WEBVTT 1 00:00:00.000 --> 00:00:02.560 Doing the fundamentals everywhere all the time, 2 00:00:02.560 --> 00:00:05.360 is already as complicated as you can imagine. 3 00:00:05.360 --> 00:00:08.560 Doing anything beyond that doesn't even happen in reality. 4 00:00:08.560 --> 00:00:12.640 And so if you do the fundamentals everywhere all the time, 5 00:00:12.640 --> 00:00:15.160 you become an advanced business owner. 6 00:00:17.960 --> 00:00:20.240 The wealthiest people in the world see business as a game. 7 00:00:20.240 --> 00:00:21.800 This podcast, the game is my attempt 8 00:00:21.800 --> 00:00:23.160 at documenting the lessons I've learned 9 00:00:23.160 --> 00:00:24.760 on my way to building acquisition.com 10 00:00:24.760 --> 00:00:26.360 into a billion dollar portfolio. 11 00:00:26.360 --> 00:00:28.120 My hope is that you use the lessons to grow your business 12 00:00:28.120 --> 00:00:29.520 and maybe someday soon partner with us 13 00:00:29.520 --> 00:00:31.000 to get to a hundred million dollars and beyond. 14 00:00:31.000 --> 00:00:32.200 I hope you share and enjoy. 15 00:00:37.720 --> 00:00:40.280 Charlie Mugger was one of my greatest heroes 16 00:00:40.280 --> 00:00:43.920 and he just recently passed away at the age of 99, 17 00:00:43.920 --> 00:00:45.800 a month and a half away from turning 100. 18 00:00:46.680 --> 00:00:49.600 He lived one of the most exceptional lives, 19 00:00:49.600 --> 00:00:52.520 both in his personal success, 20 00:00:52.520 --> 00:00:54.840 but I would say more so in how much he was willing 21 00:00:54.840 --> 00:00:57.640 to give back to others to help others along the way. 22 00:00:57.680 --> 00:01:02.160 And he embodied all of the traits that he espoused 23 00:01:02.160 --> 00:01:06.320 in the many speeches and talks and shareholder meetings 24 00:01:06.320 --> 00:01:09.200 that he had over his 99 year career. 25 00:01:09.200 --> 00:01:13.400 And I want to share some of my personal biggest takeaways 26 00:01:13.400 --> 00:01:15.640 from having Charlie Mugger as a hero 27 00:01:15.640 --> 00:01:17.680 that don't even come close to the many gems 28 00:01:17.680 --> 00:01:18.560 of wisdom he shared, 29 00:01:18.560 --> 00:01:21.360 but are some of the ones that I use on a regular basis. 30 00:01:21.360 --> 00:01:22.440 So right off the bat, 31 00:01:22.440 --> 00:01:24.720 the first and biggest one is his process 32 00:01:24.720 --> 00:01:25.560 of inverted thinking. 33 00:01:25.720 --> 00:01:28.560 He purportedly claims that he's not the first person 34 00:01:28.560 --> 00:01:31.440 to say this Einstein always said invert, always invert. 35 00:01:31.440 --> 00:01:34.320 And so Charlie was a huge history buff 36 00:01:34.320 --> 00:01:37.080 and loved living in the past 37 00:01:37.080 --> 00:01:39.640 and reading autobiographies of the smartest people 38 00:01:39.640 --> 00:01:40.840 who would ever walk the earth 39 00:01:40.840 --> 00:01:43.480 and a lot of his thinking processes were formulated 40 00:01:43.480 --> 00:01:45.040 from seeing how those people thought 41 00:01:45.040 --> 00:01:46.880 and he passed it along to people like you and me. 42 00:01:46.880 --> 00:01:51.880 And inverted thinking is simply taking a very hard problem. 43 00:01:51.880 --> 00:01:54.160 So if you said, hey, I want to grow my business, 44 00:01:54.160 --> 00:01:56.920 trying to grow a business is in some ways 45 00:01:56.920 --> 00:01:58.720 more complex and difficult than saying, 46 00:01:58.720 --> 00:02:00.080 if I were to destroy my business 47 00:02:00.080 --> 00:02:02.280 and as few moves as possible, what would I do? 48 00:02:02.280 --> 00:02:03.400 And so then thinking, well, 49 00:02:03.400 --> 00:02:05.040 if I wanted to absolutely destroy my business, 50 00:02:05.040 --> 00:02:07.720 I would do this first and then I would do this second 51 00:02:07.720 --> 00:02:10.320 and then I would do this third and then I would do this fourth. 52 00:02:10.320 --> 00:02:11.240 And you create that list 53 00:02:11.240 --> 00:02:13.240 and all of a sudden what's interesting about it is that 54 00:02:13.240 --> 00:02:16.760 we have such a stronger ability to find threats 55 00:02:16.760 --> 00:02:19.600 and negatives in our environment than we do positives. 56 00:02:19.600 --> 00:02:20.960 And so it's like if I were to ask you, 57 00:02:20.960 --> 00:02:23.160 hey, tell me 10 things you're grateful for. 58 00:02:23.200 --> 00:02:24.600 You might be like, well, right? 59 00:02:24.600 --> 00:02:25.960 Now if I said, tell me 10 things, 60 00:02:25.960 --> 00:02:27.400 tell me about 10 problems you have in your life. 61 00:02:27.400 --> 00:02:30.360 You could probably rattle off 100 without breaking a sweat. 62 00:02:30.360 --> 00:02:33.080 It's because we're way more wired to find threats 63 00:02:33.080 --> 00:02:35.520 in the environment than find good things. 64 00:02:35.520 --> 00:02:39.120 Now using that engine, we apply it to a business 65 00:02:39.120 --> 00:02:41.440 or personal setting or any complex problem 66 00:02:41.440 --> 00:02:43.600 and say, okay, I'm gonna find all the ways 67 00:02:43.600 --> 00:02:44.760 that I'm gonna destroy my business 68 00:02:44.760 --> 00:02:46.480 and then you invert it. 69 00:02:46.480 --> 00:02:48.200 And so for me to destroy my business, 70 00:02:48.200 --> 00:02:50.600 I would make sure that I would never let anyone know 71 00:02:50.600 --> 00:02:51.720 about my stuff, okay? 72 00:02:51.720 --> 00:02:53.200 Well, then what would I do to invert that? 73 00:02:53.200 --> 00:02:55.680 I would let as many people assuming possible know about my stuff. 74 00:02:55.680 --> 00:02:56.920 If I wanted to destroy my business, 75 00:02:56.920 --> 00:02:59.440 I would make sure that we had terrible products 76 00:02:59.440 --> 00:03:01.760 so that anybody who bought it would immediately think 77 00:03:01.760 --> 00:03:03.640 it was awful and tell all their friends 78 00:03:03.640 --> 00:03:04.960 that it sucked and leave bad reviews. 79 00:03:04.960 --> 00:03:06.760 Okay, so what's the opposite of that? 80 00:03:06.760 --> 00:03:08.440 I wanna have something that's exceptional 81 00:03:08.440 --> 00:03:09.960 that as soon as people get it, they love it, 82 00:03:09.960 --> 00:03:11.120 they tell the difference how great it is 83 00:03:11.120 --> 00:03:12.880 and then they leave positive reviews, right? 84 00:03:12.880 --> 00:03:14.280 And you can go down the list and start thinking, 85 00:03:14.280 --> 00:03:16.240 okay, if I wanted this negative thing to happen, 86 00:03:16.240 --> 00:03:17.240 what would I do? 87 00:03:17.240 --> 00:03:18.920 You say that and then you invert it. 88 00:03:18.920 --> 00:03:21.600 And for whatever reason, you get completely different answers. 89 00:03:21.640 --> 00:03:24.400 Then you would try to think of it in the positive. 90 00:03:24.400 --> 00:03:26.360 And I have done this, Einstein did it, 91 00:03:26.360 --> 00:03:28.280 Munger did it, there are way more successful than I am 92 00:03:28.280 --> 00:03:29.120 in many ways. 93 00:03:29.120 --> 00:03:30.600 And so it is a process that I've used 94 00:03:30.600 --> 00:03:31.840 in so many from parts of my life. 95 00:03:31.840 --> 00:03:34.840 Charlie said, the death of most people is liquor 96 00:03:34.840 --> 00:03:37.440 is the three else, liquor, leverage, and ladies. 97 00:03:37.440 --> 00:03:38.280 That's it. 98 00:03:39.280 --> 00:03:43.200 And so I'm not saying you avoid liquor, ladies, and leverage, 99 00:03:43.200 --> 00:03:45.840 but to some degree, that's pretty much what they did. 100 00:03:45.840 --> 00:03:47.360 They never took on excessive debt 101 00:03:47.360 --> 00:03:49.680 beyond what they could very reasonably cover. 102 00:03:49.960 --> 00:03:53.080 They didn't flander, like obviously Warren had two wives. 103 00:03:53.080 --> 00:03:54.880 He had his own setup, but they weren't running 104 00:03:54.880 --> 00:03:56.280 through many, many women. 105 00:03:56.280 --> 00:03:58.120 And Charlie was pretty adamant about this. 106 00:03:58.120 --> 00:04:00.800 He said, I've never seen somebody whose life was better 107 00:04:00.800 --> 00:04:02.400 by including drugs and alcohol on them. 108 00:04:02.400 --> 00:04:05.360 Next thing I got from Charlie is his absolute obsession 109 00:04:05.360 --> 00:04:08.480 with simplicity and his importance of complexity 110 00:04:08.480 --> 00:04:10.960 and things that seem too complicated. 111 00:04:10.960 --> 00:04:14.680 Charlie's most common response to deals was too hard. 112 00:04:14.680 --> 00:04:17.560 And I think that that shows so much humility 113 00:04:17.560 --> 00:04:20.240 in how he'd approach his one of the greatest investors 114 00:04:20.240 --> 00:04:22.400 of all time and still the majority of deals 115 00:04:22.400 --> 00:04:23.960 that came in and he was brilliant. 116 00:04:23.960 --> 00:04:25.640 He would just say too hard. 117 00:04:25.640 --> 00:04:28.440 And so to me, it's not like obviously 118 00:04:28.440 --> 00:04:30.440 he could think about it harder and figure it out 119 00:04:30.440 --> 00:04:32.560 or he probably did already know what it was, 120 00:04:32.560 --> 00:04:37.560 but it just showed his absolute commitment to simplicity. 121 00:04:37.800 --> 00:04:39.880 And I think Warren was quoted by saying, 122 00:04:39.880 --> 00:04:42.520 we want to have businesses that are so wonderful 123 00:04:42.520 --> 00:04:44.800 that an idiot could run it and then have wonderful people 124 00:04:44.800 --> 00:04:45.640 run it instead. 125 00:04:45.640 --> 00:04:48.160 And I think about that a lot with the businesses 126 00:04:48.160 --> 00:04:49.000 that we want to invest in. 127 00:04:49.000 --> 00:04:50.560 And even the business models that we choose to pursue 128 00:04:50.560 --> 00:04:52.320 because oftentimes you have strategic decisions 129 00:04:52.320 --> 00:04:53.640 you need to make in your business. 130 00:04:53.640 --> 00:04:55.360 You're like, okay, well, there's this slightly more complicated 131 00:04:55.360 --> 00:04:58.600 thing or this simple thing, which one should I do? 132 00:04:58.600 --> 00:05:01.400 Well, oftentimes if it's simpler at scale, 133 00:05:01.400 --> 00:05:03.720 it becomes complex and complexity at scale 134 00:05:03.720 --> 00:05:04.720 becomes impossible. 135 00:05:04.720 --> 00:05:06.960 And so he takes the path of least resistance 136 00:05:06.960 --> 00:05:08.360 when it comes to some of these decisions. 137 00:05:08.360 --> 00:05:11.760 And so I guess Charlie gave me a lot of permission 138 00:05:11.760 --> 00:05:14.720 to just say too tough, too hard for me. 139 00:05:14.880 --> 00:05:16.520 And I think a lot of times letting yourself off, 140 00:05:16.520 --> 00:05:18.080 saving all that at mental energy 141 00:05:18.080 --> 00:05:20.960 of trying to make an impossible or complex task work 142 00:05:20.960 --> 00:05:22.880 rather than just saying, I'm opting out. 143 00:05:22.880 --> 00:05:24.240 I'm going to follow the easier path 144 00:05:24.240 --> 00:05:25.160 because at the end of the day, 145 00:05:25.160 --> 00:05:28.200 we're the ones who choose how hard we want our lives to be. 146 00:05:28.200 --> 00:05:29.680 And so he's like, yeah, well, if it's my choice 147 00:05:29.680 --> 00:05:30.800 then I just choose the easy life. 148 00:05:30.800 --> 00:05:32.480 If the hard way to make money, easy way to make money 149 00:05:32.480 --> 00:05:33.400 and you could choose either one 150 00:05:33.400 --> 00:05:34.720 then why would you not choose the easy one? 151 00:05:34.720 --> 00:05:35.720 The next thing I learned from Charlie, 152 00:05:35.720 --> 00:05:39.120 a concept that I remember as unique expensive sticky air 153 00:05:39.120 --> 00:05:40.760 managed by an owner. 154 00:05:40.760 --> 00:05:43.160 And so basically that was their breakdown 155 00:05:43.160 --> 00:05:44.240 of the perfect business. 156 00:05:44.240 --> 00:05:47.720 So unique in that it has a brand or something unique about it 157 00:05:47.720 --> 00:05:49.200 that makes it difficult for other people to copy. 158 00:05:49.200 --> 00:05:50.800 This is when they talk about a competitive mode. 159 00:05:50.800 --> 00:05:53.680 And so brand being one of the most obvious ones 160 00:05:53.680 --> 00:05:55.960 that you can use, unique expensive. 161 00:05:55.960 --> 00:05:59.000 So expensive and air actually are paired together 162 00:05:59.000 --> 00:06:00.520 which is you want something that you can buy 163 00:06:00.520 --> 00:06:02.040 for a penny and sell for a dollar, 164 00:06:02.040 --> 00:06:05.200 not buy for 90 cents and sell for a dollar, right? 165 00:06:05.200 --> 00:06:06.800 You want to have a lot of margin 166 00:06:06.800 --> 00:06:08.560 in whatever it is that you sell 167 00:06:08.560 --> 00:06:11.000 so that you can make more gross profits 168 00:06:11.000 --> 00:06:12.760 so that you can reinvest in the business 169 00:06:12.760 --> 00:06:14.640 and or take distributions as an owner. 170 00:06:14.640 --> 00:06:16.760 So the sticky part is getting something 171 00:06:16.760 --> 00:06:19.240 that people will buy again and again and again and again. 172 00:06:19.240 --> 00:06:22.280 And so that's both recurring and also reoccurring. 173 00:06:22.280 --> 00:06:23.480 And so if you look at their portfolio, 174 00:06:23.480 --> 00:06:25.080 they have recurring businesses like insurance 175 00:06:25.080 --> 00:06:27.960 but they also have reoccurring businesses like Coca-Cola. 176 00:06:27.960 --> 00:06:30.040 So you probably have bought Coca-Cola products 177 00:06:30.040 --> 00:06:32.080 knowingly or unknowingly and you probably have never thought 178 00:06:32.080 --> 00:06:33.720 that you're on a Coca-Cola subscription. 179 00:06:33.720 --> 00:06:37.000 But every time you buy a power raid or you get a sprite 180 00:06:37.000 --> 00:06:38.760 or you go to the gas station and you grab a drink 181 00:06:38.760 --> 00:06:41.160 or you go to a restaurant and you ask for a diet Coke 182 00:06:41.160 --> 00:06:43.240 and you're there, all of those, 183 00:06:43.240 --> 00:06:45.000 even though they are reoccurring to you, 184 00:06:45.000 --> 00:06:47.720 they are recurring to the parent company 185 00:06:47.720 --> 00:06:49.800 because that restaurant or that gas station 186 00:06:49.800 --> 00:06:51.560 regularly buys the same amount of Coke, 187 00:06:51.560 --> 00:06:53.840 even though you're not the one who's quote on the subscription. 188 00:06:53.840 --> 00:06:56.280 And the farther up the distribution chain you go, 189 00:06:56.280 --> 00:06:58.200 the more reliable those purchases become. 190 00:06:58.200 --> 00:07:03.200 And so they both wanted unique things that no one else could copy 191 00:07:03.200 --> 00:07:04.440 that you could charge a lot of money for 192 00:07:04.440 --> 00:07:05.680 that don't cost a lot. 193 00:07:05.680 --> 00:07:08.080 And so the air piece is also low capital expenditure 194 00:07:08.080 --> 00:07:10.200 that you don't have to keep pouring money back into the business 195 00:07:10.240 --> 00:07:11.320 in order to keep it competitive. 196 00:07:11.320 --> 00:07:13.480 Sticky is that you want people to love the products 197 00:07:13.480 --> 00:07:15.040 such that they want to keep buying it again and again. 198 00:07:15.040 --> 00:07:17.880 And so those are the actual economics of the business. 199 00:07:17.880 --> 00:07:20.360 The second part of the business was who's running it, right? 200 00:07:20.360 --> 00:07:22.800 They said they want a business that's so wonderful 201 00:07:22.800 --> 00:07:24.320 that an idiot couldn't ruin it 202 00:07:24.320 --> 00:07:26.360 and then hire a wonderful person to run it. 203 00:07:26.360 --> 00:07:28.040 And so when they talk about wonderful people, 204 00:07:28.040 --> 00:07:29.440 they've pieced these pieces together 205 00:07:29.440 --> 00:07:31.200 from the talks that both the Moogiven, 206 00:07:31.200 --> 00:07:33.920 but it's that they want someone who acts like an owner. 207 00:07:33.920 --> 00:07:36.800 They want them to behave as though 100% of their net worth 208 00:07:36.800 --> 00:07:39.120 is in the business that they're invested in 209 00:07:39.120 --> 00:07:40.720 and they cannot sell a stock ever. 210 00:07:40.720 --> 00:07:43.880 And so when you get someone to think in that way, 211 00:07:43.880 --> 00:07:46.280 then you get someone who was gonna make ultimately 212 00:07:46.280 --> 00:07:47.280 very long-term decisions. 213 00:07:47.280 --> 00:07:48.880 That's the only thing they're actually indexing for 214 00:07:48.880 --> 00:07:50.600 by setting the incentives in that way. 215 00:07:50.600 --> 00:07:53.040 You have to imagine all of your net worth 216 00:07:53.040 --> 00:07:54.880 is in the one stock that you're running of the company 217 00:07:54.880 --> 00:07:56.000 and you can never sell it. 218 00:07:56.000 --> 00:07:57.720 Now what do you do is your decision making 219 00:07:57.720 --> 00:07:59.440 and that's the right decision for the business. 220 00:07:59.440 --> 00:08:00.840 And so I think one of the other things 221 00:08:00.840 --> 00:08:02.520 that Charlie's been so good at is he just knows 222 00:08:02.520 --> 00:08:03.560 one enough is enough. 223 00:08:03.560 --> 00:08:05.400 He said, I don't need the last dollar 224 00:08:05.400 --> 00:08:07.040 and I'm roughly paraphrasing there, 225 00:08:07.040 --> 00:08:09.360 but basically he believed that deals 226 00:08:09.360 --> 00:08:13.720 should are either good and obvious or bad and obvious. 227 00:08:13.720 --> 00:08:15.440 So you shouldn't need an excel sheet to figure out 228 00:08:15.440 --> 00:08:16.640 if you're gonna make money. 229 00:08:16.640 --> 00:08:18.280 It should be clear that you're going to make money 230 00:08:18.280 --> 00:08:19.120 on the deal. 231 00:08:19.120 --> 00:08:21.640 And so he didn't need to big borrow and steal 232 00:08:21.640 --> 00:08:24.520 and negotiate and chisel away the other person's slice 233 00:08:24.520 --> 00:08:26.640 of the pie to get a few more percentage points. 234 00:08:26.640 --> 00:08:28.240 He said either you're gonna make a lot of money or I'm not. 235 00:08:28.240 --> 00:08:31.440 And so he was willing to leave meat on the bone 236 00:08:31.440 --> 00:08:33.520 or some room for other people at the table 237 00:08:33.520 --> 00:08:35.200 so that one other people could make money. 238 00:08:35.200 --> 00:08:36.920 But I think the long-term thing is that those people 239 00:08:36.960 --> 00:08:38.200 who do deals with him again. 240 00:08:38.200 --> 00:08:40.360 Because imagine if you're always known 241 00:08:40.360 --> 00:08:42.960 as a super tough negotiator that doesn't leave anything 242 00:08:42.960 --> 00:08:45.240 for anybody else, it's like you might get that one deal 243 00:08:45.240 --> 00:08:46.520 but no one's gonna call you first. 244 00:08:46.520 --> 00:08:47.920 You're always gonna be called as a last resort 245 00:08:47.920 --> 00:08:49.240 rather than the first version they call. 246 00:08:49.240 --> 00:08:50.480 And the amount of benefit you get 247 00:08:50.480 --> 00:08:52.360 from being everyone's first call 248 00:08:52.360 --> 00:08:53.960 rather than their last call, 249 00:08:53.960 --> 00:08:55.760 probably can't be accounted for 250 00:08:55.760 --> 00:08:57.640 for an entire lifetime compounded 251 00:08:57.640 --> 00:08:59.000 with that kind of reputation. 252 00:09:01.400 --> 00:09:03.280 Aimos in Asian quick break just to let you know 253 00:09:03.280 --> 00:09:05.120 that we've been starting to post unlinked in 254 00:09:05.120 --> 00:09:06.600 and want to connect with you. 255 00:09:06.640 --> 00:09:08.080 All right, so send me a connection request 256 00:09:08.080 --> 00:09:09.720 and let me know that you listen to the show 257 00:09:09.720 --> 00:09:11.000 and I will accept it. 258 00:09:11.000 --> 00:09:12.720 There's anyone you think that we should be connected 259 00:09:12.720 --> 00:09:15.360 with, tag them in one of my or Laila's posts 260 00:09:15.360 --> 00:09:17.480 and I will give you all the love in the world. 261 00:09:17.480 --> 00:09:19.080 All right, so let's get back to the show. 262 00:09:21.280 --> 00:09:22.720 So another one, this is a big one 263 00:09:22.720 --> 00:09:23.560 that I learned from Charlie. 264 00:09:23.560 --> 00:09:25.440 It was actually the importance of brand. 265 00:09:25.440 --> 00:09:27.240 And so if you look at their most recent, 266 00:09:27.240 --> 00:09:28.680 and if you think about them as investors 267 00:09:28.680 --> 00:09:30.480 in my opinion, they only got better 268 00:09:30.480 --> 00:09:32.000 because you're discerned as a decision maker 269 00:09:32.000 --> 00:09:33.120 just only improves with time 270 00:09:33.120 --> 00:09:34.400 as long as your mental faculties are there. 271 00:09:34.400 --> 00:09:36.720 And Charlie has shown, I mean, 272 00:09:36.720 --> 00:09:38.120 till the day he died that he had all of his 273 00:09:38.120 --> 00:09:40.520 mental faculties, he did the shareholder meeting 274 00:09:40.520 --> 00:09:42.280 was still just smart as a whip. 275 00:09:42.280 --> 00:09:43.760 And if you look at their largest 276 00:09:43.760 --> 00:09:45.720 most recent investment, it's been Apple. 277 00:09:45.720 --> 00:09:47.960 And so right now over half of at least the last time 278 00:09:47.960 --> 00:09:52.360 I checked, half of Berkshire Hathaway is just Apple. 279 00:09:52.360 --> 00:09:54.080 Half huge. 280 00:09:54.080 --> 00:09:55.840 Why were they willing to buy a technology company 281 00:09:55.840 --> 00:09:58.800 when they normally didn't buy into technology overall? 282 00:09:58.800 --> 00:10:02.040 It was because they saw the brand of Apple 283 00:10:02.040 --> 00:10:04.040 as the big strategic mode. 284 00:10:04.040 --> 00:10:06.720 They saw that Apple could keep creating products 285 00:10:06.720 --> 00:10:08.200 and they had such a loyal audience 286 00:10:08.200 --> 00:10:10.560 of people who would just buy anything that they put out 287 00:10:10.560 --> 00:10:12.040 that they felt the likelihood that this company 288 00:10:12.040 --> 00:10:14.960 would be able to charge above average prices 289 00:10:14.960 --> 00:10:17.320 for average products for the extended, 290 00:10:17.320 --> 00:10:19.360 for the foreseeable future was high. 291 00:10:19.360 --> 00:10:23.360 And so they were willing to bet a huge amount of money 292 00:10:23.360 --> 00:10:26.040 on that company and they did and they were right yet again. 293 00:10:26.040 --> 00:10:29.840 And so seeing that the companies they buy 294 00:10:29.840 --> 00:10:32.400 really are brands, you know, Ben Bridges-Jewlers, 295 00:10:32.400 --> 00:10:33.720 you know, think about C's candies, 296 00:10:33.760 --> 00:10:35.880 you think about Dairy Queen, you think about Guy Co. 297 00:10:35.880 --> 00:10:38.880 These are all companies that are wholly owned 298 00:10:38.880 --> 00:10:43.200 by Berkshire Hathaway and they were willing 299 00:10:43.200 --> 00:10:46.240 to buy those companies because they had a strategic mode 300 00:10:46.240 --> 00:10:49.400 and it wasn't because they had some novel business thing. 301 00:10:49.400 --> 00:10:51.560 It was because of the brands that those companies had built. 302 00:10:51.560 --> 00:10:54.000 And when I saw that them as investors 303 00:10:54.000 --> 00:10:57.360 and me as a business owner in different hats, 304 00:10:57.360 --> 00:10:58.920 both saw the importance of brand to me 305 00:10:58.920 --> 00:11:01.560 was very confirming on my investment now 306 00:11:01.560 --> 00:11:02.920 in trying to build a brand that I am. 307 00:11:03.000 --> 00:11:04.920 So this is a big one. 308 00:11:04.920 --> 00:11:07.760 Charlie talked about living within your means a lot 309 00:11:07.760 --> 00:11:09.520 and it's such an obvious thing 310 00:11:09.520 --> 00:11:12.880 but if you had all the rules of money written in order, 311 00:11:12.880 --> 00:11:14.880 you could follow just rule number one 312 00:11:14.880 --> 00:11:16.680 and never need money ever again, 313 00:11:16.680 --> 00:11:20.560 which is if you always spend less than you earn, 314 00:11:20.560 --> 00:11:22.400 you will literally never need money. 315 00:11:22.400 --> 00:11:24.120 You wouldn't even need your savings 316 00:11:24.120 --> 00:11:27.040 because you would always spend less than you earn. 317 00:11:27.040 --> 00:11:28.920 So you would never lack for money. 318 00:11:28.920 --> 00:11:31.280 It's rule number one, two, three, four, five, six, seven, eight, 319 00:11:31.440 --> 00:11:32.440 nine, 10 320 00:11:32.440 --> 00:11:34.760 because like you can't even do investing 321 00:11:34.760 --> 00:11:36.920 where rule number one is don't lose money. 322 00:11:36.920 --> 00:11:38.760 Rule number two is don't forget rule number one. 323 00:11:38.760 --> 00:11:42.120 Well, you couldn't do that unless you spent less than you earned. 324 00:11:42.120 --> 00:11:45.120 And so like rule zero is spend less than you earn. 325 00:11:45.120 --> 00:11:46.720 And what's crazy is that so many people 326 00:11:46.720 --> 00:11:49.240 are trying to find advance and complicated trading 327 00:11:49.240 --> 00:11:53.280 and investing tactics when they haven't even mastered 328 00:11:53.280 --> 00:11:55.120 bouncing their budget. 329 00:11:55.120 --> 00:11:59.840 And so he had such an emphasis on doing the fundamentals 330 00:11:59.840 --> 00:12:03.200 that I think just his repeated emphasis of that 331 00:12:03.200 --> 00:12:05.960 and just now paired with my own experience 332 00:12:05.960 --> 00:12:08.760 having grown relatively large companies. 333 00:12:08.760 --> 00:12:09.880 I mean, over the last three years, 334 00:12:09.880 --> 00:12:12.680 we've added a hundred million in revenue organically 335 00:12:12.680 --> 00:12:14.040 from the companies we have in the portfolio. 336 00:12:14.040 --> 00:12:16.840 So I feel relatively confident in talking about it. 337 00:12:16.840 --> 00:12:20.160 We don't do anything complicated ever. 338 00:12:20.160 --> 00:12:23.480 All we do is continually try and simplify the business 339 00:12:23.480 --> 00:12:27.240 and do the fundamentals everywhere all the time. 340 00:12:27.240 --> 00:12:29.800 That's it because doing the fundamentals everywhere 341 00:12:29.840 --> 00:12:33.600 all the time is already as complicated as you can imagine. 342 00:12:33.600 --> 00:12:36.720 Doing anything beyond that doesn't even happen in reality. 343 00:12:36.720 --> 00:12:40.840 And so if you do the fundamentals everywhere all the time, 344 00:12:40.840 --> 00:12:43.840 you become an advanced business owner. 345 00:12:43.840 --> 00:12:46.320 You know, I mean, Warren and Charlie both talk about 346 00:12:46.320 --> 00:12:47.840 learning from the mistakes of others. 347 00:12:47.840 --> 00:12:49.840 So the next point that I would say I grabbed from 348 00:12:49.840 --> 00:12:52.640 with him and Warren was learning from the mistakes of others. 349 00:12:52.640 --> 00:12:53.480 You know what they say? 350 00:12:53.480 --> 00:12:56.640 A dumb person makes their own mistake and then repeats it. 351 00:12:56.640 --> 00:12:58.520 A smart person learns from their mistakes. 352 00:12:58.520 --> 00:13:00.760 A wise person learns from the mistakes of others. 353 00:13:00.760 --> 00:13:04.160 And so you can live multiple lifetimes of lessons 354 00:13:04.160 --> 00:13:07.120 simply by allowing other people to share their lessons 355 00:13:07.120 --> 00:13:08.120 and their mistakes with you 356 00:13:08.120 --> 00:13:10.520 and then taking the lesson without the scar. 357 00:13:10.520 --> 00:13:12.800 And so honestly, that's why I make the, 358 00:13:12.800 --> 00:13:15.200 I mean, this just so that I can transfer as many of the scars 359 00:13:15.200 --> 00:13:17.520 rather the lessons that I got without the scars 360 00:13:17.520 --> 00:13:18.880 to everyone in those nation. 361 00:13:18.880 --> 00:13:20.920 But I feel like I've learned so many of those lessons 362 00:13:20.920 --> 00:13:24.160 from Uncle Charlie and Uncle Warren 363 00:13:24.160 --> 00:13:27.760 that I've just been able to apply into a modern day 364 00:13:27.760 --> 00:13:29.600 business environment just in my own way. 365 00:13:29.600 --> 00:13:33.320 I think one of the most understated things 366 00:13:33.320 --> 00:13:35.400 that I learned from Charlie was that despite being 367 00:13:35.400 --> 00:13:37.400 one of the best investors of all time, 368 00:13:37.400 --> 00:13:40.600 I think the thing that made him one of the best 369 00:13:40.600 --> 00:13:42.520 isn't necessarily his financial return. 370 00:13:42.520 --> 00:13:44.840 There are other investors who have achieved higher returns 371 00:13:44.840 --> 00:13:45.840 than he and Warren. 372 00:13:45.840 --> 00:13:47.320 Now obviously from absolute returns 373 00:13:47.320 --> 00:13:49.360 because they've been doing it for so long, 374 00:13:49.360 --> 00:13:51.920 they have one of the biggest portfolios of all time. 375 00:13:51.920 --> 00:13:54.120 But Charlie's net worth was only a few billion dollars. 376 00:13:54.120 --> 00:13:55.680 And I say only as though it's not a lot of money, 377 00:13:55.680 --> 00:13:56.520 of course it was. 378 00:13:56.520 --> 00:13:59.400 But he could have made a lot more if he so chose to. 379 00:13:59.400 --> 00:14:01.920 But he said over and over again that he never wanted 380 00:14:01.920 --> 00:14:02.880 to make money. 381 00:14:02.880 --> 00:14:05.360 He just desperately wanted to be independent. 382 00:14:05.360 --> 00:14:06.920 He said he just overshot. 383 00:14:06.920 --> 00:14:09.440 And I think about that a lot when it comes to 384 00:14:09.440 --> 00:14:11.320 what things I'm optimizing for. 385 00:14:11.320 --> 00:14:15.440 Because it's so easy to get caught in the race of more. 386 00:14:15.440 --> 00:14:17.520 I've just always wanting more and never having enough. 387 00:14:17.520 --> 00:14:19.520 And I think probably the single greatest thing 388 00:14:19.520 --> 00:14:21.040 that I would say I observed from Charlie 389 00:14:21.040 --> 00:14:23.320 was that he knew what enough was enough 390 00:14:23.320 --> 00:14:25.120 and that he'd accomplished his objective, 391 00:14:25.120 --> 00:14:27.000 which was to be free and independent. 392 00:14:27.000 --> 00:14:28.640 And so just do whatever he wanted, 393 00:14:28.640 --> 00:14:30.720 whenever he wanted with whom ever he wanted. 394 00:14:30.720 --> 00:14:33.200 And I think that in a lot of ways, 395 00:14:33.200 --> 00:14:35.800 the way he lived was an ideal life. 396 00:14:35.800 --> 00:14:40.200 He spent his time doing the thing 397 00:14:40.200 --> 00:14:43.160 that he was exceptional at with the person 398 00:14:43.160 --> 00:14:44.840 that he probably cared the most about in the world, 399 00:14:44.840 --> 00:14:46.360 just Warren, his closest friend. 400 00:14:46.360 --> 00:14:48.440 They never argued once in their entire relationship 401 00:14:48.440 --> 00:14:50.000 per my understanding. 402 00:14:50.000 --> 00:14:52.840 And what better of a life could you ask for? 403 00:14:52.840 --> 00:14:54.640 And so I think when I think about his life, 404 00:14:54.640 --> 00:14:57.360 I see that as such a wonderful model to go after. 405 00:14:57.360 --> 00:14:59.440 And I will be eternally grateful 406 00:14:59.440 --> 00:15:01.400 for the contribution that he had, 407 00:15:01.400 --> 00:15:03.200 unknowingly, to my life.