Other[Music][Music][Music]so we're absolutely honored to have so we're absolutely honored to have so we're absolutely honored to have manish babrai here with us today in 1991 manish babrai here with us today in 1991 manish babrai here with us today in 1991 manish provided his own i.t consulting manish provided his own i.t consulting manish provided his own i.t consulting and systems integration company transtec and systems integration company transtec and systems integration company transtec with a hundred thousand dollars he went with a hundred thousand dollars he went with a hundred thousand dollars he went on to sell the company in two thousand on to sell the company in two thousand on to sell the company in two thousand for twenty million dollars in 1999 for twenty million dollars in 1999 for twenty million dollars in 1999 monish provides for his own hedge fund monish provides for his own hedge fund monish provides for his own hedge fund for buy investment funds with one for buy investment funds with one for buy investment funds with one million dollars today he has over 500 million dollars today he has over 500 million dollars today he has over 500 million dollars of assets under million dollars of assets under million dollars of assets under management has successfully employed a management has successfully employed a management has successfully employed a market beating value value-oriented market beating value value-oriented market beating value value-oriented global investing approach for over 20 global investing approach for over 20 global investing approach for over 20 years years years mr probably is also the author of the mr probably is also the author of the mr probably is also the author of the dondo investor and mosaic perspectives dondo investor and mosaic perspectives dondo investor and mosaic perspectives on investing both are which are must on investing both are which are must on investing both are which are must reads for any value investor mr probably reads for any value investor mr probably reads for any value investor mr probably is also famous for paying 650 000 with is also famous for paying 650 000 with is also famous for paying 650 000 with his good friend guy spear for an his good friend guy spear for an his good friend guy spear for an invaluable lunch with warren buffett invaluable lunch with warren buffett invaluable lunch with warren buffett manish for buy is also incredibly
Othermanish for buy is also incredibly generous giving away approximately two percent of his wealth every year to the dakshana for dao foundation the foundation provides student services to some of the least privileged members of indian society which enables them to attend elite institutions of higher learning thank you for joining us today mr prabhan tai it's a pleasure to be with you looking forward excellent thank you so much so let's start with the questions um when studying this the selection of spawner stocks in your portfolio our students found two common mechanical filter um threads one was that as we mentioned in previous interviews there's a maximum market cap they were sort of looking for lovely spawners and the other trend that we saw that there was a lot of high insider ownership within these companies are there any other sort of mechanical
Questionerare there any other sort of mechanical factors they use to narrow down your selection when looking for multi-backers using platforms like capital iq for example
Todd Combsyeah so actually anytime you uh mentioned to me mechanical filters i cringe in general uh it's probably not a good approach to investing because the real world is messy and individual businesses are messy but one of the things that is uh very powerful about the spawners is uh i can maybe give you an example i own a portion of a company in india called uh indian energy exchange iex and iex basically is a effectively it's a monopoly business and it allows the trading of electricity between generators and the discounts the distribution companies and they collect an approximately 1.5 fee of the amount transacted and so uh basically uh currently i think uh i mean when we invested approximately less than three
Otherinvested approximately less than three percent of india's total electricity usage was going through uh iex and now it's uh over six and a half percent so in terms of the percent of the increase in the last three four years quite significantly but also uh per capita consumption of electric electricity is going up so the business has many tailwinds they also started uh another business called indian gas exchange and so on that business basically produces uh 80 operating margins so if they take it 100 in revenue something like 80 is is a pre-tax profit and then after you pay maybe 25 taxes on that you still have like 60 after tax so it's an extremely profitable business and as it scales uh that profitability only increases they have no real good way to use that money that's coming in and so they only really for more for the most part have two choices
Questionermost part have two choices either they can uh dividend or to shareholders and or buy buy back their shares
Questionerum on the other hand if you look at a business like let's say 10 cent in china tencent basically is also a business that generates very high returns of equity and it's not as good as iex in terms of you know eighty percent uh operating margins across but it's very healthy
Questionerand uh they generate tens of billions a year in uh free cash flow every year but inside tencent is uh what i would call a sequoia fund on steroids so if they make uh 15 billion in a year you know free cash flow
Questionerthey have a biz dev arm that is going to take that 15 billion and deploy it into uh mostly private deals and they are also very thoughtful about it so they're not sprinkling money around to early stage businesses etc they focus on businesses that have
Otherthat have achieved certain milestones and certain traction and then they'll come in they also tend not to want to have large stakes uh because they want to leave you know incentive team so their engine which feeds uh this this dev arm has been very successful they've uh they've invested in what have later turned into more than i think 15 or 20 unicorns and they've done really well so what i'm saying is they have an engine which takes their cash flow and puts it into other businesses and that engine uh the track record of that engine is can go up against the best venture capitalists it's extremely good and uh there's no carry you know so it's even better for investors that engine that tencent has is extremely rare most companies that are even really good businesses like iex do not have the ability to redeploy the money that's coming in
Questionerthe money that's coming in into other businesses if you look at a business like berkshire hathaway for most of its history the berkshire from 1965 till now has never issued a dividend i think one time profit i think the record indicates that they one time issued a dividend of 10 cents and buffett said that he must have gone to the bathroom to the bathroom while the board made that decision but he said he's never after that ever stepped in the bathroom during a board meeting and so there's been no dividends uh other than the ten cent dividend on what is more than a four hundred thousand dollar stock today but from 1965 until very recently maybe the last few years not only did burke should not issue a dividend they did not buy back their shares the buybacks have started more recently because even an amazing capital allocation engine like berkshire
Questionerallocation engine like berkshire has not been able to find enough opportunities to redeploy the capital into which worked extremely well for more than 40 years so if you have a great business that's spinning off lots of cash i mean berkshire for example had made a very early investment when they bought c's candy and cease candy has been nothing but a money spinner but it has no ability to use the cash that it generates but the berkshire engine was such that they didn't need c's to use the cash they took the cash flow from c's and they bought 100 other businesses and they were really good at that so that type of progress of redeployment of cash is rare and spawners uh you know coming to spawner so if you take a business like iex iex actually is a spawner uh they've the first spawn they've created is indian gas exchange which they're trying to grow and scale
Otherwhich they're trying to grow and scale but by its very nature indian gas exchange hardly needs any capital it's like indian energy exchange that also hardly needs any capital so even if it's really successful it will not be able to use the capital so even though they are smaller they really can't do much with it so they the difference between let's say a berkshire hathaway and let's say an amazon the difference between these two is in the case of amazon the the redeployment of the cash generated is mostly done with internal projects so they basically are spawning new enterprises new adventures and so on in the case of berkshire a lot of it is acquisitions not that much coming from internal redeployment they do have some amazing businesses that are redeploying internally etc but for the most part they've got to go externally so if you look at the kind of the
Todd Combsso if you look at the kind of the hierarchy the absolute best way to use capital is if you have a spawning engine internally that has a high hit rate and it's spawning businesses that generate high returns and equity that's you know that's mecca you you hit the top spot there the second is if you can't do that and you can buy or invest in other businesses or assets at you know valuations that would give us give you high returns of equity that's also excellent the third would be either dividends or buybacks and buybacks actually can be extremely powerful if they are done at modest valuations if you look at a business like mastercard uh so mastercard does a lot of acquisitions they have very high you know net income versus revenues etc fantastic business but they still end up with lots of cash and even though the business trades at a
Todd Combsand even though the business trades at a very high multiplevery high multiplevery high multiple they still continue to buy back sharethey still continue to buy back sharethey still continue to buy back share because they've got no other option sobecause they've got no other option sobecause they've got no other option so it's way better to buy back mastercardit's way better to buy back mastercardit's way better to buy back mastercard stock at 10 times earnings than 40 timesstock at 10 times earnings than 40 timesstock at 10 times earnings than 40 times earnings but even at 40 it still worksearnings but even at 40 it still worksearnings but even at 40 it still works but it's not that great so so spawnersbut it's not that great so so spawnersbut it's not that great so so spawners are basically sitting pretty much at theare basically sitting pretty much at theare basically sitting pretty much at the apex of the of the pyramidapex of the of the pyramidapex of the of the pyramid and uh which is why we like them so muchand uh which is why we like them so muchand uh which is why we like them so much so we have questions discussing um someso we have questions discussing um someso we have questions discussing um some of the other factors that go intoof the other factors that go intoof the other factors that go into spawners for examplespawners for examplespawners for example 10 cents they managed to actually10 cents they managed to actually10 cents they managed to actually despite the chinese government having adespite the chinese government having adespite the chinese government having a lot of anti-trust policies they didlot of anti-trust policies they didlot of anti-trust policies they did manage in some of their departments tomanage in some of their departments tomanage in some of their departments to have a monopoly tensions music hadhave a monopoly tensions music hadhave a monopoly tensions music had exclusive licensing agreements now theexclusive licensing agreements now theexclusive licensing agreements now the chinese government is really crackingchinese government is really crackingchinese government is really cracking down on those so how do you evaluatedown on those so how do you evaluatedown on those so how do you evaluate that aspect or how do i validate forthat aspect or how do i validate forthat aspect or how do i validate for example umexample umexample um real estate companies in japan that may
Questionerreal estate companies in japan that may be spawners who um banks there are some recent events that of some frauds in that area that's banks sort of are more hesitant to lend to them now
Questioneryeah so i'll i'll sidestep stuff which goes into current portfolio holdings just i think uh that that just gets married i prefer not to go into but i would say that there's a blogger i follow in china i think she was saying that hope i can remember this correctly but she was saying that in china it was or it is innovation and then regulation and uh in in europe it's regulation and then no innovation and uh in the u.s it's innovation and no regulation so you've got these different uh you know i think this is kind of a white paintbrush but the bottom line is i think that there are very few things that i have noticed that have happened in china recently
Otherthat have happened in china recently that i would be scratching my head aboutthat i would be scratching my head aboutthat i would be scratching my head about so for example uh in my in myso for example uh in my in myso for example uh in my in my non-profit adventuresnon-profit adventuresnon-profit adventures with the dakshina foundation i havewith the dakshina foundation i havewith the dakshina foundation i have spentspentspent 141414 years examining the for-profit sectoryears examining the for-profit sectoryears examining the for-profit sector of education in india very closelyof education in india very closelyof education in india very closely and we've even had them as vendors andand we've even had them as vendors andand we've even had them as vendors and you knowyou knowyou know paid them to provide services to ourpaid them to provide services to ourpaid them to provide services to our students etc we're a very longstudents etc we're a very longstudents etc we're a very long history with the indian let's sayhistory with the indian let's sayhistory with the indian let's say tutoring industry which is the industrytutoring industry which is the industrytutoring industry which is the industry exact same industry that the chineseexact same industry that the chineseexact same industry that the chinese government crackdown upongovernment crackdown upongovernment crackdown upon the indian government alsothe indian government alsothe indian government also is extremely upset of this industryis extremely upset of this industryis extremely upset of this industry and from my point of view rightand from my point of view rightand from my point of view right rightfully sorightfully sorightfully so and i don't think of the players in thatand i don't think of the players in thatand i don't think of the players in that industryindustryindustry by any stretch of the imagination asby any stretch of the imagination asby any stretch of the imagination as being high qualitybeing high qualitybeing high quality i think they'rei think they'rei think they're i would say ruthless capitalistsi would say ruthless capitalistsi would say ruthless capitalists and so if you if you just uh and i'mand so if you if you just uh and i'mand so if you if you just uh and i'm going to use that as an example to justgoing to use that as an example to justgoing to use that as an example to just you know go to the others
Otheryou know go to the others if you have a situation where a if you have a situation where a if you have a situation where a set of universities or university has 10 set of universities or university has 10 set of universities or university has 10 000 seats 000 seats 000 seats and there are 1 million people aspiring and there are 1 million people aspiring and there are 1 million people aspiring to get those seats which is somewhat to get those seats which is somewhat to get those seats which is somewhat similar to the situation similar to the situation similar to the situation with the iits in india with the iits in india with the iits in india 10 15 000 seats and 10 15 000 seats and 10 15 000 seats and north of half a million two million kids north of half a million two million kids north of half a million two million kids interested in those seats interested in those seats interested in those seats there's a there's a there's a basic problem of basic problem of basic problem of a large number of a large number of a large number of students in interested in a very small students in interested in a very small students in interested in a very small number of seats number of seats number of seats anytime you have that situation anytime you have that situation anytime you have that situation capitalism is lead to is going to lead capitalism is lead to is going to lead capitalism is lead to is going to lead to enterprises that come up to enterprises that come up to enterprises that come up with with with trying to find ways where they'll say trying to find ways where they'll say trying to find ways where they'll say that if you give me x that if you give me x that if you give me x i can increase your odds of getting that i can increase your odds of getting that i can increase your odds of getting that seat seat seat and in a unregulated world and in a unregulated world and in a unregulated world that uh that uh that uh type of capitalist endeavor is going to type of capitalist endeavor is going to type of capitalist endeavor is going to go bananas go bananas go bananas which it did in china which it did in china which it did in china so what ended up happening in china is so what ended up happening in china is so what ended up happening in china is that every chinese parent wants the kids that every chinese parent wants the kids that every chinese parent wants the kids to go to the best schools to go to the best schools
Otherto go to the best schools and all these for-profit educationand all these for-profit educationand all these for-profit education companies come up and say lookcompanies come up and say lookcompanies come up and say look if you want to go to peking universityif you want to go to peking universityif you want to go to peking university or you know singular whateveror you know singular whateveror you know singular whatever we are the toll bridgewe are the toll bridgewe are the toll bridge that you have to pass throughthat you have to pass throughthat you have to pass through andandand the toll bridge has two costs it has athe toll bridge has two costs it has athe toll bridge has two costs it has a dollar ordollar ordollar or rmb cost and it has a lot of effort costrmb cost and it has a lot of effort costrmb cost and it has a lot of effort cost and the end result of all of that is theand the end result of all of that is theand the end result of all of that is the thatthatthat chinese coupleschinese coupleschinese couples come to the conclusion that they reallycome to the conclusion that they reallycome to the conclusion that they really can't havecan't havecan't have very many kidsvery many kidsvery many kids because it's so expensive and sobecause it's so expensive and sobecause it's so expensive and so draining and so complexdraining and so complexdraining and so complex so i think the the government has itsso i think the the government has itsso i think the the government has its heart in the right place when it saysheart in the right place when it saysheart in the right place when it says we don't wantwe don't wantwe don't want this kind of a system because it reducesthis kind of a system because it reducesthis kind of a system because it reduces uh people's interest in having auh people's interest in having auh people's interest in having a reasonable size families etc which whichreasonable size families etc which whichreasonable size families etc which which goes against the country's uhgoes against the country's uhgoes against the country's uh things but on the other sidethings but on the other sidethings but on the other side the problem that this type of situationthe problem that this type of situationthe problem that this type of situation has is there's no easy answerhas is there's no easy answerhas is there's no easy answer anytime you unless you increase those 10
Otheranytime you unless you increase those 10 000 seats to 100 000 seats or you give people other avenues which the ccp is trying to do it leads to a quandary and like there was a joke i think on twitter that these for-profit education companies in china have converted their facilities into high-end cafes where you go in to have a coffee and then you sit down at a table with a very high priced tutor who you know ineffectively continues to tutor you but you just pay for the coffee and the coffee instead of being five dollars is five hundred dollars and so you kind of sidestep it's just a coffee shop you know so it's kind of funny but anyway so i think that on many fronts in china the uh it is actually healthy for the country uh to have a robust competitive environment and i think in the case of the large players in chinese tech they're
Questionerthey're pretty high quality players but in many cases the rules were not defined and so you know in a wild west scenario you're not really breaking any laws you're just proceeding with what's acceptable in the wild west and uh and so i think chinese government coming down and saying hey wait a minute i think some of these things would be you know tweak it somewhat at the end of the day we end up with a better ecosystem and uh and i think that's what they're driving towards so that's my two cents on that
Otherokay thank you really appreciate that and that feedback
Questioneranother question is how effective of a method do you think that it is to try and find um let's say for example mastercard and visa where they have a great business model in the us and in a lot of countries but there are some countries like china for example or some other
Questionerlike china for example or some other countries where where those companies aren't there so how good of a um investing strategy do you think is it's to find those types of companies in those other countries and and try and analyze those
Todd Combsyeah so i think first of all just to digress a little bit uh payment systems in the us are way behind payment systems in almost any other part of the world payment systems in china are extremely advanced korea very advanced and actually in many ways the u.s payment system is very archaic and it has an extremely high frictional cost so one of the issues that comes up is that if if i'm a small merchant uh you know doing some you know some small e-commerce site online selling to consumers i have to pay the visa mastercard ecosystem two to three percent of my top line which is a ridiculously high charge for uh enabling payments uh if i were to
Todd Combsfor uh enabling payments uh if i were to use my bank or if i want to use other avenues it would drop to you know drop it by more than 95 it's it and so one of the things that we've seen is that companies have come up like a firm and others which are basically trying to sidestep the visa mastercard ecosystem by saying okay let's spread the payments out three or four payments now that two percent is gone so the two percent uh three percent that they're taking in some ways it does come back to the consumers because uh most of us have an iv drip of airline miles coming to us through the credit cards and there's a arms race on that front in terms of you know uh i'll give you more and more so there is uh some kickback in effect coming to the consumers but in in general uh the the u.s because of the moat of these companies and because of the kickback mechanisms
Todd Combsand because of the kickback mechanisms that have been put in place it makes it really hard to disrupt them in the other countries like china et cetera they weren't there to begin with and so the merchants weren't interested in suddenly saying oh yeah please take two percent and i'm really happy about that so i think payment systems uh in general are an area of rapid change globally some of the most in in the us are pretty strong but they're going through a lot of changes all around the world and so yeah so when you're investing in payment systems you have to be aware that it's a moving target and sometimes you can end up with very deep enduring modes like the way visa mastercard did and you know to some extent even you can say alipay tens and pay they've also you know developed some great modes but it can it can shift
Questionercan it can shift uh those are industries that rapiduh those are industries that rapiduh those are industries that rapid change so one has to be a little carefulchange so one has to be a little carefulchange so one has to be a little careful
Otheryeah absolutely thank you for thatyeah absolutely thank you for thatyeah absolutely thank you for that that's very helpfulthat's very helpfulthat's very helpful
Questionerand students saw that um we read nickand students saw that um we read nickand students saw that um we read nick sleeps letters and we saw about scaledsleeps letters and we saw about scaledsleeps letters and we saw about scaled economies shared how powerful businesseconomies shared how powerful businesseconomies shared how powerful business model that is and then you also bring upmodel that is and then you also bring upmodel that is and then you also bring up a lot like a recycling funeral servicesa lot like a recycling funeral servicesa lot like a recycling funeral services business model are there any otherbusiness model are there any otherbusiness model are there any other business models that you think uh youbusiness models that you think uh youbusiness models that you think uh you see are very very powerfulsee are very very powerfulsee are very very powerful
Questioneri mean i think uhi mean i think uhi mean i think uh it's in the eye of the beholder and iit's in the eye of the beholder and iit's in the eye of the beholder and i think it's in what is very useful is tothink it's in what is very useful is tothink it's in what is very useful is to just take a step back when you when youjust take a step back when you when youjust take a step back when you when you look at different businesseslook at different businesseslook at different businesses uh just take a step back on theuh just take a step back on theuh just take a step back on the uh nature and quality of the businessuh nature and quality of the businessuh nature and quality of the business you know buffett says that there areyou know buffett says that there areyou know buffett says that there are some businessessome businessessome businesses that are so easy to runthat are so easy to runthat are so easy to run and that you could have an idiot runningand that you could have an idiot runningand that you could have an idiot running those businesses and they would justthose businesses and they would justthose businesses and they would just keep doing well i mean
Warrenkeep doing well i mean keep doing well i mean if you are a coke bottler for example if you are a coke bottler for example if you are a coke bottler for example you have a monopoly territory you have a monopoly territory you have a monopoly territory given to you by the coca-cola company given to you by the coca-cola company given to you by the coca-cola company you will compete with a pepsi borrower you will compete with a pepsi borrower you will compete with a pepsi borrower but you will not compete with another but you will not compete with another but you will not compete with another coke bottler coke bottler coke bottler right and right and right and the joke with the coke waters was that the joke with the coke waters was that the joke with the coke waters was that as the as the as the owner was dying owner was dying owner was dying on his deathbed he would call his kids on his deathbed he would call his kids on his deathbed he would call his kids and as he's taking his last breaths he and as he's taking his last breaths he and as he's taking his last breaths he would tell them would tell them would tell them whatever you do whatever you do whatever you do don't let them change the contract don't let them change the contract don't let them change the contract and then he would die and then he would die and then he would die okay and then when the kids are dying okay and then when the kids are dying okay and then when the kids are dying they would tell their kids whatever you they would tell their kids whatever you they would tell their kids whatever you do don't let them change the contract do don't let them change the contract do don't let them change the contract and then they would die and then they would die and then they would die and um and um and um because because the bottom line was that because because the bottom line was that because because the bottom line was that you know the they you know the they you know the they had um had um had um it was great because they they bought uh it was great because they they bought uh it was great because they they bought uh you know set up concentrate from the you know set up concentrate from the you know set up concentrate from the coca-cola company and cocoa company made coca-cola company and cocoa company made coca-cola company and cocoa company made a good money good bit of money and this a good money good bit of money and this a good money good bit of money and this is a syrup contract that's like a
Warrenis a syrup contract that's like a software business if you really think about it uh but then they control the rest of the distribution and the pricing and all of that and because of the brand you know you're not going to buy you know blots cola you know and and such so you're going to do quite well with it so i think the thing is that when you look at a business you know it's a very wide spectrum of companies some businesses are in this very favored situation where the moat is wide and deep and can endure for a very long time and it generates higher returns and equity and most of capitalism is not like that uh most of capitalism is dog eat dog it's really tough it's difficult i mean if i wanted to for example have the windows of my home clean okay you know i mean i would go on yelp and you know have a few window guys give me coats
Warrencoats i mean they have to be very competitive if they've got a really good reputation they might be able to get a little bit of a premium for that but it won't be much and so there are lots and lots of businesses which is the nature which is the bread and butter of capitalism where you're just going to have to be amazing at execution and amazing at everything whereas the coke bottler can be extremely poorly managed as long as the plant is running okay and you're not putting poison in the coke bottles life is going to go on and it's going to do well it may not be doing as well as it could do with great management but it'll still do well and in fact i would guess that most coke and pepsi bottlers are under managed for that in fact one of the other things that comes up in capitalism is the businesses that need to be extremely well managed to survive
Otherextremely well managed to survive do end up being well managed because otherwise they gone and the businesses that can uh you know deal with a lot of slack and still stay alive um are generally going to have slack
Questionerthat's very interesting thank you for sharing that and then you discuss a lot how investors with small amounts of capital should be able if they're very talented to generate 40 50 percent irrs um you've mentioned uh our students want to know what really should they focus on eventually then that's in the past for example but there are plenty of those in japan that don't re-rate or take a long time to re-rate so should it be net-net with a near-term special situation rating catalyst should they focus more on real estate discounts to navs rather than cash discounts look for future one xpe's cheap earnings and discount the nav etc do you have any
Questionerdiscount the nav etc do you have any more guidance in that regard
Otheruh yeah all of the above so i think what you what you want to do is it is i i think it's really useful it was really useful for me to to set an absolute target okay so let's say your absolute target is that i want to i have a very small amount of capital and i want to double it every three years for example what that means is you need to be generating about 26 a year or something so which means that you really can't buy a business at 80 of intrinsic value because even with some growth and stuff it would be hard to get a double in two or three years but if you were able to buy an asset which is worth a dollar but you were able to buy it for 30 cents that may lend itself to something like that and so the range of acids that can give you that outcome can vary a lot so it could be
Questionerso it could be a distressed bond so it could be highly bond where the annualized uh you know return to maturity exceeds 30 percent a year now most bonds where your you know coupon is 30 a year are there for a very good reason you're likely not to get the coupon and probably not get your money back so good luck with that but sometimes things get mispriced so for example charlie munger made an investment i think in 2002 in tenneco i was very distressed he he bought the common and he also bought the bonds and the bonds were at you know i don't know 20 30 cents on the dollar and even the common was really clobbered and it worked out i think in about three years three or four years after that he was the 10 million with 80 million so that that worked well so i think the high returns with low amounts of capital is definitely there and one of the
Questioneris definitely there and one of the things that george greenblatt points out is let's say i am extremely good at identifying opportunities where i can get a 50 percent return with my million dollars let's say i have a million dollars and i i'm really good at finding things which will give me 50 a year well if i am successful at that for any period of time in a few years i'll have 10 million okay and then i'll be looking for opportunities to put the 10 million to work and i may no longer be able to get 50 percent a year but i'll be i might be happy with 30 or 20 right so what that means is that i have left the arena off the 1 million 50 compounders because they cannot move the needle for me and when the 10 goes to 30 it really cannot move so many times when i look at a business so you know i manage like you know like you know like let's say 750 million or something
Warrenlet's say 750 million or something when i look at a business sometimes where the total capital i can put in is 2 million okay and it has a very high return okay and it has a very high return i don't spend my time looking at that business it's going to take effort to figure it out it's just not worth it the amount of capital i can put in whatever i can put in it's just not worth it so even though i may like that hunt and all of that uh i have moved on now when i started out i was running a million i'd be all over that right so what happens is as investors get more and more successful they move up the chain and they leave the low end to new entrants so the low end is always there for a young enterprising person okay and uh i want to tell you uh i want to tell you a story which i think you guys might relate to so one of the things about human nature and you know our psychology and who we
Otherand you know our psychology and who we areareare is after the age of fiveis after the age of fiveis after the age of five it never changesit never changesit never changes so from the age of five to the age of 95so from the age of five to the age of 95so from the age of five to the age of 95 who you are and what yourwho you are and what yourwho you are and what your likes and dislikes and traits arelikes and dislikes and traits arelikes and dislikes and traits are areareare hard-coded um andhard-coded um andhard-coded um and to lead the best possible lifeto lead the best possible lifeto lead the best possible life you want to have your behavior patternsyou want to have your behavior patternsyou want to have your behavior patterns alignalignalign with what your inborn traits arewith what your inborn traits arewith what your inborn traits are because inbound traits are frozenbecause inbound traits are frozenbecause inbound traits are frozen if your behavior doesn't align with theif your behavior doesn't align with theif your behavior doesn't align with the inbound traits then you will haveinbound traits then you will haveinbound traits then you will have sub-optimal resultssub-optimal resultssub-optimal results sososo whenwhenwhen warren buffett was a kidwarren buffett was a kidwarren buffett was a kid he used to go to thehe used to go to thehe used to go to the ex-urban racetrackex-urban racetrackex-urban racetrack in nebraskain nebraskain nebraska and the examined race track xlr isand the examined race track xlr isand the examined race track xlr is nebraska spelled backwardsnebraska spelled backwardsnebraska spelled backwards and in fact one year i think i went toand in fact one year i think i went toand in fact one year i think i went to the berkshire meeting i think in thethe berkshire meeting i think in thethe berkshire meeting i think in the late 90s or early 2000s the meeting waslate 90s or early 2000s the meeting waslate 90s or early 2000s the meeting was at the excitementat the excitementat the excitement track it the track had closed down andtrack it the track had closed down andtrack it the track had closed down and become a meeting venuebecome a meeting venuebecome a meeting venue sososo he used to go to the racetrackhe used to go to the racetrackhe used to go to the racetrack and uh he had a number of differentand uh he had a number of differentand uh he had a number of different interests in horse racing but one of
Questionerinterests in horse racing but one of these was very interested in it at the end of the races he would pick up all the tickets that people had thrown on the grounds you know and and he would gather them all up and then one by one he'd go through each one to see if some drunk had thrown a winning ticket and as you know there's a lot of alcohol consumed at the exile racetrack with either people who are drunk or just don't pay attention and every time he would find some tickets that actually had money in them and because he was under 18 and it was illegal for him to do betting he was he used to send his aunt alice to the window to collect on the ticket so he'd collect all the tickets then he'd sent and alice to you know collect and he did that you know through high school whatever and and then when he became a value investor and when he started his own fund
Questionerand when he started his own fund he sat down with the moody's manual he sat down with the moody's manual he sat down with the moody's manual and the and the and the moody's manual you know uh i i bought some on ebay just for i i bought some on ebay just for i i bought some on ebay just for nostalgia saying but the moody's manuals nostalgia saying but the moody's manuals nostalgia saying but the moody's manuals are pretty thick are pretty thick are pretty thick okay they're like encyclopedias and okay they're like encyclopedias and okay they're like encyclopedias and they're very fine print they're very fine print they're very fine print and they have like three or four and they have like three or four and they have like three or four companies with a lot of detail in one companies with a lot of detail in one companies with a lot of detail in one page page page mostly it is the quantitative data of mostly it is the quantitative data of mostly it is the quantitative data of these companies you know kind of these companies you know kind of these companies you know kind of revenues cash flows revenues cash flows revenues cash flows assets liabilities that sort of thing assets liabilities that sort of thing assets liabilities that sort of thing because the income statement balance because the income statement balance because the income statement balance sheet and that that sort of thing sheet and that that sort of thing sheet and that that sort of thing and there were tens of thousands of and there were tens of thousands of and there were tens of thousands of companies in these moody's value companies in these moody's value companies in these moody's value and and and buffett buffett buffett went through every single company went through every single company went through every single company two times through all the menu it's a two times through all the menu it's a two times through all the menu it's a lot of work lot of work lot of work i mean he literally from seven a.m to 11 i mean he literally from seven a.m to 11 i mean he literally from seven a.m to 11 p.m other than for meals that's what he p.m other than for meals that's what he p.m other than for meals that's what he was doing was doing was doing and for him it was exactly the same as and for him it was exactly the same as and for him it was exactly the same as the ex-arbonne
Questionerthe ex-arbonne the ex-arbonne what he was looking for is what he was looking for is what he was looking for is something weird something weird something weird that people had missed so he would find that people had missed so he would find that people had missed so he would find for example some insurance company where for example some insurance company where for example some insurance company where the market cap was 15 million and the market cap was 15 million and the market cap was 15 million and one year's earnings were 25 million one year's earnings were 25 million one year's earnings were 25 million right and so these were the winning right and so these were the winning right and so these were the winning tickets that people had thrown away and tickets that people had thrown away and tickets that people had thrown away and he would find these companies and he he would find these companies and he he would find these companies and he would once he found weird things he would once he found weird things he would once he found weird things he would research it and it was real then would research it and it was real then would research it and it was real then he'd you know start buying the stock etc he'd you know start buying the stock etc he'd you know start buying the stock etc and and and even after he got influenced even after he got influenced even after he got influenced by charlie munger by charlie munger by charlie munger and he started buying better businesses and he started buying better businesses and he started buying better businesses you know probably i would say a few you know probably i would say a few you know probably i would say a few years back i would say maybe 10 12 years years back i would say maybe 10 12 years years back i would say maybe 10 12 years ago i was in his office ago i was in his office ago i was in his office uh with with my friend guys beer uh with with my friend guys beer uh with with my friend guys beer and uh and uh and uh you know i had lunch with him in 2008 you know i had lunch with him in 2008 you know i had lunch with him in 2008 and after the lunch i you know setting and after the lunch i you know setting and after the lunch i you know setting up the lunch and all that i got to know up the lunch and all that i got to know up the lunch and all that i got to know his assistant quite well uh debbie his assistant quite well uh debbie his assistant quite well uh debbie and uh
Questionerand uhand uh and soand soand so guy and i asked debbie if we could takeguy and i asked debbie if we could takeguy and i asked debbie if we could take her to lunchher to lunchher to lunch uh before the berkshire annual meetinguh before the berkshire annual meetinguh before the berkshire annual meeting and uh she said oh yeah that'd be greatand uh she said oh yeah that'd be greatand uh she said oh yeah that'd be great so she just she said i said she saidso she just she said i said she saidso she just she said i said she said uh the meetings on saturday fridays areuh the meetings on saturday fridays areuh the meetings on saturday fridays are really busy because all these peoplereally busy because all these peoplereally busy because all these people coming into town but if you come oncoming into town but if you come oncoming into town but if you come on thursdaythursdaythursday i can i can go for lunch on thursday soi can i can go for lunch on thursday soi can i can go for lunch on thursday so for several yearsfor several yearsfor several years a guy me and debbie used to go for luncha guy me and debbie used to go for luncha guy me and debbie used to go for lunch on thursday and in to me the luncheson thursday and in to me the luncheson thursday and in to me the lunches with debbiewith debbiewith debbie were way better than the lunches withwere way better than the lunches withwere way better than the lunches with warren okaywarren okaywarren okay i mean we really got the lowdown of whati mean we really got the lowdown of whati mean we really got the lowdown of what was happening from debbie okaywas happening from debbie okaywas happening from debbie okay buffett has a veneer of diplomacy butbuffett has a veneer of diplomacy butbuffett has a veneer of diplomacy but debbie was awesome so anyway i thinkdebbie was awesome so anyway i thinkdebbie was awesome so anyway i think we'd go to berkshire headquarters towe'd go to berkshire headquarters towe'd go to berkshire headquarters to pick debbie up and then uhpick debbie up and then uhpick debbie up and then uh one year i think uhone year i think uhone year i think uh uh buffett was uh was you know we wereuh buffett was uh was you know we wereuh buffett was uh was you know we were very surprised we went up the elevatorvery surprised we went up the elevatorvery surprised we went up the elevator and he was there the at the
Questionerand he was there the at theand he was there the at the when the elevator came up in the 14thwhen the elevator came up in the 14thwhen the elevator came up in the 14th floor he was there at the entrancefloor he was there at the entrancefloor he was there at the entrance waiting for us and i thought maybe he'swaiting for us and i thought maybe he'swaiting for us and i thought maybe he's waiting for the elevator to go down butwaiting for the elevator to go down butwaiting for the elevator to go down but he said umhe said umhe said um would you like a tour of headquarterswould you like a tour of headquarterswould you like a tour of headquarters and we said oh yeah sure if you'reand we said oh yeah sure if you'reand we said oh yeah sure if you're turtling your thumbs and you want toturtling your thumbs and you want toturtling your thumbs and you want to give us yo-yos tours we are all all forgive us yo-yos tours we are all all forgive us yo-yos tours we are all all for tours and so he took us all over showingtours and so he took us all over showingtours and so he took us all over showing us all the memorabilia and all of thatus all the memorabilia and all of thatus all the memorabilia and all of that and then you know we went to his officeand then you know we went to his officeand then you know we went to his office and i noticed he had japan companyand i noticed he had japan companyand i noticed he had japan company handbook in his officehandbook in his officehandbook in his office and the japan coming handbook is theand the japan coming handbook is theand the japan coming handbook is the same as the moody's manual except it hassame as the moody's manual except it hassame as the moody's manual except it has it's like value line with oneit's like value line with oneit's like value line with one half a page for each japanese companyhalf a page for each japanese companyhalf a page for each japanese company and he was going through it so i iand he was going through it so i iand he was going through it so i i you know now warren wasyou know now warren wasyou know now warren was he was uhhe was uhhe was uh 80 years old you know80 years old you know80 years old you know andandand examinedexaminedexamined was an exercise he was doing when he waswas an exercise he was doing when he waswas an exercise he was doing when he was 12 years old12 years old12 years old and the moody's manual was something he
Questionerand the moody's manual was something he was doing when he was 25 years old all three exercises are exactly the same okay and the amazing thing is when he's 80 years old and he's managing hundreds of billions of dollars he knew he can find nothing in there that can move the needle for berkshire okay it's like you're like i told you the million dollar guys have to move up they can't stay there they're going to move up but the thing is he loved the hunt so much that he couldn't help himself and probably if he found something in there berkshire couldn't buy it he probably could buy it for his own account and he did that with korean stocks a few years ago where again it was the exact same thing it was quantitatively cheap and he couldn't help himself right and so that is the nature of this uh investing game is that um
Otherum there will always bethere will always bethere will always be winning accelerant tickets on the groundwinning accelerant tickets on the groundwinning accelerant tickets on the ground and the onlyand the onlyand the only question it tai isquestion it tai isquestion it tai is will you bendwill you bendwill you bend and make some effort to pick them upand make some effort to pick them upand make some effort to pick them up and analyze them soand analyze them soand analyze them so if a personif a personif a person is interested in doing that i mean iis interested in doing that i mean iis interested in doing that i mean i think that you know there's athink that you know there's athink that you know there's a we have these uh ancient indian textswe have these uh ancient indian textswe have these uh ancient indian texts the upanishadsthe upanishadsthe upanishads they are spiritual but i think they'rethey are spiritual but i think they'rethey are spiritual but i think they're very heavily philosophicalvery heavily philosophicalvery heavily philosophical and i think there's a quote let me seeand i think there's a quote let me seeand i think there's a quote let me see if i can remember it they sayif i can remember it they sayif i can remember it they say asasas is your wishis your wishis your wish so is your willso is your willso is your will as is your will so is your deedas is your will so is your deedas is your will so is your deed as your deed so is your destinyas your deed so is your destinyas your deed so is your destiny and then the punchline is your deepestand then the punchline is your deepestand then the punchline is your deepest desire is your destiny so if you reallydesire is your destiny so if you reallydesire is your destiny so if you really really want somethingreally want somethingreally want something okayokayokay buffett really really wanted to findbuffett really really wanted to findbuffett really really wanted to find every single winning ticketevery single winning ticketevery single winning ticket that anyone had ever thrown away rightthat anyone had ever thrown away rightthat anyone had ever thrown away right and so he just went all in on that rightand so he just went all in on that rightand so he just went all in on that right so if you're willing to go all inso if you're willing to go all inso if you're willing to go all in and search in the nooks and crannies of
Otherand search in the nooks and crannies of the markets you will find lots of treasures but you've got to be very uh passionate about it and like i mean uh the thing is i've talked about in some of my past videos that you know in 2019 i was visiting turkey and i i visited this company where the market cap was 20 million and liquidation value was like 5 600 million hallelujah we're at the ex-sovereign race track and except that in this case there's millions and millions of dollars on the ground nobody wants to pick it up the entire country of turkey 80 million people have no interest in picking up these aksarben tickets so the indian guy from bandra in mumbai in india has to go there and do the job for them it's okay i'm happy to do the job and then you know in 2015 there was my peo one this company rain industry that found and
Otherfound and no one was interested you know we've got no one was interested you know we've got no one was interested you know we've got 1.3 billion people in india they're not 1.3 billion people in india they're not 1.3 billion people in india they're not interested and it's okay i'll i'll help interested and it's okay i'll i'll help interested and it's okay i'll i'll help them out them out them out and and that's fine so and and that's fine so and and that's fine so they are there they are there they are there they are there in plain daylight they are there in plain daylight they are there in plain daylight but you've got to be focused on the hunt but you've got to be focused on the hunt but you've got to be focused on the hunt and it can show up in many different and it can show up in many different and it can show up in many different uh you know shapes and forms uh you know shapes and forms uh you know shapes and forms and uh but if you're if you're focused and uh but if you're if you're focused and uh but if you're if you're focused on that on that on that uh it will happen uh it will happen uh it will happen and when you find one of those that's and when you find one of those that's and when you find one of those that's either let's say a very low um just a either let's say a very low um just a either let's say a very low um just a very low let's say earnings power very low let's say earnings power very low let's say earnings power multiple or something that's at a huge multiple or something that's at a huge multiple or something that's at a huge discounted book value how important is discounted book value how important is discounted book value how important is it to have a near-term tangible catalyst it to have a near-term tangible catalyst it to have a near-term tangible catalyst for the stock to re-rate or do you just for the stock to re-rate or do you just for the stock to re-rate or do you just feel like the discount is major enough feel like the discount is major enough feel like the discount is major enough where it'll just re-rate anyways if where it'll just re-rate anyways if where it'll just re-rate anyways if you've made the correct choice you've made the correct choice you've made the correct choice yeah so you know i was telling you that yeah so you know i was telling you that yeah so you know i was telling you that the quantitative stuff you've got to be the quantitative stuff you've got to be
Questionerthe quantitative stuff you've got to be a little careful about a little careful about a little careful about book value if a company is trading well book value if a company is trading well book value if a company is trading well below book value below book value below book value it doesn't mean it's worth book value it doesn't mean it's worth book value it doesn't mean it's worth book value okay okay okay it could be worth well about book value it could be worth well about book value it could be worth well about book value or it could always be worth well below or it could always be worth well below or it could always be worth well below book value book value book value so we cannot just use quantitative so we cannot just use quantitative so we cannot just use quantitative screens alone screens alone screens alone or if someone some companies at a low pe or if someone some companies at a low pe or if someone some companies at a low pe it may deserve to be a low pe because in it may deserve to be a low pe because in it may deserve to be a low pe because in three years it might be gone okay three years it might be gone okay three years it might be gone okay so you know it it deserves to be a p of so you know it it deserves to be a p of so you know it it deserves to be a p of two because in year three is not there two because in year three is not there two because in year three is not there so so so i think what we have to do is that when i think what we have to do is that when i think what we have to do is that when we find things that are statistically we find things that are statistically we find things that are statistically cheap cheap cheap it's only the beginning of the hunt it's only the beginning of the hunt it's only the beginning of the hunt when something is statistically cheap when something is statistically cheap when something is statistically cheap and it can be cheap in a number of and it can be cheap in a number of and it can be cheap in a number of different ways different ways different ways we then have to roll up our sleeves and we then have to roll up our sleeves and we then have to roll up our sleeves and the first question we're going to ask the first question we're going to ask the first question we're going to ask ourselves is ourselves is ourselves is what i'm looking at is it within my what i'm looking at is it within my what i'm looking at is it within my circle of competence and can i figure
Othercircle of competence and can i figure this out okay and if the answer is yes then i can go further and if the answer is yes then i can go and if the answer is yes then i can go further and uh so and uh so i think we have to you know even when i think we have to you know even when buffett started with the moody's manuals buffett started with the moody's manuals he was looking for things that were statistically cheap but he had a awesome business analyst mind so so he could then go from there to looking at well how real is this and what's going on here and all these things
Questionerthank you for that we really appreciate it and um a lot of students are interested in getting some advice for you on how to sort of fund in the future so how do you initially raise capital for the fund apart from the 025 free structure that you highly recommend if you do not have let's say relatively which friends and family to raise it from and also how much capital do you believe that investor would need to start a hedge
Questionerinvestor would need to start a hedge fund today or to mention their moneyfund today or to mention their moneyfund today or to mention their money full time in the usfull time in the usfull time in the us
Questionerokay yeah sookay yeah sookay yeah so
Warreni would say that before we get to thei would say that before we get to thei would say that before we get to the raising a fund questionraising a fund questionraising a fund question uh what should have happened before thatuh what should have happened before thatuh what should have happened before that isisis 10 years or 50 a year10 years or 50 a year10 years or 50 a year so if you for example had very modestso if you for example had very modestso if you for example had very modest amounts of capital you know i don't knowamounts of capital you know i don't knowamounts of capital you know i don't know 50 000 25 00050 000 25 00050 000 25 000 10 000 for example10 000 for example10 000 for example at 50 a year it becomes a significantat 50 a year it becomes a significantat 50 a year it becomes a significant number so if you have ten thousandnumber so if you have ten thousandnumber so if you have ten thousand dollarsdollarsdollars and you haven't been able to doand you haven't been able to doand you haven't been able to do you know 30 40 50 a year for a long timeyou know 30 40 50 a year for a long timeyou know 30 40 50 a year for a long time then i don't think you should even thinkthen i don't think you should even thinkthen i don't think you should even think about a fund or anything and the secondabout a fund or anything and the secondabout a fund or anything and the second is that if you've got an engineis that if you've got an engineis that if you've got an engine whichwhichwhich is getting you those high wage returnis getting you those high wage returnis getting you those high wage return the power of compounding is suchthe power of compounding is suchthe power of compounding is such that if you never raised the fundthat if you never raised the fundthat if you never raised the fund you would still be enormously wealthyyou would still be enormously wealthyyou would still be enormously wealthy so i think the first criteriaso i think the first criteriaso i think the first criteria to getting into the fun businessto getting into the fun businessto getting into the fun business is you should already be independentlyis you should already be independently
Otheris you should already be independently wealthywealthywealthy andandand if you are not already there it meansif you are not already there it meansif you are not already there it means thatthatthat something's happened in the past wheresomething's happened in the past wheresomething's happened in the past where it hasn't been proven that you can doit hasn't been proven that you can doit hasn't been proven that you can do thisthisthis now if you're already wealthynow if you're already wealthynow if you're already wealthy then i think you focus on the friendsthen i think you focus on the friendsthen i think you focus on the friends family and foodsfamily and foodsfamily and foods especially theespecially theespecially the okay and buffett says that if you have aokay and buffett says that if you have aokay and buffett says that if you have a great track recordgreat track recordgreat track record they will swim to you in the middle ofthey will swim to you in the middle ofthey will swim to you in the middle of the atlanticthe atlanticthe atlantic in shock infested watersin shock infested watersin shock infested waters to invest with you so if you have doneto invest with you so if you have doneto invest with you so if you have done wellwellwell people will find youpeople will find youpeople will find you and so you don't need to beand so you don't need to beand so you don't need to be great at raising capitalgreat at raising capitalgreat at raising capital you need to be great at pounding outyou need to be great at pounding outyou need to be great at pounding out great returnsgreat returnsgreat returns if you pound out the great returnsif you pound out the great returnsif you pound out the great returns everyone's looking for those managerseveryone's looking for those managerseveryone's looking for those managers and they are trying hard to find youand they are trying hard to find youand they are trying hard to find you and they will find you soand they will find you soand they will find you so when i started my fund i had a millionwhen i started my fund i had a millionwhen i started my fund i had a million dollars from eight investors whodollars from eight investors whodollars from eight investors who actually asked meactually asked meactually asked me to manage money for them because ito manage money for them because ito manage money for them because i should give them stock tips and they've
Othershould give them stock tips and they've done well with that but then after i got the fund going and you know the sec puts a lot of restrictions on you know you cannot solicit advertise all these things but they don't stop me from talking to my existing investors i can talk about existing investors or anything so i remember the first annual meeting we had which was again eight brave people around a conference table and you know we met and then we went for dinner i told my investors at that time that do you know why you have been put on planet earth do you know your mission in life they said no why don't you tell us i said you were put on planet earth so that you might bring in assets to public that is your mission in life so one thing to understand about humans is most humans have no idea why they are they are looking for a mission so just give them the mission
Questionerso just give them the mission
Questionerso i said please go to your closest friends and family and tell them about me and ask them to contact me and you know then i can talk to them because once people contact me then i can talk to them it's just it's just that i can't you know speed dial all the dentists in north carolina and say please invest with me you know scc wouldn't like that too much so i just told them that was their mission in life and they went out and you know executed on that mission so we went from eight investors to 17 investors to 25 investors and we just kept going from there and then when those new investors came in i also had to educate them on what their mission in life was and we just kept going from there yeah
Otherthank you for that that's very helpful and in the past you've talked a lot about both fiat chrysler and about
Questionerabout both fiat chrysler and about ferrariferrariferrari um stellantis today owns for uh fiatum stellantis today owns for uh fiatum stellantis today owns for uh fiat chrysler and then xor has a stake inchrysler and then xor has a stake inchrysler and then xor has a stake in ferrari do you have any thoughts onferrari do you have any thoughts onferrari do you have any thoughts on either stellatus or xoreither stellatus or xoreither stellatus or xor
Warrenyeah i i think uh so john elkan who's ayeah i i think uh so john elkan who's ayeah i i think uh so john elkan who's a chairman is a good friend of mine i ichairman is a good friend of mine i ichairman is a good friend of mine i i got himgot himgot him i got known quite well uhi got known quite well uhi got known quite well uh once i had aonce i had aonce i had a uh ownership stake in umuh ownership stake in umuh ownership stake in um in fear chrysler and uh so anyway iin fear chrysler and uh so anyway iin fear chrysler and uh so anyway i think uh one of my deep regrets is thatthink uh one of my deep regrets is thatthink uh one of my deep regrets is that i used toi used toi used to own likemore than one point three or one pointmore than one point three or one pointmore than one point three or one point four percentfour percentfour percent of fiat chrysler that first invested inof fiat chrysler that first invested inof fiat chrysler that first invested in the five billion market cap we put inthe five billion market cap we put inthe five billion market cap we put in about 70 million or so and then theyabout 70 million or so and then theyabout 70 million or so and then they spun out ferrarispun out ferrarispun out ferrari and uh you know i got 1.3 million sharesand uh you know i got 1.3 million sharesand uh you know i got 1.3 million shares of ferrari in that spin outof ferrari in that spin outof ferrari in that spin out and again the my ownership of ferrariand again the my ownership of ferrariand again the my ownership of ferrari was over one percent amazingwas over one percent amazingwas over one percent amazing every 100 ferraris sold was for theevery 100 ferraris sold was for theevery 100 ferraris sold was for the benefit of cobra iphone investorsbenefit of cobra iphone investorsbenefit of cobra iphone investors you know how utopian is that and then inyou know how utopian is that and then inyou know how utopian is that and then in my infinite wisdom
Todd Combsmy infinite wisdom overly focused on the peo ones ferrari is trading at 30 40 times earnings i sold it so i think we made like 100 million on ferrari but if i had done nothing we would have like 300 million of ferrari stock today which would be very nice i think xor is a good allocator of capital i think they've done some very good things with the way they've approached things and i think john is young and i think he has a long runway ahead he has a good team so i would expect that he will make a good decisions and i think they will do well in the future yes absolutely yeah
Questionerinteresting thank you for sharing your thoughts on those and we haven't had an update in a while on the contest between you and guy spear of centric uh realty versus mastercard uh how are you feeling about your position and i know it's still in the early innings but what are your how are
Questionerearly innings but what are your how are you feeling right now about that
Todd Combsi think i think uh i haven't looked at the numbers lately but i would i would guess mastercard is probably ahead um i i have to go back and look at that but we also i think it's a long it's a long contest and uh uh sun tech is actually just beginning to kind of hit its stride right now the there's a lot of talents coming in there's uh their business has gone very capitalized and so um the night is young and we shall have to see what happens in the next uh five or seven years but that'll be uh i mean i think that i was much more biased towards the peo ones and all of that when i made that bet and i'm more biased towards the compounders now i don't know if i would place that bet today but i couldn't tell you which one's gonna win right now we'll have to see
Questionerokay that's very interesting thank you
Questionerokay that's very interesting thank you for that and then people are wondering if you've read a book that's nixley rates really highly it's called zen and the art of motorcycle maintenance and if so what are your thoughts on that book have you read that book itai
Otheri have not read it personally but it's in my plans for the next book that i read probably okay yeah so i did read uh zen and the art of motorcycle maintenance i also found it difficult to read and i could not get out of it what nick sleep got so nicely that particular book had transformational value for him in a number of different ways it did not have the same i think towards the end of the book i started to understand more of it but i think so i i would definitely say that it's worth picking up the book and reading it just you know just to see if it is something that resonates so i i
Otherit is something that resonates so i iit is something that resonates so i i couldn't get to nirvana withcouldn't get to nirvana withcouldn't get to nirvana with zenzenzen but you know there have been other booksbut you know there have been other booksbut you know there have been other books whichwhichwhich have resonated a lot with me and havehave resonated a lot with me and havehave resonated a lot with me and have helped me a lothelped me a lothelped me a lot and soand soand so i think each each one of us we arei think each each one of us we arei think each each one of us we are our receptors are different at differentour receptors are different at differentour receptors are different at different timestimestimes and we are able toand we are able toand we are able to pick up different thingspick up different thingspick up different things uh at different times and then that canuh at different times and then that canuh at different times and then that can work but the book was very successful itwork but the book was very successful itwork but the book was very successful it got translated into many languagesgot translated into many languagesgot translated into many languages i think he did a the authori think he did a the authori think he did a the author was turned down by like you know 50was turned down by like you know 50was turned down by like you know 50 publishers or something before anyonepublishers or something before anyonepublishers or something before anyone took a chance on him and then it becametook a chance on him and then it becametook a chance on him and then it became a wrong way best sellera wrong way best sellera wrong way best seller sososo it is umit is umit is um what i did find easier is i switchedwhat i did find easier is i switchedwhat i did find easier is i switched from reading itfrom reading itfrom reading it to listening to it on audibleto listening to it on audibleto listening to it on audible and that definitely went better for meand that definitely went better for meand that definitely went better for me uh the reading was was going very slowuh the reading was was going very slowuh the reading was was going very slow but i think it's it's a it's worth worthbut i think it's it's a it's worth worthbut i think it's it's a it's worth worth reading surereading surereading sure excellent thank you excited to check itexcellent thank you excited to check it
Questionerexcellent thank you excited to check it out and uh for a concluding question today uh what would you say your favorite books about either startup founders or former ceos of companies
Todd Combsyeah i mean i would say that uh uh founders you know i would say sam walton's book uh i think that's a really good you know business biographies and business autobiographies is probably my favorite genre because i just love them so much and for example recently i read a book which was written by seoul price's son so sole price was the founder of price club and jim senegal at costco used to work at price club then he started costco and then eventually they bought price club so they asked jim senegal i think a few years back what did you learn from sole price and he said you know it's the wrong question he said there's nothing i know that did not come from sole price
Questionerthat did not come from sole price so everything i know is from sole priceso everything i know is from sole priceso everything i know is from sole price and uhand uhand uh sososo i think when you go throughi think when you go throughi think when you go through business biographies in ottawa biographybusiness biographies in ottawa biographybusiness biographies in ottawa biography there's a wide range i really enjoyedthere's a wide range i really enjoyedthere's a wide range i really enjoyed the making of an american capitalist bythe making of an american capitalist bythe making of an american capitalist by roger loganstreenroger loganstreenroger loganstreen but i think that there's so manybut i think that there's so manybut i think that there's so many biographies and autobiographies thatbiographies and autobiographies thatbiographies and autobiographies that havehavehave uh come out over the years that i thinkuh come out over the years that i thinkuh come out over the years that i think cancancan help you along quite a ways you know i'mhelp you along quite a ways you know i'mhelp you along quite a ways you know i'm reading right nowreading right nowreading right now uh thisuh thisuh this this one you know inventthis one you know inventthis one you know invent invent and wander you know this is theinvent and wander you know this is theinvent and wander you know this is the bezos writing but also the intro bybezos writing but also the intro bybezos writing but also the intro by isaacsonisaacsonisaacson is really amazing sois really amazing sois really amazing so i think whatever you can do toi think whatever you can do toi think whatever you can do to read aboutread aboutread about autobiographies of founders orautobiographies of founders orautobiographies of founders or biographies of entrepreneurs i thinkbiographies of entrepreneurs i thinkbiographies of entrepreneurs i think that'sthat'sthat's it's tremendous because you get to seeit's tremendous because you get to seeit's tremendous because you get to see thingsthingsthings from the lens that they're looking atfrom the lens that they're looking atfrom the lens that they're looking at and you can see them in so manyand you can see them in so manyand you can see them in so many different industriesdifferent industriesdifferent industries so those are wonderfulso those are wonderfulso those are wonderful absolutely thank you so much really
Questionerabsolutely thank you so much really appreciate it and we really appreciate you taking the time out of your schedule to meet with us today this was an extremely helpful session and um the students really really value it
Otherwell uh it i happy and i think it was a it was a fun session and i think yeah it sounds like you did your homework and uh and uh i think uh i i enjoyed the interaction and i enjoyed the question so thank you very much