#362 Li Lu

John Mackey, founder of Whole Foods, shared that if he had listened to the podcast earlier, emphasizing cost control, Whole Foods might still be independent. This sentiment echoes Andrew Carnegie’s belief that while profits and prices fluctuate, cost savings are permanent. The podcast's main theme of controlling expenses resonates with Ramp, a company that offers tools for cost control, including corporate cards and automated expense reporting. The episode also highlights Li Lu’s memoir, "Moving the Mountain," detailing his harrowing childhood in communist China, his quest for education, and the brutal realities of the Cultural Revolution, culminating in the Tiananmen Square massacre.

• John Mackey, the founder of Whole Foods, emphasized the importance of controlling expenses, attributing it as a pivotal factor that could have kept Whole Foods independent.
• Andrew Carnegie's philosophy on cost control is highlighted, where he believed that while profits and prices are cyclical, cost savings are permanent and can be strictly controlled.
• Ramp, a company focused on cost control, is mentioned as embodying this principle by providing tools for controlling spend, such as corporate cards and automated expense reporting.

"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."

• John Mackey attributes the potential independence of Whole Foods to the lessons learned from the podcast, particularly on cost control.

"Profits and prices are cyclical, subject to any number of transient forces on the marketplace. Costs, however, could be strictly controlled."

• Andrew Carnegie's quote underscores the importance of cost control as a more stable and manageable aspect of business operations.

"Ramp gives you everything you need to control your spend. Ramp gives you easy to use corporate cards for your entire team. Automated expense reporting and cost control."

• Ramp is presented as a modern tool that embodies Carnegie's philosophy by providing comprehensive cost control solutions.

• The book "Moving the Mountain: My Life in China, from the Cultural Revolution to Tiananmen Square" by Li Lu is introduced.
• Li Lu is the founder of Himalaya Capital Management and had a significant investment partnership with Charlie Munger.
• The book, written in Li Lu's early twenties, details his challenging childhood and experiences during the Cultural Revolution in China.

"Li Lu is the founder of Himalaya Capital Management, which he's been running for about 30 years. Lee also had a 20-year investment partnership with Charlie Munger."

• Li Lu's professional background and significant partnership with Charlie Munger are highlighted.

"Lee wrote this book in his early twenties when he fled communist China for the United States."

• The book was written during a pivotal time in Li Lu's life, capturing his early experiences and struggles.

• Li Lu's early childhood was marked by extreme hardship, including being left alone at a boarding school and suffering from severe hunger.
• He faced bullying and social isolation due to his family's political background and economic status.
• Despite these challenges, Li Lu developed resilience, confidence, and a thirst for knowledge.

"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."

• Li Lu's loneliness and isolation at a young age are depicted, setting the stage for his challenging childhood.

"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."

• The extreme hunger Li Lu experienced is described, highlighting the severe conditions he endured.

• Li Lu was bullied by his classmates who taunted him about his parents' political and social status.
• The teachers at the boarding school used fear and division to control the children, further isolating Li Lu.
• Through these experiences, Li Lu developed a sense of inferiority but also began to cultivate resilience and self-confidence.

"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 bullying Li Lu faced due to his family's background is highlighted, showing the social challenges he encountered.

"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."

• The harsh and abusive environment at the boarding school is depicted, illustrating the difficult conditions Li Lu endured.

• Li Lu's encounter with lizards at the boarding school helped him overcome fear and build confidence.
• He began to question the collective beliefs and sought the truth, demonstrating his curiosity and desire for accurate information.
• Li Lu's ability to gather information and learn from others became a crucial skill in his later life.

"My courage grew. I was no longer afraid of lizards. Gradually, I grew in confidence. Gradually, I realized that the most important thing was confidence. If you had confidence and believed you were right, you would feel stronger."

• Overcoming fear of lizards helped Li Lu build confidence and resilience.

"I had to ask detailed questions to understand a story and often interrupted the storyteller. I developed a keen sense of imitation, narration, and imagination. I had a great thirst for knowledge."

• Li Lu's inquisitiveness and desire for knowledge are highlighted, showing his proactive approach to learning.

• Li Lu's resilience and willpower are exemplified by his response to a hornet attack, where he fought back despite the pain.
• His determination and fighting spirit are recurring themes throughout his early life experiences.

"The more violently the hornets attacked me, the stronger my will was to fight them."

• Li Lu's response to the hornet attack illustrates his strong will and resilience.

• Li Lu's biological father is introduced when he comes to collect Li Lu from the hospital after the hornet attack.
• This marks a significant moment in Li Lu's life, as he begins to have contact with his family.

"A week after I left the hospital, my father came to collect me. We can't keep the child any longer, said the head of the kindergarten."

• The introduction of Li Lu's father signifies a turning point in his early life, as he begins to reconnect with his family.

• Li Lu's difficult upbringing in China during the Cultural Revolution.
• His parents were intellectuals, placing them in a low social category.
• Li Lu's father was accused of being a spy and his mother came from a land-owning family, both considered negative backgrounds by the government.

"They can do anything to you if your background is bad. My mother was from a land-owning family, and that's bad. My father listened to a foreign broadcast on the radio, and someone overheard it, so they accused him of being a spy. That's even worse."

• Explanation: Li Lu explains the severe repercussions of having a bad background in China during the Cultural Revolution.

• Li Lu lived with Big Dad and Big Mom, who had six children and very limited resources.
• The family struggled to make ends meet, with children collecting firewood and food from the streets.

"My father took me to live with Da Pa. So that translates to Big Dad, which is what you and I will call him Big Dad. And then Big Mom and their six children."

• Explanation: Li Lu is taken in by Big Dad and Big Mom, showcasing the communal support despite limited resources.

"They had very little money to the point where all their clothes, including Li Lu's, had to be made by Big Mom. And the kids had to go out in the street and work."

• Explanation: The dire financial situation of Big Dad's family is highlighted, emphasizing the harsh living conditions.

• The impoverished neighborhood was rife with violence and alcoholism.
• Li Lu experiences emotional trauma from being called a spy's son.

"One of their neighbors is drunk all the time. He beats on his wife. There is all kinds of violence."

• Explanation: Li Lu describes the violent environment he grew up in, adding to his emotional and psychological stress.

"After the fight, Big Dad punished all of his sons except me. I cried and asked him, aren't you my dad? Why did they say, my dad is a spy? Are you a spy?"

• Explanation: Li Lu's confusion and emotional pain from being labeled a spy's son are evident.

• The Zhang family, who had close ties with the government, abused their power by controlling ration tickets and having connections with the local police.

"When I think of the Zhangs, I think of true evil. They could simply tell you that they didn't get enough tickets from the district government and essentially starve you."

• Explanation: The Zhang family's manipulation and abuse of power are highlighted as a significant issue in Li Lu's community.

• Big Dad dies in a coal mine explosion, leaving the family without its main support.

"We found Big Dad on a cart. His face was blue, his mouth, nose, and ears full of coal. He was cold and hard. Big Ma collapsed. This family had lost its pillar."

• Explanation: The tragic death of Big Dad is a turning point, leaving the family in dire straits.

• Li Lu's parents are being rehabilitated, and he starts living with them for the first time in a small room.
• He feels like a stranger with his own parents.

"My family finally had space of its own. Every few weeks, my mother would come in from the commune where she's living and working and we would get together. I called the days when we were together, the days I have a home."

• Explanation: Li Lu's sense of belonging is fleeting and dependent on rare family reunions.

"By the time he's almost nine, I had lived with at least nine families."

• Explanation: Li Lu's unstable childhood is marked by constant movement between different families.

• Despite numerous challenges, Li Lu develops a strong desire to learn and read.
• He is supported by a kind teacher, Wang, who offers him a place to stay and encourages his education.

"Teacher Wang said to me, I hear you're leaving us. Do you still want to learn to read and write? I told her, I want to study. She said, you cannot leave here. You can live in my home if your family cannot take care of you."

• Explanation: Teacher Wang's support is crucial for Li Lu's educational aspirations and future success.

• Li Lu stands up to a bully named Fatty, whose father holds a significant position of power.
• This incident leads to further complications for Li Lu and the teacher who supports him.

"Fatty was furious, dragging the girl along by her hair. She screamed in pain. So I went up to Fatty, slapped his face and said, let go of her. I bit his hand. I seized a stone and began hitting him on the head."

• Explanation: Li Lu's courage in standing up to a bully reflects his strong sense of justice despite the risks involved.

• Li Lu survives the 1976 Tangshan earthquake, the deadliest earthquake in human history.
• He witnesses the devastating aftermath, including the death of Big Ma and her children.

"Suddenly I tripped over something. My hand touched something fleshy. It was a severed arm. I blacked out and fainted."

• Explanation: The traumatic experience of the earthquake and its immediate impact on Li Lu.

"When I looked down through the hole, I saw six pairs of blue and black legs lying there. All their upper bodies were crushed under the roof."

• Explanation: The graphic description of the aftermath, highlighting the immense loss and trauma experienced by Li Lu.

• Li Lu's early life is marked by extreme hardship, instability, and the abuse of power.
• Despite these challenges, he develops a strong desire to learn and a deep sense of justice.

"I had begun to love reading, and yet, in every new environment, he finds the same reoccurring theme that those in authority, that those in power routinely abuse the people that they have power, control and dominion over."

• Explanation: The recurring theme of power abuse in Li Lu's life and his growing love for reading and learning.

• The facade of equality in the commune contrasted with the reality of crude inequality.
• Party leadership enjoyed better resources and privileges despite promoting equality and honesty.

"The party's secretary had set up a separate tent for his own family. The cook prepared food separately for his family. The secretary's family had better food because all of the relief goods were sent to him first."

• Illustrates the disparity between the leadership and the common members of the commune.
• Highlights the hypocrisy of the party's rhetoric versus their actions.

"The party leadership had said that we're all the same, that we should never take a piece of thread that was the public property, that we must be honest."

• The official propaganda promoted equality and honesty, which starkly contrasted with the reality.

• The government had complete control over information, leading to widespread indoctrination.
• The reaction to Chairman Mao's death exemplified the extent of the indoctrination.

"The great leader of the chinese people, the founder of the Chinese Communist Party, the great teacher of the revolution of the world, the Red sun in the hearts of the chinese people, the chairman of the Chinese Communist Party and the chairman of the party military committee, comrade Mao passed away due to an incurable disease."

• The announcement of Mao's death was dramatic and emphasized his importance to the people.

"They're crying and mourning. It's like you would expect. Their reaction is like, almost if your child had died."

• The intense mourning shows the deep indoctrination and emotional control the government had over the people.

• Building a Kang (a traditional heated platform) was essential for survival in the cold climate.
• The protagonist's father became well-known for his skill in building Kang, which helped the protagonist understand and bond with him.

"My father became well known in the area as an expert Kang maker. Every day, people came to ask him for help."

• The father's skill and reputation provided a sense of pride and connection for the protagonist.

"These trips with my father to build the Kang helped me understand him better. Everywhere he went, people praised him. He was good at everything."

• Building the Kang together allowed the protagonist to see his father's strengths and gain a deeper understanding of him.

• The protagonist discovered a suitcase full of pictures and writings that revealed his parents' past lives.
• This discovery provided insight into why his family was ostracized and why he was sent away.

"I found pictures of foreign architecture, bridges, churches, and people in strange costumes. I saw pictures of a young man with glasses wearing a white western suit. He looked so elegant and handsome."

• The pictures depicted a different, more prosperous past life of his parents.

"My mother talked about her life and the fact that intellectuals, which his mother was one, were sent to do farm work as some form of ideological remolding."

• His mother explained the ideological remolding that intellectuals like her had to undergo.

• The protagonist's dedication to learning and reading became a crucial part of his future success.
• His mantra of "accurate and complete information" drove him to extraordinary lengths to gather knowledge.

"Lee's mantra became accurate and complete information. Complete sometimes meant going to extraordinary lengths to get a read on the CEO of a company being researched by Himalaya Capital Management, such as attending their church or talking to their neighbors."

• Demonstrates Lee's commitment to thorough research and understanding.

"This is why biographies are so important, why understanding the early life of somebody is so fundamental to understanding why they do the things they do, why the way. The way they are."

• Emphasizes the importance of understanding a person's background to comprehend their actions and motivations.

• The resumption of national college entrance exams provided a pathway to a better future.
• The concept of competition was introduced as a motivating factor for hard work and success.

"The national College entrance exams have resumed. I asked, what is a college entrance exam? He said, any young person who wants to enter college has to pass an exam. It's kind of a competition."

• The college entrance exams were seen as a gateway to higher education and a better life.

"Competition means you work hard and society will give you a reward. I still didn't quite understand it. Is competition a good thing? Of course it is, he said. Little Lou, you should work hard to prepare for your future."

• Competition was framed as a positive force that encouraged hard work and rewarded effort.

• Lee's dedication to education led to his escape from China and significant academic achievements in the United States.
• Despite initial language barriers, Lee excelled academically and obtained multiple degrees simultaneously.

"He moves to the United States. He can't speak English. He learns English in a summer, and he becomes one of the first people in Columbia's school history to receive three degrees simultaneously."

• Lee's perseverance and dedication enabled him to overcome language barriers and achieve academic success.

"He gets a BA in economics, an MBA, and a JD. So it makes perfect sense with what we've gone over so far in the book, with what you know about his background."

• His academic achievements were a culmination of his lifelong dedication to learning and hard work.

• The protagonist's grandmother and other family members provided encouragement and support for his education.
• The discovery of a new library and access to books opened up new worlds and possibilities for the protagonist.

"His grandmother, he says, was one of the first people to encourage me. She declared to everyone that I was no ordinary child."

• The grandmother's encouragement boosted the protagonist's confidence and motivation.

"It astonished me to see so many books all at once, thousands of them. I had never seen so many books in my life before. In books, I could travel to every corner of the world and communicate with the people there. I would read all day long."

• Access to books provided a means of escape and a way to expand his knowledge and understanding of the world.

• Charlie Munger's quote emphasizes the value of reading.
• Lee Lu's early life and education were heavily influenced by reading.
• Reading biographies allowed Lee to make "friends with the eminent dead."

"As long as I have a book in my hand, I don't feel like I'm wasting my time."

• This quote underscores the significance of continuous learning and reading.

"Most of the friends I made in books, Charlie says reading biographies means you're making friends with the eminent dead."

• Reading biographies provides a unique connection to historical figures and their wisdom.

• Lee's reading continued into senior middle school, equivalent to high school in the U.S.
• He read biographies of scientists like Enrico Fermi and Albert Einstein.
• Lee formed a secret group called "Stream" to discuss and question societal issues.

"This group must be kept secret because the present educational system suppressed human nature. Students were slaves and teachers were gods."

• The educational system in China was repressive, stifling free inquiry and critical thinking.

"One of his teachers that take a liking to Li realizes that you have to get out of China."

• Lee's teacher recognized his potential and advised him to study abroad for a more conducive learning environment.

• Lee's teacher narrated his own life story to illustrate the importance of continuous learning.
• Despite being from a peasant family, the teacher invested in books and education.
• This story resonated with Lee, who adopted a rigorous study schedule.

"I only slept four or 5 hours a day, and I read continuously. Though I was in a remote village, I spent all my money on books."

• The teacher's dedication to learning despite his circumstances highlights the transformative power of education.

"I drew up a detailed plan for myself. There were three months left before the exam. Every morning I got up at 4:45."

• Lee's disciplined study routine exemplifies his commitment to achieving academic success.

• The second half of Lee's life involved political activism, culminating in the Tiananmen Square Massacre.
• The government violently suppressed the protests, leading to widespread chaos and loss of life.
• Lee had to flee China to escape persecution.

"The army is going to clear out Tiananmen Square tonight. Citizens of Beijing, stay in your homes tonight."

• The government's announcement foreshadowed the brutal crackdown on protesters.

"A soldier thrust his bayonet into her chest, and she fell down dead. People ran over to her. The tanks kept coming and coming and opened fire everywhere."

• The violence and brutality of the government's response were shocking and devastating.

• Lee used a smuggling route to escape China and eventually started a new life in New York at 23.
• His journey from being an unwanted child to a fighter in Tiananmen Square and finally a fugitive highlights his resilience and determination.

"I had grown from an unwanted child to a fighter in Tiananmen Square, and now it was a criminal wanted by the government."

• Lee's reflection on his life underscores the drastic changes and challenges he faced.

"I didn't want to give in. I wanted to escape. I didn't know what kind of life awaited me. I just knew that I was on my way."

• Lee's decision to flee illustrates his desire for freedom and a better future.

• The podcast recommends reading the book about Lee's life for more detailed insights.
• The speaker is working on another episode focusing on Lee's investment strategies and lessons learned from Buffett and Munger.

"Highly recommend reading the book. If you can get a copy of the book, I will leave a link down below. If you buy the book using that link, you'll be supporting the podcast."

• Encouragement to read the book for a deeper understanding of Lee's journey and support the podcast.

"I'm in the process of doing research on another Lilu episode. This all about how he thinks about investing and company building, what he learned from Buffett and Munger."

• Upcoming content will delve into Lee's investment philosophy and business insights.