The key to investing is that when you find yourself in the happy position, don't sell it when it's overpriced. Only possibly sell it when it's egregiously. My guest is Manish Paparay, the renowned investor who built his fortune by openly copying Warren Buffett. You're going to get the best business models to start if you're brand new. If you want to build real wealth without betting the farm, this is the one to save and listen to twice. It's also very good for you to send your team. My biggest mistakes and greatest learnings have been to become more patient. The laws of investing are like the laws of physics. And I think this Buffett guy wrote the laws of investing. Whether you believe in gravity or not, it's going to affect you. If someone followed Buffett's approach to investing, they would do better than the 98%. >> What is your mental model that you like the best for deciding the next bet you're going to take? >> Total nobrainers. So >> what do you think most people get completely wrong about money? >> Well, the I think the single most important thing is you spend less than you earn. >> Yeah. We may live for 80, 90, 100 years. And uh so the important thing is that when you get started in your career uh in your early 20s that right from the beginning you're uh you're putting something away and those early dollars being put away have a huge impact because of the non nonlinear aspect of compounding. Humans have difficulty getting their arms around the notion of compounding. You know, how money grows over time if you leave it and so on. And so being able to put something aside a little bit all the time is a very good habit. >> Yeah. What would you say to somebody that was young, stuck in their job, doesn't think that they could make it? What would you tell that person? One of the things to keep in mind is there are 168 hours in a week. Your employer wants 40 hours. There's still another 128 hours left. And so even when you take out time for eating and sleeping and showering and everything else, you have at least another 40 50 hours that you could do something else. And so I think it's very important to live close to where you work so you don't spend a lot of time commuting. And you effectively have enough time for a second venture or second job. And because someone else is already paying your rent and groceries and everything, you don't need the second venture to feed you. And we are now in a knowledge economy. So a lot of things that people will want to do does not need capital. It just needs what's between your ears. It just needs you to be creative to think about what could be, should be, can be etc. So you come up with an idea, you have the time 40, 50 hours, you keep your job, you do not get quit quit your job. You try your idea. Let's say it doesn't work. No problem. you go back to square one, think of another idea. >> So, do you think a lot of people give bad advice when they tell you to burn the bridges, quit your job, go all in today? >> Yeah, I don't think you should do that. I think that's a that's a one-way ticket to hell. >> Me, too. No, I think we we want, like I said, we want upside without downside. That's how I invest, right? >> So, the the way an people think entrepreneurs take risk. Entrepreneurs do not take risk. They do everything in their power to minimize risk. They look at this whole equation and say, "How do I crack this without taking risk?" Ventureback startups are less than onetenth of 1%, maybe even 100th of 1% of the total number of startups in this country. 99.99% of of the economy is non venturebacked. the Chinese restaurant, the laundromat, the window washing business, whatever. Right? None of those companies are venturebacked. So that is where most of the American economy get it gets its growth from. And that goes unreported, right? I mean, uh, some of the biggest businesses we have today in the US in the world were not created uh, with venture capital. Ford Motor Company, Walmart, Microsoft, you know, the most of these companies, IKEA, uh, were created on a kitchen table with nothing. >> And, um, so if you keep your job and you try number one and you go all in on that, you got the time and it gets some traction, when it gets enough traction where you're making more money than your job, you just switch switch roles. quit and go to the other side. If it doesn't work, um, you go back to square one, idea number two. In my case, it was the third idea that I came up with that got traction. The first two didn't work, but the third idea took off. and and after after 9 months of doing both the third idea which was my IT services company the first company I went and ran uh basically had enough cash flow that was exceeding what I was getting paid so I switched because I was desperate to work 100 hours a week right and I didn't want to be doing two things I wanted to do one thing and so as >> was that only after that replaced your salary >> yes after 9 months of banging ing at doors and doing things. I had three clients >> and those three clients were giving me enough cash flow that it exceeded my salary >> and that's when I quit. So effectively it was risk-free because I never went to a situation where I was without cash flow, without a paycheck or any of that. And then very quickly after that it doubled the salary. I was making two or three times what I was making and it just kept going and I the business was growing so fast and I kept reinvesting and and all of that. Uh so that company I emptied out my 401k. I was 25. I had about 30,000 my 401k. I took that to zero because I said if it if it fails I can go back and start over. Not a problem. And I took every credit card I could get. So, I had 70,000 in unused credit card credit limits available. And as the company started growing, I used every single one of those. >> In fact, they were all maxed because the company was growing so fast that by the time I got paid from clients, you know, I had to cover that. And then about 2 years after I started, I met a banker who converted all of that into a line of credit, paid off all my credit cards, and I said, "Hallelujah." >> So, if a young person is listening to this and they're like, "I don't have cash right now. I don't know how to start the business." What is the way that you pitch people to give you a credit card to give you capital? Like, how do you talk people into giving you money? The founder of FedEx, Fred Smith, he had payroll coming on Monday in the early days of FedEx and he couldn't make meet per payroll. He knew he couldn't meet it. He went to Vegas, okay? Played blackjack, won at blackjack and made payroll on Monday, okay? And if he had lost at blackjack, which could have happened, that probably should have happened, there's no FedEx, you know. So all these businesses go through these you know extreme situations. So bottom line is the number one skill you have to have when you're starting any business is you have to have selling skills. >> You need selling skills to get clients. You need selling skills to get a banker to give you a loan. You need selling skills to get your friends to give you their credit card. But more important than I think more important than selling skills is unique value propositions. >> So capitalism is brutal. Anytime there's a company that makes a lot of money, there's 100 other people thinking about how can I take that business away from them. Right? So the nature of capitalism is creative destruction. Someone opens a sushi restaurant, they do really well, there'll be 10 other sushi restaurants opening, right? So the important thing that we're going to look at is before we embark on a business, we have to really pay attention to how is this unique and how is this sustainable. So we have to be kind of careful observers of the world around us and we have to think about how could this world around us be different and can I participate in making that different. So we can come up with something where uh there is some kind of a business idea or some kind of a business that you can come up with that doesn't exist today. >> Mhm. >> But there's a need for it. That's it. You know, anytime we try something and we fail, we learn and so the second one's going to get better and the third one's going to get better and you just keep going from there. >> So good. Um, I love this idea that you you have called cloning basically where you just, you know, you don't think that there has to be original ideas all the time. In fact, you copy some of the richest, most successful people in the world. Can you talk to me about what is cloning? Do we have to have original ideas to make money? >> We do not need any original ideas to make money. And I know I'm contradicting myself just said. I remember that when Chipotle first came out, you know, in Chicago in the early 2000s, I used to go to Chipotle and I loved it, you know, everyday lunch was Chipotle. It was great. And from the time I first went to Chipotle till today, it's been 25 years. Incredibly successful business. No one scrolled it. So, Chipotle's Chipotle's innovation was he let you he let you make the taco you wanted, right? They got all laid out. >> I'm a burrito girl, but I'll allow it. Yeah, >> burrito. So, you say, "Okay, I want this. I don't want this. I want this." No, it's extreme customization, right? That one of the big reasons why they succeeded. >> Okay. And so if you if you really look around carefully, what you're going to find is you're going to find many businesses like Chipotle Click where there should be three of them, but only one exists. And there's offering gap after offering gap available. Now your job is easy. You clone Chipotle. >> Yeah. >> And you know what happens when you clone is there's some things that you're going to figure out that you can do better than them or different than them. But the core piece which is that you know the customization piece make it the same. >> Yeah. >> Okay. And just go from there. >> It's fascinating because it's so true. You know we have a saying here. I started getting annoyed that people always start at innovate. >> And I think you should go imitate iterate innovate like >> and you don't even need to do you don't even think about that. What I would what I would do is make it even simpler. I would say >> just be a shameless cloner. Okay. So, don't even don't even say that when I take Chipotle, I'm going to change anything. It's working. >> Yeah. >> Okay. It's working great. Why change anything? The change is going to come automatically because you're different from the founder, right? >> You know, the funny thing about Chipotle is the founder was a fine dining chef in Denver. Yeah. >> Right. >> He wanted to open a fine dining restaurant. And so he opened Chipotle as a stepping store saying I'll open this thing. I'll make some money here and then I can open my fine dining restaurant. So actually what he did was he brought in fine dining nuances into Chipotle. You know the food is very fresh and all of that, right? And the funny thing was that was the idea. That was the idea that was a scalable idea, not the fine dining restaurant, you know. >> Yeah. So what he actually wanted to do was uh very different. But what I'm trying to say is that I think that if you look at the world around you and you look at businesses that you admire >> and and even even simpler than businesses that you admire, just make a list of all the products and services that you use. It is very difficult for any company to get even $1 from you. Very difficult. So the products and services that you're already using means that those are incredible businesses. >> Yeah. >> And then look at can multiple versions of that exist. >> That's a great point. I'm actually going to send this to my team because it's funny. One of them the other day came to me in one of our businesses and I said, "Well, what are our competitors doing?" um and what does their product stack look like? What does their sales stack look like? If this isn't working for us, go talk go look at the people who it's working for. >> And I remember one of the the leads uh of the team said to me, um >> oh well, I don't know if I could secret shop that. Is that ethical? And I was like, have you read Sam Walton's book? Like he used to go and lay down on the ground with a tape measure between aisles >> of all of his competitors. He knew everything about their business. a lot. You have no context. You haven't won at this. You haven't done it before. So why would you with no data, no context, and no history of winning, just go find a new way to run and use your hands instead of your feet? >> Yeah, >> that's ridiculous. One thing Monish and I keep coming back to in this conversation is that rich people do not usually get rich by taking wild risks. They get rich by finding weird lopsided bet. And that is why I keep talking about buying boring businesses. This is why we built Main Street Millionaire Live. It's a virtual event where you can get with my team to do a live workshop and I will show you how to find the best businesses to buy, how to evaluate them, fund them, and spot the things that make a deal either a really good risk or insane. If you have been listening to episodes like this thinking, I get it and I'm interested in investing in businesses, but I don't know where to start, this is where you start. Grab your seat at this link at msm.live. This is the last event we are doing like this for all of 2026. So if you do not jump in now, you can wait another year to learn. Now, you took this even so far as to, for instance, I believe you paid like $650,000 to have dinner with Warren Buffett back in the day. >> Lunch. Yeah, >> lunch. >> Dinner might be more expensive. >> Oh god, what would that be? A lot. Um, >> it was a lunch special. >> >> Well, I hear it's not a fancy. >> The reason it was a lunch special is a few years later it went for 26 million. >> You got a deal. You are a >> lunch for$ 26 million. >> This might be your best investment yet. You should have traded that. So, what do you learn like when you're going into a meeting with Warren Buffett with this mentality you have of like cloning the best ideas, learning from the best? What did you learn? So the lunch was a lot of fun and actually I I had no I didn't have many expectations for the lunch. So um let me go back a few years before the lunch because then you can understand kind of why why the lunch happened. When I read about the way Buffett did investing it made all the sense in the world and he's an open book. because they said this is how you should invest right then I looked at the way the rest of the world did investing the mutual funds and fund managers and they're not following what Buffett is saying >> so a mutual fund will have 100 or 150 stocks and Buffett says six 10 at the most right so I said the laws of investing are like the laws of physics and I think this Buffett guy wrote the laws of investing and whether you believe in gravity or not it's going to affect you. Okay. So I said we have this entire industry of investment management which is operating without the laws of physics >> and then you have this guy who's doing it this way and nobody else is doing it this way. Mhm. >> This is Chipotle with no competitors, right? I looked at all that I said, you know, I think that if someone followed Buffett's approach to investing, they would do better than the 98%. And I also feel that an idea is like an Everyone has one. So an idea without execution means nothing. It was 94. I had just sold a portion of my business. Uh, and after taxes, everything I had a million dollars. I didn't need the money. The the company was profitable and fine. And for the first time, I had cash in the bank. So, I said, I'm going to take this million. I'm going to invested using Buffett's approach. And uh so from 95 to 2000 the first 5 years I was doing this part-time while I'm running my company the million became 14 million and I was just making investments in public equities and you know doing what Buffett did you know basically 10% bets 10 bets and it was like 60 70% a year it just blew the doors off and I said this worked way better than I thought. Well done, Modish. Well done. I knew you could do this. And I was losing interest in my IT business and I was much more interested in the investing business. And so I found a CEO and I transitioned out and um then I had these friends where I used to give them stock tips because I had already bought something. So they came to me in 99 and they said we want you to manage money for us because this stock tip business is very random, right? And so basically um I set up a fund really as a hobby uh $1 million from eight people just to manage that. By the time I got to 2007, I'm managing 600 million. We haven't had a single down year and we've compounded at like 35% a year before fees and I was extremely wealthy at that point because I'm getting 1/4 of the gains over 6%. And Warren is running these annual charity lunch auctions once a year where you get to have lunch with him. And I said I owe the man a tuition bill. I said, you know, I taken all his intellectual property. Everything is based on him and he doesn't want anything. He's an open book, but I want to say thank you. >> So I said the lunch would be a great way to say thank you. So I said, um, you know, I think at that time I had made 70 million of Warren. So I said, what's a reasonable amount to pay if someone made you 70 million? I said, 3%. 3%'s pretty good, right? I don't think it's too much. That's how I covered 2 million. And so at the lunch, I had no agenda. >> Mhm. >> My only agenda was to look Warren in the eye and say, "Thank you so much." Right? Warren, on the other hand, has a very different agenda at the lunchd. He wants to make sure that whoever won that lodge feels they got a bargain. So, he wants to deliver a lot of value. You know, it's just a great guy. He said, "I'm free for the whole afternoon." So he says, "Whenever you guys are tired of me and you want me to go, let me know, but I don't have any place to be. I can be here as long as you want." After about 5 minutes, you think it was your grandfather. He put you at ease. He was not the richest guy in the world, whatever. Anytime we would ask him a question, he would convert the question into a a way to teach something. He's just such a great teacher. And um and I was really surprised when in the middle of the conversation I I told I told Warren that my wife she's a fan of yours but her real love in life is Charlie Munger. Warren's part and Warren got comparative. He said my my partner Charlie Monger is a very boring guy. Says he says I'm going to set you guys up to have lunch with him and you're going to find that lunch with me is way more interesting than lunch with him. So I thought he's just joking, right? And 2 days after the lunch, I got a message from his assistant to Charlie's assistant. And then uh lunch got set up with Charlie. And I found lunch with Charlie way better than lunch with war because Charlie's just, you know, uh just so open. And um so that lunch with Charlie led to a friendship with him where basically I used to meet him to play bridge with him, meet him once a quarter approximately to have dinner with him at his place and with Warren also uh we became friends but not like Charlie. >> Yeah. >> Uh because Charlie was in LA, I was in California at the time and so that was easy. So it became buy one lunch get infinite free. >> You know what's interesting? But I've met a lot of investors by now, a lot of really successful ones. You seem really happy as an investor and um to me investing is very stressful. Like I know in 2008 you had a tough year like most investors. That was a brutal year where many people I was at Goldman at the time. >> No, that's wrong. I was at Goldman in like 2009 2010 >> but those years were terrible too. Everybody thinks that 2008 is one year, >> but that was like when Goldman was under um we were having the the trials um actually uh for whether we caused the crisis or not. And um and I remember knowing a few people who actually killed themselves during that period that meant I was in New York and uh and yet you've gone through these huge losses and huge gains but seem really happy and steady. Something to keep in mind is if wealth is lost, nothing is lost. If health is lost, something is lost. And if character is lost, everything is lost. I didn't come up with that. Some guy much smarter than me a long time ago came up with that. Okay? Life has a way of changing overnight both ways. It can go from very good to very bad and it can go from very bad to very good. You can't resign yourself to the fact that that, oh, I'm down and I'm going to be down forever. Well, if you think you're going to be down forever, you are going to be down forever. But if you just say, I can pick myself up again. Keep going. That's fine. >> What do you think is the most amount of money you've ever made in investing and lost in investing in a year? like for people to understand the full weight of this like >> well we've we've had we've had companies we've invested in who have gone bankrupt so we've had uh companies we I've made investments which have gone to zero now typically when we make an investment we don't do it more than 10% of our assets so if I have you know 10 bets and two bets for example went to zero which would be pretty extreme it's not the end of the world now because you got the other eight that So, >> but it could be 50 100 million. >> Oh, yeah. I mean I mean I I manage 1.4 billion currently. So, if I'm placing a bet current today, it's a $140 million bet, right? And the 140 million uh there are I hope it doesn't happen, but there are chances it can go to zero >> and there are chances it can become a billion. You know, we look very carefully at downside protection >> even before we look at the upside. We look at the downside. So, they're designed not to be uh high risk, high reward. They're designed to be low risk and hopefully uh moderate to high rewards. >> So, what is that like if you have to put dollar amounts on that? So, let's say you have $140 million investment. Well, you've had some huge wins that at least I could find online historically. >> Like which companies have you put in 10, 20, $100 million and then what have they gotten out for you? Like what's been the best investment you ever made? in my career, two companies that have become more than 100 baggers, right? So they they went up more than a hundred times. Uh one happened right at the beginning when I started in '95 where I put a 100,000 into a company and it became 10 million. That was great. And another one which also happened at that time was I put just 10,000 into a company and it became 1.4 million. That was 140. Uh and then one that's happened more recently uh was a company in Turkey where um that was just so mispriced we couldn't we shooting fish in a barrel um where the market cap when we invested in 2019 was uh $15 million and now it's a billion and a half. So it's gone up 100x and uh that one we own about 40% of that business. How do you decide when to sell to take money off the table? >> Well, so when when we make an investment, I always feel that you learn the business after you own it. >> Um, you you may think you know it before you invest, but you really get to know it as you live with it, right? And there is there is no such thing as a risk-free investment. The biggest mistake I have made in life is selling too early. Really? >> Yeah. So I used to for example I used to own my funds used to own 1% of Ferrari uh at a cost base of about $10 million. Okay. So in effect >> what is it today about? >> It would be about 50 times that. Okay. So and and the thing is that when I look at a business like Ferrari uh it should never be sold in capitalism. There are very very few businesses that have long-term sustaining enduring modes. And when you end up with a business that is exhibiting those characteristics, you don't want to touch them. My uh biggest mistakes and greatest learnings have been to become more patient. Like for example, this this company in Turkey which has gone up 100x um it looks embriionic. it's still undervalued. It's still s trading at about half of what it's worth. And um they could compound for 20, 30 years, 40 years. So that's a business we will just hold as long as we can. As long as I don't see secular declines in the business, we understand the business well. We we hold it and it's not our only holding. We have other holdings. So the nature of the way capitalism works is that very few of your investments uh will end up with giving you most of your wealth. And this is the way the Walton family got wealthy. This is the way the Burkshire Hathaway people got wealthy. This is the way the co-founders got wealthy. It is by concentrated holdings in particular companies. And so, um, the key the key to investing is that when you find yourself in the happy position of partial ownership of a great business, don't sell it when it's fully priced. Don't sell it when it's overpriced. Only possibly sell it when it's egregiously overpriced. Like, you can't justify it in any possible way. Then you can look at it. >> What is your mental model that you like the best for deciding the next bet you're going to take? If you only get 10, you must have very clear models for determining when you want to add on a risk. >> Yeah. So, what we are looking for is total no-brainers. >> So, let's say I own a home in Austin. Okay. And let's say I bought the home for $2 million. Okay. and I go to my realtor after one month of buying the home and say, "Hey, uh, what's my home worth?" They said, "Oh, Mish, it's still worth 2 million." Okay. And let's say I go back after another month. And the guy say, "Yeah, still worth 2 million." And then maybe after a few months, you say, "Oh, you know, it's 2,50,000." Okay. So, if you just kept writing down what that house is worth and what a buyer would pay for it, you're going to see very little change over time. If I look at all the stocks in the New York Stock Exchange and I throw a dart at any one of them, let's say IBM or Amazon or whatever, and I just look at the 52- week range on their prices, it will be 100 to 200 or 80 to 150. It's a wide range. Your house is not going to go from 1.5 million to 2 and a half million or 1 to 2 million. It doesn't do that. >> Okay? So auction-driven markets accentuate price movements much more than you would if you were not auctiondriven. And because they accentuate price movements, sometimes you get extreme mispricing in both directions. You get extreme overvaluation and you get extreme undervaluation. So what I'm looking for is anomalies. I'm looking for weird things that make no sense. And because we have so many stocks and so many things going on, you will find weird things. And so when the weird things I remember like for example, there was a company uh called Level Three Communications. Level 3 built this massive fiber optic network. You know, they were going to be transporting all the internet data everywhere. Massively overbuilt. Okay. The data never came and the company's upside down. So the stock has collapsed. It was a darling. It collapsed and people are concerned they'll go bankrupt. So they had a lot of debt. Right now they had they had these bonds that they had issued where the bonds were trading at 18 cents on the dollar. So someone paid a dollar for the bonds. They're now at 18 cents. The bonds had a coupon of 6%. Which means if you bought it at 18 cents, you were getting paid interest of 33% a year. Right? I looked at the level three balance sheet and I saw that they had enough cash to make the debt payments for at least four or five years. So I said in 3 years I get my money back and I still have a claim of a dollar because it's a bond. It's not a stock and they still have money after that and I think that in 3 years the and it's a very high quality business with the people running it. They may sell assets, they may do different things. I said I don't see how I can lose money there. I don't see if I buy level three bonds. So I put 10% of the fund in level three bonds. I didn't know it at the time. Warren made the exact same bet at the exact same time for the exact same reasons. Okay. What happened is we went for 3 years. We clipped the coupons and after 3 years the bonds at 60 cents. I didn't even wait. I sold. So basically we tripled our money on what we paid for the asset plus we got the interest in the meanwhile >> and uh that wasn't even a stock investment. It was a fixed income investment. So basically there's always weird things going on and um we just want to pay attention to them. >> Yeah. >> And the other thing is that uh this is not a business of a lot of activity. If I find something like level three once a year, I might only have one or two ideas like that, but that's all I need. I need a idea like that once every two or three years. I don't even need it once a year. >> So, part of the game is you really have to just stop yourself from doing too much. >> My job is to just read and be with Cody at a podcast. That's my job. >> Well, it's funny. I remember when I was at Goldman, uh, Warren invested in Goldman and everybody thought he was crazy, >> but obviously and I was a little pee on tiny little, you know, nothing at that company, but um, >> but I remember, you know, the senior people explaining how the deal got done and the price that he got it at and the terms and our balance sheet and just there was so much noise about how, you know, we were something like a countrywide that was doing all of the insurance, you know, the the backing of the mortgages when in fact Goldman had none that risk on its balance sheet. So, he made like one of the best bets ever. >> And and I want to tell you something about what happened then. Warren paid $130 a share at that time for Goldman Sachs during the financial crisis. The stock went down further. I bought it at $65 a share. Okay, half of Warren's price. Now like Ferrari, another stupid thing I did which is a company like Goldman Sachs should never be sold. So I tripled my money. Well wealth and mish I soaked. I should never have sold it. It's like a Ferrari. It's like these durable modes. And uh I made money on Goldman. I made money on Ferrari but I should have never sold them. So eventually I will learn from these mistakes not to do that. >> Oh, I think you're doing pretty well today. I I you know um I kind of want to talk about some cultural things happening. >> Yeah. >> Like for instance um kids buying Pokemon cards and trading them at crazy valuations today. Do you think that that's a good idea or no? >> No, not a good idea. How do you explain to this younger generation why that's a bad idea? If they go, "No, no, but I bought it for 50 bucks and today it's at 250. You don't understand it's different today." What would you say to them? >> Well, let me distinguish uh let me let me uh look at two different uh examples of what you can invest in. So, you can buy a Rembrandt and it's a million dollars. Okay? Or you could buy uh three apartments which can be rented out which are also a million dollars and you make these two investments. The Rembrandt you say could be worth 2 million in the future or 3 million in the future. The future value of Rembrandt depends on the perceived value by other people in the future in a very subjective way. The future value of the apartment building that you bought will depend on the rents it's generating. So if you bought in in a great place with a great demographic and the neighborhood becomes better, the rents could triple or double in some time and the apartment will be worth 2 or 3 million. So if you understand Rembrandt so well that you have a very high probability of saying this is going to be worth 10 million in 10 years, go buy the Rembrandt. That's like the Pokemon card. You should always be within your circle of competence. So, if you're buying Rembrandt, you're buying Pokemon cards, or you're buying apartment buildings, all of these you should be knowing them cold. And if you got the confidence that it's going to be worth more, that's fine. It just may be that you're correct about Pokemon cards because I don't understand them, and I'm correct about apartments because I do understand them. H >> Why do so many people get caught up in these bubbles? Like maybe you could say we might be in an AI bubble today. You might be able to say we're in a collectible nostalgia bubble today. Like what is it about human nature that makes you a bad investor emotionally? Sometimes >> humans want to invest in things that have recently done well. >> We just have giant recency bias. It's just the nature of people wanting to go to flavor of the day and and actually that going to the flavor of the day actually makes it possible for me to do what I'm doing. There is a lemming aspect to human behavior. Uh there is a herd mentality. There is want to buy flavor of the day, want to buy what's popular. All of that is there. And it is those characteristics that allow someone like me to do what I do. >> How do you go against the crowd to invest when everybody else might think you're crazy? Like, have you ever had somebody say like, "This is crazy. Don't do this. Why are you investing?" And you did it anyway. >> Yeah. I mean, I think you've got to have conviction on your ideas. I mean, the thing is that it's the same thing as starting a business. you you want to start some business, everyone's going to tell you it's not going to work, right? And they may or may not be right, but uh you feel passionate about it and you go for it. If I've done the work and I understand things and I've got conviction, then I'm going to act based on that. Yeah, absolutely. >> Taking for Manish and I, the most expensive mistakes don't happen because you're dumb or I'm dumb. They happen because we're alone moving fast and taking guesses. Business owners do this constantly. Boredom is for business owners doing seven figures at least in revenue and who do not want to make the wrong decisions in isolation. Just like he is going to pay $650,000 to sit down with Warren Buffett to learn from him. I've realized that when I have a third party who gives me advice and I get to steal all their homework, I make way more money. How does it work in boardroom? You actually get to sit down with my operating team and partners. You bring the bottlenecks, the issues in your business like cash flow, hiring, sales, marketing, and we help you find the next lever to fix with our operating tools, advisors, weekly coaching, quarterly planning, and owners who follow our exact private equity playbook to scale revenue and profits. This is not for people who do not have a business. This is only for people who are already building their business. But if you are that, then you should apply to join growthboard here. You can go to contrarianthinking.co/ co/growth-border. >> You also uh kind of have famously said you don't lie. Is that true? >> Well, we try not to lie. That if if I did not lie at all, um I would be at a Jesus level. Okay. I'm not at a Jesus level yet, okay? Or a Buddha level or a Gandhi level. Uh so, uh the whole lies versus truth is a very powerful mental model. There's a book I read a long time back called power versus force uh written by a kind of new age guy in Arizona, Dr. David Hawkins. But he had a theory that he said that if I lie to you and in your conscious state you don't know I'm lying to you. In your subconscious state you do. And he said that there's a pipe that goes between the subconscious and the conscious. But for most humans that pipe is mostly clogged. Okay? So the signal cannot get through. But he says the pipe is not fully clogged. >> So what happens is that you uh in his terms he said you either go weak or strong in the presence of a person telling the truth versus telling lies. So if someone lying to you, you may not know directly that they're lying to you, but you will feel I don't know if they want to spend time with this person. You know, like the Yuskar salesman, you don't know what part of what he's telling you is a lie, but you know there's a lot of lies in there, right? So you don't want to be there. Like that's why people want to shop at home. They don't want to go to the car dealership because it's not a pleasant experience. uh they'd rather just go online, buy the car and have it delivered and they'll be done with it, right? And so so basically we know we know at least subconsciously when people are not being truthful with us and we see that play out. Humans get strong and love being around the truth >> and so we crave that. And so uh in leadership and in entrepreneurship or in a selling situation, the more truthful you can be, the better off you are long term. >> You know, it's interesting. I remember having a leadership meeting yesterday and um and the meeting was sort of last minute and the reason that I held it candidly was because I heard little little bickerings, you know, little, oh, this person did this and this person did this, but they weren't going to each other having a conversation. >> And so I heard it enough times that I just thought, well, we don't have time for this. So I pulled everybody into actually this room where we're sitting and I said, all right, this is your shot. It's free, but like if you don't bring it up here, >> that means it's not a real issue. >> Yeah. >> So, you have to look the person in the face and don't don't say general generalities. You have to say, "Cody, you did this, blah, you know, so and so, you did this." And what's fascinating to watch is how many people will not tell the truth because they'd rather be diplomatic. >> Yeah. And I'm wondering, have you found ways to indoctrinate that culture to get more people to have difficult conversations? Yeah. when you have conflict or when when our team members are not being candid. I think that having them speak in a kind of moderated way where one person speaks without interruption >> what their perspectives and feelings are and everything then the other person speaks and again shares eventually can lead to uh better outcome. it may not may or may not solve the problem but but I would just say this that I don't want to be part of a team >> which has dysfunction like that. So if you have things going on where there people talking behind the back and all these things going on you have to fix it. Yeah, it's interesting. I've learned like Elon has this uh line that I love where he says, "Running a company is just finding the series of compounding lies inside of your company." And I related to that because I think it's um it's truthful and sort of non-egoic to say that and to say, "Hey, I'm one of the best entrepreneurs in the world and I still know that whether it's to your point, not complete deceit, but just sort of hiding the truth or not even realizing it or whatever, >> you know, your job as an investor is sort of to find the truth in a company or not." >> Yeah. >> And then in when you're running a company, it's probably to find the truth even inside of your own company. Yeah. which was a crazy realization for me to realize the first time I ran a company. >> Yeah. Also, I think when when Elon interviews people and he interviews a lot of people, I think he interviewed the first 3,000 hires at SpaceX himself. Uh he asked them one of the questions he asked the engineers is what's the most difficult problem you solved? Right? And he says that uh when they start answering the question, if they really didn't solve that problem, it's going to become obvious because he's smart enough as a as a problem solver to figure it out. So he just goes deeper and deeper into that area with a person and he says eventually just reveals itself whether they actually solve that difficult problem or whether they heard about it and they think they can you know fudge their way through it. >> Now you you only have 10 investments that's and you hold them for a long time. That is like having a relationship I would imagine with a lot of that senior executive team or the CEO team in some way. Um, you know, you could compare it to marriage, you could compare it to dating, you could say that they become partners of yours in some way. How important is it screening the CEO and the founders and the key team, not just the underlying assets in the balance sheet and if it is important and how do you determine whether you want to bet on a person or not? >> Yeah. So the culture and the nature of the people is very fundamental and that takes time. Uh some of it we can get by looking at long histories of the business been around for a while. you could say what didn't they say 10 years ago and then what happened >> and so definitely we have to uh have a good understanding of the people and we have to be uh uh comfortable and confident that we can be long-term partners and the the other thing about investing is that it tolerates a high error rate right the modes of the companies the competitive advantage of the company the nature of the CEO the nature of esteem. Many of these things we may or may not have gotten it exactly right and sometimes they are much better than where you think they are and sometimes they're much worse. Uh but we definitely try. Is there a question that you ask or that you I know you can't if they're public CEOs you can't always um you know go direct to them to ask questions in the same way but is there a question that you ask to screen an individual that you find really helpful? Well, one of the one of the things that uh which I got from Warren is he says that when you go meet a company, you ask the company's leadership that if I were not investing in your business, which of your competitors would you suggest I should invest in? And which of your competitors do you think I should short or I should never invest in? It's a great question even to ask if you run a qu a company like I'm thinking about what would my answer to that question be and that also tells me who do I want to go hire from competitors like you know which products do we want to launch which we kill what have they already done that we're trying right now that may or may not work. >> Yeah. >> That's a very that's a good mental model. >> Yeah. >> What does a day in the life of of billion-dollar investor look like? You up at 6 a.m. You have 16 meetings, coffee breaks. Now >> I work from home even though my office is half a mile away. Uh maybe two or three times a week I speak to uh some of my team on Zoom. Uh I go to the office maybe once a year or something. Uh very rare and uh but I I just uh decide on a uh I don't I don't uh have a lot of preconceived I want to do this and that for the next 3 months. I'm I leave it very free uh to have the uh flexibility to go into any area I want to go into. So I'm just it's it's very very much seat of the pants based on what is going on. >> Yeah. You know, it's so interesting. I've you know, I ran our biggest asset management company we've had. We only manage it, you know, just a little bit over nine figures. But um we it's interesting my husband is the one who runs our investment portfolio now. And I always joke I want to come back in my next life as that instead of operating companies. We still are not good enough. You know, I think we're good operators of company. We've grown a lot every year, you know, sort of tripled or or um a little bit more each year, but it's the leverage there is so different than investing. Mhm. >> And so, uh, I think a lot of times the cool part of you sharing stuff like this is most people don't realize, >> like you said, the power of compounding. They don't realize the power of like not taking an action every decision, which you've talked about. They don't realize the power of being patient. And when you have capital, allowing that capital to do the work for you as opposed to you having to do all of it. And so, I think it's really it's a it's a give to share that with people because most people I mean, how many employees do you have to manage your fund group? roughly. >> They're just uh two people full-time. >> Yeah. >> And there are two part-time. >> I mean, it's wild. And then you imagine, you know, if our company does, let's say, you know, shy of nine figures a year here, we'll have 130, you know. >> Yeah. >> And so the leverage is so >> And also the other thing is that if if I went from 1.4 billion to 14 billion, it might be a couple more people. That's why >> you know it's just it's not uh going to be 10 times the number of people we have you know it's just going to because that's the beauty of the business. It's a uh the reason I went into this business is because I could just see that the economics are great. It just works great. I'm a single player single game player guy. >> So I'm not the kind of person who's happy being on a soccer team. I'm probably going to be be happier playing tennis. >> Yeah, >> you know >> that makes sense. So, so maybe for somebody listening explain like sort of to wrap it up if you are looking at business models and deciding I think a lot of what matters is the game you choose to play. Not just because of who you are but also whether that is a good game or not like you know we talk about a silly thing like vending machines. I like vending machines to learn how to do business. It's cheap. There's not a lot of risk. You have an entire business encomp with very little capex. It's sort of a great but it's a terrible business at scale actually really tough business. >> How do you think about business models in general? Do you have a mental model to determine if one business model is better than another? >> Yeah, I mean I think that u a lot of that comes um comes naturally. I'll give you an example that I think you might you might find interesting is um in uh when when when Buffett was a teenager, he was in Washington DC. His father was a congressman and he hated being in DC. He wanted to be back in Omaha, but he was he was in DC. And there was a guy in his high school, Dawn Danley. And one day Warren went to Dawn's house and he saw Dawn tinkering with a pinball machine. Okay. And he says, "What are you doing?" He said, "Oh, you know, I I got this pinball machine that doesn't work um for like five bucks because people are just giving it away. And I think for another five or $7 in parts, I can get it working." Okay. And uh so Warren says to him, um, "Are there a lot of pinball machines that you can get that are not working?" He said, "Oh, there's a people just have them sitting all over." So what Warren did was he's like 16 or something, 15. Um he tells Danley to fix pinball machines non-stop. Like they get 20, 30 of them, right? And puts them to work fixing those. And then he and Danley go to the barber shops in DC and they tell the barber that we work for Mr. Wilson because they're two kids, right? There's no Mr. Wilson. Mr. Wilson is a fictitious character. They say we are we work for Mr. Wilson and Mr. Wilson has authorized us to make you an offer which is we'll put the pinball machine in your ber shop for free and every week we'll come and pull out what coins are there and half come to you and half we take for Mr. Wilson. So the barber said put the machine in the corner like I mean there's no downside right? So those uh pinball machines when uh Warren was leaving DC after high school, he had 45 barber shops with the pinball machines. And he said the first week he went into the first barber shop, there was $5 in there and he gave two and a half to the barber, he thought he died and went to heaven because on a $10 investment in four weeks they were going to clear the money and then you know the return on capital is infinite. So what I'm trying to say is that you talked about the vending machines, right? The vending machine, the entrepreneur is not doing anything unusual. If Warren bought pinball machines at market price and put them in the barber shops, it would be in terrible business, right? >> It became a great business because they flipped it a little bit. So understanding the economics of a great business is not difficult. In fact, what I would just say I would say the following. My my filter for understanding whether a business is great or not is does it blow me away? Okay. Does it hit me in my head with a 2x4? Like when I see Buffett's pinball machine business, you instantly know that's a great business, right? You know they're not spending anything on the on the pinball machine. It's fantastic, right? And the same business when you buy it at list price and you put it there, you lose your shirt. You're going to be going to be a terrible business. So what we want to do is we want to find the anomalies, right? And so that's exactly how I look at business is that is it the pinball business? Is it Buffett's pinball business? And if it is, like level three was like Buffett's pinball business, right? So, we look for these weird things and we're looking for weird things that make no sense and then we find them and we go back to doing what we're doing and look for the next weird thing. >> So, good. Not enough people try to take the complex simplify it. >> Yeah. >> And just do it a few times. >> Yeah. So, we can make the vending business really good. >> We just have to get the machines for free. >> That's true. And be the one that can fix them cuz you're right. That is the >> that's where the the best vis businesses in vending when we had a bunch of them cuz we own a bunch of laundromats. So you put vending machines in the laundromats similar to Warren. >> Yeah. >> Uh but the best part of that business ended ended up being the people who fix the vending machines cuz they break all the time. >> Absolutely. >> Yeah. So um and they do the same thing. They then take the vending machines, fix them up, resell them. >> So I think that's that's the thing is is uh the business opportunities are all over. These were these were kids coming up with this. Yeah. >> And Warren had he had this other kid >> where he used to sell golf balls on the street corner in Omaha. But he had a he had a couple of friends who would go dive in the water to get the golf balls out. And Warren never wanted to do it. He he said, "I never want to do any hard work." So he paid those kids to dive and then he sold the golf balls. But again, the golf ball is free. You know, it's free and so you're going to make a lot of money when you do that. So, basically, we want to look for these businesses where some part of the equation is different than the mainstream and that just changes it completely. >> Ambitious but lazy. I love it. This was such a useful conversation. Thank you so much for being here. Where do you like people to follow along? >> Well, you know, I'm on I'm on X and LinkedIn. Bonish papri. >> Okay. Um, so let's start there. >> Okay. >> Uh, follow along for the ride. But thank you so much for being here. >> Always a pleasure, Cody. Thank you so much.