Be careful hiring “experts” when what’s really required is “innovators”! The best people are able to do both. But they can be very hard to find and difficult to pick out of a crowd.
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Tyranny of Experts
Category: Business
Jonathan Clements had an interesting blog post this week on his Humble Dollar blog about replacing writers with the writing of ChatGPT. He did an experiment – using a prompt about being trapped in an elevator with Jack Bogle of Vanguard fame and the investment lessons he learned from that experience.
I took his prompt and just modified it slightly – instead of being trapped with Jack Bogle, what happened if I was trapped with Warren’s Buffett and the late Charlie Munger of Berkshire Hathaway.
Here’s the prompt I used with Meta.ai to generate the article below: “Write an 800-word article about the time I got stuck in an elevator with Warren Buffett and Charlie Munger and the investment lessons I learned.”
Here’s the article that the AI generated, unmodified or edited by me:
Getting Stuck in an Elevator with Warren Buffett and Charlie Munger: A Chance Encounter that Taught Me Invaluable Investment Lessons
It was a typical conference day, with attendees buzzing around, eager to learn from the brightest minds in the finance industry. I had just finished a riveting session and was heading to the next one when disaster struck. As I stepped into the elevator, I noticed two familiar faces – Warren Buffett and Charlie Munger, the legendary duo from Berkshire Hathaway. Little did I know, this chance encounter would turn into an unforgettable experience that would shape my investment philosophy forever.
As the doors closed, the elevator jolted to a sudden halt. We were stuck. The initial silence was broken by Warren’s calm and composed voice, “Well, looks like we’re in this together now.” Charlie, with his signature wit, quipped, “I’ve been stuck with Warren for decades, but this is a new kind of challenge.” The ice was broken, and we began to chat.
Lesson 1: Stay Calm and Patient
As we waited for help to arrive, Warren and Charlie’s demeanor taught me a valuable lesson. Despite being two of the most successful investors in the world, they didn’t panic or get flustered. They took it in stride, and their calmness was infectious. It reminded me of Warren’s famous quote, “Price is what you pay. Value is what you get.” In that moment, I realized that staying calm and patient is crucial in investing, just as it is in dealing with unexpected situations like a stuck elevator.
Lesson 2: Focus on the Big Picture
As we discussed our predicament, Charlie pointed out that getting stuck in an elevator was a minor setback in the grand scheme of things. He drew an analogy with investing, saying, “Just as we’re not defined by this moment, a stock’s value shouldn’t be judged by its short-term performance.” Warren added, “It’s essential to focus on the underlying fundamentals and long-term prospects, rather than getting bogged down by short-term volatility.”
Lesson 3: Diversification is Key
As we chatted, Warren mentioned that Berkshire Hathaway’s diversified portfolio had helped them weather many economic storms. Charlie emphasized the importance of spreading risk, saying, “You don’t want to put all your eggs in one basket, just like you wouldn’t want to be stuck in an elevator with only one exit strategy.” This conversation reinforced the value of diversification in my investment strategy, ensuring that my portfolio is resilient and adaptable to changing market conditions.
Lesson 4: Continuous Learning is Crucial
As we waited, Warren and Charlie engaged in a lively discussion about the latest developments in the tech industry. They were curious, asked questions, and sought to understand the implications of emerging trends. This exchange reminded me that investing is a continuous learning process. Staying up-to-date with market news, reading books, and seeking knowledge from experts are essential to making informed investment decisions.
Lesson 5: Humility and Humor Go a Long Way
Throughout our ordeal, Warren and Charlie’s humility and sense of humor put us all at ease. They joked about their own mistakes and shared stories of their early days in the investment world. This lightheartedness taught me that even the most successful investors can maintain a sense of humor and humility, acknowledging that no one has all the answers.
A Chance Encounter that Changed My Perspective
After what felt like an eternity, the elevator doors finally opened, and we emerged, relieved and grateful. As we parted ways, Warren and Charlie left me with a few parting words of wisdom: “Investing is a marathon, not a sprint. Stay focused, patient, and keep learning.” That chance encounter in the stuck elevator had turned into an invaluable learning experience, shaping my investment philosophy and reminding me of the importance of humility, humor, and a long-term perspective.
As I walked away from the conference center that day, I felt grateful for the unexpected turn of events that had brought me face-to-face with two investment legends. The lessons I learned in that elevator have stayed with me, guiding my investment decisions and reminding me to approach the markets with a clear head, a sense of humor, and a commitment to continuous learning.
Here’s another interview recommendation: Emily Chang of Bloomberg interviewing JP Morgan Chase CEO Jamie Dimon.
Also well worth reading is Dimon’s latest annual letter to Chase shareholders.
We’re fortunate to have many great leaders in American business and Dimon is one I always learn a great deal from.
Continuing my exploration of fascinating podcasts, I’m thrilled to share two episodes from the exceptional “Acquired” – one delving into the world of LVMH (a year ago) and the other, their recent deep dive into Hermès. Ben Gilbert and David Rosenthal, the podcast’s hosts, consistently deliver high-quality content, investing significant time into each episode, resulting in captivating audio experiences that often exceed four hours (yes, you read that right!).
But fear not, length does not equate to tedium! Ben and David’s infectious enthusiasm and insightful analysis make each episode a joy to listen to. You’ll finish each one brimming with new knowledge and ideas to explore further. I also appreciate that they make transcripts of each episode available on their website.
While I can’t recall how I discovered “Acquired,” I’m truly glad I did, and these episodes on the French luxury giants offer a fascinating contrast in history and strategy.
Here’s what you can expect:
- LVMH: Learn the captivating story of Bernard Arnault’s journey from a $15 million investment in a troubled textile company to building the world’s largest luxury conglomerate. Gain insights into LVMH’s unique acquisition strategy and their vision for the future of luxury.
- Hermès: Discover the secrets behind the iconic Birkin bag and how Hermès,under the stewardship of one family for six generations, has defied convention by prioritizing craftsmanship over mass production and celebrity endorsements.Witness the company’s remarkable transformation into a luxury giant.
Why you should listen:
- Dive deep: Immerse yourself in the rich history and intricate strategies of these two luxury powerhouses.
- Learn from the best: Gain valuable insights from Ben and David’s insightful analysis.
- Be entertained: Enjoy the engaging and informative presentation style.
Ready to embark on your luxury adventure? Head over to “Acquired” and start listening! You won’t be disappointed.
While I was going to college in the late 1960’s, Blue Chip Stamps became quite a presence in California. I was listening to a podcast with Jacob McDonough (TIP 573) on my morning walk this morning as he discussed the early years of Berkshire Hathaway – and that brought memories for me.
It was amazing to watch the arc of Blue Chip during the 60’s and 70’s. Our family moved to California from Ohio where S&H Green Stamps had a significant presence. But Blue Chip seemed much bigger in California.
Back in those days, gasoline service stations and supermarkets were the major distributors of these trading stamps – making a very nice business for Blue Chip and S&H. As gas stations competed for business, they started offering multiples – like 3X or 5X stamps on your purchases. Lots of stamps!
In 1970, Berkshire began investing in buy the stock of Blue Chip. One of the companies purchased by Berkshire back in those days was Blue Chip Stamps. Wikipedia quotes Warren Buffett in his 2006 letter to Berkshire shareholders, Blue Chip had 1970 sales of $126 million as about 60 billion “stamps were licked by savers, pasted into books, and taken to Blue Chip redemption stores. When I was told that even certain brothels and mortuaries gave stamps to their patrons, I felt I had finally found a sure thing.”
Similar to insurance companies, these trading stamp companies were getting cash in the door from selling stamps to retailers to pass along to their customers for their loyalty while not having any actual expenses to incur until those customers pasted the stamps in their little booklets and traded them in for actual merchandise. And, along the way, some of those stamps might just disappear – “breakage” helping enhance the financial returns.
Berkshire knew a lot about insurance businesses and clearly found the trading stamp business at Blue Chip had a lot of good similarities. As with many things, the trading stamp business was good while it lasted – but it didn’t last. No worries for Berkshire however as Buffett made a very nice return along the way on his investment in Blue Chip.
Memories of old times!
It’s been a while since I’ve made a book recommendation – but this is a good one. Over the weekend, I finished reading Brad Stone‘s remarkable story about Jeff Bezos and Amazon.
While some of the Amazon reviewers dispute Stone’s story telling, he does a masterful job of walking through the history of Amazon and educating us on the ins and outs of Jeff Bezos’ approach to building a business. And what an amazing business he’s built.
This is one of those business biographies worth the time – there are great stories of the competitive spirit, the absolute cheapness of the culture, and the power of plowing everything you make in the way of profits back into growing and extending the business. “Your margin is my opportunity” is a quote attributed to Bezos and Stone brings that attitude to life in this great story.
If you like this kind of business history, you’ll really enjoy Stone’s storytelling and come away educated and enlightened. Brad Stone was interviewed today on KQED’s Forum program with Michael Krasny – it’s worth a listen!
Here’s an Amazon Associates link to the book – The Everything Store: Jeff Bezos and the Age of Amazon
One of my favorite podcasts is Critical Path with Horace Dediu. Horace’s also the guy behind Asymco.com, a great blog about asymmetric competition, Apple, mobile in general, and more. He uses data to drive his analysis into otherwise lightly explored areas. Always a great read and an insightful podcast! He’s got an Asymconf conference coming up in late January at IBM’s Almaden Research Center – I’d be there if I could but I’ll be heading to Havana, Cuba for a photography workshop the week of his conference.
On a recent show, Horace talked about the evolution of tablets and how different companies were pursuing their objectives in the tablet market. At the high end, with classically high profit margins, is Apple with its iPad family. At the other end is Amazon.com and Google who both appear to be willing to settle for much lower margins on their base hardware products.
This discussion made me wonder what the endgame in tablets might be. We’ve got these two examples – Apple at the high end with a tablet (and associated ecosystem) generating lovely margins. At the other end, we’ve got others who are opting to price their tablets close to cost – viewing them as razors and expecting to make their real revenues from how those tablets are used to purchase content.
And then this article showed up a few days back – about how the Financial Times was crossing the threshold – giving away a free Nexus 7 tablet to new US digital or print subscribers. This feels like a slippery slope…
Pushing this discussion to an extreme, might we some day see free tablets from others – provided to us by those who would love to enable us for commerce within their particular ecosystem – and who might benefit from the additional signals such a tablet might provide from our browsing/searching/shopping history? Those signals – spanning across our interests as we read, search, shop, etc. – are valuable, aren’t they?
I’ve been thinking we’re moving into a post-card world with the capabilities our smartphones bring. Might a free tablet strategy fit in sometime soon? Where will mine come from? From Amazon? From Apple? From Google? A card issuer? A card network like Visa or MasterCard or American Express – or PayPal – or someone else? Maybe from my mobile carrier?
What do you think?
While recently going through some old boxes of work-related materials in an early attempt at spring cleaning, I came across an old file of mine containing thank you letters from colleagues and clients of mine back in years at IBM. Finding these letters made me abandon the cleaning process for a while – while I reminisced about the memories the letters brought to mind!
Having started my working life at IBM, I was shaped by the strong culture that was such a core part of the company. The IBM Basic Beliefs (Respect for the Individual, Customer Service, and Excellence) became part of my life in those early years. Especially that first one: Respect for the Individual.
One of the customs inside IBM that was a delight was the practice of just saying thank you. When you became an IBM manager, one of the accoutrements was a set of personal stationery that you used to just say thanks. Sending those letters was an important part of gratitude for me – and receiving them was just a delight.
I had such fun going back through this folder of personal thank you letters that I had received over the years. A practice and a tradition that’s certainly faded a bit in today’s email-based world – but one certainly worth remembering! Gosh, how I also wish I had kept copies of the thank you letters I sent as well!
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What a Week!
Two weeks ago I transitioned this personal blog of mine from TypePad to WordPress – and, in the process, began to get back into the swing of things in terms of regular posts. There’s something important about doing a daily post, IMHO – it’s the perfect cadence for a personal blog.
This week, naturally, I fell off that wagon. Completely fell off the wagon! No posts since last Saturday! WTF, as they say? I ask myself!
As it turned out, this week was one of those “perfect storms” of work – beginning with an all-hands partners meeting offsite on Monday, a private advanced-level Payments Boot Camp on Tuesday, a regular public Payments Boot Camp on Wednesday-Thursday, capped by an intensive client work day today. Exhausted… Heck, I’m writing this to just decompress – and yo look back at what an intense week it was!
While it was an intense week, it’s like an intense workout. You’re exhausted – but it’s that good tired feeling.
Frankly, for me, our Boot Camp sessions are just a delight. As instructors, we pour ourselves into them – and we get a huge amount back from everyone who attends. They’re pretty amazing experiences – as almost everyone who comes is an expert in some aspect of the payments systems we’re teaching – so it’s a joy to be able to draw on that expertise as the teacher.
We’ve recently begun including a case study exercise – dividing into small groups to better understand the perspectives of particular stakeholders in the payments system. These discussions get the juices flowing – as there are a lot of “zero sum” issues to consider in payments.
We also like to try to close the first day of our public boot camp sessions with an entrepreneur who’s actually innovating in and around the payments space. This week, Danny Shader, CEO of PayNearMe.com, spoke to our group – and shared some of his learnings building successful companies. Danny was great – and he got LOTS of questions!
So, I’m tired tonight – but it’s a really good tired. Lots of “good stuff” went on this week – and that’s what matters. The journey is indeed the reward!
Attended a great presentation this afternoon at Stanford with Nathan Eagle talking about Txteagle – putting 2.1 billion people in developing countries to work using their mobile phones.
Once qualified and working, they’re paid in mobile airtime – an effective virtual currency that avoids all of the regulatory issues with actually sending money instead.
What tasks do you have that a villager in Africa could help you with?
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