Henry Ellenbogen’s investment strategy centers on identifying the rare 1% of companies that generate outsized long-term returns, often small-cap firms undergoing radical transformation. He emphasizes 'Act II' entrepreneurs—founders who apply hard-won lessons from past ventures to new challenges—and backs them with a conviction-driven, long-term capital approach. His firm, Durable Capital, practices dollar cost averaging up in winning positions and prioritizes leadership, culture, and adaptability over short-term metrics. The conversation explores how AI and robotics are reshaping industries akin to past technological shifts, and why businesses must embrace continuous improvement—what he calls 'physical kaizen'—to maintain durable advantages. Henry also reflects on the importance of intellectual honesty, team development, and fostering environments where colleagues elevate one another. Through case studies like Netflix’s risky but successful pivot to streaming, he illustrates how resilience, vision, and patient capital enable companies to navigate disruption and emerge stronger.