Interesting Article on Mohnish Pabrai

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A Disciple of Warren Buffett’s Finds His Own Way of Giving Back (H/T to Guy Spier

When Mohnish Pabrai was a child he was lucky enough to attend an elite private school in his hometown of Mumbai, India. For several years, he sat next to a classroom window that overlooked an immense slum that flooded during monsoons and blistered in the heat. Every day, he watched as the slum’s inhabitants struggled with basic survival. Only 10 feet away from this destitution, young Pabrai felt as if there was an unbridgeable gulf between him and the caste of Indians known as “the untouchables.” “Not once did any teacher ever acknowledge there was anything worth looking at out that window,” Pabrai says. “You had the constant smell of raw sewage, but it was never mentioned.”

Decades later, Pabrai, now 47, is doing more than reminisce about the horrors he witnessed outside that window. A wealthy hedge fund manager, Pabrai has come up with a way to lift some of the most desperately poor children out of those slums. By creating The Dakshana Foundation, a market-based philanthropy with clear and sustainable objectives that are easy to measure, Pabrai is sending hundreds of Indian students to the country’s most elite technical university — and therefore giving them a shot at a life-changing career.(See photos of a slum in Mumbai.)

It would certainly be simple for someone like Pabrai never to look back. As the managing partner at Pabrai Investment Funds in Irvine, California, he is a millionaire many times over. Pabrai was once featured in Forbes magazine in his pajamas, a symbol of the easy life, and in 2008, he shelled out $320,050 to have lunch with his business idol, Warren Buffett (whose investment style Pabrai emulated with his family of hedge funds). Yet, he says that vision of poverty he witnessed through his classroom window has haunted him all these years: “In some subconscious way that permeated and influenced me.”

Inspired by Buffett’s decision to donate his fortune to the Gates Foundation, Pabrai and his wife, Harina Kapoor, decided they would start giving away roughly $1 million a year as their net worth crossed $50 million. Although at first he wasn’t sure how to give away his money, he knew he wanted to be able to quantify his charitable offerings rather than use them to just sit on a museum board with other wealthy investors. He also looked at simply writing a check as an old man’s sport. “I have the energy of a lifetime to build something,” he says. “I can start experimenting now with the clear understanding that many of my experiments will fail.”

A firm believer in education as a golden ticket, in 2007 Pabrai set about establishing special two-year boarding schools where impoverished yet highly intelligent students can study to take the Dakshana-subsidized entrance exam for the prestigious Indian Institutes of Technology (IIT). With a 2% admission rate, it’s the most exclusive technical university system in the world. Tuition is free, but the entrance exam is expensive and daunting. Many hire costly tutors prior to taking the test. Five years later, Pabrai’s schools are producing some extraordinary results. Nearly three quarters of Dakshana’s graduates were accepted by the IIT system last year. And if a Dakshana scholar does not pass the IIT exam, he or she is then encouraged to take the exam for another college, such as the National Institutes of Technology (NIT).

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