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Intelligent Fanatics Project | Book Review

What Is the Intelligent Fanatics Project?

The Intelligent Fanatics Project is a study of business leaders that have built enduring organizations. The co-founders of the Intelligent Fanatics Project are Ian Cassell and Sean Iddings. I was introduced to Ian Cassel after reading some of his excellent content on MicroCap Club. They created the Intelligent Fanatics Project because they believe the only sustainable competitive advantage a company truly has is the company’s human capital. Strong leadership and company culture can last for decades if they are constantly focused on and improved by leadership.

Intelligent Fanatics Project | How Great Leaders Build Sustainable Businesses

The books Great Leaders Build Sustainable Businesses and Standing on the Shoulders of Giants both examine businesses that are built and lead by intelligent fanatics. They built companies that serve a clear purpose and have a very specific culture that promotes innovation, integrity, and an ownership mindset. Cassel and Iddings believe that if you can identify leaders that possess the characteristics of an intelligent fanatic then market-beating returns will follow.

Through a series of case studies, these characteristics are examined in depth. The case studies cover many different companies, time periods, industries, and countries. Let’s take a look at what Cassel and Iddings believe are the characteristics of an intelligent fanatic:

Long Term View

A consistent focus on making decisions that benefit the company long term are a hallmark of intelligent fanatics. They focus on building the infrastructure that would support a much larger business. Cassel and Iddings reference a theme developed by Tom Russo called “the capacity to suffer.” Great leaders have the foresight and autonomy to make decisions that may harm short term profits. Intelligent fanatics have the foresight to invest capital in areas that create greater wealth in the future. I have written an article about Tom Russo and “the capacity to suffer” which can be found here.

A great CEO is able to allocate money in such a way that he stays ahead of the competition. In many cases, these decisions are questioned as short term thinkers can’t see the long term impacts their decisions will have.

Superpower of Incentives

Cassel and Iddings examine intelligent fanatics that were able to find a way to motivate their employees through creative incentive structures. The structures they created were always changing and evolving to be more efficient and meaningful to their employees.

An effective incentive structure allowed the companies examined to recruit higher quality talent. Not only did it help in recruitment but more importantly it helped in retaining talented employees.

Money wasn’t the only incentive employees could pursue, although it is a major component. The CEOs emphasize advancement and promotion within the company. This accomplished many things. Advancement from within allowed intelligent fanatics to retain talented employees who had experienced the company culture and could continue spreading this culture as they rose through the ranks. This gave employees a greater sense of ownership in the company and a sense of satisfaction that they were making progress.

Carlo Brito of Ab InBev said, “What distinguishes you from an average company is the kind of people that you can attract, retain, develop, train, promote.”

It may seem counterintuitive to encourage the CEOs of the companies you own to focus on incentives as it will cost the company more money or shares through stock options within the company. If an incentive structure is done correctly it can greatly benefit the company and in turn the shareholders. An incentive structure that emphasizes the wrong kind of goals can lead to disaster and capital destruction.

Ownership Mind-Set

An ownership mindset is often accompanied by high insider ownership. Many of the intelligent fanatics were the founders of their companies and had a significant amount, if not all, of their wealth tied to the success of their companies. This is what we want, a CEO who has tied their personal wealth to the success of the company.

In this article on the Harvard Business Review website, they were able to correlate founders involvement with a company and shareholder return.

Study of Founder-led companies by Bain and Company

These results mirror the results of intelligent fanatics. Founder owners are able to instill the culture they believe will lead to success. They then act in a way that benefits the company not just themselves. Decisions are made based on what’s best for the company in the long term because they are, in many cases, the largest shareholder of the company.

Productive Paranoia

Productive paranoia is the practice of always being aware of what the competition is doing. Intelligent fanatics know what is going on in their industry and how they may be disrupted. In order to prevent disruption, they are constantly trying to better themselves, their product, and their company to stay ahead.

The authors identified a few ways intelligent fanatics are productively paranoid. They focus on keeping a clean balance sheet, meaning they use very little debt.

Many very successful companies take on significant amounts of debt in order to grow their business more quickly. Intelligent fanatics are always aware that the next recession may be on the horizon. They structure their company in such a way that they can survive a recession without harming the livelihood of their employees. A debt-laden company may not come out the other side of a prolonged market downturn. In contrast, intelligent fanatics are able to weather the storm and take more market share when business picks up again.

Sam Walton built the Walmart Empire. He had little experience in retail but travelled around the country observing other retail operations and taking the ideas he liked back to Walmart. This is a theme throughout the books. Intelligent fanatics are always trying to learn and improve their companies. Never being satisfied allows intelligent fanatics to incrementally improve over the decades. This improvement translates to higher margins, more profit, and eventually to the shareholders through higher returns.

A hallmark trait of Intelligent Fanatics is their obsessive focus on the customer. Jeff Bezos and Amazon are known for having a focus on customer service. When making decisions Bezos says Amazon “puts the customer at the center of everything we do.” Bezos believes that his frame of mind allows him to get a glimpse at how long term decision may turn out in the future. It has been by putting the customer above all else that intelligent fanatics are able to build lasting companies.


Experimentation and innovation are essential to building a lasting organization. But with experimentation comes failure and intelligent fanatics are not afraid of failure.

For all the amazing success Amazon has achieved (Amazon Web Services, Twitch, Amazon Prime) they have also had major failures. The Amazon Fire phone was one of those failures and by 2015 it was discontinued. They key to success is to keep experimenting until you find that massive winner like Amazon Web Services that make up for all the failures.

A company culture that promotes long term thinking is key to experimentation. Companies that are solely focused on meeting next quarter’s earnings projection will not be able to make the necessary investments into creating new products for fear of missing their quarterly number. A culture of innovation must prevail throughout the company to achieve lasting results.

Each of the intelligent fanatic case studies in the two books relied on experimentation to build the extremely successful companies they went on to create.

Decentralized Organizations

As companies grow, layers of management tend to grow as well. Intelligent fanatics fought back against building a company that became dominated by red tape and paperwork.

They sought to build companies that were lean and efficient. Employee autonomy was promoted and employees were trusted to do what they thought was right. By creating a clear vision for the company, intelligent fanatics did not feel the need to install layer after layer of management. When the vision and purpose of the company are clearly communicated to employees the need for direct supervision decreases.

Southwest Airlines and Nucor are used as case studies in the book. These two companies were able to accomplish better results for their customers while using a fraction of the manpower. Both companies were able to stay lean and eliminate unneeded costs and as a result, were able to undercut competitors prices.

Additional Traits to Look For

Some additional traits of intelligent fanatics examined by Cassel and Iddings:

  1. Perseverance: The intelligent fanatics examined had significant setbacks at the beginning of their journey. They were able to overcome those setbacks and continue on their mission.
  2. Industry Experience: Often prior industry experience is seen as an asset. Conversely, Cassel and Iddings believe that lack of industry experience is an asset. It allows intelligent fanatics to develop their owner systems without being influenced by how things were done in the past. Lack of industry experience lead the fanatics in the book to disrupt industries because they didn’t just follow along with pre-existing practices.
  3. Dominate a Small Market Before Expanding: The intelligent fanatics were able to dominate small markets prior to expanding. This allowed them to build their companies and cultures to a point where they could use internal cash flows to fund growth as compared to diluting shareholders with an equity raise. By dominating a small market best practices and efficiencies were established that could be used in the expansion.


The Intelligent Fanatics Project provides a useful framework for evaluating management through a more qualitative lens. After reading the case studies I had a much better understanding of the traits that Cassel and Iddings look for in the management teams they invest in.

The CEOs who were examined have all built companies that flat out beat the market. The average time frame the intelligent fanatic CEOs were in charge was thirty-seven years. Over that thirty-seven year span, they produced an average of 25% compounded annual returns. This is the type of returns investors dream of. $10,000 invested over thirty-seven years at 25% compounded annual growth rates grows to $38 million. A thirty-seven-year holding period may be a little unrealistic. This shows how powerful it can be to find and invest with intelligent fanatics. Finding an intelligent fanatic CEO and investing in them for the long term can produce exceptional results.

I thoroughly enjoyed both books in the Intelligent Fanatics Project series and plan on buying the third book in the series when it comes out. As someone that has no formal business education, I found the case studies extremely helpful. From now on I will be applying the Intelligent Fanatics framework to management teams and the culture they create when assessing potential investments.

My Book Review Classification

I’ve come up with a quick classification system for the books I have reviewed.

Buy: I think you should buy the book. The concepts and teachings in the book are ones that you will continue to revisit so having the book on your shelf is an advantage.

Borrow: Many of the books I review are available at your local library. The library is a great resource and an easy way to save a bit of money. Some of the books are not available at the library so borrowing may not be an option. A “borrow” book is a book I think is worth reading but one that you might not revisit or refer again.

Burn: A book classified as a “burn” is one I didn’t finish or wish I hadn’t read. Let me spend my time reading these “Burn” books so you don’t have too.

I Rate the Intelligent Fanatics Project As A:

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