I’ve written many times about lessons I’ve learned from Warren Buffet. Guess what?
I’m back again with another post about the new HBO Documentary about him titled, “Becoming Warren Buffet.” I’ve already watched this twice and think it’s worth studying. The documentary gives insight into how Buffett thinks about money, business, and investing.
In the documentary Buffett said:
“I have constructed a business that fits me. It’s kind of crazy to spend your life painting if you’re painting a subject you don’t want to look at. I got to paint my own painting in business on an unlimited canvas. It’s a different sort of place. I work with a great group of people that make my life very easy and take good care of me. We have 25 people in the office and if you go back it’s the exact same 25 employees. We don’t have any committees at Berkshire. We don’t have a public relations department. We don’t have an investor relations department. We don’t have a general counsel. We just don’t go for things people do as a matter of form. It’s exactly the life I like and it’s not work to me. It’s a form of play.”
After hearing this, I pulled out my phone and recorded these comments with the Voice Recorder. Words cannot express how valuable these comments truly are for us.
Instead of designing our businesses to fit us like Buffett did, we tend to construct our lives to support our businesses. We don’t make our businesses support how we want to live and because we trade our lives away for our businesses, we end up hating life. Our businesses end up owning us.
I think one of the reasons Buffett has been so successful is that he learned to build a business he absolutely loves. Because he loves his business, he enjoys every single day. He is surrounded by great people and spends the majority his time reading and thinking. Working for him is similar to play for others.
Buffett’s company is one of the largest companies in the world and he only has 25 employees in his office. Why do you think this is? Because he doesn’t want more employees. He doesn’t like hiring, training, and managing employees. Companies of a similar size would have hundreds of employees at headquarters. He doesn’t care what other companies do. He does what he wants and he is happier and more successful because of it.
Consider that all other large fortune 500 companies have committees, public relations departments, investor relation departments, and general counsel on staff. He doesn’t. How much time, money and aggravation is eliminated by not doing what other companies do?
Think about your business for a minute.
Have you designed a business you truly love?
Does going to work feel like play to you?
If your answer to either question is “NO” then you’re probably doing things simply because other people, or other businesses do them. You’re copying instead of thinking.
Ed Latimore recently wrote:
“You have to understand something. This is the part that most people get caught up on because they have no imagination. When you lack imagination, you’re forced to accept your surroundings as they appear to be. Changing your life seems impossible. You can’t see how space can be rearranged by sheer effort into a space that reflects your desires.”
This simple means you can create your dream business if you’re creative, resourceful, and willing to work to make it a reality.
I can still remember in my real estate business when I decided we would no longer attend home inspections for the homes we sold to our investor clients. Every listing agent was outraged. “How can you say you represent the buyer if you’re not going to attend their inspection? How can you call yourself a good agent if you don’t care about the inspection?”
Just because we didn’t attend each home inspection, doesn’t mean we didn’t care. I simply hated spending 3 hours at a home inspection. It was very expensive to me and to my agents. Think about it for a minute:
If your real estate business sells 25 homes a month and your agents attend each home inspection, this translates into 75 hours lost each month and 900 hours lost each year. How much commission income is lost throughout the year when we’re spending 900 hours at home inspections?
I decided this was too expensive for the business and it was significantly better to have my agents selling homes to other clients instead of following a home inspector around for half a day.
The reality is we cannot change the results of a home inspection. We can negotiate to try and solve any issues that arise after the inspection, but attending the home inspection makes zero sense. However, the majority of real estate agents do it on a daily basis. Why? Because everyone else does it. They don’t stop and think about it accurately.
Speaking of thinking, Buffett also said the following in the documentary:
“I like things quiet. I actually shut my door at the office because I don’t want to hear anybody talking outside. I still probably spend 5 or 6 hours a day reading. I like to sit and think and I spend a lot of time doing that and some days it’s pretty unproductive but I find it enjoyable to think about business or investment problems. Business and investment problems are easy. It’s the human problems that are the tough ones. Sometimes there aren’t any good answers with human problems. There is almost always a good answer with money.”
This sounds very similar to something I read about John D. Rockefeller written by Morgan Housel:
“Rockefeller’s job wasn’t to drill wells, load trains, or move barrels. It was to make good decisions. And making good decisions requires, more than anything, quiet time alone in your own head to think a problem through. Rockefeller’s product – his deliverable – wasn’t what he did with his hands, or even his words. It was what he figured out inside his head. So that’s were he spend most of his time and energy.”
You want to know something else? Bill Gates does the same thing.
If three of the wealthiest men in history all believe reading and thinking were their most valuable activities, don’t you think it would make sense for us to read and think more?
The crazy thing is “thinking” feels unproductive like Buffet said. It really does. When you sit and think you feel like you should be doing something else. Something with a tangible result. Well, at least I do. I have to constantly remind myself that thinking IS my most valuable activity – by far.
As an example, I spent a lot of time thinking about what Buffett said in this documentary. I actually sat down with my notebook and listed everything I learned and ended up with 11 different ideas to ponder, evaluate and implement. The most valuable idea was to list every single thing I do for money. Next, I need to think about each item and ask myself the following questions…
1. Do I enjoy this activity?
2. How much is this activity worth in terms of $$$?
3. Can this activity be compounded?
4. Does this activity help create a new income producing asset?
My hope is to create a painting I truly love. A painting with an unlimited canvass.