Whether it's Buffett or Duan Yongping, they often say that buying stocks is buying a company, and the most important thing about buying a company is understanding the business.

My previous understanding of "understanding the business" was being able to comprehend the business model, estimate future cash flows, and know the company's competitive advantages.

However, this understanding always felt like answering a question; I could provide some text and express my personal thoughts, but deep down, I still felt like I was scratching an itch without really getting to the core.

In this interview, Duan Yongping once again used Apple as an example, but unlike before, he provided three specific judgments that allowed me to truly grasp what he meant by "understanding the business" and how it manifests.

In my impression, this part of his sharing had never appeared in his Q&A records.

This interview was quite remarkable.

In Duan Yongping's Q&A records, he often discusses Apple and some key characteristics he has realized about the company:

This company does not pursue commercial interests to the extreme but rather pursues user experience to the extreme, striving to bring unique value to users.

He often cites examples related to Apple's ecosystem, customer stickiness, and so on.

But in this interview, he mentioned three judgments he made about Apple in the past:

The first was when he said that Apple would definitely launch a large-screen phone.

Three years after he made this judgment, Apple indeed launched a large-screen phone.

Why?

He said it was a basic need for users; to provide a good experience for users, it was a necessary thing to do.

The second time he said that Apple would definitely not launch a television.

For this judgment, he had two experiences in his own company. In both cases, the actual executors at the time wanted to try making a television. He said if they wanted to try, then go ahead; he wouldn't stop them.

As a result, after trying twice, his own company ultimately did not proceed with it.

Of course, Apple also did not launch a television.

Why?

He said televisions do not provide any value to users.

The third time is even more interesting.

More than a decade ago, there were rumors in the industry that Apple was going to launch an electric car, but no matter what internal information or photos circulated, he insisted that Apple would not produce an electric car.

In the end, Apple indeed canceled the electric car project.

Why?

He said it was not a technical issue, but he believed that electric cars could not provide value to users.

Regarding the value Duan Yongping mentioned here, my personal understanding is that it refers to the unique feelings and experiences that users can gain.

From Duan Yongping's three "definitive judgments," my current understanding of "understanding the company" is:

It is not just superficial boasting but the ability to internalize and understand the company's values and behavioral patterns, even being able to vividly imagine what the company will and will not do in the future based on its values.

This is the true essence of "understanding," a kind of understanding that has made oneself a part of the company, deeply grasping the core of its values.

I think this is the most brilliant explanation of "understanding the company" I have heard so far.

In addition to Apple, Duan Yongping also talked about a company he claims to not understand very well: Nvidia.

Previously, I thought I somewhat understood Nvidia, knowing that its competitive advantage is the CUDA ecosystem, among other things.

But Duan Yongping provided a different perspective to examine Nvidia.

His main point was:

He looked at Jensen Huang's speeches and views from over a decade ago, and then reviewed what Jensen Huang has done over the past decade, only to find that what Huang has done aligns with what he once envisioned.

So now, when he looks at Nvidia and the future of AI, he observes what Huang is currently saying and uses that to judge what Huang will do in the future and the future development of Nvidia.

For investors who have been following electronic products and AI development, Apple and Nvidia have long been familiar topics.

However, being able to extract new viewpoints and discover new angles from these familiar discussions is truly impressive.

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