Founders
#295 I had dinner with Charlie Munger
Podcast summary created with Snipd AI
Quick takeaways
- Invest in great businesses and surround yourself with exceptional people for long-term success.
- Exercise patience in investing and take advantage of market downturns to purchase undervalued businesses.
- Hard work and an immigrant mentality contribute to remarkable success, as seen in the rise of Korean businesses in the auto industry.
- Maximizing and minimizing specific variables in business, such as operating costs and intermediaries, can help create success and consumer monopolies.
Deep dives
Finding Your Life's Work
A recurring theme among founders is the search for one's life's work. Many entrepreneurs spend their lives searching for something unique to them, a venture they can do indefinitely. Starting multiple companies is often necessary in this pursuit. Charlie Munger, for instance, didn't find his true calling until his 40s. Tiny, the sponsor of the episode, built a business acquiring other companies because they understand that founders may have a business they want to sell now or in the future.
The Impact of Charlie Munger
Charlie Munger, known for his partnership with Warren Buffett, played a crucial role in designing Berkshire Hathaway. His focus was on buying wonderful businesses at fair prices rather than just bargains. Through their patient approach and ability to recognize true opportunities, Buffett and Munger have achieved long-term success. They believe in the value of wisdom, prevention, and understanding the odds. By embracing patience, avoiding mistakes, and trusting their judgment, they have been able to consistently outperform.
The Importance of Great Businesses and People
Charlie Munger emphasizes the significance of investing in great businesses and surrounding oneself with exceptional people. The durability and competitive advantage of a company contribute to its long-term success. Rather than being swayed by popular opinion or mimicking the herd, Munger and Buffett focus on staying rational and trust their own judgment. They have a disciplined approach, waiting for the right opportunities and acting when the odds are in their favor.
The Power of Patience and Learning from History
Patience is crucial in investing and seizing opportunities. Charlie Munger and Warren Buffett patiently wait for the right moment to invest, taking advantage of market downturns and purchasing undervalued businesses. They understand the importance of enduring short-term problems and focusing on long-term value. Learning from history is another form of leveraging one's knowledge. By studying the past and avoiding mistakes, one can make informed decisions and achieve superior results.
The Power of Hard Work and Immigrant Mentality
The podcast episode discusses the importance of hard work and having an immigrant mentality. It emphasizes how individuals from disadvantaged backgrounds, like Chungju Young, the founder of Hyundai, achieved remarkable success through their relentless work ethic. The speaker highlights the dedication and relentless effort shown by Koreans, who worked long hours and prioritized education, as well as mentioning the rise of Korean businesses in the auto industry. The episode encourages listeners not to be surprised when hardworking individuals outperform those who do not put in the same level of effort.
Maximizing Variables and Specializing for Success
The podcast episode explains the value of maximizing and minimizing specific variables in business to achieve success. It provides examples of companies like Costco and Geico that have excelled by focusing on specific aspects, such as minimizing operating costs or eliminating intermediaries. The speaker argues that specialization and differentiation are vital to stand out from the competition. Additionally, it emphasizes the importance of making wise business decisions by betting on the quality of the business rather than solely relying on the quality of management. The episode underscores the significance of understanding the power of brands and the potential of creating consumer monopolies.
Continuous Learning, Finding Great People, and Making Mistakes
The podcast episode highlights the value of continuous learning and self-improvement as key factors for success. It suggests that individuals who constantly seek knowledge and learn from a variety of subjects have a higher chance of excelling in their careers. The episode also emphasizes the importance of surrounding oneself with great people and working only with those who are respected, admired, and enjoyed. Additionally, it addresses the inevitability of making mistakes and the vital role they play in personal and professional growth. The speaker advises embracing mistakes as learning opportunities and being resilient in the face of difficulties.
What I learned from having dinner with Charlie Munger and rereading The Tao of Charlie Munger.
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(5:45) The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.
(8:48) He has never forgotten the importance of having friends in high places.
(9:04) Most people systematically undervalue their time. — Peter Thiel
(11:08) Franklin & Washington: The Founding Partnership by Edward Larson. Founders #251)
(12:23) Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Changed America by Les Standiford. (Founders #284)
(15:02) Charlie took the excess capital out of Blue Chip Stamp and invested it in profitable businesses.
(16:56) Charlie started seeing the advantages of investing in better businesses that didn't have big capital requirements and did have lots of free cash that could be reinvested in expanding operations or buying new businesses.
(17:38) Go for great.
(21:33) In everything I’ve done it really pays to go after the best people in the world. —Steve Jobs
(27:15) If you're in a good business just know that it's human nature to mess it up. Don't mess it up. Just stay there and let time do its work.
(27:34) One truly great business will make your unborn grandchildren wealthy.
(28:08) All I Want To Know Is Where I'm Going To Die So I'll Never Go There: Buffett & Munger – A Study in Simplicity and Uncommon, Common Sense by Peter Bevelin. (Founders #286)
(34:39) I did not succeed in life by intelligence. I succeeded because I have a long attention span.
(34:54) Charlie Munger on how he made $400 or $500 million by reading Barron’s for 50 years.
(35:11) One of the reasons Charlie and Warren have never worried about anyone mimicking their investment style is because no other institution or individual has the discipline are the patience to wait as long as they can.
(35:47) Wisdom is prevention.
(36:50) Only play games where you have an edge. — A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by Ed Thorp. (Founders #222)
(38:31) Wise people step on big and growing troubles early.
(44:51) I am continually amazed at the number of people who are presented with an opportunity and pass. There’s your basic dividing line between the people who shoot up in their careers like a rocket ship, and those who don’t — right there. — Marc Andreessen's Blog Archive (Founders #50)
(46:28) The most inspiring biography I’ve read so far: Born of This Land: My Life Story by Chung Ju-yung. (Founders #117)
(47:11) Invest Like The Best #204 Sam Hinkie Find Your People
(42:42) Rober Caro’s Books:
The Path to Power: The Years of Lyndon Johnson I
Means of Ascent: The Years of Lyndon Johnson II
Master of the Senate: The Years of Lyndon Johnson III
The Passage of Power: The Years of Lyndon Johnson IV
(48:46) We just got after it and we stayed after it. — Sam Walton: Made In America by Sam Walton. (Founders #234)
(52:39) Some brand names own a piece of consumer's minds and they do not have any direct competition.
(55:30) We are individual opportunity driven.
(57:08) Size and market domination can create their own kind of durable competitive advantage.
(56:15) Jony Ive: The Genius Behind Apple's Greatest Products by Leander Kahney. (Founders #178)
(1:01:57) Extreme specialization is the way to succeed. Most people are way better off specializing than trying to understand the world.
(1:04:44) Wise people want to avoid other people who are just total rat poison and there are a lot of them.
(1:05:35) Charlie and I have seen so much of the ordinary in business that we can truly appreciate a virtuoso performance.
(1:09:00) Am I Being Too Subtle?: Straight Talk From a Business Rebel by Sam Zell. (Founders #269)
(1:10:15) Charlie looks at nearly everything through the lens of history. You aren't changing human nature. Things will just keep repeating forever.
(1:13:13) There should be more willingness to take the blows of life as they fall. That's what manhood is, taking life as it falls. Not whining all the time and trying to fix it by whining.
(1:14:40) Hard Drive: Bill Gates and the Making of the Microsoft Empire by James Wallace and Jim Erickson. (Founders #290)
(1:17:00) Arnold Schwarzenegger autobiographies and episodes:
Total Recall: My Unbelievably True Life Story by Arnold Schwarzenegger. (Founders #141)
Arnold: The Education of a Bodybuilder by Arnold Schwarzenegger. (Founders #193)
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“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth
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“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth
Be like Gareth. Buy a book: All the books featured on Founders Podcast
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