Invest Like the Best on Acquired

Episode Summary

Executive Summary: Acquired hosts Ben Gilbert and David Rosenthal interview Patrick O’Shaughnessy about his path from philosophy student to CEO of O’Shaughnessy Asset Management, the evolution from quant investing to software-driven wealth management via Canvas, and how his podcast and investment work reinforce each other through public learning, curation, and asking better questions. The episode also explores his use of Seven Powers to build durable advantage.

Main Topics: Origins of OSAM and quant investing (Priority: 5/5): Patrick explains the firm’s roots in his father’s research-driven approach, including early factor research like the Dogs of the Dow and the idea that disciplined, data-backed investing can outperform. Career path and liberal arts education (Priority: 4/5): He describes being a poor high-school student, discovering philosophy at Notre Dame, and how self-directed learning shaped his later career in finance and podcasting. How asset management works (Priority: 5/5): Patrick breaks down the economics of long-only asset management, why fees are typically asset-based, and how capacity and product design differ from venture/PE/hedge funds. Canvas as a software platform for advisors (Priority: 5/5): OSAM’s major evolution is Canvas, a customizable software layer that lets advisors design tailored portfolios for end clients while OSAM handles implementation and trading. Invest Like the Best and learning in public (Priority: 5/5): The podcast began as a curiosity-driven experiment, became a major platform, and now serves as both a learning engine and a subtle marketing asset without being built as one. Seven Powers and competitive advantage (Priority: 4/5): The hosts and Patrick apply Hamilton Helmer’s framework to OSAM, discussing brand, counter-positioning, and cornered resources as key sources of durable advantage. Future roadmap: knowledge database, fund, and new podcast series (Priority: 4/5): Patrick outlines a broader strategy of capturing, structuring, and sharing insights through a more formal knowledge system, an early-stage fund, and the new ‘Founders Field Guide’ series.

Key Arguments: OSAM began as a research-first firm; its investing edge came from simple but rigorous historical analysis rather than complex modeling. A liberal arts/philosophy education can be a strong foundation for finance because it builds self-directed learning and argumentation skills. Long-only asset management is a recurring-revenue, low-complexity business, but durable success depends on product quality and trust, not just assets under management. Canvas turns OSAM’s internal investment infrastructure into a software product for RIAs, making OSAM more like a technology company that monetizes through asset management. The podcast succeeded because it was niche, curiosity-led, and consistent; it was never designed as overt marketing, which preserved authenticity. Public-market investing experience transfers well to venture and product thinking because it sharpens questions, due diligence, and pattern recognition. Seven Powers concepts map to OSAM: brand through high-quality low-variance outcomes, counter-positioning through transparency, and cornered resources via research partners. The best strategic edge is often not the answer itself but the ability to ask better questions of the right people and then act on the answers.

Data Points: Original research lookback period: 1920s - Patrick says the firm’s early historical stock research used microfiche data going back to the 1920s. Dogs of the Dow rebalancing frequency: 1 trade per year - He describes the original strategy as buying the 10 highest-yield Dow stocks and redoing it annually with a single trade. OSAM Independence Day: July 3, 2007 - The firm spun out of Bear Stearns and began operations just before the 2008 crisis. Bear Stearns track record continuity: 14 people - Dual-employed portfolio managers transitioned from Bear to OSAM to preserve continuity. Years until Canvas launch effort: Late 2018 - He says Canvas was built rapidly after OSAM had already spent years building internal infrastructure. Podcast start year: 2016 - Invest Like the Best launched in the fall of 2016. OSAM CEO transition: 2018 - Patrick says he took over OSAM in 2018. Podcast pilot commitment: 7 episodes - He committed to seven episodes at the start to force a habit and test the format. Audience bump from repeat guest: ~10% - Patrick says Michael Mauboussin appearances repeatedly created about a 10% audience increase. Early episode listener count: 571 people - He cites the first episode as having 571 listeners. Initial Acquired audience count: 28 people - Ben and David mention Acquired’s first episode had about 28 listeners. OSAM research partner arrangement: Free access to data/infrastructure - Independent researchers get access to OSAM’s library and tools in exchange for IP ownership rights. Business tour duration in Canada: 3 weeks - Patrick traveled across Canada explaining performance after the crisis. Number of presentations to investors: ~50 - He recalls giving roughly 50 presentations to rooms of 50 to 150 people. Current engineering team size: ~5 full-time engineers - He says Canvas is built by a relatively small engineering team. Canvas pricing structure: Minimum fee plus sliding scale - Fees vary based on settings and customization, capped below many traditional managers’ fees.

Pivotal Quotes: "The thing itself is get better. I guess I'll call it the art of conversation." — Patrick O'Shaughnessy: He describes his core operating principle across the podcast, investing, and research. "I do think brand is, is like the most straightforward one that I don't need to spend a lot of time on, which is just like high quality, low variance outcomes." — Patrick O'Shaughnessy: He explains how he thinks about brand as a source of power under Seven Powers. "I actually only do one thing and it just happens to show up in a lot of different like outcomes or side effects." — Patrick O'Shaughnessy: He frames his multiple projects as manifestations of one underlying scout function.

Implications: The episode shows how finance, media, and software increasingly converge around curation, transparency, and community trust. For builders, the lesson is that durable advantage can come from public learning, better questions, and turning internal know-how into a product.