Collection: Mohnish Pabrai - #18 'How Pabrai Fund & Dakshana Was Started'
[Transcript]
MOHNISH PABRAI 00:07
Yeah, so I just copied what Warren Buffett did. There was a Buffett partnership in 1950s, there was a book written, a chapter on exactly what the fund did. I copied that chapter and went to a lawyer, I said "Copy this." And he created the fund, that's it.
It cost $8,000 and we're in business. And before I spend the $8,000 my friends already told me they want to put $1 million to start the fund.
So actually the thing is if there are things that you don't understand in anytime we do things, there are things that we don't understand. In fact, even when Dakshana started there were lot of things we did not understand. The first thing we did not understand is how to find scholars.
So you know, we copied Anand Kumar's model. But Anand Kumar, every year has 10,000 people who shows up at his doorstep to take his test. Today, no tomorrow is his test right? Tomorrow is his selection test. There are probably 5,000 or 10,000 is taking the test. And then he pick the 30 kids and you know, go from there.
So when Dakshana started and if we hold some test, nobody would show up because nobody knows us right? So one question I was trying to figure is how did we ever find any scholars and how would they find us? And it was a dominant question, we did not know the answer. So, this is what I did.
I've started Dakshana and I hired in India a consultant. This guy was a IIT grad, he was like 64 years old. And I told him, I want you to just do research on Dakshana, on these things, like you know, how you find scholars and how we train them, how we did – go meet anyone who is willing to meet you, go meet all the coaching schools.
And I told him for example, you can tell the coaching institute that if somebody comes to them, they don't have money, send them to us. Many things like that.
And I told him that everyday he works for us. He will get paid 5,000 rupees. So I said if you spend one day on us, 5,000 rupees. If you spent less than a day, 500 rupees an hour. So just bill whatever time you spend, send me the bill, I will pay you.
You just keep doing research and so he started going and meeting people. And I think 3 or 4 times when he met people. They told him you should look at JNV. And he had never heard of JNV before, so after the third person told him look at JNV. He decided to look at JNV, okay. And then we found JNV and now, you are here.
Okay so basically, we did not know – Whenever you starts a business, you don't know the answer. You don't know all the answer which is okay. You need to know few answers and you need to make sure you reduce your risks.
So that guy was paid 500 rupees or 5,000 rupees a day. If he worked full time for 1 month is 1 lakh rupees. If he worked full time for 3 months is 3 lakh rupees, no problem, I'm willing to just lose that money. 3 lakh rupees gone is not going to be a problem.
So you don't need to figure out everything on day 1. In fact, you will figure out [Inaudible]. In fact, even Sam Walton and Walmart he just kept learning as he went along and that's how he do it.
So important thing you understand when you start a business is you need to have passion, you need to have time, you do not need money. And –
[Broken Recording]
Passion and [Inaudible].
{Source: https://youtu.be/xa1CH2nK1cM)
[YAPSS Takeaway]
1. You don't have to know everything when you start a business, but make sure you keep learning and improve along the way. ️
