Lessons from Warren Buffet, "The Snowball"

All I can think about lately is Warren Buffet. I’m just about finished reading his biography, “The Snowball”, and I’m amazed at how complicated he is.

He is a billionaire for good reason — but that’s not entirely a compliment.

Any success at Buffet’s level comes at a high price. Here are a few lessons that show why, for better or for worse, everyone knows Warren Buffet’s name.

Obsession

Buffet’s life is his work. Even in the days when he managed thousands and not billions of dollars, he would visit company CEOs and chairmen unannounced to badger them with questions.

Whenever Buffet came across businesses, people, or ideas that interested him, he would spend every waking second thinking about them.

He would read his favorite books so often that he could quote passages word for word and identify which page they appeared on. He knew the ins and outs of businesses he had just learned about a few weeks earlier.

While this suited him professionally, his family life suffered. His wife demanded a separation and moved away(although they are still legally married), and his kids have never gotten to know him deeply.

Even when he was present, he was never really present. 

The most telling story was that when he used to rock his newborn daughter to sleep, he would sing a lullaby while working through a business problem in his mind.

Always being 3 steps ahead means that you can never enjoy the present moment.

“Invert, Always Invert”

“Tell me where I’m going to die so I don’t go there,” says his business partner Charlie Munger.

It’s a saying that illustrates Munger and Buffet’s ability to invert situations in order to find success by first seeing what failure looks like.

Notoriously frugal, Buffet’s wife was able to convince him to buy a new house in Omaha for $31,500 and he named it “Buffet’s Folly”. This is how his biographer explains his reluctance to buy the house:

Buffet wasn’t just looking at cost, but opportunity cost. Refusing to do something doesn’t mean nothing happens; instead, it means that something else happens.

In effect, he always asked himself: What happens down the line if I do this? What happens if I don’t?

Frugal

With the exception of some large luxuries he was able to rationalize as “business investments” (like a private jet), Buffet remains extremely frugal in most regards.

When his friend Kay Graham asked if she could borrow a dime for a phone call, Buffet only had a quarter and rushed to go get change so that he didn’t have to forfeit the extra 15 cents. He was worth hundreds of millions of dollars at the time.

While that example is extreme, the principle served him well in business. He looked for CEOs and managers who shared the cost-cutting “gene” and these individuals were the ones who were able to stay in business longest because they always seized opportunities to keep costs low and maximize profits.

Inner Scorecard

Warren Buffet has been so successful due in large part to his ability to block out “noise”. He rarely listens to anyone outside of his inner circle, doesn’t care what other people think about his lifestyle, and sticks to his principles to an insane degree.

He calls this disposition an “inner scorecard”.

The former is an inner scorecard, and the second option is an outer scorecard.

This quality is the most notable of Buffet’s to me. For all of his faults, he chooses to live a life in which he prepares for everything as much as he can and in turn, can live with the consequences.

It takes courage to keep an inner scorecard because there are times when you seem out of touch or flat-out wrong to others. But so long as you have considered all options and are doing what you think is right, it doesn't matter.

You’ve won.

P.S. I’m finishing up this book in the next couple of days and taking a few more days to organize my notes. I’m planning on doing a lot of posts about this book and everything I’ve learned, so stay tuned if you follow me on Twitter/X!