#362 Li Lu

**David Senra** (0:00)
A few weeks ago, I was talking to John Mackey, the founder of Whole Foods, and he told me one of the craziest things anyone has ever said about the podcast. He had listened to over 100 episodes before he met, and he told me that if founders existed when he was younger, that Whole Foods would still be an independent company. He said that since the podcast and all of History's Greatest Entrepreneurs constantly emphasize the importance of controlling your expenses, he would have put more of a priority on it, especially during good times. It is natural for a company, and I think for human nature, to just not watch your costs as closely, because everything is going so well. Andrew Carnegie had one of the best ways to describe why this is so important, because he would actually repeat this mantra time and time again. He would say, profits and prices are cyclical, subject to any number of transient forces on the marketplace. Costs, however, could be strictly controlled. And in Carnegie's view, any savings achieved in the cost were permanent. That quote from Carnegie is something I was talking about with my friend Eric, who's the co-founder and CEO of Ramp. Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp, and I've spent a ton of time with them over the last year or two. They all listened to the podcast and they picked up on the fact that the main theme from the podcast is on the importance of watching your costs and controlling your spend, and how doing so can give you a massive competitive advantage. That is a main theme for Ramp. The reason that Ramp exists is to give you everything you need to control your spend. Ramp gives you everything you need to control your costs. Ramp gives you easy to use corporate cards for your entire team, automated expense reporting and cost control. Those last two words, cost control. There's a line in Andrew Carnegie's biography that says, cost control became nearly an obsession. I believe if Andrew Carnegie was alive, he would be using Ramp because Ramp would give him everything he needed to control spend, optimize all his financial operations on a single platform. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business control costs. That is ramp.com.
The book that I want to talk to you about today is Moving the Mountain, My Life in China from the Culture Revolution to Tiananmen Square, and it was written by Li Lu. Li Lu is the founder of Himalaya Capital Management, which he's been running for about 30 years. Li also had a 20-year investment partnership with Charlie Munger. The Munger is the way I came to know about Li Lu because one time Munger was talking about the importance of patience, and he told a story where he made 400 or he told the story of how he made about 400 or 500 million from reading Barron's magazine for 50 years. And Munger said, I read Barron's magazine for 50 years. The entire time, I only found one idea that could act on only one. I made 80 million dollars on that idea, basically risk free. And then I took that 80 million and I gave it to Li Lu, and he turned it into 400 or 500 million dollars. So Li Lu is known to have this cult like following. He's known to have fantastic financial returns. But that is not what this book is about. Li wrote this book in his early 20s when he fled Communist China for the United States. When the book ends, there is no possible way for Li to know or predict what his future holds. And so I want you to keep that in mind as we go through what is going to be one of the most remarkably difficult childhoods that you and I have ever studied together. And so the book starts with Li Lu when he's in preschool. And I need to tell you upfront, this book is really hard to find. There's only two copies available on Amazon right now. One is for sale for like $300, the other for $600. So I need to thank Kenny Lee and my friend Moses Kagan. Kenny lent this book to my friend Moses, and then he allowed Moses to send the book to me, which in turn allows me to make this podcast for you. So let's go ahead and jump into this unbelievable story. The last three-year-old besides myself was crying in the big room of the kindergarten, a boarding school for preschoolers. But soon even he would go and I would be left all alone. And then the hunger. I dreamt of eating lizard meat. The only thing I could do was drink water to fill my stomach so full that it hurt and made me briefly forget about my hunger. And so at this boarding school, this kindergarten, Li is the only one without a family. So he's the only one that doesn't go home. So imagine he's probably four or five years old. And every weekend, all the other kids get to go home. Li cannot go home and we'll find out why he can't go home. He's gonna be in like nine different, I think he moves around nine different times by the time he's nine years old. So it says, the other kids had come back and would show off the goodies they had brought from home. They talked about the movies they had seen or the stories they had heard from their parents. And so from the very beginning, Li understands how different his life is from his classmates. I was scrawny. I wore the same jacket and pants all year round. My clothes were covered with holes and patches. I was always dirty. And so immediately he starts to get bullied by his entire class. They somehow had learned that my parents were people with problems. Your father's a spy and your mother's a landlord's daughter. Remember, this is Communist China. You're nothing but a bastard. The children would start to chant, bastard, bastard, nobody picks you up. Bastard, bastard, nobody picks you up. My kindergarten was like a prison. Every day we got up, dressed quickly and washed. Then the whistle blew and we lined up to go to the dining room. Then we sat at the long tables with our hands behind our backs. The teacher made a speech. The big kids would then recite some of chairman Mao's quotations. The teachers would control the children by making them hate each other, by encouraging factions. That was what you could do when you had authority. The teachers beat the children with whatever was at hand. Fly swats or sticks and a bamboo switch. At meals, we had to sit still while the teacher put the food in our bowls. If you ate too fast, you would be hit. And you had to eat everything. I was scared to death.