Compounders & Quality
Nick Sleep & Qais Zakaria
Back businesses that share their scale gains with customers, and hold for the destination, not the quarter.
Nick Sleep and Qais Zakaria were two investors who ran a small fund called Nomad together for about thirteen years. They kept things unusually simple: they owned only a handful of businesses at a time and held them for many years, buying and selling almost nothing. They are best known for the idea of ‘scale economies shared’ - a business that gets cheaper as it grows and hands those savings back to customers as lower prices. They read businesses patiently for the long term instead of chasing the next quarter. When they later chose to return their investors money, they shared their old letters freely so anyone could learn from them.
The method
They studied the actual business and its customers - why people keep coming back - not the jumping share price. They pictured where a business would realistically be in ten or twenty years (‘destination analysis’) rather than guessing the next three months. They looked for businesses with a self-feeding loop of lower costs and lower prices, held very few of them, and then mostly did nothing, letting good businesses compound over years while keeping fees, taxes, and mistakes low.
The record
Nomad was a small partnership that ran for roughly thirteen years and then returned money to its investors. Its long-term results came from holding a few businesses patiently rather than trading often. Past results are history, not a promise; what worked over one long stretch may not repeat, and nothing here says anyone should copy their holdings.
Where they were wrong
Holding very few things for many years is hard to stomach and risky if you pick wrong, because each business matters so much that one rotten choice can hurt badly. ‘Doing nothing’ quietly fails if a business breaks and you keep sitting still out of habit instead of watching calmly. And picturing a twenty-year destination can simply be wrong - the world changes in ways nobody predicts. The method rewards deep understanding and honesty; used lazily, it becomes neglect.
Studies
5- Study 01Scale economies shared: the loop rivals cannot breakA shop that shares its savings looks less greedy today but builds a loop rivals cannot break - thin slices of a giant cake beat thick slices of a small one.Read this study →
- Study 02Destination analysis: where will it be in 20 years?Ask where the train is really going, not whether it is a minute late at the next station - the destination matters far more than the next quarter.Read this study →
- Study 03Own few, hold long: let good businesses compoundPlant a few good trees in rich soil and leave them alone - the money is made by sitting still, not by digging the roots up to check them.Read this study →
- Study 04The hard skill of doing nothingDont just do something, sit there - the calm skill of not-doing beats a great deal of busy, costly, emotional activity.Read this study →
- Study 05Read the business, not the share priceStand inside the shop watching the customers, not outside watching the flashing number - the business is the real thing; the price is only a mood.Read this study →
Primary sources
full register →Read Nick Sleep & Qais Zakaria in their own words. We reproduce none of it - these are the real things to go to.
Nomad Investment Partnership Letters to Partners (2001–2014) letters
The complete Nomad letters, released for free by Sleep and Zakaria's own IGY Foundation - the primary source for 'scale economies shared' and destination analysis.