Mohnish Pabrai_ FASTEST Way To Financial Freedom_ Proven Playbook For Quitting Your 9-5 In 9 Months_(M4A_128K)

Episode Transcript

Speaker 1 (00:00):
I wanted to make either done to investor.

Speaker 2 (00:01):
It's a way of doing business and making money without
taking risks, like for example, mister Gates, mister Walton, mister Branson.
All of these people followed these simple mental models. So
if they won, they would win big and if they lost,
they'd lose nothing.

Speaker 1 (00:17):
So I want to add everything.

Speaker 2 (00:18):
Okay, let's start with this.

Speaker 1 (00:20):
Manage Pavaria is the self made millionaire who built one
of the most respected investment firms in the world, managing
over a billion dollars, and now he's giving us the
simple tools and frameworks to create life changing Well, if.

Speaker 2 (00:33):
Humans understood that if I embark on a business in
a format where the risk is close to zero, more
people would do it. And that's what these mental model do.
For example, cloning, we are taught if you want to
start a business, you need to come up with something new.
But actually, if you are a great cloner, you will
be ninety percent ahead of the rest of humanity. And

(00:54):
in fact, everything that Microsoft has done well has come
from copying someone.

Speaker 1 (00:59):
On the outset.

Speaker 2 (01:00):
And then there's time when you're starting a business, don't
quit the day job because some other yo yo is
paying your rent. But it does mean that you need
to find time to work on your business. But I
will show you the perfect way to allocate your time.
And that's not all. There's models like low hanging fruit,
skin in the game, givers versus takers, and the circle

(01:20):
of competence, and I'll explain all of them.

Speaker 1 (01:23):
What about investing, because you're very well known for being
an excellent investor.

Speaker 2 (01:27):
There are three things that matter with investing. And there's
also something known as the rule of seventy two. But
I wish they would teach it more in high school.
And it tells us how long it takes money to double.
Now this is exciting.

Speaker 1 (01:43):
I see messages all the time in the comment section
that some of you didn't realize you didn't subscribe. So
if you could do me a favor in double check
if you're a subscriber to this channel, that would be
tremendously appreciated. It's the simple it's the free thing that
anybody that watches this show frequently can do to help
us here to keep everything going in this show. In
the trajectorates on, so please do double check if you subscribed,
and thank you so much, because in a strange way,

(02:05):
you are You're part of our history and you're on
this journey with us, and I appreciate you for that.
So thank you, Menish Pabrai. With the work that you
do and the sort of public educating that you've done
more recently in your career. What is the message you're
trying to convey, If you have to summarize that message

(02:27):
and exactly who you're trying to convey it to.

Speaker 2 (02:30):
It really depends on what message. There are a few
different mental models that have figured out over the last
few decades. When you have clarity on these mental models,
and especially when you can start overlaying them, that's when

(02:52):
you get one plus one becomes eleven. And so these
mental models are not all in the same direction or
in the same genre.

Speaker 1 (03:02):
So just to post there for a second. So the
word mental models, yeah, means it's basically a framework for thinking.

Speaker 2 (03:09):
Yes.

Speaker 1 (03:09):
So one framework for thinking is this idea of cloning. Yes,
as one such example.

Speaker 2 (03:14):
Yes, let's take the mental model of cloning cloning cloning, right,
So what we are taught is that if you want
to start a business, you need to come up with
something new, something that hasn't been done before. But the
reality is that the world will very easily accept three

(03:36):
of the same thing or five of the same thing.
And usually it is an advantage to look at something
that already exists and say, can another one of those exist,
for example, or can I take what's there and tweak
it a little bit. So there's something peculiar in the

(03:58):
human psyche, maybe going back into our history and our
ancestral evolution, where humans look down upon cloning, but if
we look at it. So for example, two of the
greatest cloners I think in human history were Bill Gates
and Sam Walton. Now we think of Bill Gates as

(04:19):
an innovator, and we think Sam Walton created Walmart, which
was also new, but actually they both met too models
and Microsoft would not have existed without being a great cloner.
So when we look at Microsoft, word it came from

(04:40):
word Perfect, which was which a competitor that he took out.
We look at Excel, it came from Lotus. We look
at Bing came from Google, and you know what bing is,
but it's not Google. Everything that Microsoft has done well
at has come from copying someone on the outside. And

(05:01):
when we look at Sam Walton, who's you know, the
Walton family. If you pull them all together. It's the
richest family in the world. It's richer than Elon and everyone.
And Sam Walton, by his order admission, would tell you
that he has no original ideas. So originally Walmart cloned

(05:23):
Seers and Kmart.

Speaker 1 (05:25):
For my international listeners, these are two big supermarket chains.

Speaker 2 (05:28):
Yeah, and they're both gone. In fact, Walmart buried them.
And Sam Walton was one of the most intense cloners ever.
So if he was driving on vacation with his family
and he's passing some retail store, he would tell his
family to stay in the car and he would go

(05:50):
in the store just to check it out. And he
said that there is no human who has lived in
history or will live in the future who has visited
more retail stores than he has. One time, there was
a manager of his and he would go in with
his managers to these stores. Retail is one of the

(06:10):
most transparent businesses. You can go into your competitive store
and you'll figure out the entire business model in ten minutes.
You don't need to talk to them. Okay, it's beautiful.
So he went into this retail store and the manager
says to him, oh, what a terrible operation. The whole
store was topsy. Turvey's really bad, and Sam says to him, yeah,
but did you see the candle display. The candle display

(06:33):
was fantastic. So Sam felt that he could learn from anyone.
It didn't matter if you were a useless operator or
a great operator or whatever, anyone in the middle. Walmart
is just an amalgamation of ideas from other places. If
we look if you look at a company like Starbucks,

(06:53):
we think of Starbucks as innovative. But actually what Howard
Schultz did is he saw a con except in Italy,
and his idea was that, I think this is the
work in the US, right, and so he cloned. He
cloned that idea from Italy and brought that coffee shop
experience to the US. If you are a great cloner,

(07:16):
you will be ninety percent ahead or ninety five percent
of the rest of humanity. Now another mental model. Humans
have this perspective that starting a business is risky. In reality,

(07:37):
entrepreneurs do not take risk. They do everything in their
power to minimize risk, and in many cases, when they
embark on a business, the risk approaches zero. What is
extremely risky is a nine to five job. Because we

(07:58):
have one life, right, and it goes away and you
may not get to do what's in your heart. You
may not get your music out right, and so getting
our music out is really important. So this notion which
is drilled into us that if you're an entrepreneur you're
taking risk really kind of does a big disservice to

(08:23):
most humans. And if humans understood that, if I embark
on a business, I can do it in a format
whether risk is zero or close to zero, and I
can clone an existing business. Right now, you've combined two
mental models and we can start adding more to them.

(08:44):
But two has become eleven. One plus one has already
become eleven. It's nonlinear. And why is it that? Why
am I saying that entrepreneurs do not take risk? So
if I take my own case as an example, and
I can give you one hundred cases like that, But

(09:06):
if I take my own case an example, I was
working nine to five at a company and I had
a business idea. My employer expected me to work forty
hours a week. Right, there's one hundred and sixty eight
hours in the week, so I felt like there must

(09:27):
be at least another thirty forty hours that I could
work on my startup.

Speaker 1 (09:34):
Could you show me this in context?

Speaker 2 (09:35):
Right, So if we look at our whole week, for example,
these beautifully arranged legos, if I take one of these
blocks of legos, so each one of those blocks in
there is two hours, so eight hours a day. We're
sleeping eight hours a day, right, and we're doing that
seven days a week. So basically we've got seven days

(09:58):
a week, eight hours a day. The blue legos are
showing our forty hours a week, eight hours a day,
five days a week. We're working, right. Then we get
to other you know, preparing dinner and showering, shaving, getting ready,

(10:19):
whatever else. So that's about four hours a day on
the weekdays, which is including commute time, and about eight
hours a day on the weekend. Then we get to
free time, you know, social media and watching Netflix and
hanging out with friends, going for dinner, and we've got
quite a bit. We've got about four hours a day
of doing that and about eight hours a day on

(10:41):
the weekend. So this is kind of typical what a
typical week for most people would look like. Right now.
When you're starting a business, the important thing is don't
shut off the cash flow. Some other yo yo is
paying your rent and my mother Yoyo is paying your grocery.

(11:02):
So we don't want to rock the boat. But we're
going to make one change to Blue.

Speaker 1 (11:06):
Which is the amount of hours I'm working for my
nine to five now.

Speaker 2 (11:09):
Before I started my startup, I used to get top
reviews as an employee. You know, I was very focused
on doing a great job for my employer all in right,
the day I decided I'm going to run do my startup,
I decided I need to be just above firing level.

(11:29):
My performance needs to be just good enough so they
don't can me, but nothing beyond that because I need
all my energy to go into my startup. So that's
the only tweak I'm making is Blue stays. But we're
not doing extra blues like we were doing before.

Speaker 1 (11:47):
Right, and at least for anybody that doesn't can't see
because you're listening an audio is work exactly.

Speaker 2 (11:53):
Yeah, Blue is work exactly. Now. When we embark on
a startup, we should never do a startup to make money.
The worst reason to start a company. The purpose of
business is not to make money. The purpose of business

(12:13):
is to deliver an incredible product or service to humanity.
If you do that, the money is a side effect.
It'll happen. We don't need to focus on it. So
what we are looking for is, do we have a
product or a service that we're thinking about that we

(12:34):
could bring into this world that is going to improve
the world in some way?

Speaker 1 (12:40):
How do I know if it's a good idea?

Speaker 2 (12:43):
Whatever idea you have come up with is not going
to work, okay, because you came up with it in
an ivory tower between your years, okay, and that's not
really a great place to in great ideas. What's going
to happen is we're going to be doing what I

(13:05):
call rapid prototyping, which is we take this idea and
show humans what it is. And when you show it
to humans, you will get feedback. So I'll maybe I'll
just give it in more practical terms. When I was

(13:25):
when I was starting my first business, it was going
to be a IT services business, okay, information technology services,
and I was going to be providing these services to
very large businesses, companies that are you know, billion dollars
or more in earnings or cashlows. I was in a
meeting with a senior IT guy at a very large

(13:48):
bank in Chicago, and I was going through my PowerPoint
tech with them. I came to the tenth slide, said
my spiel, went to slide life. So the boss, who
was sitting in the meeting, said, go back to slight ten.
So I went back to slight ten again, gave my

(14:09):
speech that I had for slight ten, and took it
to eleven. He said, go back to slight ten and
do not change the slide. I don't have an interest
in any other slide, okay. So I took it back
to slight ten, and all he wanted to talk about

(14:29):
was what was on slight ten. My deck was talking
about seven things we could do. Slight ten was one
of those seven. It was an extreme pain point for him.
He needed help on that one thing. He didn't need
help on all the other riff raft stuff I was

(14:51):
talking about. So when you're doing a startup, you have
to be listening very carefully. Your customers or potential customers
will tell you exactly what you need to do. Whatever
you came up with maybe eighty percent right or seventy

(15:13):
percent right or forty percent right, but your customer will
tell you what is one hundred percent right, okay, Because
that's a real pain point. So I went back and
thought about it, and I realized that his pain point,
and I could see it was a severe pain point
because he gave me a purchase order at the end
of that meeting, was going to be a pain point

(15:35):
for a lot of people. So I went back, I
took slight ten, blew it up into twenty slides, and
that became the deck. Okay, everything else got thrown out
right now. I couldn't have done that without him. My
brain is too small to have figured that out. So

(15:58):
anytime you're doing a startup of any kind and you
have a prototype or an early product or something going on,
your users are going to tell you exactly what tweak
they want.

Speaker 1 (16:13):
You've just reminded me of a conversation I had this morning, okay,
where I interviewed someone. Because much of what you're saying
is orientated towards startups, but it's actually every single day
of everyone's life. Because I interviewed someone this morning for
a really critical role in the company, and this person
has spent twenty years one of the biggest companies in
the world, and when I was doing the interview, she
was telling me about lots of things she's done in

(16:34):
those twenty years, and I was just trying to get
to this one thing, can you put on events? And
she was telling me about this and that and the
other thing, and this and this and the other thing,
and I was just actually, I'd only come to this
interview to figure out if she could do put on
big scale events. So we spent of an hour conversation.
We spent fifty five minutes talking about a bunch of
things I wasn't interested in. And actually, as you were speaking,
I was going, you know what she could have done

(16:54):
at the start of that conversation. She could have gone, Stephen,
can ask you one question, what is the what do
you look looking for from this person? And then I
would have gone, I just want some of that comportent events,
And then the next fifty five minutes could have been
persuading me that she can do that. Sure, And it
just applies to what you just said there. How could
you of this as the salesperson that day in that
meeting with what you know? Now? How could you have

(17:18):
done a better job without going through all of those slides?

Speaker 2 (17:21):
Well, I think what I would do now if I
were doing something like that, is that my radar on
listening would be ten x. You know, we don't learn
when we speak, we learn when we listen. So I
would really be trying to talk less and extract more.

(17:46):
And I won't even rely so much on slides. I'd
like to really bring them in into what they're trying
to say. And so basically, in if you study if
you study businesses, you know, venture back, non benure back, whatever,
this is a very common thing. There are almost no

(18:08):
businesses who end up with the business model that was
originally conceived. I mean, that just would be such an anomaly.
It's really the interplay between the founding team and the
early customers which really leads to taking this wet clay
and making into something that people want, you know. And

(18:32):
so you know, if you think of something like Google glass,
you know when they came up with those glasses that
they thought the whole world was going to wear. Yeah,
so it didn't work. Well. Why didn't it work? Well?
The reason it didn't work is you're talking about something
extremely personal, okay, like, for example, really is chewing gum? Okay,

(18:55):
my mouth is a very personal space. I'm not going
to put glots to income in there's close exactly, You're
not going to put some brand that's half the price
of rig Lease in there because you don't want to
go there. That's not of interest to you. So when
we wear glasses or sunglasses or anything we wear, that's

(19:18):
very personal. So the the ergonomics and the human factors
are very important. If it's slightly off. Now Meta is
trying to do the same thing, but they went to
ray Ban, right, they did a Jvi ray band. Those
glasses look like normal glasses. I think there's a higher

(19:40):
chance you don't have any Google glass.

Speaker 1 (19:45):
No, no, I think.

Speaker 2 (19:48):
Yeah. So what I'm trying to say is that we
have to pay very close attention to the customer. I mean,
Steve Jobs was right. The customer doesn't know what he wants, okay,
but if you put in front of them, then they
can now tweak and tell you exactly what they want. Right.
So that and that's another mental model, which is now

(20:10):
we get to the third model, which is that you're
not smart enough. Whatever founding team you have is not
smart enough to figure out what people want. Period. So
you have to have very good listening skills, and you
have to have the flexibility to and again when you're listening,
separate the signal from the noise, right, take in what

(20:31):
is real signal and leave out what is the noise,
and then you're starting to get down a path which
is going to make more sense.

Speaker 1 (20:40):
The other thing that's kind of a model maybe woven
into there was this idea of just like attention to
detail and not even sure if that's a model. But
when you told me about the Walmart founders laying between
the aisles to measure the exact centimeter of length, the
model there for me was just like precision in detail.

Speaker 2 (20:58):
It's a game of inches. I mean, what I'm saying
is that when Sam Walton was trying to figure out
the name of the company, one of the reasons he
went with Walmart was it was seven letters, and he
was looking at the cost of putting up signage stores,

(21:21):
and he was trying to come up with a name
with the fewest letters because it costs less, Okay, And
so I meant cost sensitivity is all over the place
in Walmart, right. I mean that's just front and center
with what they do, right. They's just really squeeze blood
out of a rock, you know. So basically, I mean

(21:42):
I think that was and that's the reason why they
became so successful. One of the things you can always
control in business is your costs. You may not be
able to control your margins and selling prices and a
lot of other things, but you can always control costs.
So that's another model where you have to have discipline.

(22:02):
You have to have very strong discipline on the cost set.
If you look at something the LVMH you know the
guy who runs it, I mean he's in luxury goods,
he's in high end and yeah, yeah, yeah, I mean
everything you know is you know, they've taken over Tiffany's everyone.

(22:24):
But when you look at how the company is run,
it's very tight. He spends money on the best real
estate because that's important, but the deals he negotiates on
those real estate is mind blowing, you know. So it's
it's a very tightly run operation on a product category

(22:45):
that doesn't necessarily need it. But that's why they that's
why he's become the wealthiest guy in Europe.

Speaker 1 (22:51):
Because that mentality will then apply to every decision absolutely,
and if you apply it to one hundred things, it
does matter.

Speaker 2 (22:57):
Oh, it does matter big time. Yes.

Speaker 1 (22:59):
So I have these yellow blocks here, yes, which represent
working hours working on your own business. Yes, So show
me how you would take some of these blocks away, yes,
and introduce ours working on your own business.

Speaker 2 (23:11):
Yeah. So basically it's it's really quite simple. We're not
really not going to mess with our sleep cycles. We're
going to leave that alone the same and we need
our blue which is our work workspace forty hours. We
need that to continue. One of the changes we're going
to make is we're going to live close to work,
so we're going to cut down commute time as much

(23:33):
as we can, okay, because every hour matters. Okay. So
the area that we're going to focus on is the
free time, okay. And the reason why taking out the
free time is not a problem is because what we
are embarking on, like we just discussed, it's not about
making money, is getting our music.

Speaker 1 (23:52):
Out, getting on music out that which means.

Speaker 2 (23:55):
That we have something in us that we know the
world needs and we want to bring it to that world.
We want to bring it to the world. And because
we want to bring it to the world, it's not work.

Speaker 1 (24:10):
I think the audience might be challenging themselves in the
head and saying, but I love the thing I do
for work. I'm one of maybe the rarer group of
people that I get to work with puppies every day
and I love that.

Speaker 2 (24:22):
Yeah, so I think that I think this is not
for everyone. So I think you have to ask yourself
who you are. If you are truly excited about your
nine to five job and what you're spending your main working,
main waking hours on, awesome, that's great. I mean everyone's
not going to be an entrepreneur. Everyone's not going to

(24:43):
have a startup. Everyone. They may be getting their music
out in a different way on someone else's platform, which
is perfectly fine. But if that is not you, where
when you go to work, you're not super excited to
get up in the morning and you're not tap dancing
to work every day. If that's not happening, then there's
something wrong and you have to ask yourself, well, is

(25:08):
there something else that is that you're passionate about that
you want to do and this is not something that
should take a lot of effort. So if you go
back and look at for example, Bill Gates and Paul Allen, right,
I mean, Bill Gates is at Harvard and he sees

(25:32):
a magazine which shows a very early personal computer, and
he realizes that there's a paradigm shift, and he realizes
that he needs to be part of it. And Paul
Allen is the one who sent him that magazine and
he told Bill, we got to go do this now.

(25:54):
This is our time now. And for Bill it was
a very easy decision, very de decision, very difficult for
his parents. His parents were in shock that he's going
to abandon his degree. And you know, he told his parents,
don't worry about it. I'm going to come back and

(26:15):
I'll finish the degree. And several decades later, Harvard gave
him an honored and his parents were in the audience
and he told them, I told you that finish it off, right.

Speaker 1 (26:26):
Because I put some numbers to this, twelve percent of people,
according to the stats that are listening right now, are
explicitly unsatisfied with their job, which means they hate it.
Eighty five percent of work is globally are disengaged, meaning
they're not fully invested or happy at work. So it's
a huge number of people. More than half of the
US workers are at least somewhat satisfied, but engagement remains

(26:48):
worryingly low. So if we look at that eighty five
percent number, eighty five percent of workers globally are dis engaged,
meaning not fully invested or happy at work. So it's
really those sure people.

Speaker 2 (27:00):
And the thing is, it's not it's not just enough
to be unhappy at work. That's one piece of it.
The unhappiness can be in symptom and one of the
one of the causes can be that you have a
different calling in life and you are not following following

(27:22):
your calling. Now. Sometimes for someone like Bill Gates, for example,
and Paul Allen, they figured out their calling and they
just went right. For many of us, it may not
be that easy. So what we have to do is
we have to try a few things. You know, you

(27:44):
try on different shoes to see what fits, and so,
you know, have some thought experiments. Talk to your friends,
you know, say Okay, you know, I'm a ups driver.
This is what I do, and I really like playing
the guitar, or I like to make these art figurines

(28:05):
or something at home, whatever else. Right, So you have
to figure out what your calling is. And I'm probably
not the best person to tell you how to figure
out what the calling is. They be another guest of
yours can help them with that.

Speaker 1 (28:20):
Do you think everyone has a calling.

Speaker 2 (28:23):
Yeah. I mean, I think we are all unique children
of God, and I think we all have some music
we want to get out, and knowing what that is
and getting it out may not be the easiest thing,
but it's a worthwhile journey to try to get there. Right. So,

(28:46):
we can't do this just because we're dissatisfied, and we
can't do this just because we want to make money
and get rich. We've got to have something that we
think the world would be interested in. And you know,
in my case, i'd gone through this session with a
couple of industrial psychologists and they told me, Monash, you

(29:08):
like to play games. You're a game player. And actually
they couldn't be more accurate. So when I was doing
my startup, I'm a numbers guy and a math guy,
so I actually like that. So what I used to
do is, because I had no money, I used to

(29:30):
send two hundred letters a week to these senior IT
people at two hundred different companies. But what I did is,
so all these people I was sending this letter to,
they had a gatekeeper, some secretary, etc. Whose job was
to not let anything through. And my whole purpose was

(29:51):
I need this letter to get through. It needs to
get through the gatekeeper. So I was using mail Merge,
which was mass producing these letters, but was a customization
the male world where if some person name was David Smith,
it said dear Dave, okay, and then throughout the letter
it talked Dave's name came up like three four times.

(30:14):
When the assistant got a letter, she couldn't tell whether
I know Dave.

Speaker 1 (30:18):
Or not because he used his shortened.

Speaker 2 (30:20):
Name, shortened name, and she doesn't want to throw a
letter that is somebody that he knows, so the letter
would go through enough times. Right now. What I also
did is a one week after those letters were delivered,
I called I made two hundred calls. I called all
two hundred people and basically if I got boys mail,

(30:43):
left a message whatever else. Right now, they have entered
the sales funnel, okay, So Dave Smith is in the
sales funnel. If I get no response from Dave Smith
after one week, there's one more call. Then the calls
stuff getting spaced out double time, two weeks out, then

(31:04):
four weeks out, then eight weeks out, then sixteen weeks out.
But Dave never leaves that funnel, okay, until he tells
me do not bother me anymore, and I have no interest.
They're going to stay in that funnel. So the second week,
I send out another two hundred letters, make another two

(31:25):
hundred calls, right, and now I've got the first week,
second week, so you can see as time goes on,
I'm calling NonStop, right, because this thing is But what
I was tracking, because I'm a math guy, what I
was tracking is, Okay, these two hundred letters went out,
how many people did I get any kind of positive

(31:47):
response from? Right, because not everyone's telling me to get lost? Okay?
And how many meetings am I having? And what is
the ratio of calls to meetings, meetings to close, et cetera.
And my ticket size of the item I was selling
was very large, hundreds of thousands of dollars right nine

(32:09):
months after doing this. Where now let's go back here.
So we're going to take our free time. So what
I've tried to describe is that what I'm doing is
actually more exciting than the orange. The yellow is more
exciting than the orange. So basically yellow, the yellow is

(32:31):
our startup.

Speaker 1 (32:33):
So that's working when your startups.

Speaker 2 (32:34):
So on the weekend, I'm going to do ten hours
a day because I'm not working right And on the
weekdays I'm going to do four hours a day because
I've got other things to do because i have a
job and whatever else is going on. So there's my weekdays,
five days there where I'm putting in four hours a day,

(32:56):
and then I'm putting in ten hours on the weekend
and the free time. This is not as exciting as
pounding Dave. Pounding Dave continuously, Tilly says, either get off
my back or here's your purchase order is very exciting.
It's way more exciting than playing some social media or

(33:19):
watching Netflix or whatever.

Speaker 1 (33:20):
Else, which is what people currently do with their free time.

Speaker 2 (33:23):
So one of the litmus tests of whether you need
you should be doing a startup or not is yellow
needs to be more exciting than orange.

Speaker 1 (33:37):
Your startup needs to be more exciting than your free time.

Speaker 2 (33:40):
Netflix should be so painfully boring for you, and going
on Facebook or Instagram whatever, it should be very boring
for you compared to this is exciting compared to building
your company. Yes, so you know the Pink song. We

(34:01):
don't need no education, Yeah, we don't need no toot control.
Yeah we don't need none of this. This is so useless.
You understand how useless this is. Yellow is where it's
at it. It's not in the orange stuff. We don't
need this, thank.

Speaker 1 (34:17):
You, So we don't need any free time. This is
better than free time building your business.

Speaker 2 (34:24):
You're having an orgasm every hour, So what can you
what can be better than this?

Speaker 1 (34:31):
Much of what I do here when I'm having these
conversations as I'm trying to put myself in the shoes
of the person who is currently sat in a nine
to five job and they've got an idea, and their
idea is isn't really hasn't really gone anywhere yet necessarily,
and the pressure they're feeling in their lives is probably
now a financial one, Like they want financial freedom, they
want more optionality in their lives, to be able to

(34:52):
go on holiday, make more choices, and have more freedom.
If you're that person, what are the mental models that
we haven't just gush chat that you need to be
thinking about to get from zero to one?

Speaker 2 (35:02):
So one of the things to keep in mind is
that we live in a world now where most things
that you would want to do in terms of starting
a business are not capital intensive. What does that mean
doesn't take much money. In fact, what's been happening over
time is startups need less and less and less money

(35:24):
because they need more and more and more brain power. Right,
So the good news is that a gating factor is
not that you need money. When I started my business,
I took on. I signed up for every credit card
that would come to me. So I had seventy thousand

(35:46):
in unused credit lines in probably a dozen Visa and MasterCards. Right.
I had about thirty thousand dollars in my retirement account
I four oh one K, which I also took out
as a twenty five. I can make that up later, right,
So basically I had one hundred thousand dollars of capital,
and that one hundred thousand got used because once I

(36:06):
got going, I needed to work in capital and so on.
But then the business was the business was actually cash
flow positive. Nine months after I was doing this, I
was able to get rid of this. So after nine
months my business was producing enough cash flow that I

(36:27):
went and resigned. Okay, and yeah, we can, we can
put that in here as well. So what happened is
that I went to my boss and his boss and
basically told them that I'm started a business it's not
competitive with the company, and I'm going to be leaving

(36:48):
in two weeks and this is my two weeks notice.
And basically that was that right. And you know, they
sat me down and said, you know, Monish, we were
so confused for the last night months because we met
several times because we saw big drop off in your performance,
but it was never so low that we wanted to

(37:10):
fire you. I said, exactly, that was exactly what I
was trying to do. I was trying to say just
about firing level. He said, well, you mastered it, because
we met several times, but we couldn't get rid of you.
So they what they told me is they said, look,
when your business fails, not if your business fails. When
your business fails, please come back. We'll give you more money,

(37:35):
You're going to get a promotion, and we'd love to
have you back. I could immediately come back. So I said,
I got one free shot where I leave my job.
I go, I do this thing, and if it doesn't work,
I'm back to almost exactly where I was. Almost no change.

Speaker 1 (37:54):
Right, type one, type two decision making.

Speaker 2 (37:56):
Yeah, and so and this is not just me. What
risks this bill Gates take Okay, Bill Gates, what is
his value as a Harvard freshman in the job market? Zero? Okay,
nobody would pay him anything, and he could come back
any timen't finished a degree. So let's say he went

(38:18):
to New Mexico, things didn't work out. He's got wealthy
parents in Seattle. Okay, he just comes back, graduates a
year later, and he goes on. So what was the risk?
There was no risk. And if you study entrepreneur after
entrepreneur after entrepreneur, what you're going to find. So if
we look at Sir Richard Branson, he wants to start

(38:43):
an airline. Okay. Now, to start the airline, you need
a Jumbo seven four seven that costs like one hundred
and fifty million the plane, the plane, right, that's some
serious money. Richard Branson got Virgin Atlantic off the ground
with zero and with zero risks. So here's what he did.

(39:04):
You replace capital with creative thinking. So he calls two
oh six five five five one two one two, which
is directory assistance in Seattle, Washington, and he asks for
the phone number for Boeing. Okay, so he calls the
main Boeing switchboarding Selver Planes. Right, yeah, Boeing makes the

(39:25):
seven for seven. So he calls the main switchboard a
Boeing giant, huge company and says, I'd like to lease
a jumbo and they hang up on him. Okay. He
calls about thirty times and they keep hanging up and
finally they get tired of his calls and the lady says,

(39:45):
let me put you in touch with somebody who's in
charge of leasing and they can tell you to get lost. Okay,
So she transferred him to a person who's actually leasing jumbos.
This person tells Richard says, look, mister Branson, in every
country we have one customer, and in the UK that

(40:07):
is the British that is British Airways, so we have
nothing to talk about. So he said, well this humor
me for a second. He said, if British Airways called
you and said that they wanted to lease an old,
used jumbo, do you have one lying around? So the
guy says, as a matter of fact, we do, but
that's academic. He said, well, what would you lease it

(40:28):
to British Airways for? Just since we're having a conversation.
What ended up happening is Boeing leased him that jumbo
and the reason they leased him that jumbo is they
had one just sitting around, so they didn't really have
any risk because they said, the moment the guy doesn't
make any payments, we're going to pull the plane. Right. So, now,

(40:48):
when you have an airline, you sell all the seats
four months in advance, the cash has already come in.
You pay for the fuel thirty days after the plane lands,
and you pay for the lease after the plane lands.
You don't need any capital. Virgin Atlantic got off the
ground with zero capital. Okay. Now if you can start

(41:10):
an airline with needs a jumbo with zero capital, you
can start any business with zero capital. Okay. So basically,
when you look at business after business after business, all
of them, what they do is they start small. They're embryonic,
they minimize risk, they get a few customers, and then

(41:32):
after this role with the customers right, and then that's
how they get going. So the important thing is that
when we take the blue out, when blue is no
longer here, which is work, which work is gone, yellow
has got almost double or triple because this is where
all the orgasmic activity is.

Speaker 1 (41:52):
So we move the work. We've quit the nine to
five job, and we leave that time over table.

Speaker 2 (41:55):
I was working on my startup, like from seven to
nine in the morning, and then I would come back
six pm and work till ten or twelve in the
evening when you had a job, when I had my job,
and then I'd work on the weekends. And I was
so desperate to just go full time into it because
I just said, if you just let me go full time,

(42:16):
I can tear it up. And that's exactly what happened.
I mean we in about five first year we did
four hundred thousand revenue, second year one point four million,
thirty or three million, and by the six or seventh
year we were at about fifteen seventeen million. It just
grew because basically then I had no shackles on me,
you know, I could just go full out right and

(42:38):
the engine. I knew all the statistics of these letters,
so many calls, only this so much, this means this
and all of that, and it works so and if
it doesn't work, you can go back to your nine
to five and give it another shot, you know, So
you actually could do this a few times.

Speaker 1 (42:57):
I think that's a really unappreciated framework. As you called it,
a mental model, which is because you said you sent
two hundred letters. So many times kids come up to
me in the street and they say that I've been
looking for a job. I've sent six emails. Yeah, and
they go, no, one's got back to me. Yeah, And
you can see that it's hit their confidence. And now
they've actually arrived at the conclusion that getting a job

(43:18):
is like harder, im possible because they sent six Yeah.
Now when I interview people like you, they all give
me much bigger numbers. They say two hundred, three hundred five,
you know. And there's something in this sort of law
of averages which is just like just take more swings,
you know. You see it in like currital.

Speaker 2 (43:32):
My daughter, when she was graduating from Berkeley, came to
me and I was really surprised. She said, I want
to work at a hedge fund, and so I said, okay.
And her degree was not in business, so she was
not a natural candidate to be even considered. I said,
can you make a list of every hedge fund in

(43:53):
New York in LA and put it in excel managing
partner's name. Now we don't know people's email addresses, but
we know everyone's mailing address. Okay, the mailing address is
a public piece of data. Address Their address is easy, right,

(44:13):
And I said that. So she got a list of
about twelve hundred funds in LA and New York. And
I said, what you're going to do is you're going
to ask for the job, but you're going to have
two pages behind that giving them a stock tip. You're
going to give them a pitch that you have written
up of a company that if they invest in, they're

(44:37):
likely to make money. We sent the twelve hundred letters
physical letters, okay, all physical letters, no email, right. And
there's a eighty five year old guy in New York
who gets the letter. He's retired, the fund doesn't exist,
it shouldn't have been on the list for whatever. But
he has a friend in LA. He says, Hey, Jamie,

(44:57):
aren't you looking for an analyst? And this girl, she
seems to have the perfect kind of background and she
ends up with a higher salary than anyone went to
Berkeley Business School with a much higher GPA than hers.

Speaker 1 (45:15):
I was thinking about what you're saying, and I made
a video the other day which I think is somewhat relevant,
where I was trying to describe to people how to
send a message to someone in a way that creates
impact and the framework that I came up with which
I will animate on the screen. But it's basically so

(45:36):
this axis here is the signal versus noise of the
channel you're using. So a high signal channel is one
where it gets past the PA it's less saturated, less busy.
A high noise channel, which is the opposite, would be
sending an email to the press at your company dot
COM's EIL. So like everyone goes through that path and

(45:58):
doesn't doesn't get to the person. And then the other
axis is basically the emotional impact of the message. Yeah,
so high emotional impact is doing what you said, put
a stock tip in there. You're going to stand out.
They're going to think you're a little bit strange or
what you said about like shortening the name. That creates
more emotional resonance. And then low would just be yeah
AI slop, copy and paste jargon and really like the

(46:18):
most successful messages are up here, absolutely, like high signal channel,
high emotionally resonant. Absolutely, But what ends up happening is
people send loads of messages down here and then they
get depressed, demotivated, Say an one's getting back to me yeah.

Speaker 2 (46:31):
Like Michael Jordan used to say, you miss every shot
you don't take.

Speaker 1 (46:36):
Yeah, yeah, yeah.

Speaker 2 (46:39):
So basically it is. I mean, I think one of
the things about entrepreneurs is that you need to have resilience,
like for me. For me, what the data I was
looking for is that if I send five thousand letters okay,
which takes twenty five weeks six months, how many meetings

(47:05):
does that end up in. If that ends up with
ten meetings or twenty meetings, well now I have my number, right,
and then the second part is the meeting to close
ratio right. And so to me as a math guy,
I was just interested to know that it's non zero, okay,

(47:26):
just relation, and I could see very quickly it was
non zero. Literally within the first two three months, I
could see it's non zero.

Speaker 1 (47:33):
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(48:38):
sixteen through sixteen to nineteen years old, which is what
I did, was working in cold telesales. So my job
at sixteen years old was to call people at nine
pm cold and try and get them to buy windows
and doors. And it taught me the exact lesson you're describing,
which is, yes, eighty percent of people tayed off.

Speaker 2 (48:56):
Eight But it doesn't matter.

Speaker 1 (48:58):
I always say eighty percent of five fifteen percent sent
it in a nice way, and then five percent were
at least receptive to what I had to say. Yeah,
maybe one percent close. But when you understand that, you
think of life through that lens.

Speaker 2 (49:11):
And actually Steve and I had the almost same experience.
So my father was an entrepreneur. He was really smart
at identifying what I call offering gaps, like things that
should exist in the world but didn't, and he would
get these businesses off the ground with no money. I
saw him do it repeatedly. His downfall was he was

(49:31):
very aggressive in growing the businesses and so they didn't
have staying power. There was almost no equity, always very lever,
so he went bankrupt eight or nine times, right repeatedly.
When I was when I was about eleven or twelve
years old, my brother and I we were like his
board of directors, okay, because he had nobody else. The

(49:55):
three of us would sit down at night to figure
out how to make the business last one more day. Okay,
everything's caving in. The creditors, the craving in the business
is collapsing. How do we make it work for one
more day? And then the next night we'd get together
and how do we get it work for one more day? Again?
Right at sixteen, And I don't know why my dad

(50:19):
did this, but I'm so grateful that he did. He
was at that time he had a gold jewelry factory
in Dubai and he was going cold calling in person
to jewelry shops to buy his jewelry that he was manufacturing.
So he took me with him on many of these trips.
And I was sixteen, just like you, right, So we

(50:40):
would take the taxi from Dubai du Abu Dhabi. And
now there's all these gold shops. He doesn't know any
of them, right, and he's going one after the other,
after the other after the other, and I would be stunned.
That fifth shop he makes a sale. Yeah, and it's

(51:02):
a very small sale because he has no trust and
all that, but he's made the sale. Then I noticed
that after three months, we go back to that same
shop we made the little sale to the guy brings
out tea. There's a lot of chemistry, bigger order, and
then I saw the orders increase right, and then he's
continued to do that. I went with him to Doha,

(51:23):
Cutter cutter, and again the same thing. It was like,
you know, I saw how those doors opened, and I
saw how it didn't matter to him when they closed.
That was irrelevant to him.

Speaker 1 (51:38):
You know, really interesting new way to think about it,
because what you're saying there is actually when you get
that one, yes, it's actually a seed that's being planted
that can grow into something.

Speaker 2 (51:50):
We just care about the ratio and the number. Okay,
so what effort did it take? Like I was saying,
if I sent five thousand letters and I get twenty meetings,
that's awesome. I mean that's a fantastic ratio because one
sale is going to get me about two hundred thousand
or three hundred thousand. It's a significant amount, right, I
mean so that I don't need large numbers, and but.

Speaker 1 (52:13):
The lifetime value of that huge.

Speaker 2 (52:15):
Yeah. Yeah, I mean, I mean, these these relationships I
got then, they're still with me, you know, So it's
it's it's like forever.

Speaker 1 (52:25):
Here's a philosophical way to think about that for just everybody,
which is you can remember probably conversations you had in
your life that you thought were totally inconsequential, but then
eight years later that seed became a business relationship. The
example I always gives when I was fourteen, I applied
for the Apprentice. They did this like Junior Apprentice on
the BBC, and it's a long story, thirty five thousand

(52:47):
kids in London and across the UK applying. I met
a kid in the line while I was queuing up
for my audition and he said to me, oh, my
dad runs this five hundred million dollar company. And I
was like, yeah, whatever, like not interested. I went through
the auditions. I didn't ended up getting on in the
show for whatever reason, but then I ended up because
we were waiting in the queue that day. I was

(53:08):
really nice to this kid and I added him on Facebook.
Five years later, I get a message on Facebook. Hey,
five years later, although I didn't get on the show,
which would have got me about twenty five thousand dollars
investment in my company if i'd won, five years later,
I'm working on a startup. That kid from the line says, Hey,
my dad has sold his business for a billion dollars

(53:28):
and I've been watching you on Facebook for the last
five years. My dad would love to meet you. It
was an Indian family, the Aliwalias. They'd sold the business
called Eurocarparts. They took me to London when I was
literally so broke. I was like shoplifting food to feed myself,
and his dad invested double what I would have won
on the show into my business. And that always reminded
me that like every conversation that I have is like

(53:50):
planting a seed that at any point in my life
sure could turn into something.

Speaker 2 (53:56):
I mean, you know, I always bring up Adam Grant's book,
Givers and Takers. I don't know if you're seeing that
all humans on the planet fall into one of three categories.
They are either a giver, or a taker or a matcher. Okay,
there there are no other categories of humans. There's just

(54:18):
the other three categories. Now. The matchers are relatively simple
to understand. Their mental framework is if Steven does me
a favor, I'm going to try to do something similar
for him, you know, one to one. They can do
matching in the math in their heads. The takers, who

(54:39):
you don't have anything to ever do with, are trying
to scam and screw everyone and always take and never give. Okay,
the takers basically go nowhere, okay, and if you have
any takers in your life, get rid of them. Okay.
Now the givers. What the givers do is the givers

(55:02):
are not focused on what comes back to them. They
just want to help you. They want to help humanity.
And what ends up happening is the universe conspires to
help them, so the givers become the most successful. Everyone

(55:23):
is trying to give to them even though they're not
asking for it. So basically, when we and that's the
book that Adam Graham grant road, Giver and Takers is
one of the mental models. This is a great mental
model to have is to be a giver. Don't play

(55:43):
math games, you know, always try to make sure the
other guy gets the better end of the deal, and
just keep going through your life that way and that
goodwill will compound and it will take care of itself.

Speaker 1 (55:59):
And it's high horizon. You don't worry about the time horizon.

Speaker 2 (56:02):
You're not doing it for getting something back. That's the key.
You're not doing any mathematics like I'm going to do.
You're not calculating I'm going to do this so XYZ happens.
You're just doing it. End of story.

Speaker 1 (56:17):
I was sat with my girlfriend last night. She runs
a breathwork business, so she's essentially a solo printer, and
she's at that point where she's trying to scale. In fact,
I just meet so many I think I actually ran
a survey before, and the vast majority of business owners
are in that sme category, that small, small sort of
business category. It's the back startup to the backbone of
our economy. But they come to me with the same problem,

(56:38):
which is maybe I started as an individual, I've got
high demand, and now I'm a bottleneck and I don't
know how to get out of being like a freelancer.
How does the freelancer become an agency? And the thing
I was chatting to my girlfriend about last night was
the step she hasn't taken yet is hire someone exceptional.

(57:00):
And so many founders come to me, these early stage
faners are like, ah, like my customer is like me,
I do it better. I don't trust anybody. I wondered
if you had it like a mental model for so.

Speaker 2 (57:12):
The thing is, so if you look at people like
Elon Musk and Steve Jobs, they believe then number one
job is recruiting the first three thousand people who joined
SpaceX all personally interviewed by Elon. Just think about that,

(57:32):
those are three thousand hires. Think about the number of
interviews to get the three thousand highers. Okay, he did
not believe there was any other way. And what Steve
Jobs used to say is that A players want to

(57:53):
work with A players. The moment you start introducing B
players will hire B and C players. They will never
hire an A player. So your downhill, the journey's already
started the moment you get a B player. And so
as an entrepreneur, you know, we have a lot of

(58:16):
demands on our time, right, but recruiting has to be
at the top, and you've got to be willing to
spend inordinate amounts of time on recruiting. Okay, And there's
you know, there are tools that you can use. We

(58:37):
use There's a company called Caliper we use for pre
employment testing. And the thing is that between the genetics
of a human and the first five years of the
life experience who they are, their traits are hardcoded. That
is not going to change from five to ninety five. Okay,

(58:59):
So it's it's not like you're going to change as human.
Human is the way they are. Okay, Now, these pre
employment testing tests can get you data that you're not
going to get an interview.

Speaker 1 (59:12):
One of my companies i'm building at the moment, it's
called culturetest dot com. It's exactly this. Okay, I mean,
you're just like preaching, preaching to the kui.

Speaker 2 (59:22):
But what I'm saying is that it was the beast.
We need to get really good at recruiting.

Speaker 1 (59:27):
Yeah, okay, it's my absolute, absolute obsession. And what I
found out is that, funnily enough, from doing these culture tests.
So I've culture tested tens of thousands of people in
the general population now and the shocking part was just
to give you some context on what it does. It
benchmarks are best performing people and how they make their decisions.
The assumption here is that culture isn't the thing you
come up with at the off site. Culture is how

(59:49):
you'd behave on Christmas Eve when you get a text
message from a client, like what you do there is
your company culture? So it basically creates these questions which
simulate optimal culture in that team, and it puts you
in that scenario and says what do you do? This
is probably a good point to talk to you guys
about culturetest dot com, which is the website we're about

(01:00:10):
to launch for anyone who has the responsibility of hiring someone,
which is probably everybody listening. One bad hire can destroy
your entire company. So we made culturetest dot com so
that you guys at home can spot those red flags
and avoid those hires that might be the end of
your business. Culture Tests will make you your own personalized
culture test so that you can screen every single person

(01:00:31):
that wants to be in your team and your current
team members and people that have left to see how
they align. Just go to culturetest dot com and put
your email address in, and the minute we launch, I'm
going to send you an email so you can try
it before anybody else.

Speaker 2 (01:00:45):
So recruiting is really important, and I think the other
thing is, uh, we're willing to hire people or may
not do things as well as we do. But actually,
also what I've also found is I have so many
people on my team team who are better than me.
You know, they're better at many of these things because

(01:01:05):
it's not my natural bent to do those jobs. So
that's really when you get a huge bang for the
buck is you end up with team players that are
way better than you.

Speaker 1 (01:01:17):
How do you think about firing people? Because this is the.

Speaker 2 (01:01:20):
Found hire slow fire fast.

Speaker 1 (01:01:27):
Founders really struggle with the fire fast thing.

Speaker 2 (01:01:29):
And it is very important to fire fast. I think
firefast is more important than higher slow. And you're doing
the person a service because they may be exceptional in
another row at another place, so you are helping them

(01:01:54):
try to find that, and you're helping your other team members.

Speaker 1 (01:02:00):
If I was trying to work for your companies, what
is the one non negotiable, like, what is the trait
that I would demonstrate where you would immediately not even
consider me.

Speaker 2 (01:02:08):
The most important is integrity, you know, I mean we
want three traits, right, We want intelligence, we want integrity,
and we want willingness to work hard. Right, And none
of these three are really negotiable.

Speaker 1 (01:02:26):
And what does integrity mean in your definition?

Speaker 2 (01:02:29):
Well, it's absolute honesty is pretty simple. You know, it's
black and white, and you conduct yourself with the highest
levels of ethical standards, so on all fronts when you're
dealing with a customer or internally or externally, it's the
moral standards need to be very high.

Speaker 1 (01:02:48):
When you think about your wealth, how much of it
has come from building businesses versus being a great investor
of the capital that you managed to make from those businesses.

Speaker 2 (01:02:58):
I think currently most has come from the investing side.

Speaker 1 (01:03:03):
You're very well known for being a really excellent investor
over many, many, many, many many years. I'll put a
graph on the screen that I found which I think
shows the returns of your investment strategy versus the dal
Jones this graph. Have you seen that one before?

Speaker 2 (01:03:19):
I haven't seen it this way, But people put of
all kinds of things.

Speaker 1 (01:03:22):
Yeah, I mean, all this says is that you're extremely
good at investing. So I want to know if I
if i'mant starting my investing career. I'm working at a
nine to five job at the moment, I've got a
couple of thousand dollars in my bank account. How should
I be thinking about investing? Should I be investing?

Speaker 2 (01:03:39):
So there are there are three things that matter in
terms of getting a great outcome with investing. Starting capital,
how much the amount you start with, length of the run,

(01:04:01):
how long are you going to invest the money? And
the radar return. Okay, So before I answer your question,
I want to tell you a story. So, and this
is a true story in sixteen twenty three in New York.

(01:04:24):
The Native American Indians in New York who owned the
island of Manhattan. The Dutch settlers wanted to buy the island,
and so they went to the Indians and said, we'd
like to buy the island of Manhattan, great natural harbors,
it can be a great place for us. And the

(01:04:44):
Indians and the Dutch reached an agreement to sell the
island of Manhattan for twenty three dollars. And when people
hear that, they think, oh, the Indians got taken. You know,
island of Manhattan for twenty three dollars is ridiculous. But
let's say let's say the Indians had a trust officer

(01:05:06):
who they said, invest this twenty three dollars for the
benefit of the tribe and try to do a decent job.
Right now, There's something known as the rule of seventy two,
and the rule of seventy two is a is a
very important rule, and I wish they would teach it
more in high school than elementary school. It tells us

(01:05:28):
how long it takes money to double. And it's kind
of a mathematical hack. So, for example, if I'm going
to get a seven percent return and I do seventy
two divide by seven, that's approximately ten and at a
seven percent return, it's going to take ten years for
the money to double. Seven percent compounded will take ten years.

(01:05:50):
If I have a ten percent return, it will take
seven years. Seventy to divide by ten is seven. If
I have a fifteen percent return, it will take five years.
Seventy two divide back fifteen is five approximately, and if
I have a twenty percent return, it'll take three and
a half years. So this rule of seventy two is

(01:06:11):
a nice hack, and it's very important to know how
long money takes to double, because then we can start
doing a lot of math in our heads. So when
we look at these Indians with the twenty three dollars,
if they were getting a seven seven percent return, it
would become forty six dollars in ten years, and then
it would become ninety two dollars in twenty years and

(01:06:35):
one hundred and eighty four dollars in thirty years. So on. Now,
if you go one hundred years, right, it's ten periods
of ten and ten. Period of ten is two to
the power of ten, and two to the power of
ten is oneenty twenty four, So we throw away the

(01:06:56):
twenty four because we don't want to complicate the math.
So at seven percent for one hundred years, you would
have a thousand times or we started with. And this
is why, because compounding becomes nonlinear, people have a hard
time getting their hands around it.

Speaker 1 (01:07:13):
So nonlinear meaning it's not.

Speaker 2 (01:07:16):
Going up in a straight curve, it's going up in
a hockey stick orgistic club. Yeah, so in seventeen twenty three,
the Indians would have twenty three thousand. It would have
gone up one thousand, and then if they continue at
the seven percent in eighteen twenty three they would have
twenty three million, and in nineteen twenty three they would

(01:07:38):
have twenty three billion, and in twenty twenty three they'd
have twenty three trillion. Okay, Now, the entire wealth of
every man, woman, and child in the United States is
one fifty trillion. One sixth of that is not undeveloped
land in Manhattan. So if the Indians had invested at

(01:08:02):
seven percent a year for the last four hundred years,
they would have more money than owning the land. So
they were not taken. They were given a fair deal,
but they just didn't have a good trust officer could
actually make it happen for them. So the magic of

(01:08:23):
compounding is that we started with twenty three dollars and
we end up with twenty three trillion without having a
great trader return. It's just an okay. Seven percent is
just okay. It's not great, it's not bad, but it's okay. Now,
if you go back one hundred years, so we started
at sixteen twenty three, go back one hundred years to

(01:08:44):
fifteen twenty three, we had twenty three hundred cents in
sixteen twenty three.

Speaker 1 (01:08:50):
Twenty three hundred cents.

Speaker 2 (01:08:51):
Twenty three dollars is twenty three hundred cents.

Speaker 1 (01:08:54):
Oh okay, if they'd got it.

Speaker 2 (01:08:55):
Just converted to cents four dollars right now, if you
make it one thousandth of that.

Speaker 1 (01:09:02):
Just so I'm clear here, So if you're saying, if
you went back one hundred years from that point and
you gave them just twenty three cents.

Speaker 2 (01:09:08):
If you gave them two cents, if you give them
two cents, two point three cents, to be exact, but
if you just gave them two cents, one hundred years later,
there would be twenty dollars. If you gave them two
point three cents. One hundred years later, they'll be twenty
three dollars. Then now it would be the twenty three trillion, right.
So what I'm trying to say is that if the

(01:09:31):
runway is long enough, the starting capital doesn't matter. Even
the radar return doesn't matter if the runway is long enough. Now,
so when people are thinking about investing, they have to
keep a few things in mind. The first thing is
spend less than you ere so always try to save

(01:09:55):
the first dollar rather than the last dollar. If you
are making fifty thousand dollars a year, put five thousand
into savings to start with, and then do the rest
of your expenses after that. Now, it's very important when
we saw with this example, you start young. So when

(01:10:15):
people start working at twenty two or twenty three, whenever
they start working, they have to be saving then because
that early money at twenty two can compound for fifty years,
and that's what we want. So we don't need to
do heroic things with finding the next n video or

(01:10:36):
whatever else. We can just put it into an index.
And the important thing is spend less than you earn,
and keep putting that five, seven, ten thousand every year
into the savings. Don't go have a vacation in Hawaii
with it. Let it keep compounding and just put it
into a broad index and we don't really care.

Speaker 1 (01:10:58):
So for someone who is never before, yeah, which would
probably be the majority of the audience, how do we
simplify even further in terms of just put it in
an index? What does that mean?

Speaker 2 (01:11:08):
So basically, you could open an account at Fidelity or
Interactive Brokers or Robin Hood any of these places. You
could open a brokerage account for very little.

Speaker 1 (01:11:21):
Money, and there's lots of them in every country.

Speaker 2 (01:11:23):
Yeah, And then you could just ask them to give
to buy you the S and P five hundred index,
for example, and they will get you invested in that.

Speaker 1 (01:11:36):
And the S and P five hundred is basically the
top five hundred companies.

Speaker 2 (01:11:40):
It's the Yeah, the five hundred dominant businesses in the
US like NVIDIAs in there and Microsoft and Apple and
so on.

Speaker 1 (01:11:49):
And you're going to get your ten percent a year
if the trend holds over the last century.

Speaker 2 (01:11:54):
The S and P has plenty of periods where it
does nothing. It's somewhat over eat it right now. But
I think if you have a long enough traumum time horizon,
your dollar cost averaging in it's perfectly okay. What you
could also do as an alternative is buy Berkshire Hathaway.

(01:12:14):
So that's a stock BRKB. So you can again tell
these people that just put it into Berkshire Hathaway. It's
like an index. And again it's like set and forget it.
You don't need to think about the investing side. You
focus on yellow, okay, and keep putting this little money
away on the side, and it's going to compound. And

(01:12:34):
so at eighteen, if you put away five thousand dollars
and you fast forward to when you're sixty eight fifty
years later. Right now, if if you got a ten
percent return on that money every year, let's say every

(01:12:56):
seven years, it would double. Okay, divided by ten is seven,
fifty years is seven doubles. Seven times seven is forty nine,
and due to the power of seven is one twenty eight. Okay,

(01:13:16):
So we can throw away the twenty eight. Keep it simple.
You're going to have one hundred times what you started.
So the five thousand at eighteen is going to be
five hundred thousand. Okay at nineteen, If you put money away,
that's another five hundred thousand, twenty you might have ten
thousand you can put in, so you can start seeing

(01:13:39):
that over a lifetime, you know you're going to be
having too much money.

Speaker 1 (01:13:48):
As you might have been able to tell. I'm absolutely
fascinated by the psychology behind high performing sports teams. I
think it started with my love for Sir Alex Ferguson
as a Manchester United fan. So when I was told
about a new Netflix here that covers the rise of
the Dallas Cowboys, it immediately piqued my interest. And this
isn't because I'm mad about American football. I'm not. I
don't even watch it, but I do know about the

(01:14:09):
Dallas Cowboys, and for a lot of Texans, they're much
more than a sports team. I watched this series and
it is absolutely brilliant. It centers on Jerry Jones, an
oil businessman with no football background, who bought the Cowboys
in the late eighties and transformed them into the most
valuable sports franchise in the world. It's all about how
one guy assembled a powerhouse team in the nineteen nineties

(01:14:33):
made up of legendary players and coaches, and through fearless
decision making, led his team to three Super Bowl victories
and I really enjoyed it, and I think you might too.
Check out America's team, The Gambler and His Cowboys, which
are streaming right now only on Netflix, and they now
sponsor this podcast. I've just invested millions into this and

(01:14:54):
become a co owner of the company. It's a company
called ketone Iq, and the story is quite interesting. Talking
about ketosis on this podcast and the fact that I'm
very low carb, very very low sugar, and my body
produces keytones which have made me incredibly focused, have improved
my endurance, have improved my mood, and have made me
more capable of doing what I do here. And because
I was talking about it on the podcast, a couple

(01:15:15):
of weeks later, these showed up on my desk in
my HQ in London, these little shots, and oh my god,
the impact has had on my ability to articulate myself,
on my focus, on my workouts, on my mood, on
stopping me crashing throughout the day was so profound that
I reached out to the founders of the company and

(01:15:35):
now I'm a co owner of this business. I highly
highly recommend you look into this. I highly recommend you
look at the science behind the product. If you want
to try it for yourself, visit keytone dot com slash
Stephen for thirty percent off your subscription order and you'll
also get a free gift with your second shipment. That's
keytone dot com slash Stephen. And I'm so honored that
once again a company I own can sponsor my podcast.

(01:15:59):
You've been referred to as the Dando Investor, and I've
I've got a book here which you wrote called the
Dando Investor. What what what does this word Dando mean?
And why do they call you the dan Do investor.

Speaker 2 (01:16:14):
Dando is actually a word from Gujrat which is on
the on the western coast of India where Gandhi came from.
They're extremely astute business people and Dando if you translated
directly in Gujrati, it means business, but it doesn't really
mean business. What it means is it's a way of

(01:16:36):
doing business where the downside is non existent. We already
discussed how mister Branson is a Dando investor. He had
no downside. Mister Gates was a Dando investor, he had
no downside. Mister Walton, the Dando investor, had no downside.

(01:16:59):
So all of these people embarked on businesses built huge
fortunes without taking risk. And so the Duando Investor was
written from the perspective of how can we minimize risk
while keeping the returns intact.

Speaker 1 (01:17:18):
You use this example of the Patels. What is that story.

Speaker 2 (01:17:23):
The Patels went to Uganda more than one hundred years ago,
maybe close to one hundred and thirty years ago.

Speaker 1 (01:17:32):
It was a family.

Speaker 2 (01:17:33):
It's an ethnic group in India, and so this ethnic
group came to Uganda to build the railroad. But they're
very savvy business people and over the course of the
last one hundred odd years when they were in Uganda,

(01:17:54):
through their Dhuando methods of doing business, they became very
successful entrepreneurs and they controlled large parts of the Ugandan economy.
And idy Amine came to power in Uganda in the
nineteen seventies and he said africa Is were Africans. So

(01:18:14):
what he did is he threw all the Patels out
and he nationalized all their assets. So now the Patels
were stateless. The US took them in, the UK took
them in, Canada took some of them in and when
they landed in the US. They basically really didn't have

(01:18:35):
any skills that would allow them to get good jobs,
white collar jobs in the US. And what a few
of them started to do was they realize that if
they bought a motel, a small ten or twenty room hotel,

(01:18:56):
the family couldn't live in one or two of the rooms,
and they could use the money they got out and
get a bank loan and run the motel. Now, motels
are very labor intensive businesses, so what they did is
when a Patel took over a motel, they fired all
the staff, and the family took over all the jobs,

(01:19:18):
you know, the cleaning and front desk and everything else. Right,
And the Patels are vegetarians and they're very they live
a very simple life. So when a Patel took over
a motel in an area, what they were able to
do is they were able to undercut the prices of

(01:19:39):
all the other motels in the area because they have
no labor, they have no payroll, they have no workers,
comp none of those things. And so they were if
everyone else is charging twenty five dollars the night, they're
charging you know, nineteen a night. So the occupancy was
higher than everyone else and they saved their money, and
then what they would do is buy the new motel,

(01:20:01):
send the nephew to run it, and then buy the
next motel. And this started happening in the early seventies.
And when you fast forward to today, eighty percent of
all the motels in the US are on the Patel ownership.
Eighty percent. So the Patels make up point one percent

(01:20:26):
of the US population. Indians make up about little one percent,
maybe one point two, one point three percent, Just one
tenth of that is the Patels. And this point one
percent population is controlling eighty percent of the motels in
the country. And it's because of the dund Way.

Speaker 1 (01:20:51):
So if I want to steal from the Dando Way,
you told me it's good to be a copier. What
are the principles of the Dando Way that I need
to be thinking about, because I think there was was
then nine. There was nine principles total in the book.

Speaker 2 (01:21:05):
Well, the most important one is heads, I win tales,
I don't lose much. Everything we discussed today is Stephen
is heads, I win tales, I don't lose much. When
I started my business, when Bill Gates started, when Sam
Walton started, when Richard Branson started that was the formula.

(01:21:30):
If they won, they would win big, and if they lost,
they'd lose nothing. So everything has to be in business
about risk reduction. Everything has to be about free lunches.
We love free lunches, okay, So we always have to
think about how do we get this done without capital,

(01:21:52):
without risk free lunches.

Speaker 1 (01:21:55):
Do you think there's an opportunity for people because everybody's
at the moment thinking about AI and technology and these
like really advanced new innovations as an opportunity, But does
that create an opportunity in the boring, in the motel,
in the laundreemat.

Speaker 2 (01:22:12):
Yeah. So you know, the reality is so entrepreneurship is
not studied much in business schools because there's nobody going
to give you a consulting project for studying entrepreneurs If
we really study startups in the US or actually anywhere
in the world, ninety nine point ninety nine percent of

(01:22:33):
startups a non venture backed.

Speaker 1 (01:22:36):
What does that mean?

Speaker 2 (01:22:37):
What I mean by that is those are your laundromat,
your Chinese restaurant, your you know, eBay seller, whatever Amazon seller,
so on. Right, there's small businesses. None of those companies
were formed because of venture capital. So the media focuses

(01:22:59):
on all the venture apple lead businesses, and so people
think that, oh, if I have to do a startup,
I got to do something in technology. Well that's like
one tenth to one percent or less. You can ignore it.
You don't need to really worry about it. The important
thing is to be an observer and to look at

(01:23:22):
what my dad would call offering gaps. So let me
explain an offering gap. Right, So let's say there's a town,
let's call it town A, Town A. There's a barbershop
in towny, okay in the barber's one of many barbers

(01:23:42):
doing well, et cetera. There's another town about thirty miles away,
Town B, which also has barbers. They're also doing fine.
There's a new township coming up in the middle of
these two towns called town C. Town C doesn't have
much of a population, but it's growing fast. So the

(01:24:03):
barber in town A goes to see what they all
the hoopla abur town see is all about. So it
makes it takes a trip there, sees that there's some
increase in population people are moving in, and he notices
there's no barber shops. Why would there be any barber
shop because it's brand new, right, So he's thinking, how
do I do this without taking risk? And what he

(01:24:26):
does is he rents a sublease is a small storefront,
buy some used barber equipment, and then decides that one
day a week he's going to go into that town
and cut hair every Wednesday. And it puts up a
note board saying available Wednesdays. And what happens is people

(01:24:50):
start coming in. They come in because they have no choice.
If you don't go to this barber, you've got to
spend half an hour driving to one of the other
two towns. Now, he normally charges thirty bucks for a haircut,
but here he doesn't need to charge thirty because there's
an opportunity cost of the time you're saving, so he
can charge forty five. So he's charging forty five over here,

(01:25:15):
and then when he's in his own town, he's charging thirty. Now,
what he already notices Wednesdays are filled up, so he
says Tuesday and Wednesday, okay, And gradually what ends up
happening is that that business is full time and he's
making forty five bucks an now per haircut. But the

(01:25:36):
nature of capitalism is more barbers are going to show up.
So the second barber comes in, the third barber comes in.
Eventually the haircut there is going to be thirty bucks.
It's going to neutralize. But in the meanwhile, he's doubled
his business. Right, what risks did you take? So going

(01:25:57):
into town c was addressing an opportunity gap. When Howard
Schultz started Starbucks, he saw an offering gap. He thought
that what Italians love about cafes might be what Americans
love too. Didn't exist, right, and he went and did it.

Speaker 1 (01:26:21):
You know that barber that moves into town c first
and they're really having a great time because there's no competition.
One of your points when you're talking about the Dandin method,
is this idea of creating a durable moat. It'sero point
four of the nine.

Speaker 2 (01:26:35):
So sometimes what happens is that you start a business.
Every business starts off without a moat.

Speaker 1 (01:26:43):
What is a moat?

Speaker 2 (01:26:46):
We have a castle, a night in charge of the
castle to keep the invaders away. And one of the
ways to keep the invaders away is you put a
moator water around the castle. So when you put a
motor water around the castle, it makes it harder for
anyone to take the castle, and a business with a

(01:27:08):
mortar around it is a business that competitors will have
a difficult time taking business away from. So what can
happen with our barber in town? C Humans are creatures
of habits. We don't like to change our barber every month.
We like the same barber. So if he's competent and good,

(01:27:29):
what's going to end up happening is that his client
base will stay with him.

Speaker 1 (01:27:34):
What about loyalty points? I was just struck the other
day when I was shopping in La at air One,
which is a supermarket here in La and someone had
recommended to me on the plane, which actually goes to
your point about actually give a great product, because an
airline hostess on my flight over here went, oh you're
in Keito diet, you need to go check out air One.
I got.

Speaker 2 (01:27:52):
So that's the recommendation and GX more powerful than any
ad or anything else they could.

Speaker 1 (01:27:56):
Rive And I went there, yeah when I landed because
I needed a supermarket and didn't know the place. But
then interestingly, when I was the checkout yesterday after my
second visit, the lady that check out goes hey, are
you are you an I one member? And I was
like one member and she was it does cost you,
when she was honest, it costs money. Yeah, but here's
what you get. She goes on this order today, you
would have got ten percent off this entire order. It's expensive.

(01:28:17):
Her one and she goes and we give you a
drinker if you much listed all the things off. I
signed up and bought the membership to that one. I
tell you now, I'm not going anywhere else. I don't
know what it is, but now that I'm a member
and I have the app, I'm not going anywhere else.

Speaker 2 (01:28:31):
Well that's now. That's the hack that Amazon did right
with Prime and two or three years ago, I was
I was seated at dinner next to Bill Gates. You know,
my middle name is Forrest Gump. These things happen once
in a while, and Bill is Bill is describing to

(01:28:52):
me how the business model of cost Go and the
business model of Amazon is illegal. Okay, So I said,
why is it illegal? He said, when you put a
membership fee, what you're doing to the consumer is you're
locking them in, which means the consumer is no longer

(01:29:14):
going after the lowest price because they're the distortion and
their behavior.

Speaker 1 (01:29:19):
Yeah.

Speaker 2 (01:29:20):
Okay, so now the FDC doesn't believe it's illegal, but
Bill Gates does. And I was just thinking, well, that's
because you're competitive with Amazon, you know.

Speaker 1 (01:29:30):
Yeah, that prime thing with Amazon is super smart.

Speaker 2 (01:29:33):
Yeah, and that was taken from Costco. Oh okay, you know,
but basically, yeah, the lock lock in is very powerful.

Speaker 1 (01:29:42):
Well, one company I wanted to talk to you about
was Apple, because Apple, I find is a really interesting company.
You talked about being a copycat, kind of arriving later
to the party with new things. They've kind of been
a story of both sides of the equation. They've been innovative,
it seems, especially under Steve Jobs and more recently, I
mean they were like copying other people, but now I'm

(01:30:03):
not even sure what they are.

Speaker 2 (01:30:04):
Well, so Apple is a very unusual company in that
everything emanated from one guy. Okay, and that one guy
has been gone for a long time, and if you
look at Apple, basically nothing new has come out since
he left. We don't have a Steve Jobs at Apple.

(01:30:29):
And the same thing happened at Disney. You know, they
had to buy Pixar because there was no Disney anymore,
mister Disney was gone, and so Apple, actually I find
somewhat risky as an investment. Yes, because if the form

(01:30:49):
factor so currently humans walk around the brick in their
pockets and their hands. At some point that form factor
is going to change. It may be interview into something
beware or some other more ergonomic situation that may or
may not be Apple, and in fact more likely not

(01:31:11):
to be Apple. It's probably some guy in a garage somewhere.
And so if they are smart enough to find the
guy in the garage early enough and buy them, they're okay,
and bring them in as an extree jobs. That's okay.
But even there the odds are low.

Speaker 1 (01:31:29):
What does they say to you about founders the specialness
of founder? Are they a unique animal or can you
swap them out and still be tremendously successful.

Speaker 2 (01:31:41):
Well, I would say that there's there are a lot
of elements of luck. So first of all, founders are
all great at what I call offering gaps. Right, they
find something that the world doesn't have, that needs, etc.
And they go after it. Sometimes what happens with the
offering gaps is a mote gets built, right, someone starts

(01:32:05):
visa it becomes a Morti company or American Express and
so on, and it perseveres and scales.

Speaker 1 (01:32:12):
Like Apple with their ecosystem, that closed ecosystem.

Speaker 2 (01:32:15):
But one hundred percent of businesses eventually will go to zero.
And so it very well could be that a business
could last for fifty hundred, two hundred years, one fifty years,
could last well past the founder's lifetime. Those are businesses

(01:32:37):
which were built with a lot of principles and a
lot of great core values. You know, the founder of Ikea,
every decision he took was with a five hundred year
of view. How many businesses think with the five hundred
of view? And Ikea, you know, I was. I was

(01:32:58):
studying Ikea some very remarkable things about it. First of all,
he never ever took debt. Every single store they built
they built out of retained earnings and cash. He never
took debt. And I've studied business failure quite a bit.
The single biggest reason why businesses fail is leverage. They
owe people money and they can't pay it back, and

(01:33:21):
that they're gone. So Ikea has never taken debt. If
you never take debt as a retailer, you're going to
grow slower, right, you've got to keep kind of bringing
in the cash. But it's a very solid foundation because
it's on a rock solid balance sheet and such. And

(01:33:46):
his second principle was no two Ikea stores can be
the same. So what he said is that whenever we're
opening a new Ikea store, there has to be some
innovation that is going into that store that does not
exist in our previous stores. Because he says that if

(01:34:08):
I don't keep innovating, I'm done. And so if we
don't notice it because we think all the ideas are
the same, but actually if you study them and look
at when they were built, et cetera, you start seeing
these these incremental changes that they're making.

Speaker 1 (01:34:27):
That's a really interesting idea that I could implement into
everything that I do, which is just making sure that every
podcast I do there's one new experiment or innovation, or
every piece of work you do, whatever team you're in,
is just to run out one experiment, and absolutely we
have to make it measurable, right, right, that's not an experiment.
So you also talk about making fewer big, infrequent bets. Yeah,

(01:34:49):
who's that relevant for and in what context?

Speaker 2 (01:34:52):
So one of the things that Warren Buffett says. He
says that you get a punch card which you can
punch many times in your lifetime, and each time you
buy a stock, it's one punch that's gone. So what
Warren is saying is if they were the rule which
said that you cannot buy more than twenty stocks in

(01:35:15):
your whole life, what would happen is you'd be very
thoughtful about what you bought, Okay, and chances that are
those decisions might be good decisions because you only have
nineteen left and then you only have eighteen left, etc.
So in venture investing, a very small sliver of companies

(01:35:42):
that venture capitalists invests in do well. Right the high
borne out rate and if you look at the stock market,
four percent of listed companies generate ninety percent of the return.
So most companies that we may think about investing in

(01:36:06):
are likely not to do well for us. It's a
ninety six percent odds that. That's why the index is
so important. Is when you buy the index, you bought
that four percent, and if you go pickstocks, you were
one in twenty five chants of getting it one of

(01:36:28):
those four percent.

Speaker 1 (01:36:29):
You said earlier. The punch card analogy of twenty things
in the punch card. You've got to pick twenty in
your life. If you only had three or three to
five things that you would bet or back now, which
I think is actually kind of what you do, what
would those things be?

Speaker 2 (01:36:43):
Well, I mean, so I'm trying to resist going to
specific names, yeah, because I think that would hurt people
more than help people.

Speaker 1 (01:36:54):
Okay, it's fair.

Speaker 2 (01:36:55):
What I would prefer that people do is focus on
the other two variables, which is the amount your saving
and the length of the runway, and focus on the index.
So I think that it's it's kind of like saying
I want to be a great AI developer, because it's

(01:37:16):
the wait we will to be a great AI developer
is going to take time. Just the nature of the situation.

Speaker 1 (01:37:23):
What do you think about these people that day trade?
Because so many young people, specifically men, are being sucked
in by these adverts that you can day trade your
way to wealth.

Speaker 2 (01:37:32):
It's not good. I think. I think it's the broker
is going to make all the money, Robinhood will do well.

Speaker 1 (01:37:42):
Not you Do you think anyone can make loads of
money as a long term day trader?

Speaker 2 (01:37:47):
I look at it this way. If you study the
Forbes four hundred, the four hundred Richish people in the US,
in the world. Actually, I don't see any day tree
is in there.

Speaker 1 (01:38:03):
One of the last things I want to speak to
you about is this idea of circling the wagons. Yes,
what does circling the wagons mean?

Speaker 2 (01:38:12):
Warren Buffett said that over a fifty year period of
running Berkshire Hathaway, he's made hundreds of investments and only
twelve have moved the needle for Berkshire Hathaway. So it's

(01:38:36):
the same three or four percent rule where if we
say that Warren made three hundred investments, he probably made
more than three hundred. But let's say he made three
hundred decisions, only twelve have resulted in what we see
as Berkshire Hathway today. And the important thing was not

(01:39:00):
the buy decision on those twelve. The important thing was
never selling them. So circle the wagons is a term
that comes from the nineteenth century when these pioneers were
moving west, the wagon trails moving west, and the Native

(01:39:22):
Indians would attack or bandits would attack these wagon trails.
So what they would do is they would put themselves
in a circle. They would circle the wagons. Then defend
that circle as best they could with their guns and
so on, But the wagons being circled was the best

(01:39:43):
possible way of trying to face off that attack. So
in effect, they circle the wagons around the crown jewel.
So when I'm talking about circle the wagons, what I'm
saying is that in a lifetime of investing, there are
very few times when you're going to actually have a
huge multi bagger. What's not a big big winner. You know,

(01:40:07):
something that goes up ten x, fifty x hundred x,
and what you want to do is you want to
effectively circle the wagons around that idea so it doesn't
get sold. So we are not going to know before
we invest whether something is going to be a multi

(01:40:29):
bagger or not, but we may figure it out after
we own it. So after we we're only going to
know a business after we own it. We're not going
to know it before we own it. After we own it,
we may understand the business will enough to know that
this is a great business. And when we figure out
it's a great business, you don't want to sell that.

Speaker 1 (01:40:50):
When I meet people like you, I I'm always so
inspired because we spend a lot of time thinking about
the wins. The great decisions. We've talked about that. I've
shown you the graph your great decisions. What is the
worst stab a decision you made in terms of financial performance.

Speaker 2 (01:41:02):
Well, I've had so many zeros, so I mean away,
I mean yeah, I mean so there's mistakes of comission,
which is things going to zero, and there's mistakes of omission.
The mistakes of omission are far far worse. Okay, So

(01:41:26):
the biggest mistakes I've made aren't the ones that I
have gone to zero. The biggest mistakes I've made are
the ones that I sold and I shouldn't have where
I should have circled the wagons and I didn't, and
those have been very costly.

Speaker 1 (01:41:40):
Give me one example.

Speaker 2 (01:41:42):
Well, so I think this was in about thirteen years back,
twenty twelve. I invested in a company called fear Chrysler Automobiles. Basically,
it was coming out of bankruptcy after the financial crisis.
They'd gotten rid of all that debt and everything, and
stock was very cheap. It was about five or six

(01:42:02):
billion dollars that you could buy the whole business. One
of the things that didn't pay too much attention to
at the time was that eighty percent of Ferrari was
inside for you at Chrysler, and they owned Ferrari eighty
percent of it, but they had many other assets which
I like. They had the ram trucks and Jeep and

(01:42:25):
Mazarati and so on. And when I looked at the business,
I thought the business was worth many times the five
or six billion, even ignoring Ferrari. And I was right.
So in the end, I made several times my money.
And in twenty seventeen or twenty eighteen, they took Ferrari public,

(01:42:48):
so they actually then listed the company and it looked
like that they had captured all the value, and so
I sold us to own approximately one percent of Ferrari
as part of that purchase that I had made, So

(01:43:09):
eighty percent of Ferrari was in this five billion dollar company.
Ferrari now has a market gap of almost one hundred billion,
and I would have about a billion more if I
had not done that stupid thing. So I made of
a couple of hundred million on this whole thing, but

(01:43:31):
it would have been a lot more. And all I
needed to do was just not sell it.

Speaker 1 (01:43:35):
Do you deal in Cryptotle? Do you now invest?

Speaker 2 (01:43:38):
It's outside my competence. I don't understand it.

Speaker 1 (01:43:41):
I was gonna say one of the things I know
it's about you that's quite rare for someone that deals
in bees billions, is you have a smile on your face.
You seem like a really genuinely happy person.

Speaker 2 (01:43:51):
Well, what will the point of the bees without being happy?

Speaker 1 (01:43:55):
A lot of people aren't, as you know, Well.

Speaker 2 (01:43:57):
Then they've lost their way somewhere. I mean on a
daily basis, I specifically asked myself, how do I want
to spend today? And I focus on spending it not
with the focus on maximizing money. I focus it with
maximizing what Monish loves. And that changes the whole the time.

(01:44:19):
But that's the way it is.

Speaker 1 (01:44:20):
And what is that?

Speaker 2 (01:44:21):
Well, currently it's golf. Like one other things that really
struggled with today was there wasn't going to be any golf.
So I said, it's either Stephen or golf. Should I
go to Steven or should I go for golf? I said,
you know what, give the arms a rest, let's go

(01:44:42):
meet Stephen.

Speaker 1 (01:44:43):
I'm glad you did. We have a You probably just
answered this question. We have a tradition where the lascus
leaves a question for the next not knowing who they're
leaving it for. And the question left for you is
if you could go anywhere right now instantly, where would
you go?

Speaker 2 (01:44:58):
I'd go to the golf course.

Speaker 1 (01:45:00):
Thank you so much. Thank you letter everything that you do,
it's so incredibly important. And I now know why people
love listening to you and learning from you, and it's
because you have this most remarkable ability to tell deeply
engaging stories. Thank you so much. This has always blown
my mind a little bit. Fifty three percent of you
that listened to this show regularly haven't yet subscribed to

(01:45:20):
this show. So could I ask you for a favor?
If you like the show and you like what we
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to speak to, and we'll continue to do what we do.

(01:45:41):
Thank you so much.