I have written a lot about my first trip with 20 Peking University students to meet Warren Buffett in Omaha. A couple of Buffett’s comments from that Omaha meeting have really stuck with me. They have been rattling around in my head and have made me question how I am living. In this article, I detail five more of these Buffett “life lessons”. Four others can be found here.

 

Life Lesson 1: Work with or for someone you admire. Pretend you don’t need the money.

A student asked what you should do when you are just starting out. His answer was to pretend you are wealthy and don’t need the money. What would you do and who would you work for in that case? What person or institution do you admire so much that you would work for free?

He also talked about finding something you love to do and to start doing it now. Don’t wait. Don’t postpone your life for money or other reasons. Do what you love now.

Life Lesson 2: Have an inner scorecard – and then let other people do the work.

He mentioned at lunch how you need to have an inner scorecard to measure your business and life. He has spoken about this frequently and I believe he got this from your father. The idea of having a scorecard is important in terms of creating focus. But the “inner” part is about resisting the natural temptation to compare yourself to others. As he frequently says, envy is what makes the world go round.

However, something he said that was new to me was when he described his “lifetime formula” as letting other people do the work while he sits and thinks. Other people build and run the businesses. He just sits in his office and reads and thinks. This lifelong formula is pretty much my dream as well.

Life Lesson 3: Live frugally.

He spoke a lot about wealth and what utility it has and doesn’t have for him (I wrote about this here). He lives frugally and always has. He appears to live on about $100k per year, except for his plane (which he says costs about $1.5M per year).

He spoke at length about how there is nothing about spending any more money that makes him any more happy. Having four houses wouldn’t make him more any more happy. Having four cars wouldn’t make him more happy then having one.

I also think being frugal is good advice in terms of having focus in life and not getting caught in acquiring things as a habit. Plus, the less you need to live, the more free you are to pursue your dreams.

Note: In the past 6 months, I have been cutting out costs as an exercise in minimalism. Every month I cut two expenses and then see if I miss them. In almost all cases, I find it makes no difference in my life. I have also gotten rid of all debt. I don’t even carry a credit card that isn’t paid off in full every month now. This is sort of an exercise in logic and also about letting my puritanical streak run free for a bit.

Life Lesson 4: Learn about an industry by talking to CEOs in that industry.

This is more of a business thing. He spoke about his first trip to GEICO in Washington DC when he was still a business student. How he knocked on the door on a Saturday and spent the afternoon talking to the one guy in the office. This GEICO story is well-known but he also mentioned that he really didn’t know much about insurance at that time. That was a surprise. His approach in his early years in New York and Omaha was to visit 5-10 CEOs in industries he was interested in. Note: This is right out of Philip Fisher’s scuttlebutt approach. He also mentioned that he would ask CEOs what one company they would buy in their industry if they could buy only one? And which would they short if they could short only one.

His two favorite sources of information when he was young appear to be annual reports and talking with CEOs.

Life Lesson 5: Optimism is powerful – and infectious.

Bill Gates has said Warren Buffett is the most optimistic person he has ever met. But Warren said this was not an opinion he just adopted. He said it is the result of analysis. The world (and the US in particular) is getting better and better. Most everyone alive in the USA today is wealthier than the world’s richest person when Warren was born in 1930. But this is based on overall wealth (not cash). So quality of healthcare, ability to travel, communication, entertainment options, etc.

My own take-away is that optimism is surprisingly powerful. It does change how you think and feel very quickly. It also probably makes you more emotionally stable. I do think it is particularly infectious. When you are around optimistic people, you almost immediately feel better yourself. And the effect happens within minutes.

I think this last point ties to Part 1, which was about the importance of having great partners and friends. If you surround yourself with optimistic people, you naturally become so yourself. I think the same can be said for surrounding yourself with rational people.

Ok. This is my 9th(?) article on that trip. That seems overly-sufficient. On to other topics.

Cheers, Jeff

• You can read my summary of the Buffett trip – Part 1 here, Part 2 here. and Part 3 here.
• You can read “7 Things I Learned At Lunch With Warren Buffett” here (in Chinese here)
• You can read the Q&A here in English (here in Chinese)

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