Success Book Reviews: Warren Buffett and "The Snowball" Part 3

This is part 3 of a “review” of Alice Schroeder’s remarkable biography of Warren Buffett, "The Snowball”. Actually, this topic would be better categorized as part of my Success Secrets category, since, as always on this blog, my goal is to elucidate the behaviours, disciplines, and metal models of the most successful people. Part 1 is here. Part 2 is here. We continue...

Buffett Secret # 3: Hire or acquire skill sets that are lacking
One of the startling revelations (to me , at least) in the book was the fact that Buffett took the Dale Carnegie course. My image of Buffett, before this book, was that of a brilliant analytical individual whose insights into corporate structure and value allowed him to buy companies cheaply. While that is absolutely true, it turns out that it frequently took a lot of interpersonal skills to buy the kind of assets he was seeking, especially if these assets were not publicly available. This is one of the areas where interpersonal skills are required. Another is in encouraging and “firing up” your employees to consistently perform at their highest level ( a fact that Jack Welch also addresses in a video I posted recently).

What Buffett and Welch reveal to us is that you ignore the human component of your business at your peril.

Sometimes you hire, rather than acquire, the lacking skill sets. To improve the results of his insurance businesses, Buffett hired the outstanding Ajit Jain. Jain proved to be such an outstanding risk manager that his name is bandied about as a successor to Buffett himself at Berkshire Hathaway.

Buffett Secret # 4: Keep Expenses low. Stay away from “Glamour”
Buffett never maxed out on fancy homes, fancy cars, fancy hobbies, or fancy possessions. Now, we can never know exactly how much of this is actually true, but we do know, from Schroeder, that Buffett basically maintained a singe residence, a home in Omaha, Nebraska, for the whole of his working life. This is a far cry from the deca-million-dollar Manhattan condos maintained by lavish-spending CEOs. Similarly, Buffett often bought into “low-glamour” businesses such as flooring, metal fabricators, shoes and furniture. Why? Because the cash flows from the businesses were cheaper than cash flows of more glamourous businesses. Also, because he candidly admitted that he didn’t understand high tech. While Buffett could match brains with highest of high-tech CEOSs, my own guess is that, to Buffett, the long-term value of the cash-flow stream of a high-ech business is more difficult to predict than the long term value of massively scaled business based on serving a huge and slowly-changing need. Coffee roasters instead of Javascript, as it were.

Buffett Secret # 5: Find a Supportive Mate
Buffett, always a keen scout of talent, picked Suzie to be his wife. N Suzie he found a woman who was willing to allow Buffett the time and mental tranquility to achieve his full potential. In my own experience, I have seen the demands of family, often channeled through the society’s pop-psychology lens, stifle nascent potential, in the interests of fulfilling dubious “needs” (such as consumer goods, fine houses, “work/life balance”) . Truly great careers, and great achievements , need decades to come to their full fruition, and the achiever needs supportive people around hm, to “wall off” distractions, provide empathy and understanding, and to provide approval and comfort during rough times. A tranquil marriage, free of divorce or major psychological upheavals, has to have been the greatest success secret of all

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