Mohnish Pabrai — Self-made investor and founder of Pabrai Investment Funds, managing over a billion dollars. Author of The Dhandho Investor and a noted disciple of Warren Buffett's value-investing approach.
The gist
Pabrai walks Steven Bartlett through the mental models he has accumulated over decades as an entrepreneur and investor. He argues that entrepreneurs do not take risk but minimize it, that cloning existing businesses beats inventing new ones, and that a 9-5 job is riskier than starting a company. He details a practical playbook for going from employee to founder in about nine months using free time and cheap capital, then pivots to investing fundamentals: the rule of 72, the power of long-runway compounding, and why low-cost index funds beat stock-picking for most people. He closes with lessons on recruiting A-players, building moats, circling the wagons around big winners, and his biggest investing regret.
Big reveals
- Pabrai admits that while building his startup he deliberately let his job performance drop to 'just above firing level' so all his energy went into his business.
- Reveals he funded his first startup by signing up for every credit card he could get plus cashing out his 401k, assembling about $100,000 in capital.
- Argues the Native Americans who sold Manhattan for $23 were NOT cheated, because at 7% compounding that sum would exceed $23 trillion today.
- Recounts Bill Gates telling him at dinner that the membership-fee models of Costco and Amazon Prime are effectively 'illegal' because they lock consumers in.
- Calls Apple 'somewhat risky' as an investment, saying nothing genuinely new has come out since Steve Jobs left.
- Says his worst mistakes are mistakes of omission, then confesses selling his Ferrari/Fiat Chrysler stake too early cost him roughly a billion dollars.
- States crypto is outside his circle of competence and he simply doesn't understand it.
Things worth remembering
- Microsoft Word came from WordPerfect, Excel from Lotus, and Bing from Google; Pabrai calls Microsoft one of history's great cloners.
- Sam Walton chose the name 'Walmart' partly because seven letters made store signage cheaper.
- As a startup founder he mail-merged 200 letters a week using recipients' shortened first names ('Dear Dave') to slip past gatekeepers.
- His daughter cold-mailed roughly 1,200 hedge funds with a stock tip attached and landed a higher-paying job than her Berkeley business-school peers.
- The first 3,000 people hired at SpaceX were all personally interviewed by Elon Musk.
- The rule of 72: divide 72 by your return rate to find how many years it takes money to double.
- About 80% of US motels are owned by the Patel ethnic group, who make up roughly 0.1% of the US population.
- The founder of IKEA never took on debt and built every store from retained earnings, reportedly making decisions with a 500-year view.
- Only about 4% of listed companies generate 90% of stock-market returns, which is why Pabrai favors index funds.
- Over 50 years at Berkshire Hathaway, Warren Buffett says only about 12 investments truly moved the needle.
Recommended in this episode
Books, products and media the guest or host genuinely endorsed here — with the buy link.
Affiliate link — we may earn a commission at no extra cost to you.
The Dhandho Investor
Mohnish Pabrai
“I've got a book here which you wrote called the Dhandho investor. What what What does this word Dhandho mean?” — Mohnish Pabrai 01:16:00Find it on Amazon
Give and Take
Adam Grant
“that's the book that Adam Grant Grant wrote, Givers and Takers, is one of the mental models with is a great mental model to have” — Mohnish Pabrai 00:54:15Find it on Amazon
Caliper
Caliper Corporation (inferred)
“There's a company called Caliper we use for pre-employment testing.” — Mohnish Pabrai 00:58:24Find it on Amazon