Insight
Pabrai: Real entrepreneurs minimize risk rather than take it
“Entrepreneurs do not take risk. They do everything in their power to minimize risk.”
Insight
Pabrai: Products you already pay for represent great business models to clone
“It is very difficult for any company to get even one dollar from you. Very difficult. So the products and services that you're already using means that those are incredible businesses. And then look at, can multiple versions of that exist?”
Insight
Pabrai: Following Buffett's concentrated strategy outperforms 98% of fund managers
“I think that if someone followed Buffett's approach to investing, they would do better than the 98%.”
Insight
Pabrai: Do not sell great businesses when overpriced, only when egregiously overpriced
“When you find yourself
In the happy position of partial ownership of a great business, don't sell it when it's fully priced.
Don't sell it when it's overpriced.
Only possibly sell it when it's egregiously overpriced.
Like, you can't justify it in any possi…”
Insight
Pabrai: Companies with durable moats like Goldman Sachs should never be sold
“Another stupid thing I did, which is a company like Goldman Sachs should never be sold.”
Disclosure
Pabrai: Pabrai Investment Funds Operates With Two Full-Time and Two Part-Time Staff
“They're just two people full-time. And they're two part-time.”
Insight
Pabrai: Full-Time Workers Have 40 to 50 Weekly Hours for Side Ventures
“One of the things to keep in mind is there are a 168 hours in a week. Your employer wants 40 hours. There's still another 128 hours left. And so even when you take out time for eating and sleeping and showering and everything else, you have at least another 40…”
Assertion Partly supported
Pabrai: Venture-backed startups are under 0.1% of US startups
“Venture backed startups are less than one 10th of one percent, maybe even 100th of one percent. Of the total number of startups in this country. 99.99% of the economy is non-venture backed.”
Assertion Supported
Pabrai: Ford, Walmart, Microsoft, and Ikea were built without VC
“Some of the biggest businesses we have today in the US and the world Were not created with venture capital, Ford Motor Company, Walmart, Microsoft, you know, the most of these companies, Ikea were created on a kitchen table with nothing.”
Opinion
Pabrai: Chipotle's extreme customization drove its major commercial success
“Chipotle's innovation was he let you make the taco you wanted, right? ... Extreme customization, right? That was one of the big reasons why they succeeded.”
Assertion Not checkable as stated
Pabrai: Grew $1M into $14M from 1995 to 2000 using Buffett's strategy
“And so from 95 to 2000, the first five years I was doing this part time while I'm running my company, the million became fourteen million.”
Assertion Partly supported
Pabrai: Fund reached $600M by 2007 with 35% annualized gross returns
“By the time I got to 2007, I'm managing six hundred million. We haven't had a single down year, and we've compounded at like 35% a year before fees.”
Opinion
Pabrai: Lunch With Charlie Munger Was Way Better Than With Warren Buffett
“And I found lunch with Charlie way better than lunch with Warren because Charlie's just, you know just so open.”
Disclosure
Pabrai: Portfolio positions are typically capped at 10% of total assets
“Now, typically when we make an investment, we don't do it in more than 10% of our assets.”
Assertion Partly supported
Pabrai: Turkish investment made at $15M market cap grew 100x to $1.5B
“And then one that's happened more recently was a company in Turkey where that was just so mispriced. We couldn't, you know, shooting fish in a barrel. Where the market cap when we invested in 2019 was fifteen million dollars, and now it's a billion and a half.…”
Assertion Partly supported
Buffett made the exact same Level 3 bond investment as Pabrai
“Warren made the exact same bet at the exact same time for the exact same reasons.”
Assertion Supported
Pabrai: Elon Musk personally interviewed first 3,000 SpaceX hires
“I think he interviewed the first 3000 hires at SpaceX himself.”
Insight
Pabrai: Investing inherently tolerates a high error rate on moats and leadership
“And the other thing about investing is that it tolerates a high error rate, right? The moats of the companies, the competitive advantage of the company, the nature of the CEO, the nature of his team, many of these things we may or may not have gotten it exactl…”
Insight
Pabrai: Evaluate companies by asking leaders which competitor to buy or short
“Well, one of the things that which I got from Warren is he says that when you go meet a company, you ask the company leadership that If I were not investing in your business, which of your competitors would you suggest I should invest in? And which of your com…”
Disclosure
Pabrai: I only quit my job once startup cash flow exceeded salary
“After nine months of banging at doors and doing things, I had three clients, and those three clients were giving me enough cash flow that it exceeded my salary. And that's when I quit. So effectively, it was risk-free because I never went to a situation where …”
Disclosure
Pabrai: At 25, I drained $30k savings and maxed $70k credit cards
“I was 25. I had about 30,000 in my. I took that to zero because I said, if it fails, I can go back and start over. Not a problem. And I took every credit card I could get. So I had 70,000 in unused credit card credit limits available. And as the company starte…”
Assertion Supported
Pabrai: Chipotle was founded to fund a fine dining restaurant
“The founder was a fine dining chef in Denver, right? He wanted to open a fine dining restaurant, and so he opened Chipotle as a stepping stone saying, I'll open this thing, I'll make some money here, and then I can open my fine dining restaurant. So actually w…”
Disclosure
Pabrai: Funds previously owned 1% of Ferrari for $10M
“My funds used to own one percent of Ferrari at a cost base of about ten million dollars.”
Disclosure
Pabrai: Pabrai Funds tripled its money on Level 3 bonds while clipping coupons
“We went for three years, we clipped the coupons, and after three years, the bonds are at 60 cents. I didn't even wait. I sold them. So basically we tripled our money on what we paid for the asset plus we got the interest in the meanwhile.”
Mohnish Pabrai