Other[Music][Music]thank you so much for joining us todaythank you so much for joining us todaythank you so much for joining us today exploring the legacy of Charlie Munger aexploring the legacy of Charlie Munger aexploring the legacy of Charlie Munger a conversation with monish Pai hello andconversation with monish Pai hello andconversation with monish Pai hello and uh my name is Robert pittinger with theuh my name is Robert pittinger with theuh my name is Robert pittinger with the YPO Mosaic chapter mon P has been a YPOYPO Mosaic chapter mon P has been a YPOYPO Mosaic chapter mon P has been a YPO member since 1997 lives in Austin Texasmember since 1997 lives in Austin Texasmember since 1997 lives in Austin Texas and graduated from Clemson University heand graduated from Clemson University heand graduated from Clemson University he is CEO of Dondo funds which he grew fromis CEO of Dondo funds which he grew fromis CEO of Dondo funds which he grew from a million with eight investors to $840a million with eight investors to $840a million with eight investors to $840 million as of December 31st massivemillion as of December 31st massivemillion as of December 31st massive massive growth in that time uh monishmassive growth in that time uh monishmassive growth in that time uh monish authored two books on value investingauthored two books on value investingauthored two books on value investing the Dondo investor and Mosaicthe Dondo investor and Mosaicthe Dondo investor and Mosaic perspectives on investing so it is onlyperspectives on investing so it is onlyperspectives on investing so it is only fitting that he is speaking to the YPOfitting that he is speaking to the YPOfitting that he is speaking to the YPO Mosaic chapter today monish is a highlyMosaic chapter today monish is a highlyMosaic chapter today monish is a highly successful value investor who did it bysuccessful value investor who did it bysuccessful value investor who did it by his term shamelessly cloning as hehis term shamelessly cloning as hehis term shamelessly cloning as he explains the management decisions ofexplains the management decisions ofexplains the management decisions of Warren Buffett and Charlie Munger as aWarren Buffett and Charlie Munger as aWarren Buffett and Charlie Munger as a way to say thank you to them for hisway to say thank you to them for hisway to say thank you to them for his success mon Pai along with fellow wior
Othersuccess mon Pai along with fellow wior guy spear teamed up to purchase the 2007 charity lunch with Warren and Charlie for $650,000 the lunch was lifechanging for both gentlemen and monish is here to tell us more about his close friend Charlie Munger which he uh which developed out of that lunch besides his friendship friendship with Charlie one of the things monish is most proud of is his lifetime ban from a casino in Las Vegas for his Blackjack prowess so monish thank you for being with us today we're so grateful and uh we look forward to to hearing some of your wisdom about Charlie and about playing Blackjack so the first thing that we'd like to start with is there's a quote that you've talked about that Charlie Munger has said which is take a simple idea and take it seriously can you talk to us about what that means and what Charlie
Questionerabout what that means and what Charlie meant by that line and how you've applied it in your life and and in your applying it in your life and and in your and in your investing yeah well uh
OtherRobert first of all it's a pleasure to be with you always a pleasure to talk to YPO like many of you YPO has completely changed my life for the better I can't even imagine what my life would have been if there was no YPO there was so many changes and improvements YPO brought along and also I also wanted to share my grief and condolences with all of you on October 7th you know I think many of you maybe directly or indirectly maybe knew some of the victims or the folks who got injured or maybe the folks who got taken hostage and so on so my thoughts and prayers are with you on that and hopefully we'll get to a Finish Line on that at some reasonable Point hopefully yeah so my friendship with Charlie was
Ted Weschleryeah so my friendship with Charlie was quite unexpected and accidental never expected to even meet him and that was a great bonus of my life first time I met Charlie was even before the Buffett lunch was at a YPO event so actually one of the yers who wrote po Charlie Almanac Peter Kaufman arranged for him to speak to YPO and I just moved to California then I think it must have been 2004 or something and so that was the first time I met Charlie and actually hung out with him a bit the quote you brought up take a simple idea and take it seriously it's a famous Monger quote and it's something that I've always tried to practice in my life even before I heard of Charlie or even before I heard about that quote because I think it's so powerful so I think that as we go through life we get some aha moments you know where we uncover some nugget of wisdom or
Otheruncover some nugget of wisdom or knowledge maybe many other humans have either not figured out are not given the amount of weight they should to that particular piece of wisdom and knowledge and it can become a source of tremendous competitive advantage and so one of the things I learned about very early was the power of cloning and the power of copying and I remember when I was in my early 20s I read this book by Tom Peters you know he was a big management Guru in the 80s where he was giving the example of these two gas stations in California that were diagonal on a busy intersection from each other and both the gas stations were self-served and so you come in you pump your gas and you leave in one case the owner would come out maybe once an hour or something pick a random car and wash the windshield or check the oil just some extra service at
Warrencheck the oil just some extra service at nonono charge and the guy who was diagonalcharge and the guy who was diagonalcharge and the guy who was diagonal across the street was seeing this takeacross the street was seeing this takeacross the street was seeing this take place and he said to himself well that'splace and he said to himself well that'splace and he said to himself well that's kind of stupid you can't do it forkind of stupid you can't do it forkind of stupid you can't do it for everyone if you did it for everyoneeveryone if you did it for everyoneeveryone if you did it for everyone you'd lose your shirt because you're notyou'd lose your shirt because you're notyou'd lose your shirt because you're not charging for it and he never copied orcharging for it and he never copied orcharging for it and he never copied or cloned that and over time what happenedcloned that and over time what happenedcloned that and over time what happened is that the gas station that wasis that the gas station that wasis that the gas station that was providing this random extra service sawproviding this random extra service sawproviding this random extra service saw an increase in business and the onean increase in business and the onean increase in business and the one diagonal from him saw a decrease evendiagonal from him saw a decrease evendiagonal from him saw a decrease even after seeing theafter seeing theafter seeing the decrease the guy across the street diddecrease the guy across the street diddecrease the guy across the street did not change Behavior so Tom Peter saidnot change Behavior so Tom Peter saidnot change Behavior so Tom Peter said and this is what I found veryand this is what I found veryand this is what I found very unbelievable he said that you can go tounbelievable he said that you can go tounbelievable he said that you can go to your most direct competitors and you canyour most direct competitors and you canyour most direct competitors and you can sit down with them and you can give themsit down with them and you can give themsit down with them and you can give them all your trade sequence everything thatall your trade sequence everything thatall your trade sequence everything that you learned that has given you anyou learned that has given you anyou learned that has given you an advantage and they will listen to youadvantage and they will listen to you
Otheradvantage and they will listen to you but there will be no Behavior change okay so I read that I said this is ridiculous this cannot be the the way the world works you know and I'm in my early 20s I haven't really kind of experienced life and I don't know kind of how things work but I made a promise to myself that I'm going to prove Tom Peters wrong okay and I was going to prove him wrong two ways one I was going to look for instances where humans see something smart happening and copy or clone it because that would prove him wrong and the second is whenever I personally see someone doing something smart I'm going to copy it because that also proves him wrong and from my early 20s till now this year I'm going to be 60 what I found because I became a student of this is that Tom Peters was mostly right humans are really I still don't know why it is the case but humans
Otherdon't know why it is the case but humans have an aversion to cloning they somehow consider it beneath themselves that you know I didn't come up with this or this is not my idea and that sort of thing something some weird thinking like that and what I also found is that when I forced myself to copy things that I found to be smart it gave me a big Edge and so this was an example of a simple idea and what I found is that there were a very small sliver of humans who were master cloners and these small sliver of humans owned the world they really really did very well so for example almost everything at Microsoft is cloned Microsoft spends so many billions of dollars on Microsoft research and their research labs and so on nothing has ever come out from that what has worked for them is looking at Lotus and creating Excel looking at word perfect and
OtherExcel looking at word perfect and creating Word looking at the mac and creating Word looking at the mac and creating windows and on and on and on and even now open AI is a partnership with AI you know Google actually did the work Microsoft did none of the work and they are ahead you know and so Sam Walton was another great cloner you know and in fact hostco you know Jim Sagal who was the longtime founder CEO of Costco he had cloned the entire model from Soul price who he used to work for and someone asked him what did you learn from Soul price and his response was it's the wrong question everything I know is from Soul price you know so he says there's nothing I know that did not come from Soul price so these were people who took a simple idea very very seriously and so it's not just enough to read about some idea be impressed with it whatever but when you see that something really grabs you you
Questionersee that something really grabs you you see that something really grabs you you have to go all in and you have to fight have to go all in and you have to fight have to go all in and you have to fight the normal tendency of the status quo the normal tendency of the status quo the normal tendency of the status quo and I think Charlie I mean both Charlie and I think Charlie I mean both Charlie and I think Charlie I mean both Charlie and Warren I think their success has and Warren I think their success has and Warren I think their success has come from the dogged pursuit of a few come from the dogged pursuit of a few come from the dogged pursuit of a few very simple ideas and once they figured very simple ideas and once they figured very simple ideas and once they figured so for example when they bought Seas so for example when they bought Seas so for example when they bought Seas candy in the' 70s in candy in the' 70s in candy in the' 70s in California it was a huge jump for them California it was a huge jump for them California it was a huge jump for them they paid three 10 Book value for the they paid three 10 Book value for the they paid three 10 Book value for the company they thought they were paying company they thought they were paying company they thought they were paying too much and they didn't understand how too much and they didn't understand how too much and they didn't understand how good a business it was and the only good a business it was and the only good a business it was and the only thing Warren did every year is he left thing Warren did every year is he left thing Warren did every year is he left the management alone to run the business the management alone to run the business the management alone to run the business but on January 1st of each year he but on January 1st of each year he but on January 1st of each year he personally changed all the prices and he personally changed all the prices and he personally changed all the prices and he changed all the prices significantly changed all the prices significantly changed all the prices significantly above the rate of inflation so inflation above the rate of inflation so inflation above the rate of inflation so inflation was 3% he would raise the price 10% and was 3% he would raise the price 10% and was 3% he would raise the price 10% and the next year was 3 or 4% he'd raise the next year was 3 or 4% he'd raise the next year was 3 or 4% he'd raise another 10% and what surprised him was
Otheranother 10% and what surprised him was he kept pounding in these very heavy price increases and unit volumes kept going up and it stunned him that you could have a business with this much pricing power and both Warren and Charlie did not understand Brands and did not understand the power of Brands but they became very Ardent students of what was this phenomena what did this mean how can we apply this in other businesses and it was fundamental to the Burkshire that we see today right because it was again looking at a relatively simple idea but really trying to get your arms around it so I think that all of us you know many of us who start businesses we start businesses because we see an offering Gap you know we see something some product or service that should exist in the world but maybe doesn't or not enough of it and so on
Questionerdoesn't or not enough of it and so on and we go into it I think I think once we take that plunge having this notion of the dogged pursuit of simple ideas will lead to a lot of good things so Charlie kept a bust of Ben uh Franklin didn't he you talk about his connection what did he what how did he feel connected to Ben Franklin can you talk about uh he looked up to Ben Franklin would i' like to hear your thoughts on that and and what Ben Franklin meant to to Charlie
Warrenyeah so I think Ben Franklin is a person very much worth studying many of us know you know different Franklin courts and we've kind of looked we we are familiar with Ben Franklin founder of the United States and so on but uh Walter Isaacson wrote a very good biography on Ben Ben Franklin he's the same guy who wrote the biographies on Steve Jobs and Elon Musk and so I think the overdose ing on
Otherand so I think the overdose ing on Franklin which is a very good idea simple idea taken seriously is is a really good thing Franklin actually uh there are many aspects of Franklin of Franklin that would resonate with YP because Franklin basically started out as an entrepreneur right and so he had a printing business and a publishing business and he yearned for Independence Financial Independence Independence of thought all kinds of Independence and in his early 40s he basically sold his business to his Apprentice with no money basically changing hands at the time and he just told an apprentice you just pay me a percentage of the profits over the next few decades whatever right and sort of the win-win for both sides and once he freed himself from the you know the daily visites of running a business he could focus on bigger things and more
Othercould focus on bigger things and more interest and so Franklin Franklin wasinterest and so Franklin Franklin wasinterest and so Franklin Franklin was you know he was a really polymath youyou know he was a really polymath youyou know he was a really polymath you know he did he invented so many thingsknow he did he invented so many thingsknow he did he invented so many things you know bif focals the lightning rodyou know bif focals the lightning rodyou know bif focals the lightning rod and uh figuring out electricity and soand uh figuring out electricity and soand uh figuring out electricity and so many other things he was a philosophermany other things he was a philosophermany other things he was a philosopher without him there's no United States sowithout him there's no United States sowithout him there's no United States so he was very Central tohe was very Central tohe was very Central to getting France to support the Unitedgetting France to support the Unitedgetting France to support the United States against England by sending troopsStates against England by sending troopsStates against England by sending troops so if you think about itso if you think about itso if you think about it one Monarch monarchy was going to fightone Monarch monarchy was going to fightone Monarch monarchy was going to fight another monarchy to help the foundationanother monarchy to help the foundationanother monarchy to help the foundation of aof aof a democracy okay it just doesn't make anydemocracy okay it just doesn't make anydemocracy okay it just doesn't make any sense on the surface but the French camesense on the surface but the French camesense on the surface but the French came through and sided with the Americans andthrough and sided with the Americans andthrough and sided with the Americans and fought the British and led to thefought the British and led to thefought the British and led to the independence of the Colonials andindependence of the Colonials andindependence of the Colonials and basically the foundation and formationbasically the foundation and formationbasically the foundation and formation of America so he was also very pragmaticof America so he was also very pragmaticof America so he was also very pragmatic you know the the founding fathers are anyou know the the founding fathers are anyou know the the founding fathers are an interesting group it's actually worth
Warreninteresting group it's actually worth studying all of them but they were very different from each other and Franklin had many ideas about what the United States should be many of those went by the way side but he was practical in uh the formation of basically coalitions and compromises to get to the end point so I think Charlie very much appreciated Franklin from the point of view of this creation of Independence and Charlie himself really yearned to be financially independent he didn't want to be financially independent to buy Ferraris he wanted Financial Independence so he could do and say whatever he thought he wasn't kind of a servant to anyone if you will and he could pursue his whatever his passions were in life in fact he used to joke he said that you know I was always pursuing Financial Independence and I think I overshot a
QuestionerIndependence and I think I overshot a bit you knowbit you knowbit you know where he ended up with you know a fewwhere he ended up with you know a fewwhere he ended up with you know a few billion dollars that he really didn'tbillion dollars that he really didn'tbillion dollars that he really didn't need you know but but it it is what itneed you know but but it it is what itneed you know but but it it is what it is I I think you know many of us jokeis I I think you know many of us jokeis I I think you know many of us joke that Charlie is Ben Franklinthat Charlie is Ben Franklinthat Charlie is Ben Franklin reincarnated they if there ever is areincarnated they if there ever is areincarnated they if there ever is a Reincarnation of Ben Franklin it wouldReincarnation of Ben Franklin it wouldReincarnation of Ben Franklin it would have been Charlie Munger they're veryhave been Charlie Munger they're veryhave been Charlie Munger they're very similar in a lot of their attributes yousimilar in a lot of their attributes yousimilar in a lot of their attributes you know when I met Buffett for lunch I'dknow when I met Buffett for lunch I'dknow when I met Buffett for lunch I'd asked him Mr Buffett if you could meetasked him Mr Buffett if you could meetasked him Mr Buffett if you could meet anyone living or dead for for lunch whoanyone living or dead for for lunch whoanyone living or dead for for lunch who would you like to meet and he says firstwould you like to meet and he says firstwould you like to meet and he says first I'd like to meet Sophia LaurenI'd like to meet Sophia LaurenI'd like to meet Sophia Lauren okay he was always a big fan of Sophiaokay he was always a big fan of Sophiaokay he was always a big fan of Sophia Lauren and then he saids no no noLauren and then he saids no no noLauren and then he saids no no no scratch that answer I I really want toscratch that answer I I really want toscratch that answer I I really want to meet Isaac Newton if I really could Imeet Isaac Newton if I really could Imeet Isaac Newton if I really could I would like love to have had lunch withwould like love to have had lunch withwould like love to have had lunch with Isaac Newton so I said why why would youIsaac Newton so I said why why would youIsaac Newton so I said why why would you want to why do you pick Newton all thewant to why do you pick Newton all thewant to why do you pick Newton all the people you could have pick to have lunch
Questionerpeople you could have pick to have lunch with why do you pick Newton he said well
Warrenyou know Newton invented calculus he said Newton probably was the smartest human who ever lived and he said then that he said new newon was the smartest but Franklin was the wisest and so he said my meeting with Newton was really be along the lines of you know he got swept up into the Euphoria of the south sea bubble he lost his fortune where he first saw the bubble saw the foolishness of the bubble then participated in the bubble himself you know and and then he lost his fortune and so he said that that would be my line of inquiry is out of the mind that wonderful a mind go so a drift but Franklin you know Franklin was clearly the wisest and Charlie was up there you know I don't think I in my lifetime ever met a man who was wiser or smarter than Charlie
Questionerwho was wiser or smarter than Charlie there's a big difference in the IQ level there's a big difference in the IQ level there's a big difference in the IQ level and the wisdom even between Warren and and the wisdom even between Warren and and the wisdom even between Warren and Charles no comparison actually can you Charles no comparison actually can you Charles no comparison actually can you talk about more of that and how Charlie talk about more of that and how Charlie talk about more of that and how Charlie changed uh Warren's thought processes on changed uh Warren's thought processes on changed uh Warren's thought processes on on investing over the years
Questioneryeah I think Warren this year at the Burkshire in the burshire annual letter if you guys you know go to the booksh thatway.com and pull up the letter he has a one page and a tribute to Charlie and he talks about how Charlie is the architect of Burkshire and Warren is the general contractor and he said basically Charlie you know Burk show was built to the blueprint of Charlie and basically Warren was was trained and studied under Ben Graham and he was very heavily influenced by Ben Graham Ben Graham's entire investing framework came out of the depression and came out of the market crash so he went looking
Othermarket crash so he went looking for the stocks that were most widely mispriced the cheapest stocks because he was always concerned about you know not losing principal and reducing risk and Charlie in some of his Early Adventures in business realized that there was some business businesses that just gave you one difficult decision after another and there were other businesses that were so easy to run and they made a lot of money and so there was no real correlation between how difficult a business was and how how much money you made in fact there was an inverse correlation and so he told Warren that you made a big mistake buying burshire haway but I'm going to try to help you fix it and he said rather than buying a fair business at a good price you need to buy good businesses at a fair price and that is a huge transition for someone like Buffett
Questionerhuge transition for someone like Buffett who has so much respect for Ben Graham and he also used an approach created by Ben Graham to compound money at very high rates you know into the 30s per year and so for someone to give up something that worked so well for for him and move in the direction of Charlie Munger Warren said was just only happened because of the power of Charlie's mind and Charlie was really remarkable in the sense that he let Warren come to the other side at his own pace never criticized him for any decisions he made Warren till today has very deeply embedded in him The Bargain Hunter which surfaces from time to time and Charlie would see that but he wouldn't really rub it in his face and kind of he was it was interesting because I think what I noticed with Charlie is Charlie was on the board of Costco for almost three
Questionerthe board of Costco for almost three decades and I know that the institutions all the institutions whose boards and stuff he got involved with like the West Lake Harvard West Lake School in Los Angeles or the UCSB or Stanford or University of Michigan I know that all these institutions got improved but the interesting thing about his finesse was he was able to improve them without the institutions feeling that he was imposing their will on them so he kind of cajoled them into a direction without them even realizing that they were being cajoled in a particular direction I met Jim Sagal the founder of Costco at the Charlie Memorial on March 10th the family had a memorial for him in La a wonderful ceremony and I asked Jim Sagal Jim SLE actually spoke at the memorial I said Jim Charlie was on the board for three decades what can you point to that
Questionerthree decades what can you point to that is different at Costco than if Charlie was not there and he couldn't think of anything and the reason he couldn't think of anything is because Charlie pushed them into an area so in such a subtle manner that they think it's their ideas you know it's like their thinking and their idea like he always pushed them to think long term Costco is really not a retailer it's a buying agent for the customer it's a very different mindset and he reinforced that and the reinforcements took place in such a manner that they don't even realize that there was an influence which is so beautiful speaking of mindset Charlie had uh when he made decisions he had uh mental models that he would talk about can you talk about Charlie's mental models and how he made decisions yeah so you know he was a very prolific reader I
Warrenyou know he was a very prolific reader I would guess that Charlie was reading would guess that Charlie was reading would guess that Charlie was reading maybe 200 to 500 books a year on a wide maybe 200 to 500 books a year on a wide maybe 200 to 500 books a year on a wide variety of subjects you know sometimes I variety of subjects you know sometimes I variety of subjects you know sometimes I would go to see him and there'd be a would go to see him and there'd be a would go to see him and there'd be a book on you know global warming he was book on you know global warming he was book on you know global warming he was reading many times I'd see him reading a reading many times I'd see him reading a reading many times I'd see him reading a physics book and you know just different physics book and you know just different physics book and you know just different just very wide range of just very wide range of just very wide range of interests and there were two things that interests and there were two things that interests and there were two things that were very amazing about Charlie's brain were very amazing about Charlie's brain were very amazing about Charlie's brain one was that Charlie from all that one was that Charlie from all that one was that Charlie from all that reading and all that reading and all that reading and all that experience has had etched into his experience has had etched into his experience has had etched into his brain certain mental models about the brain certain mental models about the brain certain mental models about the way the world Works which would maybe way the world Works which would maybe way the world Works which would maybe sometimes not be the way we we would sometimes not be the way we we would sometimes not be the way we we would think they would so for example the think they would so for example the think they would so for example the model I gave you about model I gave you about model I gave you about cloning humans having an aversion to cloning humans having an aversion to cloning humans having an aversion to cloning this would not be something that cloning this would not be something that cloning this would not be something that you would normally conclude you know you would normally conclude you know you would normally conclude you know it's unusual weird there's another it's unusual weird there's another it's unusual weird there's another mental model for example which is the
Questionermental model for example which is the human tendency for reciprocation so when we when we lived in hunter gatherer societies and in small groups and some guy had a very successful hunt and brought down a big beast and he brought this Beast to his fellow GA fellow you know Community he would store the beef or the meat in the bellies of his neighbors because there's no ref Refrigeration what are you going to do you can't eat the meat yourself and you can't really store it so it's going to spoil so what he would do is he'd call all his neighbors and they would have a great feast and everyone would remember was that Joe is a really good guy okay because Joe shared his spoils with us and so when Frank would have a big beast he would bring down Joe would be invited for sure To The Feast right so reciprocation in humans Charlie believed was etched into our brains from
Otherbelieved was etched into our brains from the times of hunter gatherer but there's a quirk the thing is that what the mental model that got etched into our brains does not have a calibration engine so what that means is that if I do you a favor all you know is mish is a good guy Mish did me a favor you're not able to calibrate how big a favor did he do you just have good feelings about me and so when you don't have a calibration engine and you just feel good about somebody and you know Salesman take advantage of this particular quir in just human cognitive thinking and I've taken advantage of it when I built my business so for example if someone approaches pabra funds and they say hey I'm interested in your funds can you send me some information what most of my competitors do is they send everything digital you know because it's efficient
Otherdigital you know because it's efficient right we also send it digitally but we also send a physical package and in the physical package there's some goodies in there there's a very nice cross pen okay and there's a book and a few other things now the recipient of this package the minimum investment is a few million dollars okay when when they get my pen which is a very nice pen they feel obligated in some way the only way to kind of equalize that obligation is wire a few million dollars and so or if they don't wire the few million dollars returning that pen is really complicated you know what I'm saying you going to go you know package it and send it the post office and whatever so if I send out a 100 of these packages maybe one or two out of a couple of hundred come back saying thank you for your package I don't have any interest in the services of the fund
Warreninterest in the services of the fund warm regards right but 98 98% don't come back and those 98 99% feel good about Mish and they a decent percentage of them bu the money so it's $50 one way and a few million the other way because there's no calibration engine okay so as you so Charlie had probably 50 to 100 of these models maybe more and what was so fantastic about Charlie's brain is he had these models in his brain and I've never seen any other human who's able to do this which is I think why I think there's no humans with Charlie's kind of brain power I would bring up something to him he's never thought about this some new stock or some problem I'm having with du the foundation or something and he's instantly correlated three models working together and giving the answer and for so his ability to have these models in his brain and to know
Warrenthese models in his brain and to know which three applied and how they interact with each other when they appli together that's you know I'm a very juvenile kind of practitioner of that Charley was the you know the the Kung Fu Master he was a Yoda on that front and it gave him a big Advantage so usually
Questionerand then you Warren said that Charlie had the best 60-second mind to analyze any business especially in businesses anytime I brought up any business to him he was so fast and mainly he was really he was so fast and mainly he was really fast at getting to a no and getting to a no for at least one good reason very quickly so it took away a lot of noise from his life speaking of bringing businesses to him for his feedback you you made some investments in some companies in Turkey some number of years back when it was not on anyone's radar I'm curious did you run those by Charlie if not it'd be great to
Questionerthose by Charlie if not it'd be great to hear some of the things that you did run by Charlie and his thoughts every time I brought up turkey to him Charlie was very netive okay he would instantly say I don't want to do that I don't want to hear about it whatever right and but I persisted okay so I persisted with Charlie we own a Coke bottler in Turkey right and of course I know Charlie knows the coke business really well obviously they they they're huge shareholder in coch so I said Charlie tell me how I'm going to lose money on this okay so he said it's going to work okay so so I said but you were so negative he said no that's going to work that's fine that's going to work you so so I I got I saw him kind of shift as I talked to him so more I think his frame on something like turkey was that it would be such so much work for him to take that leap to
Othermuch work for him to take that leap to do the work etc or make the trips whatever that he said okay I'm I'm going to focus because you know this is we are in a business with no call strikes you know you're you're at the plate it's not like baseball three strikes and you're out you can let a thousand pitches go by right thousand good pitches so if Charlie says no to Turkey and turkey does really well doesn't matter what actually matters is that he shouldn't be saying yes to something that doesn't do well you know and so that's kind of how he thought about it yeah so I think on Turkey I finally got him to move a little bit that was okay can you talk about his sense of humor I I heard something that even when he got to the hospital in his uh last time he he still had a sense of humor oh yeah I think I think he joked with the nurse I think
Warrenthink he joked with the nurse I think the nurse asked him you know how are youthe nurse asked him you know how are youthe nurse asked him you know how are you he said oh I'm dying how about you youhe said oh I'm dying how about you youhe said oh I'm dying how about you you know you so the thing about Charlie isknow you so the thing about Charlie isknow you so the thing about Charlie is so one month before CH exactly one monthso one month before CH exactly one monthso one month before CH exactly one month before Charlie passed away I had my lastbefore Charlie passed away I had my lastbefore Charlie passed away I had my last dinner with him and I didn't know it wasdinner with him and I didn't know it wasdinner with him and I didn't know it was going to be my last time seeing him andgoing to be my last time seeing him andgoing to be my last time seeing him and it was one-on-one just just him and meit was one-on-one just just him and meit was one-on-one just just him and me on a Saturday at his home and of courseon a Saturday at his home and of courseon a Saturday at his home and of course his mind was very sharp but he washis mind was very sharp but he washis mind was very sharp but he was telling me there's a lot of things wrongtelling me there's a lot of things wrongtelling me there's a lot of things wrong with his body and and different thingswith his body and and different thingswith his body and and different things and the day or the day before he passedand the day or the day before he passedand the day or the day before he passed away when he was in theaway when he was in theaway when he was in the hospital he was trying to close one lasthospital he was trying to close one lasthospital he was trying to close one last Grant to a nonprofit so Charlie I don'tGrant to a nonprofit so Charlie I don'tGrant to a nonprofit so Charlie I don't think Charlie had a a belief in God Ithink Charlie had a a belief in God Ithink Charlie had a a belief in God I think he was agnostic and I know that hethink he was agnostic and I know that hethink he was agnostic and I know that he basically didn't believe there wasbasically didn't believe there wasbasically didn't believe there was nothing after you know his belief wasnothing after you know his belief wasnothing after you know his belief was it's this is it and you know he had oneit's this is it and you know he had oneit's this is it and you know he had one of his big mental models and you know
Questionerof his big mental models and you know and I think in an interview he gave just about I think a month or three weeks before he passed away they asked him you know what would you like on your gravestone if someone would put something in your gravestone and he said I tried to be useful and the I tried to be useful is actually exactly simple idea that he took very seriously so he extracted everything he could from his mind and his body till the last day right I mean basically till the last day I mean his family is with him and all that but he's still trying to help some nonprofit do better right there's no upside to him doing that he's not trying to publicize that there's no Legacy or anything it's just a selfless act and even with Warren I think the the relationship got built because of so many selfless acts so there's a book I don't think Charlie ever read this book
Questionerdon't think Charlie ever read this book it's a book by Adam grant called give and take and it's a great book to read and Adam Grant basically said that there are three kinds of people in this world the givers the takers and the matchers okay the givers are the people who are always trying to do things for others without any scorecard and without anything in return they just want to help you okay the takers I don't need to explain what a taker is you just want to have nothing to ever do with a taker they just want to extract from you with never giving anything back selfish people and then the matchers who think they're really smart oh Robert did X for me I'm going to do exactly X for him okay what Adam pointed out in his book is that the givers end up owning the world and they end up owning the world because there's so much Goodwill they generate with all
Warrenso much Goodwill they generate with all the people around them and Charlie never read that book but Charlie was a giver he never really tried to think about what is it in it what's in it for me what am I going to get out of this so I'll give you a story which is a funny story but it also has a couple of very beautiful lessons so one time I used to play Bridge with Charlie at the LA Country Club he would play on Fridays and probably like maybe one or two times a month I would meet him and his friends for bridge so usually we would have lunch starting at about 12:30 at the LA Country Club in the dining room very nice food and Ambiance and then we'd go off to play bridge right for like three four hours so I was sitting on this you know table for four and sitting across from me were Charlie Munger and Rick Goran they were very close friends they done you know
Othervery close friends they done you know
Othervery close friends they done you know Rick was the one who brought se's Candy to their attention and I told the two of them I said you know you guys think this is just some bridge game and this is just some lunch okay but I want to just tell you guys this is a [__] iconic moment okay that some yo-yo Indian guy from some Suburban Mumbai is sitting with two massive historic I cons and I know you you guys don't think that's the case but that's how I think about okay I told him that so I said when you guys were you know in the 60s shooting fish in a barrel after the water had been run out with all the deals you guys were doing tell me about one of the more interesting deals okay so the two of them look at each other and Rick Goran tells him why don't you tell him about that redhead nurse and Charlie's language always with me was very
Warrenlanguage always with me was very colorful you know I don't think we went three sentences without the f word and Charlie says oh yeah yeah he says Rick yeah that's a good story so he tells me he said there was this Maverick entrepreneur in California Southern California who had come up with this kind of uh liquid adhesive you could pour into your radiator if there was a leak and it would automatically seal any leaks and to build sales what the guy did was he used to go to different a auto body shops auto repair shops call the mechanics and then pull out his gun and shoot a hole in his car's radiator and then pour the liquid and show them that there was no leak okay and that's how he built Sals okay now this guy passes away premature you know heart attack the wife who's grieving finds out that the executor of his will is this redhead nurse who he
Questionerhis will is this redhead nurse who hehis will is this redhead nurse who he was having an affair with that shewas having an affair with that shewas having an affair with that she didn't even know about okay so he leftdidn't even know about okay so he leftdidn't even know about okay so he left the business and all the assets to thethe business and all the assets to thethe business and all the assets to the wife but he made the mistress thewife but he made the mistress thewife but he made the mistress the executor of the will okay and both theexecutor of the will okay and both theexecutor of the will okay and both the women were pissed off at each other okaywomen were pissed off at each other okaywomen were pissed off at each other okay each was more pissed than the other andeach was more pissed than the other andeach was more pissed than the other and the business itself actually wasthe business itself actually wasthe business itself actually was basically bankrupt they had some debtbasically bankrupt they had some debtbasically bankrupt they had some debt and it really didn't have any valueand it really didn't have any valueand it really didn't have any value Beyond on the debt and Charlie and RickBeyond on the debt and Charlie and RickBeyond on the debt and Charlie and Rick wanted to buy the business there werewanted to buy the business there werewanted to buy the business there were two $80,000 notes that were owed to twotwo $80,000 notes that were owed to twotwo $80,000 notes that were owed to two ants of the wife and so they could haveants of the wife and so they could haveants of the wife and so they could have bought those notes at a discount frombought those notes at a discount frombought those notes at a discount from those two women and the equity reallythose two women and the equity reallythose two women and the equity really didn't have any value so they could havedidn't have any value so they could havedidn't have any value so they could have paid like you know maybe 100,000 forpaid like you know maybe 100,000 forpaid like you know maybe 100,000 for instead ofinstead ofinstead of 160,000 but Charlie told Rick we don't160,000 but Charlie told Rick we don't160,000 but Charlie told Rick we don't want to take advantage of these women wewant to take advantage of these women wewant to take advantage of these women we want to play full price to them so he
Questionerwant to play full price to them so he talked to the wife and he talked to the two aunts and he said look we'd like to buy the business it really doesn't have much value we'll pay 80,000 to each of you and we need you to sign off on it and we need that other nurse because she's the executor of the will to cooperate as well and the nurse was not willing to sign off on anything she wasn't going to get anything and she was pissed off and so Charlie arranged to meet the nurse at the California club for lunch he had never met her before he he wanted to basically smooth the feathers and you know explained to her that this was the right thing to do and so on so forth and the California Club is a very kind of you know Blue Blood old institution big ceilings and Charlie always sat in the same dining table I actually met him for the first time at the California Club
Otherthe first time at the California Club and she came directly from from work in her nurse's uniform which was one side is too small for her and everyone in the dining room thinks that Charlie's having lunch with a porn star you know and they're like a gast you know this is Mr Monger we all love Mr Munger Mr Monger is a very honorable citizen of Los Angeles Etc what's he doing with a porn star and Charlie himself is really surprised at the way she appears anyway he kind of says I kind of controlled myself I try to control my eyes I basically uh pacified her and we got the deal done okay and now so they bought the business for 160,000 and they got it done two years after that uh Rick guran needed money and they own the business 50/50 so he told Charlie listen I need a couple hundred thousand and I'm tight and I want to sell you this business you
Warrenand I want to sell you this business you can take over 100% of it and Charlie asked him what do you think it's worth what what your portion worth He says my portions I think worth 200,000 so Charlie says no you're wrong your portion is worth 300,000 and here's the check for 300,000 so he didn't take advantage of those two women paid them a full price he didn't know them and he didn't take advantage of Rick Goran I mean think about it a seller is proposing a selling price and you're proposing to pay 50% above the selling price the seller is proposing okay but that's what that's how Charlie was he always wanted to make sure that if you did business with him you felt like you got the better end of the deal and and so these win-win things now obviously once you do something like that for Rick you've cemented of friendship and trust and everything else
Otherfriendship and trust and everything else for a lifetime and Beyond and you know for a lifetime and Beyond and you know for a lifetime and Beyond and you know Rick will do anything for you so I think Rick will do anything for you so I think Rick will do anything for you so I think that I found the story funny but I think that I found the story funny but I think that I found the story funny but I think that story also has some many many good that story also has some many many good that story also has some many many good lessons for us so I think in business lessons for us so I think in business lessons for us so I think in business when we think about things in that when we think about things in that when we think about things in that context of context of context of win-win as opposed to transactional I win-win as opposed to transactional I win-win as opposed to transactional I think we get a lot of Tailwinds what did think we get a lot of Tailwinds what did think we get a lot of Tailwinds what did Charlie say tell me about your Charlie say tell me about your Charlie say tell me about your conversation with Charlie when you got conversation with Charlie when you got conversation with Charlie when you got banned from the casino yeah I mean so banned from the casino yeah I mean so banned from the casino yeah I mean so basically both Warren and char basically both Warren and char basically both Warren and char you know Warren has a thing he says that you know Warren has a thing he says that you know Warren has a thing he says that I wanted to be a I wanted to be a I wanted to be a bookie by but my parents wouldn't bookie by but my parents wouldn't bookie by but my parents wouldn't approve of it so I went into the approve of it so I went into the approve of it so I went into the insurance preses right they basically insurance preses right they basically insurance preses right they basically are both betting are both betting are both betting personalities you know they are gamblers personalities you know they are gamblers personalities you know they are gamblers but they're gamblers in the sense that but they're gamblers in the sense that but they're gamblers in the sense that they only want to bet when the odds are they only want to bet when the odds are they only want to bet when the odds are in their favor so they're never going to in their favor so they're never going to
Questionerin their favor so they're never going to go you know sit down at the table and ingo you know sit down at the table and ingo you know sit down at the table and in Vegas or anything so I knew thatVegas or anything so I knew thatVegas or anything so I knew that Charlie's got all this you know gamblingCharlie's got all this you know gamblingCharlie's got all this you know gambling mindsetmindsetmindset and I explained to him I went to him oneand I explained to him I went to him oneand I explained to him I went to him one time I said Charlie by the way I justtime I said Charlie by the way I justtime I said Charlie by the way I just got banned from this casino in Vegas andgot banned from this casino in Vegas andgot banned from this casino in Vegas and I explained to him how I got banned andI explained to him how I got banned andI explained to him how I got banned and I explained to him my system he had soI explained to him my system he had soI explained to him my system he had so much fun with that he loved that youmuch fun with that he loved that youmuch fun with that he loved that you know because basically for him it wasknow because basically for him it wasknow because basically for him it was all about these PS where the odds wereall about these PS where the odds wereall about these PS where the odds were in your favor and I I found an anomalyin your favor and I I found an anomalyin your favor and I I found an anomaly where this particular Casino had reallywhere this particular Casino had reallywhere this particular Casino had really thin ODS because their location was offthin ODS because their location was offthin ODS because their location was off strip and they needed to bring people instrip and they needed to bring people instrip and they needed to bring people in to come and play there and so they hadto come and play there and so they hadto come and play there and so they had improved the game versus what you wouldimproved the game versus what you wouldimproved the game versus what you would normally find the game was still innormally find the game was still innormally find the game was still in their favor like the average guy playingtheir favor like the average guy playingtheir favor like the average guy playing there would lose money but if you youthere would lose money but if you youthere would lose money but if you you know applied a couple of tweaks that I
Otherknow applied a couple of tweaks that I know applied a couple of tweaks that I did in fact the funny thing is I had a did in fact the funny thing is I had a did in fact the funny thing is I had a good relationship with these guys taken good relationship with these guys taken good relationship with these guys taken them for about them for about them for about 150,000 over a few months and they came 150,000 over a few months and they came 150,000 over a few months and they came and told me the guy general manager came and told me the guy general manager came and told me the guy general manager came and sat around me and said you know stop and sat around me and said you know stop and sat around me and said you know stop dealing to him and then the dealer was dealing to him and then the dealer was dealing to him and then the dealer was you to deal he got angry he said right you to deal he got angry he said right you to deal he got angry he said right now stop dealing to him okay and then now stop dealing to him okay and then now stop dealing to him okay and then she's like you know taken a back and she's like you know taken a back and she's like you know taken a back and then he tells me look Mish we love you then he tells me look Mish we love you then he tells me look Mish we love you we enjoy having you I watched your we enjoy having you I watched your we enjoy having you I watched your videos I read your book and we watched videos I read your book and we watched videos I read your book and we watched all the video of you all the video of you all the video of you playing and we can't have you play playing and we can't have you play playing and we can't have you play Blackjack here anymore I said you know Blackjack here anymore I said you know Blackjack here anymore I said you know you guys have problems with card you guys have problems with card you guys have problems with card counters I'm not counting cards you know counters I'm not counting cards you know counters I'm not counting cards you know that he said that's what had us confused that he said that's what had us confused that he said that's what had us confused because we watched the tape for a while because we watched the tape for a while because we watched the tape for a while and it was very clear to us you weren't and it was very clear to us you weren't and it was very clear to us you weren't counting cards but we figured out that counting cards but we figured out that
Othercounting cards but we figured out that your system we can't beat your systemyour system we can't beat your systemyour system we can't beat your system and so we're done so that's the so theyand so we're done so that's the so theyand so we're done so that's the so they said you can come to the casino you cansaid you can come to the casino you cansaid you can come to the casino you can use all the facilities but you cannotuse all the facilities but you cannotuse all the facilities but you cannot sit down to the Black Jack tap so to mesit down to the Black Jack tap so to mesit down to the Black Jack tap so to me actually I was actually very proud ofactually I was actually very proud ofactually I was actually very proud of that because basically the system workedthat because basically the system workedthat because basically the system worked that's what I was really trying to dothat's what I was really trying to dothat's what I was really trying to do you know from a hourly pay point of viewyou know from a hourly pay point of viewyou know from a hourly pay point of view I'm better off pursuing other PursuitsI'm better off pursuing other PursuitsI'm better off pursuing other Pursuits but it was just fun to do it you knowbut it was just fun to do it you knowbut it was just fun to do it you know
Questionerover the years Mish what surprised youover the years Mish what surprised youover the years Mish what surprised you the most about about Charlie we knowthe most about about Charlie we knowthe most about about Charlie we know that he was a good businessman and athat he was a good businessman and athat he was a good businessman and a good investor and a goodgood investor and a goodgood investor and a good partner I saw him interact he had eightpartner I saw him interact he had eightpartner I saw him interact he had eight kids he had so many in-laws grandkidskids he had so many in-laws grandkidskids he had so many in-laws grandkids greatgreatgreat grandkids with a wide range ofgrandkids with a wide range ofgrandkids with a wide range of personalities right and Charlie loved apersonalities right and Charlie loved apersonalities right and Charlie loved a quote of Ben Franklin you know soquote of Ben Franklin you know soquote of Ben Franklin you know so there's a quote of benen Franklin wherethere's a quote of benen Franklin wherethere's a quote of benen Franklin where Bren Franklin says keep your eyes wide
OtherBren Franklin says keep your eyes wide open before you get married and half shut afterwards
Questionerokay and and and and Charle actually I think that's really what I noticed with him is that he applied a very different kind of framework and mental models in how he dealt with different people like sometimes you know I would be interacting with or I would watch him interact with someone and then when the person left I'd say you know Charlie he said yeah I know like you know he'd understand that that person had you know different quirks or whatever but the way he finessed all of that I think there were a lot of lessons I learned that this wasn't just some polymath I think this was a person who really was wise and you know understood the spectrum of the way humans were and how to navigate around that Spectrum he really had seen and figured out a lot of things about
Questionerand figured out a lot of things about different nuances and it was very helpful to him you know monish you know wipers very well how can we as yers become better investors uh modeling ourselves after each other
QuestionerI would say that there's a book called poor Charlie Almanac and uh they've come out with a new edition but if you go to the older editions I think those are better the new edition doesn't have that much illustrations and all of that I think the old one is a little better at the back of the book is 11 speeches he gave and I think the there's a lifetime of wisdom in those speeches I feel if someone uh went through those speeches and understood them it's better than a four-year college degree anywhere and there one of those speeches which is the psychology of human misjudgment where he goes to different mental models of how the
Otherdifferent mental models of how the different quirks in our brains wiring because of all our Evolution our brains are very far from just purely rational and so uh having a good understanding of exactly how the apparatus between our years functions uh really functions it gives us a huge leg up and so I think that if we uh and a lot of his wisdom was distill was distilled into those 11 speeches so I think that if I try to read reread them every year and every year I can swear that I'm reading something I've never read before some some passage I think I've never read and so different things kind of dawn on me at different times that's what I would say is a great way to improve not just as a business leader but improve as a spouse or as a father or grandfather or a son or daughter like that you know
Othervery good yeah I'd like to open up for questions if anyone has questions at
Otherquestions if anyone has questions at this time so Bruce Bendell says you've been in YPO over 25 years so what if anything did Charlie think about YPO
Questioneryeah so both Charlie and Warren you know they were not members of YPO and Warren actually used to joke and say I I keep telling them make a age exception for me you know and let me in but they won't and they both had a lot of respect for YPO they both spoke to YPO at multiple occasions and one time I discussed YPO directly with Charlie and he said it's a wonderful organization has a great Mission and it's really good so they understood it and I think they were right on on that very good I think uh
OtherJose can't we can hear you I think you're I think you're on mute in the meantime Boaz gillad has a question how did Charlie manage the amount of money that he left behind yeah so Charlie's
Questionerthat he left behind yeah so Charlie's wife had a accident she basically fell backwards down the stairs at their home in Minnesota and then she suffered for what maybe year or 18 months and then a lot of surgeries and then passed away and she had always wanted half their assets to go to their AG children and it just so happened you know that the year she died was the only year in the US tax code when there was no estate tax there was a quirk in the way the taxes were done and there was one year it's funny people youed should joke it was the year you throw Grandma off the bus you know basically you wouldn't pay any taxes and it just happened that she died that year and I think uh at that time I think Charlie's net worth was about 2 billion or so I think this was 2010 2010 or so that this happened so he passed on about 125 million to each of his kids at at
Questioner125 million to each of his kids at at that time in Burkshire stock which would be probably worth like maybe 4 or 500 million each now maybe 400 million or something and the kids have done amazing things in terms of from a philanthropic point of view some they been very impressive things that they have done very different from each other and then Charlie basically said okay now the other half used to tell me I'm just focused on giving it away and uh he made quite a few different grants and things that he was doing but I still think that when he passed away it may have been maybe a couple of billion and I don't know what he kind of Beed or intended to do with that I I don't think he was planning for more to go to the kids so he must have uh planned something out but I'm not sure about that very good very good what other questions do we have any other questions
Questionerdo we have any other questions
Otherquestions do we have any other questions before we we're getting close to the topbefore we we're getting close to the topbefore we we're getting close to the top of the hour here excellent anything elseof the hour here excellent anything elseof the hour here excellent anything else you want to share before we go Mish Iyou want to share before we go Mish Iyou want to share before we go Mish I
Questioneralways enjoy speaking to Yo and ofalways enjoy speaking to Yo and ofalways enjoy speaking to Yo and of course uh being able to speak aboutcourse uh being able to speak aboutcourse uh being able to speak about Charlie was wonderful I miss himCharlie was wonderful I miss himCharlie was wonderful I miss him terribly I have been reflecting back weterribly I have been reflecting back weterribly I have been reflecting back we had a veryhad a veryhad a very unlikely 15-year friendship and I neverunlikely 15-year friendship and I neverunlikely 15-year friendship and I never expected that I always remember I'd walkexpected that I always remember I'd walkexpected that I always remember I'd walk into Charlie's house uh he'd be workinginto Charlie's house uh he'd be workinginto Charlie's house uh he'd be working on some architectural plans or somethingon some architectural plans or somethingon some architectural plans or something he'd see me and there'd be a twinkle inhe'd see me and there'd be a twinkle inhe'd see me and there'd be a twinkle in his eye he would be very happy andhis eye he would be very happy andhis eye he would be very happy and excited to see me and we'd always have aexcited to see me and we'd always have aexcited to see me and we'd always have a great time together and one of thegreat time together and one of thegreat time together and one of the things I've always felt is that I alwaysthings I've always felt is that I alwaysthings I've always felt is that I always had a lot of faith in Charlie'shad a lot of faith in Charlie'shad a lot of faith in Charlie's judgment and he had had a very strongjudgment and he had had a very strongjudgment and he had had a very strong positive opinion of me and anytime if Ipositive opinion of me and anytime if Ipositive opinion of me and anytime if I get into you know self-doubt or anythingget into you know self-doubt or anythingget into you know self-doubt or anything I always say whatever I may think about
WarrenI always say whatever I may think about myself I have no doubt that Charlie nailed me perfectly and he thought well of me so life is okay you know everything's okay I always you know fall back to that but I miss him a lot and I'm very grateful that my life was able to cross with such a remarkable person I'll Never See someone like that again they broke the mold after they made Charlie so we're not going to see another Charlie Monger again but he left us a great body of work and it's wonderful to be able to look at that well monish thank you for taking taking the time you're just an amazing disciple of both Charley and Warren I myself really enjoy following you on your podcast and on social media so thank you for being so active and we hope to have a future connection and discussion with you uh at other events absolutely I I very much enjoyed it Robert and thank you very much for all of you and all the
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