Prologue
Growing up, I was obsessed with sports — both playing and watching. I knew every obscure fact and statistic for "my teams" — The Vikings, the Twins and especially the University of Minnesota Golden Gophers.
As a kid, I was around business a lot because my dad was a successful corporate attorney who constantly had clients coming over to our house working on deals over our kitchen table and calling at all hours of the night. Additionally, both of my grandfathers, whom I adored, were accomplished senior business executives and active investors. But business and investing were of little interest to me — give me the sports page.
In life you have these "AHA!" moments which are extremely impactful, maybe like the first time you met your wife, you remember the time, place and date like it was yesterday, even if it was twenty years ago. An AHA! moment happened for me at the University of Minnesota where I majored in Political Science and Economics thinking I would be a lawyer like my dad, but my real "major" was as a very backup quarterback for the football team.
When I was a senior, a friend of my dad asked me to lunch and asked me if I ever thought about working on Wall Street. At the time, I thought the Federal Reserve was an Indian reservation. He gave me examples of how very small investments in companies like Control Data, Medtronic and 3M turned into very large sums of money based on the success of those companies. Seeing I was interested, he explained how the magic of compound interest works over time and the Rule of 72. I couldn't believe how amazing it was. I was hooked and found a new passion. Out with Sports Illustrated, in with The Wall Street Journal.
I wrote this book to share what I have learned over the past 20 years about how to identify and invest in the small companies that can become big companies — what I call the stars of tomorrow. The hunt for these companies has the greatest potential for reward, but can also be very dangerous for the ill-prepared.
In reality, finding the best stocks is really finding the best companies — over time a stock's performance will be aligned with how the company does. Great companies and investors are both systematic and strategic to achieve their objectives. The framework I provide in this book with our growth investing 10 commandments, the 4Ps for every great growth company (people, product, potential and predictability) and sources to use to spot these companies early is a guide to finding tomorrow's 10 baggers.
I am honored that one of my investment heroes, Peter Lynch, reviewed Finding the Next Starbucks and gave me some practical input in making it clearer and better. An analogy he used to describe the purpose of the book is that of a ski instructor. With a couple lessons, you can't expect to be an expert, but you will learn some important fundamentals and also some strategy for not getting hurt. This book is meant to be a guide that will help you with both.
You don't have to be the next Warren Buffett or Peter Lynch to find the next Starbucks, Google or Amgen, but you do need the right fundamentals, which I hope you'll find here.