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QuestionerI didn't want to start the giving when II didn't want to start the giving when II didn't want to start the giving when I was in my 70s or 80s or somethingwas in my 70s or 80s or somethingwas in my 70s or 80s or something because point I wouldn't really havebecause point I wouldn't really havebecause point I wouldn't really have much energy and I mean my only option atmuch energy and I mean my only option atmuch energy and I mean my only option at that point would be to write checks andthat point would be to write checks andthat point would be to write checks and probably wouldn't even be able to doprobably wouldn't even be able to doprobably wouldn't even be able to do that much due diligence so I wanted tothat much due diligence so I wanted tothat much due diligence so I wanted to actually start experimenting a lotactually start experimenting a lotactually start experimenting a lot earlier and because I had a bias towardsearlier and because I had a bias towardsearlier and because I had a bias towards education and specifically education ineducation and specifically education ineducation and specifically education in India and I wasn't going to be moving toIndia and I wasn't going to be moving toIndia and I wasn't going to be moving to India I knew that it was going to beIndia I knew that it was going to beIndia I knew that it was going to be difficult and Uphill to try to you knowdifficult and Uphill to try to you knowdifficult and Uphill to try to you know get something going remotely and Iget something going remotely and Iget something going remotely and I expected to fall flat on my face Iexpected to fall flat on my face Iexpected to fall flat on my face I wanted to give myself enough time sowanted to give myself enough time sowanted to give myself enough time so that 5 10 15 years of failures kind ofthat 5 10 15 years of failures kind ofthat 5 10 15 years of failures kind of becomes like the tuition bill and thenbecomes like the tuition bill and thenbecomes like the tuition bill and then maybe after 10 years I would know whatmaybe after 10 years I would know whatmaybe after 10 years I would know what I'm doing so I started you know when ourI'm doing so I started you know when ourI'm doing so I started you know when our net worth crossed 50 million I startednet worth crossed 50 million I startednet worth crossed 50 million I started with the formula that we would give away
Otherwith the formula that we would give away 2% of net worth every year and that 2% of net worth every year and that 2% of net worth every year and that would give the organization at least a would give the organization at least a would give the organization at least a million dollars a year and I wasn't million dollars a year and I wasn't million dollars a year and I wasn't particularly concerned if the million particularly concerned if the million particularly concerned if the million then pretty much went up in smoke for then pretty much went up in smoke for then pretty much went up in smoke for several years I just viewed that as part several years I just viewed that as part several years I just viewed that as part of the tuition to be paid and so I of the tuition to be paid and so I of the tuition to be paid and so I started when I was 42 now I'm 60 so started when I was 42 now I'm 60 so started when I was 42 now I'm 60 so there's 18 wonderful years of experience there's 18 wonderful years of experience there's 18 wonderful years of experience which has been very helpful and of which has been very helpful and of which has been very helpful and of course we didn't have even 10 years or course we didn't have even 10 years or course we didn't have even 10 years or even 10 months of no traction we were even 10 months of no traction we were even 10 months of no traction we were very lucky we got traction almost right very lucky we got traction almost right very lucky we got traction almost right away probably in a few weeks and so away probably in a few weeks and so away probably in a few weeks and so there really wasn't any kind of wasted there really wasn't any kind of wasted there really wasn't any kind of wasted money or anything like that what I was money or anything like that what I was money or anything like that what I was expecting things went I would say 10x expecting things went I would say 10x expecting things went I would say 10x better than I expected that's been the better than I expected that's been the better than I expected that's been the journey so far okay I I want to get into journey so far okay I I want to get into journey so far okay I I want to get into that Journey can I ask like just a that Journey can I ask like just a that Journey can I ask like just a mechanical question though I mean you're mechanical question though I mean you're mechanical question though I mean you're it's an odd group of people all all fund
Questionerit's an odd group of people all all fund managers sort of similar to you in terms of tax situation LPN like most of our money's in our funds curious like what are the mechanics you like distribute Securities do you use some sort of donor advice fund you have a family Foundation do you like is have you figured anything like dos or don'ts in terms of like okay getting money from fund to people well I
Questionermean I think it depends on the amount I think if you have um you know definitely like a seven figure number or something annually then Foundation would make sense I think the economics would work out the frictional cost would be low so I had started with a 501c3 Family Foundation in the US and a charitable trust in India so they kind of two separate organizations after a few years because we had other folks who wanted to contribute to
Questionerfolks who wanted to contribute to dakshana we got public charity status from the IRS so dakna now has been for quite a while it's been a public charity and one of the advantages of the public charity is that when someone at Microsoft or Google or one of these places donates money the company match can happen these places like IBM and Google and Microsoft and so on will only do the match if it's a public charity you know kind of bonafide public charity in the US Etc and so that's been actually helpful because we've got quite a few donors like that to you know smaller amounts but the the company match is significant and so on basically that's what we did we set a foundation and then I mean in terms of the giving yeah you know you can give the foundation appreciated stock that's got some tax advantages you can give it cash that's pretty standard set of tools that
Questionerthat's pretty standard set of tools that you would use with other Charities that you're giving money or talk to okay
Questionergreat and so now kind of getting into the the meat of what you've done can you just lay out the story of D sh and like how how he started what what you guys do some of the results Etc
Otheryeah I mean I'll get into that in a second but I just wanted to kind of talk a little bit more philosophically about this concept of what I would call feedback loops we have feedback loops in capitalism so for example if you start a business let's say you start a restaurant or something that business at the end of the day does not make money or you know has difficulty and you know is running in loss and so on eventually that business is going to go away even if you're venture-backed and you know you raise capital and so on at the end of the day
Othercapital and so on at the end of the day eventually the business has to be profitable if it is not profitable in some way cash flow positive and so on it's going to go away so basically in capitalism we have these what I would call feedback loops which is that if we are not productive in providing Society with some useful product or service as a business we will not exist because if you're providing something useful it will manifest itself in the form of you know profits and cash flows and that'll keep the business going and growing and so on in philanthropy we have a problem because there is no feedback loop what I mean by that is so let's say I'm the Rockefeller foundation and let's say I have a billion dollars in my endowment or nest egg and I'm a stupid investor I don't have like great investing skills and I'm generating something like 6% a year you
Questionergenerating something like 6% a year you know invested in index and a few other things and the Mandate of this Foundation is to spend 5% of its assets every year you know the IRS kind of wants you to spend around 5% to keep your status so the rockilla foundation would spend $50 million it would make about $60 million and so every year the Corpus would keep increasing now that 50 million so this Corpus increasing means that 50 years from now that organization will still be around and 100 years from now it'll be still be around if those numbers hold the five and 6% and all that now it doesn't matter whether the Rockefeller Foundation does anything useful or not if they start the year with 50 million and just make a bonfire out of it and no good to society it doesn't matter because the following year they will have another 50 million or more ready to go and two years from
Otheror more ready to go and two years from now they'll have another 50 plus million to go and it would basically keep going so in effect unlike a business that has to provide some positive value to society foundation with an endowment may or may not provide any useful value to society and it would keep going forever so the lack of a feedback loop is a real problem in charity so that's the first that there are basically two feedback loops that are missing in the nonprofit world the first thing that's missing is that you don't need to create a profit right you basically make this 5 six% uh by being dumb and stupid or whatever and you'll be in business forever and the second is that you don't really need to do anything effective to help society and you'll be around so the second problem which is in capitalism the measurement of outcomes is very precise I mean we all
Todd Combsoutcomes is very precise I mean we all look at businesses we all decide which ones we want to invest in we know how those businesses are doing we have a lot of precision of what went in and what came out and those measurements are very precise there's no ambiguity about them in most philanthropic Ventures even ones that have a lot of positive value to society the measurements are really hard in fact I would argue that probably for like 98% of stuff that that you would do in the nonprofit world the measurements may be almost impossible let's say for example you know there's a big drug problem in the city of San Francisco amongst the homeless and you set up some program to deliver free needles to all the homeless people who want it clearly that may have some net positive benefit but what is that benefit right I mean the measurement of how much
Questionerright I mean the measurement of how much good the needle program did becomes really difficult to measure and if you don't have measurements then how do you decide what do you want to increase or decrease or what changes do you want to make in a in a capitalist business it's really simple the profits and kind of growth and all of that give you a lot of feedback on what's working and what's not working and what areas to focus on and not focus on all of these things in general you know Society benefits and everyone benefits so the nonprofit world has these two problems one is that you would basically be in business forever while you could do basically nothing good and there's nothing that would take you out of that situation the second is that the measurements are hard so even if you have a great heart and you actually want to do a good job the
Otheractually want to do a good job the measurements are hard so what I did at dsh is I in inverted the problem you know like Munger says you know invert always invert and the inversion that I did was that I was only going to look at activities where the feedback loops or the ability to tell what output came from the input was easy to do so most of these kind of initiatives that you would embark on the measurement is really difficult I mean let's take the example of the Goddess man who recently you know she gave a billion dollars to the Albert Einstein school of medicine and they've taken away I mean there's no tuition anymore for anyone in going to med school at the Albert andin School of Medicine clearly that has positive impacts but if someone is already you know a 100 million plus family going some kid going to the Albert Einstein School of Medicine them getting tuition
OtherSchool of Medicine them getting tuition free you know the benefit of that to that family in terms of helping Society versus another family which really needs that free tuition for the person to become a doctor is very different the return on invested capital in those two situations is extremely different and so I don't even know if there will be any measurements done of you know what percent of that class needed that help and what percent didn't and so on so forth even though I think I love the idea I think it's a great initiative at dsh what we did was because of the inversion I said okay education in general has a huge multiplier effect because you know you basically are you can transform you know zeros into Heroes that has a huge impact I grew up in India I grew up with a lot of extreme poverty that I witnessed all around me and I knew that they were millions and
Otherand I knew that they were millions and millions of people who were very smart and who would never get a chance at a decent education my thinking was that if we can harness these high throughput brains and you know provide them the tools so that that brain becomes very useful to society and to the family and Community then that's a very positive thing and so what daksha did and what we've done for the last 18 years or so is that we had two ecosystems in India that made duction extremely effective in fact I actually didn't want to set up my own operation I didn't want to actually do a nonprofit I just wanted to write checks and I was disappointed 18 years ago when I looked because I was not able to find organizations where I thought the social return on invested Capital was acceptable or high in India we have this kind of somewhat unique situation where
Questionerkind of somewhat unique situation where we have these very elite Indian Institute of Technology which has a number of campuses which are from us standards almost free to attend they're heavily subsidized by the government but they're very difficult to get into it's a strict meritocracy to get into the IIT so it doesn't matter if your father went there or Rich you are or what money you donate to the iits there is only one way to get admitt it into the iits which is you have to clear their entrance exam and the entrance exam does not have essays or anything subjective it is a pure kind of quantitative and you know qualitative kind of objective test it's probably the toughest test in the world and there's about one and a half 1.3 million kids a year who try to get into the iits every year and there are 16,000 seats so the admit rate is about like
Questionerseats so the admit rate is about like 1.3% or so you know I think Princeton would have a admit rate of about four or 5% and a lot of the IVs are between like 4 to 8% and so on Bill Gates says that if he was limited to recruit from only one school for Microsoft when he was running Microsoft he was only recruit from the iits he would not recruit from MIT and he would not recruit from Stanford and he would bypass all the US universities would only recruit from the iits and the reason he's saying that is and I'll get to a little bit about what Dua does but just want to explain kind of a little bit of how it works in the IIT so you get ranked when you take this test from 1 Million number one to 1.3 million you get a rank when you are rank one they come and ask you which campus and which major do you want by the time you get to rank approximately 95 out of 1.3 million
Otherrank approximately 95 out of 1.3 million
OtherIIT Bombay computer science has closed so if you get ranked 96 you cannot go to IID Bombay computer science
Otherdaksh had scholar very poor kid basically grew up in a slum in Hyderabad parents were like under 50 bucks a month in monthly income sometimes they didn't even have food to eat went to sleep hungry and so on so this kid basically gets accepted by IIT with a rank of 63 which is the best rank we've ever produced at Dua in 18 years and so he goes to IID Bombay computer science
Otherthe IID Bombay computer science class that class has the horsepower in that class has no parallel anywhere in the world there is no classroom there is no computer science classroom in the United States or anywhere else in the world with the brain power that the IID Bombay computer science class has because you've got people who are ranked
Otherbecause you've got people who are ranked 90 now just to tell you about how hard that test is if you score about 33% on that test you will get a seat at IIT you just have to score 33% these kids who are in the top 96 have like something like 90 plus per score 92% score on that test so anyway asoke goes to IID Bombay computer science he has never seen a test in his life that he wasn't number one it's never happened to him in every class he was in at duar or any place else he was always number one and the first test he had the first computer science test in the first class he took his rank was like 80 out of 90 whatever kids in the class and he said I got a score of like you know 27 out of 100 on that test I studied really hard for it he said I spent about a half an hour just looking at the paper I never ever happened to me that I am not in
Questionerhappened to me that I am not in the top you know one or top 5% or 10% and he said there were kids in that class who had topped that test they got 100 on it and they were goofing off the previous night they weren't even studying they were like playing around so he went back from that test and he said asoke find another gear whatever you've done in the past you're not in Kansas anymore he really bustered his ass I mean he's he's a very competitive guy really worked really hard he Gra graduated probably in the top 15% of his class I told him when he when he was graduating you know he grew up in a slum in Hyderabad and the Microsoft campus was India's headquarters of Microsoft was like right there you could see it every day so he for him it was aspirational to go to work for Microsoft and he had applied to Microsoft he got a job and I said listen why don't you send
Otherjob and I said listen why don't you send an email to hrg@google.com and you just send them your resume but in the email I just want you to tell them your iitg rank of 63 and your GPA when you're graduating from IID Bombay computer science within about 7 hours of him sending that email Google setup Skype interviews with him they never met him three guys talked to him for about you know 20 minutes each and he had a job offer from Google and he moved to Mountain View and ashoke is now I think level seven I think makes over a million dollars a year and he's moved up quite a bit he's got a large team that works for him and so on so anyway what dakna does is we identify extremely poor kids who've got very high horsepower the iits have a 1.3% admit rate we've got about a 70% admit rate of our kids going to IIT and then we've expanded to med
Otherto IIT and then we've expanded to med school and so on and we take now about thousand kids a year and about 7 or 800 of them end up at very good schools and almost all of them go to some decent College you know currently Dak spends about 3 million a year and we just barking on about 10 million of capex and then we'll probably be able to take about 1500 kids a year we have our own campus now 9 acres and such and so that's what we do and so the input output ratio at at dakna is very easy to measure we know it costs us about $33,000 to basically support a kid for one or two years and like in ashok's case you know the family used to make 50 bucks a month the family is now at like you know 880,000 a month you know and transformation from 50 bucks to $80,000 was $3,000 so that's kind of what we do folks can you just elaborate a little bit on what's done in that year for the
Questionerbit on what's done in that year for the kids to make the transformation happen and like $3,000 seems like you get a lot out of $3,000
OtherYeah so basically we have two programs one is a two-year program one is a one-ear program and I'll just go over the one-year program for Simplicity they drop a year after high school so they finished 12th grade they finished high school they drop one year for prep for the IIT exam we moved them to our campus in Pune so room board coaching you know books everything is covered they don't pay for anything it costs us approximately uh you can say about $1,500 a year for the room and board and all of that for them and another 1,500 for all the coaching so we have very high-end faculty you know we have some faculty members that in India make about 60 70 $80,000 a year Ian it' be equivalent to making about a half a
Otherequivalent to making about a half a million dollars in the US so rich kids try to get into the DU program because we have better coaching at Daka than the for-profit world does in India we have a problem where we have to you know have a lot of gates up make sure that we're not getting but we get a lot of offers from very wealthy parents offering us even 20 $330,000 a year to take their kid and of course we don't take any of the kids at any price it's free or nothing that's kind of how we do that I'll give you just a chance to brag for a second the stats on the medical school program are I think are perhaps even more impressive do you I don't know if you remember what they are you wrote about them in your annual report yeah I mean the there's another there's a set of medical colleges which is like the iits called the all India Institute of Medical
Otherthe all India Institute of Medical sciences and they have a ridiculously lower acceptance rate I they got much fewer seats when I was in high school in India there used to be only 36 seats for aims and there were like 50,000 kids applying for those 36 seats it was just insane trying to get a seat I mean probably some of the very top doctors in the US Indian doctors are as graduates these guys some of these guys got Nobel prizes and so on and so the admit rate at ases in India is like .1% and Dak success rates in ases is around I mean we don't actually try to get into as we just have them take the test just as a we just try to get them into med school but the kids we take on about 15% of them go to as whereas on the national population it's 0.1% it's a it's an insanely hard so actually our numbers on the aim side are even better yeah that's
Otherthe aim side are even better yeah that's awesome I'm gonna let uh folks will come up to the computer and just ask a couple questions back there hi Manish thanks for doing this I'm curious how the 3,000 per student has evolved as you guys have scaled did it used to be 5,000 a student and as you've scaled The price came down and if you're 3 million a year operating budget went up to $10 million a year $20 million a year could you still will scale the business you know not the business the I guess the organization and Achieve similar success rates at similar costs
Otheryeah when we started it was an Outsource model so we didn't have our own campus we basically just wrote checks we identified the kids and then we sent them to for-profit coaching locations and paid for everything basically paid for the room and board and paid for the coaching and all that
Otherand paid for the coaching and all that and over time we brought it we broughtand over time we brought it we broughtand over time we brought it we brought it completely inous vertically in and init completely inous vertically in and init completely inous vertically in and in fact now a lot of the faculty is ourfact now a lot of the faculty is ourfact now a lot of the faculty is our alarms so a lot of the kids who actuallyalarms so a lot of the kids who actuallyalarms so a lot of the kids who actually graduated through our program went to Igraduated through our program went to Igraduated through our program went to I Etc they've come back and those guys areEtc they've come back and those guys areEtc they've come back and those guys are fantastic because they've gone through afantastic because they've gone through afantastic because they've gone through a program so yeah the cost used to beprogram so yeah the cost used to beprogram so yeah the cost used to be aroundaroundaround 5,000 and of course there's been5,000 and of course there's been5,000 and of course there's been inflation the last 18 years it used beinflation the last 18 years it used beinflation the last 18 years it used be around 5,000 about 17 18 years ago it'saround 5,000 about 17 18 years ago it'saround 5,000 about 17 18 years ago it's come down to about 3,000 but if youcome down to about 3,000 but if youcome down to about 3,000 but if you consider the inflation in the last 18consider the inflation in the last 18consider the inflation in the last 18 years it's probably come down even moreyears it's probably come down even moreyears it's probably come down even more because of you know what money was thenbecause of you know what money was thenbecause of you know what money was then versus now and we do have limits inversus now and we do have limits inversus now and we do have limits in terms of how far this can go uh we thinkterms of how far this can go uh we thinkterms of how far this can go uh we think that we can get to spending about 7 or8that we can get to spending about 7 or8that we can get to spending about 7 or8 million a year and then we would max outmillion a year and then we would max outmillion a year and then we would max out because we would run out of IIT seats webecause we would run out of IIT seats webecause we would run out of IIT seats we are already taking approximately 3 4% of
Otherare already taking approximately 3 4% ofare already taking approximately 3 4% of the IIT seats like one in 20 one in 25the IIT seats like one in 20 one in 25the IIT seats like one in 20 one in 25 kids on that campus is coming from dakshkids on that campus is coming from dakshkids on that campus is coming from daksh I don't think we can ever get to moreI don't think we can ever get to moreI don't think we can ever get to more than one in eight you know I mean that'sthan one in eight you know I mean that'sthan one in eight you know I mean that's a lot take 12% of the seats because youa lot take 12% of the seats because youa lot take 12% of the seats because you have to understand the rich kids youhave to understand the rich kids youhave to understand the rich kids you know they've got a lot of resources andknow they've got a lot of resources andknow they've got a lot of resources and they're trying everything under the sunthey're trying everything under the sunthey're trying everything under the sun and in fact a lot of them start theand in fact a lot of them start theand in fact a lot of them start the coaching in sixth grade so our coachingcoaching in sixth grade so our coachingcoaching in sixth grade so our coaching starts after 12th grade for one year astarts after 12th grade for one year astarts after 12th grade for one year a lot of the rich kids are going throughlot of the rich kids are going throughlot of the rich kids are going through coaching for like six years for examplecoaching for like six years for examplecoaching for like six years for example to try to get in so it's insaneto try to get in so it's insaneto try to get in so it's insane situation starting a kid at 12 trying tosituation starting a kid at 12 trying tosituation starting a kid at 12 trying to get into I at 18 so yeah so basically Iget into I at 18 so yeah so basically Iget into I at 18 so yeah so basically I think once we get to about 78 million ofthink once we get to about 78 million ofthink once we get to about 78 million of spending I think these we run out ofspending I think these we run out ofspending I think these we run out of seats basically and so we'll probablyseats basically and so we'll probablyseats basically and so we'll probably get to that in a few years we're justget to that in a few years we're justget to that in a few years we're just adding capacity which will take about
Questioneradding capacity which will take about three years with all the construction and all that but basically it'll go to about 5 million a year in about three years and then the next step from that would be to Max it to about 8 million so I would say in probably six years five six years will be maxed out thank you so much monish and congrats on the successes so far I would like to ask a two- part part kind of two related questions but one you talked about pursuing high risk High reward investments in your Charities so like maybe talk a little bit about some failures that you've learned some lessons from and what those lessons might be and relatedly now that you found something that works so phenomenally do you try to create a feedback loop where all your incremental in kind of charitable Investments flow into like compounding what you've
Questionerinto like compounding what you've already built and adjacencies related to it or you planting other seeds to try to do something maybe perhaps in an entirely different domain
Questionerwell I'm a big believer in Focus so I think for us right now our focus is to get to the 708 million and max out the model maybe we'll try to take it to 10 12 million and see I mean I actually want to hit a brick wall and just see where that wall is so we'll push as much as we can to see you know what the limits of that wall is and where that ends up if you think about it from a net worth point of view I mean I would say if DNA was spending something like 10 million a year you know and if the my net worth were let's say around 200 million be about like a 5% type annual number if there were no outside donors I mean that those numbers that' be my net worth got in half because I got divorced a few
Questionerin half because I got divorced a few years back thankfully it was still over 50 after the divorce so we could still keep it going but we're not at 200 million yet with some luck maybe next year we'll see but yeah I mean I think that I always want to have feedback loops I don't want to I don't mind taking risk when we started this model that is working very well it wasn't expected to work I mean I was a guy in shorts in California doing something remote in India and basically people took advantage of us I mean we paid these coaching companies to coach our kids they sell Third Rate faculty they sometimes never sent anyone they basically just took the and nobody showed up and so we had a lot of issues so for example the very first batch that we had our success rate of getting kids into I was about 10% just 10% of the kids got in it was the same quality of
Otherkids got in it was the same quality of kids as we have today but it was a 8:1 7 to1 differential in success it was very clear to me that what we had given in terms of quality to the kids of coaching was pathetic it was terrible so I knew that hey this is just like any business we just have to you know block and tackle just make tomorrow better than today and you know we fired some of the coaching places that screwed us fool me once shame on you fool me twice shame on me so you know we got rid of all the yo-yos who were you know screwing with us and you know the next year was around 20% and I knew it could keep going higher and we just kept working at it and I want to find other models I I think we'll need to find some other models in a few years I know that the return will go down I don't think we'll ever find anything like this I mean this
Otherever find anything like this I mean this is just we just locked out and veryis just we just locked out and veryis just we just locked out and very extreme whatever but it won't beextreme whatever but it won't beextreme whatever but it won't be anything like this but that's okay cananything like this but that's okay cananything like this but that's okay can be a much lower return and still bebe a much lower return and still bebe a much lower return and still be quite good
Questionerhey Manish thanks for doingquite good hey Manish thanks for doingquite good hey Manish thanks for doing this so quick question at the beginningthis so quick question at the beginningthis so quick question at the beginning you mentioned some of the failures ofyou mentioned some of the failures ofyou mentioned some of the failures of Charities at large and I'm wonderingCharities at large and I'm wonderingCharities at large and I'm wondering have you seen anything interesting inhave you seen anything interesting inhave you seen anything interesting in terms of people who are employing otherterms of people who are employing otherterms of people who are employing other methods to kind of fix some of thosemethods to kind of fix some of thosemethods to kind of fix some of those failings outside of what you'refailings outside of what you'refailings outside of what you're specifically doing
Otheryeah I'm reallyspecifically doing yeah I'm reallyspecifically doing yeah I'm really impressed with some of the Charitiesimpressed with some of the Charitiesimpressed with some of the Charities have run into since then so for examplehave run into since then so for examplehave run into since then so for example some of you might be familiar withsome of you might be familiar withsome of you might be familiar with Success Academy which is Joel greenSuccess Academy which is Joel greenSuccess Academy which is Joel green blats initiative in New York City withblats initiative in New York City withblats initiative in New York City with all the Chara schools and such I thinkall the Chara schools and such I thinkall the Chara schools and such I think they've done a wonderful job and inthey've done a wonderful job and inthey've done a wonderful job and in general Charter Schools if they run wellgeneral Charter Schools if they run wellgeneral Charter Schools if they run well I think they have that's a US modelI think they have that's a US model
QuestionerI think they have that's a US model which is easier to get you guys' kind of arms around is that because you're getting base level funding in terms of public dollars from the government and then you're overlaying that with private funds the return on those private funds is very high so like for example Joel's case the Success Academy a lot of the teachers are IV League educated and a lot of the students are inner city minorities and so on so it's kind of Two Worlds that would normally never meet and they've done a great job I mean I think so I think charter schools that are well-run and such I think that's can work well because of the Public Funding that is coming through and we have a lot of waste of Public Funding in the public school system in most cases around the country so that can be a good model I found some very good models in India as
Questionerfound some very good models in India as well some are in education sometime somewell some are in education sometime somewell some are in education sometime some are kind of adjacencies so yeah I meanare kind of adjacencies so yeah I meanare kind of adjacencies so yeah I mean if you look at it from the lens of youif you look at it from the lens of youif you look at it from the lens of you know input output you'll find it veryknow input output you'll find it veryknow input output you'll find it very easy because that's what you guys do foreasy because that's what you guys do foreasy because that's what you guys do for a living right so when you look at thea living right so when you look at thea living right so when you look at the goddess man program at Albert Einsteingoddess man program at Albert Einsteingoddess man program at Albert Einstein and you let's say you work going toand you let's say you work going toand you let's say you work going to compare it to Success Academy I mean I'mcompare it to Success Academy I mean I'mcompare it to Success Academy I mean I'm nothing against the goddess man but Inothing against the goddess man but Inothing against the goddess man but I think you know Joel's program to me hasthink you know Joel's program to me hasthink you know Joel's program to me has a higher return all right thanks fora higher return all right thanks fora higher return all right thanks for doing this I just had a brief questiondoing this I just had a brief questiondoing this I just had a brief question has your philanthropy been exclusivelyhas your philanthropy been exclusivelyhas your philanthropy been exclusively focused on this education and if notfocused on this education and if notfocused on this education and if not have you invested in or donated tohave you invested in or donated tohave you invested in or donated to Regions that have experienced naturalRegions that have experienced naturalRegions that have experienced natural disasters or anything with shorter termdisasters or anything with shorter termdisasters or anything with shorter term time Horizons the reason I ask istime Horizons the reason I ask istime Horizons the reason I ask is because I live in Asheville which as youbecause I live in Asheville which as youbecause I live in Asheville which as you may know has recently been hit prettymay know has recently been hit prettymay know has recently been hit pretty hard by hurricanes and I'm in charge of
Questionerhard by hurricanes and I'm in charge of a team that's trying to allocate a couple million dollars to disaster recovery and if so I'm just wonder if there's any general lessons that you've observed from that if you don't have any experience that's to okay
CharlieDaka has done very little outside of its core model I mean I think one time I gave 10,000 to Joel to have lunch with him with a donation to Success Academy and you know I had lunch with Buffett that was a donation as well to the Glide Foundation when there was a turkey earthquake we made some contribution because we've got investments in Turkey so I didn't feel like we should just be taking without giving but in general I say no almost 99% of the time and I don't look at other causes I think it's really important in philanthropy to be focused so I think in your Asheville situation
Questionerso I think in your Asheville situation yeah the important thing there would be to drill down to see what is the best way to help that Community with those limited resources you know and that's not an easy problem to get your arms around so you can certainly limit yourself to Asheville but you can still optimize within that I think that because charity is so hard I think all of you my advice would be to stay very narrow to say no a lot to not sprinkle you know all over the place I don't think that would work very well you've been really generous with your time would you have would be open to I know we have at least one or two kind of non philanthropic questions at folks just as practitioners of investing would be curious on your thoughts is that all right sure no problem hey uh monish I I know you don't really like talking about your existing stocks so
Questionertalking about your existing stocks so I'm not going to ask you about that butI'm not going to ask you about that butI'm not going to ask you about that but you know Buffett has been selling Bankyou know Buffett has been selling Bankyou know Buffett has been selling Bank of America and apple and the S&P is at aof America and apple and the S&P is at aof America and apple and the S&P is at a I guess I don't know what the percentileI guess I don't know what the percentileI guess I don't know what the percentile is but it's it's a pretty high uh youis but it's it's a pretty high uh youis but it's it's a pretty high uh you know PE ratio and you know even withknow PE ratio and you know even withknow PE ratio and you know even with within that it's being driven by sort ofwithin that it's being driven by sort ofwithin that it's being driven by sort of these ma massive sort of macro Trendsthese ma massive sort of macro Trendsthese ma massive sort of macro Trends you know AI whatnot I mean I'm I'myou know AI whatnot I mean I'm I'myou know AI whatnot I mean I'm I'm curious sort of a your sort of macrocurious sort of a your sort of macrocurious sort of a your sort of macro view just in terms of valuationview just in terms of valuationview just in terms of valuation opportunity availability and then Iopportunity availability and then Iopportunity availability and then I would say also you know the future forwould say also you know the future forwould say also you know the future for you know small cap stock picking I knowyou know small cap stock picking I knowyou know small cap stock picking I know sort of earlier in your career you didsort of earlier in your career you didsort of earlier in your career you did you know sort of more small cap I meanyou know sort of more small cap I meanyou know sort of more small cap I mean you know I know you do stuff in Indiayou know I know you do stuff in Indiayou know I know you do stuff in India sort of curious your thoughts on sort ofsort of curious your thoughts on sort ofsort of curious your thoughts on sort of highle macro and then just also what youhighle macro and then just also what youhighle macro and then just also what you think the future for sort of small capthink the future for sort of small capthink the future for sort of small cap stock picking in sort of the US domesticstock picking in sort of the US domesticstock picking in sort of the US domestic markets is I mean do you think that
Questionermarkets is I mean do you think that because of ETFs people are you know there's just less and less active management I'm just sort of curious your thoughts on that
Questioneryeah you know I really enjoyed a recent letter by David Einhorn where he was talking about how Buffett always says that he's not a market timer he's never focused on Market timing and David made the point that he's the best Market timer he knows that there's no better Market timer than Warren you know I mean like you know he closed the partnership in ' 69 and Charlie and everyone else took it on the chin but Warren didn't if you just track the history of what Warren's done you know it turns out that he's usually had just impeccable even like for example his gen repurchase with stock overvalued Burkshire stock and so on he's been very smart about it I mean I think Burkshire
Questionersmart about it I mean I think Burkshire probably you know building that dryprobably you know building that dryprobably you know building that dry powder he may have some views thatpowder he may have some views thatpowder he may have some views that things are a little froy but they maythings are a little froy but they maythings are a little froy but they may actually get a chance to put 100 billionactually get a chance to put 100 billionactually get a chance to put 100 billion or more to work on something and he saidor more to work on something and he saidor more to work on something and he said I think he made a comment that marketI think he made a comment that marketI think he made a comment that market dislocation will happen he said hedislocation will happen he said hedislocation will happen he said he doesn't know whether it'll happen nextdoesn't know whether it'll happen nextdoesn't know whether it'll happen next year but he thinks the odds in 10 yearsyear but he thinks the odds in 10 yearsyear but he thinks the odds in 10 years are high for example I mean that's aare high for example I mean that's aare high for example I mean that's a comment he made so that's I think how Icomment he made so that's I think how Icomment he made so that's I think how I think about that from my point of view Ithink about that from my point of view Ithink about that from my point of view I mean I'm a stock picker so I don'tmean I'm a stock picker so I don'tmean I'm a stock picker so I don't really particularly care about where thereally particularly care about where thereally particularly care about where the S&P is at because I'm not buying the S&PS&P is at because I'm not buying the S&PS&P is at because I'm not buying the S&P and I'm not buying the Magnificent 7evenand I'm not buying the Magnificent 7evenand I'm not buying the Magnificent 7even and so on but I think that yeah there'sand so on but I think that yeah there'sand so on but I think that yeah there's always world with 50,000 stocks and allalways world with 50,000 stocks and allalways world with 50,000 stocks and all these individual things going on tothese individual things going on tothese individual things going on to individual companies there's alwaysindividual companies there's alwaysindividual companies there's always going to be exceptional opportunities Igoing to be exceptional opportunities Igoing to be exceptional opportunities I think if someone is just willing to dig
Questionerthink if someone is just willing to dig even in the most froy markets there would be opportunities and especially now we have kind of this barbell type Market where you know a lot of it is Left Behind and a few things are kind of raging on I don't find a lot of things but I find enough things to invested we don't have too many buckets if I look at our billion or so under management you know it's the most weird allocation we have you know 70% or something is sitting in Turkey maybe another 20 or 25% is sitting in Coal so that's we're at 95% now and then the 5% doesn't really matter you know not really relevant within turkey basically the 70% is in three stocks so that's the allocation we have right now and I wouldn't want it any other way thank you all right last question how you doing and thank you for taking the time let's have a quick question in the dond
Questionerhave a quick question in the dond investor you had written that if you own a stock and after two or three years it's not working it's probably time to move on so I'm curious if you still feel that way broadly and then more specifically how you might think about something like a factor being out of fashion which maybe explains why the stock is not working even if the business is executing well
Todd CombsI mean I think that one of the things about the good news of the investing business is one can do really well even with a high error rate so the best of us will be wrong one out of three times in what we think something company's going to do many of us will be wrong half the time or more than half the time stock could Flatline stock could decline stock doesn't get to where we think it is where it should be valued at so there's a lot of reasons error rate being as
Questionera lot of reasons error rate being as high as it is if you've invested in something and after 3 years is still sitting where you invested or lower than where you invested I think there's a decent probability that your assessment was wrong it's not a 100% probability but I think that you need to do a holistic analysis of what might be going on it's possible that it's still undervalued it's possible that market may take longer and so on that's fine but it's I think a decent possibility at that point that there may be some factors that you may not be understanding that is affecting intrinsic value thank you so much for your time you know I don't know what the social turn will be on this uh hour that you spent but there there's a fair amount of capital in the room and uh sort of like minds and and hopefully I think you've probably influenced some of
Otherthink you've probably influenced some of the thinking and uh sort of ripples will be felt over time but uh really appreciate it thank you
Otherwell uh Scott I just want to say that I have a lot of respect for you and what you do and that's why when you called approached me I was a no-brainer for me to participate and I really enjoyed the interaction so thank you so much
Othergreat I appreciate that all right