OtherI think topic which little different than you guys had originally requested so the topic I had suggested was to talk about social return on invested Capital which I think maybe might resonate with rotarians it's a rotary is a wonderful organization worldwide in the various chapters and especially various Indian chapters have done really exceptional work so I'm very happy to talk to you guys and this notion of looking at charity and philanthropy from the lens of a capital allocator can be quite powerful and it can have a lot of transformative impacts that ordinarily may not be possible there were two individuals who in 2019 won the Nobel Prize for economics and they married to each other this French lady Esther Duo and her Indian husband abijit banery and they've written a few books on this like for example this one here is one of their
Otherexample this one here is one of their more recent books and both of them have done some really remarkable work on trying to measure social impacts so when we are trying to do good in the world and when we are trying to help Humanity if you will but basically when we are when we trying to help humanity and improve the world if you will then you know in the pursuit of that measurement of outcomes or input to Output ratios become very important and input to Output ratios is fundamental to how we think about investing so basically let me take a simple example there's a poor hungry person sitting outside a temple looking for people to give him some food and some you know charitably mmed people give him food or give him money to get some food and clearly that has has a positive impact or if we help uh help the person basically become you
Otherhelp the person basically become you know healthier provide some medicalknow healthier provide some medicalknow healthier provide some medical attention Etc anything you do to helpattention Etc anything you do to helpattention Etc anything you do to help that person is a net positive and sothat person is a net positive and sothat person is a net positive and so that at a at a base level is perfectlythat at a at a base level is perfectlythat at a at a base level is perfectly fine but but then if you if you were tofine but but then if you if you were tofine but but then if you if you were to ask yourself the question what is theask yourself the question what is theask yourself the question what is the impact of giving that person a meal orimpact of giving that person a meal orimpact of giving that person a meal or let's take it a step further what is thelet's take it a step further what is thelet's take it a step further what is the impact of giving that person three mealsimpact of giving that person three mealsimpact of giving that person three meals a day 7 days a week 365 days a yeara day 7 days a week 365 days a yeara day 7 days a week 365 days a year clearly that also has a great socialclearly that also has a great socialclearly that also has a great social impact the actual benefit to society mayimpact the actual benefit to society mayimpact the actual benefit to society may not be optimized so to do a real benefitnot be optimized so to do a real benefitnot be optimized so to do a real benefit to society one would need to contrastto society one would need to contrastto society one would need to contrast that with other initiatives one couldthat with other initiatives one couldthat with other initiatives one could take and try to compare and contrasttake and try to compare and contrasttake and try to compare and contrast them so we have the guy sitting outsidethem so we have the guy sitting outsidethem so we have the guy sitting outside the temple who's hungrythe temple who's hungrythe temple who's hungry and you could give him food Etc and thatand you could give him food Etc and thatand you could give him food Etc and that would be helpful let's say there's awould be helpful let's say there's awould be helpful let's say there's a family which is homeless for example infamily which is homeless for example infamily which is homeless for example in Bangalore for example and some
QuestionerBangalore for example and some charitably minded people help provide shelter to that family and you know again there's a there's a cost for doing that and so if you were to compare these two initiatives which is feeding a person giving them you know what the base level calories that need or providing shelter to a family one cannot do everything that is needed by societies underprivileged so which of the two for example has a higher return to society and what happens with most philanthropic Endeavors and most philanthropic organizations is that is not a question that's ever considered and the reason the question is never considered is because it's too difficult to answer so how would you measure the impact of giving someone food and saying okay the impact of this is XYZ and it costs X and benefits y for example and you provide a family shelter
Questionerexample and you provide a family shelter and that cost costs a and the benefit is B so how does a and x and y and B compare and those comparisons become really difficult and that's what Esther Duo and her husband tried to do they looked at different Endeavors that different nonprofits were doing they did a lot of field work in Rajasthan and they actually tried to quantify and measure the outcomes and for most philanthropic efforts measurement of outcomes is extremely difficult just because these things are so subjective so nebulous if we have a bunch of homeless you know drug addicts in Los Angeles for example and there's a nonprofit that provides free needles to them in the hope that there is at least you know less transmission of undesirable diseases Etc with contaminated needles that also does good but how do you compare the three how do you
Questionercompare the three how do you you compare is the needle program better than giving the temple guy food or is that better than giving a family shelter which other the three is the best and the which of the three is the best is really important because resources are limited so if we knew for a fact that the best of the three is to provide the family shelter then we would ignore the other two and provide as many family shelters that we could because then it would just become a no-brainer and the second second problem in philanthropy is that I'll use a US example there may be similarities in India but if I take the example of the Rockefeller Foundation or let's say the Ford foundation in the United States and let's say for example the Rockefeller Foundation has an endowment of a billion dollars okay so they have1 billion dollar usually invested in you know some
Questionerdollar usually invested in you know some DiversifiedDiversifiedDiversified way and US charitable laws forway and US charitable laws forway and US charitable laws for nonprofits require them to spend 5% ofnonprofits require them to spend 5% ofnonprofits require them to spend 5% of their total Corpus every year totheir total Corpus every year totheir total Corpus every year to maintain their nonprofit status so theymaintain their nonprofit status so theymaintain their nonprofit status so they have a billion dollars they have tohave a billion dollars they have tohave a billion dollars they have to spend $50spend $50spend $50 million okay and they spend the 50million okay and they spend the 50million okay and they spend the 50 million and they spend the 50 million inmillion and they spend the 50 million inmillion and they spend the 50 million in a variety of different initiatives maybea variety of different initiatives maybea variety of different initiatives maybe some of it is going to the needlesome of it is going to the needlesome of it is going to the needle program some of it is going to helpprogram some of it is going to helpprogram some of it is going to help homeless people in India just variety ofhomeless people in India just variety ofhomeless people in India just variety of differentdifferentdifferent initiatives the billion dollars thatinitiatives the billion dollars thatinitiatives the billion dollars that they have invested maybe annuallythey have invested maybe annuallythey have invested maybe annually averages out a return of let's say 7 oraverages out a return of let's say 7 oraverages out a return of let's say 7 or 8% a year so after one year what happens8% a year so after one year what happens8% a year so after one year what happens is that they have spent 50 billion 50is that they have spent 50 billion 50is that they have spent 50 billion 50 million and they have made about 70 ormillion and they have made about 70 ormillion and they have made about 70 or 80 million so so a year later they would80 million so so a year later they would80 million so so a year later they would have1 billion $20 millionhave1 billion $20 millionhave1 billion $20 million available more than the 1 billion theyavailable more than the 1 billion theyavailable more than the 1 billion they had a year ago it does not matter if thehad a year ago it does not matter if the
Otherhad a year ago it does not matter if the 50 million that they spent had any positive impact or not it's irrelevant because every year the Rockefeller foundation will spend 50 million and they will make 40% more than and so the Corpus will keep growing and the organization will exist forever regardless of whether it does well or not not now if we ins of the Rockefeller Foundation we think of a for-profit company and let's take a for for-profit company in Bangalore called infosis okay done extremely well for very long period of time extremely well-run very profitable very highly valued by the market Etc if infosis provides useless services and the quality of their services are poor what will happen is that next year their sales would go will go down and if they continue to provide Pro poor poor service more and more of their clients will leave
Questionertheir clients will leave permanently and eventually regardless of how much money they have in the bank Etc eventually the company will cease to exist it will basically go bankrupt so in a capitalist system there is a natural feedback cycle where if a company does not deliver high value products or Services the market system will wipe out those businesses eventually so capitalism has a natural creative destruction built into its basic Frameworks and the creative D destruction is why we as a society do better every year because the not so great businesses or the businesses that are no long of providing that much value will continue to basically be wiped out or liquidated Etc and newer businesses will come in which provide much better value and much better outcomes Etc but in the nonprofit world when we look at something like the Rockefeller foundation with this 5% out
OtherRockefeller foundation with this 5% out and 7% in there is no such feedback loop they can endlessly for the next 100 years next Thousand Years provide terrible service to society and it does not matter they will still exist so non profit that is interested in optimizing doing a great job using limited resources to provide maximum value to investors or to to society has to artificially employ a different set of rules and almost all nonprofits not only do they not know these rules they don't apply them so to apply them you first have to know them other than me and a handful of people like Esther and abijit nobody knows these rules nobody cares to know these rules nobody gives a damn about knowing these rules so I want to talk a little bit about these rules so we discussed that measurement of outcomes measurement of outcomes is not necessary in a capitalist system in a
Othernecessary in a capitalist system in a for-profit world because the market will decide whether you are providing good service or not and if you don't provide good service it'll just take you out so in the nonprofit world what we at dakna did is when we were starting out is we said okay measurement in the nonprofit world is very difficult but measurement in the nonprofit world is absolutely essential if you don't measure then how do you know how you're doing how do you know whether you are useful or useless so what what we did at dakha is we inverted the problem one of my most loved quotes of Charlie Monger is invert always invert so we inverted the problem so we said we are not going to pick a cause and then figure out how to measure the outcome of that cause we're going to pick causes where we know outcome measurement is easy so for
Othermeasurement is easy so for example the guy outside the the temple example the guy outside the the temple example the guy outside the the temple who's hungry there are lots of who's hungry there are lots of who's hungry there are lots of complications in figuring out those complications in figuring out those complications in figuring out those outcomes especially when you want to outcomes especially when you want to outcomes especially when you want to compare them to other compare them to other compare them to other Alternatives just comparing the hungry Alternatives just comparing the hungry Alternatives just comparing the hungry guy outside the temple to giving a guy outside the temple to giving a guy outside the temple to giving a homeless family housing just those two homeless family housing just those two homeless family housing just those two if you had one CR to spend on feeding if you had one CR to spend on feeding if you had one CR to spend on feeding you know hungry people versus providing you know hungry people versus providing you know hungry people versus providing 10 families permanent shelter for 10 families permanent shelter for 10 families permanent shelter for example which is better I don't know example which is better I don't know example which is better I don't know which is better and it's very difficult which is better and it's very difficult which is better and it's very difficult to answer that question so what we did to answer that question so what we did to answer that question so what we did at dakna is said we said that we will at dakna is said we said that we will at dakna is said we said that we will not answer such questions because such not answer such questions because such not answer such questions because such questions are difficult to answer we questions are difficult to answer we questions are difficult to answer we will pick causes where the answer is will pick causes where the answer is will pick causes where the answer is easy so we said okay out of all the easy so we said okay out of all the easy so we said okay out of all the different things that we can do in terms different things that we can do in terms different things that we can do in terms of helping Humanity you know providing of helping Humanity you know providing of helping Humanity you know providing housing to the homeless providing food housing to the homeless providing food housing to the homeless providing food to the hungry Etc we decided that we
Otherto the hungry Etc we decided that we want to pick cause is where outcome measurement is easy and the cause that daksh picked was education and the reason we picked education was for two or three reasons one of the biggest reasons we picked education is outcome measurement is really obvious and the second reason we picked it is if I just compare education to the guy outside the temple give a man a fish and you feed him for a day teach a man to fish and you feed them for a lifetime so just from the perspective that there's a guy outside the temple and you could take two different approaches which is one is provide three meals a day or the second approach is to figure out what skills or help can be given to that person so he or she can work and feed themselves eventually in general without even doing a lot of measurement the second approach
Othera lot of measurement the second approach is likely to have a higher return onis likely to have a higher return onis likely to have a higher return on social return on invested Capital so wesocial return on invested Capital so wesocial return on invested Capital so we decided we wanted to teach fishing anddecided we wanted to teach fishing anddecided we wanted to teach fishing and we didn't want to give fish because justwe didn't want to give fish because justwe didn't want to give fish because just implicitly that teaching fishing isimplicitly that teaching fishing isimplicitly that teaching fishing is going to do well the second thing thatgoing to do well the second thing thatgoing to do well the second thing that dsh did is we focused on initially ourdsh did is we focused on initially ourdsh did is we focused on initially our initial Focus was on identifying veryinitial Focus was on identifying veryinitial Focus was on identifying very bright kids who were extremely poorbright kids who were extremely poorbright kids who were extremely poor 16-year-old kids typically these were16-year-old kids typically these were16-year-old kids typically these were kids whose parents were illiterate theykids whose parents were illiterate theykids whose parents were illiterate they were laborers or Farmers or you knowwere laborers or Farmers or you knowwere laborers or Farmers or you know blue color jobs Etc never went toblue color jobs Etc never went toblue color jobs Etc never went to college and may not even have spokencollege and may not even have spokencollege and may not even have spoken English Etc so that's the demographic weEnglish Etc so that's the demographic weEnglish Etc so that's the demographic we were working with and we would identifywere working with and we would identifywere working with and we would identify kids who were kids of these people andkids who were kids of these people andkids who were kids of these people and we would take over their education forwe would take over their education forwe would take over their education for two years the grade 11th and grade 12two years the grade 11th and grade 12two years the grade 11th and grade 12 11th and 12th standard and we would11th and 12th standard and we would11th and 12th standard and we would blast them into IIT and daksh has beenblast them into IIT and daksh has beenblast them into IIT and daksh has been doing this for for 17 years now and if
Otherdoing this for for 17 years now and ifdoing this for for 17 years now and if you look back in the last 17 yearsyou look back in the last 17 yearsyou look back in the last 17 years something like around close to 70% ofsomething like around close to 70% ofsomething like around close to 70% of the kids that we have taken on have beenthe kids that we have taken on have beenthe kids that we have taken on have been successfully accepted by the iits andsuccessfully accepted by the iits andsuccessfully accepted by the iits and close to 90% of the kids that we'veclose to 90% of the kids that we'veclose to 90% of the kids that we've taken on have been accepted by the nitstaken on have been accepted by the nitstaken on have been accepted by the nits or the iits and if you expand that toor the iits and if you expand that toor the iits and if you expand that to kids who have gone to some engineeringkids who have gone to some engineeringkids who have gone to some engineering College it would probably approach 95%College it would probably approach 95%College it would probably approach 95% so the success rate is really high soso the success rate is really high soso the success rate is really high so just to give you an example in Bangalorejust to give you an example in Bangalorejust to give you an example in Bangalore we have a lot of alums and our kids comewe have a lot of alums and our kids comewe have a lot of alums and our kids come from all over India we have kids fromfrom all over India we have kids fromfrom all over India we have kids from Carill in Kashmir and we have sent aCarill in Kashmir and we have sent aCarill in Kashmir and we have sent a girl from Andaman Islands togirl from Andaman Islands togirl from Andaman Islands to IIT and we have sent kids from theIIT and we have sent kids from theIIT and we have sent kids from the sundarbans Delta in Bengal arunachalsundarbans Delta in Bengal arunachalsundarbans Delta in Bengal arunachal Pradesh we have sent kids from very veryPradesh we have sent kids from very veryPradesh we have sent kids from very very far-flung corners of India to the iitsfar-flung corners of India to the iitsfar-flung corners of India to the iits and after they finished a lot of themand after they finished a lot of themand after they finished a lot of them end up in Bangalore for example one ofend up in Bangalore for example one ofend up in Bangalore for example one of our dakna alums in Bangalore whose
Otherour dakna alums in Bangalore whose parents had income of less than 5,000 rupees a month when we accepted him as a DNA scholar he is from fatur District in utar Pradesh Rajiv Kumar he has been at Google in Bangalore for 10 years now graduated from IIT kpur in 2014in Bangalore Google pays him 1.9 crores a year and if he transfers to Mountain View California which if he wants to they will allow him to do that his annual salary would go up to about $800,000 a year but if we look at the compensation he he gets in Bangalore the 1.9 crores a year the family used to be at 5,000 rupees a month 60,000 Rupees a year they went from 60,000 Rupees a year to basically close to 2 crores a year and to take them from 60,000 Rupees to 2 crores dakna spent about 2 and A2 lakhs on that person so we put two and 1 half lakhs into a kid and the families typically our families are under $100 a
Othertypically our families are under $100 atypically our families are under $100 a month like 7 8,000 rupees many of themmonth like 7 8,000 rupees many of themmonth like 7 8,000 rupees many of them are less than 2 3,000 rupees a month inare less than 2 3,000 rupees a month inare less than 2 3,000 rupees a month in household income so if I were to say tohousehold income so if I were to say tohousehold income so if I were to say to anyone that look here is a poor familyanyone that look here is a poor familyanyone that look here is a poor family they make 5,000 rupees a month or eventhey make 5,000 rupees a month or eventhey make 5,000 rupees a month or even let's say 10,000 rupees a month and Ilet's say 10,000 rupees a month and Ilet's say 10,000 rupees a month and I want their income to be 50,000 Rupees awant their income to be 50,000 Rupees awant their income to be 50,000 Rupees a month for example that would give them amonth for example that would give them amonth for example that would give them a decent standard of living to take itdecent standard of living to take itdecent standard of living to take it from 5,000 to 50,000 and I were to tellfrom 5,000 to 50,000 and I were to tellfrom 5,000 to 50,000 and I were to tell you that I'll give you two and 1 halfyou that I'll give you two and 1 halfyou that I'll give you two and 1 half laks please identify any family that youlaks please identify any family that youlaks please identify any family that you want Here's 2 and A2 FL and in 6want Here's 2 and A2 FL and in 6want Here's 2 and A2 FL and in 6 years make that family income 10 timesyears make that family income 10 timesyears make that family income 10 times or more than what it is today and theor more than what it is today and theor more than what it is today and the answer for the most part would be thatanswer for the most part would be thatanswer for the most part would be that it cannot beit cannot beit cannot be done that you cannot on the face of itdone that you cannot on the face of itdone that you cannot on the face of it like if if I go to the guy who's outsidelike if if I go to the guy who's outsidelike if if I go to the guy who's outside the temple and I look at the guy outsidethe temple and I look at the guy outsidethe temple and I look at the guy outside the temple and I say okay let's providethe temple and I say okay let's providethe temple and I say okay let's provide Skilling to this person okay let's see
OtherSkilling to this person okay let's see what we can provide Etc so that the income is 50,000 it would almost for sure fail it wouldn't work now the reason it works at dakshana is because the benevolent government of India basically has this amazing system of universities and institutes called the iits the iits are very heavily subsidized by the government they are almost free to attend if you withdraw the government subsidy from the iits and the iits were going to charge the students who were attending the actual cost of tuition and boarding and lodging and everything it would be around around approaching 15 to 20 lakhs a year it would cost each student about close to 20 lakhs a year if you withdraw the government funding so if someone went through four years of IIT education it would cost them about 80 lakhs and the transformation that took
Otherlakhs and the transformation that took place for Rajiv Kumar in in Bangalore took place because we did not spend the 80 lakhs the benevolent government of India spent the 80 lakhs but the benevolent government of India does not care whether you are rich or poor when you go to IIT so if you are Amani's son and you go to IIT you get a subsidy and if you are some extremely poor person's son and you go to IIT you get the same subsidy it is very stupid public policy but that's just the way it is there's a lot of stupid public policy in India and other countries around the world but we saw that there's this policy that exists which is that if you get a person to IIT you unlock 80 lakhs of government support and to unlock that 80 lakhs of government support Rajiv Kumar has to be accepted by the iits now to be accepted by the iits the coaching will cost you
Otherby the iits the coaching will cost you three to five lakhs okay so a familythree to five lakhs okay so a familythree to five lakhs okay so a family like rajiv's family which is makinglike rajiv's family which is makinglike rajiv's family which is making 60,000 Rupees a year how are they going60,000 Rupees a year how are they going60,000 Rupees a year how are they going to pay 4 lakhs for coaching they cannotto pay 4 lakhs for coaching they cannotto pay 4 lakhs for coaching they cannot they don't even know in fact the kidsthey don't even know in fact the kidsthey don't even know in fact the kids that we are taking for IIT prep have notthat we are taking for IIT prep have notthat we are taking for IIT prep have not heard the wordheard the wordheard the word IIT if you are in the sundarbans OR inIIT if you are in the sundarbans OR inIIT if you are in the sundarbans OR in Andaman Islands you're growing up orAndaman Islands you're growing up orAndaman Islands you're growing up or whatever you don't know what IIT is youwhatever you don't know what IIT is youwhatever you don't know what IIT is you never heard heard of I so they cannotnever heard heard of I so they cannotnever heard heard of I so they cannot even aspire to go to I because they'veeven aspire to go to I because they'veeven aspire to go to I because they've never heard of it and if they've heardnever heard of it and if they've heardnever heard of it and if they've heard of it they will never know how to crackof it they will never know how to crackof it they will never know how to crack the exam because there is no coachingthe exam because there is no coachingthe exam because there is no coaching available in the Andaman Islands for IITavailable in the Andaman Islands for IITavailable in the Andaman Islands for IIT there's no coaching available in faturthere's no coaching available in faturthere's no coaching available in fatur District that is high quality for IITDistrict that is high quality for IITDistrict that is high quality for IIT coaching or the sundarbans or arunachalcoaching or the sundarbans or arunachalcoaching or the sundarbans or arunachal Pradesh or remote tripura Etc so therePradesh or remote tripura Etc so therePradesh or remote tripura Etc so there is an awareness problem there is ais an awareness problem there is ais an awareness problem there is a coaching availability problem andcoaching availability problem and
Othercoaching availability problem and there's an affordability problem butthere's an affordability problem butthere's an affordability problem but what we realize the D is that there arewhat we realize the D is that there arewhat we realize the D is that there are high qualityhigh qualityhigh quality brains everywhere and the iits werebrains everywhere and the iits werebrains everywhere and the iits were supposed to take the best talent ofsupposed to take the best talent ofsupposed to take the best talent of India and create the best Engineers butIndia and create the best Engineers butIndia and create the best Engineers but what actually happened is they took thewhat actually happened is they took thewhat actually happened is they took the best talent from Urbanbest talent from Urbanbest talent from Urban India which was middle class or higherIndia which was middle class or higherIndia which was middle class or higher and from that demographic they createdand from that demographic they createdand from that demographic they created the best Engineers so if you were inthe best Engineers so if you were inthe best Engineers so if you were in rural India or if you were from Urbanrural India or if you were from Urbanrural India or if you were from Urban India and poor you were excluded and ifIndia and poor you were excluded and ifIndia and poor you were excluded and if you're excluding rural India you'reyou're excluding rural India you'reyou're excluding rural India you're already straight away excluding 70% ofalready straight away excluding 70% ofalready straight away excluding 70% of the country about 900 million people arethe country about 900 million people arethe country about 900 million people are excluded and then if you exclude theexcluded and then if you exclude theexcluded and then if you exclude the urban poor you're again excluding fewurban poor you're again excluding fewurban poor you're again excluding few hundred million people there as wellhundred million people there as wellhundred million people there as well you're Bas basically excluding somethingyou're Bas basically excluding somethingyou're Bas basically excluding something like 85 90% of the country from evenlike 85 90% of the country from evenlike 85 90% of the country from even having a chance to go there but what wehaving a chance to go there but what wehaving a chance to go there but what we realize at Daka is that that 80 laks of
Otherrealize at Daka is that that 80 laks of subsidy is really the key to transformation of families and making heroes from zeros and we cannot spend and we would have very low return on invested Capital if we were to spend 82 and a half lakhs on each kid so the iits were not subsidized and daksha has to spend 82 and a half lakhs two and a half lakhs for the coaching and 80 lakhs for the four years our social return on invested Capital would be terrible because now if I go back and tell you that okay there's this guy outside the temple who has no food and I'll give you 82 lakhs and please take his income to 50,000 a month well all you need to do is you put the 82 lakhs in the bank and the bank will give you about four lakhs or five lakhs a year and so you've immediately taken the income to 40 45,000 so if you're willing to spend the 85 lakhs you can take the guy outside
Other85 lakhs you can take the guy outside the temple and permanently feed him no the temple and permanently feed him no the temple and permanently feed him no problem and or you can even take a problem and or you can even take a problem and or you can even take a homeless family and give them housing but then the social return on invested but then the social return on invested but then the social return on invested capital is very low so daksh was able to capital is very low so daksh was able to capital is very low so daksh was able to do what I would call is a hack it was a do what I would call is a hack it was a do what I would call is a hack it was a hack or it was jugar as you would say in hack or it was jugar as you would say in hack or it was jugar as you would say in India that we basically took a India that we basically took a India that we basically took a government program that was never government program that was never government program that was never intended to alleviate poverty and we intended to alleviate poverty and we intended to alleviate poverty and we transformed it to a program to alleviate transformed it to a program to alleviate transformed it to a program to alleviate poverty in a way that the bureaucrats poverty in a way that the bureaucrats poverty in a way that the bureaucrats who set up that program could never who set up that program could never who set up that program could never imagine so there is a set of schools imagine so there is a set of schools imagine so there is a set of schools that the government set up the javahar that the government set up the javahar that the government set up the javahar naod naod naod vial there are two of these schools in vial there are two of these schools in vial there are two of these schools in Bangalore there's one of these schools Bangalore there's one of these schools Bangalore there's one of these schools in every District of India almost every in every District of India almost every in every District of India almost every District of India in my opinion this is District of India in my opinion this is District of India in my opinion this is the biggest the biggest the biggest achievement of Rajiv Gandhi and nobody achievement of Rajiv Gandhi and nobody achievement of Rajiv Gandhi and nobody knows about it so Rajiv Gandhi had this
Otherknows about it so Rajiv Gandhi had this hairbrained idea that he went to Dun school and dun school is a very elite boarding school the best used to be the best boarding school in India I know that's still the case probably still the case and he had a wonderful time it goes from sixth grade to 12th grade and he had this hairbrain idea that he wanted to provide a dune School type education to to poor kids in rural India across all of rural India and he went to his minister of HR at the time narar and he told narar that this is what I would like to have happen and narar Ra was a very talented man and amazingly this school system got created not only did it get created but they were able to take a lot of elements from dun school and replicate it across 660 schools across India so there are 660 of these boarding schools across India and if you visit these schools for
OtherIndia and if you visit these schools for the most part you would be very impressed with your government you would be impressed that our government can do such a great job they put one of these boarding schools in each district of India and they came up with a kind of like a McDonald's type cookie cutter format of what a school should look like each school has 30 acres of land and each school is a boarding school from sixth standard to 12th standard following cbsc curriculum it's a residential boarding school and the government pays everything the way the center did it is they told the States you provide us 30 acres of land in every district and we will create the school and the students from your District can go to that school for free so the obviously the states get a benefit and what happens with these schools is they are like kind of mini
Questionerschools is they are like kind of minischools is they are like kind of mini iitsiitsiits so every year in sixso every year in sixso every year in six standard across these 660 schools 80standard across these 660 schools 80standard across these 660 schools 80 kids are admitted to sixth standard inkids are admitted to sixth standard inkids are admitted to sixth standard in two sections section a section B so 40two sections section a section B so 40two sections section a section B so 40 kids in each section in 660 schoolskids in each section in 660 schoolskids in each section in 660 schools there is a language independent IQ testthere is a language independent IQ testthere is a language independent IQ test that'sthat'sthat's conducted by the government across Indiaconducted by the government across Indiaconducted by the government across India for fifth standard students and anyonefor fifth standard students and anyonefor fifth standard students and anyone in fifth standard can take thatin fifth standard can take thatin fifth standard can take that test and the test is designed so thattest and the test is designed so thattest and the test is designed so that it's not really in English or Hindi orit's not really in English or Hindi orit's not really in English or Hindi or something it's kid just it's kind ofsomething it's kid just it's kind ofsomething it's kid just it's kind of like a language independent IQ test solike a language independent IQ test solike a language independent IQ test so there are about 40 lakh kids a yearthere are about 40 lakh kids a yearthere are about 40 lakh kids a year across India who take thatacross India who take thatacross India who take that test and there are 40,000test and there are 40,000test and there are 40,000 seats in the jnvs for the students whoseats in the jnvs for the students whoseats in the jnvs for the students who are accepted so it is a 1% acceptanceare accepted so it is a 1% acceptanceare accepted so it is a 1% acceptance rate all of the tabulation andrate all of the tabulation andrate all of the tabulation and selections are done in Delhi so ifselections are done in Delhi so ifselections are done in Delhi so if there's a school in Bangalore forthere's a school in Bangalore forthere's a school in Bangalore for example they to na vial the principal orexample they to na vial the principal orexample they to na vial the principal or any of the people in that school have no
Otherany of the people in that school have no ability to admit a single child they get a list from Delhi that tells them these are the 80 kids that are going to be joining your school and they have to take those 80 kids now the kids that are coming to these schools are already in the top 1% from an IQ perspective the schools are English medium and the they gradually convert over to English Medium as the kids get better by eth or n9th standard all the teaching is in English D conducts our selection test in 10th standard for these kids and so there have 40,000 kids in 10th standard when I first started in 2007 I used to get a spreadsheet in Irvine California from Delhi from the head of these schools which gave me a single spreadsheet with 40,000 rows with the test scores of all these kids across India it took me about 10 minutes to take that 40,000 lists down to 4,000 of
Othertake that 40,000 lists down to 4,000 of the best performers and then we invited these 4,000 kids in 10th standard to take our selection test the dakna selection test and they took our selection test across you know maybe 30 40 centers in India the schools would transport these kids and then from these four or 5,000 kids that we tested we picked about 400 kids so we took about 10% of the kids and we accepted them for two years of IIT coaching so basically the dsh scholars are 400 kids coming from an original pool of 40 lakh kids and when we take these 400 kids why would we not get 80 or 90% to IIT they got brains coming out of their years so like Rajiv Omar who is in Bangalore working for Google at almost two crores was one of these kids and all we did is we used this whole government mechanism to identify very high IQ brains and when we spent 2 and
Otherhigh IQ brains and when we spent 2 and A2 lakhs on a very high IQ brain versus A2 lakhs on a very high IQ brain versus A2 lakhs on a very high IQ brain versus two and a half lakhs on feeding some poor guy outside a temple the two and a poor guy outside a temple the two and a poor guy outside a temple the two and a half lakhs spent on a very high IQ brain half lakhs spent on a very high IQ brain half lakhs spent on a very high IQ brain is going to give you a much higher return than feeding the guy at the return than feeding the guy at the return than feeding the guy at the temple so we knew that the social return temple so we knew that the social return temple so we knew that the social return invest capital is extremely high and invest capital is extremely high and invest capital is extremely high and then D scaled this in the next few years then D scaled this in the next few years then D scaled this in the next few years we have our own campus now in punee it's we have our own campus now in punee it's we have our own campus now in punee it's a 109 acre campus we have 1,400 kids at a 109 acre campus we have 1,400 kids at a 109 acre campus we have 1,400 kids at any time going through IID prep at our any time going through IID prep at our any time going through IID prep at our own campus we have 600 kids and that's own campus we have 600 kids and that's own campus we have 600 kids and that's going to increase to about 2,000 going to increase to about 2,000 going to increase to about 2,000 eventually and so this is what we do so eventually and so this is what we do so eventually and so this is what we do so dakna spends about $25 million a year dakna spends about $25 million a year dakna spends about $25 million a year about 20 crores or so I think we get about 20 crores or so I think we get about 20 crores or so I think we get massive massive Returns on invested massive massive Returns on invested massive massive Returns on invested capital on that it's actually cannot be capital on that it's actually cannot be capital on that it's actually cannot be measured because it's so extreme if you measured because it's so extreme if you measured because it's so extreme if you take the case of Rajiv AR all his future take the case of Rajiv AR all his future
Othertake the case of Rajiv AR all his future generations and all his cousins andgenerations and all his cousins andgenerations and all his cousins and siblings and everybody else is all in asiblings and everybody else is all in asiblings and everybody else is all in a different situation now and so what isdifferent situation now and so what isdifferent situation now and so what is the social impact on that the socialthe social impact on that the socialthe social impact on that the social impact of that is approaching Infinityimpact of that is approaching Infinityimpact of that is approaching Infinity it's extremely high it's no point evenit's extremely high it's no point evenit's extremely high it's no point even trying to measure it because thetrying to measure it because thetrying to measure it because the measurements are so extreme and that'smeasurements are so extreme and that'smeasurements are so extreme and that's how dsh looks at it and I I wish otherhow dsh looks at it and I I wish otherhow dsh looks at it and I I wish other nonprofits would study D flow and banerynonprofits would study D flow and banerynonprofits would study D flow and banery and dakshanaand dakshanaand dakshana and try to approach it that way oneand try to approach it that way oneand try to approach it that way one other thing before I stop my monologueother thing before I stop my monologueother thing before I stop my monologue is that the one of our centers where weis that the one of our centers where weis that the one of our centers where we do this coaching one of the largestdo this coaching one of the largestdo this coaching one of the largest centers is in Bangalore there is acenters is in Bangalore there is acenters is in Bangalore there is a Charles teamer Hall at that school thatCharles teamer Hall at that school thatCharles teamer Hall at that school that we built be spent about $35 million onwe built be spent about $35 million onwe built be spent about $35 million on the infrastructure for the coaching thatthe infrastructure for the coaching thatthe infrastructure for the coaching that happens in Bangalore for about 240 kidshappens in Bangalore for about 240 kidshappens in Bangalore for about 240 kids at a time it's near the airport hereat a time it's near the airport hereat a time it's near the airport here Lanka near near Lanka so if you guysLanka near near Lanka so if you guys
OtherLanka near near Lanka so if you guys want to visit sometime you can justwant to visit sometime you can justwant to visit sometime you can just nudge me or nudge shanu Radha and we cannudge me or nudge shanu Radha and we cannudge me or nudge shanu Radha and we can arrange for you guys to visit the schoolarrange for you guys to visit the schoolarrange for you guys to visit the school and you might be actually very impressedand you might be actually very impressedand you might be actually very impressed with what your government has done andwith what your government has done andwith what your government has done and the public private partnership thatthe public private partnership thatthe public private partnership that daksh has with the government so withdaksh has with the government so withdaksh has with the government so with that I'll turn it over to you and we'llthat I'll turn it over to you and we'llthat I'll turn it over to you and we'll see what questions or comments you havesee what questions or comments you havesee what questions or comments you have
Otherthank you thanks Manish you opened eyesthank you thanks Manish you opened eyesthank you thanks Manish you opened eyes to a whole different subjects for us into a whole different subjects for us into a whole different subjects for us in the in rotary world so I'll just let thethe in rotary world so I'll just let thethe in rotary world so I'll just let the flow open and then I'll take it overflow open and then I'll take it overflow open and then I'll take it over from that over to the any questionsfrom that over to the any questionsfrom that over to the any questions please you can raise your hand or youplease you can raise your hand or youplease you can raise your hand or you can type on the chat so before they getcan type on the chat so before they getcan type on the chat so before they get
Questionerpre how did Warren Buffett give it topre how did Warren Buffett give it topre how did Warren Buffett give it to the Bill Gates Foundation uh because Ithe Bill Gates Foundation uh because Ithe Bill Gates Foundation uh because I understand they both are good friends sounderstand they both are good friends sounderstand they both are good friends so you know it very closely so does heyou know it very closely so does heyou know it very closely so does he measured it like that well I thinkmeasured it like that well I thinkmeasured it like that well I think Buffett has a much more difficult
OtherBuffett has a much more difficult problem than we have so he wants to give away more than 99% of his wealth and his wealth is is you know I mean if he had not started giving away the wealth he would be the wealthiest guy in the world right now he's still in the top five or seven wealthiest people in the world so what Buffett did in 2005 is he decided that he would take 5% of the shares of Burkshire hathway that he had left with him every year and he would donate 5% of those shares to The Gates Foundation 85% of it goes to the Gates Foundation and 5% into each of the foundations of his three kids so Burkshire hathway has approximately 1 and A5 million shares outstanding and each share trades for about $600,000 so the company has a value of about 900 billion and Warren Buffett's stake in the company before he started giving his shares away was approximately
Questionergiving his shares away was approximately 35% or so of the company about 500,000 shares so he used to have 500,000 shares of Burkshire haway in 2005 the first year he gave away 25,000 shares which was 5% so he's left with 40 475,000 shares the second year he gave 5% of 475,000 which is a little less than 25,000 shares so if you calculate every single year from then till now every year the number of shares given goes down a little bit because the numerator is going down but the thing is because bursha haway is compounding at a rate more than 5% a year his net worth is still grown so if he were to live for 1,000 years he would still not have given away all his money there would still be money left because the 5% of what was left is being given away now he has a peculiar problem that most of us don't when he was starting this giveaway program his
Questionerwas starting this giveaway program his net worth was $100 billion if he had not given away any money that net worth today would be around 300 or 350 billion do approximately which would be the wealthiest guy the lvmh guy is the wealthiest guy today at about 200 billion but he would be almost one and a half two times that the problem you run into is that when you want to give away 350 billion how are you going to give that away what are you going to give it away to where it has some positive impact on society so he did the best that he could with this big size problem which is he convinced Bill Gates to take the money in addition to his own money and pump the money out through the Gates Foundation and the Gates Foundation at the scale at which they are giving the money away is in the billions every you know several billion dollars a year they
Questionerknow several billion dollars a year they doing you know working on vaccinesdoing you know working on vaccinesdoing you know working on vaccines alleviation of malaria just differentalleviation of malaria just differentalleviation of malaria just different programs of women's health reproductiveprograms of women's health reproductiveprograms of women's health reproductive health and so on so forth you know ushealth and so on so forth you know ushealth and so on so forth you know us education and so on so given the massiveeducation and so on so given the massiveeducation and so on so given the massive amount of money that Buffett is givingamount of money that Buffett is givingamount of money that Buffett is giving away every year like he's giving aboutaway every year like he's giving aboutaway every year like he's giving about $6 billion a year his choices are very$6 billion a year his choices are very$6 billion a year his choices are very limited and So within those it's the thelimited and So within those it's the thelimited and So within those it's the the same problem that burshire hathway hassame problem that burshire hathway hassame problem that burshire hathway has if burshire haway has to make aif burshire haway has to make aif burshire haway has to make a investment today that is going to moveinvestment today that is going to moveinvestment today that is going to move the needle for the company it needs tothe needle for the company it needs tothe needle for the company it needs to be a investment of more than 25 or $50be a investment of more than 25 or $50be a investment of more than 25 or $50 billion how many companies in India evenbillion how many companies in India evenbillion how many companies in India even have a market value of more than 25 orhave a market value of more than 25 orhave a market value of more than 25 or 50 billion how many companies in the50 billion how many companies in the50 billion how many companies in the world have a market value and he wantsworld have a market value and he wantsworld have a market value and he wants to make an investment where the value ofto make an investment where the value ofto make an investment where the value of his ownership of the business is lesshis ownership of the business is lesshis ownership of the business is less than 10% so how many companies in thethan 10% so how many companies in thethan 10% so how many companies in the world have a value of less than 200
Otherworld have a value of less than 200 billion or 500 billion it's very very have a value more than that more than 2500 billion so Buffett's problem is a size problem it's a very good problem but we don't have that size problem thankfully so we can be a little bit more Nimble than he is my email address people were asking for my email address my email address is if you have profitable Endeavors to talk about it's it's MP PAB funds.com p a r AI Fu n ds.com for charity it's m PAB M PAB R AI d.org so those are the two addresses so anyway over to you Buu
Otherokay Mish thanks a lot that was very elate very nicely so the next question is from B how does Dak look at philanthropy in terms of enabling opportunities via content in online education in today's yeah I mean I think we have looked at it looked at it quite a bit in terms of the efficiencies and dig digitization of
Otherefficiencies and dig digitization of what we do so far the an has always come back that when we're looking at things like the IIT entrance exam the yields would go down a lot if we relied on digital now we could do a lot more kids recently I had a nice call with the physics Walla and physics Wallas have done some really good job and they want to collaborate with us on some of this stuff where they've got some real strengths on the digital side and they want to give us all kinds of things for free where we can broaden and we looking into it so we will we will evaluate you know whether we can have an offering which can right now dakna is an inch wide and a mile deep and whether it makes sense for us to be a mile wide and an inch deep very interesting thanks past president ramas is under the question Dak is an amazing example question is how can it be scaled to make
Questionerquestion is how can it be scaled to make a positive to sorry to make a disruptive societal impact it's a very good question
Otherso the way I am trying to answer the question for myself is that June 11th 2054 I am leaving planet Earth and we are almost I mean I'm a little less than 30 years from my departure date from planet Earth 29 years and 355 days or something 350 days so I have an engine that is compounding wealth and I have another engine that is giving away weth which is giving away through daksh what I had done is I had cloned Warren Buffett which is when we first started daksh I said okay every year like Buffett gives away 5% I'll start by giving away 2% of our wealth every year that time the net worth was around 50 million so we were giving away about million dollars a year at the time it is my goal that one day before departure
Questionermy goal that one day before departure from planet Earth which would be June 10th 2054 I should have 5,000 rupees left to my name and everything else should be gone there's a guy called Chuck Frei and I don't know if you guys have heard of him but you can Google him Chuck Frei passed away recently he formed a company called dutyfree International he formed a lot of company general Atlantic Partners Etc he was billionaire many times over and he had this objective that when he passed away he wanted to have nothing left so here was for the last several decades giving away money mostly anonymously you know like a lot of buildings and things to universities hospitals and all that and when Chuck fre died in San Francisco he was renting a very small Studio apartment in San Francisco and the total assets he had left was under $100,000 which was also given away after
Other$100,000 which was also given away after he passed away by his family so Chuck Frei from my point of view is my hero and so I like to play math games I like to play games with numbers so the challenge I will have is that dsha needs to scale over time where we are currently giving away we currently are donating about 2 and a half 3 million a year is what we are spending we need to scale that up so that maybe in a few years it is 10 or 20 million a year and then a few years after that is 30 40 million a year but you know we'll get there so what will happen is the return on invested Capital sadly will go down just like it is lower for Gates Foundation than it is for us because they are so large but that's okay so it's okay to go down if the absolute numbers are going up and so there are two games I'm playing there's a compounding game to crank and build
Othercompounding game to crank and build wealth and there's a game to give away the money and the second game needs to step up big time and we'll try and do that we'll try to follow Chuck's example
Questionersure monish you let a home run there so the next question and probably the last question is venod please go ahead ask your question thanks
Questioneruh Manish the question is you know are we I mean Daka Foundation are we looking at only iits and nits or I mean the 400 students what we are now taking a th000 kids a year and we have expanded to Medical so basically IIT nit ases and government medical colleges so the Thousand kids a year we are spending approximately $2,500 per kid so our expenditures are about 2 and half million we have a large campus in Pune and we are just embarked on a expansion so that campus currently accommodates 600 kids we are spending about $12
Other600 kids we are spending about $12 million and increasing the capacity of that to about 1100 kids it'll take about 3 years to do that so the next thing will be that in of spending about 2 and a half million a year once we have expanded the campus our spending will go to about 4 million a year or so four or five million and we are continuously looking at what we can do so this is something that we always we are experimenting with different things we're looking at different things and and you know there are some extremely impressive organizations so for example one organization you guys may be very familiar with is aay Patra and Akay Patra is in Bangalore and they do incredible work so I think the social return on invested Capital that Akay Patra generates because we've looked at it very closely is very high the midday meal program that they supplement with
Othermeal program that they supplement with the government is a really really good program they make it work really well so we also have the choice that you know let's say I could at some point say okay let's give 2 million a year to aath for example let's have them scale even faster my concern will be that when I go to them they'll just say we can't take it we can't scale so these are fun problems to think about but that's what we'll try to do we we'll look at models other models Akay Patra is a good model there's another one foundation for excellence teach for India akanga foundations and there a few others that are foundations we are aware of in India and I'm always trying to understand what what work people are doing and there's another one in Bangalore where you guys might know the nud and nud is another one doing some very good work so we'll
Otherone doing some very good work so we'll we'll look at we don't need to have it we'll look at we don't need to have it we'll look at we don't need to have it all homegrown I'm happy to just write all homegrown I'm happy to just write all homegrown I'm happy to just write checks that'll be fine too no problem checks that'll be fine too no problem checks that'll be fine too no problem problem I enjoyed the interaction and problem I enjoyed the interaction and problem I enjoyed the interaction and thank you very much for the opportunity thank you very much for the opportunity thank you very much for the opportunity thank you bye