Thread by @FoundersPodcast

I read all of Warren Buffett's shareholder letters. [54 years!]

This is a thread of my highlights.

Just run your business as if: 1) you own 100% of it; 2) it is the only asset in the world that you and your family have or will ever have; and 3) you can’t sell or merge it for at least a century.

Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them.

My conclusion from my own experiences and from much observation of other businesses is that a good managerial record is far more a function of what business boat you get into than it is of how effectively you row.

Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

We subscribe to the philosophy of Ogilvy & Mather’s founding genius, David Ogilvy: “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants.”

In a business selling a commodity-type product, it’s impossible to be a lot smarter than your dumbest competitor.

Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community.

Nothing sedates rationality like large doses of effortless money.

One of the lessons your management has learned—and, unfortunately, sometimes re-learned—is the importance of being in businesses where tailwinds prevail rather than headwinds.

Our conclusion is that, with few exceptions, when a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.

Both our operating and investment experience cause us to conclude that “turnarounds” seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price.

A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: “When the phone don’t ring, you’ll know it’s me.”

We try to avoid small commitments—If something’s not worth doing at all, it’s not worth doing well.

Our preaching was better than our performance. We neglected the Noah principle: predicting rain doesn’t count, building arks does.

Our experience with newly-minted MBAs has not been great. Their academic records look terrific & the candidates always know just what to say; but too often they are short on personal commitment to the company & general business savvy. It’s difficult to teach a new dog old tricks.

Virtually any volume can be achieved if profitability standards are ignored.

The manager of an already high-cost operation frequently is uncommonly resourceful in finding new ways to add to overhead, while the manager of a tightly-run operation usually continues to find additional methods to curtail costs.

The best of all investment worlds—the coupling of a very important and very hard to duplicate business advantage with an extraordinary management whose skills in operations are matched by skills in capital allocation.

We’ve always found a telephone call to be more productive than a half-day committee meeting.

We will not equate activity with progress or corporate size with owner-wealth.

The business world is simply too complex for a single set of rules to effectively describe economic reality for all enterprises.

Time is the friend of the wonderful business, the enemy of the mediocre.

Charlie and I have observed no correlation between high corporate costs and good corporate performance. In fact, we see the simpler, low-cost operation as more likely to operate effectively than its bureaucratic brethren.

Size seems to make many organizations slow-thinking, resistant to change, and smug.