Mental Models for Reading Indian Businesses

Imagine your friend Rohan wants to know if the new sweet shop near his school will do well. He looks at one thing only: the price of the barfi. It is cheap. So he says, "This shop will be a hit!" But is that enough? A cheap sweet can still taste bad. The shopkeeper can still be rude. The shop can be in a lonely lane where no one walks. Looking at only one thing gave Rohan a very small, very risky answer.

Professor Sanjay Bakshi is an Indian teacher and investor. He teaches value investing to students in Delhi. He learned a big idea from Charlie Munger and Warren Buffett, and he explains it to Indians in a simple way. The idea is this: to understand a business, you must look at it from many angles at once, not just one. Munger called this collection of angles a latticework of mental models - a fancy phrase that just means "a small kit of simple big ideas from different subjects." A mental model is only a clear, tested way of thinking about how the world works. Bakshi's gift is showing how to use these simple ideas to read an Indian business - a kirana, a sweet brand, a tuition class - the same way a good doctor checks many things before saying you are healthy.

There is an old Indian story of blind men touching an elephant. One holds the leg and says, "It is a pillar." One holds the tail and says, "It is a rope." One holds the ear and says, "It is a fan." Each man is honest, and each man is wrong - because each felt only one part. To know the elephant, you must put all the touches together.

Reading a business is exactly like this. One person looks only at profit. One looks only at the founder's smile. One looks only at the fancy office. Each sees a small truth and misses the whole animal. Bakshi's method, borrowed from Munger, is to hang a few reliable ideas on a frame in your head and point them all at the business at once.

You do not need eighty subjects. You need a small kit of simple, strong ideas, and the habit of reaching for the right one. When Bakshi looks at a shop, he asks money-maths questions (does it earn real cash?), people questions (why do buyers keep coming back?), competition questions (can the shop next door easily copy this?), and history questions (what happened to other shops like it?). No single question is the answer. Put together, they surround the business so its weak spots cannot hide.

illustrative Asha runs a small tuition class called Kavi Coaching. Rohan looks at only one number: last year it earned ₹6 lakh profit, up from ₹4 lakh. One lens says, "Growing fast, must be great." Now let us bring the latticework.

The money-maths lens asks: is that ₹6 lakh real cash in the bank, or unpaid fees that parents still owe? If ₹3 lakh is still owed, the profit is half as solid as it looks. The people lens asks: why do students come back? If they come only because Asha herself teaches, and she is tired and wants to stop, the class has no future without her. The competition lens asks: can anyone copy this? If a new coaching centre with a big banner opens across the road tomorrow, will students leave? The history lens asks: what happened to the last three coaching classes in this area that grew fast on one star teacher?

Each lens is a different question, and the one-number reader asked none of them. The single-lens view said "great." The four-lens view says, "growing, but the cash is soft, it leans on one person, and rivals can copy it easily." That is a much more honest picture. Bakshi's point is not that any one lens gives the final answer - it is that together they stop you from being fooled by the one shiny number.

Half-learned ideas are worse than none. If you only half-understand a model and throw around big words like "network effect" or "compounding" without really knowing them, you feel clever while thinking badly. A wrong idea used with confidence is more dangerous than admitting you do not know. Bakshi keeps stressing: learn the few models properly, in plain words, before you trust them.

You can fit models to a story you already like. It is easy to first decide "I love this shop" and then pick the models that make it look good. That is cheating yourself. The models only help if you use them before you decide - to ask hard questions honestly - not afterward to defend a choice your heart already made.

More lenses can mean more ways to fool yourself. A clever person with many models can build a fancy reason for almost anything. The kit is a check against seeing only one side; it is not a magic machine. When the lenses disagree and you truly cannot make sense of it, the honest answer is "too hard for me" - and walking away is allowed.

The habit costs almost nothing - only reading and the honesty to look past your favourite idea - which is why Bakshi teaches it to ordinary students, not just rich people. What it cannot give you for free is depth. Bakshi has read for decades across money, behaviour, and history, so his few models are strong and real, not slogans. You should copy the direction, not pretend you already have his depth. For an Indian reader this is very useful, because our businesses are often family-run kiranas, sweet brands, and small factories where the numbers alone hide a lot. Deliberately run each one past a few plain lenses - the cash (is the profit real money?), the people (why do buyers stay?), the copycats (who can easily do the same?), and history (how did similar shops end?). The accounts are one lens. Most mistakes hide in the other lenses.

• Notice when you are using only one lens. If your whole reason is "the profit went up" or "the founder seems nice," you are the blind man holding one leg - reach for more angles.
• Keep a small kit of plain ideas. Real cash versus paper profit; why buyers come back; who can copy it; what history shows. Understood simply, not as buzzwords.
• Ask the questions before you decide, not after. Use the lenses to test a business honestly, not to defend a choice you already made.
• Learn each idea properly. A half-known model used boldly fools you worse than knowing nothing.
• Say "too hard" when the lenses fight and you cannot settle it. Walking away from a confusing business is a smart move, not a weak one.