There is no money put into them to begin with. Even if half these ventures fail or never scale up, it doesn’t matter. With minimal downsides, failure rates don’t matter to Sir Richard Branson.
The common ingredient in all 200+ businesses under virgin group is that there was very little money invested in any of them at startup. With a bit of creative thinking, Branson launched the Virgin Airlines with an initial investment of just $2 million. Classically, this story is all about “Few Bets, Big Bets and Infrequent Bets.” Chapter 3: Virgin Dhandho Virgin group head Richard Branson’s approach to business is – start a business with minimal capital and no risk – Dhandho on steroids. Manilal worked hard, saved all he could, patiently waited for right deal to materialize and then bet it all on a single no brainer bet. In a matter of four years he had paid off most of his debt and Motel was generating enough cash for him to construct a new Holiday Inn Express in California. After few years, in partnership with few Gujarati friends he bought a Motel and started operating it. Chapter 2: Manilal Dhandho Manilal started his work in US at minimum wage, worked 16 hours a day, saved money and learned the gas station business. The snowball effect over time ended up creating amazing results for the Patel community. The cash generated by one motel was used to buy another motel and very soon Patels began applying their low cost model to higher-end hotels, gas stations, convenience stores (7-Elevens) etc. Mohnish explains the idea by doing DCF analysis on various possible outcomes for a motel business and proves that it was a typical “Heads, I win tails, I don’t lose much!” bet – the dominating theme of this book. With frugality and extremely low operating costs, Patels turned the motels into cash generating machine.
#Mohnish pabrai dhandho investor discounted cash flow free#
The distressed motel industry, low initial investment, easy mortgage and free accommodation were reasons compelling enough to attract the Patel community to motel business. The history of Patels in US is very interesting one and Mohnish adds some details to it. Patels) in US make up less than 0.2% population but they control more than 50% of the motel business employing nearing a million people and owning over $40 billion in motel assets in US. Chapter 1: Patel Motel Dhandho Mohnish starts with introduction to the “Patel Motel business”.
Dhandho is Gujarati word which is best described as endeavors that create wealth while taking virtually no risk. copying the ideas which have been tried and tested by other successful people and are proven strategies. Notes from “The Dhandho Investor – By Mohnish Pabrai” Mohnish is a strong proponent of cloning i.e.