Warreni'm going to be meeting actually charlie on thursday for lunch so in about a couple of days which will be fun and he's going to be 98 in january 1st and no mental decline lots of physical decline but you know charlie says to me that he hasn't spent an hour in his life working out and all the you know thousands of hours he saved added to his reading time and all his doctors who kept telling him otherwise are all dead so and he also tells me that 99 of the friends he's known are dead but i told him it's okay charlie you got some new ones and he always looks at the positive side so i mean i think charlie is one of the i would say broadest thinkers you would ever encounter and i have to pinch myself that we are i mean not only that i need them but that even in living in the same time uh all of us are living at the same time
Questioneruh all of us are living at the same timeuh all of us are living at the same time as he is living just like it's veryas he is living just like it's veryas he is living just like it's very unusual for all of us to be living inunusual for all of us to be living inunusual for all of us to be living in the same time as elon musk is livingthe same time as elon musk is livingthe same time as elon musk is living living so these are these are veryliving so these are these are veryliving so these are these are very unusual people and historic figures thatunusual people and historic figures thatunusual people and historic figures that will go down in historywill go down in historywill go down in history and and such but the range of things weand and such but the range of things weand and such but the range of things we talk about is is quite quite wide but italk about is is quite quite wide but italk about is is quite quite wide but i would say that both with warren andwould say that both with warren andwould say that both with warren and charlie there is so much in the publiccharlie there is so much in the publiccharlie there is so much in the public domain with both of themdomain with both of themdomain with both of them that you don't need to know themthat you don't need to know themthat you don't need to know them especially that's especially through aespecially that's especially through aespecially that's especially through a warrant that you can learn a lot fromwarrant that you can learn a lot fromwarrant that you can learn a lot from both of them just by being in the roomboth of them just by being in the roomboth of them just by being in the room you're in and not going anywhere soyou're in and not going anywhere soyou're in and not going anywhere so so they open books they've shared quiteso they open books they've shared quiteso they open books they've shared quite widelywidelywidely and they're shared quite openly and soand they're shared quite openly and soand they're shared quite openly and so that gives us a lot of wonderfulthat gives us a lot of wonderfulthat gives us a lot of wonderful learning andlearning andlearning and and knowledge which is which is great soand knowledge which is which is great soand knowledge which is which is great so i would say that the things thati would say that the things thati would say that the things that probably i learned from charlie in the
Warrenprobably i learned from charlie in the interaction with him i would say more has more to do with me just observing him not so much in terms of what he says but in terms of just me just seeing how he how he lives his life and you know how he spends his day and and so on so one is that charlie has these mental models that he believes that if you hard code them in your brain especially learn to overlay them it gives you huge advantages in life but one of his mental models is to not engage in self-pity so his wife died a few years ago very long close relationship i mean she had an accident she fell backwards down the stairs it was not it was very unpleasant you know then she had a lot of surgeries inside but the whole experience was very negative but i've never seen charlie brood about it he has sight in only one eye and a few years back i saw that he
Warreneye and a few years back i saw that he was having a lot of trouble with his second eye there was some problem with the optic nerve on the second eye where he almost lost his sight and then he was able to do an experimental procedure that brought back a lot of the site but he still had to use very powerful lights through that process when i saw him about to lose his second eye and the only thing that charlie cares about a lot is reading it's his number one love in life so it's you know he is kind of nature taking away the one thing he truly loves even in that circumstance i did not see him engage in self-pity what i just heard him say at the time was i might have to learn braille you know and so he looks forward and even now he was recently telling me that his his eyesight is really deteriorating it's much harder for him to read
to readto read sees a lot of floaters and such butsees a lot of floaters and such butsees a lot of floaters and such but i think i think the big lesson i'vei think i think the big lesson i'vei think i think the big lesson i've taken from charlie is not what he hastaken from charlie is not what he hastaken from charlie is not what he has said to mesaid to mesaid to me is what i have observedis what i have observedis what i have observed and what i have observed is stoicand what i have observed is stoicand what i have observed is stoic behaviorbehaviorbehavior to the power of strike behaviorto the power of strike behaviorto the power of strike behavior and to me that's the biggest take homeand to me that's the biggest take homeand to me that's the biggest take home is thatis thatis that here's someone whohere's someone whohere's someone who doesn't complain no matter what you knowdoesn't complain no matter what you knowdoesn't complain no matter what you know just takes whatever is dealt to them andjust takes whatever is dealt to them andjust takes whatever is dealt to them and uh continues forward so it's it's beenuh continues forward so it's it's beenuh continues forward so it's it's been really wonderful toreally wonderful toreally wonderful to see that in action and and learn fromsee that in action and and learn fromsee that in action and and learn from that so speaking of observation ithat so speaking of observation ithat so speaking of observation i believe i saw a tweet by you go about anbelieve i saw a tweet by you go about anbelieve i saw a tweet by you go about an hour an hour ago where it seems likehour an hour ago where it seems likehour an hour ago where it seems like your daughter is starting anyour daughter is starting anyour daughter is starting an entrepreneurial journey so what are someentrepreneurial journey so what are someentrepreneurial journey so what are some things that you think she might havethings that you think she might havethings that you think she might have learned from you watching you and yourlearned from you watching you and yourlearned from you watching you and your entrepreneurship success as you can seeentrepreneurship success as you can seeentrepreneurship success as you can see i have this beautiful stash and thei have this beautiful stash and thei have this beautiful stash and the stash is beautiful because i use thestash is beautiful because i use the
Otherstash is beautiful because i use the product of my daughter's startup so there are four of them who started this kind of beauty product style they have this first product which is terra edition which is a pre-shampoo one of them is a very gifted chemist so i think she did a kick-ass job on it and so well i think i find that my daughter picked up a lot of stuff about entrepreneurship and things because just observing things going on and of course we've had a number of conversations over the years but i find that her instincts on a number of fronts are pretty right on so i mean i think that when you're engaging in a startup i would separate startups into two categories venture-backed startups and non-venture-backed startups venture back startups may make up less than maybe one tenth of one percent of startups so they're for the most part irrelevant they're an aberration or an
Otherirrelevant they're an aberration or an anomaly non-venture-backed startups is what 99.9 of humanity engages in and in back startups what entrepreneurs do is they try really hard to minimize risk they do everything in their power to reduce risk and which is counter to what most people think people think that when people start businesses they go high risk high return most entrepreneurs are trying to go low risk high return and so i've seen it even in her startup they've tried to do a number of things with which muted the downside and took away the odds of spectacular failures and so on so they did a good job i think the product is pretty good it's still very uphill and it's still very low probability that it would scale and grow and be very successful but they don't have much of a burn and they've got a long runway so burn and they've got a long runway so wish them all the best so anybody out
Questionerwish them all the best so anybody out here have questions on zoo raise your hand first off thank you so much for uh having me up for letting us have the opportunity to speak with you um i really appreciate it i'm a portfolio manager for the amazing investment club that we you know are co-hosting tonight with the entrepreneurship center my question is we always like to talk about learning more educating ourselves and investing my question is if you were to advise a college student interested in investing and they have limited knowledge what would be you know the first thing that you would tell them to do or what would be a recommendation to learn i guess on like learning and how to better yourself and gain knowledge well
Warrenthe first thing i'd suggest to them to do is open a brokerage account but i wouldn't ask them to open it at robinhood i would ask
Questionerthem to open it at robinhood i would ask them to open it at robinhood i would ask them to open the account that may be them to open the account that may be them to open the account that may be interactive brokers or td ameritrade interactive brokers or td ameritrade interactive brokers or td ameritrade e-trade one of those e-trade one of those e-trade one of those discount brokers robinhood is too much discount brokers robinhood is too much discount brokers robinhood is too much like a video game so that might defeat like a video game so that might defeat like a video game so that might defeat the purpose and i would i would say that the purpose and i would i would say that the purpose and i would i would say that the good great thing about investing now the good great thing about investing now the good great thing about investing now with with with all these platforms is they've gone to all these platforms is they've gone to all these platforms is they've gone to commission free trading which means that commission free trading which means that commission free trading which means that even if you had a hundred dollars or a even if you had a hundred dollars or a even if you had a hundred dollars or a thousand dollars or ten thousand dollars thousand dollars or ten thousand dollars thousand dollars or ten thousand dollars you can get started the frictional cost you can get started the frictional cost you can get started the frictional cost is zero basically so first i'd open the is zero basically so first i'd open the is zero basically so first i'd open the brokerage account brokerage account brokerage account and the second is that i would and the second is that i would and the second is that i would do do do research into research into research into different businesses different businesses different businesses and i would and i would and i would make myself aware of the make myself aware of the make myself aware of the what buffett called the 20 punch card what buffett called the 20 punch card what buffett called the 20 punch card what buffett says is that if investors what buffett says is that if investors what buffett says is that if investors thought of them themselves having thought of them themselves having thought of them themselves having you know this punch card where you could you know this punch card where you could you know this punch card where you could punch it 20 times in your lifetime punch it 20 times in your lifetime
Warrenpunch it 20 times in your lifetime and when you punch it for the 20th time that's your last punch which means in fact what he's saying is you you get to make 20 stock picks in your whole life okay now that's a very extreme view but if you knew that you only had 20 picks that you could make over the next say 70 years then you open the bag the brokerage account and you start doing analysis of different businesses so you start with businesses that you're familiar with you know businesses whose products you use you know you might be a user of apple or android or which means alphabet and you know you might use a certain paint company's products and you might wear certain clothing and you know use certain products for cooking or whatever so you're using all kinds of products in your everyday life so you're clearly familiar with the company's
Questionerclearly familiar with the company's products and for you to have chosen that company's products is what you're using already clears a pretty high bar because most things that we encounter we're not going to consume and then i would just say you know study those businesses to see which ones make sense and such and then when you study the businesses you know there are different tools you could read the berkshire hathaway letters going all the way back all the annual meetings are now on cnbc they've archived them i think buffett.cnbc.com and then you've got the different biographies on buffett and charlie you've got a book called charlie's almond hack so there's a lot of data to consume and in the brokerage account i would hope that you don't have a portfolio of more than three stocks so first of all you've only got 20 picks for 70 years
Questionerfor 70 years so you can't blow them all in you can't so you can't blow them all in you can't so you can't blow them all in you can't load 10 in one year load 10 in one year load 10 in one year so so so you know maybe pick one or two or three you know maybe pick one or two or three you know maybe pick one or two or three stocks that you have stocks that you have stocks that you have extreme high conviction about and then extreme high conviction about and then extreme high conviction about and then take it from there but you need a take it from there but you need a take it from there but you need a brokerage account so that it's real brokerage account so that it's real brokerage account so that it's real and so the gains and losses are real and so the gains and losses are real and so the gains and losses are real it wouldn't be the same doing it it wouldn't be the same doing it it wouldn't be the same doing it in excel so hi in excel so hi in excel so hi my name is miguel so i'm currently a my name is miguel so i'm currently a my name is miguel so i'm currently a junior attending the college and i had a junior attending the college and i had a junior attending the college and i had a question actually pertaining to one of question actually pertaining to one of question actually pertaining to one of the whole engineer fund i was able to do the whole engineer fund i was able to do the whole engineer fund i was able to do a little bit of research and i was very a little bit of research and i was very a little bit of research and i was very interested in the fact that you had the interested in the fact that you had the interested in the fact that you had the volleyball the chinese retail online volleyball the chinese retail online volleyball the chinese retail online retailer on there because i remember a retailer on there because i remember a retailer on there because i remember a couple of months back that the chinese couple of months back that the chinese couple of months back that the chinese government actually imposed an government actually imposed an government actually imposed an anti-trust law on them which tanked a anti-trust law on them which tanked a anti-trust law on them which tanked a lot of their value but lot of their value but lot of their value but i found it very interesting because it i found it very interesting because it i found it very interesting because it seems like you have a decent holding in
Questionerseems like you have a decent holding in that company and for me personally i wasn't able to see the growth value in that stock because again since the actual transformers might actually restrict the growth i just wanted to ask about your perspective on that like what sort of value you see and just if you could also talk about your investment strategy
Questionerall right so the only questions i'm probably going to dub today are the ones relating to current portfolio holdings i will duck the question on alibaba if you have another question now maybe you could ask it or maybe you could ask later
Questionerwould you like to ask another question
Questionerthat was kind of i'll think of another one but
Questionerokay sorry about that how about uh kind of going into uh miguel's question you have you're in a few different countries you're not just invested in the united states so how do you think about
Questionerstates so how do you think about assessing the political currency any risk like that when maybe not necessarily china but when you look at other countries outside the u.s yeah i
Todd Combsmean at the end of the day i really don't care that much about the geography and and such i'm a bottoms up stock picker so so what i'm most concerned about is specific nuances about the business in general micro events will trump macro events so the long term return you get out of the business will usually depend on how well that business does or how poorly that business does it won't have that much to do with you know what's happening with the currency and what's happening with who's running the place and you know who's running the country and so on so in general there are there are differences in different geographies in terms of some markets are more overvalued at certain times and others are more
Questionercertain times and others are more undervalued so you can find more opportunities in certain places versus others based on that so i would say in general i find like a place like turkey is very undervalued because of so much macro noise japan is undervalued because it's delivered such terrible returns for so long you know some pockets or maybe india and china might be undervalued you can definitely find a lot of undervalued businesses right here in the us as well and so that's fine so you don't really need to necessarily be looking across the globe i think the more important thing is to focus on looking at things that are within your circle of competence so it is not necessary to be you know aware of things globally there's an investment fund in minnesota and i don't know this is still their mandate but it's called the mayors and powers
Questionerit's called the mayors and powers fund it's a mutual fundfund it's a mutual fundfund it's a mutual fund and their mandate was to be mostlyand their mandate was to be mostlyand their mandate was to be mostly invested in minnesota companiesinvested in minnesota companiesinvested in minnesota companies and the fund did quite well i mean theyand the fund did quite well i mean theyand the fund did quite well i mean they did really welldid really welldid really well and if you think about you would thinkand if you think about you would thinkand if you think about you would think that it would be quite restrictivethat it would be quite restrictivethat it would be quite restrictive to be limited just to minnesotato be limited just to minnesotato be limited just to minnesota businesses or mainly to minnesotabusinesses or mainly to minnesotabusinesses or mainly to minnesota businessesbusinessesbusinesses but less can be morebut less can be morebut less can be more andandand that type of a focusthat type of a focusthat type of a focus allows you to get very specialized andallows you to get very specialized andallows you to get very specialized and allows youallows youallows you to actually know the business as wellto actually know the business as wellto actually know the business as well and in their case it's really easy forand in their case it's really easy forand in their case it's really easy for themthemthem to travel and meet the companies so beto travel and meet the companies so beto travel and meet the companies so be aware of the business they might haveaware of the business they might haveaware of the business they might have neighborsneighborsneighbors who arewho arewho are employees there are consuming theemployees there are consuming theemployees there are consuming the products and so onproducts and so onproducts and so on sososo it can give you a big edgeit can give you a big edgeit can give you a big edge if you are narrowly focused one doesn'tif you are narrowly focused one doesn'tif you are narrowly focused one doesn't need to be very broadly focused i thinkneed to be very broadly focused i thinkneed to be very broadly focused i think i think there'si think there'si think there's multiple ways to skip the cat yeah somultiple ways to skip the cat yeah somultiple ways to skip the cat yeah so many one of the things that youmany one of the things that you
Questionermany one of the things that you mentioned was actually like your circle of competence and just investing with them in that realm so i just like not everyone can be indonesian like have tech startups and things like that so how do we as young individuals find that circle of competence and actually grow that knowledge within that circle of confidence we can actually be better at investing
Questioneryeah actually so to ask the question is to answer it so if you find yourself asking yourself is business x in your circle of competence i can give you the answer the answer is no it's not in your com in your circular competence so anytime you feel you find that you're asking yourself a question like if you ask yourself a question do i understand apple then i would say no the answers you don't understand it because you wouldn't have asked yourself that question
Questionerhave asked yourself that question if you understood that business if you understood that business if you understood that business so we got a question from nick kwasnik so we got a question from nick kwasnik so we got a question from nick kwasnik and he was asking when he started and he was asking when he started and he was asking when he started transdeck in 1991 how did you go about transdeck in 1991 how did you go about transdeck in 1991 how did you go about recruiting and identifying high quality recruiting and identifying high quality recruiting and identifying high quality people to join you considering the small people to join you considering the small people to join you considering the small amount of capital that you started with amount of capital that you started with amount of capital that you started with
Otherwell well well
Otheri made a lot of hiring mistakes i hired i made a lot of hiring mistakes i hired i made a lot of hiring mistakes i hired a lot of people who were the wrong hires a lot of people who were the wrong hires a lot of people who were the wrong hires i i didn't have 90 of the frameworks i have didn't have 90 of the frameworks i have didn't have 90 of the frameworks i have now and that is exactly what a lot of now and that is exactly what a lot of now and that is exactly what a lot of other entrepreneurs do as well i mean other entrepreneurs do as well i mean other entrepreneurs do as well i mean the thing is we just don't know the thing is we just don't know the thing is we just don't know everything we need to know at the time everything we need to know at the time everything we need to know at the time when we need when we're executing so when we need when we're executing so when we need when we're executing so there were lots of hiring mistakes they there were lots of hiring mistakes they there were lots of hiring mistakes they were also were also were also by random chance you end up sometimes by random chance you end up sometimes by random chance you end up sometimes you know you know you know amazing people amazing people amazing people so you end up with all of the above i so you end up with all of the above i so you end up with all of the above i mean i think that there's a famous old mean i think that there's a famous old mean i think that there's a famous old picture picture picture of microsoft which has like and you guys of microsoft which has like and you guys of microsoft which has like and you guys might have seen it it has bill gates and
Questionermight have seen it it has bill gates and paul allen paul allen you know paul allen has a big beard and it's got about eight or nine other kind of 70s looks early microsoft employees in there some of you might have seen that picture maybe you can google it in that picture the only people who stayed on for some period of time after that were just paul allen and bill gates the rest of those guys were gone so even the likes of bill gates who i think is extremely good at hiring and very smart also made a lot of hiring errors so those early people in microsoft went away and then the next crowd that came was a little better and they got better over time so i think a lot of companies early stage companies are getting going especially again non-venture-backed uh venture backed you get some advantage because eventual vcs can help you on that front they're going to make a lot
Questionerthat front they're going to make a lot of hiring mistakes because number one they have no brand nobody's heard about them really exceptional people may not be interested in joining them they see a lot of career risks but the bottom line is that it doesn't mean that the business is not going to work you just keep plodding ahead it can still work if it's a great model it can transcend some incompetence in the team and the important thing over time is to try to improve the team so either by you know natural attrition or deliberate action uh you need to start improving the team
Questioneryeah um just on that point you know i think that you started your startup you said you make a lot of mistakes what was the thing that really helped your company succeed though in overcoming those mistakes well i think the the important thing is that you have to
Warrenimportant thing is that you have to you have to have the rightyou have to have the rightyou have to have the right strategy you have to have the rightstrategy you have to have the rightstrategy you have to have the right productproductproduct and you have to have the right priceand you have to have the right priceand you have to have the right price and you have to know how to sell thoseand you have to know how to sell thoseand you have to know how to sell those you can't screw up on and you knowyou can't screw up on and you knowyou can't screw up on and you know there's athere's athere's a there's a there's a wonderful bookthere's a there's a wonderful bookthere's a there's a wonderful book it's called theit's called theit's called the origin and evolution of new businessesorigin and evolution of new businessesorigin and evolution of new businesses it was written by a guyit was written by a guyit was written by a guy named amer bidetnamed amer bidetnamed amer bidet b-h-i-t-e he used to be a professor atb-h-i-t-e he used to be a professor atb-h-i-t-e he used to be a professor at harvard i think now he's a tufts inharvard i think now he's a tufts inharvard i think now he's a tufts in boston and now now omar is a friend ofboston and now now omar is a friend ofboston and now now omar is a friend of mine i didn't i didn't know him when imine i didn't i didn't know him when imine i didn't i didn't know him when i read the book butread the book butread the book but he's become a friend since then hehe's become a friend since then hehe's become a friend since then he interviewed about 10 years worth ofinterviewed about 10 years worth ofinterviewed about 10 years worth of 500 ceos500 ceos500 ceos for the book because basicallyfor the book because basicallyfor the book because basically entrepreneurshipentrepreneurshipentrepreneurship isisis significantly understudied in businesssignificantly understudied in businesssignificantly understudied in business schoolsschoolsschools i mean business school professors geti mean business school professors geti mean business school professors get paid a lot to study marketing brandingpaid a lot to study marketing brandingpaid a lot to study marketing branding hr different things but they there's nohr different things but they there's nohr different things but they there's no natural sponsorsnatural sponsorsnatural sponsors to study entrepreneurship so anyway amar
Questionerto study entrepreneurship so anyway amar did a very detailed study and and what he found was that there were a lot of common themes amongst these inc 500 ceos because these are the 500 fastest growing businesses in the us for about 10 years uh i mean for ten years he had like basically you know thousands of companies he had access to and what he did is he interviewed a lot of these inc 500 ceos he synthesized a lot of what all of them were saying because he found a lot of commonality even though these people didn't know each other they the way they were going about their businesses had a lot of commonality so for example and he did this this i think this study was done in the 90s so it's been a few years but for example he found that a large number of the owners of these companies either put global in their company name or they put international in their
Questioneror they put international in their company name and the reason they put global or international in the company name is so they appeared larger so all these companies were one of the things that you have to do with a startup is you have to convince you know large mainstream businesses to give you business and they're not really interested in giving you business if they know that you're you know fly-by-night startup who just got going so they would you know kind of look kind of like a blowfish pump themselves up and present a aura of being much larger another thing that i did which again he found in the book a lot of other people who had done that is i had two different business cards i had a business card that said president and ceo and i had another business card which said vice president marketing i never used my president's ceo business
Questioneri never used my president's ceo business cardcardcard whenever i was in a sales situation iwhenever i was in a sales situation iwhenever i was in a sales situation i always presented myselfalways presented myselfalways presented myself as a vp of marketing for the businessas a vp of marketing for the businessas a vp of marketing for the business and the reason i did that is it made theand the reason i did that is it made theand the reason i did that is it made the business look biggerbusiness look biggerbusiness look bigger and it made the business look moreand it made the business look moreand it made the business look more impressive because they'll say well thisimpressive because they'll say well thisimpressive because they'll say well this guy looks pretty goodguy looks pretty goodguy looks pretty good he's working for someone so that someonehe's working for someone so that someonehe's working for someone so that someone he works for must be also pretty goodhe works for must be also pretty goodhe works for must be also pretty good so it just gave an impression that theso it just gave an impression that theso it just gave an impression that the company wascompany wascompany was kind of large a little bit deceitful butkind of large a little bit deceitful butkind of large a little bit deceitful but a lot of us startup guys do somea lot of us startup guys do somea lot of us startup guys do some deceitful things to get going and i wasdeceitful things to get going and i wasdeceitful things to get going and i was surprised that i wasn't the only guy whosurprised that i wasn't the only guy whosurprised that i wasn't the only guy who had done it a lot of people have donehad done it a lot of people have donehad done it a lot of people have done that so like this you found a number ofthat so like this you found a number ofthat so like this you found a number of kind of modelskind of modelskind of models that werethat werethat were common across the board so i would saycommon across the board so i would saycommon across the board so i would say that if you read that bookthat if you read that bookthat if you read that book it would give you a head start on modelsit would give you a head start on modelsit would give you a head start on models that you should usethat you should usethat you should use because a lot of people already figuredbecause a lot of people already figured
Questionerbecause a lot of people already figured out so you don't figure out on your ownout so you don't figure out on your ownout so you don't figure out on your own andandand most of these guys i think had issuesmost of these guys i think had issuesmost of these guys i think had issues withwithwith the team probably wasn't that good andthe team probably wasn't that good andthe team probably wasn't that good and whatever but what was probablywhatever but what was probablywhatever but what was probably absolutely dead onabsolutely dead onabsolutely dead on correct for them to make it iscorrect for them to make it iscorrect for them to make it is they were attacking athey were attacking athey were attacking a the absolutely correct marketthe absolutely correct marketthe absolutely correct market with the absolutely correct product atwith the absolutely correct product atwith the absolutely correct product at the right price andthe right price andthe right price and that equationthat equationthat equation is going to be helpfulis going to be helpfulis going to be helpful usually when there is some kind ofusually when there is some kind ofusually when there is some kind of disruption going on some kind of changedisruption going on some kind of changedisruption going on some kind of change taking placetaking placetaking place in a marketplacein a marketplacein a marketplace that's usually when new entrants have athat's usually when new entrants have athat's usually when new entrants have a way have an ability to penetrateway have an ability to penetrateway have an ability to penetrate and get tractionand get tractionand get traction so like for example you know electricso like for example you know electricso like for example you know electric cars are newcars are newcars are new tesla can come in because the other guystesla can come in because the other guystesla can come in because the other guys haven't yet established themselves righthaven't yet established themselves righthaven't yet established themselves right sososo the other thing you would find withthe other thing you would find withthe other thing you would find with using 500 companies is theyusing 500 companies is theyusing 500 companies is they had identified what i would call anhad identified what i would call anhad identified what i would call an offering gapoffering gapoffering gap and which was clearly a pain point for
Questionerand which was clearly a pain point for their customers but not many people were addressing that pain point and that's how they were able to grow and scale even if they didn't have the right uh the right team behind them initially so just a reminder for the people on zoom if you'd like to ask my niche a question instead of dming it to me um just raise your hand unmute yourself and then you can ask your question and i believe we had one from tunisia who asked so you've talked a bit in the past about leveraging business how they're not always a great mix can you speak can you elaborate a bit more and can you give any examples on when uh leverage is appropriate in a business
Otheryeah i mean i think in general capitalism is brutal and almost all businesses are very fragile they cannot survive for very long if even a few things go wrong just because
Questionereven a few things go wrong just because things are so competitive for most businesses and in general if you have if you are levered and you encounter a headwind the odds of making it through that had been go down dramatically if you are levered i mean just just to give you the example of my daughter you know with their product they don't have any debt or any anything in fact all of them are working at other jobs and other things so they've got income coming in so the business really does not face any financial crunch but i would say that whether you're a startup or even a fortune 100 company if there's a lot of debt in the picture it can come to hurt you in a manner that doesn't allow you to play out your hand and of course in public markets in public markets what can happen is that debt can create opportunities to invest so for example in the financial crisis
Questionerso for example in the financial crisis you know day 2008 early 2009 there was a lot of stuff that was crashing and burning one particular industry that got really really almost destroyed hammered really badly was the commodities industry so almost all commodity commodity prices collapsed to levels unprecedented levels because demand went down so much so there was a a blue chip canadian miner in vancouver called tecuminko they had a very dominant footprint in metallurgical coal and metallurgical coal is used to make iron and steel there are it's kind of like an oligopoly they're just a few places in the world where you can get large amounts of metallurgical coal and and actually once you have a steel plant the the chemistry of the particular metacore that you use becomes very specific so you can't just suddenly switch from one mind to another you know the
Otherone mind to another you know the chemistry matters chemistry matters chemistry matters and so which means that you get to these and so which means that you get to these and so which means that you get to these long-term contracts with these iron and long-term contracts with these iron and long-term contracts with these iron and steel plants steel plants steel plants so tech kamenco in 2008 they had done a so tech kamenco in 2008 they had done a so tech kamenco in 2008 they had done a very large acquisition of one of their very large acquisition of one of their very large acquisition of one of their wet coal competitors wet coal competitors wet coal competitors and what they had done when they did the and what they had done when they did the and what they had done when they did the deal was they deal was they deal was they financed it quickly with a one-year financed it quickly with a one-year financed it quickly with a one-year bridge loan bridge loan bridge loan and their plan was that within the year and their plan was that within the year and their plan was that within the year they would issue long-term debt they would issue long-term debt they would issue long-term debt uh you know 10-15 year 20-year bonds and uh you know 10-15 year 20-year bonds and uh you know 10-15 year 20-year bonds and then straighten out the balance sheet then straighten out the balance sheet then straighten out the balance sheet and go about their business and go about their business and go about their business and what happened is they closed the and what happened is they closed the and what happened is they closed the deal with that one-year bridge loan deal with that one-year bridge loan deal with that one-year bridge loan and then commodity prices tanked and then commodity prices tanked and then commodity prices tanked and the financial markets for the most and the financial markets for the most and the financial markets for the most part shut down so they had no ability to part shut down so they had no ability to part shut down so they had no ability to refinance refinance refinance and it wasn't even clear how they could and it wasn't even clear how they could and it wasn't even clear how they could service the debt because they had taken service the debt because they had taken service the debt because they had taken on so much leverage with some on so much leverage with some on so much leverage with some assumptions on what the price and such
Questionerassumptions on what the price and such would be so the stock i think went from forty five dollars to four dollars in just a few days and i looked at it when it was at four dollars in fact commodity prices you know the stock price of commodities just collapsed there were some so many bargains but i i felt like the banks who had this debt would not want to take over a bunch of metallurgical coal mines because banks are not in the business of running mines what they would probably do with a company like takamenko is they would extract extract a pound of flesh and extend that loan out a little bit just because it just made more sense to that rather than trying to turn the screws on something and then the all the company would say well here's the keys to the mine good luck and they don't want that they want the loan to be kind of you know current
Questionerthe loan to be kind of you know current and ongoingand ongoingand ongoing and and i also felt likeand and i also felt likeand and i also felt like they had so many other assets that hethey had so many other assets that hethey had so many other assets that he could try to sell and do differentcould try to sell and do differentcould try to sell and do different things forward sales and production dothings forward sales and production dothings forward sales and production do different things when they could get outdifferent things when they could get outdifferent things when they could get out of the jam so i didn't really see aof the jam so i didn't really see aof the jam so i didn't really see a downsidedownsidedownside wherewherewhere they would go bankrupt or something ithey would go bankrupt or something ithey would go bankrupt or something i think that they would be able to kind ofthink that they would be able to kind ofthink that they would be able to kind of work it outwork it outwork it out and so we we actually invested a goodand so we we actually invested a goodand so we we actually invested a good amount in uh early 2009 in tekumenko andamount in uh early 2009 in tekumenko andamount in uh early 2009 in tekumenko and within a yearwithin a yearwithin a year it was back at 45.it was back at 45.it was back at 45. so they had you know kind ofso they had you know kind ofso they had you know kind of exactly what iexactly what iexactly what i forecasted the banks gave them someforecasted the banks gave them someforecasted the banks gave them some breathing room extracted higher interestbreathing room extracted higher interestbreathing room extracted higher interest rates and all of thatrates and all of thatrates and all of that and then they were able toand then they were able toand then they were able to sell some assets and then they were ablesell some assets and then they were ablesell some assets and then they were able to forward sell some sales in the mix ofto forward sell some sales in the mix ofto forward sell some sales in the mix of mix of all that they got a little jammix of all that they got a little jammix of all that they got a little jam and eventually they were able toand eventually they were able toand eventually they were able to refinance the whole thing sorefinance the whole thing sorefinance the whole thing so it can create opportunities for an
Questionerit can create opportunities for an investor but i think if you're an operator not going down the leverage path is a really good idea looks like someone's racing direct go ahead hi i'm tanis thank you so much for your answer i have another question i have been reading uh a 2018 forbes article and i was interested because your opinion into answering one of the questions there why do you think non-profits organizations should think about capitalization and returns i'm sorry non-profit organizations should think about how they should think about habitat returns capitalization yes
Warrenwell so i mean i would say that if you're if you're referring to let's say if you refer to let's say a university let's say billionaire college and let's say they have an endowment for example how that endowment is invested and how it performs has a significant impact on the
Otherhas a significant impact on the well-being of the students you know and so non-profits need to be very business-like in how they invest their assets and how they invest their money there was a very small liberal arts college in iowa called grinnell and grinnell is i think last i checked was like less than a thousand students grinnell very early when they when the endowment had almost no money they got warren buffett on the board of the one of the advisors to the endowment and then they had uh i think joe rosenfield was one of the guys who was running the place and they just hit it so far out of the park in terms of how well the investments did that for example grinnell was one of the early investors in intel and intel got formed because one of the alums was from grinnell one of the founders eventually
Questionergrinnell one of the founders eventually grinnell one of the founders eventually grinnell's endowment you know went past grinnell's endowment you know went past grinnell's endowment you know went past a billion and a billion and a billion and you know a billion for a thousand you know a billion for a thousand you know a billion for a thousand students students students is like is like is like 10 million dollars per student 10 million dollars per student 10 million dollars per student you know it's a lot of money you know it's a lot of money you know it's a lot of money and uh and uh and uh i think grinnell i think grinnell i think grinnell could could could probably have afforded probably have afforded probably have afforded to go to go to go tuition free for everyone tuition free for everyone tuition free for everyone you know housing free everything free if you know housing free everything free if you know housing free everything free if you look at the you look at the you look at the yale endowment for example yale endowment for example yale endowment for example i think last time i looked at it i think last time i looked at it i think last time i looked at it something like one third or 35 something like one third or 35 something like one third or 35 or something of their total or something of their total or something of their total expenses were coming from the endowment expenses were coming from the endowment expenses were coming from the endowment so it was covering a third of the entire so it was covering a third of the entire so it was covering a third of the entire i think harvard is similar so if those i think harvard is similar so if those i think harvard is similar so if those institutions continue to do well institutions continue to do well institutions continue to do well they can get to the point where almost they can get to the point where almost they can get to the point where almost everything is paid for everything is paid for everything is paid for so i think it's very important for so i think it's very important for so i think it's very important for non-profits non-profits non-profits to to to have people have people have people on the team on the team on the team who are astute about capital allocation who are astute about capital allocation who are astute about capital allocation it's really important it's really important it's really important unfortunately most non-profits are not
Questionerunfortunately most non-profits are not like that they make a decision by committee you get you don't get fired for buying ibm you know it's just that type of notion and uh so it's very subpar i just have one more question so you've talked a lot about management driving a lot of a lot of success in these companies i guess my question is we always talk here about buffett steve jobs elon musk is there any ceos that you can think of from any time period that you think is underappreciated and that people should you know study up more on
Questionerwell i think i think we have a lot of amazing leaders and i think in many cases they either they've written autobiographies or others have written biographies on them i mean like for example there's a guy ken i think ken iverson who was the founder leader of nucor i forget the name of the autobiography he wrote but you can look it up i think i
Questionerwrote but you can look it up i think iwrote but you can look it up i think i think it's on amazon it's an exceptionalthink it's on amazon it's an exceptionalthink it's on amazon it's an exceptional book explainingbook explainingbook explaining that if you look at you know thethat if you look at you know thethat if you look at you know the founders of home depot if you look atfounders of home depot if you look atfounders of home depot if you look at and you know some of them are veryand you know some of them are veryand you know some of them are very unusual if you look at someone likeunusual if you look at someone likeunusual if you look at someone like reed hastings that netflix he doesn'treed hastings that netflix he doesn'treed hastings that netflix he doesn't have an officehave an officehave an office and he doesn't have a deskand he doesn't have a deskand he doesn't have a desk andandand when he goes to workwhen he goes to workwhen he goes to work he just kind of wanders around picks uphe just kind of wanders around picks uphe just kind of wanders around picks up conversations randomlyconversations randomlyconversations randomly with peoplewith peoplewith people it's a seems like a very disorganizedit's a seems like a very disorganizedit's a seems like a very disorganizedit's a seems like a very disorganizedit's a seems like a very disorganized way to try to run anything but he alsoway to try to run anything but he alsoway to try to run anything but he alsoway to try to run anything but he also says thatsays thatsays that one time i was listening to him in a tedone time i was listening to him in a tedone time i was listening to him in a tedone time i was listening to him in a ted talk and he said thattalk and he said thattalk and he said thattalk and he said that it's been three months since he made anyit's been three months since he made anyit's been three months since he made anyit's been three months since he made any decisions at netflixdecisions at netflixdecisions at netflixdecisions at netflix and he saidand he saidand he saidand he said the longer i can gothe longer i can gothe longer i can gothe longer i can go without having to make a decisionwithout having to make a decisionwithout having to make a decisionwithout having to make a decision the better the place runsthe better the place runsthe better the place runsthe better the place runs and so his management styleand so his management styleand so his management styleand so his management style is unusual it probablyis unusual it probablyis unusual it probablyis unusual it probably maybe fits a company like netflixmaybe fits a company like netflixmaybe fits a company like netflixmaybe fits a company like netflix but it might fit a lot of places as wellbut it might fit a lot of places as well
Todd Combsbut it might fit a lot of places as well it's an unusual style so i think when you see a lot of success in different places it's worth studying in in many cases in almost all cases the leaders almost never they're too low eager to write anything and most of them no one else writes anything about them so for example there was a guy named soul price who was the founder of price club which is the model that costco followed and eventually costco bought price club sole price's son wrote a biography on his dad i think the guy was unbelievable and i think everything that costco does that makes it such a great business came from sole price and they have a bunch of unusual traits that stole price had and unusual belief systems that he had which made costco a very successful place he did not think of price club as a retailer he thought a price club as a buying
Questionerhe thought a price club as a buying agentagentagent for the consumerfor the consumerfor the consumer so he felt that he was on the side ofso he felt that he was on the side ofso he felt that he was on the side of the consumerthe consumerthe consumer trying to get them the best possibletrying to get them the best possibletrying to get them the best possible dealdealdeal going up against the manufacturersgoing up against the manufacturersgoing up against the manufacturers andandand curating and picking the best productscurating and picking the best productscurating and picking the best products and making sure they got great deals andand making sure they got great deals andand making sure they got great deals and keeping a very small sliverkeeping a very small sliverkeeping a very small sliver of the proceeds for themselves so thatof the proceeds for themselves so thatof the proceeds for themselves so that was just a extremely enlightened waywas just a extremely enlightened waywas just a extremely enlightened way to run thingsto run thingsto run things and it's worked out extremely well so iand it's worked out extremely well so iand it's worked out extremely well so i think studying business successthink studying business successthink studying business success and studying business biographies i meanand studying business biographies i meanand studying business biographies i mean the good news is if you go on amazon andthe good news is if you go on amazon andthe good news is if you go on amazon and just start you know michael delljust start you know michael delljust start you know michael dell recently wrote a book and it'll bring uprecently wrote a book and it'll bring uprecently wrote a book and it'll bring up suggestions of other books and look atsuggestions of other books and look atsuggestions of other books and look at some of those you can just keep goingsome of those you can just keep goingsome of those you can just keep going you very soon have 200 biographies toyou very soon have 200 biographies toyou very soon have 200 biographies to plow through and you wouldn't haveplow through and you wouldn't haveplow through and you wouldn't have scratched the surface so it's a greatscratched the surface so it's a greatscratched the surface so it's a great area toarea toarea to spend time in and it's a great area tospend time in and it's a great area tospend time in and it's a great area to read about
Questionerread about hi manish thanks for meeting with ushi manish thanks for meeting with ushi manish thanks for meeting with us do you still believe thatdo you still believe thatdo you still believe that a discounted cash flowa discounted cash flowa discounted cash flow methodology of owner's earnings formethodology of owner's earnings formethodology of owner's earnings for analytics analyzing securities is stillanalytics analyzing securities is stillanalytics analyzing securities is still one of the most fundamental forms ofone of the most fundamental forms ofone of the most fundamental forms of security analysis and how does that sortsecurity analysis and how does that sortsecurity analysis and how does that sort of overlay into the venture capitalof overlay into the venture capitalof overlay into the venture capital space or potentially private equityspace or potentially private equityspace or potentially private equity
Warrenthanks yeah i think allthanks yeah i think allthanks yeah i think all all intelligent investingall intelligent investingall intelligent investing is putting out cash todayis putting out cash todayis putting out cash today in thein thein the with the objective of getting more cashwith the objective of getting more cashwith the objective of getting more cash in the futurein the futurein the future that's the essence of investing isthat's the essence of investing isthat's the essence of investing is if i'm going to put outif i'm going to put outif i'm going to put out a thousand dollars today the only reasona thousand dollars today the only reasona thousand dollars today the only reason i'm putting it out is that i expect toi'm putting it out is that i expect toi'm putting it out is that i expect to get more than a thousand dollars back inget more than a thousand dollars back inget more than a thousand dollars back in the futurethe futurethe future and if i want to get five thousandand if i want to get five thousandand if i want to get five thousand dollars back in the future so everydollars back in the future so everydollars back in the future so every single business on the planet it doesn'tsingle business on the planet it doesn'tsingle business on the planet it doesn't matter whether it's tesla or whethermatter whether it's tesla or whethermatter whether it's tesla or whether it's mcdonald'sit's mcdonald'sit's mcdonald's it is worth the sum of future cash flows
Warrenit is worth the sum of future cash flows that that business would produce from now till judgment day discounted to present value by some reasonable interest rate the difficulty that we get into with in with investments is in the vast majority of businesses is it is very difficult to have a high degree of certainty on those future cash flows and they become extremely uncertain as you go further out in the years so so the issue is it's it's not that whether a dcf model a dcf model makes sense or not a dcf model is the only way to really value anything there's no other way to really value it the issue is that if i look at the company like facebook and and let's say for arguments say facebook is trading at 20 or 30 times trading earnings whether that price is low or high or reasonable depends on what our view is is on what on what cash flows facebook will generate in 2022 2023 2024
Questioner2022 2023 2024 all the way till when facebook exists and the outer years don't matter that much because when you discount them back they don't have much impact because the time takes care of that so most of that value is there in the next five years so seven years for example so if we knew for certain that a business was going to grow 50 percent a year for five years for example okay a fifty percent five years which would mean that you know 1.5 three point three five seven and a half times whatever the earnings are today it'd be about seven and a half times in five years and if the earnings or let's say let's say let's call it eight times for example if it was trading at a multiple of 100 times earnings and it was growing 50 percent a year what that would mean is in five years if the price didn't change it would be at 12 or 13 times earnings
Questionerat 12 or 13 times earnings and if after five years they still had a very robust growth engine ahead of them it would be very wise to buy that business at 100 times earnings on the other hand if you have a business where earnings are declining by five or ten percent a year it may be too much to pay ten times earnings for that okay so the dcf models are absolutely kind of like there's no debate on those i think that that's just the only way you can battle you can truly value any asset the difficulty is in determining what those cash flows are so we have a question that came in from online if you were to give advice to young people who are looking to start their own investment partnership today what kind of advice would you give what sort of pitfalls and traps should they try to avoid and how should they go about forming a partnership yeah so i
Questionerabout forming a partnership yeah so i would say that you know even if you start this very modest sun let's say for example you started with ten thousand dollars and let's say you were a very gifted capital allocator you know able to compile money at high rates if you were you know doing 20 30 a year let's say 25 a year that 10 000 would be doubling every three years and if you went for 21 years for example it would be seven doubles i think seven doubles is 128. okay so you would have like more than 100 times the 10 000 so you would have like one and a quarter million or something so i think that there should be a couple of conditions in terms of managing your own managing money for others number one you should be independently wealthy so if you've compounded well with your own capital for some period of time basically you would just the nature of
Questionerbasically you would just the nature of compounding iscompounding iscompounding is that you'd be quite wealthy and then atthat you'd be quite wealthy and then atthat you'd be quite wealthy and then at that point once you'rethat point once you'rethat point once you're wealthy whether you manage money forwealthy whether you manage money forwealthy whether you manage money for others or not is becoming irrelevantothers or not is becoming irrelevantothers or not is becoming irrelevant because you'll continue to compound andbecause you'll continue to compound andbecause you'll continue to compound and do well if you never so if you have ifdo well if you never so if you have ifdo well if you never so if you have if you were 20 years old and you were doingyou were 20 years old and you were doingyou were 20 years old and you were doing this 20 30 a year by 41 you would havethis 20 30 a year by 41 you would havethis 20 30 a year by 41 you would have over a millionover a millionover a million and by 71 you would have over a billionand by 71 you would have over a billionand by 71 you would have over a billion without ever adding anything to the 10without ever adding anything to the 10without ever adding anything to the 10 000 you started with without ever000 you started with without ever000 you started with without ever managing anyone any money for anyone somanaging anyone any money for anyone somanaging anyone any money for anyone so my my take is that the firstmy my take is that the firstmy my take is that the first rule should be that you should haverule should be that you should haverule should be that you should have provenprovenproven that you are a greatthat you are a greatthat you are a great investor and the proof would be thatinvestor and the proof would be thatinvestor and the proof would be that you'd be independently wealthy and yeahyou'd be independently wealthy and yeahyou'd be independently wealthy and yeah if you if you've done that thenif you if you've done that thenif you if you've done that then at that point if you said that youat that point if you said that youat that point if you said that you wanted towanted towanted to you know manage money for others i thinkyou know manage money for others i thinkyou know manage money for others i think that would be a relatively easy thing tothat would be a relatively easy thing tothat would be a relatively easy thing to do in fact they would find you a lot of
Questionerdo in fact they would find you a lot of people will find you and want to give people will find you and want to give people will find you and want to give you money you won't even have to spend you money you won't even have to spend you money you won't even have to spend much time looking for them so we have a much time looking for them so we have a much time looking for them so we have a few more questions online and then um few more questions online and then um few more questions online and then um i'll ask a question about the doctor i'll ask a question about the doctor i'll ask a question about the doctor china foundation so you can promote that china foundation so you can promote that china foundation so you can promote that and then we'll wrap up how does that and then we'll wrap up how does that and then we'll wrap up how does that sound
Othersounds good
Questionerall right so uh one of the precedent questions was a few years the precedent questions was a few years the precedent questions was a few years ago you ago you ago you took part in buying an insurance company took part in buying an insurance company took part in buying an insurance company but it didn't seem like that investment but it didn't seem like that investment but it didn't seem like that investment really panned out it seemed like you had really panned out it seemed like you had really panned out it seemed like you had the idea of investing in the flow but the idea of investing in the flow but the idea of investing in the flow but that whole business you had to sell it that whole business you had to sell it that whole business you had to sell it later later later so can you talk about the process of you so can you talk about the process of you so can you talk about the process of you know sort of what happened with any or know sort of what happened with any or know sort of what happened with any or was that a mistake in your mind and uh was that a mistake in your mind and uh was that a mistake in your mind and uh what did you learn from that experience what did you learn from that experience what did you learn from that experience
Otheryeah i think when we bought the yeah i think when we bought the yeah i think when we bought the insurance company it had a insurance company it had a insurance company it had a 60-yard million dollar book value and we
Questioner60-yard million dollar book value and we sold the insurance company it had a 60-odd million book value and we basically got just a little bit above what we paid for it so it wasn't a loss which was fine the the guy who bought it in my opinion is a much better operator than me because in the in the last few years that he's owned it the book value has gone to almost 140 million they've done really well on underwriting and they've done exceptionally well on the investing he's actually a much better investor than me fixed income i think he's just really a fixed income is not an area i would consider myself to be top-end on and in insurance in insurance business you are forced to put a large portion of the assets in you know low risk fixed income type investments and i think in that case right when the fire the covet crisis hit march of last year
Questionerlast year he was sitting with almost the entire fixed income portfolio in u.s treasuries and then he went to work in a pretty major way where i think he was finding stuff to invest in where the risk was low and the yields were 10 20 which is really good on the on the fixed income side of the portfolio and he's also done well on the on the equity side so it's worked out well i think it was the right thing to sell the business i think it's under a better manager than i could have been i think he understands the investment the insurance management and also better than me so it's been great but but i i think for me it was a mistake to buy the business because one is insurance insurance of the core is the really terrible business you're writing a policy today and taking on risk and the actual real risk will really not be known for several years
Questionerbe known for several years so it's like you're selling a product whose cost you don't know so when costco sells a product they know they have a 15 markup when an insurance company sells a policy they are statistically hoping based on past models that they have not underpriced the policy and they're kind of hoping and praying that that's the case the second thing is that the buyer of these insurance policies so in our case stone trust was a workers comp insurance company you know the buyers of workers come insurance the companies that buy workers comp are required to buy the insurance because of it's required by law they think of the insurance premium like a tax and they think that they get nothing for that tax so everyone believes when they buy an insurance policy that they will never file a claim you know when you buy a car insurance
Warrenyou know when you buy a car insurance policy you're trying to get the cheapest policy and you don't think you'll ever file a plane so everyone thinks it's just a one-way transfer of money but the claims do come in and so when the company is trying to buy a policy or an individual is trying to buy an auto insurance policy all they're focused on is the lowest possible cost and so pricing is set by your dumbest competitor it's really bad to be in businesses like airlines for example where pricing is set by your dumbest competitor it's great to be in a business like attack philip felipe you can set your price to whatever you want and the higher the price of the watch the higher the demand for the product that's a great business or tiffany's for example a strong pricing power so i i think the core economics of most insurance companies are terrible and even my friend who's
Otherare terrible and even my friend who's done so well we have to see really in the fullness of time i think the insurance end of that business is challenging if you are very smart on the investment end of it you can uh overcome some of the the challenges of the core economics of the business but i'm happy not to be in the insurance business that's do you have any more questions online or in person all right
Questionerso um i'll ask the final question which allows you to plug the document foundation a little bit and then we'll have tyler wrap it up for us so i believe in one of your recent interviews you talked a bit about how there was a small change in the drama foundation going forward and so can you kind of talk about what your hopes are for the foundation what you look to accomplish and where you want it to be in five years yeah i think dakshina has been a really wonderful
Otherdakshina has been a really wonderful journey it's been about it's been almost a 15-year journey for me so far everything about it has widely exceeded my expectations i think it's done better than my wildest dreams so far it looks like it'll continue to do very well so that's it's worked out really wonderfully i think it's worked out wonderfully for two or three reasons one is that i got very lucky with an extremely high quality leadership team and they they've just done an incredible job so so that's that's been a huge the second thing that has helped us is that we took a very business-like approach to philanthropy so i was only interested in doing things where the social return on invested capital was extremely high so we looked at it so the problem most charities have is the people who run them have tremendous hearts they have too much heart
Otherhearts they have too much heart and too little head and too little head and too little head and and and to run a non-profit well to run a non-profit well to run a non-profit well you need a balance between heart and you need a balance between heart and you need a balance between heart and head head head you need a great hard hard but you also you need a great hard hard but you also you need a great hard hard but you also need need need very solid solid hospital horsepower in very solid solid hospital horsepower in very solid solid hospital horsepower in terms of terms of terms of you know the return on invested capital you know the return on invested capital you know the return on invested capital that you're putting in those societal that you're putting in those societal that you're putting in those societal benefits benefits benefits and you know how the and you know how the and you know how the investment end of it is running investment end of it is running investment end of it is running all of that and and generally the skill all of that and and generally the skill all of that and and generally the skill sets are so different sets are so different sets are so different for all of them and so for all of them and so for all of them and so in general what we find is that now we in general what we find is that now we in general what we find is that now we are in this situation where we have a are in this situation where we have a are in this situation where we have a lot of lot of lot of very successful leaders and very successful leaders and very successful leaders and entrepreneurs like bill gates or entrepreneurs like bill gates or entrepreneurs like bill gates or michael dell etc who set up foundations michael dell etc who set up foundations michael dell etc who set up foundations you know mark zuckerberg and so on you know mark zuckerberg and so on you know mark zuckerberg and so on they have such strong business skills they have such strong business skills they have such strong business skills that i think those foundations are that i think those foundations are that i think those foundations are likely to do really well likely to do really well likely to do really well but i think that uh but i think that uh but i think that uh dakshina just got lucky because we had dakshina just got lucky because we had dakshina just got lucky because we had we cloned a great model we cloned a great model
Warrenwe cloned a great model we brought a great team and and we werewe brought a great team and and we werewe brought a great team and and we were very disciplined about saying novery disciplined about saying novery disciplined about saying no to almost everything thatto almost everything thatto almost everything that was suggested that we do so we only dowas suggested that we do so we only dowas suggested that we do so we only do one or two thingsone or two thingsone or two things today we do them really well we do themtoday we do them really well we do themtoday we do them really well we do them better than almost anyone else we do dobetter than almost anyone else we do dobetter than almost anyone else we do do them better than any other non-profitthem better than any other non-profitthem better than any other non-profit i'm aware ofi'm aware ofi'm aware of and the focus has really helpedand the focus has really helpedand the focus has really helped sososo philanthropy is more difficult thanphilanthropy is more difficult thanphilanthropy is more difficult than making money so capitalism is brutal butmaking money so capitalism is brutal butmaking money so capitalism is brutal but philanthropy is really hard becausephilanthropy is really hard becausephilanthropy is really hard because you're trying to go after problems likeyou're trying to go after problems likeyou're trying to go after problems like you knowyou knowyou know povertypovertypoverty education healtheducation healtheducation health environmentenvironmentenvironment these are all really tough problems athese are all really tough problems athese are all really tough problems a lot of very smart business leaderslot of very smart business leaderslot of very smart business leaders governmentsgovernmentsgovernments billions and trillions spentbillions and trillions spentbillions and trillions spent and those problems are still with usand those problems are still with usand those problems are still with us so the only way you can move the needleso the only way you can move the needleso the only way you can move the needle is by being very focused and oneis by being very focused and oneis by being very focused and one difference from investing isdifference from investing isdifference from investing is in investing we go low risk high returnin investing we go low risk high returnin investing we go low risk high return that's what we're trying to do
Otherthat's what we're trying to do in philanthropy you have to go high-risk in philanthropy you have to go high-risk high-return so what you have to be willing to do is when you identify a problem you have to be willing to swing for the fences and you have to be willing to completely lose out the only way to move the needle is to swing for the fences so most philanthropic organizations are very meek in the approach they take and they are unwilling to fail that's a recipe for disaster you know it's kind of like the gates foundation putting money into vaccines very high risk they haven't in all these years had a single home run but it's the right place to put the money because if you get a malaria vaccine it has huge impacts on humanity and if you eradicate polio it has a huge impact on on humanity so you have to go for these very bold difficult things which kind of kind of flies counter to
Otherwhich kind of kind of flies counter to the way most of us like to like to approach life and so dakshina actually believes in those pretty strongly
Otherand so i think that's been helpful to us so right now i believe we're gonna have if everybody can just stay on for a few minutes have tyler wrap up this conversation for us thank you so much thank you all for being here today this is what we're all about the entrepreneurship center we really just have events resources programming we have alumni coming to speak to us much like today and he's not alumni but in a similar fashion they'll come to speak to us share their experience you can ask some questions i was just putting the chat was our check-in form if you could click that and if you're in person could you scan this qr code it'll take you to our checking page and just get your name see that you're here today just choose
Othersee that you're here today just choose check in at the hub it's actually really important to us so just you know scan it with your qr if you're here or just click the link online it takes like 30 seconds stops and you can go ahead and do that now or afterwards but pretty much what we're all about the entrepreneurship center is providing an opportunity for students once you guys be able to learn learn about our different pillars that you see over here failing wisely openness to risk grant self-protection collaboration in a similar format to this next thursday we have beth comstock coming to speak to us some of you may or may not have heard about our company some you may or may not you know little thing called hulu yeah she started it she's a willing mary alone she'll be here speaking with us and we hope to see you there thank you so much for your time today we hope you have a great rest of your day thank you my nation i hope you enjoy your thursday lunch
Otherabsolutely looking forward thank you