This is Matt Reustle and today we are breaking down the historic General Electric. Honestly, approaching this episode was a unique challenge. Today’s GE barely resembles what was once the largest company in the world. So rather than purely focus on what’s remaining, we decided to use a lens of “then versus now”.
 
To break down General Electric I am joined by Josh Aguilar, a GE Analyst at Morningstar and enthusiast on all things capital allocation. It’s a theme we revisit throughout the conversation on GE's time as a conglomerate, and its rise and fall. The story of GE has many chapters, the origin dates back to Thomas Edison in 1896 and while GE has long been classified as an industrial business for a very long time – it’s hard to overlook the technological breakthroughs they’ve introduced; the incandescent light bulb, the ex-ray machine, the electric locomotive, and commercial jet engine. The business has had no shortage of historic products. But when Jack Welch took over in 1981 – he implemented a playbook that brought GE much praise over the coming decades, and Josh and I focus our conversation on the end of Welch’s era until the present day. 
 
Now, if you’d like to hear more on the early years of General Electric and particularly Thomas Edison – make sure to check out our newest Colossus teammate David Senra and his podcast Founders. David conveniently dropped a new episode on Edison this week, and after my conversation, you’ll hear a preview of that episode. So stay tuned for that, after my conversation with Josh. Please enjoy this breakdown of General Electric.
 
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
 
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Show Notes
[00:04:05] - [First question] - What GE looks like today compared to its peak
[00:07:42] - The reasons why GE lost so much of its power
[00:15:14] - How much of their success can be attributed to being propped up by leverage  
[00:17:18] - The strategy they’re operating with today and the businesses within GE
[00:24:05] - Drivers in the decision to split up their business and end the conglomerate era
[00:25:34] - Would they have made disposals if they were operating from a strong position 
[00:27:15] - What their capital allocation and free cash flow will look like going forward
[00:29:38] - GE’s centralized thought process of the past and their management style now
[00:31:14] - Exxon Mobil: An Aging Energy Empire
[00:32:23] - Driving factors behind their decision to transition towards green energy
[00:34:36] - How the margin profile plays out and competitive dynamics of renewables
[00:35:16] - Thoughts about conglomerates and what will work in the future 
[00:37:07] - What could lead to GE’s success in the future over the coming years
[00:38:56] - How the market values these types of business 
[00:39:43] - Main takeaways from his analysis of GE
[00:43:52] - Clip from Founders about GE’s founder, Thomas Edison