[00:00:00 – 00:00:09] Nitin Pajaj

Hey everyone, welcome to the Industry Show. I’m your host, Nitin Pajaj. And joining me today is Monsoon Pabrai. Monsoon, welcome on the show.

[00:00:09 – 00:00:10] Monsoon Pabrai

Thank you for having me, Nitin.

[00:00:11 – 00:00:15] Nitin Pajaj

Great to have you here. Let’s start with the big question. Who is Monsoon?

[00:00:15 – 00:00:40] Monsoon Pabrai

That’s the hardest question. I’m just a, I think I describe myself as just a curious person who, and I think I strongly believe like having life, And being able to think and do what we want in this world is such a blessing. So trying to do the most with my day, month, year, and lifetime that I can and learn as much as I can since that’s such a gift.

[00:00:41 – 00:01:00] Nitin Pajaj

So much wisdom there. And we’ll unpeel that in the next few minutes. Yes. Tell us through your lens of creating impact and doing more for the community, tell us what is Drew Investments. Why did you start it? What’s behind the name and a sense for the size and scale of the operations.

[00:01:01 – 00:02:12] Monsoon Pabrai

Yeah. So Drew Investments is a long only, mostly public equity investment firm that I manage and we invest across the world. So right now, US, India, China, Turkey, and then Europe. The reason it’s called Drew is because I’m a When I was eight, nine years old, I read every single Nancy Drew book that had come out. And I think of myself as a female sleuth, kind of girl detective, when we’re doing our investigation into different companies. Just because it’s a lot more like detective work and investigative journalism than it is crunching numbers on an Excel. And I think that answers everything. But the scale, we’re just getting started. We’re four years old. And we have various funds and we may or may not create some new ones, but the right now it’s almost all public equities and we have one private equity and I’m not sure if we’ll go more into private equity, but for now it’s we take a lot of inspiration from Buffett and Munger in the way we set up and the way we treat our investments and we treat our clients.

[00:02:13 – 00:02:39] Nitin Pajaj

And you’ve had a very unique and special relationship and have learned a lot through them through the years. So that’s very fortunate to have, I’m sure. And I love the investigative hat you wear as you go find these investments. So many kudos to you. You said you just got started in four years is a very relatively short term, but you’ve done quite a bit in this relatively short time. So congratulations on all of that.

[00:02:40 – 00:02:40] Monsoon Pabrai

Thank you.

[00:02:41 – 00:02:57] Nitin Pajaj

As you navigate all of these things, there is things to find out, new stuff to learn, regulations, macroeconomic challenges, and multiple things that I’m sure you get thrown at you. What is the one big challenge you would like to call out?

[00:02:58 – 00:04:31] Monsoon Pabrai

The biggest, I think, oh man, there’s so many challenges, but I think the one that probably a lot of investors are finding right now in the US is really good companies don’t come cheap. And I think it’s really hard to get your timing correct, to get your confidence correct. So I find it easier to look outside the US and just keep a couple U. S. positions. But I had, I actually just asked Nick sleep this last week, just asked him, I think he basically ran the Nomad partnership and he traveled across the world. He biked from, I think, east to west of China and would meet companies in Malaysia, Thailand, all over Southeast Asia. And I asked him, you did all this research overseas and you end up, ended up with Costco, Amazon, and Berkshire Hathaway, something wrong or what is it? And he just said that the US has, you can’t duplicate the kind of innovation and capitalistic environment here. And I was talking to Guy Spier about this too, and he said, the way we treat private property in the West is not the way it’s treated in a lot of other regions. So it’s something I think about a lot now. As an investor, which is, yes, I’m fishing in other places where people aren’t fishing. Is there a reason or how much should I be willing to pay and not using like a Western framework when I go there and balancing both, balancing the US, balancing the global? Yeah, I’ll say that’s the biggest challenge right now.

[00:04:32 – 00:04:41] Nitin Pajaj

Yeah, a lot said in very few words. Now, on the flip side of challenges come opportunities and you sift through a lot of those. What’s the one that you’re most excited about?

[00:04:45 – 00:05:44] Monsoon Pabrai

Oh, there’s, I do a 10 by 10 in the portfolio, so 10 positions, about 10% each, give or take. And I would say all 10 I’m very excited about. But I think, like, theme-wise, I think Indian Financial Services is a great place to be. It’s something that you probably don’t have to be on the ground every day in India to keep an eye on. But I would say being there is definitely more helpful. In the US, I think, I don’t have too much exposure to tech, but I think anyone that does should maintain it. I think it’s a innovative, incredible space. The US system is set up to reward people who succeed. I think those are probably two big themes that I think are easy to duplicate, easy to understand why they’ll do very well over 10, 20, 30 years. I think people that say there’s a bubble in AI are wrong. I think we are very early.

[00:05:45 – 00:05:45] Nitin Pajaj

Yes.

[00:05:45 – 00:05:50] Monsoon Pabrai

Very early. Yes. So, yeah, I think that sounds right.

[00:05:51 – 00:06:20] Nitin Pajaj

Awesome. Now, as we look forward and what’s happening next over the next 10, 20 years, I like to use this moment to reflect back and I’d invite you to share two moments from your life and career. One where things did not work out as you had expected. There was disappointment. Failure lessons, and another where things exceeded your expectations and became a success beyond your imagination.

[00:06:22 – 00:08:01] Monsoon Pabrai

No, I think I might be too early to honestly answer both of those because a lot of the investments we make would be on like a three to five, maybe 10 year time horizon. And we’re on year four. I will say the one I can talk about mistakes. That’s definitely one I’m more than happy to talk about. I think a lot of people followed Alibaba Munger to purchasing Alibaba and that was partly because we hadn’t seen him buy anything in decades, anything substantial, which was cheap that we had proper access to. So I was one of those poor souls who bought a ton of Alibaba. Then I also bought Tencent and lost a good amount of money on those and made the call when we were down to exit and said, I can make it up in India and other positions. And I did. So I’m proud of that decision to not just stay in it. I’d say I think almost all my clients, if not the majority of them, had an Alibaba position. And I just told them, I said, if you guys have it, I don’t need to keep it in the fund. It’s fine. I think it will come back, but I just don’t have that time. It was literally my first year, so it wasn’t the best decision to make. And I don’t think it was necessarily wrong, but I think it just hurt a lot at that time. Yeah. Great successes. I think other than launching the funds and having incredible clients, I don’t think there’s anything more I can talk about yet, but maybe in five or so years. If we chat again, I might have one for you.

[00:08:01 – 00:08:02] Nitin Pajaj

We will for sure.

[00:08:02 – 00:08:02] Monsoon Pabrai

Yes.

[00:08:02 – 00:08:05] Nitin Pajaj

And I’m sure it’ll happen sooner than five years.

[00:08:05 – 00:08:06] Monsoon Pabrai

I hope so, yeah.

[00:08:07 – 00:08:15] Nitin Pajaj

Switching gears a little bit, outside of all of this, the investigations and finding the secrets, what do you do for fun?

[00:08:15 – 00:08:51] Monsoon Pabrai

Oh, fun for me is, okay, the other thing that I strongly believe in is, yes, we have one body, one life. I think Buffett says if you had one car, for your whole life, how well would you take care of it? So same thing with my body. I love to exercise. I work out ideally five days a week. It usually ends up being three or four. So I weight train, I do Pilates, I do yoga, I play tennis, I run, trying to do more strength training. And something that I try to do once a year is like a five day, maybe more, hiking trip. I stopped carrying my own backpack a while ago.

[00:08:51 – 00:08:51] Nitin Pajaj

I usually have someone carry it for.

[00:08:51 – 00:09:42] Monsoon Pabrai

Me or we have a Jeep bring our bag for us. But I usually go to some random country with a bunch of friends and all college friends and we do a hike together. And I think that’s probably my highlight every year. And I think as we’ll as it started off as mostly all girls. And so also just to be young Indian women hiking without men in our lives across the world. That was something that you would never have seen my mom. Her generation or the generation before even think about doing. So I feel blessed. So that’s another fun hobby. But I think the how many trips we have left in us is probably going to go down just because more of my girlfriends are getting married and having kids. So maybe when the kids are 18, we might start up again.

[00:09:44 – 00:09:57] Nitin Pajaj

Good perspective to have. That sounds really fun, though.

I enjoy hiking. I’ve done a few backpacking trips. I do still carry my own backpack. Maybe that’s a little bit of a control freak in me that drives me to do that.

[00:09:58 – 00:10:01] Monsoon Pabrai

No, it’s impressive. I wish I could, I wish I could carry my own backpack, but…

[00:10:02 – 00:10:05] Nitin Pajaj

I guess you’re too busy working out so hard that you can’t.

[00:10:05 – 00:10:18] Monsoon Pabrai

Oh, thank you. I think it takes away, for me, it takes away from the beauty of the nature if I’m huffing and puffing with 30 pounds. But no, but I enjoy it a lot and there’s a bunch more on.

[00:10:18 – 00:10:20] Nitin Pajaj

My list that I hope to do.

[00:10:20 – 00:10:21] Monsoon Pabrai

All right.

[00:10:21 – 00:10:21] Nitin Pajaj

We should exchange notes on that.

[00:10:21 – 00:10:22] Monsoon Pabrai

Please. Yeah.

[00:10:24 – 00:10:28] Nitin Pajaj

Now, any book or a podcast that is a favorite that you want to share?

[00:10:29 – 00:11:31] Monsoon Pabrai

So there’s a lot of books I like and they’re on my website and I have them linked to Amazon so it’s easy for people to purchase. I think right now, favorite book, probably it’s actually just a PDF that you can find right now, but I think the book is going to come out next year. I just saw it. It’s a Nicks sleeps and what’s his name, Zacariah, like K Zacariah’s 13 years of partner letters. And you can just basically see them struggling to figure out the way to invest and constantly asking themselves questions and they end up at the answer, which is just Amazon, Costco, Berkshire. And I think that is something that’s interesting that probably not a lot of people have seen. And if you don’t want to read all 1314 letters because they’re word. Then there’s a book, Richer, Wiser, Happier. Chapter six is Nick Sleep. Chapter one is my dad, which is the whole reason I’m involved in the space and everything. But I think chapter six is a really exciting chapter for anyone.

[00:11:32 – 00:11:33] Nitin Pajaj

Yeah, I have read that book.

[00:11:33 – 00:11:34] Monsoon Pabrai

Awesome.

[00:11:34 – 00:11:37] Nitin Pajaj

Yeah. William is an amazing author.

[00:11:38 – 00:11:48] Monsoon Pabrai

Yes. And the other book for anyone who’s new to investing for like personal finance is probably Psychology of Money. Yeah, that’s a great one. I would say that’s another good one. Yeah.

[00:11:49 – 00:11:54] Nitin Pajaj

Sweet. Now, onto my favorite part of the show. We call this the one line life lessons.

[00:11:55 – 00:11:55] Monsoon Pabrai

Yes.

[00:11:55 – 00:11:56] Nitin Pajaj

All ears for yours.

[00:11:56 – 00:14:29] Monsoon Pabrai

Okay. The first rule in life is to be kind. If you’re not kind to other people, if you’re not kind to yourself, and if you’re not honest to yourself and other people, I think it’s obvious and it makes you an untrustworthy person. It makes you engage with people who don’t have the highest level of integrity. So I think be honest, be kind is number one. Number two comes from Munger. It’s to invert. And so if we have a difficult challenge or difficult question in front of us or an investment that I don’t know how to position size or how to think about, it’s very easy to just flip it around and look at it a different way. So that comes from Munger. From my dad, it’s my favorite. It’s heads I win, tails I don’t lose too much. And I just made a really fun investment in Turkey and there’s no downside. There’s literally no downside, but the upside could be a double or a 50x and I have no idea where it depends on if the operations play out and a bunch of stuff kind of playing correctly, but I think we ended up buying it at almost the value of the real estate. So cheap enough to proceed. And it’s not something we would find in the US. I think being patient is another thing for Munger, which was would take us to number four. I think it’s really hard, especially living in New York where I’m getting investment tips all the time about cheap and exciting things to not rotate the portfolio seven times a year. And just waiting and sitting is the best way. So even Buffett says it, the stock market is transfer of wealth from the active to the passive. And then the last one also comes from my dad, which is to be a shameless cloner. And I think this actually applies to all entrepreneurs where, and I see this a lot because I went to Berkeley and I have a lot of friends in the tech space who are more engineering focused where they’re trying to create the next new exciting thing. I’m like, the exciting things already been created, just create the competitor and take their market share and undercut them. It’s so much better than creating some new crazy company. And I used to work at, it was a really fun company. It was a nail painting robot machine. And that would have been a very cool, innovative product. But I think if I’m as an entrepreneur, I prefer doing something that I’ve seen done hundreds of times and providing that as a service. Yeah.

[00:14:29 – 00:14:32] Nitin Pajaj

Love that. As I said, so much wisdom there.

[00:14:33 – 00:14:34] Monsoon Pabrai

I agree with you, it’s the best question.

[00:14:36 – 00:14:57] Nitin Pajaj

Thank you. Monsoon, really appreciate you being here, sharing your journey and story and your successes and life lessons and looking forward to bringing you back on and sharing more of these stories and journeys. And by then, you probably have done a lot more of these backpacking trips. And so there’ll be a lot more to talk about.

[00:14:59 – 00:15:00] Monsoon Pabrai

Good. I’ll be emailing you all my photos.

[00:15:00 – 00:15:01] Nitin Pajaj

So please do.

[00:15:02 – 00:15:03] Monsoon Pabrai

Thanks, Nitin.

[00:15:03 – 00:15:04] Nitin Pajaj

Awesome. Thank you.