Nick Sleep

Focusing on businesses that share scale economics with their customers.

Who He Is

Nick Sleep co-founded Nomad Investment Partnership with Qais Zakaria in 2001 and wound it down in 2014 after achieving exceptional returns. Rather than continue managing money, Sleep chose to return capital to investors and focus on his own investments and life.

Sleep's letters to Nomad partners have become legendary among value investors. Written with literary grace and deep thought, they explore investment philosophy, business analysis, and the nature of capitalism itself.

His willingness to walk away from a successful fund at its peak demonstrated that he meant what he wrote about enough being enough. He chose quality of life over maximizing assets under management.

Core Investment Philosophy

Sleep focused on "scale economics shared." He sought businesses that became more efficient as they grew and shared those savings with customers rather than extracting them as profit. This created a virtuous cycle of growth and loyalty.

He held extremely concentrated portfolios, sometimes with just a handful of positions. When conviction was high enough, he was willing to put substantial capital behind a single idea.

Patience defined his approach. Doing nothing was the hardest part. The natural impulse to act usually leads to worse outcomes than sitting still.

He thought about businesses from the customer's perspective. Companies that genuinely served customers well would ultimately succeed, while those that exploited them would eventually fail.

Patterns He Focuses On

• Scale Economics Shared — The central concept. As companies grow and costs decline, do they pass savings to customers or keep them as profits? Those who share create durable competitive advantages.
• Customer Delight — Do companies genuinely improve customer lives? Businesses built on serving customers well have structural advantages over those focused on extraction.
• Destination Analysis — He thought about where a business would be in ten or twenty years, not next quarter. Long-term trajectory mattered more than current financials.
• Management Character — He spent significant time understanding the people running businesses. Integrity, customer focus, and long-term thinking in leadership mattered immensely.
• Reinvestment Opportunity — Businesses that could continuously reinvest in growth at attractive returns were preferable to those paying out earnings as dividends.
• Industry Structure — He analyzed competitive dynamics to understand which businesses had sustainable advantages versus those in races to the bottom.

Example Companies

Costco — The exemplar of scale economics shared. As Costco grew and gained purchasing power, it reduced prices for customers rather than expanding margins. This created fierce customer loyalty and continued growth.

Amazon — Sleep recognized Amazon's willingness to sacrifice short-term profits for customer benefit and long-term growth. The flywheel of lower prices, more customers, and greater scale created a virtuous cycle.

Berkshire Hathaway — Another long-term holding, reflecting Sleep's admiration for Buffett's approach and Berkshire's culture of decentralization and integrity.

Limitations and Criticisms

Sleep's extreme concentration meant that portfolio outcomes depended heavily on a few companies. This approach requires exceptional judgment and conviction that most investors cannot replicate.

His decision to close Nomad means there is no ongoing track record to evaluate. His approach worked brilliantly for a period, but whether it would continue to work remains unknown.

The "scale economics shared" framework may not apply broadly. Many industries do not exhibit these dynamics, limiting the universe of potential investments.

Sleep's literary and philosophical approach, while inspiring, may not translate into practical guidance. His letters are better read as essays than as investment manuals.

What Modern Investors Can Learn

• Seek businesses that serve customers genuinely — Companies built on customer delight have structural advantages over those focused on extraction.
• Think about scale economics — Ask whether growing companies share efficiencies with customers or capture them as profit.
• Focus on destination — Where will this business be in ten years? Current financials are a snapshot, not a movie.
• Embrace inactivity — Doing nothing is often the right choice. The urge to act usually leads to worse outcomes.
• Know when enough is enough — Maximizing is not always optimal. Quality of life and purpose matter.