The best in the world or nothing.

I don't do many things. But the things I do, I aim to be the best in the world at.

This has inadvertently affected the businesses I choose to buy and own.

I recently read Jim Collins' Good to Great, where he shows how eleven companies managed to go from good to great and the similarities they had between them.

I'm not going to spoil the book for you but there's an idea that made me think about the businesses I invest in, the hedgehog concept.

It was not the first time I heard about it. Daniel Kahneman also wrote about it in Thinking, Fast and Slow (another book I won't spoil for you.)

All these businesses succeeded because they knew the answer to three important questions:

1. What are you passionate about?

2. What drives your economic engine?

3. What are you the best in the world at?

If you look at the businesses we own. Most of them have a clear answer to these three questions.

The passion question is easy. Most of the businesses we own are ran by founders or leaders who have been in the company for decades.

Wise is an excellent example of this. It is founder-led with most top insiders being in the company for over a decade.

It is not a coincidence. We are always looking for leaders with skin in the game and who knows what they are doing.

The question about economic engine is an easy one too. The businesses we invest in are usually growing with little new capital requirements and high margins.

Booking Holdings (whose CEO has been in the company for over 25 years), for example, is operating with less capital now than in 2014 with 7X the free cash flow.

But the most interesting and hardest question would be the one about being the best in the world.

Are the businesses we own aiming to be the best in the world?

Root has less than 1% of the market share of auto-insurance in the US, but they aim to be number one. It's not ambition built on nothing. They have the best telematics technology in the world. Are probably the most advanced in embedded insurance. And do aim to provide the cheapest prices to customers.

Wise is not just aiming to be another app for low cross-border transfers. They want to be the cheapest, fastest, and most transparent. And they already are. With the ultimate aim to be 'The' network for the world's money.

While the passion and economic engine were two aspects I have consciously considered when picking leaders to make investments, the best in the world one is something that happened without me actively thinking about it.

But I believe it is the most important one as far as returns are concerned. Because it ensures that you have a very long runway. You're investing in a business knowing that 20 years from now, it will be much bigger and much more profitable than today.

Speaking of runway, I believe that Wise has one of the longest. I recently updated my analysis to show the unit economics of the economy and this long runway, you can find it below.