#362 Li Lu

Charlie Munger said that Li Lu was the only outsider he ever trusted with his money. Decades before Li Lu made Munger half a billion dollars, Li survived one of the most horrific childhoods imaginable: Born into poverty, abandoned, hungry, beaten, surrounded by death. Persistent. Smart. Disciplined. Intensely curious. Obsessed with reading and learning. Determined to escape. This is a story you absolutely cannot miss. What I learned from reading Moving The Mountain: My life in China from the Cultural Revolution to Tiananmen Square by Li Lu. ---- Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more. ---- Build relationships with other founders, investors, and executives at a Founders Event ---- Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here. ---- Join my free email newsletter to get my top 10 highlights from every book ---- Follow Founders Podcast on YouTube (Video coming soon!) ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

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

• 0:00David Senra?

  A few weeks ago, I was talking to John Mackey, the founder of Whole Foods, and he told me one of the craziest things anyone has ever said about the podcast. He had listened to over 100 episodes before he met, and he told me that if founders existed when he was younger, that Whole Foods would still be an independent company. He said that since the podcast and all of history's greatest entrepreneurs constantly emphasized the importance of controlling your expenses, he would have put more of a priority on it, especially during good times. It is natural for a company, and I think for human nature, to just not watch your costs as closely because everything is going so well. Andrew Carnegie had one of the best ways to describe why this is so important, because he would actually repeat this mantra time and time again. He would say, "Profits and prices are cyclical, subject to any number of transient forces on the marketplace. Costs, however, could be strictly controlled.

• 0:45David Senra?

  And in Carnegie's view, any savings achieved in the costs were permanent." That quote from Carnegie is something I was talking about with my friend Eric, who's the co-founder and CEO of Ramp. Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp and have spent a ton of time with them over the last year or two. They all listened to the podcast and they picked up on the fact that the main theme from the podcast is on the importance of watching your costs and controlling your spend, and how doing so can give you a massive competitive advantage. That is a main theme for Ramp. The reason that Ramp exists is to give you everything you need to control your spend. Ramp gives you everything you need to control your costs. Ramp gives you easy-to-use corporate cards for your entire team, automated expense reporting, and cost control. Those last two words, "cost control."

• 1:30David Senra?

  There's a line in Andrew Carnegie's biography that says, "Cost control became nearly an obsession." I believe if Andrew Carnegie was alive, he would be using Ramp because Ramp would give him everything he needed to control spend, optimize all his financial operations on a single platform. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business control costs. That is ramp.com.

• 1:57David Senra?

  The book that I want to talk to you about today is "Moving the Mountain: My Life in China from the Cultural Revolution to Tiananmen Square," and it is written by Li Lu. Li Lu is the founder of Himalaya Capital Management, which he's been running for about 30 years. Li also had a 20-year investment partnership with Charlie Munger. Charlie Munger is the way I came to know about Li Lu, because one time Munger was talking about the importance of patience, and he told a story where he made 400, or he told the story of how he made about 400 or 500 million from reading Barron's magazine for 50 years. And Munger said, "I read Barron's magazine for 50 years. The entire time, I only found one idea that I could act on, only one. I made $80 million on that idea, basically risk-free.

• 2:40David Senra?

  And then I took that 80 million, and I gave it to Li Lu, and he turned it into 400 or 500 million dollars." So Li Lu is known to have this cult-like following, he's known to have fantastic financial returns, but that is not what this book is about. Li wrote this book in his early 20s, when he fled Communist China for the United States. When the book ends, there is no possible way for Li to know or predict what his future holds. And so I want you to keep that in mind as we go through what is going to be one of the most remarkably difficult childhoods that you and I have ever studied together. And so the book starts with Li Lu when he's in preschool. And I need to tell you upfront, this book is really hard to find. There's only two copies available on Amazon right now.

• 3:23David Senra?

  One is for sale for like $300, the other for $600. So I need to thank Kenny Lee and my friend Moses Kagan. Kenny lent this book to my friend Moses, and then he allowed Moses to send the book to me, which in turn allows me to make this podcast for you. So let's go ahead and jump into this unbelievable story. "The last three-year-old besides myself was crying in the big room of the kindergarten, a boarding school for preschoolers. But soon even he would go, and I would be left all alone. And then the hunger. I dreamt of eating lizard meat. The only thing I could do was drink water to fill my stomach so full that it hurt and made me briefly forget about my hunger." And so at this boarding school, this kindergarten, Lee is the only one without a family. So he's the only one that doesn't go home.

• 4:06David Senra?

  So imagine he's probably four or five years old. And every weekend, all the other kids get to go home. Lee cannot go home, and we'll find out why he can't go home. He goes, he's just gonna be in like nine different. I think he moves around nine different times by the time he's nine years old. So it says, "The other kids had come back and would show off the goodies they had brought from home. They talked about the movies they had seen or the stories they had heard from their parents." And so from the very beginning, Lee understands how different his life is from his classmates. "I was scrawny. I wore the same jacket and pants all year round. My clothes were covered with holes and patches. I was always dirty." And so immediately, he starts to get bullied by his entire class. "They somehow had learned that my parents were people with problems. Your father's a spy and your mother's a landlord's daughter. Remember, this is Communist China.

• 4:51David Senra?

  You're nothing but a bastard." The children would start to chant, "Bastard, bastard, nobody picks you up. Bastard, bastard, nobody picks you up." "My kindergarten was like a prison. Every day, we got up, dressed quickly and washed. Then the whistle blew and we lined up to go to the dining room. Then we sat at the long tables with our hands behind our backs. The teacher made a speech. The big kids would then recite some of Chairman Mao's quotations. The teachers would control the children by making them hate each other, by encouraging factions. That was what you could do when you had authority. The teachers beat the children with whatever was at hand. Flyswats or sticks and a bamboo switch. At meals, we had to sit still while the teacher put the food in our bowls.

• 5:35David Senra?

  If you ate too fast, you would be hit and you had to eat everything. I was scared to death." And so throughout this entire book, there's multiple examples of Lee being different from everybody else around him. And so at this time, there's when he said, "I dreamt of eating lizard meat." It's because at this boarding school, they were overrun with these giant lizards. And all the other kids said, "If the lizards touch you, they're poisonous and they'll kill you." And so this collective brainwashing is a major theme throughout the book. And so instead of actually looking in as what were being told true, all the other kids just accepted it. But Lee did not. And so one time, he had a bunch of lizards come on top, like they called all over him. And he's like, "Well, nothing happened. There was no poison." And this is the result. My courage grew. I was no longer afraid of lizards.

• 6:20David Senra?

  Gradually, I grew in confidence. Gradually, I realized that the most important thing was confidence. If you had confidence and believed you were right, you would feel stronger. And so that's the first indication of an important part of his personality is like, I want to seek the truth. I, he's intensely curious. He wants to gather information and have an accurate reading on the world. And he is a fighter. And so there's other kids in the same grade that are given authority by the teachers and they're called officials. There's a first, second, and third official. And they typically bully and try to intimidate the other kids. And this is what happens when they try to do that to Lee. The first official swaggered over to me, clenching his fist, but I was prepared and hit him first, knocking him to the ground, which completely crushed his position as the number one leader.

• 7:03David Senra?

  The second and third officials looked at each other and then ran away. This greatly enhanced the status that Lee had with his other kids. In our small society, it rose from the very bottom right to the top. Yet I retained a deep sense of inferiority from my lack of contact with the outside world. Wait till he learns how to read. That changes his entire life. Because at this point, he's completely, think about it, he has no family, no money, no resources of any time of any kind, doesn't leave. He's the only child not to leave the walls of the kindergarten. Everything he does, everything he learns is completely controlled by others. He has no idea what's going on with the outside world. And you see, right from the very beginning, he develops these instincts and these, these skills that become very valuable if you want to be an investor, right?

• 7:48David Senra?

  When other children were talking about what they saw and heard on Saturday night and Sunday, I felt inferior. I had no way of acquiring information. I had no home, no one to take me out, no food. So what does he do? When the kids come back, they usually, the little kids are like bragging, like, I saw this movie and I eat this. He starts asking questions and changing just these sessions of people bragging about what they did for the weekend as a way for him to learn. I had to ask detailed questions to understand a story and often interrupted the storyteller. I developed a keen sense of imitation, narration, and imagination. I had a great thirst for knowledge. My inquisitiveness and imagination came from my shut up life. These questions and answering sessions is the only way that he got information

• 8:31David Senra?

  about the outside world that I had never seen. So when he is six years old, he's actually attacked by a giant swarm of hornets. And his response to this gives you an insight into his personality. Says, "The more violently the hornets attacked me, the stronger my will was to fight them. Eventually, he collapses and is taken to the hospital." And then it's at this point that we first get his introduction to his biological father. "A week after I left the hospital, my father came to collect me. 'We can't keep the child any longer,' said the head of the kindergarten. 'When we agreed to take him, we were doing you a favor. We would not normally accept a child of such terrible family background.' My father carried me away on his bicycle. They can do," and he's talking about the government of China at this point, "they can do anything to you if your background is bad.

• 9:13David Senra?

  My mother was from a land-owning family, and that's bad. My father listened to a foreign broadcast on the radio, and someone overheard it, so they accused him of being a spy. That's even worse. Since the Cultural Revolution, all intellectuals have been considered useless. My parents, who had gone to universities, were put into the lowest category. Shortly after I was born, my parents had to send me to foster families. And then I went to that kindergarten. Even now, my parents couldn't keep me. They were both under political attack and couldn't even have a home of their own. My father took me to live with Da Pa." So that translates to Big Dad, which is what you and I will call him.

• 9:57David Senra?

  Big Dad and then Big Mom and their six children. My father and Big Dad had met in the coal mines. Big Dad is a true friend to Li Lu's biological father. And he agrees to take him in, even though he has six sons and a wife to support. They live in a tiny, little, two-room shack, I guess is what you would call it. They had very little money, to the point where all their clothes, including Li Lu's, had to be made by Big Mom. And the kids had to go out in the street and work. They had to feed themselves, they had to raise their own chickens. And so, they would go, including Li Lu and the other sons, would go out in the streets, picking up tree branches for firewood and collecting thrown-away cabbage for the chickens.

• 10:40David Senra?

  He is in a terrible environment for anybody, much less a six-year-old. And so a lot of the neighbors are impoverished. There's a lot of drinking. One of their neighbors is drunk all the time. He beats on his wife. There is all kinds of violence. And so there's a fight that breaks out. And during this fight, somebody tells Lee that your father is a spy. And so this part is absolutely heartbreaking. Imagine a six-year-old saying this to you. After the fight, Big Dad punished all of his sons except me. I cried and asked him, aren't you my dad? Why do they say my dad is a spy? Are you a spy? Big Dad said, I am your dad. Just ignore what they said. But there is this other man, Li Lu says. I also call him Pa. I said, who is he? Is he a spy?

• 11:24David Senra?

  He had spent so little time with his biological dad. He doesn't, he's not even sure who his father is. Big Dad sighed and said, don't think about it, child. You stay here. Nobody can do anything to you. If anyone wants to bully you, you have me here. I felt pained at my heart. And then another main theme of the book is the fact that humans, if they're put in a position of power and authority, will usually abuse that. He's constantly seeing the contradiction and the hypocrisy between what the state is telling them and what actually happens. And so there's a family in the community called the Zhangs. And he says, when I think of the Zhangs, I think of true evil. So these are people living in the neighborhoods, but they have close relationships with the government. And so they call them the director of the neighborhood committee.

• 12:09David Senra?

  And so the government sends the directors of the neighborhood committee ration tickets. Ration tickets were required to buy such things as meat, fish, and vegetables. But if the Zhangs did not like you, they could simply tell you that they didn't get enough tickets from the district government and essentially starve you. They also had close connections with the local police, which gave them further power. And this is his description of Aunt Zhang. She was cold and cruel and always found a way to hurt people. And so the neighborhood he's growing up in is inhabited. It's really close to the coal mines. It's inhabited by mine work, coal mine workers. That's what Big Dad does. He says, "One day, there had been an explosion in the mine. Dozens of miners were trapped. Big Ma looked stunned. Her husband was among the dozens of miners stuck down there." So Big Ma and Lillu go to the mines, and this is what happens.

• 12:53David Senra?

  "We saw about 10 miners emerge, pushing carts. On the carts were bodies. We found Big Dad on a cart. His face was blue, his mouth, nose, and ears full of coal. He was cold and hard. Big Ma collapsed. This family had lost its pillar." And so did Lillu. Remember, his dad, where he thinks is his dad, said, "Don't worry. I will protect you. I am here for you. The family had lost its pillar. What would they do now, a family of six children and a mother? The family collapsed. We had nothing left. Very soon, the family had nothing to eat. I could no longer stay with them." Think about that. That's an entire story in four sentences.

• 13:37David Senra?

  Everything I'm reading to you happens over many, many pages. But those four sentences tell you an entire story. "The family collapsed. We had nothing left. Very soon, the family had nothing to eat. I could no longer stay with them." Remember Big Ma and her six sons. We'll go back to them in about three years from now. Now, he's about seven or eight years old when this is happening. His parents are being quote-unquote rehabilitated by the Chinese government. And so for the very first time, he's going to live with his parents. They live together in a single, small room, no bigger than a room in a student dormitory, is the way that Lillu describes this. "My family finally had space of its own. Every few weeks, my mother would come in from the commune, where she's living and

• 14:20David Senra?

  working, and I guess being rehabilitated, and we would get together. I called the days when we were together the days I have a home. But I felt awkward with my parents. They were strangers to me." And so Lee does the math for us. He says, by the time he's almost nine, I had lived with at least nine families. And this is the beginning of this intense desire to learn, to learn how to read, and to make money so he can support himself and the people he loves. I felt superfluous, being shunted from house to house and gradually inferior. Perhaps the world did not welcome me. I wanted to grow up fast so I could make money and support Big Ma. One day, my father's institute told him that he would be sent away for six months.

• 15:05David Senra?

  My mother was still living in the Orchid Commune, and none of my parents' friends could take me in any longer. And he is saved by the generosity. He's got a bunch of teachers. But he's got a few that have great hearts and that actually care about him and want to teach him and help him. One day at my school, teacher Wang said to me, I hear you're leaving us. Do you still want to learn to read and write? I told her, I want to study. She said, you cannot leave here. You can live in my home if your family cannot take care of you. And this is going to be one of the most important sentences of the book, because it's going to be the foundation upon which his future wildly, wildly successful career is going to rest upon. I had begun to love reading.

• 15:47David Senra?

  And yet, in every new environment, he finds the same reoccurring theme, that those in authority, that those in power routinely abuse the people that they have power, control, and dominion over. And so there's this kid in the neighborhood called Fatty. Fatty's father was the chief of the Bureau of Electricity, so he's a very important person. And Fatty is a bully, and Lee is a fighter. And so when Lee sees Fatty beating up a girl, this is what happens. Fatty was furious, dragging the girl along by her hair. She screamed in pain, so I went up to Fatty, slapped his face, and said, let go of her. I bit his hand. I seized a stone and began hitting him on the head. Fatty had hardly expected a skinny boy like me to fight so fiercely and effectively.

• 16:33David Senra?

  And since Fatty's family is powerful, they try to take revenge against the family of the teacher that's letting Lee stay there. He has to go and apologize even though he doesn't want to. And he says, "I felt like a jinx. Wherever I went, bad luck followed. In despair, I cried. I said in my heart, 'Wait till I grow up, Fatty. See how I will settle accounts with you.' It seemed that my childhood was over. I was no longer carefree. I lost all interest in games. I wanted to see and learn so many things. I started to observe, study, and understand people. I became more and more reserved and introverted." And so what he's describing is he did not have the luxury of a childhood. He was forced to grow up fast. And somehow, his life continues to get even worse. Lee Lu survives the 1976 Tangshan earthquake.

• 17:18David Senra?

  The Tangshan earthquake is the deadliest earthquake in human history. Over 300,000 people are going to die. The earthquake was so loud and powerful that in its immediate aftermath, everybody in the neighborhood thought that the atomic bomb had been dropped on them. It's completely dark when it happened. There's no electricity, and Lee is running for his life. And he says, "Suddenly, I tripped over something. My hand touched something fleshy. It was a severed arm. I blacked out and fainted." He wakes up. "I looked around in the daylight. All the buildings were gone. I ran as fast as I could towards the place where Big Ma and her family had lived. Their house had caved in, but the roof survived. Someone had dug a hole in the roof to look inside.

• 17:59David Senra?

  When I looked down through the hole, I saw six pairs of blue and black legs lying there. All their upper bodies were crushed under the roof. The last time I seen legs of such color was when Big Dad died. As soon as I saw them, I almost blacked out. The heads of Big Ma and the children had been crushed. Their brains were everywhere. Big Ma was kneeling over the two little ones. When the earthquake came, she must have knelt over their heads to protect them with her back. Now, whenever I think about mothers, I think of Big Ma kneeling over the children."

• 18:39David Senra?

  He is 10 years old when this is happening. So the entire town, gone. So he is sent to go live with his mother at the commune, at the orchard, orchard commune that she's at. And we see the same thing. The people in power, they preach equality, we're all the same. And yet they do everything in their power to live differently than everybody else. Life at the orchard commune where I had gone with my mother and brother appeared peaceful and balanced. Everyone seemed to be eating and drinking like anyone else. But behind the facade, the crude inequality made me furious. The party secretary had set up a separate tent for his own family. The cook prepared food separately for his family. The secretary's family had better food because all of the relief goods were sent to him first.

• 19:23David Senra?

  They considered these relief supplies to be their own property. The party leadership had said that we're all the same, that we should never take a piece of thread that was the public property, that we must be honest. He is realizing that they are all brainwashed. That the official propaganda does not match the reality on the ground. He sees this over and over and over again during his young life. And listen to how they described the death of their leader. This is when Chairman Mao is gonna die. While he's in school, one day, the loudspeaker, which had been silent for weeks, suddenly came to life. Now important news is to be announced. Now important news is to be announced. This one sentence was repeated for half an hour, and then finally, a heavy voice spoke. The great leader of the Chinese people, the founder of the Chinese Communist Party, the

• 20:08David Senra?

  great teacher of the revolution of the world, the red sun in, in the hearts of the Chinese people, the chairman of the Chinese Communist Party, and the chairman of the Party Military Committee, Comrade Mao, passed away due to an incurable disease. And he details the reaction to the people around him. They're crying and mourning. It's like you would, you would expect their reaction is like almost if your childhood died. The government had complete control over the flow of information, and the kids were indoctrinated and brainwashed before they could even read. And so at this point in his life, he's back to living with his mom and his dad in this like tiny little shack. And he says, "Winter was coming. Nothing was more important than acquiring a warm house." And so in order not to freeze to death, they have to build this thing called a kang,

• 20:53David Senra?

  also known as a kang bed stove. So this is a traditional heated platform used for sleeping in the northern part of China where the winter climate is very cold. And so other people in the community realized that Li's dad is very good at building these kangs. And so they come to him and ask him for help. "My father became well-known in the area as an expert kang maker. Every day, people came to ask him for help. I was enchanted by my father. He was like an enigma, a riddle to me." Before the earthquake, I'd never lived with my parents as a real member of the family for very long. So these trips with my father to build the kang helped me understand him better. Everywhere he went, people praised him. He was good at everything. I began to be proud of him. He was a first-rate bricklayer, an excellent house builder, and an expert in building kang.

• 21:37David Senra?

  And so it's during this time that he's living with his mom and dad that he finds insight into their past lives and why they were ostracized and why he was sent away. And so he finds this suitcase full of pictures and writing. He says, "I found pictures of foreign architecture, bridges, churches, and people in strange costumes. I saw pictures of a young man with glasses, wearing a white, western suit. He looked so elegant and handsome. There were several photos of that same young man rowing a boat or hunting with a gun. The more I looked, the more mysterious I found the people and places in the photos, and the more excited I became. Then it dawned on me that the young man was my father." I told my parents of the small suitcase with the many strange things in it. Hearing this, my mother became very nervous. "How could you look at those things? You were only

• 22:19David Senra?

  a child." She was so nervous. My father's response was different. He said calmly, "What of it? If the child is interested in those things, let him look at them. Didn't the Cultural Revolution end?" And so for the first time in his life, Lee is now getting the information he needs to understand what was happening to him. So he talks about the fact that they studied abroad, that a lot of those pictures came from the Soviet Union. "They told us about their childhood, their courtship. My father came back from studying in the Soviet Union. My mother talked about her life. And the fact that intellectuals, which his mother was one, were sent to do farm work as some form of ideological remolding. The life they described seemed so different from mine. It was a mystery to me. They were proud of their life in the 1950s. It sounded like another world. I felt I could learn

• 23:02David Senra?

  a lot from them. From that night, I felt I had a home, a father and mother. I felt I had a history and a goal." And so this is where we see that Lee's intense, intense dedication to learning, to reading. It's going to serve him wonderfully in his future career. In fact, there's a great Financial Times article about Lee. I actually might do another episode on Lee after this. But it says, "Lee's mantra became accurate and complete information." I'm reading from the Financial Times article right now. "Lee's mantra became accurate and complete information. Complete sometimes meant going to extraordinary lengths to get a read on the CEO of a company being researched by Himalaya Capital Management, such as attending their church or talking to their neighbors." This is why biographies are so important, why understanding the early life of somebody

• 23:47David Senra?

  is so fundamental to understanding why they do the things they do, why the way they are. There is a talk about this. So I also watched this. He gives a lecture at Columbia Business School. Lee gives his lectures in like 2006. A big part of the lecture is Lee absolutely admonishing, "These are Columbia MBA students." And Lee is lighting them up about how unprepared they are. There couldn't be more of a stark contrast between the unpreparedness of these Columbia MBA students with the way that Lee conducts research and runs his company. And why?

• 24:23David Senra?

  It is learning, it is reading, it is work ethic that saved Lee's life. If you grew up like he did, you have two options, find a way out or perish. And so at this point in the story, his dad is giving him the map of a way out. You look so happy these days, father, why? Yes, he said, I'm happy. The National College Entrance Exams have resumed. I asked, what is a college entrance exam? He said, any young person who wants to enter college has to pass an exam. It's kind of a competition. What is a competition? I asked. Competition means you work hard and society will give you a reward. I still didn't quite understand it. Is competition a good thing? Of course it is, he said.

• 25:06David Senra?

  Little Lou, you should work hard to prepare for your future. Go to college and study hard, he said. Now I remember this talk and the last sentence repeated itself constantly. I now knew what I wanted to do. I want to go to college. I had found my road to paradise. I kept saying to myself, I want to go to college. I want to study. This book is going to end with the Tiananmen Square massacre and Lee literally being on the run from the Chinese government. He's put on the list, I think, of like the top 21 most wanted student leaders for the Tiananmen Square demonstrations and protests and everything they did. Some of them did not escape to other places like Lee was able to.

• 25:48David Senra?

  And as a result, they spent nine years in prison, 13 years in prison in China. And so when Lee tells you in the book right now, I found my road to paradise. I kept saying to myself, I want to go to college. I want to study. He moves to the United States. He can't speak English. He learns English in a summer and he becomes one of the first people in Columbia's school history to receive three degrees simultaneously. He gets a BA in economics, an MBA and a JD. So it makes perfect sense with what we've gone over so far in the book, with what you know about his background. And then you go watch that lecture that he did at Columbia Business School and he is lighting them up. He cannot believe how unprepared they are. There's a scene in a movie that I think about very often. There's this movie called Seven with Morgan Freeman and Brad Pitt.

• 26:32David Senra?

  And there's a scene in the movie where Morgan Freeman is let into a library late at night by some security guards. He's there to do some research. The security guards are sitting upstairs and instead of reading or learning or trying to improve what they know about the world, they just sit in an empty library at night and they sit around playing poker. And Morgan Freeman, the character that Morgan Freeman plays, puts down his hat and says, "Gentlemen, I'll never understand you. All these books, the world of knowledge at your fingertips, and what do you do? You sit around and play poker all night." I think of that scene when I watch Lee Liu's lecture to the Columbia MBA students. And I think of that scene because Lee's response is the exact opposite.

• 27:15David Senra?

  So there's more than 100,000 schoolchildren that take part in this competition. And Lee comes in fourth in composition, sixth in oration, and among the first 20 in math. Around this time, he's reunited with his grandmother. "His grandmother," he says, "was one of the first people to encourage me. She declared to everyone that I was no ordinary child." She, in a previous life, had been the principal of a school and part of the local government legislative committee. And for that, she was sent to 20 years in prison. And so at the school he's at, he winds up meeting this woman. He says, "The woman on crutches told me that she worked in the school's new library. Come and see the library. It astonished me to see so many books all at once, thousands of them.

• 28:00David Senra?

  I had never seen so many books in my life before." In books, listen to how he describes this impact. Remember, this is a person that just unbelievable struggle and devastation for the first, you know, 12, 15 years of his entire life. Very limited view on the outside world. And this is where he realizes books is his way out. "In books, I could travel to every corner of the world and communicate with the people there. I would read all day long." As I was doing research for this episode, I came across this wonderful quote by Charlie Munger that I think Lee Liu would agree with. Charlie says, "As long as I have a book in my hand, I don't feel like I'm wasting my time." Here's another thing that Lee... Now, think how crazy this is. This is why I started with that story of Charlie Munger at the very beginning of

• 28:45David Senra?

  the discussion that you and I are having. The version of Lee Liu that's writing these words that you and I are going over does not know Charlie Munger, doesn't know of his existence, sure as hell doesn't know that he's gonna in the future have a 20-year partnership with him. Listen to what Lee, that version of Lee, is describing this unfettered access to a library, what that's doing for him. "Most of the friends I made in books," Charlie says. "Reading biographies means you're making friends with the eminent dead." They describe it the exact same way. That blew my mind. So this reading continues into what he calls senior middle school, which I think is like our version of high school in America. And so he's reading biographies. Specifically, he's reading about biographies of scientists.

• 29:27David Senra?

  So he's reading The Atom in My Family, which is by Enrico Fermi's wife, which tells the life story of her husband. And he's also reading about Albert Einstein and Albert Einstein and his Olympia club. So he goes, "Oh, I think we should have a Chinese Olympia club to read and discuss the problems of our generation, its development, the reforms, and China and its future." So this group would read and write and meet. It says, "The group met for the first time and we decided to call it 'Stream,' because both of our quietness and persistence would flow like a stream. This group must be kept secret because the present educational system suppressed human nature. Students were slaves and teachers were gods, and so you were not allowed to question them. You were not allowed to question, is what you're being told true?"

• 30:12David Senra?

  And so one of his teachers that take a liking to Lee realizes that you have to get out of China. David Ogilvie has this great quote where he says, "Talent is most likely to be found among nonconformists, dissenters, and rebels." Lee is definitely a nonconformist, a dissenter, and a rebel, and that's very dangerous in China. And so originally, Lee is studying physics. He eventually changes to economics, but his teacher tells him, "You have talents in physics, but you cannot study here in China. You should go to the United States, study and research, need an atmosphere of free inquiry." And so as this conversation continues, you realize that his teacher is giving him great advice that he did not follow. He had a tremendous variety of books and magazines, but why should he still be reading when he was already so well-read? Lee didn't understand, and this is something Lee talks about, the compounding nature of knowledge. So he says, "One night, he told me a story.

• 30:56David Senra?

  I was born in a peasant family in a remote village." This is gonna sound like Lee's life story. "I was born in a peasant family in a remote village. For generations, my family tilled the land. The only thing I could offer was my youth and vigor. I could work hard and study well. So I only slept four or five hours a day, and I read continuously. Though I was in a remote village, I spent all my money on books. I realized there was another world outside this one." He sighed. "In our country, what you like, what you want to do, and what you get to do are all different." Hence why he's telling him to go to the United States. "Each one of us is but a small part of a big machine in society.

• 31:35David Senra?

  Only those who have power can decide what role each of us can play in the machine." And Lee is very similar to this teacher, where he's like, "You know, all I had was youth and vigor. I could work hard and study well, so I'm just gonna dedicate my life and really go after it." And we see that Lee does the same thing. "I drew up a detailed plan for myself. There were three months left before the exam. Every morning, I got up at 4:45. From 5:00 until 6:00, I studied for an hour. From 6:00 until 6:30, I ran to school as exercise, and then reviewed what I had studied in the previous hour. I then stayed at school all day. At 9:30, I ran home, 9:30 PM, that is, reviewing the day's study. At home, I ate something and worked until midnight. My desire to meet the challenge grew.

• 32:19David Senra?

  I knew that I would pass. Soon, the results were announced for each school. I was fifth in my school, and I knew I would get into a good university." So that is the end of the first half of the book. I recommend, if you can get a copy, or hands-on a copy of the book, definitely read the first half of the book up until he goes to college. The second half is about becoming much more politically active, and then it ends with the Tiananmen Square massacre, and Lee having to flee for his life. So I'm gonna pick it up right there. "Television, radio, and ubiquitous loudspeakers all kept repeating, 'Citizens of Beijing, stay in your homes tonight. Students, return to your colleges. The army is going to clear out Tiananmen Square tonight. Citizens of Beijing, stay in your homes tonight.'"

• 33:02David Senra?

  I saw the army start to march towards the square. People tried to stop them with their bodies. Soldiers pushed their way forward, bayonets raised. A girl student from Beijing University went up to the soldiers and said, "The students aren't rioters, but patriots." A soldier thrust his bayonet into her chest and she fell down dead. People ran over to her. The tanks kept coming and coming and opened fire. Everywhere people were dropping, people could not believe that the government could have shot at its own people. The tanks never stopped and they ran over the bodies. The soldiers were mad. They killed whoever was in their way. Hundreds of armed soldiers charged the crowd. Gunshots created chaos. The north side of the square was a sea of fire.

• 33:47David Senra?

  Dozens of tanks entered the square. All the tents were being smashed under them. There were still hundreds of people in them. They had gone to sleep, thinking the worst would be that the police would haul them on to a bus and send them back to college. Now they were being ground to pieces. People shouted names, parents trying to find their sons and daughters. My mind became stone. Only one thought was chiseled on it. Why am I still alive? And so now everybody's fleeing and trying to run from Tiananmen Square. And Li says, "Over the next few days, I stayed at a different place each night.

• 34:30David Senra?

  The government put my name on the list of wanted people. Our descriptions were issued to customs, railway stations, bus stations, neighborhood committees. Our photos were posted all over the country and shown on television." And so at this time, Hong Kong is still a British colony. And so Li actually uses a smuggling route that was established to bring contraband of Western goods from Hong Kong. And so he uses that route to escape China. And he describes the last day in China. "Dawn was approaching. I came out of the basement and took a deep breath. I would not go to prison. I would escape. I looked back on my life so far. I had grown from an unwanted child to a fighter in Tiananmen Square. And now I was a criminal wanted by the government. I had experienced oppression and rebelled against it. I didn't want to give in.

• 35:14David Senra?

  I wanted to escape. I didn't know what kind of life awaited me. I just knew that I was on my way." That is how the book ends. This is when he starts a new life in New York at 23 years old. 23 year old Li Lu had no idea, couldn't possibly have known what lay ahead in his future. Highly recommend reading the book. If you can get a copy of the book, I will leave a link down below. If you buy the book using that link, you'll be supporting the podcast at the same time. I'm in the process of doing research on another Li Lu episode. This all about how he thinks about investing and company building, what he learned from Buffett and Munger. If I can get enough material to make an episode that's worthy of your time, that'll be the next episode I do. But in the meantime, that is 362 books

• 35:59David Senra?

  down, 1,000 to go, and I'll talk to you again soon. Real quick before you go, if you already subscribe to Founder's Notes, make sure that you log in and get access to this new feature that I've added. There is now a private podcast feed included in every subscription to Founder's Notes. There's 51 short bonus episodes waiting for you, and I'm making more short episodes based on the research that I do using Founder's Notes. So each episode will cover a single topic, like how do history's greatest entrepreneurs think about leadership? Or a single person, like what are Henry Ford's best ideas? I'm going for a maximum insight to time spent ratio. So for example, I made an episode on James Dyson. I took a 40 year career, 40 hours of reading, down to 12 minutes full

• 36:43David Senra?

  of ideas from James's career that you can use in your life and work. If you don't already subscribe to Founder's Notes, highly recommend that you do so because subscribers to Founder's Notes have access to all of my notes and highlights for every book that I've read for the podcast, all in one giant searchable database. The podcast is a great tool to learn from history, but it's pushed to you. Founder's Notes gives you the ability to control it. It gives you the ability to tap into that collective knowledge of history's greatest entrepreneurs and use it when you need it. If you're going to spend hours and hours listening to different Founder's episodes, I would encourage you heavily to invest in a subscription for Founder's Notes. It makes the lessons that you're learning on the podcast even more powerful. It is the same tool that I use myself. I built it for myself years

• 37:26David Senra?

  before. I even had the idea to make it into a product and service that other people can use. Anytime you hear me pulling up an idea or a quote from a past episode, that is me searching Founder's Notes. And I use it because it gives me the superpower to tap into the collective knowledge of history's greatest entrepreneurs on demand. And you can do so as well by going to foundersnotes.com and signing up for a subscription. That is founders with an S, just like the podcast, that's foundersnotes.com. Thank you very much for your support. Thank you for listening and i'll talk to you again soon.