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In 2014, Jeff Bezos wrote:

"A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married."

The 3 "Dreamy Businesses" Amazon got married to were:

1. Amazon Marketplace
- LTM Revenue: $140 billion
- 3P Seller Services 10-year Revenue CAGR: 31.7%

2. Amazon Prime
- LTM Revenue: $40.2 billion
- Subscription Services 10-year Revenue CAGR: 34.6%

3. Amazon Web Services
- LTM Revenue: $90.8 billion
- AWS 10-year Revenue CAGR: 40.1%

Jason Zweig once wrote an article called "The Best Investor You've Never Heard Of".

That article described the life and career of Joseph (Joe) Rosenfield.

In roughly 30 years, Joe turned a small school in Iowa into one of the richest colleges in America. Here's how:

Joining Grinnell - Given Rosenfield's unwavering commitment to investing for the long-term, it's somewhat ironic that Joe didn't actually enter the investment field until he was nearing retirement.

Joe spent 2 decades practicing law, another decade as chairman of an Iowa-based retailer, and 20+ years serving on the board of Grinnell College before becoming Chairman of its Investment Committee. 

Managing Grinnell's Endowment - Unlike most college endowments which typically choose to either have an ultra diversified portfolio or buy primarily government bonds, Joe took a different approach.

Joe reportedly told a colleague "Our job is to make this institution financially impregnable." And to do so he made big bets on businesses and people he believed in. Though there aren't records of all his investments, here are a few high profile ones that have been shared over the years.

- Grinnell bought 300 shares of Berkshire Hathaway in the late 1960's after being introduced to Warren Buffett. The two subsequently became great friends and often shared investment ideas with each other.

- Invested $300,000 in a startup called NM Electronics that was founded by a Grinnell trustee, Robert Noyce. Shortly after, that company was renamed Intel.

- Allocated 1/3rd of the endowment's capital with the Sequoia Fund. Sequoia significantly outperformed the broad market over the succeeding 20 years.

Performance - While the exact returns are hard to come by today, during Rosenfield's time in charge, Grinnell's endowment grew from $11 million to more than $1 billion.

Today the endowment touts ~$2.5 billion, which is quite the sum for a school with only about 1,800 students.

Investment Philosophy - It has been more than 20 years since Joe's passing, but there are still plenty of lessons investors can take away from his career.
Joe kept his investment approach simple. He was highly selective, he bet on people he believed in, and he rarely sold.

In the words of his long-time friend and fellow Grinnell Board member, Warren Buffett: "Joe is a triumph of rationality over convention."

"Scale Economies Shared" was a term first coined by Nick Sleep and Qais Zakaria of Nomad Partners. 

This refers to companies who benefit from economies of scale but choose to pass those benefits through to customers thus reinforcing its advantages and driving greater market share.

When Scale Economies Shared are implemented, it can be a truly virtuous cycle. 

Here are 6 companies that employ it well:

1. Costco

Costco is perhaps the best example of this. The company consistently passes through its cost savings to its members.

While most retailers add a mark-up to their merchandise, Costco demands the lowest possible prices from suppliers and adds little to no markup so as to maintain the lowest possible prices. 

In turn, this constantly improves the value of a Costco membership.

2. Amazon 

Amazon's unparalleled logistics footprint reduces its cost to serve on a per order basis. Every dollar the company pours into its fulfillment network, the faster and cheaper it becomes to fulfill orders. 

And like Costco's membership model, Amazon passes these benefits through with Amazon Prime. As Jeff Bezos once said "We want Prime to be such a good value, you’d be irresponsible not to be a member."

3. Wise (formerly TransferWise)

Wise reduces the cost of cross-border payments by actively dropping its own prices where possible. In fact, here's their stated mission: "We are creating money without borders: instant, convenient, transparent and eventually free."

This low-cost model has helped the company to attract 7.5 million active customers, which Wise can earn money on through its alternative products like the Wise Card.

4. Ally Financial

Ally is the largest digital bank in the US. In Ally's case, "Lower Prices" actually come in the form of higher savings rates.

By not having any physical bank branches, Ally generates cost savings that it can pass through to customers with higher rates on savings accounts. This helps Ally consistently attract more depositors.

5. Domino's Pizza

While Domino's might not be the first company that comes to mind when you hear "Scale Economies Shared", its standardized production processes and bulk ordering of raw materials gives it a cost advantage over other pizza providers.

The company uses these cost savings to maintain some of the lowest pizza prices in the industry which helps drive continuous traffic to its locations.

6. Coupang

Often called the "Amazon of South Korea", Coupang possesses many of the same advantages. Thanks to its huge active customer base (~40% of South Korea's population), Coupang's logistics investments are spread across a wider customer base. This gives Coupang an advantage over other retailers on a per package basis.

It passes these cost savings through by providing free shipping for all Rocket WOW Members, thus encouraging more spending on its platform.

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