Mohnish Pabrai (Billionaire Investor): The $100 Investment Hack That's Disappearing Fast! The Fastest Way To Financial Freedom!

Is copying Warren Buffett the fastest way to get rich? Mohnish Pabrai reveals the strategy to turn 1K into 10K in 30 days, quit your job safely, build passive income, and master the step-by-step formula millionaires actually use! Mohnish Pabrai is a renowned value investor and founder of Pabrai Funds, who is best known for his successful implementation of Warren Buffett's value investing principles. He is also the bestselling author of books such as, ‘The Dhandho Investor’, which guides people on low-risk, high-return investing. He explains: ⬛ Why building passive income is simpler than you think ⬛ How to build a business or portfolio with no risk ⬛ Why copying ideas made Mohnish a millionaire ⬛ How to find low-risk, high-reward investment opportunities ⬛ Why 99% of people follow the wrong advice about money 00:00 Intro 02:27 Mental Models for Business and Investing 14:08 Never Start a Company for This Reason, It'll Fail 16:26 How to Focus Your Sales and Pitches 20:53 The Importance of Attention to Detail 26:39 Why the Low Engagement in 9–5 Jobs 34:44 How to Reach Financial Freedom 43:10 You Have to Reach Out to Thousands of Places 45:28 Signal vs. Noise Ratio 47:48 Ads 52:37 The 3 Categories All Humans Fall Into 56:35 How to Scale Your Company as a Solopreneur 59:25 Mastering the Art of Hiring 01:01:29 Hire Slow, Fire Fast 01:03:00 Do People Build More Wealth from Business or Investing? 01:06:12 The Magic of Compounding 01:11:10 How to Invest in Indexes 01:14:01 Ads 01:16:10 Why Do They Call You the Dhandho Investor? 01:17:45 The Patels' Framework to Take Over the U. S. Motel Industry 01:21:09 Heads I Win, Tails I Don’t Lose Much 01:22:07 What Is the New Opportunity in the AI Era? 01:26:34 Business Moats 01:27:46 Loyalty Points Models 01:29:54 Is Apple a Good Investment? 01:34:55 The Importance of Making Fewer Big and Infrequent Bets 01:37:35 Is Day Trading Worth It? Can You Make Money from It? 01:38:16 Circling the Wagons Follow Mohnish: Instagram - https://bit.ly/4lCFFO6 YouTube - https://bit.ly/4fKRroh You can purchase Mohnish’s book, ‘The Dhandho Investor: The Low-Risk Value Method to High Returns’, here: https://amzn.to/4mUZz88 The Diary Of A CEO: ⬛ Join DOAC circle here - https://doaccircle.com/ ⬛ Buy The Diary Of A CEO book here - https://smarturl.it/DOACbook ⬛ The 1% Diary is back - limited time only: https://bit.ly/3YFbJbt ⬛ The Diary Of A CEO Conversation Cards (Second Edition): https://g2ul0.app.link/f31dsUttKKb ⬛ Get email updates - https://bit.ly/diary-of-a-ceo-yt ⬛ Follow Steven - https://g2ul0.app.link/gnGqL4IsKKb Sponsors: Fiverr - https://www.fiverr.com/diary with code DIARY for 10% off your first order Netflix - http://netflix.com/title/81725526 KetoneIQ - Visit https://ketone.com/STEVEN for 30% off your subscription order Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Steven Bartlett?

  Why do they call you the Dando investor?

• 0:01Speaker 01

  It's a way of doing business and making money without taking risks. Like, for example, Mr. Gates, Mr. Walton, Mr. 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.

• 0:17Steven Bartlett?

  So I want to know everything.

• 0:18Speaker 01

  Okay, let's start with this.

• 0:20Steven Bartlett?

  Mohnish Prabhar 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 wealth.

• 0:33Speaker 01

  If 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 models 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 90% ahead of the rest of humanity. And in fact, everything that Microsoft has done well at has come from copying someone on the outside. 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,

• 1:18Speaker 01

  givers versus takers, and the circle of competence. And I'll explain all of them.

• 1:23Steven Bartlett?

  What about investing? Because you're very well-known for being an excellent investor.

• 1:27Speaker 01

  There are three things that matter with investing. And there's also something known as the rule of 72. 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.

• 1:43Steven Bartlett?

  Just give me 30 seconds of your time. Two things I wanted to say. The first thing is a huge thank you for listening and tuning into the show, week after week. It means the world to all of us. And this really is a dream that we absolutely never had and couldn't have imagined getting to this place. But secondly, it's a dream where we feel like we're only just getting started. And if you enjoy what we do here, please join the 24% of people that listen to this podcast regularly and follow us on this app. Here's a promise I'm going to make to you. I'm going to do everything in my power to make this show as good as I can now and into the future. We're going to deliver the guests that you want me to speak to, and we're going to continue to keep doing all of the things you love about the show. Thank you.

• 2:27Steven Bartlett?

  Mohnish 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 had to summarize that message and exactly who are you trying to convey it to?

• 2:43Speaker 01

  It really depends on what message. There are a few different mental models that I've 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 you get one plus one becomes 11. And so these mental models are not all in the same direction or in the same genre.

• 3:14Steven Bartlett?

  So just to pause there for a second. So the word mental models means it's basically a framework for thinking.

• 3:21Speaker 01

  Yes.

• 3:22Steven Bartlett?

  So one framework for thinking is this idea of cloning.

• 3:25Speaker 01

  Yes.

• 3:26Steven Bartlett?

  As one such example.

• 3:27Speaker 01

  Yes. Let's take the mental model of cloning.

• 3:30Steven Bartlett?

  Cloning.

• 3:31Speaker 01

  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 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 human psyche, maybe going back into our history

• 4:13Speaker 01

  and our ancestral evolution, where humans look down upon cloning. But if you 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 an innovator. And we think Sam Walton created Walmart, which was also new. But actually, they're both me too models. And Microsoft would not have existed without being a great cloner. So when we look at Microsoft Word, it came from WordPerfect.

• 4:53Steven Bartlett?

  Which was a company before.

• 4:54Speaker 01

  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 when we look at Sam Walton, who was, 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 own admission, would tell you that he has no original ideas. So originally Walmart cloned Sears and came out.

• 5:37Steven Bartlett?

  For my international listeners, these are two big supermarket chains.

• 5:41Speaker 01

  Yeah, and they're both gone. They, they, in fact Walmart buried them. And, 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 in the store just to check it out. And he said that there is, 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 most transparent businesses.

• 6:25Speaker 01

  You can go into a competitor's store and you'll figure out the entire business model in 10 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-turvy, it was really bad. And Sam says to him, yeah, but did you see the candle display? The candle display 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.

• 6:59Speaker 01

  Of ideas from other places. If we look at, if you look at a company like Starbucks, we think of Starbucks as innovative. But actually, what Howard Schultz did is he saw a concept in Italy. And his idea was that I think this is 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, you will be ninety percent ahead or ninety-five percent of the rest of humanity. Now, another mental model, humans have this perspective

• 7:43Speaker 01

  that starting a business is risky. In reality, 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 approach is zero. What is extremely risky is a nine to five job. Because we 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, so this notion, which is drilled into us that

• 8:27Speaker 01

  if you're an entrepreneur, you're taking risk, really kind of does a big disservice to most humans. And if, if humans understood that if I embark on a business, I can do it in a format where the 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. But two has become eleven. One plus one has already become eleven. It's nonlinear. And

• 9:05Speaker 01

  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 a hundred cases like that. But if I take my own case as 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 a hundred and sixty eight hours in the week. So I felt like there must be at least another thirty, forty hours that I could work on my startup.

• 9:46Steven Bartlett?

  Could you show me this in context?

• 9:48Speaker 01

  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 are sleeping eight hours a day, right? And, and we're doing that seven days a week, right? So basically, we've got seven days a week, eight hours a day, we are sleeping. 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, whatever else.

• 10:33Speaker 01

  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 the weekends. 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 some other yo-yo is paying your groceries. So we don't want to rock the boat. But we're going to make one change to blue.

• 11:18Steven Bartlett?

  Which is the amount of hours I'm working for my nine to five.

• 11:21Speaker 01

  Now, 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. 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 the blue stays, but we're not doing extra blues like we were doing before, right?

• 12:00Steven Bartlett?

  And blue for anybody that doesn't, can't see, because you're listening on audio, is work.

• 12:04Speaker 01

  Exactly, yeah. Blue is work, exactly. Now, when we embark on a startup, we should never do a startup to make money. It's the worst reason to start a company. The purpose of business is not to make money. The purpose of business 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 are thinking

• 12:46Speaker 01

  about, that we could bring into this world, that is going to improve the world in some way?

• 12:52Steven Bartlett?

  How do I know if it's a good idea?

• 12:55Speaker 01

  Whatever idea you have come up with is not going to work. Okay?

• 13:04Speaker 01

  Because you came up with it in an ivory tower between your ears. Okay, and that's not really a great place to find great ideas. What's gonna happen is, we are going to be doing what I 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, I'll, um, maybe I'll just give it in more practical terms. Uh, when I was, uh, when I was starting my first business, uh, it was going to be a IT services business. Okay, information technology services. And I was gonna be providing these services to very large businesses.

• 13:49Speaker 01

  Companies that are, you know, billion dollars or more in, in earnings or cash flows.

• 13:55Speaker 01

  I was in a meeting with a, a senior IT guy at a very large bank in Chicago. And I was going through my PowerPoint deck with them. I came to the 10th slide, set my spiel, went to slide 11. So the boss who was sitting in the meeting said, go back to slide 10. So I went back to slide 10, again, gave my speech that I had for slide 10 and took it to 11. He said, go back to slide 10 and do not change the slide. I don't have an interest in any other slide. Okay, so I took it back to slide 10.

• 14:39Speaker 01

  And all he wanted to talk about was what was on slide 10. My deck was talking about seven things we could do. Slide 10 was one of those seven.

• 14:53Speaker 01

  It was an extreme pain point for him. He needed help on that one thing. He didn't need help on all the other riffraff stuff I was talking about. So when you're doing a startup,

• 15:09Speaker 01

  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 percent right, or forty percent right, but your customer will tell you what is a 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 for a lot of people.

• 15:49Speaker 01

  So I went back, I took slide 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 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.

• 16:26Steven Bartlett?

  You've just reminded me of a conversation I had this morning.

• 16:28Speaker 01

  Okay.

• 16:29Steven Bartlett?

  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 at 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 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, 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, do you know what she could have done at the start of that conversation? She could have gone, Stephen, can I ask you one question? What is the, what are you looking for from, from this person?

• 17:14Steven Bartlett?

  And if, and then I would have gone, I just want someone that can put on events. And then the next fifty-five minutes could have been persuading me that she can do that.

• 17:21Speaker 01

  Sure.

• 17:22Steven Bartlett?

  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 done a better job without going through all of those slides?

• 17:34Speaker 01

  Well, I think what what I would do now if I were doing something like that is that my 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. And I won't even rely so much on slides. I'd like to really try to bring them in into into what they are trying to say. And and and so basically, in if if you study, if you study businesses, you know, venture back, non venture back, whatever, this is a very common thing.

• 18:19Speaker 01

  There are almost no businesses who end up with the business model that was originally conceived. I mean, that just is 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.

• 18:43Steven Bartlett?

  Hmm.

• 18:44Speaker 01

  You know, and 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 gonna wear.

• 18:52Steven Bartlett?

  Yeah.

• 18:53Speaker 01

  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, Wrigley's chewing gum. Okay. My mouth is a very personal space. I'm not gonna put Glott's chewing gum in there.

• 19:14Steven Bartlett?

  What's Glott's chewing gum?

• 19:15Speaker 01

  Exactly.

• 19:16Steven Bartlett?

  Okay.

• 19:17Speaker 01

  Okay.

• 19:17Steven Bartlett?

  Yeah.

• 19:18Speaker 01

  You're not gonna put some brand that's half the price of Wrigley's.

• 19:22Steven Bartlett?

  Yeah.

• 19:22Speaker 01

  In there. Because you don't wanna go there. That's not of interest to you. So when we wear glasses or sunglasses or anything we wear, that's 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 JV with Ray-Ban. Those glasses look like normal glasses. I think there's a higher chance.

• 19:54Steven Bartlett?

  Well, I've got some. We used them, yeah.

• 19:56Speaker 01

  You don't have any Google Glass.

• 19:58Steven Bartlett?

  No, no, no, no, no. I mean, I think they cut the project, didn't they?

• 20:01Speaker 01

  Yeah, so, so what I'm trying to say is that we, 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 it in front of them, then they can now tweak and tell you exactly what they want. Right, so, so that, and that's another mental model, which is, now 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 be have the flexibility to, and again, when you're listening, separate the signal from the noise, right?

• 20:43Speaker 01

  Take in what 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.

• 20:53Steven Bartlett?

  The other thing that's kind of a model maybe woven into there was this idea of just like attention to detail. I'm 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 and detail.

• 21:10Speaker 01

  It's a game of inches. I mean, what I'm saying is that when, 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

• 21:32Speaker 01

  in stores and he was trying to come up with a name with the fewest letters because it costs less. Okay, and so, I mean.

• 21:43Speaker 01

  Cost, cost sensitivity is all over the place in Walmart. I mean, that's just front and center with what they do, right? They just really squeeze blood out of a rock, you know? So basically, I mean, 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, 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. You have to have very strong discipline on the cost side. If you look at something like LVMH, you know, the guy who runs it, I mean, he's in luxury goods, he's in high end.

• 22:27Steven Bartlett?

  LVMH make Louis Vuitton and?

• 22:29Speaker 01

  Yeah, yeah, yeah, I mean, everything, you know, you know, they've taken over Tiffany's, everyone. 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 that doesn't necessarily need it. But that's why they, that's why he's become the wealthiest guy in Europe.

• 23:04Steven Bartlett?

  Because that mentality will then apply to every decision.

• 23:07Speaker 01

  Absolutely.

• 23:07Steven Bartlett?

  And if you apply it to a hundred things, it does matter.

• 23:09Speaker 01

  Oh, it does matter, big time, yes.

• 23:11Steven Bartlett?

  So I have these yellow blocks here.

• 23:13Speaker 01

  Yes.

• 23:14Steven Bartlett?

  Which represent working, hours working on your own business.

• 23:17Speaker 01

  Yes.

• 23:18Steven Bartlett?

  So show me how you would take some of these blocks away.

• 23:20Speaker 01

  Yes.

• 23:21Steven Bartlett?

  And introduce hours working on your own business.

• 23:24Speaker 01

  Yeah, so basically, it's, it's really quite simple. We're really not going to mess with our sleep cycles. We're going to leave that alone.

• 23:31Steven Bartlett?

  Sleep staying the same.

• 23:32Speaker 01

  And we, 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 as we can.

• 23:46Steven Bartlett?

  Okay.

• 23:46Speaker 01

  Because every hour matters. Okay, so the area that we're going to focus on. Is the free time.

• 23:53Steven Bartlett?

  Okay.

• 23:54Speaker 01

  And the reason why taking out the free time is not a problem is because what we are embarking on, like we just discussed, is not about making money, is getting our music out.

• 24:05Steven Bartlett?

  Getting our music out, what do you mean by that?

• 24:07Speaker 01

  Which means 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.

• 24:23Steven Bartlett?

  I think the audience might be challenging themselves in their head and saying, but I love my, the thing I do for work. I'm, I'm one of maybe the rarer group of people that I get to work with puppies every day, and I love that.

• 24:35Speaker 01

  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, uh, main waking hours on, awesome. That's great. I mean, everyone's not going to be an entrepreneur. Everyone's not going to have a startup. Everyone, they're, they may be getting their music out in a different way on someone else's platform, which is perfectly fine. And, but, but if, if that is not you, where when you go to work, you're not super excited to get up in the, in the morning and you're not tap dancing to work every day, if that's not happening, then there's something wrong.

• 25:17Speaker 01

  And you have to ask yourself, well, is there something else that is, that you're passionate about, that you wanna do? And this is not something that should take a lot of effort. So if we go back and look at, for example, Bill Gates and Paul Allen, right? I mean, Bill Gates is at Harvard and he sees 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.

• 26:01Speaker 01

  And he told Bill, we gotta go do this now. This is our time now. And for Bill, it was a very easy decision. Very indecisive, very difficult for his parents. His parents were in shock that he's gonna abandon his degree. And, you know, he, he told his parents, don't worry about it. I'm gonna come back and I'll finish the degree. And several decades later, Harvard gave him an honorary degree. And his parents were in the audience and he told them, I told you, I'd come back, finish it off, right?

• 26:39Steven Bartlett?

  So 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 workers 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 worryingly low. So if we look at that eighty-five percent number, eighty-five percent of workers globally are disengaged, meaning not fully invested or happy at work. So it's really those.

• 27:11Speaker 01

  Sure.

• 27:11Steven Bartlett?

  People.

• 27:12Speaker 01

  And, 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 a 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 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.

• 27:57Speaker 01

  You know, you 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 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. Maybe another guest of yours can, can, can help them with that.

• 28:32Steven Bartlett?

  Do you think everyone has a calling?

• 28:36Speaker 01

  Yeah, I mean, I think, I think we are all unique children of God. And I think we, uh, we all have some music we wanna get out. And, uh, 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 we can't do this just because we're dissatisfied. And we can't do this just because we wanna make money and get rich. We've gotta have something that we think the world would be interested in. And, uh, you know, in my case, I'd, I'd gone through this, uh, session with a couple of industrial psychologists and they told me,

• 29:20Speaker 01

  Mohnish, you like to play games, you're a game player. And actually, they couldn't be more accurate. So when I was doing my startup, um, I'm, 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 send two hundred letters a week to the senior I T 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, et cetera, whose job was to not let anything through.

• 30:02Speaker 01

  And my whole purpose was, 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 there was a customization, the mail word, where if person, some person's name was David Smith, it said, Dear Dave, okay? And then throughout the letter, it talked Dave. Dave's name came up like three, four times. When the assistant got the letter, she couldn't tell whether I know Dave or not.

• 30:31Steven Bartlett?

  Because you used his shortened name?

• 30:33Speaker 01

  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, 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 voicemail, 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 start getting spaced out double time.

• 31:15Speaker 01

  Two weeks out, then 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 gonna stay in that funnel. So the second week, I send out another two hundred letters. Make another two 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.

• 31:57Speaker 01

  How many people did I get any kind of positive 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, etc.? And my ticket size of the item I was selling was very large, hundreds of thousands of dollars, right? Nine months after doing this, where, now let's go back here. So we're gonna 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...

• 32:42Speaker 01

  What is the yellow? The yellow is our startup. So that's working on your startup? So on, on the weekends, I'm gonna do ten hours a day because I'm not working, right? And on the weekdays, I'm gonna 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.

• 33:04Speaker 01

  Five days, I'm putting in four hours a day. 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 till he 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 watching Netflix or whatever else.

• 33:33Steven Bartlett?

  Which is what people currently do with their free time.

• 33:35Speaker 01

  So one of the litmus tests of whether you should be doing a startup or not is yellow needs to be more exciting than orange.

• 33:49Steven Bartlett?

  Your startup needs to be more exciting than your free time.

• 33:52Speaker 01

  Netflix should be so painfully boring for you. And going on Facebook or Instagram, whatever, should be very boring for you.

• 34:02Steven Bartlett?

  Compared to?

• 34:03Speaker 01

  This is exciting.

• 34:04Steven Bartlett?

  Compared to building your company?

• 34:06Speaker 01

  Yes.

• 34:11Speaker 01

  So you know, the Pink Floyd song, we don't need no education.

• 34:15Steven Bartlett?

  Yeah.

• 34:16Speaker 01

  We don't need no thought control.

• 34:17Steven Bartlett?

  Yeah.

• 34:18Speaker 01

  We don't need none of this. This is so useless. You understand how useless this is? Yellow is where it's at. It's not, it's not the orange stuff. We don't need this. Thank you, Stephen.

• 34:30Steven Bartlett?

  So we don't need any free time?

• 34:33Speaker 01

  This is better than free time.

• 34:35Steven Bartlett?

  Building your business.

• 34:36Speaker 01

  You're having an orgasm every hour. So what can you, what can be better than this?

• 34:44Steven Bartlett?

  Much of what I do here when I'm having these conversations is 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 isn't really, hasn't really gone anywhere yet necessarily. And the, 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 go on holiday, make more choices and have more freedom. If you're that person, what are the mental models that we haven't discussed yet that you need to be thinking about to get from zero to one?

• 35:15Speaker 01

  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.

• 35:27Steven Bartlett?

  What does that mean?

• 35:28Speaker 01

  Doesn't take much money. In fact, what's been happening over time is startups need less and less and less money 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, 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 in unused credit lines in probably a dozen Visa and Master Cards, right? I had about thirty thousand dollars in my retirement account, my 401K, which I also took out and said, twenty-five, I can make that up later, right?

• 36:11Speaker 01

  So basically, I had a hundred thousand dollars of capital. And that hundred thousand got used because once I got going, I needed working capital and so on. And, 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 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

• 36:54Speaker 01

  I'm starting a business, it's not competitive with the company, and I'm going to be leaving in two weeks and this is my two weeks' notice. And basically, that was that, right? And, you know, they, they sat me down and said, you know, Mohnish, we were so confused for the last nine months because we met several times because we saw a big drop-off in your performance, but it was never so low that we wanted to fire you. I said, exactly. That was exactly what I was trying to do. I was trying to say just above firing level. He said, well, you mastered it. Because we, we met several times, but we couldn't get rid of you.

• 37:34Speaker 01

  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. 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.

• 37:56Steven Bartlett?

  Yeah.

• 37:56Speaker 01

  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, right?

• 38:07Steven Bartlett?

  So Amerson's type one, type two decision making.

• 38:09Speaker 01

  Yeah. And so, and this is not just me. What risk does Bill Gates take? Okay, Bill Gates, what is his value as a Harvard freshman in the job market? Zero. Okay, he, nobody would pay him anything. And he could come back anytime and finish that degree. So let's say he went 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

• 38:48Speaker 01

  you're gonna find, so if we look at Sir Richard Branson, he wants to start an airline. Okay? Now, to start the airline, you need a jumbo seven four seven that costs like a hundred and fifty million.

• 39:04Steven Bartlett?

  The plane.

• 39:04Speaker 01

  The plane, right? That's some serious money. Richard Branson got Virgin Atlantic off the ground with zero and with zero risk. So here's what he did. 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 asked for the phone number for Boeing. Okay, so he calls the main Boeing switchboard.

• 39:35Steven Bartlett?

  Boeing sell the planes, right?

• 39:37Speaker 01

  Yeah, Boeing makes the seven four seven. So he calls the main switchboard of 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, 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 transfers him to a person who's actually leasing jumbos. This person tells Richard, says, look, Mr. Branson, in every country, we have one customer. And in the UK, that is British Airways.

• 40:22Speaker 01

  So we have nothing to talk about. So he says, well, just 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 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 the 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 gonna pull the plane. Right? So now, when you have an airline, you sell all the seats four months in advance. The cash has already come in.

• 41:07Speaker 01

  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.

• 41:17Speaker 01

  Virgin Atlantic got off the ground with zero capital. Okay, now, if you can start an airline that needs a jumbo with zero capital, you can start any business with zero capital. Okay? So, 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 after that, they just roll with the customers, right? And then that's how they get going. So. So the important thing is that when we take the blue out, when blue is no longer here.

• 41:56Steven Bartlett?

  Which is work.

• 41:57Speaker 01

  Which the work is gone, yellow's gone almost double or triple. Because this is where all the orgasmic activity is.

• 42:04Steven Bartlett?

  So we move the work, we quit the nine to five job and we move that time over to work.

• 42:08Speaker 01

  I was, I, I was working on my startup like from seven to nine in the morning. And then I would come back six P M. And work till ten or twelve in the evening.

• 42:18Steven Bartlett?

  When you had a job.

• 42:18Speaker 01

  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, 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, third year, three million, and by the sixth 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 the engine, I knew all the statistics of these letters, so many calls, so many this, so much this means this and all of that. And it works.

• 43:00Speaker 01

  So, and, and if, 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.

• 43:10Steven Bartlett?

  I think that's a really unappreciated framework, as you call it, or 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, look, I've been looking for a job. I've sent six emails.

• 43:23Speaker 01

  Yeah.

• 43:24Steven Bartlett?

  And they go, no one's got back to me.

• 43:25Speaker 01

  Yeah.

• 43:25Steven Bartlett?

  And you can see that it's hit their confidence and now they've actually arrived at the conclusion that getting a job is like hard or impossible because they sent six.

• 43:34Speaker 01

  Yeah.

• 43:34Steven Bartlett?

  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 cricket.

• 43:45Speaker 01

  My, 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, 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 New York and LA? And put it in Excel, managing partner's name, address. 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.

• 44:23Steven Bartlett?

  The address.

• 44:24Speaker 01

  The address is easy.

• 44:25Steven Bartlett?

  Yeah.

• 44:25Speaker 01

  Right. And I, I said that, so she, she got a list of about 1,200 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 likely to make money. We sent the 1,200 letters, physical letters. Okay. All physical letters, no email, right? And there's an 85 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, whatever.

• 45:07Speaker 01

  But he has a friend in LA. He says, hey, Jamie, 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 who went to Berkeley Business School with a much higher GPA than hers.

• 45:28Steven Bartlett?

  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'll, I'll, we'll animate on the screen. But it's basically, so 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 P A. It's less saturated, less busy. A high noise channel, which is the opposite, would be sending an email.

• 46:06Speaker 01

  Yeah.

• 46:06Steven Bartlett?

  To the like, press at yourcompany.com's email. So like, everyone goes through that path and doesn't get, doesn't get to the person. And then the other axis is basically the emotional impact of the message.

• 46:16Speaker 01

  Yeah.

• 46:16Steven Bartlett?

  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.

• 46:27Speaker 01

  Yeah.

• 46:28Steven Bartlett?

  A I slop.

• 46:29Speaker 01

  Yeah.

• 46:29Steven Bartlett?

  Copy and paste jargon. And really like the most successful messages are up here.

• 46:33Speaker 01

  Absolutely.

• 46:34Steven Bartlett?

  High, like high signal channel, high emotionally resonant.

• 46:36Speaker 01

  Absolutely.

• 46:37Steven Bartlett?

  But what ends up happening is people send loads of messages down here. And then they get depressed and demotivated, so no one's going back to me.

• 46:43Speaker 01

  Yeah. Like Michael Jordan used to say, you miss every shot you don't take.

• 46:49Steven Bartlett?

  Yeah, yeah, yeah.

• 46:51Speaker 01

  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 5,000 letters. Okay, which takes 25 weeks, six months. How many meetings does that end up in? If that ends up with 10 meetings or 20 meetings. Well, now I have my number, right? And then the second part is the meeting to close ratio, right?

• 47:31Speaker 01

  And so to me as a math guy, I, I was just interested to know that it's not zero. Okay, I just wanted to make sure. And I could see very quickly it was not zero. Literally within the first two, three months, I could see it's not zero.

• 47:46Steven Bartlett?

  Every business needs a competitive edge. And if you're great at hiring, that edge should probably be your people. The A players you bring in, and I don't just mean your full time team, but your freelance support too. If you feel like your talent isn't quite cutting it, then I want you to take another look at our sponsor, Fiverr Pro. Fiverr Pro is Fiverr's premium offering, where every freelancer is hand vetted. So you're guaranteed top quality every single time. What's brilliant about Fiverr Pro is that you're picking from very experienced talent in marketing, web, app development, AI and 750 other categories. And these are people that can swoop in and lead the more complex projects that your team might not be capable of handling yet. And because it's a personalized service, a Fiverr Pro hiring expert will find the help your business needs for you.

• 48:30Steven Bartlett?

  They'll hire them and manage your outsourced projects end to end too. And if you're not happy with your freelancer's work, then you get your money back. They are that confident in their talent. So to give it a shot, head to fiverr.com/dairy and for 10% off your first order, use code DARY. I think one of the most formative experiences you can give your children, which I got at 16, through 16 to 19 years old, which is what I did, was working in cold telesales. So my job at 16 years old was to call people at 9pm cold and try and get them to buy windows and doors. And it taught me the exact lesson you're describing, which is, yes, 80% of people tell you to fuck off.

• 49:08Speaker 01

  98% say that, but it doesn't matter.

• 49:11Steven Bartlett?

  I always say like 80% told me to fuck off. 15% said it in a nice way. And then 5% were at least receptive to what I had to say.

• 49:18Speaker 01

  Yeah.

• 49:18Steven Bartlett?

  Maybe 1% closed. But when you understand that, you think of life through that lens.

• 49:24Speaker 01

  And actually, Stephen, 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 very aggressive in growing the businesses. And so they didn't have staying power. There was almost no equity, always very levered. So I, he went bankrupt eight or nine times, right, repeatedly.

• 49:58Speaker 01

  When I was, um, 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 three of us would sit down at night to figure out how to make the business last for one more day. Okay, everything's caving in, the creditors are 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?

• 50:30Speaker 01

  At sixteen, and I don't know why my dad 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 would take the taxi from Dubai to 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.

• 51:14Steven Bartlett?

  Yeah.

• 51:14Speaker 01

  And it's 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 too. The guy brings out tea, he, there's a, there's a lot of chemistry, bigger order. And then I saw the orders increase, right? And then he's continuing to do that. I, I went with him to Doha, Qatar, Qatar. 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, you know?

• 51:52Steven Bartlett?

  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.

• 52:03Speaker 01

  We just care about the ratio and the number, okay? So what effort did it take? Like I was saying, if I send five thousand letters and I get twenty meetings.

• 52:13Speaker 01

  That's awesome. I mean, that's a fantastic ratio because one sale is going to get me about 200,000 or 300,000. It's a significant amount, right? I mean, so that I don't need large numbers and.

• 52:26Steven Bartlett?

  But the lifetime value of that.

• 52:27Speaker 01

  It's huge. Yeah, yeah. I mean, I mean, uh, these, uh, these relationships I got then, they're still with me. You know, so it's a, it's, it's like forever.

• 52:37Steven Bartlett?

  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 give is when I was 14, I applied for The Apprentice. They did this like junior apprentice on the BBC and it's a long story. 35,000 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 um 500 million dollar company. And I was like, yeah, whatever, like not interested. I went through the auditions, I didn't end up getting on in the show for whatever reason.

• 53:17Steven Bartlett?

  But then I ended up, because we were waiting in the queue that day, I was 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 $25,000 investment in my company if I'd won. Five years later, I'm working on a startup. That kid from the line says, hey, um, my dad has sold his business for a billion dollars. 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 Alawalias. They'd sold a business called Euro Car Parts. 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.

• 53:59Steven Bartlett?

  Um, and that always reminded me that like every conversation that I have is like planting a seed that at any point in my life.

• 54:05Speaker 01

  Sure.

• 54:06Steven Bartlett?

  Could turn into something.

• 54:08Speaker 01

  I mean, you know, um, I always bring up Adam Grant's book, uh, Givers and Takers. I don't know if you've seen that.

• 54:17Speaker 01

  All humans on the planet fall into one of three categories. They are either a giver, or a taker, or a matcher. Okay, there are no other categories of humans, it's just these are the categories. Now, the matchers are relatively simple to understand. Their mental framework is, if Stephen does me a favor, I'm gonna 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 you don't have anything to ever do with, are trying to scam and screw everyone.

• 54:58Speaker 01

  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 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 is trying to give to them, even though they're not asking for it.

• 55:41Speaker 01

  So, basically, when we, and that's the book that Adam Graham, Grant wrote, Givers and Takers, is, one of the mental models, this is a great mental model to have, is to be a giver. Don't play 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.

• 56:12Steven Bartlett?

  And the time horizon, you don't worry about the time horizon.

• 56:14Speaker 01

  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 X, Y, Z happens. You're just doing it. End of story.

• 56:29Steven Bartlett?

  I was sat with my girlfriend last night. She runs a breathwork business, so she's essentially a solopreneur. 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 startups in the backbone of our economy, but they, they come to me with the same problem, 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 to hire someone exceptional.

• 57:12Steven Bartlett?

  And so many founders come to me, these early stage founders are like, ah, like I, I, my customers like me, I do it better. I don't trust anybody. I wondered if you had like a mental model for thinking about.

• 57:23Speaker 01

  The, the thing is, so if you look at people like Elon Musk and Steve Jobs, they believe their number one job is recruiting. The first 3,000 people who joined SpaceX, all personally interviewed by Elon. Just think about that. Those are 3,000 hires. Think about the number of interviews to get the 3,000 hires. Okay?

• 57:53Speaker 01

  He did not believe there was any other way. And what Steve Jobs used to say is that A players.

• 58:05Speaker 01

  Want to work with A players. The moment you start introducing B players. B players will hire B and C players. They will never hire an A player. So your downhill the journey is already started. The moment you get a B player. And so as an entrepreneur. You know, we have a lot of 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.

• 58:50Speaker 01

  We 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 their life experience, who they are, their traits are hard coded. That is not going to change from five to ninety five. Okay. So it's not like you're going to change a 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 in an interview.

• 59:24Steven Bartlett?

  One of my companies I'm building at the moment is called culturetest.com. It's exactly this.

• 59:29Speaker 01

  Okay.

• 59:31Steven Bartlett?

  I mean, you're just like preaching, preaching to the choir here.

• 59:34Speaker 01

  But what I'm saying is that.

• 59:36Steven Bartlett?

  It was the most.

• 59:37Speaker 01

  We need to get really good at recruiting.

• 59:39Steven Bartlett?

  Yeah.

• 59:40Speaker 01

  Okay.

• 59:40Steven Bartlett?

  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 our 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 offsite. Culture is how you 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.com,

• 1:00:21Steven Bartlett?

  which is the website we're about 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.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 Test will make you your own personalized culture test so that you can screen every single person 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.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.

• 1:00:57Speaker 01

  So recruiting is really important. And I think the other thing is we're willing to hire people who 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 who are better than me. You know, they're better at many of these things because 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.

• 1:01:29Steven Bartlett?

  How do you think about firing people? Because this is the other thing I hear from founders.

• 1:01:33Speaker 01

  Hire slow, fire fast.

• 1:01:39Steven Bartlett?

  Founders really struggle with the fire fast thing.

• 1:01:41Speaker 01

  And it is very important to fire fast. I think fire fast is more important than hire slow. And you're doing the personal service because they may be exceptional in another role at another place. So you are helping them try to find that. And you're helping your other team members.

• 1:02:12Steven Bartlett?

  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?

• 1:02:21Speaker 01

  The most important is integrity.

• 1:02:25Speaker 01

  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.

• 1:02:39Steven Bartlett?

  And what does integrity mean in your definition?

• 1:02:41Speaker 01

  Well, it's absolute honesty is pretty simple. You know, it's black and white.

• 1:02:47Steven Bartlett?

  And you-

• 1:02:47Speaker 01

  Conduct yourself with the highest levels of ethical standards.

• 1:02:52Speaker 01

  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.

• 1:03:01Steven Bartlett?

  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?

• 1:03:10Speaker 01

  I think currently most has come from the investing side.

• 1:03:15Steven Bartlett?

  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 Dow Jones. This graph, have you seen that one before?

• 1:03:32Speaker 01

  I haven't seen it this way, but people put up all kinds of things, yeah.

• 1:03:35Steven Bartlett?

  I mean, all this says is that you're extremely good at investing. So I want to know, if I'm starting my investing career, I'm working in 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?

• 1:03:51Speaker 01

  So there are, there are three things that matter in terms of getting a great outcome with investing.

• 1:04:07Speaker 01

  Starting capital, how much the amount you start with, length of the runway, how long are you going to invest the money? And the rate of return. Okay, so before I answer your question, I wanna tell you a story. So, and this is a true story. Um, in sixteen twenty-three, in New York, 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.

• 1:04:52Speaker 01

  It can be a great place for us." And the 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 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

• 1:05:36Speaker 01

  in high school than elementary school. It tells us how long it takes money to double, and it's a kind of a mathematical hack. So, for example, if I'm going to get a seven percent return, and I do seventy-two divided by seven, that's approximately ten. And at the seven percent return, it's going to take ten years for the money to double. Seven percent compounded will take ten years. If I have a ten percent return, it will take seven years. Seventy-two divided by ten is seven. If I have a fifteen percent return, it will take five years. Seventy-two divided by fifteen is five, approximately. And if I have a twenty percent return,

• 1:06:20Speaker 01

  it'll take three and a half years. So this Rule of Seventy-two is 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 hundred and eighty four dollars in thirty years, so on. Now, if you go a hundred years, right? It's ten periods of ten.

• 1:07:00Speaker 01

  And ten periods of ten is two to the power of ten.

• 1:07:05Speaker 01

  And two to the power of ten is one thousand twenty four. So we throw away the twenty four because we don't wanna complicate the math. So at seven percent for a hundred years, you would have a thousand times what we started with. And this is why, because compounding becomes nonlinear. People have a hard time getting their hands around it, so. Nonlinear meaning? It's not going up in a straight curve. It's going up in a. Hockey stick. Hockey stick, yeah. So in seventeen twenty three, the Indians would have twenty three thousand. It would have gone up a thousand. And then if they continue at the seven percent, in eighteen twenty three, they would have twenty three million.

• 1:07:49Speaker 01

  And in nineteen twenty three, they would have twenty three billion.

• 1:07:54Speaker 01

  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.

• 1:08:07Speaker 01

  One sixth of that is not undeveloped land in Manhattan. So if the Indians had invested at 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 compounding is that we started with twenty three dollars, and we end up with twenty three trillion. Without having a great rate of return, it's just an okay, seven percent is just okay. It's not great. It's not bad, but it's okay.

• 1:08:52Speaker 01

  Now, if you go back a hundred years, so we started at sixteen twenty-three, go back a hundred years to fifteen twenty-three. We had twenty-three hundred cents in sixteen twenty-three.

• 1:09:03Steven Bartlett?

  Twenty-three hundred cents?

• 1:09:04Speaker 01

  Twenty-three dollars is twenty-three hundred cents.

• 1:09:06Steven Bartlett?

  Oh, okay, if they'd got it.

• 1:09:08Speaker 01

  Just converted to cents instead of dollars, right? Now, if you make it one thousandth of that.

• 1:09:14Steven Bartlett?

  So just so I'm clear here, so if you're saying if you went back a hundred years from that point, and you gave them just twenty-three cents.

• 1:09:21Speaker 01

  If you gave them two cents.

• 1:09:23Steven Bartlett?

  If you give them two cents.

• 1:09:24Speaker 01

  Two point three cents, to be exact. But if you just gave them two cents.

• 1:09:27Steven Bartlett?

  Yeah.

• 1:09:28Speaker 01

  A hundred years later, there will be twenty dollars. If you gave them two point three cents, a hundred years later, they'd be twenty-three dollars, and now it would be the twenty-three trillion, right? So what I'm trying to say is that if the runway is long enough, the starting capital doesn't matter. Even the rate of 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 earn. So always try to save the first dollar rather than the last dollar.

• 1:10:12Speaker 01

  So if you are making fifty thousand dollars a year, put five thousand as 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 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.

• 1:10:42Speaker 01

  And that's what we want. So we don't need to do heroic things with finding the next Nvidia or 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, 10,000 every year into the savings. Don't go have a vacation on Hawaii with it. Let it keep compounding and just put it into a broad index and we don't really care.

• 1:11:11Steven Bartlett?

  So for someone who has never invested before.

• 1:11:13Speaker 01

  Yeah.

• 1:11:13Steven Bartlett?

  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?

• 1:11:21Speaker 01

  So basically, you could open an account at Fidelity or Interactive Brokers or Robinhood, any of these places. You could open a brokerage account for very little money.

• 1:11:34Steven Bartlett?

  And there's lots of them in every country.

• 1:11:36Speaker 01

  Yeah. And then you could just ask them to give, to buy you the S and P 500 index, for example, and they will get you invested in that.

• 1:11:49Steven Bartlett?

  And the S and P 500 is basically the top 500 companies.

• 1:11:52Speaker 01

  It's the, yeah, the 500 dominant businesses in the US, like Nvidia is in there and Microsoft and Apple and so on.

• 1:12:02Steven Bartlett?

  And you're going to get your 10% a year if it, if the trend holds over the last century.

• 1:12:06Speaker 01

  The S and P has plenty of periods where it does nothing. It's somewhat overheated right now. But I think if you have a long enough time horizon and your dollar cost averaging in, it's perfectly okay. What you could also do as an alternative is buy Berkshire Hathaway. So that's a stock, BRKB. So you could again tell these people that just put it into Berkshire Hathaway. It's like an index. And, and again, it's like set it and forget it. You don't need to think about the investing side. You focus on yellow. Okay. And keep putting this little money

• 1:12:44Speaker 01

  away on the side and it's going to compound. And so at 18, if you put away $5,000 and you fast forward to when you're 68, 50 years later, right? Now, if, if you got a

• 1:13:04Speaker 01

  Ten percent return on that money.

• 1:13:06Steven Bartlett?

  Every year.

• 1:13:06Speaker 01

  Let's say, every seven years it would double. Okay, seventy two divided by ten is seven. Fifty years is seven doubles. Seven times seven is forty nine. And

• 1:13:24Speaker 01

  two to the power of seven is one twenty eight. Okay, so we can throw away the twenty eight, keep it simple. You're gonna have a hundred times what you started with. 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 that over a lifetime, you know, you're going to be having too much money.

• 1:14:00Steven Bartlett?

  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 series 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 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,

• 1:14:45Steven Bartlett?

  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 is streaming right now only on Netflix. And they now sponsor this podcast. I've just invested millions into this and become a co-owner of the company. It's a company called Ketone IQ and the story is quite interesting. I started talking about ketosis on this podcast and the fact that I'm very low carb, very, very low sugar and my body produces ketones, which have made me incredibly focused, have improved my endurance, have improved my mood and have made me more capable at doing what I do here. And because I was talking about it on the podcast, a couple of weeks later, these showed

• 1:15:29Steven Bartlett?

  up on my desk in my HQ in London, these little shots. And oh my God, the impact this 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 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 ketone.com/steven for 30% off your subscription order and you'll also get a free gift with your second shipment. That's ketone.com/steven. And I'm so honoured that once again, a company I own can sponsor my podcast.

• 1:16:11Steven Bartlett?

  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 dando investor?

• 1:16:26Speaker 01

  Dando is actually a word from Gujarat, which is on the, on the western coast of India where Gandhi came from. They are extremely astute business people and dando, if you translate it directly in Gujarati, it means business, but it doesn't really mean business. What it means is it's a way of doing business where the downside is non-existent.

• 1:16:56Speaker 01

  We already discussed how Mr. Branson is a Dando investor. He had no downside. Mr. Gates was a Dando investor. He had no downside. Mr. Walton was a Dando investor. He had no downside. So all of these people embarked on businesses, built huge fortunes without taking risk. And so the Dando investor was written from the perspective of how can we minimize risk while keeping the returns intact?

• 1:17:31Steven Bartlett?

  You use this example of the Patels. What is that story?

• 1:17:35Speaker 01

  The Patels went to Uganda more than 100 years ago, maybe close to 130 years ago.

• 1:17:45Steven Bartlett?

  It was a family?

• 1:17:46Speaker 01

  It's an ethnic group in India. And so this ethnic group came to Uganda to build the railroad. And but they are very savvy business people. And over the course of the last 100-odd years, when they were in Uganda, through their Dando methods of doing business, they became very successful entrepreneurs and they controlled large parts of the Ugandan economy. And Idi Amin came to power in Uganda in the 1970s. And he said Africa is for Africans. So what he did is he threw all the Patels out

• 1:18:31Speaker 01

  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 any skills that would allow them to get good jobs, white-collar jobs in the US. And

• 1:18:57Speaker 01

  What a few of them started to do was they realized that if they bought a motel, a small ten or twenty room motel, uh, the family could 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, you know, the cleaning and front desk and everything else, right? And the Patels are vegetarians and they are very, they live, they live a very simple life.

• 1:19:42Speaker 01

  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 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 a 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 next motel, 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,

• 1:20:24Speaker 01

  eighty percent of all the motels in the US are under Patel ownership. Eighty percent. So the Patels make up point one percent of the US population. Indians make up about little over 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, um.

• 1:21:01Speaker 01

  It's because of the Dando Way.

• 1:21:04Steven Bartlett?

  So if I wanna steal from the Dando Way, you told me it's good to be a copier. Um, what are the principles of the Dando Way that I need to be thinking about? Cause I think there was, was there nine? Yeah, there was nine principles in total in the book.

• 1:21:18Speaker 01

  Well, the most important one is heads I win, tails I don't lose much.

• 1:21:26Speaker 01

  Everything we discussed today, Stephen, is heads I win, tails 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. 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, without risk, free lunches.

• 1:22:08Steven Bartlett?

  Do you think there's an opportunity for people? Cause 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 laundromat?

• 1:22:25Speaker 01

  Yeah, so you know, the reality is so entrepreneurship is not studied much in business schools because there's nobody gonna give you consulting project for studying entrepreneurs. If we really study startups in the US or actually anywhere in the world, ninety nine point nine nine percent of startups are non-venture backed.

• 1:22:49Steven Bartlett?

  What does that mean?

• 1:22:50Speaker 01

  What I, what I mean by that is those are your laundromat, your Chinese restaurant. Your, you know, eBay seller, whatever, Amazon seller, so on, right? The small businesses. None of those companies were formed because of venture capital. So the media focuses on all the venture capital led 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 of one percent or less. You can ignore it. You don't need to really worry about it.

• 1:23:27Speaker 01

  The important thing is to be an observer and to look at what, 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 barber shop in Town A. Okay, and the barber's, one of many barbers 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.

• 1:24:09Speaker 01

  Town C doesn't have much of a population, but it's growing fast. So the barber in Town A goes to see what the, all the hoopla about Town C is all about. So he makes a, 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 does is he rents a, subleases a small storefront, buys 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.

• 1:24:54Speaker 01

  And he puts up a note board saying, I'm available Wednesdays. And what happens is people start coming in.

• 1:25:05Speaker 01

  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, and then when he's in his own town, he's charging thirty. Now, what he notices is 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 hour per haircut.

• 1:25:47Steven Bartlett?

  Hmm.

• 1:25:48Speaker 01

  But the 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.

• 1:26:05Steven Bartlett?

  Hmm.

• 1:26:05Speaker 01

  Right? What risk did he take? So going 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.

• 1:26:34Steven Bartlett?

  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 Dandide method is this idea of creating a durable moat. It's point four of the nine.

• 1:26:47Speaker 01

  So, so sometimes what happens is that you start a business. Every business starts off without a moat.

• 1:26:56Steven Bartlett?

  What is a moat?

• 1:26:59Speaker 01

  We have a castle. A knight in charge of the castle to keep the invaders away. And one of the ways to keep the invaders away is you put a mortar mortar around the castle. So when you put a mortar mortar around the castle, it makes it harder for anyone to take the castle. And a business with a moat 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.

• 1:27:39Speaker 01

  So if he's competent and good, what's going to end up happening is that his client base will stay with him.

• 1:27:46Steven Bartlett?

  What about loyalty points? I was just struck the other day when I was shopping in L A at Air One, which is a supermarket here in L A. And someone had recommended it to me on the plane, which actually goes to your point about actually give a great product. Cause an airline hostess on my flight over here went, oh, you're on keto diet. You need to go check out Air One. I got to, so that's the recommendation.

• 1:28:05Speaker 01

  And that's ten X more powerful than any ad or anything else they could drive.

• 1:28:08Steven Bartlett?

  And I went there.

• 1:28:09Speaker 01

  Yeah.

• 1:28:10Steven Bartlett?

  When I landed, because I needed a supermarket and didn't know the place. But then interestingly, when I was at the checkout yesterday, after my second visit, the lady at the checkout goes, hey, are you, are you an Air One member? And I was like, Air One member? And she was, it does cost, she was honest, she went, it costs money.

• 1:28:24Speaker 01

  Yeah.

• 1:28:24Steven Bartlett?

  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, Air One. And she goes, and we give you a drink every month. She listed all the things off. I signed up and bought the membership to Air One. I tell you now, I'm not going anywhere else. I don't know what it is.

• 1:28:41Speaker 01

  Yeah.

• 1:28:41Steven Bartlett?

  But now that I'm a member and I have the app, I'm not going anywhere else.

• 1:28:44Speaker 01

  Well, that's, now that's the hack that Amazon did, right? With Prime and.

• 1:28:53Speaker 01

  Two or three years ago, 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 describing to me how the business model of Costco 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 going after the lowest price because they're the distortion in their behavior.

• 1:29:32Steven Bartlett?

  Yeah.

• 1:29:32Speaker 01

  Okay, so now the FTC 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?

• 1:29:42Steven Bartlett?

  Yeah, that Prime thing with Amazon is super smart.

• 1:29:46Speaker 01

  Yeah, and that was taken from Costco.

• 1:29:48Steven Bartlett?

  Oh, okay.

• 1:29:50Speaker 01

  But basically, yeah, the lock-in is very powerful.

• 1:29:55Steven Bartlett?

  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 not even sure what they are.

• 1:30:17Speaker 01

  Well, so Apple is a very unusual company in that everything emanated from one guy. Okay, and that one guy's 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. And the same thing happened at Disney. You know, they had to buy Pixar because there was no Disney anymore. Mr. Disney was gone. And so, Apple, actually, I find somewhat risky.

• 1:30:58Steven Bartlett?

  As an investment?

• 1:30:59Speaker 01

  Yes, because if the form factor, so currently, humans walk around with a brick in their pockets or in their hands. At some point, that form factor is going to change. It may be integrated into something we wear or some other more ergonomic situation.

• 1:31:20Speaker 01

  That may or may not be Apple. And in fact, more likely not 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 the next three jobs, that's okay. But even there, the odds are low.

• 1:31:41Steven Bartlett?

  What does this say to you about founders? The specialness of founders? Are they a unique animal? Or can you swap them out and still be tremendously successful?

• 1:31:54Speaker 01

  Well, I would, 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, et cetera, and they go after it. Sometimes what happens with the offering gaps is a moat gets built, right? Someone starts Visa, it becomes a multi-company or American Express and so on. And, and it perseveres and scales.

• 1:32:25Steven Bartlett?

  Like Apple with their ecosystem, their closed ecosystem?

• 1:32:27Speaker 01

  But 100% of businesses eventually will go to zero. And so it very well could be that a business could last for 50, 100, 200 years, 150 years. Could last well past the founder's lifetime. Those are businesses 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 500-year view. How many businesses think with a 500-year view?

• 1:33:07Speaker 01

  And IKEA, you know, I was, I was 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 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, uh, kind of bringing in the cash. But it's a very solid foundation.

• 1:33:50Speaker 01

  Because it's, it's on a rock solid balance sheet. And, and such. And um, his second principle was no two Ikea stores can be the same. So what he said is that whenever we are 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 I don't keep innovating, I'm done. And so if we don't notice it, because we think all the Ikea's are the same. But actually, if you study them and look at when they were, when they were built, et cetera,

• 1:34:34Speaker 01

  you start seeing these, these incremental changes that they're making.

• 1:34:39Steven Bartlett?

  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.

• 1:34:52Speaker 01

  Absolutely.

• 1:34:53Steven Bartlett?

  But you have to make it measurable, right? Or else it's not an experiment. So, um, you, you also talk about making fewer big and frequent bets.

• 1:35:02Speaker 01

  Yes.

• 1:35:02Steven Bartlett?

  Who, who's that relevant for and in what context?

• 1:35:05Speaker 01

  So, one of the things that Warren Buffett says, he says that you get a punch card which you can punch 20 times in your lifetime. And each time you buy a stock, it's one punch that's gone. So what, what Warren is saying is.

• 1:35:23Speaker 01

  If there was a rule which said that you cannot buy more than twenty stocks in your whole life, what would happen is you would be very thoughtful about what you bought. Okay, and chances 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 that venture capitalists invest in do well, right, the high burnout rate.

• 1:36:03Speaker 01

  And if we look at the stock market, four percent of listed companies generate ninety percent of the return.

• 1:36:13Speaker 01

  So most companies that we may think about investing in 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 pick stocks, you have one in twenty-five chance of getting one of those four percent.

• 1:36:42Steven Bartlett?

  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 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?

• 1:36:56Speaker 01

  Well, I mean, so I'm trying to resist going to specific names.

• 1:37:03Steven Bartlett?

  Yeah.

• 1:37:04Speaker 01

  Because I think that would hurt people more than help people.

• 1:37:06Steven Bartlett?

  Okay, that's fair.

• 1:37:07Speaker 01

  What I would prefer that people do is focus on the other two variables, which is the amount you're saving and the length of the runway and focus on the index. So I think that it's kind of like saying, I want to be a great AI developer because it's the way we will. To be a great AI developer is going to take time. It's just the nature of the situation.

• 1:37:35Steven Bartlett?

  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.

• 1:37:45Speaker 01

  It's not good. I think it's.

• 1:37:49Speaker 01

  The broker is going to make all the money. Robin Hood will do well. Not you.

• 1:37:56Steven Bartlett?

  Do you think anyone can make loads of money as a long term day trader?

• 1:38:00Speaker 01

  I look at it this way. If you study the Forbes 400, the 400 richest people in the US, in the world, in the world, actually. I don't see any day traders in there.

• 1:38:15Steven Bartlett?

  One of the last things I wanted to speak to you about is this idea of circling the wagons.

• 1:38:22Speaker 01

  Yes.

• 1:38:22Steven Bartlett?

  What does circling the wagons mean?

• 1:38:25Speaker 01

  Warren Buffett said that over a 50 year period of running Berkshire Hathaway. He's made hundreds of investments. And only 12 have moved the needle for Berkshire Hathaway. So it's the same three or 4% rule where if we say that Warren made 300 investments. He probably made more than 300, but let's say he made 300 decisions. Only 12 have resulted in what we see as Berkshire Hathaway today.

• 1:39:09Speaker 01

  And the important thing was not the buy decision on those 12. The important thing was never selling them. So circle the wagons is a term that comes from the 19th century. When these pioneers were moving west, the wagon trails moving west. And the native 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.

• 1:39:53Speaker 01

  But the wagons being circled was the best possible, 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.

• 1:40:16Steven Bartlett?

  What's that?

• 1:40:17Speaker 01

  A big winner, you know, 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-bagger or not, but we may figure it out after we own it. So after we, we are 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 well 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.

• 1:41:03Steven Bartlett?

  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 of your great decisions. What is the worst ever decision you made in terms of financial performance?

• 1:41:15Speaker 01

  Well, I've had so many zeros. So, I mean.

• 1:41:20Steven Bartlett?

  All the one that got away?

• 1:41:21Speaker 01

  I mean, yeah, I mean, so the, there's mistakes of commission, which is things going to zero, and there's mistakes of omission. The mistakes of omission are far, far worse. Okay, so the biggest mistakes I've made aren't the ones that 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.

• 1:41:53Steven Bartlett?

  Give me one example.

• 1:41:54Speaker 01

  Well, so I think this was in about thirteen years back, two thousand and twelve. I invested in a company called Fiat Chrysler Automobiles.

• 1:42:05Speaker 01

  Basically, it was coming out of bankruptcy after the financial crisis. They had gotten rid of all their debt and everything and the stock was very cheap. It was about five or six billion dollars that you could buy the whole business. One of the things I didn't pay too much attention to at the time was that eighty percent of Ferrari. Was inside Fiat Chrysler and they owned Ferrari, eighty percent of it. And but they had many other assets which I liked. They had the Ram trucks and Jeep and Maserati 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.

• 1:42:50Speaker 01

  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. So they actually then listed the company. And it looked like that they had captured all the value. And so I sold. I used to own approximately one percent of Ferrari as part of that purchase that I'd made. So eighty percent of Ferrari was in this five billion dollar company. Ferrari now has a market cap of almost a hundred billion.

• 1:43:30Speaker 01

  And I would have about a billion more if I had not done that stupid thing. So I I made a couple of hundred million on this whole thing, but it would have been a lot more. And all I needed to do was just not sell it.

• 1:43:48Steven Bartlett?

  Do you deal in crypto at all?

• 1:43:50Speaker 01

  No.

• 1:43:50Steven Bartlett?

  Do you invest?

• 1:43:50Speaker 01

  It's outside my competence. I don't understand it.

• 1:43:54Steven Bartlett?

  I was gonna say, one of the things I know 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.

• 1:44:03Speaker 01

  Well, what will be the point of the bees without being happy?

• 1:44:07Steven Bartlett?

  Well, a lot of people aren't, as you know.

• 1:44:09Speaker 01

  Well, 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 Mohnish loves. And that changes all the time, but that's the way it is.

• 1:44:33Steven Bartlett?

  What is that?

• 1:44:34Speaker 01

  Well, currently it's golf. Like, one of the things I really struggled with today was there wasn't going to be any golf. So I said, it's either Steven or golf. Should I go to Steven or should I go for golf? I said, you know what? Give the arms a rest.

• 1:44:54Speaker 01

  Let's go meet Stephen.

• 1:44:56Steven Bartlett?

  I'm glad you did. We have a, you've probably just answered this question. We have a tradition where the last guest 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?

• 1:45:11Speaker 01

  I'd go to the golf course.

• 1:45:12Steven Bartlett?

  Thank you so much.

• 1:45:13Speaker 01

  Oh, it's a pleasure.

• 1:45:14Steven Bartlett?

  Thank you for everything that you do. It's so incredibly important. And I now know why you, 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.