Clone First, Innovate Never
We are taught that starting a business requires an original idea. Pabrai thinks this is one of the most damaging myths in entrepreneurship. The world will easily accept three or five versions of the same thing. The real question is whether you can find something that works, copy it precisely, and execute it better or in a new geography. Bill Gates and Sam Walton are remembered as innovators. Pabrai argues they were history's greatest cloners. Microsoft Word came from WordPerfect. Excel came from Lotus. Bing came from Google. Walmart cloned Sears and Kmart, then buried them. Howard Schultz saw a coffee shop concept in Italy and moved it to the US. As Pabrai puts it, if you are a great cloner, you will be 90 to 95 percent ahead of the rest of humanity. Sam Walton made this his operating discipline. On family road trips, he would leave his family in the car and walk into any retail store he passed, just to study it. He said no human in history had visited more retail stores than he had. Once a manager dismissed a competitor's messy operation as a terrible store. Walton said, "Yeah, but did you see the candle display?" Walmart is an amalgamation of borrowed ideas. That is not a weakness in the model. That is the model.