In a world obsessed with originality, there’s a widely misunderstood yet powerful tool that many overlook: cloning. While innovation is celebrated, cloning—replicating a successful model and executing it well—has built some of the greatest businesses in history. Yet, for some reason, many people resist it.
As Mohnish Pabrai put it in his conversation at Schroders’ The Value Perspective Podcast:
“One of the weird, unusual things about humans—and I still do not know why this is the case—is that most humans have a strong aversion to cloning… They almost think it is like copying.”
But the reality is, some of the most successful companies and investors have thrived by cloning. Microsoft, for example, built its empire not by being the first to market but by studying and improving existing ideas. As Pabrai noted:
“They saw WordPerfect and cloned it to create Word. They saw Lotus 1-2-3 and created Excel. They saw Netscape and created Microsoft Explorer and now Edge. They created Bing. You know what Bing stands for: ‘But It’s Not Google.’”
Even Apple, often seen as an innovation powerhouse, borrowed its most defining technology—the graphical user interface and the mouse—from Xerox PARC Labs. Sam Walton, the founder of Walmart, built a retail empire not by inventing a brand-new concept, but by refining and expanding on what Kmart and Sears had already done:
“For the first 15 or 20 years of Walmart’s existence, there was absolutely nothing new that Walmart came up with. It was a completely cloned model taken from Kmart and Sears.”
This approach isn’t just for corporations—it’s an essential strategy for investors. Pabrai himself cloned his hedge fund model, Pabrai Investment Funds, directly from Warren Buffett’s partnerships:
“In three decades after [Buffett] shut down what is arguably the most successful hedge fund ever, no one had cloned his model; no one had cloned his fee structure. Nobody wanted to do it that way.”
His response? Do what nobody else was willing to do. Instead of charging the typical 1-2% management fee, he followed Buffett’s model and eliminated management fees altogether.
“I have copied that from Warren. You latch onto a demographic that wants that; they want the aligned interest of the investment manager, and it works.”
The lesson here is simple: cloning is not a weakness—it’s an edge. The business world is full of ideas that have already been proven. Instead of chasing novelty, sometimes the smarter move is to find a successful blueprint and execute it better.
As Pabrai wisely concluded:
“What I have found over the decades is that, number one, most humans, for whatever reason, think cloning is beneath them. And number two, if you do not follow that bias, it is going to give you a huge leg up in life.”
The question is, will you take that advantage?
You can find the entire interview here:
Mohnish Pabrai’s Conversation at Schroders – The Value Perspective Podcast
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