Business Breakdowns

This conversation was originally released in February of 2025. We’re replaying this episode because Cognex sits right at the intersection of AI and robotics. As the market focuses more on physical AI and automation in 2026, machine vision is becoming an increasingly important part of that story.

Today we are breaking down Cognex, the leader in machine vision. Cognex builds the cameras, sensors, and software that allow factories and logistics systems to see. Their technology inspects products, detects defects, reads barcodes, and guides robots across manufacturing lines and warehouses around the world.

Cognex is not your typical recurring revenue story. It is a cyclical industrial business that has grown by repeatedly finding new “S-curves” in automation. From early semiconductor inspection to modern logistics systems and AI-driven vision, the company has spent decades expanding the applications of machine vision across industries.

Our guest today is Brett Larson from NZS Capital. Brett walks us through the history of machine vision, Cognex’s unique culture and founder story, and the company’s position inside the broader automation ecosystem. We also discuss how Cognex sells into factories, the competitive dynamics with companies like Keyence, and why new technologies like deep learning could unlock the next wave of growth.

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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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠).

Timestamps

(00:00:00) Sponsor: Portrait Analytics

(00:01:42) Update on Cognex 

(00:02:53) Welcome to Business Breakdowns 

(00:03:41) Episode Intro 

(00:05:09) What is Cognex and What They Do 

(00:07:10) Hardware vs Software and Human Interaction 

(00:07:58) Market Size of Machine Vision 

(00:08:59) Cognex's Market Share and Positioning 

(00:13:01) Sales Channels and Customer Types 

(00:14:17) History and Origin of Cognex 

(00:17:49) Deep Learning vs Rules-Based Programming Examples 

(00:22:18) Customer Stickiness and Sales Contracts 

(00:27:41) Understanding S-Curves and CapEx Cycles 

(00:29:35) Culture and Leadership 

(00:40:08) Valuation and Risks 

(00:44:42) Key Lessons from Cognex

This conversation was originally released in June of 2023.

Today we return to the semiconductor value chain with one of the most important companies in modern technology: ASML. The company began life as an unwanted spin-out from Philips with no real product and little expectation of success. Today, it builds the only machines capable of manufacturing the most advanced chips in the world.

To break down ASML, I’m joined by Tom Walsh, portfolio manager at Baillie Gifford. Tom walks through how photolithography works, what’s happening inside an extreme ultraviolet machine, and how a small Dutch company came to dominate one of the most complex technologies ever built.

This breakdown pairs very well with our breakdowns on AMD, Qualcomm and Cadence. And I'd also highlight the Founders Podcast episode #8 on the Intel Trinity.  Please enjoy this breakdown of ASML.

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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Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at ⁠colossus.com/subscribe⁠.

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This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Timestamps

(00:00:00) Update on ASML and Welcome to Business Breakdowns

(00:04:01) Intro

(00:04:50) The ASML back story

(00:08:20) A deep dive into what semiconductors and Lithography are

(00:10:10) Alternate business directions ASML could have pursued

(00:21:45) How large ASML is in the industry today

(00:12:43) A look into the management team over time

(00:16:09) Moore’s Law and the key components of chip production

(00:17:15) Overall size of the machines manufactured

(00:18:20) The evolution of UV light and its important role in the advancement of Lithography

(00:22:35) Other competing companies within the field

(00:25:16) A detailed look into the cost of production industry wide

(00:26:10) Unlocked innovations associated with the development technology

(00:27:38) The life cycle of a lithography machine

(00:29:10) Revenue gained from new versus refurbished machines

(00:29:33) The cyclicality of the ASML machine revenue

(00:31:38) Potential production limitations due to capacity

(00:33:06) Margin profile and how ASML sets prices

(00:34:39) What the concentration of customers looks like

(00:39:06) Reasons why an acquisition has not taken place to date

(00:40:48) He explains where investor cash flow is directed

(00:42:07) An investors perspective on ASML opportunities

(00:44:30) How milestones in new technology are regulated and measured

(00:47:46) Potential business risks

(00:51:27) Lessons he’s learned from studying ASML

Today we are breaking down the cybersecurity giant, Cloudflare. 

Today, Cloudflare controls over 20% of the world’s web traffic, and more impressively, absorbs 2.5mn cyber attacks per second.

My guest is Sam Eden, Investor at Square Peg’s Global Tech Fund. And while I understood on the surface what Cloudflare does, Sam helped me get into the weeds on how the digital pipes actually work.

So we go through the rise of Cloudflare and how they differentiated themselves vs. the incumbents and fellow upstarts. Through this story, Sam details the product offerings that led to Cloudflare's leading market share, and what growth looks like moving forward. 

Please enjoy this episode on Cloudflare. 

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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Become a Colossus member to get our quarterly print magazine and private audio experience, including exclusive profiles and early access to select episodes. Subscribe at ⁠colossus.com/subscribe⁠.

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This episode is brought to you by ⁠⁠⁠⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit ⁠⁠⁠⁠⁠⁠⁠joincolossus.com/episodes⁠⁠⁠⁠⁠⁠⁠.

Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠).

Timestamps 

(00:00:00) Welcome to Business Breakdowns

(00:02:33) Episode Intro: Cloudflare

(00:03:56) What Cloudflare Does: A Digital Postal Service

(00:06:24) How Shopify Uses Cloudflare

(00:07:29) Serving 20% of the Internet’s Traffic

(00:08:19) The Internet Before Cloudflare

(00:12:01) Cloudflare’s Founding Story

(00:14:32) Easy Onboarding, Powerful Network Effects

(00:16:05) Why Hackers Were Early Customers

(00:16:58) How Cloudflare Benefited from the Innovator’s Dilemma

(00:19:38) Why Partnering with ISPs Was a Win-Win

(00:20:44) Bigger is Better: Cloudflare’s Reinforcing Loop

(00:22:50) Product Evolution Over Time

(00:26:37) How the Internal Security Offering Works

(00:27:53) Act 3: Developing a Proprietary Software Stack

(00:33:21) Four Ways AI Impacts the Business

(00:37:04) Building Out the Enterprise Sales Function 

(00:40:06) The “Pool of Funds” Bundling Strategy

(00:43:55) How Channel Partners Drive Growth

(00:46:58) Revenue in 3 Acts

(00:48:23) Mastering the Freemium Model

(00:51:00) Margins & EBITDA

(00:52:47) Capital Allocation: Reinvestment Rules

(00:54:09) Potential New Competitors and Threats

(00:55:17) Lessons Learned From November 2025’s Outage

(00:59:17) Why Cloudflare’s Competitive Position is Strong

(01:01:19) How Canva Uses Cloudflare

(01:02:29) How Sam is Thinking About Risks

(01:04:36) 25x Sales Requires Flawless Execution

(01:07:21) 4 Lessons from Studying Cloudflare

Today we have a special episode breaking down how investors are using AI. 

This is a question I get from many of you, and while there is no shortage of content on the implications of AI, I know there's an appetite to learn more about tangible use cases, how to make sure you're getting the most out of these tools, how to think about advancements in the technology, and ensuring that you're keeping pace with the innovation curve.

So my guest today is David Plon, Founder of Portrait Analytics. Now, David and Portrait have been partners of Business Breakdowns since last year, but I specifically asked David to do this episode because, one, he is really front and center to how investors are using and applying AI. But two, and maybe more importantly, he and his team come with a background in investing. 

So while the conversation doesn’t really focus on Portrait, you’ll hear references to what he and his team are building and how they’ve shaped it for investors, you’ll very much understand when you hear David talk that he is someone who understands the pain points of an investor.

I think everyone will find something in this episode that will benefit them in their day to day, and I would love to hear the feedback. 

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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This episode is brought to you by ⁠⁠⁠⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at ⁠⁠⁠⁠⁠portraitresearch.com⁠⁠⁠⁠⁠

—

Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit ⁠⁠⁠⁠⁠⁠⁠joincolossus.com/episodes⁠⁠⁠⁠⁠⁠⁠.

Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠).

Timestamps 

(00:00:00) Welcome to Business Breakdowns

(00:04:05) Meet David Plon: Investor to Founder

(00:05:54) Pain Points in the Investment Process

(00:09:08) AI as a “Smart Filter” for News

(00:11:54) AI’s Role in the Pre-Buy Process

(00:14:34) How AI Enables Specific Quantitative Analysis

(00:17:24) Using AI for Investment Idea Generation

(00:21:42) How to Write Good Prompts for LLMs

(00:25:27) Structured vs. Creative Tasks

(00:27:47) The Value of Experimentation & Real-Time Feedback

(00:32:28) Best Practices for Deploying AI in an Institutional Setting

(00:35:57) Why Documenting Decision Making is Essential

(00:39:19) How Models Have Improved at Using Provided Context

(00:42:02) Memory in LLMs: Near-Term Limitations, Long-Term Potential

(00:46:24) Applying Agentic AI in Investment Research

Today we are breaking down Games Workshop. This episode is another examination of the business of IP. Whether it's Disney, Electronic Arts, or Nintendo, there are so many businesses built around core IP. And while Games Workshop and its Warhammer franchise may not be as familiar to our North America listeners - this episode will tell you why that may be changing very soon.

My guest is Todd Wenning, President and CIO of KNA Capital. Todd shares his own personal story uncovering Games Workshop many years ago, he gets into the fun evolution of this business which ties into the vertical integration today, and he shares what lies ahead as awareness of Warhammer’s loyal enthusiasts welcome more into their world.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page⁠⁠⁠⁠⁠⁠⁠ here.⁠⁠⁠⁠⁠⁠⁠

—

This episode is brought to you by⁠⁠⁠⁠ ⁠Portrait Analytics⁠⁠⁠⁠⁠ - your centralized resource for AI-powered idea generation, thesis monitoring, and personalized report building. Built by buy-side investors, for investment professionals. We work in the background, helping surface stock ideas and thesis signposts to help you monetize every insight. In short, we help you understand the story behind the stock chart, and get to "go, or no-go" 10x faster than before.

Sign-up for a free trial today at⁠⁠⁠⁠ ⁠portraitresearch.com⁠⁠⁠⁠⁠

—

Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit⁠⁠⁠⁠⁠⁠⁠ colossus.com/episodes⁠⁠⁠⁠⁠⁠⁠.

Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠).

Timestamps 

(00:00:00) Welcome to Business Breakdowns

(00:03:55) Introduction to Games Workshop 

(00:05:31) History of the Warhammer IP 

(00:09:14) Games Workshop's Evolution 

(00:10:59) Warhammer Retail Stores 

(00:12:37) The Numbers Behind Warhammer's Popularity 

(00:14:03) Geographic and Demographic Concentration 

(00:16:36) Competition from Other Games & Hobbies 

(00:18:49) Events and Community: Hidden Network Effects 

(00:19:48) Margins and Cash Generation 

(00:21:31) Growth Drivers & Prime Potential 

(00:24:51) Licensing Model & Tariff Volatility 

(00:26:49) Why the Business is Defensible 

(00:28:33) The Relevance Risk 

(00:31:43) Games Workshop's Unique Flat Structure 

(00:32:52) Capital Allocation & Dividend Focus 

(00:34:16) Valuing Games Workshop 

(00:35:25) Three Man Risks for the Business 

(00:38:33) Riches in Niches & Other Lessons