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Home » Transcript: Value Investor Mohnish Pabrai’s Interview on DOAC Podcast

Transcript: Value Investor Mohnish Pabrai’s Interview on DOAC Podcast

Read the full transcript of renowned value investor Mohnish Pabrai’s interview on The Diary Of A CEO podcast with Steven Bartlett on “$100 Investment Hack That’s Disappearing Fast! (The Fastest Way To Financial Freedom)”, August 21, 2025.

The Power of Mental Models in Business and Life

STEVEN BARTLETT: Mohnish Pabrai, with the work that you do and the sort of public educating that you’ve done more recently in your career, what is the message you’re trying to convey? If you had to summarize that message and exactly who are you trying to convey it to?

MOHNISH PABRAI: It really depends on what message. There are a few different mental models that I’ve figured out over the last few decades. When you have clarity on these mental models, and especially when you can start overlaying them, that’s when you get one plus one becomes 11. These mental models are not all in the same direction or in the same genre.

STEVEN BARTLETT: So just to pause there for a second. So the word mental models means it’s basically a framework for thinking.

MOHNISH PABRAI: Yes.

STEVEN BARTLETT: So one framework for thinking is this idea of cloning as one such example.

MOHNISH PABRAI: Yes. Let’s take the mental model of cloning.

STEVEN BARTLETT: Cloning.

The Mental Model of Cloning

MOHNISH PABRAI: Cloning, right. So what we are taught is that if you want to start a business, you need to come up with something new, something that hasn’t been done before. But the reality is that the world will very easily accept three of the same thing or five of the same thing. And usually it is an advantage to look at something that already exists and say, “Can another one of those exist?” for example, or “Can I take what’s there and tweak it a little bit?”

So there’s something peculiar in the human psyche, maybe going back into our history and our ancestral evolution where humans look down upon cloning. But if you look at it, for example, two of the greatest cloners, I think in human history were Bill Gates and Sam Walton.

Now we think of Bill Gates as an innovator and we think Sam Walton created Walmart, which was also new, but actually they both were “me too” models. And Microsoft would not have existed without being a great cloner.

So when we look at Microsoft Word, it came from WordPerfect, which was a company, a competitor that he took out. We look at Excel, it came from Lotus. We look at Bing, came from Google. And you know what Bing is, but it’s not Google. Everything that Microsoft has done well at has come from copying someone on the outside.

And when we look at Sam Walton, who’s the Walton family, if you pull them all together, it’s the richest family in the world, it’s richer than Elon and everyone. And Sam Walton by his own admission, would tell you that he has no original ideas. So originally, Walmart cloned Sears and Kmart.

STEVEN BARTLETT: For my international listeners, these are two big supermarket chains.

MOHNISH PABRAI: Yeah, and they’re both gone. In fact, Walmart buried them. And Sam Walton was one of the most intense cloners ever. So if he was driving on vacation with his family and he’s passing some retail store, he would tell his family to stay in the car and he would go in the store just to check it out. And he said that there is no human who has lived in history or will live in the future who has visited more retail stores than he has.

One time there was a manager of his, and he would go in with his managers to these stores. Retail is one of the most transparent businesses. You can go into your competitor’s store and you’ll figure out the entire business model in 10 minutes. You don’t need to talk to them. It’s beautiful.

So he went into this retail store and the manager says to him, “Oh, what a terrible operation.” The whole store was topsy turvy. It was really bad. And Sam says to him, “Yeah, but did you see the candle display? The candle display was fantastic.”

So Sam felt that he could learn from anyone. It didn’t matter if you were a useless operator or great operator or whatever. Anyone in the middle. Walmart is just an amalgamation of ideas from other places.

If you look at a company like Starbucks, we think of Starbucks as innovative. But actually what Howard Schultz did is he saw a concept in Italy, and his idea was that “I think this will work in the US” and so he cloned that idea from Italy and brought that coffee shop experience to the US.

If you are a great cloner, you will be 90% ahead or 95% of the rest of humanity.

The Myth of Entrepreneurial Risk

Now, another mental model. Humans have this perspective that starting a business is risky. In reality, entrepreneurs do not take risk. They do everything in their power to minimize risk. And in many cases, when they embark on a business, the risk approaches zero.

What is extremely risky is a 9 to 5 job, because we have one life and it goes away. And you may not get to do what’s in your heart. You may not get your music out. And so getting our music out is really important.

So this notion, which is drilled into us, that if you’re an entrepreneur, you’re taking risk, really kind of does a big disservice to most humans. And if humans understood that if I embark on a business, I can do it in a format where the risk is zero or close to zero, and I can clone an existing business. Now, you’ve combined two mental models, and we can start adding more to them. But 2 has become 11.