To dispel the idea that the story described in Chapter 1 was simply a matter of fortunate timing and luck, Pabrai describes another successful entrepreneurial venture where the risks were low but the potential upside was high. The story is that of Manilal Patel, a man who immigrated as an accountant, but could not land a job due to his broken English.
For several years Manilal worked for minimum wage, slowly building wealth while biding his time and searching for a business to own and run. For twenty years he worked nearly around the clock and began to invest in residential real-estate. After September 11th, however, he would get the break he was waiting for. Travel was down, and the hotel market was suffering once again. Manilal was able to take advantage by finding some partners and putting much of his own capital towards the purchase of a Best Western hotel. The hotel required a downpayment of $1.4 million, which Manilal borrowed against his house to help fund.
Pabrai goes into further detail about various scenarios of the hotels return's. But the lessons Pabrai is attempting to illustrate are clear:
1) When a terrific investment opportunity is available, a bigger investment should be made. As Pabrai calls it: "Few bets, big bets, infrequent bets".
2) Participate in investment opportunities that have minimal downside risk but high upside potential: "Heads, I win; Tails, I don't lose much."