#279 What I Learned Before I Sold to Warren Buffett

255 snips

Nov 29, 2022

Discover the intriguing pitch made to Warren Buffett by a jewelry business owner on the street, revealing Buffett's unique investment style based on trust. Dive into lessons on resilience and mentorship gleaned from generational entrepreneurship. Hear anecdotes that emphasize humility and relationship building as cornerstones of business success. The discussion also highlights a past financial crisis that reshaped strategies and focused on core competencies, all while navigating the entrepreneurial landscape with a supportive culture.

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ANECDOTE

Chance Encounter with Buffett

Barnett Helzberg Jr. unexpectedly met Warren Buffett on a New York sidewalk.
He pitched his family's jewelry business, Helzberg Diamonds, to Buffett in a brief encounter.

ADVICE

Learn from the Best

Attend industry events and meetings to learn from successful people like Buffett.
Internalize their wisdom and philosophies for your own business.

ANECDOTE

Buffett's Due Diligence

During negotiations, Buffett surprised Helzberg by skipping due diligence.
He trusted his intuition, saying he could "smell" a good business deal.

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Relentlessly Resourceful

Paul Graham

In this essay, Paul Graham outlines the critical quality of being 'relentlessly resourceful' as a key trait for successful startup founders. He contrasts this with being 'hapless,' highlighting that relentless resourcefulness involves more than just perseverance. It requires adaptability, creativity, and the ability to continuously try new approaches to overcome external obstacles. Graham uses metaphors, such as comparing a good startup founder to a running back, to illustrate the importance of flexibility and determination. The essay also touches on the teachability of this quality and its relevance in dynamic and complex domains[4][5][3].

First to Dream

New and Improved

Jim Clayton

Jim Clayton's "First to Dream" is a captivating autobiography that chronicles his remarkable journey from humble beginnings on a Tennessee dirt farm to immense entrepreneurial success. The book details his resourcefulness and resilience in overcoming poverty, highlighting his early work experiences and the valuable business lessons he learned along the way. Clayton's story emphasizes the importance of self-discipline, perseverance, and seizing opportunities, even in challenging circumstances. He shares insights into his various ventures, including his car dealerships and ultimately, his highly successful mobile home empire. The book serves as an inspiring testament to the power of hard work, determination, and a relentless pursuit of one's dreams.

Copy this!

Lessons from a Hyperactive Dyslexic who Turned a Bright Idea into One of America's Best Companies

Ann Marsh

Paul Orfalea

This book is a memoir of Paul Orfalea's journey from a struggling kid with learning disabilities to the founder of Kinko's, a company that grew into a $1.5 billion empire. It highlights his unique approach to business, emphasizing the importance of taking care of employees and creating a compassionate company culture. The book is filled with personal anecdotes, business lessons, and Orfalea's inspired aphorisms, making it a refreshing and honest look at what makes Orfalea tick.

The Maverick and His Machine

Kevin Maney

This biography by Kevin Maney offers a comprehensive look at Thomas J. Watson, Sr., who transformed the Computer-Tabulating-Recording Company into IBM. The book explores Watson's leadership, his strategic bets on early computing technology, and his controversial interactions with historical figures like Adolf Hitler. It provides a nuanced portrait of Watson as both a visionary leader and a complex individual.

What I Learned Before I Sold to Warren Buffett

An Entrepreneur’s Guide to Developing a Highly Successful Company

Barnett Helzberg Jr.

This book offers insights into entrepreneurship, drawing from Helzberg's experiences in managing and eventually selling Helzberg Diamonds to Warren Buffett. It covers topics such as leadership, customer service, risk management, and decision-making, providing practical advice for entrepreneurs seeking to build highly successful companies.

The Founders

The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley

Jimmy Soni

In 'The Founders', Jimmy Soni delves into the turbulent early days of PayPal, a company that would become one of the world's foremost payment platforms. With hundreds of interviews and unprecedented access to internal material, Soni chronicles the challenges faced by the founders, including bruising competition, internal strife, online fraud, and the dot-com bust of the 2000s. The book highlights how this group of entrepreneurs, often referred to as the 'PayPal mafia', went on to form, fund, and advise leading companies such as Tesla, Facebook, YouTube, SpaceX, and LinkedIn. It is a story of iteration, inventiveness, and the profound impact these individuals had on modern technology and entrepreneurship.

Cable Cowboy

John Malone and the Rise of the Modern Cable Business

Mark Robichaux

This book is a penetrating portrait of John Malone's complex persona and a captivating history of the cable TV industry. Written with Malone's unprecedented cooperation, it brings to life the story of how an unassuming copper strand evolved into the digital nervous system of the U.S., providing consumers with the fastest route to the Internet. The narrative details Malone's transformation of TCI into a media colossus, his dealings with competitors and regulators, and his significant influence on the industry. The book also explores the broader history of the cable industry, including its early days of providing access to broadcast signals in rural areas and its evolution into a high-speed electronic pipeline known as broadband[1][4][5].

Estée: A Success Story

Estée Lauder

This book is an autobiography by Estée Lauder, the founder of the Estée Lauder Companies. It recounts her early life, her encounter with her uncle who taught her how to make skin products, and her subsequent journey in building a cosmetics business. The book covers her business triumphs, high society interactions, and the challenges she faced in expanding her company both domestically and internationally. It also highlights her innovative marketing techniques, such as intentionally spilling perfume at Harrods to gain customer attention. The autobiography is a mix of personal reminiscence, business insights, and the tension between her career and family life.

What I learned from reading What I Learned Before I Sold to Warren Buffett: An Entrepreneur's Guide to Developing a Highly Successful Company by Barnett Helzberg Jr.

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[5:00] Then, right there on the sidewalk I told one of the most astute businessmen in America why he ought to consider buying our family's 79-year-old jewelry business.

"I believe that our company matches your criteria for investment, I said. To which he replied, simply, "Send me the information. It will be confidential.”

My conversation with Buffett lasted no more than half a minute.

[8:00] My dream buyer for the family business all along was Warren Buffet.

[11:00] "This can be the fastest deal in history," Buffett said.

"But what about due diligence?" I asked, surprised at how fast the negotiations were moving.

Most suitors demand to see every scrap of paper you've ever generated and to interview every top manager.

That wasn't Buffett's way. "I can smell these things, Buffett said. "This one smells good.”

[12:00] First A Dream by Jim Clayton. (Founders #91)

[13:00] Buffett on his management technique: “Managers run their own shows.

They don't have to report to central management. When we get somebody who is a .400 hitter we don't start telling them how to swing.”

[14:00] I was always taught that many, many people were out there developing ideas I could use. I have found that to be true throughout my life. These thoughts and ideas have all been borrowed or stolen from many wise people.

Think of the world as your garden of marvelous people and ideas with unlimited picking rights for you.

[17:00] Cable Cowboy: John Malone and the Rise of the Modern Cable Business by Mark Robichaux. (Founders #268)

[23:00] Despite missteps, entrepreneurs are a special breed who do not give up on the larger goals.

[24:00] It's not hard to express the quality we're looking for in metaphors. The best is probably a running back. A good running back is not merely determined, but flexible as well. They want to get downfield, but they adapt their plans on the fly. — Relentlessly Resourceful by Paul Graham

[25:00] Entrepreneurs are driven to succeed. They possess an almost naive belief that nothing can stand in their way, they are mentally deaf to those who belittle their chances, they love to compete, and they have the skills of broken field runners who take the bumps and bruises along the way, change course when necessary, and stay focused on the goal.

If this is not you, don't try to fool yourself. It's not worth it.

Thinking you can start your own business or wanting to be your own boss, just because you hate your job, when you really have no desire or stamina to go it on your own, is courting disaster. Where there is no real will, there is no way.

Some people are more enamored by the concept than the reality. They would rather contemplate the beauty of the mountain from the base.

The entrepreneur wants to climb the mountain first, briefly appreciate the gorgeous vistas from the summit, and then find the next mountain. If you possess this obsession of seeing your own creative notions succeed and are willing to pay the price, then you have no choice but to pursue the life of an entrepreneur.

[29:00] He taught us to concern ourselves only with those things over which we have control.

I thought he was unique in this until I realized this is one of the key common traits of highly successful people.

Those folks are never victims; they take what comes and handle the situation. The rest is a waste of time.

[30:00] Upgrade the herd annually: "You make more money closing bad stores than opening new ones.”

His philosophy made sense. We decided we would rather spend time and effort on a $4.5 million store that could ultimately achieve annual sales of $6 million than on a lower-volume store with less potential.

[32:00] Focus is your lever to success.

Do not underestimate the incredible amount of mental discipline it takes to focus yourself and your teammates. Wonderful alternatives and seductive opportunities abound and temptations to go in multiple directions are unlimited.

Commit yourself to be the best, define what that means, and focus on the head of that pin like no one in your industry.

[32:00] Estee Lauder was a master at doing things don’t scale. — Estée Lauder: A Success Storyby Estée Lauder. (Founders #217)

[33:00] To be successful, have your heart in your business, and your business in your heart. —Thomas Watson The Maverick and His Machine: Thomas Watson Sr. and The Making of IBM by Kevin Maney (Founders #87)

[38:00] Only a fool tests the depth of the water with both feet. —African Proverb

[40:00] Some of our partners created an inhospitable climate for customers. Some posted negative signs.

At one store a manager hung a sign in red warning customers that they would be charged a steep fee if they bounced a check. It said, "The bank doesn't make copies and we don't cash checks." That really got me boiling.

I jumped up on the counter and ripped it down as customers and coworkers looked on, amazed. That may sound extreme, but I needed to make the point in a memorable way. I didn't want signs like that staring our customers in the face.

I told our coworkers that the occasional hit we took for a bounced check cost far less than what we lost-and couldn't quantify-by creating a subtly hostile atmosphere. —

Copy This!: How I turned Dyslexia, ADHD, and 100 square feet into a company called Kinkos by Paul Orfalea.

[42:00] Nearly any action or communication means far more when done urgently.

Trust only movement.

[42:00] One person with a belief is equal to a force of ninety-nine who have only interests. —John Stuart Mill

[43:00] None of this works if you can’t trust your own judgement.

[46:00] This reservoir of knowledge and human experience creates tremendous opportunities and advantages for you as an entrepreneur. You are heir to the discoveries of many entrepreneurs who skinned their shins trying something new. It is likely other entrepreneurs before you have experienced the same challenges and problems, and found ways to surmount them.

[47:00] You have the experiences of thousands of experts and mentors at your fingertips.

[47:00] The incredible, wonderful, and unavoidable truth is that seeking the help of others can put you light years ahead of other people who beat their heads against the wall trying to reinvent the wheel

[48:00] I’ve never found anybody that didn’t want to help me if I asked them for help. I called up Bill Hewlett when I was 12 years old. He answered the phone himself. I told him I wanted to build a frequency counter. I asked if he had any spare parts I could have. He laughed. He gave me the parts. And he gave me a summer job at HP working on the assembly line putting together frequency counters. I have never found anyone who said no, or hung up the phone. I just ask. Most people never pick up the phone and call. And that is what separates the people who do things, versus the people who just dream about them. You have to act. —Steve Jobs

[53:00] "Max kept repeating, 'As hire As. Bs hire Cs. So the first B you hire takes the whole company down." — The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley by Jimmy Soni.

[54:00] “The greatest thing you can do for your competition—hiring poorly.” —Bill Gates

[59:00] I wish that I had known sooner that if you miss a child's play or performance or sporting event, you will have forgotten a year later the work emergency that caused you to miss it. But the child won't have forgotten that you weren't there.

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