They’ve done a masterful job because in all the cases, whether it’s a motel or any of these other types of hotels, their competitive advantage has always been lowest-cost operator. They used to be only in the low-end motels, but now they’ve gone into the Marriotts and the Hyatts and the Hiltons. The second thing that has happened is the Patels have moved upmarket. That number is probably approaching north of 70% or 75% today. Of all the motels in the U.S., approximately half of them were under Patel ownership about a dozen years ago. When I wrote the book 12 years ago, the Patels had 40% to 50% market share. in the 1970s as refugees because they were being evicted from East Africa, from Uganda.

One of the first examples I used was the Patels who came to the U.S. I took the view in the book that if there’s a lot of cross-pollination between being an investor and being a businessman, why don’t we talk about some businesspeople, because the way they approach capital allocation and running a business directly dovetails into how an investor ought to look at their investment decisions. If you have an investment manager who’s had experience running one or more businesses, they have a significant leg-up over their peers. That’s a serious handicap because they’re missing a significant framework. Unfortunately, most professional money managers have never run a business before. Taking a step back before we delve into the Patels, for me, the starting point of interest in value investing was a quote by Warren Buffett where he said, “I’m a better investor because I’m a businessman, and I’m a better businessman because I’m an investor.” The parts of your brain that get used are the same, whether you’re running a business or making portfolio decisions, and the frameworks are similar. In fact, in a number of conversations with Charlie Munger, he always brings that up and reminds people never to try to compete with the Patels in the motel business. Pabrai: The Patel story is a great one because it illustrates the concept really well. Could you tell that story, or if you prefer, give another illustration of what you meant with this concept. John Mihaljevic, MOI Global: The classic example that I think most know is the Patel story in the hospitality business as an illustration of what Dhandho means. They recently came out with an edition in India, which sold very well ― vastly better than expected. It was a useful exercise for me, and I’m happy to get a nice check from Wiley every year. I found that the process of writing the book helped me formalize the principles inside. As they say, the best way to learn is to teach. Mohnish Pabrai: My objective in writing The Dhandho Investor was to crystalize some concepts in my own mind. The following transcript has been edited for space and clarity.

The dhandho investor audiobook