Framework by Buffett
12 key decisions, a map for just about anyone.
Warren Buffett is known for two things: making money and giving advice.
In his Berkshire Hathaway letter to shareholders last year, he wrote that his success was mainly the result of "about a dozen truly good decisions -- that would be one every five years."
He listed just a few of these decisions, but having written a lot about Buffett (longtime readers know this; also, having studied all of his shareholder letters), I realized his well-documented life in business provides a fun framework to categorize truly good decisions.
So I came up with a checklist: 12 life decisions that lead to success, using Buffett's example.
1. The decision to nurture curiosity.
This one starts early; so early that I tend to think of it as something people might do to help their kids more than themselves.
In Buffett's case, we can point to two childhood moments:
The first was at age 7, when he says he borrowed a book called One Thousand Ways to Make $1,000 from the Omaha public library, and read it dozens of times.
The second was at age 10, when, once he started showing interest in finance and the stock market, his father took him on a tour of the New York Stock Exchange.
2. The decision to get started.
Curiosity is great, but the next step is about experimentation and execution. Buffett has talked a lot about the first businesses he founded -- things like a paper route, detailing cars, and buying cases of Coca-Cola from his grandfather's grocery store and selling the individual bottles at a markup.
Even at 93 years old, Buffett remembers many of these early ventures in detail -- and he has a highly unusual advantage: he's saved a copy of every single tax return he's ever filed, dating back to 1944. That has to be a record.
3. The decision to find mentors.
Nobody does anything worthwhile alone. Most of us mere mortals need mentors to show us the way.
Buffett has talked at length about his first and most important mentor in business: the man he describes as his "investing hero," Benjamin Graham, who died in 1976 at age 82. In fact, one of the reasons Buffett decided to attend Columbia University's business school was that Graham was a professor there.
4. The decision to be bold.
My favorite early Buffett story about boldness has to do with what he decided to do on a January weekend in 1951.
Having learned that Graham (see last item) was chairman of Government Employees Insurance Company (ake GEICO), Buffett took the train to Washington, showed up at the company, and asked about it.
Serendipitous result: Lorimer Davidson, who would later become CEO, gave Buffett a four-hour explanation and tour of the insurance industry. Fast-forward quite a few years, and Buffett's Berkshire Hathway wound up owning Geico.
5. The decision to be healthy.
"You only get one mind and one body. And it's got to last a lifetime," Buffett famously told a group of students. "It's what you do right now, today, that determines how your mind and body will operate 10, 20, and 30 years from now."
Irony: Buffett has never been known for exercise or healthy habits, and says he has "the diet of a 6-year-old." Actually, there's no way I'd let my 6-year-old consume as much candy, red meat, and can after can of Coca-Cola as Buffett does, but then again he has lived to be 94 and counting.
6. The decision to nurture relationships.
One of the decisions Buffett actually lists in the shareholder letter that sparked this whole exercise was his decision to work with Charlie Munger, who passed away last year.
Buffett talks about many other crucial partners and relationships as well, among them Thomas Murphy (no relation to me, as far as I know) who was chair and chief executive officer of Capital Cities / ABC Inc., and Chuck Feeney, a billionaire turned intention-former billionaire. (We'll talk more about Feeney below.)
7. The decision to plan for afterward.
Nobody lives forever, and once he began knocking on the door of nonagenarian status, Buffett began to acknowledge this himself -- although he does like to joke about being an exception to the actuarial tables.
Finally, in 2021, he explained the succession plan for Berkshire Hathaway, which will be led by Greg Abel, who is currently the head of all non-insurance businesses at Berkshire Hathaway. (Elon Musk should pay attention to this part, by the way.)
8. The decision to cut your losses.
So many people never learn this lesson, and as someone once put it, they wind up spending their entire lives in the wrong room rather than admit they might have picked an incorrect door.
In Buffett's case, one of the big examples and decisions involved his acknowledgment, after years of trying, that the textile business -- the core of Berkshire Hathaway's business for more than its first 100 years -- was no longer viable in the United States.
9. The decision to laugh.
Life is happier when you laugh more. And while Berkshire Hathaway is a serious business -- what's more serious than money, investments, and people's futures? -- it's striking how often Buffett's letters, speeches, and interviews are peppered with jokes.
He's partial to the corny kind, and also to the bawdy kind that, if you heard your grandfather tell them, would leave you on the fence about whether to laugh or cringe. Here's one from the 2011 shareholder letter that I don't mind quoting:
A good underwriter needs an independent mindset akin to that of the senior citizen who received a call from his wife while driving home.
"Albert, be careful," she warned, "I just heard on the radio that there's a car going the wrong way down the interstate."
"Mabel, they don't know the half of it," replied Albert. "It's not just one car, there are hundreds of them."
10. The decision to teach.
They call Buffett the Oracle of Omaha, and he clearly loves the role. In fact, there are so many moments in his letters and other communications in which he makes asides to offer advice or hard-learned lessons that teaching truly seems to be his second calling.
One of my favorite examples here is the advice he gave verbatim twice over the years, in both the 1987 and 2003 shareholder letters. (Maybe he thought the audiences had turned over sufficiently in the interim?)
Anyway, it's this, and it really goes back to the first item on the list: "Develop your eccentricities when young."
11. The decision to do nothing.
This one is important: Besides the limited number of very good decisions Buffett says he's made, the other key to success is simply not to do anything when you don't see any good option. Instead of the old adage, "Don't just stand there, do something," Buffett suggests the opposite: Don't just do something, stand there!
Actually, let's use his precise quote: "The trick is, when there is nothing to do, do nothing."
12. The decision to give back.
This is where we get back to Chuck Feeney, who I mentioned all the way back in item No. 6 on this list. Feeney was a multi-billionaire who made it his life goal to give away all of his money.
It was Feeney's example that inspired Buffett to team up with Bill Gates to launch the Giving Pledge, and get more than 200 other billionaires to sign it as well.
More than his wealth, more than his advice, more than his 12 decisions -- many years from now, these are the kinds of things for which Buffett will be best remembered.
Why write about Buffett today? I'll just level with you: I was saving this for another day, but then the plan I had for today's newsletter fell apart at the last minute.
Welcome to live newsletter writing, folks!
7 other things …
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Thanks for reading. Photo credit: Photo by Hilthart Pedersen on Unsplash. I wrote about some of this before at Inc.com. See you in the comments.
I believe that things happen for a reason (your original plan for today's newsletter falling apart), and I'm glad you wrote about Buffett. I found it very interesting and motivating. Thank you! I plan to share your newsletter with a few people I know that would appreciate the 12 life decisions.
Really enjoyed your "12 Key Decisions" today and some background on Warren Buffet. In fact, I enjoy all of your uplifting articles. Warren Buffet will be remembered for his business acumen and wits of wisdom. Maybe not to the same degree, but I believe Bill Murphy will also be remembered for some of his own bits of wisdom. Keep up the great work!