Monhish Pabrai is one of my favourite investors, apart from having an amazing track record at investing he rose to fame as one of the first people to buy a charity lunch with Warren Buffet for $650,000 USD.
He said the lunch was worth every penny.
One of Monhish’s favourite concepts is cloning and he tells a good story about two petrol station owners to illustrate why some businesses fail.
Two petrol stations setup across the road from each other.
Owner A starts filling the gas manually and cleaning the cars windows.
The owner B across the road sees this and says to his assistant
‘There’s no point manually filling the gas and doing the windows as he can’t do this for every car – people will get annoyed when they return, and they have to fill their car themselves. I am not doing that’.
And so it goes, he even tells owner A how stupid he is.
Overtime owner A’s business start to take off and more people choose to use his petrol station than owner B’s.
But Owner B does nothing.
Even though owner B knows exactly what is making the other petrol station busier overtime he still does not clone Owner A.
Because he has invested and publicly stated his opinion that manually filling some cars is a waste of time.
He will desperately try to find some ‘other’ way of growing his business so he doesn’t have to admit being wrong. Also, he certainly doesn’t want owner A to see him admitting defeat.
I have seen this a lot with some ecommerce clients who have been going a long time and a young new business comes into their market and starts cleaning up.
It’s clear what the new business is doing, I reverse engineer the upstart and tell my client ‘here’s the plan’.
But they won’t do it.
They want something different, something no-one else has ever done. They want the world to think they are a genius.
But unfortunately, most of us are average (duh) and so to have a fighting chance we need to shamelessly clone what’s working for others and then improve it.
Don’t be too proud to make a lot of profit.
Stop trying to recreate the wheel.
I will leave you with two quotes to sum this up
Steve Jobs: “We have always been shameless about stealing great ideas”
Picasso’s “Good artists copy, great artists steal”
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Mark (cloner) Hammersley