Win With Flynn

Welcome back. This is part two in the series, what I’ve learned from Berkshire Hathaway Annual Meetings. Today we’ll focus on lessons for life.

If you missed part one, you can find it here: what I’ve learned from Berkshire Hathaway annual meetings [business]

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As I mentioned in part one, a few years ago I stumbled across a podcast feed for the Berkshire Hathaway Annual Meetings. They are about five hours each, going back to 1994. So, like a psychopath, I started in on them.  

And I loved every minute. 

Their annual meetings are held in Omaha, Nebraska every spring, and after a short “meeting” to elect the board and check a few required boxes for the SEC, they turn the microphones over to their shareholders, letting them ask questions about Berkshire Hathaway specifically, business generally, and in more recent years, the art of living a good life. 

I’d make a note when I heard something interesting, funny, smart, educational, or all the above. 

Warren and Charlie ended up getting the same questions on multiple occasions and they gave the same answers. They were remarkably consistent. Towards the end, listening to these most recent years, and Charlie’s last years, I was struck by the feeling that I knew their answers before they gave them. Like listening to your parents tell the same stories over and over again. Those stories you respond to with an eyeroll. And those are the same stories, inevitably, you retell to your children. 

Because they are important. 

So, as my third entry into the “what I’ve learned from” series, second on Berkshire Hathaway, I’m serving up my favorite lessons on life.

Part One: Business (last week)

Part Two: Life

A learning machine… 

CHARLIE MUNGER: Now, what on earth has caused this extreme record [at Berkshire Hathaway] to go on for such a very long time? 

I would argue that the young man who was reading everything he could read when he was 10 years old became a learning machine. He got a lot of power early and then he got a very long runway where he kept learning. 

If Warren had not been learning all the while, I’m telling you having watched the process closely, the record would be a pale shadow of what it is. And Warren has improved since he passed retirement age. 

In other words, in this field, you can improve when you’re old. 

Now, most people don’t even try and create that kind of a record. They pass power from one 65-year-old to one 59-year-old and then do it over and over again. But you get an enormous advantage from practice in this field. 

And so, what happened accidentally in the case of Warren has helped you shareholders greatly because you had this long run with power extremely concentrated, and with the man holding the power being a ferocious learner. 

Our system ought to be more copied than it is. (Applause) 

This idea of passing the power from one old codger to another, in a settled way, is not necessarily the right system at all. 

Note from Dave: Two things. Number one, this highlights the value of compounding. Not compounding returns, although that is important too, but compounding your skills and knowledge and interests.  

Number two is something I call the turnover tax. This is what Costco has figured out as well as a number of other outstanding businesses. At Costco, they pay higher than the market rate for roles in their warehouses, because they understand the costs associated with turnover. Hiring, training, and team synergy plays a role in the execution of business. 

Have you seen these NFL franchises that swap out coaches every other year? The Jets, the Jags. They pay a heavy turnover tax each time. New staff, new plays, everything starts over each time you shift your direction. You never get the chance to compound.

How to get a good partner: 

CHARLIE MUNGER: Yeah, I always say the way to get a good spouse is to deserve one. And the way to get a good part — 

WARREN BUFFETT: What’s your second way? (Laughter) 

CHARLIE MUNGER: Well, but to get a good partner you should deserve a good partner. It’s an old-fashioned way of getting ahead. And the interesting thing about it is it still works in these modern times. Nothing changes. If you just behave yourself, it’s amazing how well it works.  

Note from Dave: It’s the golden rule. Was your service bad? Ask yourself, how great were you as a customer? Demanding, impatient, confusing? Ask the same questions of yourself as a friend, spouse, manager, neighbor.

The best marriage advice I’ve ever received was to “make her feel lucky. Lucky to have you in her life.” Now, it’s impossibly hard, but worthy of a full effort. And it holds true in so many areas. Make the Little League kids feel lucky to have you in the dugout. Make the sales team feel lucky to have you on the call.

Those teams will really start to come together. I promise. You’ll get the performance and partnership you’ve wanted, and you’ll deserve it.

How to properly disagree: 

WARREN BUFFETT: Charlie says that if you disagree with somebody, you want to be able to state their case better than they can. 

CHARLIE MUNGER: Absolutely. 

WARREN BUFFETT: And at that point, you’ve earned the right to disagree with them. 

CHARLIE MUNGER: Otherwise, you should just keep quiet. It would do wonders for our politics if everybody followed my system. 

Note from Dave: This is the idea of a steel man vs a straw man and is mandatory if you want to have a real conversation about real things. The power of perspective can help. 

How to end a disagreement: 

WARREN BUFFETT: When Charlie and I disagree, and we do disagree a lot. We never argue, but we disagree. 

And Charlie, when he gets to the point where he really wants me to do something, like buy the BYD interest or something, he always says to me, “Well, in the end, you’ll see it my way. Because you’re smart, and I’m right.” (Laughter) 

Note from Dave: You can’t really change a person’s mind, but a spoon full of sugar can help. Before engaging in the conversation though, double check that they’re smart and you’re right.

How to find your calling: 

WARREN BUFFETT: I was very lucky. I found what I wanted to do because my dad happened to be in a business that he wasn’t interested in, but they had some books down there, and I loved my dad, and I’d go down and read the books and they interested me. 

And, you know, I’m glad he wasn’t a professional boxer, or I wouldn’t have any teeth left. (Laughs) It was an accident, just a total accident, but I do think you will know it when you see it.  

I wanted to work for Ben Graham. I didn’t care what I got paid, it didn’t make any difference — I just knew that that’s what I wanted to do. 

And then I pestered him for three years and he finally hired me. And then I found somebody else that I’d rather work for, who happened to be myself. (Laughter) And so I’ve been working for myself ever since.  

CHARLIE MUNGER: Well — you know, I could give the advice, figure out what you’re bad at and avoid all of it. 

That’s the way Warren and I found our profession. We failed at everything else. 

WARREN BUFFETT: We worked at everything till we found the ideal employers: ourselves. (Laughs) 

CHARLIE MUNGER: I know: Warren said, “Work for somebody you admire.” (Laughter) The only one he knew was the one he was shaving. 

There are two things that neither one of us has ever succeeded at: We’ve never succeeded at anything that didn’t interest us. And we’ve never succeeded at anything that was hard where we didn’t have much aptitude for it. I’m just amazed. You’d think, if you’re smart, you could do things that don’t interest you. But you can’t. 

Note from Dave: Follow the clues from your curiosity as a child. Work for someone you admire. Understand that your best work cannot come from an area you are not interested in.

And your best work is what everyone wants from you. 

Finding mentors: 

WARREN BUFFETT: You don’t have to look at the present-day ones, necessarily. 

If you wanted to look at great business careers, you could look at Tom Murphy or Don Keough on our board. 

And you can learn everything you could learn about being an outstanding businessperson by just studying them. And you don’t have to study somebody that is 55 and currently in some executive position. The lessons are timeless. 

If you learn the lessons of Tom Murphy, you don’t need to learn any other lessons in terms of business. 

And I would say if you learn the lessons of certain investors in the past, you know, you don’t need to worry about a contemporary example. 

Sometimes people would say to me or Charlie at one of these meetings, you know, if you could have lunch with one person that lived over the last 2000 or so years, who would you want to have it with? 

Charlie says, “I’ve already met all of them.” Because he’d read all the books. I mean he eliminated all the trouble of going to restaurants to meet them, he just went through a book, and he met Ben Franklin, and he liked Ben Franklin’s stuff better than he liked mine. 

Note from Dave: I love this perspective. It’s not what you know but who you know…but what if you know all the greatest minds in all of history? That feels like quite a competitive advantage. Go to the library and introduce yourself.

Invest in your mind and body — particularly your mind:

WARREN BUFFETT: Just imagine that you’re 16 and I was going to give you a car, any car you wanted to pick, but there was one catch attached to it — it was the only car you were going to get for the rest of your life, so you had to make it last. You can pick out the fanciest you want, a Maserati, whatever it might be. 

How would you treat it? Well, of course you would read the owner’s manual about five times before you turn the key. You’d keep it garaged. Any little rust, you would get taken care of immediately. You’d change the oil twice as often as you were supposed to, because you know it has to last a lifetime. 

You get one body and one mind, and it’s going to have to last you a lifetime, and you better treat it the same way, and you better start treating it right now, because it doesn’t do you any good to start worrying about that when you’re 50 or 60 and that little speck of rust has turned into something big. 

Invest in your mind and body — particularly your mind — we didn’t work too hard on the bodies around here. (laughter)  

It pays off in an extraordinary way. 

Your best asset is your own self. And you can become, to an enormous degree, the person you want to be. 

When I get classes in universities, I just ask them to imagine they were going to buy one of their classmates to own 10 percent of for the rest of their life. Which classmate would they pick? 

They wouldn’t pick the one with the highest IQ, or necessarily the one with the highest grades. They’d pick the person that’s going to be effective. 

And the reason people are effective is because other people want to work with them. They want to be around them.  

Being generous, being humorous, being on time, not claiming credit for more than you do but rather less than you do, helping other people — all kinds of human qualities that turn other people on. The habits they have today will follow them throughout life, so why not have good ones? 

Note from Dave: Invest in yourself, start building good habits, and also understand what is valuable to other people. It’s these “human qualities.” 

If the people that you would hope to have love you, do love you: 

WARREN BUFFETT: I tell college students that when you get to be my age, you will be successful if the people that you would hope to have love you, do love you. 

Charlie and I know a few people that have got a lot of money, and they get testimonial dinners, and they get their names on buildings, and the truth is, nobody loves them. 

Not their family, not the people who name the buildings after them. It’s sad. 

It’s something you can’t buy. I mean, Charlie and I have talked a lot of times, if we could just buy a million dollars’ worth of love, you know? But it doesn’t work that way. 

The only way to be loved is to be lovable. But the nice thing about it, of course, is that you always get back more than you give. 

I don’t know whether it was Oscar Hammerstein or who said, “A bell’s not a bell till you ring it, a song’s not a song till you sing it. Love in the heart isn’t put there to stay. Love isn’t love till you give it away.”  

Basically, you’ll always get back more than you give away. 

And if you don’t give any, you don’t get any. It’s very simple. 

CHARLIE MUNGER: You don’t want to be like the motion picture executive in California. They said the funeral was so large because everybody wanted to make sure he was dead. (Laughter) 

And there’s a similar story about the minister saying at the funeral, “Won’t anybody stand up and say a good word for the deceased?” And there was this long silence, and finally one guy stood up and he said, “Well, his brother was worse.” (Laughter) 

WARREN BUFFETT: Look around at people older than you, your older relatives or whatever, and you will not see an unhappy person who is loved by those around them. 

Note from Dave: “And in the end, the love you take, is equal to the love you make…” – The Beatles 

What is valuable in life: 

WARREN BUFFETT: The two things you can’t buy, time and love. And I’ve been very lucky in life, in being able to control my own time to an extreme degree. Charlie has always valued that, too. 

That’s why we really wanted to have money, so we could do what we damn pleased. It wasn’t six houses or boats or anything.  

We’ve got the perfect job for a couple of guys with aging bodies. And we get to do what we love to do every day. 

I mean, I literally could do anything that money could buy, pretty much. And I’m having more fun doing what I do than doing anything else. 

We’ve got it very good, but we don’t have unlimited time.  

CHARLIE MUNGER: Anybody’s lucky if they spend their time doing what they really like doing. That’s a blessing. 

WARREN BUFFETT: Yeah, we’ve had so much good luck in life. It sort of blows your mind. Starting with being born in the United States. And Canada would be fine too, incidentally. I don’t want to offend anybody. (Laughter) 

Note from Dave: It may not be time and love for you, but getting clear on your top two is an important thing to ponder.  

Begin with the end in mind: 

WARREN BUFFETT: Ask yourself who you’d want to spend the last day of your life with, and then figure out a way to start meeting them, and meet them as often as you can, because why wait until the last day. And don’t bother with the others. 

Use Charlie’s advice of thinking how you’d like your obituary to read, and then start selecting the educational past, the social past, whatever.  

You want to find the people to share life with and the activities to participate in that fit you. And if you get lucky, like Charlie and I did, you find things that interest you young. But if you don’t find them right away, you keep looking. And I always tell students to find the job that you would like to have if you didn’t need a job. 

I would try to figure out how you’d want to look back on your life and start to go on the path that leads to that goal. If you’re thinking that way, you’re more likely to get there. 

Note from Dave: If you don’t know where you’re going, how will you know when you get there?  

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