Career Advice from Mohnish Pabrai – Two Men by the Sea

To continue our unplanned series on Mohnish Pabrai, we thought we would share one of our favorite pieces of career advice that he gave at the end of a (virtual) talk at Boston College. The talk is worth watching but in case you decide not to, here is that final question transcript.

Any advice [for students] as they think about their career?

Mohnish Pabrai:

Because I’m a cloner, I would just clone the advice that Warren or Charlie would give you, which is to focus on going to work for people you like, admire and trust. If you unpack what Warren says about “like, admire and trust”, note that he does not say what the compensation is, or what the company is, whether it is a blue chip or start-up. It is about the people. You have to work for, and with, people that you would truly enjoy working with if you were not getting paid. I think that should be the criteria.

The second thing that Warren says is, don’t put things off. It’s like saving sex for old age. Not a good idea. Don’t say “I’m going to work for 3 years at Goldman Sachs, then I’m going to get my MBA, then I’m going to do X for 3-4 years, then I’m going to start a fund, and then this and then that.” I’m going to tell you the story of this very stressed-out investment banker.

There’s this guy in New York who’s an investment banker, working 100+ hours a week. He’s totally burned out. And of course, he’s making a lot of money. But he is stressed out beyond belief. So he does some research and finds this little tiny Mexican fishing village, which is in a very remote part of Mexico. There’s a small one-room resort there, and he would be the only guest there, so there will be no one around for miles. He says, “That’s the place for me.”

He goes over and books himself for a week, and recuperate from the New York life. In his first morning there, he gets up and notices there is a hut across the beach with one Mexican guy living there.

The investment banker watches this Mexican guy pull out a small canoe and he takes it out in the ocean, then he’s gone for an hour, or hour and a half, and he comes back with two fish. Then he makes a little fire and cooks one fish, which is his lunch. Then he takes a nap, wakes up in the evening, then cooks the second fish and that’s his dinner. Then he just hangs out at his hut and goes to sleep.

Then the next morning, the banker notices again that the Mexican guy wakes up, gets his boat, goes to the ocean, gets the two fish, comes back, cooks one fish, takes a nap, then cooks the second fish. After 3 days, the banker can’t take it anymore.

So the banker goes and talks to the Mexican fisherman.

Banker: When you go out to the ocean, can you catch more than two fish?

Fisherman: Well yeah, the ocean is full of fish. I can catch a lot more fish.

Banker: Why don’t you catch more than two fish?

Fisherman: I only need two fish, why would I need to catch more than two?

Banker: Look, if you catch more than two fish, then you would have some extra fish that you can sell in the market.

Fisherman: And then what?

Banker: Then you’d have some money, and as you keep getting more fish and more money, then you can get a second boat and hire a guy to fish as well. That other guy will catch more fish too. Now you’ll have even more fish to sell, even after you pay the other guy.

Fisherman: And then what?

Banker: We can keep doing that, because soon we’ll have a fleet. But then we’ll also vertically integrate, because instead of just selling fish into the market, we’ll set up a canning operation, and we’re not going to let those scumbags take all the margin by doing the canning, so we will. And we’re in this great part of the country and so we’ll create this great brand, market it as organic, and then sell it all over the world.

Fisherman: And then what?

Banker: Then I’m going to take you public, and I’m your guy to do the IPO. You’ll have lots of money and a great life!

Fisherman: And then what?

Banker: Then when you want to take a vacation, you can come here and hang out!

And the fisherman just looks at him.

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General Motors (GM) - There's Something About Mary (Barra)

We have been following General Motors ever since it popped up on Berkshires 13-F filings. It is a Ted Weschler pick, where Berkshire bought 10 million shares in 2012 and has steadily increased the position over time to about 72 million or so. They are the fifth largest shareholder.

 One of us likes what Mary Barra, GM’s CEO, has been doing over there quite a bit (though we didn’t survey anyone else around here). She has sold off the Company’s endlessly unprofitable European division, focused on core lines and cost control, while also making significant inroads into autonomous driving (GM Cruise) and EVs. She also handled the ignition switch fiasco quite effectively. This is all worth talking about in a longer post on another day, but in the mean-time we wanted to highlight a talk Mary gave at Stanford in 2017. It provides good insight into how she thinks about GM but also careers and life. She’s worth listening to.

Mary Barra, Chairman and CEO of General Motors, discusses how she not only wants results, but results with integrity. Read more leadership insights from the Stanford GSB View From The Top talk on Monday, May 4, 2017: http://stanford.io/22fGCxZ

Notes:

-On blending tech high return world with low return slow world of autos - what are you most worried about? I’m confident we have good answers but will we get it to market fast enough. So constantly reemphasizing the speed, but yet – sometimes in an organization, especially an engineering organization will take you so literally that you have to make sure you are talking about safety. We want results but we want them with integrity. It’s about talking about behaviors but you put the two types of people together (traditional engineering and tech) and it can be really powerful.

-Career, should you have breadth or depth? – can you comment on the increasing push at the graduate and undergraduate level to focus (your career), to add value day one, etc? -  it depends on the role. If you are the chief engineer of a vehicle that’s generally 15 years (of focusing) because the cycles of learning to integrate the systems of the vehicle. Integrating the powertrain group, electrical group, body group – they’re all coming together and (the chief) has to make those trade-offs. There’s certain areas where we need tremendous depth and this is one of them. And then there are areas where we need someone to say I understand this but understand the (horizontal). You need to make the trade-offs either (vertically or horizontally) and (as a company) we need both. As a mom (one child in college and one in high school) – how could you know at 16 what you want to do for the rest of your life? I’m not sure at age 55 what I want to do for the rest of my life. So I think there’s a need even in engineering to broaden your knowledge. I think it makes you a better engineer. It’s different once in your career. One of the most valued people when I was running the manufacturing engineering group was my welding expert. He has spent his career doing this and grew into the role – which is the kind of depth I am talking about. But he probably made that decision in his 30s and 40s not in high school or as an undergraduate. Even if you are sure you know what you want to do you should broaden and if you don’t know that’s okay. I came to GM thinking I was checking a box and I didn’t know what I didn’t know.

-Discusses Lyft. No one knows where auto companies will be in ten years. She thinks fleet first adoption of autonomous vehicles is the most likely case. Given you can (as a company) own the vehicles and limit locations driven, speed, and other factors while the technology is getting up to speed.

-EV – thinks about EV and fuel cells as obvious migration. Where will volumes come from? China is first and top of mind due to their push to regulate it – 10% requirement to be fully EV or plugin . Want to be the first OEM with EVs that are profitable and affordable.

Berkshire Hathaway 2019 AGM - Recap and Full Video

We had a great time in Omaha this year! Warren Buffett and Charlie Munger gave a full day of thoughtful and engaging entertainment. If you missed out don’t worry; Yahoo has a full recording (see below!).

The Berkshire AGM is not just about the Big Saturday Meet. It has created a whole ecosystem of events and conferences. A few of the ones we’re aware of:

-The Creighton Value Investing Conference - We attended this and thought it was fantastic (and free). It included a great panel of Ted Bridges (Chief Investment Officer at Bridges), Robert G. Hagstrom, (Chief Investment Officer, Equity Compass Investment Management, Senior Portfolio Manager of the Global Leaders Portfolio), Susan Schmidt, (Head of U.S. Equities, Portfolio Management at Aviva Investors), Josh Shores (Co-Portfolio Manager for Southeastern Asset Management’s Non-U.S. Strategy and the Longleaf Partners International Fund), and Whitney Tilson (Founder and Chief Executive Officer of Empire Financial Research). There was also a book signing and a lecture hall of people to network with: https://business.creighton.edu/events/11th-annual-value-investing-panel

-Yellow BRKers - We have attended this in previous years but unfortunately missed it this year. Worthwhile if you can make it: http://www.yellowbrkers.com/

-Hilton Omaha Talks - It turns out a lot of companies and funds have started putting on public open talks at the Hilton in Omaha next to the convention centre. These change every year. If you’re short on planning time you can just check the digital displays in the Hilton to see what is going on where (and maybe talk your way into something non-public… :)

-Markel Brunch - This is basically an insurance Company that positions themselves as a mini-Berkshire. They started hosting a brunch the next morning after the Berkshire AGM many years ago no (where they joke that at their first brunch only two or three people showed up). It is now a large event with a Q&A format similar to BRK and a lot of interesting people to network with. http://markelbrunch.markelcorp.com/

-Krispy Kreme Donuts - Eaten and awesome for obvious reasons.

We hope to be there next year (and hope you are as well)!!

LIVE: Yahoo Finance coverage of the 2019 Berkshire Hathaway Annual Meeting with CEO Warren Buffett and Vice Chairman Charlie Munger. Subscribe to Yahoo Finance: https://yhoo.it/2fGu5Bb About Yahoo Finance: At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life.
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