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Warren Buffett and Charlie Munger

lines on the record: 61
first: 2023-01-16
most recent: 2023-01-16
sittings or episodes: 1
sources: podcast

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“And then Munger goes into the important role that continuous education, seeking of knowledge that him and Buffett have dedicated their lives to, why that was so influential with the record that Berkshire was able to achieve. What people mean when they say a man has common sense is uncommon sense. We don't have any new tricks. We just know the old tricks better. Berkshire loves education and it loves people who like to learn. I think the one thing that we did that worked best of all, we were always dissatisfied with what we already knew. We wanted to know more. If Warren and I had stayed frozen in time, Berkshire would have been a terrible place. It's only that we kept learning that made it work, and I don't think that'll ever stop. Had Warren not been learning all this time, our record would be a mere shadow of what it is, and he's actually improved since he passed the age at which most other people.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“I pay no attention to economic forecasting. I worry about being in a good business with good people. People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts. It just happens over and over and over again. And this is an absolutely fantastic line. Still about forecasters. And it says, this is Buffett. Market forecasters will fill your ear, but they will never fill your wallet.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“And then I love how much Charlie Munger talks about the importance of practice in this book. This is something obviously that really stuck in my mind from reading the biography of Michael Jordan on episode 212. So Munger says, obviously, if you want to get good at something, which is competitive, you have to think about it and you have to practice a lot. You have to keep learning because the world keeps changing and your competitors keep learning. You have to go to bed wiser than when you got up. As you try to master what you're trying to do, people who do that almost never fail utterly. Very few have ever failed with that approach, meaning just trying to be a little wiser every day, right? Very few have ever failed with that approach. You may rise slowly, but you're sure to rise. And so then they go back to this and they go on this for quite a while. The idea is like, we're not listening to the opinions and the predictions of other people. That is just absolutely useless. Forming macro opinions or listening to the macro or market predictions of others is a waste of time. It is dangerous because it may blur your vision to the facts that are truly important.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, these next two pages are so good. It's essentially saying unusual records are a result of high levels of talent in low competition environments. Buffett says, I don't want to play a game where the other guy has an advantage. Somebody asked, how do you beat Bobby Fisher? The answer was you play him in any game except chess. He continues, one of the best motes in many respects is sometimes just having more talent. And then once you have that talent, he says, you want to work where there is little competition. One of the secrets of life is weak competition. The unusual records have been achieved by those who have worked relatively neglected fields in which the competition was light. Munger now jumps in. Competence is a relative concept. I realized what I needed to get ahead was to compete against idiots, and luckily for me there was a large supply of idiots.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“The importance of working with winners. My managerial model is Eddie Bennett. So he's talking about this is I'm just going to copy Eddie Bennett, who was a bad boy, his idea for how I run Berkshire, this metaphor is fantastic. My managerial model is Eddie Bennett, who was a bad boy. In 1919, Eddie began his work with the Chicago White Sox, who that year went to the World Series. The next year he switched to the Brooklyn Dodgers and they won their league title. However, our heroes, meaning Eddie, smelled trouble. He changed Burroughs and joined the New York Yankees in 1921, and they promptly won their first title in history. Now Eddie settled in shrewdly seeing what was coming. In the next seven years, the Yankees won five American League titles. What does this have to do with management? It is simple. To be a winner, work with winners. In 1927, Eddie received $700 for his share of the world's”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Be the last. It's episode 234 Sam Walton. I've never heard this before. It's absolutely fantastic. It is Charlie Munger's Northern Pike model. And his point is, if you're running up against somebody like this, you should just get out of the business. He says one of the models in my head is the Northern Pike model. You have a lake full of trout, but if you throw in a few northern pike, pretty soon there aren't many trout left, but there are a lot of northern pike. Walmart, in its early days, was the northern pike. It figured out how the customer could be better served and just gallop through the world like Genghis Khan. So then there's a few ideas here. This is on passion, intense interest, and working only with winners. This is one of my favorite of his. This is probably my favorite of Buffett's business, baseball stories when it regards to business. First, Munger says, I cannot put passion into someone. They either have it or they don't. There's nothing you can do about it. And Buffett goes in.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to win, you wake up with a loss. Charlie Munger says, successful places tend to get bloat. He's talking about successful companies. Successful companies tend to get bloated, fat, complacent. It's the nature of human life. Most companies, when they get rich, get sloppy. Warren Buffett, this is one way to avoid that. Widen your moat, build an enduring competitive advantage, delight your customers, and relentlessly fight costs. And Munger and Buffett both know this because they have this crazy historical base of knowledge in the history of business. Munger says it is the nature of things that most big businesses eventually fall into mediocrity or worse. Look at the history of big companies in the world, and the record is not good. Almost all great records eventually dwindle. I think that's the natural consequence of competitive life. And then Munger talks about one of the fiercest competitors that the business landscape has ever seen, something somebody you and I have talked about over and over again, the latest episode I did on him, which will not.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Eliminate those defects one by one. Then I love this idea by Buffett like this is how you find the best operator in your industry. When I interview managers, I ask what their business nightmare is. If you had a silver bullet and you could put it through the head of one competitor, which competitor and why, you will find out who asking this question, you will find out who the best guy in the industry is. He continues. Ask the management of each company which competitor that he would be willing to, this is the other side of that, right? It's like, okay, if you could knock out of the game only one of your competitors who that is the other side is what if you had to bet all of your net worth and you could like you invested all your net worth in one of your competitors who's who is that ask the manager of each company which competitor they would be willing to put their net worth in for the next 10 years then ask which of their competitors they would short this will provide important insights into the industry into your industry that even those who work their whole life in the industry would not realize two pieces of advice one from munger one from buffet this is something you and i talk about all the time if you go to sleep”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Ties together, right? These two quotes I'm reading you, the ones I just read in this one are separated by maybe 20 pages or something. This is crazy. Warren Buffett said this about Amazon in 2012. He says Amazon could affect a lot of businesses who don't think they will be affected. For Amazon, it is very hard to find unhappy customers. A business that has millions and millions of happy customers can introduce them to new items. It will be a powerhouse and could affect a lot of businesses. And this is where you really get excited, right? When you think about this, okay, Warren identified that. Caesar, this is very unusual. It says that in 2012. That is after, because Jeff is writing, you know, in the late 90s, I think 97 is his first shareholder letter. It's 15 years separating from the first shareholder letter. He'd been practicing that in the few years that he'd been running Amazon before that. But this idea is like, that is the end result of...”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“And then this is what I mentioned earlier my favorite definition of a brand. I think I've ever read a brand is a promise. That is a quote from Warren Buffett. Then he goes into the important part. Buffett's going to talk a lot about here. It's just like, you know, business can be fundamentally simple. You should be really obsessing over your customers. This is one of my favorite maxims in the history of entrepreneurship comes from Jeff Bezos. He says obsess over customers. I don't have any tattoos, but if I did, I almost feel like it'd be beneficial if I tattooed this on my forearm, just obsess over customers. There's just so much hard earned knowledge in those three words. Buffet is going to agree with Bezos here and he says, in the end, nobody's ever taken good care of the customer has ever lost. Like Sam Walton once said, there's only one boss, the customer, and he or she can fire everybody in the company from the chairman down on down simply by spending his or her money elsewhere. And a few pages later look how this actually”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Company A, do what company B does? What stops some competitor from entering the market? And so Buffett's answer to this hypothetical question is the best way to understand this, meaning why does that company have an edge, whether it's a company you're running yourself or a company you want to invest in? Why do they have an edge? The best way to understand this is to study businesses that have achieved it. The question then is, how does a company get its edge? And the way companies talks about building up the moat. And it's this idea of focus and frugality leads into his copper story. The moat is not the pro, in this case, the moat is not the product. The mode is not the industry. The moat is the management of the business in regards to its costs. This is a very old idea. This is something Buffett is saying in 2009. And yet it's something that Andrew Carnegie knew in 1865”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the best moats in many respects is to be a low cost producer. Being a low cost producer is something that's essential to people is going to be a very good business. It is like comparing a copper producer whose costs are $2.50 a pound with a copper producer whose costs are a dollar a pound. This next sentence is crazy to would be crazy to most people. I don't think it's going to be crazy to you and I. Those are two different kinds of businesses. But we're like, no, wait, they're both producing copper. And he's like, and Buffett's point, he's like, no, this advantage means it's just completely other business. Why? One is going to go broke at $1.50 a pound and the other one is going to still be doing fine. This idea that they're completely different businesses, regardless, same product, same industry doesn't matter. They're completely different just the way they're managed. So let's go back to something that's above this. Why does the business have an edge against its competitors? You're asking yourself questions, right? Ask, why can't come”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“So then they go into this irrational behavior that you see in bull markets, the sheep story that he told earlier is like a good indication of that. And he's got funny ways. Buffett's got a funny way of reminding you about this, like when you should feel that you're in danger because it says the problem is it looks so easy. So that's what attracts you to it. And so he says, but remember the late Barton Briggs observation. A bull market is like sex. It feels best just before it ends. And so Munger says, how do you take advantage of that? If you stay rational yourself, the stupidity of the world helps you. Wall Street never changes. The pockets change. The suckers change. The stock change. But Wall Street never changes because human nature never changes. Then it goes back to this idea of they don't have a master plan. They are opportunity driven. That's a great way. That's like a great use of language by them really gets this idea into our brains. We don't have a master.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“There is no point for you and I to spend all this time reading, listening to educational podcasts. If it doesn't change what we do, and if it doesn't change what we do, we didn't actually learn it. He's telling you, we've seen enough human behavior. You're not going to actually do anything with this information that we're giving you. Very few people. Obviously, some people were. And so that's what they talk about. Like most people, they don't say all people, but they're saying most people cannot learn from the experiences of other people. They're saying the exact same thing here that we've seen enough human behavior. We could tell you not to do this. A lot of people are going to do it. The smart ones, the ones that are able to learn from other people's behavior, are going to have a massive advantage because they know that learning is not memorizing information. Learning is changing your behavior. I love that whatever clicked right there is super important for me and hopefully for you as well. It's not memorizing information. Did the book that I read, the podcast I listen to, did it change my behavior? Did it actually have an effect in the real world?”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“And I was like, okay, that is actually really interesting. Charlie and I don't expect to win you over to our way of thinking. We've observed enough human behavior to know the futility of that, but we do want you to be aware of our personal calculus. What I wrote to myself in this click to me Learning is not memorizing information. Learning is changing your behavior.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Clicked is I'm going to read this first and I have no idea why I finally had a deeper understanding of this. So Buffett says Charlie and I do not expect to win you over to our way of thinking. We've observed enough human behavior to know the futility of that, but we do want you to be aware of our personal calculus. And I was like, oh my God. Sometimes I read, and you probably do this too. We're like, you know, that's two sentences, you know, three lines in a book. And yet you just sit there and you stare at it and like you read it again.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“It was selling for $35 billion. Any further refining of analysis would have been a waste of time in that case he's saying just jump on it. You know it's a good opportunity. It doesn't matter. You're paying $35 billion where it's worth $95 or $105. It doesn't matter. It is a financially fat opportunity. So we were very inexact. You'd be amazed at how inexact we are. Using precise numbers is in fact foolish working with a range of possibilities is the better approach. Now this This is one of my favorite this is where just click for me, right? We're in the middle you can't see this because you can't see the book that I'm holding we're in the middle of the book where at this part they're all talking about like the like the irrational behavior that occurs in bull markets and that just happens over and over again, right? And I'll pull out a couple quotes because I think that's very interesting. I think you and I can learn from that. And yet what sticks out to most to me”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Another thing they repeat is the importance always go for quality. Wonderful businesses are so rare. So if you get into a wonderful business, do not leave it. It is just a rare thing to happen. If you are in a wonderful business for a long time, even if you pay a little bit too much going in, getting into the business, you will get a wonderful result if you stay in that business for a long time. Buffett talks about earlier in his career, he did not really understand the power of brands. It's like this weird abstraction, right? It came from his purchase of Sease Candy many, many years ago. He's like, oh, brands are extremely valuable. They're extremely powerful and valuable. And so this leads to other investments, profitable investments in the future. And so he says, additionally, through watching sees Candy in action, I gained a business education about the value of powerful brands that opened my eyes to many other profitable investments. And this is why I think Buffett's one of the world's greatest communicators that has ever lived, because it can communicate things that are, you know, relatively...”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“I tweeted this out, and Elon Musk responded back to it. Basically agreeing with what Buffett said, again, in 1994, from this book, but is just as accurate as today. Buffett says the value of every business, the value of a farm, an apartment, or any other economic asset is 100% sensitive to interest rates. That's because all you're doing when you're investing is transferring money to someone now in exchange for a stream of money, which you expect to come back in the future. And the higher the interest rates are, the less that present value will be interest rates are to asset prices sort of like gravity is to an apple. When interest rates are low, there is little gravitational pull on asset prices. This is a crazy sentence, right? And I wish I didn't understand this. Maybe I wasn't like something that was relatively important to my business, right? But it's just amazing where I just wish.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Beginning of the book, they said, Repetition is the mother of learning. Charlie Munger goes back to this idea that it's so hard to get rich, and yet most likely when you get rich, you're going to mess it up. Just don't mess it up. The problem is not getting rich, Munger says. It is staying sane. For whatever reason, extreme success tends to warp people's minds. They cannot handle it. And then I absolutely love this section because it talks about like, you know, we talk about this like history doesn't repeat human nature does. that there's ideas in history books that are worth you know billions of dollars. I'm about to read you something, right? That sounds like Warren Buffett said it today. We just went from this zero interest rate environment. Rates are going up. Valuations are being in flux. And yet what I'm about to read you, he said in 1994, I just had a weird experience where, you know, I share a lot of like highlights and stuff from books I read on Twitter and on LinkedIn.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to review what comes in. We constantly get people offering to sell our, like we have inbound requests to buy their businesses. We just review it. Is this a company with a durable competitive advantage and attractive price? If it is, okay, we'll buy it. And if it isn't, we'll just sit on our ass and we'll read and we'll think and we'll pile up money. It's really hard to lose. That's the two different modes that you have in your business, right? This goes back into the futility that people just, the futility of trying to change other people's minds better to just select different people to work with, that people just do what they want to do. And Buffett says, I'd say that the history that Charlie and I have of persuading decent intelligent people who we thought were doing unintelligent things to change their course of action has been poor. When people want to do something, they want to do something. We don't try to change people. It doesn't work well. We accept people the way they are. And then Charlie passes on.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“I feel like there's a current running through the thinking of Buffett and Munger that talks about this. It's like, listen, we're not really big into master plans. We know we want to own wonderful businesses. We know we want to own pieces of wonderful business in public markets. But essentially, instead of going deep in this inflexible master plan, we're just going to keep reacting to the game that's on the field. And so it says, Munger says, I have a deep distrust in master planning. There has never been a master plan. Anyone who wanted to do a master plan, we fired because it takes on a life of its own and doesn't cover the new reality. Buffett says we do have a few advantages. Perhaps the greatest being that we don't have a strategic plan. Thus, we feel no need to proceed in an ordained direction, but can instead simply decide what makes sense for our owners. Charlie and I don't sit around and talk about the future of industries. We have no reports or staff. We just review what comes in and look for companies with a durable competitive advantage at an attractive price. And so think about that. That is a rather simple plan.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Times in the book that Munger talks about his ability to make decisions very rapidly. We heard Buffett say earlier that Munger has the best 30-second mind that he's ever encountered. And so until his point, it's like they have an idea of the businesses that they're interested in, they're in their mind, the characteristics of the stuff they're interested in. So even he'll get a phone call. And within like 15 seconds, like, nope, and he'll just like hang up the phone. He's like, there's no point. I know I don't want this business. There's no point us. Like we have limited time on this earth. Like, I'm not going to waste sit here and just be polite for 15 minutes just to give you a no that I can give you a no in 30 seconds. And so Munger says, spend no time arguing with people whose idea you know to be stupid. I think a main theme that comes up again and again in these life stories that you and I go over is the fact that future opportunities are unpredictable to you. You just have to trust in something. Obviously do a good job as you can with whatever's in front of you. But there's going to, if you keep going along and you keep getting better, that's going to unlock opportunities you can't possibly predict. And there's the...”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Find that it has been dressed up for sale, and therefore what Buffett's saying, it's not a high quality. Like if somebody truly cares, most likely they built a wonderful business. Somebody's just in it to start, scale, and sell, they probably don't give a shit. And so therefore the long-term prospects of a business like that are very suspect and Buffett's not interested in buying those kind of businesses. There is a great line in the Anthony Bourdain biography that I read for episode 219 that jumps out at this next, when I read this next sentence. It says, life isn't a green room for something else. Go for it. Buffett says, we're here on the earth only one time, so you ought to be doing something that you enjoy as you go along and you can be enthusiastic about. Then we have two great quotes. The first one is from Buffett. When a problem exists, whether it's in personnel or in business operations, the time to act is now. Munger says, wise people step on big and growing troubles early.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“To deserve it. That means we must keep our promises, avoid leveraging up acquired businesses, grant unusual autonomy to our managers, and hold the purchase companies through thick and thin. Our record matches our rhetoric. Most buyers competing against us follow a different path. For them, acquisitions are merchandise. We have a decided advantage when we encounter sellers who truly care about the future of their businesses, if you truly care about your business and the future of it, it's not merchandise to you. It's not just a big exit. It's like you actually care. If you are going to sell your business, like you care what happens, what happens after you leave the business? And so Buffett's like, well, if you're one of those people, of course, Berkshire would be, if you look at our track record, Berkshire would be your first choice. So he says the reverse is apt to be true also. When an owner auctions off his business exhibiting a total lack of interest in what follows, you will freak.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“The culture at your business that once the culture is in place, it is nearly impossible. You're better off just starting a different company than trying to change the culture. So says we try to provide an environment for them, meaning the managers and the CEOs of their businesses, which is exactly like we'd want if we were running a business. We would like to run our own business in our own way. So they're like, hey, we try not to mess with them, right? We're only working with A players. A players don't like to be micromanaged. And if I had to micromanage them, why did I buy the business to begin with? That doesn't make any sense. We will never allow Berkshire to become some monolith that is overrun with committees, budget presentations, and multiple layers of management. Instead, we plan to operate as a collection of separately managed, medium-sized, and large businesses, most of whose decision-making occurs at the operating level. All of the businesses that we own are run autonomously to an extraordinary degree. In most cases, the managers of important businesses we have owned for many years have not been”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Other people who are total rat poison, and there are Let's say that you want to, they're asked a hypothetical question by a fictitious character in this book. So that question says, let's say I want to hire somebody, what is important to think about? Buffett says, you look for the logical things, passion, an interest in running the business, honestly, honesty, excuse me, do they love the business or do they love the money? This is the first filter. Do they love the business or do they love the money? This is the first filter. I mean real passion. If temperament is the most important personal asset in managing money, in business it's passion. There's also why Jeff Bezos says that missionaries make the best products. Missionaries, not mercenaries. He says mercenaries are in it just for the money. Missionaries actually care about what the business is doing. What service is that business giving to the world? You want to try to hire people that are complete in alignment with you and look at it like you do, like it's a mission. They also spend a lot of time talking about company culture. The fact that you have to be very intentional, how you build.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“And one of my favorite things is because it's like these ideas are in a book and they're in the podcast. And yet this like physical item brings that out and it's like serves as like a reminder every day. And on one of the things that he says on this coffee mug is the best thing I did was to choose the right heroes. This is something that him and Munga repeat over and over again. I'm going to read this section real quick and then tell you something Munger also says I think it's very important to have the right heroes. Choose your heroes carefully and then figure out what it is about them that you admire. Then you figure out how to do the same thing. It is not impossible. And then I've actually seen clips from Warren saying this at the shareholder meeting and then Charlie adds you also should not relegate your selection of heroes to the living that the eminent dead obviously a main theme of this podcast, right? The eminent dead provides some of the best models around. And then they have some more advice for our career for our”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, how many businesses do you have to pay a membership fee to shop at? Like that's extremely rare. But why is he unusual? Why is he doing that? Because he's designing, he's getting to the business he wants by avoiding the things he does not want in that membership fee, that barrier to entry eliminates a lot of things that Charlie's talking about here. He didn't want business of people who clogged up his parking lot without buying very much. He carefully invented a system where he kept those people out and succeeded by deciding what he would be better off without and avoiding it. This is a very good way to think and it is not common. And so then Buffett goes into something that he repeats over and over again. In fact, one of the best gifts I've ever gotten is for Father's Day, my wife got me this mug and it says like the wisdom of Warren Buffett. And all it is is Warren's face with a bunch of quotes that he said. And all they do is like fill up this cup multiple times a day with espresso and then read.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Decide what kind of business that you do not want, right? So it says sole price used to say success in business came from deciding which business you could intelligently do without. He had a list of businesses that he did not want. He didn't want business from people who wrote bad checks. He didn't want business of people who clogged up his parking lot without buying very much. He carefully invented a system. He's the one that came up with the idea. Everybody knows Costco, that Costco idea is sole price's idea. It was just actually brought to life by Jim Senegal, which is sold price's mentee Jim when he was real young actually worked for sole price. He greatly admired him. In fact, the autobiography, the biography of Sol Price that I read for episode 107, Jim Senegal wrote the forward or the introduction of that book, and he says, like when people would interview him, I was like, oh, you knew Seoul for 50 years before he died, you must have learned a lot from him. He's like, no, no, I didn't learn a lot. I learned everything, everything from him. So that's what Charlie's talking about. He's like, well, he just designed a business.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“With time, you can't fool people, you can fool people some of the time, not forever. Over time, you're going to have the personal reputation that you deserve, and your company will have the reputation you deserve. Buffett says something in this book that's fantastic where he describes what an actual brand is. And he says, brand is a promise. So I'm not sure why, but when I reread that section just now, that's the idea that popped in my mind. And so then Charlie adds to this, the best way to get a reputation for yourself and your business is to actually work backwards. He is going to quote sole price. So sole price Buffett and Munger are both fans of sole price. I did an episode on him. It's episode 107. I would make the argument that sole price is the most influential retailer to ever live. Sam Walton, Trader Joe, Jim Senegal, Bernie Marcus from Home Depot, Jeff Bezos. They all used ideas in their business, variations of sold prices ideas in their business. And so we have Munger talking about like, okay, well, you should.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“You can give someone a $2 million bonus and they're happy until they see the next guy got $2.1 million and then they're miserable. And Munger illustrates why this is so ridiculous. If you're comfortably rich and someone else is getting richer faster than you, so what? Someone will always be getting richer faster than you. This is not a tragedy. Someone else is always going to be doing better at any human activity you can name. Then we go back to this idea, something that I believe with my whole heart that time is the best filter. Buffett says Gianni and Janelli maybe is the former chairman of the car company Fiat. So it says Gianni once told me, one time told me, when you get older, you'll have the reputation that you deserve. You can fool some people some of the time, but not forever. I believe the same is true for companies. And now when I read that, that's probably like, what, the third or fourth time, I think the fourth time I've read that particular highlight, something else just jumped at me where he says.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Hunger says, I am not a victim, I am a survivor. And then they start giving advice on just interpersonal relationships. You're going to, like, people, you're going to do it better. In the middle of this, he talks about hey, this is some of the best advice I ever got in my life. And so he says 40 years ago, Tom Murphy, who was the former CEO of Cap Cities and ABC, gave me one of the best pieces of advice I've ever received. He said, Warren, you can always tell someone to go to hell tomorrow. You haven't missed the opportunity. Just forget about it for a day. If you feel the same way tomorrow, then you can tell them. But don't spout off in a moment of anger. And then this is one of the most important fundamental insights into human nature that I've learned personally from Charlie Monger. And he's like, listen, everybody thinks that the world is driven by greed, but the world is not driven by greed. It's driven by envy. And your life will be a lot better if you can just eliminate envy from your life. And so Charlie says, I've heard Warren say half of it, and I guess he learned this from Warren. I've learned Warren say half a dozen times, it's not greed that drives the world, but envy. Buffett says, our experience is that envy is what really drives people.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Real careful debt, be real careful with leverage, they will preach the fact that you should try, your business should have mountains and mountains of cash. Cash is a lot like oxygen. You don't notice it 99% of the time, but when it's absent, it's the only thing that you notice. We have maximum financial flexibility to face both hazards and opportunities. Buffett says we keep our cash largely in U.S. Treasury bills and avoid other short-term securities yielding a few more basis points. Somebody sent me, and this is not my world, so I don't know, but somebody said that they right now they have $100 billion in cash earning 4% risk-free. We agree with investment writer Ray DeVoe's observation, more money has been lost reaching for yield than at the point of a gun. And why do they say that? Because cash insures your survival, something you and I talk about over and over again. You have to stay in the game long enough to get lucky. Buffet says, it pays to conduct your affairs so that no matter how foolish other people get, you're still around to play the game the next day.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Ladies and leverage. Buffett says whenever a bright and rich person goes broke, it's usually because of leverage. Any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeros, even when it's employed by very smart people. One of the things you will find this is still buffet talking. One of the things you will find, which is interesting, and people don't think of enough with most businesses and with most individuals, life tends to snap you at your weakest link. You can have somebody whose aggregate performance is terrific, but if they have a weakness, maybe it's with alcohol, maybe it's a susceptibility to taking a little easy money. It's the weak link that snaps you. And frequently in the financial markets, the weak link is borrowed money. And so the other side of the coin of this idea is like, hey, they tell you over and over again, you got to be.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“We want to get the facts and then think. Now we're many pages deep in the book and they go back to this theme default to know keep an open calendar so you can actually think. The difference between successful people and very successful people is that very successful people say no to almost everything. Munger, that was Buffett. Munger says both Warren and I have amazingly open calendar and we're very reluctant to put new commitments in there. I like flexibility and it has worked for me. And so Buffett takes this so seriously that at the point they're talking about this, I think he owned like 80 different businesses. And so he would actually every few like years, he would write the managers of his business a letter. And it's all about the fact that Buffett ruthlessly guards his time. This is what the letter says. Please turn down, this is Buffett writing, right? This is to all of the CEOs and the managers of all the subsidiaries in Berkshire. Please turn down all the proposals for me to speak.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm about to reread this and collect all the other information. In fact, a bunch of listeners actually sent me really valuable information about Singleton, like old press articles and stuff they found in like public libraries and stuff. But I want to read this because I really think this is exactly what Buffett is saying here. Let me reread Buffett before I get there, right? He's like, listen, we don't read other people's opinions. We want to think. We want to get the facts and then think. In many ways, Singleton was Buffett before Buffett, right? So it says quite often Henry simply talked about his philosophy of running a corporation and the various financial strategies that he came up with as he sat in his office each day, often working in his Apple II computer. He was a brilliant strategist, and he came up with many creative ideas, ideas that were sometimes contrary to the currently accepted methods of managing a large corporation that prevailed in those days, one of the things that blew my mind was the fact that Henry Singleton was friends with Claude Shannon, the inventor of information.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“They probably studied more different businesses and more company founders and managers and CEOs than almost anybody else, right? They've been at it since, and Buffett's gate since he was a little kid and he's been doing all this for 100 years, right? And yet they kept bringing up Henry Singleton, Henry Singleton. They're like, hey, this guy was, Charlie Munger says Henry Singleton's the smartest person he ever met. Munger said that his returns in business were utterly ridiculous. Buffet said, is literally a crime that business schools don't study this guy. And the reason it's hard to study him is you actually have to like there's not a lot written about him. I've done two episodes on him, but episode 110, there's this book called Disinforce, which is written by Singletons like right-hand guy. And it's really the history of the company Teledyne that they built together. But what was so remarkable and just made, I don't know why, just clicked when I started reading about Singleton is like how he spent his time. But the point of all this is like, there's a description in that book that really resonated with me that you have to do the work necessary to be able to trust your own judgment, or none of this is going to work. And so I'm going to read a quote from Distant Force, this episode 110.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“So skipping ahead, let's go back to this idea that they repeat over and over again, spend a lot of time thinking, reading, formulating your own thoughts, and mute the world. And so Buffett says, we do not read other people's opinions. We want to think. We want to get the facts and then think. This was such a like a mind-blowing realization because you never know when you're reading something, when it just is going to suddenly click or kind of interact with maybe an idea that was previous in your mind or weren't necessarily like completely understood how important it was. When I was reading Buffett Shareholder letters and then obviously this is like years ago. So this is probably like in 2019 maybe. And listening to Charlie Munger speak, they kept bringing up this guy named Henry Singleton. And I was like, what the heck is going on here? You know, in my opinion, Buffett and Munger have studied.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“arithmetic, and he said no teacher, you don't understand sheep. And Buffett adds on to the story by saying it always amazes me how high IQ people mindlessly imitate. And then Buffett describes this phenomenon by this idea he calls the three eyes. And so he says, you get what I call the natural progression, the three eyes. The innovators, the imitators, and the idiots.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“A wise man engaged in learning some important skill will not stop until he is really fluent in it. So more on this idea of, it's really important if you're going to run a business to understand human nature. Again, this is all these ideas, these are not on the same page. So this is how you know it's important to them because what's important to people, they will repeat. And so this is, really, it's a story about imitation is the note that I left myself when I read this. But no, what Charlie is about to tell us, he's telling us a story about human nature that's very fascinating. And if you think about like their bird's eye view that they've had in the finance industry, which, you know, it's been full of panics and bubbles and booms and busts, right? This is just absolutely fantastic. So Charlie Munger says, one of my favorite stories is about the little boy in Texas. The teacher asked the class if there are nine sheep in the pen and one jumps out, how many are left? And everybody got the answer right except this little boy who said none of them are left. And the teacher said, you don't understand.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Want to do, and you're just better off just not trying to change their behavior because only they can do that. So he says in almost 60 years of investing, we found it practically useless to give advice to anyone. And this is even in situations where you figure, hey, they should have a lot of influence and control here. And he says, listen, Charlie and I have been on boards of companies in which we were among the largest shareholders. And even then, we had very little luck changing their behavior. So we think that if you buy a stock in a company, you better not count on being able to change the course of action. And then they go back into the importance of understanding human behavior and then they touch a little bit on why so many founders and investors have it like they love history. They like studying history. They find it very useful for their careers. Buffett says you really should understand human behavior if you're going to run a business. Munger says, once you have the ideas, of course, you must continuously practice amen, something you and I talk about over and over again. Once you have the ideas, of course, you must continuously practice their use. If you don't practice, you can't perform well.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“You can't work with C players or even B players. So Buffett says the real issue is mediocrity. There are too many 240 hitters, so he loves this baseball analogy if you're a fantastic hitter, you'd be a 400 hitter. That's something he's going to repeat over and over again. But in this case, you have somebody that may even think they're a 400 hitter but are actually a 240 hitter. So that's what he's talking about. The real issue here is mediocrity. There are too many 240 hitters in business. Businesses often settle for a notch or two above mediocrity. There are strong human instincts at work. And then they also give advice where it's like, listen, you think you might be able to turn around a business or turn around a person. You're just better off getting into a better opportunity. This is something where I always say it's like actions express priority. It's one of my favorite maxims. People do what they actually want to do. And you can tell what people want to do is just like, how do you spend your time? It doesn't matter what you tell me. Hey, this is important to me. It's like just, I can look at what you do. And this is great advice from Buffett. People just do what they want.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Then they give some ideas on both that are effective for sales and effective for managing other people within your organization. Mary Kay once said, it's so simple. Yeah, it makes such a difference. Pretend that every single person you meet has a sign around his or her neck that says, make me feel important. All human beings work better if they get reinforcement. If there are constant rewards for doing well, you will be driven to do more of the same. And then they have a theme that they repeat over and over again with different little stories, and a lot of it actually is related to Buffett loves baseball stories. But it's just this idea that there's just, most of the world is by definition, has to be mediocre in that if you can actually do the work necessary to turn yourself into a formidable individual and then work with just the best, first of all, work with the best possible people and work in the best possible industries and businesses, that will do most of the work for you. And to be able to do that, you have to be kind of ruthless with cutting people that aren't up to your standards out of like you don't want to.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Wave. So he says, when new businesses come in, there are huge advantages for the early birds. And when you're an early bird, there's a model that I call surfing. When a surfer gets up and catches the wave and just stays there, he can go for a long, long time. But if he gets off the wave, he becomes mired in the shallows. People get long runs when they're right on the edge of the wave. And so he uses the example, like Microsoft or Intel. Stay on the wave.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“If I call him and describe a problem to him, any kind of situation, he gets to the essence of it immediately. When we make decisions we focus on the most important thing. Something that I preach over and over again is get into a good business and allow the miracle of compound interest to do most of the work for you. I talk about this over and over again with you, that time carries most of the weight. Buffet says compound interest is a little like rolling a snowball down a hill. You start with a small snowball and if it rolls long enough, you'll have a real snowball at the end. It's better if you're not in too much of a hurry and keep doing sound things. The reason I wanted to read you that paragraph is really for this next two sentences. Berkshire was a small business at one time. It just takes time. It is the nature of compound interest. You cannot build it in one day or one week. Going back to this idea that once you're in a good business, stay in a good business, let time do the work. Charlie Munger talks about this as staying on the”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Repetition of obvious mistakes made by And then a few pages later, they essentially give an enthusiastic endorsement of listening to Founder's podcast because they say study effective individuals. Buffett says, look at effective individuals and try to figure out why they're effective. Munger says, I think history is very helpful. It enables you to keep things in perspective. So the history of civilization and the history of finance and investing, it is very useful. Buffet says, I like history. I like financial history. It is useful to realize how extraordinary things can happen occasionally. This is a great, great line. Everything that needs to be said has already been said, but since no one was listening, everything must be said again. Now we got a couple different ideas all centered around this. One main idea, focus on the essence, the most important thing, the core. Always try to simplify things to their essence, the fundamental or most important aspect of something. The core is the way to think about it. Charlie's got the best 30 second mind in the world, Buffett said.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Apparent, almost contradiction. When you read, they talk about hey, you know, we spent so much time studying history, reading biographies, learning from the experiences of others, and then they keep repeating that most people do not learn from other people. And Munger's got a great illustration at this point. He goes, you can tell that most people don't learn from the experience of other people because there's little originality in the disasters of mankind. We'll get there in one second. Buffett said, the trick is to learn most lessons from the experience of others. Munger says, the more hard lessons you can learn vicariously rather than through your own hard experience, the better. You can see the results of not learning from other people's mistakes by simply looking around you. How little originality there is in the common disasters of mankind, he goes on to list some, drunk driving deaths, incurable venereal diseases, conversion of bright college students into brainwashed zombies as members of destructive cults, business failures. This is such a great line. Business failures through”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Is the mother of learning. And so if you pick up this book and read it, and I hope I can encourage you to do so, you're going to be maybe surprised, but a large part of this book is actually on the human psychology and then observable human nature throughout history. And if you think about this, like, okay, why would some of the greatest founders and investors of all time in Munger and Buffett, why would they be so obsessed with that? Because business is people, right? Your business partners are people, your customers are people. And so they just have a lot of is like avoiding they talk about, you know, there's a lot of low quality traits in human beings and low quality people on this earth. You need to avoid them. Again, I think they give you a simple way to do this. And so Buffett talks about like, well, when you're picking people to do business with, he just has this thing. He's like, you know, if you need like a 50-page contract to protect yourself from the person you're dealing with, you need to walk away from that deal immediately. He says, I like to deal with people where I feel a one-page contract would do the job.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source
“Out with failure and then engineer its removal. And this is one of my favorite ideas in the book. Another way to think about an idea I've already been previously exposed to. It's like, oh, you should figure out what you don't like to get to what you do like. And so it says Munger says the mental process that has really worked for me my whole life. And I use it all the time is turning everything into reverse. I figure out what I don't like instead of figuring out what I like in order to get what I like. And so they go on giving examples of inversion over and over again and intersperse through all these examples of inversion. They say stuff like this. Hey, I think a lot, this is Buffett. I think a lot of people make things more complicated than they need to. Really think you should keep things simple in both business and investments. It's usually far more profitable to simply stick with the easy and obvious than it is to resolve the difficult and then they end this section of the book with why they're saying this. This is something you and I have talked about for years. Repetition is persuasive. They said some things may seem a little repetitious, but repetition.”
2023-01-16 · Founders · #286 Warren Buffett and Charlie Munger · IDENTIFIED FROM THE TRANSCRIPT · source