A question from Mohnish Pabrai at the 1999 Berkshire Hathaway annual meeting

good afternoon mr. Buffett and good afternoon mr. Munger my name is Mohnish Pabrai and I'm from the Chicago area mr. Buffett I'd like to thank you for all your insights over the years I'm especially amazed at the pace at which you answer my letters point by point I have a question for you related to circle of competence I have a notion that both mr. monger and yourself understand the kleiner perkins model of early-stage venture capital investing and currently they focus in the internet space extremely well my notion is that I think it is well within your circle of competence to understand what they do just like you understand your circle of competence to understand what they do just like you understand what your managers at C's candy or executive jets do so the question is that with the internet I think we're seeing a change that has not been seen in the last 500 years as humans we haven't seen something that is as dramatic and as profound that's going to come upon us if let's say a John Doerr at Kleiner Perkins approached you and said that they were starting let's say a billion dollar early stage or later stage internet investment fund that kleiner would manage would you consider that would you consider participating in that investment to be within your circle of competence if it were offered at terms that looked attractive I I agree with the first part of what you said I mean I'm not sure that'll necessarily will be the most important thing in the last 500 years in the in the commercial world but it could well be and if it isn't it's right up there I mean it is it is the we talked about this last year and maybe even the year before I mean it is a huge development but and I would say that Charlie and I both understand the process of early investment / promotion probably as as well as anyone we haven't participated in it there's certain things we don't even like about it but we do understand it right Charlie yeah and I would say that no we would not have an interest in investing in the fund we do not necessarily regard the Internet there's no question if you're in the early stages of promotion and you particularly got a reputation as a successful in that but in this case it wouldn't make much difference because the whole field has gone wild you will make a lot of money selling to the next stage in the next stage in the next stage but in terms of picking out businesses that are going to do wonderfully as businesses not as stocks for a while but as businesses I I don't think it's necessarily so easy in the internet world and I I would say that if you were to ask some very top names in the field to name the next five companies out of the shoe and the next 10 companies out of the shoe and predict that one of them will learn say the 200 million dollars I used as a threshold six or seven years from now I'm not so sure they they if they gave you a list that they would name a single one that doesn't mean they might not make a lot of money by being early investors in them because they sell out to the next group and so on but in the end they have to succeed as businesses and a few will succeed as businesses the internet will have a huge impact on the world but I'm not too sure that that makes it an easy investment decision Charlie Oh at least that makes it an easy investment decision Charlie Oh at least it's not an easy investment decision for us and that's what we're looking for we will never turn our money over to somebody else you know if we're gonna lose your money as Berkshire shareholders we're gonna lose it ourselves and we're gonna come back and look you in the eye and tell you how we lost it we are not going to say this game was too tough so we'll give our money to somebody else you can give your money to somebody else and you don't need the intermediaries of me and Charlie to do it for you so we we can approach all the time I had a call you know within the last couple of days on something you you would know very well about participating in some fun or they always have you know it's always stage 1 stage 2 stage 3 and the ideas we get some more people to come in later at twice the price and maybe the fact that our name is involved in it will cause people to pay even more and all of that sort of thing we're not in that game and we're not going to turn the money over to someone else to manage it's your money you gave it to us to manage we'll manage it you decide you don't want us to manage it you decide who you give it to it we're not going to be intermediaries on it and if we don't understand something ourselves we're not we're not looking for any anybody else to do it for us that the world doesn't work very well that way anyway I mean it usually end up in the hands of the promoters and not the hands of the people who really know how to make money you

Channel: The Financial Review

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Keywords: berkshire 1999, berkshire hathaway, warren buffett, charlie munger, munger buffett, finance, india invest, india investing, stock market, investment, business, pabrai investing, pabrai investment, pabrai buffett, pabrai berkshire, investment ideas, buffett stocks, pabrai stocks

Id: Db85KCmYZTQ

Length: 5min 46sec (346 seconds)

Published: Mon May 06 2019