Category: Uncategorized

In the finance world, today is like the NBA/NFL draft. Just like our eagerness to see who the Chicago Bulls are going to draft, learn about their plans for the future, and see their assessment of the previous year – thousands of people woke up today to read Warren Buffett’s annual letter to his shareholders.

Below are my quick notes/reflections on Buffett’s letter:

• Extremely detailed – articulates all his thoughts in his writing style
• Reference to Tom Murphy’s quote: “To achieve a reputation as a good manager, just be sure you buy good businesses.” (Brought me back to the time I was reading Outsiders for the first time – Murphy’s transformation of ABC/Capital Cities was remarkable and his advice should definitely be heeded)
• Importance of using Insurance companies due to “float”
• Heavily concentrated portfolio: Most assets are in his top 15 companies
• Raises key issues that his investors may have and addresses all possible scenarios, gives a solid rationale and gives motive to prove he believes in what he says (He’s got all his skin in the game)
• Addresses the fact that he nor Munger will live forever, and lays out a clear plan for why Berkshire/his team will be successful for years to come
  • Fascinating to see his plan for shares after his passing: Conversion from A to B class, then slowly dispense into various foundations/charities (process of 12-15 years)
• Words of warning around the overall increase in complexity for incentive compensation plans and acquisition proposals
• Skepticism around the value of Board Members and their motives, as well as the process for becoming a Board Member
• Analogies
  • Acquisitions to marriage: Don’t be too quick to propose, things will not always be sunshine and rainbows. Some marriages can be idyllic and significantly better than you ever imagined
  • Acquisition Proposals are increasingly more complex, but cannot be fixed by the “expert” acquisition advisors: Don’t ask the barber whether you need a haircut
  • When seeking directors, CEOs don’t look for pit bulls, it’s the cocker spaniel that gets taken home
  • People can be good at one thing, but that doesn’t mean they should play in a lot of other areas. If you are Bobby Fischer, you must play only chess for money

For the last several years, I have been fascinated with the overall reach of social media. The fact that you can put something out there for the world to see, and that people will spend their most valuable asset, their time, in order to read or watch it, is still unbelievable to me. Another interesting thing to me is the consumer to creator ratio. I read a post from someone on LinkedIn today who talked about the 80 19 1 rule.

80% of people are solely consumers. They consume and never engage.

19% of people are interactors, they engage with the conversation, may like or comment, but do not create.

1% of people are the actual creators. They think through something or want to show the world something, and are vulnerable enough to put themselves out there.

If nothing else, I think that social media/blogging/anything else that involves publishing or posting something to the world is worth it because it not only creates vulnerability in the moment, but fosters it as a habit.

And if we as a population can become vulnerable, we can start to have more real, candid conversations.

Don’t just a book by its cover.

Funny thing. I just walked by a bookstore and watched as 10 people did this exact epigram.

We judge books by their cover in all walks of life. Within seconds of meeting people, we automatically form an opinion of what type of person they are, what they would be interested in, and whether or not we like them. Then the rest of our conversation with them is trying to confirm our belief. If they don’t do something that drastically goes against our hypotheses, then the box that we placed them in becomes thicker.

We do this in marketing all the time: judging books by their cover. We often create buying personas and customer segmentation based on a few facts. (cover page) But the best marketers have not just read the cover page, they have read the whole book. They understand their customers, their drivers, barriers, and pain points.

Whenever meeting a new person, interacting with family/friends, or marketing to our customers, we need to dive into the chapters of their lives in order to truly understand them.

Yes, it’s better to read the cover page of some books, then nothing at all. But we can’t stop there.

Consumption.

As you need to eat to survive, we need to consume information to think.

Lack of information means a lack of the ability to use our brains to their full capacity.

Without inputs, there can be no output.

This is the creation process.

As a chef mixes various, sometimes random ingredients, to create that amazing meal, so can we mix the information we receive from the world, to create whatever we want.

Just remember that nobody became a Michelin star chef overnight.

For a long time in school, I was the type of kid to say: “What’s on the test?”

I wanted to know the minimum amount of work I had to learn in order to get the A.

Whatever amount of time that was, how many words, functions, formulas I had to memorize, I would learn it, but never an ounce more.

This translates well into the entrepreneur’s journey with their MVP – or minimum viable product. Other engineers may classify this as your beta or prototype. Something that is good enough to label as your first product.

And it’s important to get out that product, put thoughts into actions, get the ball rolling.

But as we build up speed, we need to not forget the quality of our work. It is this that which sets us apart from our competitors and makes us stand out among our customers/clients.

This especially rings true when working with others.

We all know that this project is a lot of work, that we are putting in a lot of hours, but we cannot let this move us to do the minimum or lower our quality of work.

To steal from Lord of the Rings, we would be trying to scrape butter over too much bread, instead of taking the extra time to get/make more butter.

When we do this and lower our quality, we are showing to others the inconsistency in our work, raising questions of trust, and lowering their belief in our ability to deliver quality in the future.

For this reason, it might not be the best to always finish things so rapidly.

80% done with 100% accuracy can be better than 100% done with 80% accuracy.

Today is Super Bowl Sunday.

That means that over 111 million people in the US will be watching.

About 1/3 Americans.

If you are a player on one of the teams, a coach, an announcer, or a referee, you know a lot of eyes will be on you. There is pressure to perform. To give it your best, get the job done, execute.

To get to this level, it’s not what these individuals have done in front of people, but what they have done when no one is watching.

It’s the 4ams, the lost weekends, the missed birthday parties, the years of practice (no one saw) that got them to the place where they are now in the spotlight.

Games aren’t won in the arena.