Focus. Focus. Focus.
As a kid growing up in Omaha, Warren Buffett was simply trying to improve his financial status from a nickel-a-week allowance to something more substantial.
He was constantly running tallies—calculating how long it took marbles of different sizes to wade from the bottom of a tub to its drain so he could win a race against his friends—and using numbers to make something more dynamic than what they seemed like on paper. At age 7, he got his hands on a book A Thousand Ways to Make $1,000. That got him thinking about what might happen if he could become a great salesman of penny weighing machines and figuring out how long it would take him to pay off his investment through compound interest. He was always playing with some business model or another and itching to get started. So he sold soda, gum, and magazines door-to-door. He picked up paper routes until he was delivering 500 or so on his neighbors’ doorsteps every morning and filed his first tax return at age 13. He told his family that his life goal was to become a millionaire. He relished in the highs and lows of the money-making game from as early as he can remember—but for him, it was never a race.
Of course, the investing genius became one of the wealthiest people on the planet, an internationally recognized business influencer, and a self-made billionaire philanthropist. His holding company, Berkshire Hathaway, became the fourth largest company in the Fortune 500, and Warren was the only magnate to build a company from nothing and make it to the list’s Top 10.
But Warren was never in a hurry to get there. Yes, he was hustling as a kid, but he was also reading every book on investing he could find that belonged to his father—a stock salesman who worked right through the Great Depression before he became a Congressman—and he read some of them more than once. After he finished a bachelor’s degree at the University of Nebraska and made a brief attempt to attend Harvard, he noticed that two investment gurus he’d pored over in his father’s office were not only still living, but also teaching at Columbia University. Forget Harvard. His golden opportunity—sources of insider knowledge—had arrived.
At Columbia, he returned to his lifelong pursuit of making money—not to spend it, but simply to amass as much as possible for some eventual use. He met his wife, Susan, and took a Dale Carnegie class to get over his fear of public speaking so he could one day become a voice of sanity in a sea of get-rich-quick messages. He went back home, to Omaha, to spend 14 years as general partner of Buffett Partners Ltd., a hedge-fund-type partnership he started in 1956 where he grew around $105,000 to around $7 million by 1962. Then he stumbled across a dying textile company called Berkshire Hathaway Inc. He didn’t try to revive the textile business; he used it as a holding company of sorts, a place he could mold into something that fit his vision, shared by his business partner Charlie Munger.
The two started a sensible approach: Looking for “wonderful companies at fair prices—instead of fair companies at wonderful prices.” They stuck to industries they liked and understood. And the accretion continued, at a measured pace.
Along the way, the running argument with his charitable, activist wife was when to start giving big with all those earnings. Buffett stayed steadfast in his position: Let compound interest do its work. He did—for forty years. In 2006, when his net worth reached $46 billion, he made his first large payout—$31 billion in shares—to the Bill and Melinda Gates Foundation, plus another $6 billion for four charities started by his family members.
When longtime friends Bill Gates and Warren Buffett first were set to meet in 1991, though, neither was overly enthusiastic about the upcoming encounter. Bill assumed it would be a bore; Warren wasn’t really interested in computers. But they became fast friends, despite a 26-year age difference. Eventually, they’d be campaigning for charity causes, lobbying Congress, and reading books together. When Bill’s father asked the two—at one point the richest and second-richest man in the U.S.—to each write down a single word to represent what has helped them the most, both—acting quickly and without consultation—wrote the same answer: Focus.
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One of Warren’s favorite topics and earliest fascinations was the wonder of compound interest. It was the lure behind his daydreams of a penny weighing machine and the impetus behind his impulse to hold onto every extra penny he made. Each one of those could become so much more. He would write about the topic and call it his most important key to investing success. His lifelong focus was not just playing the money game, but playing the waiting game. It troubled him deeply when he saw others promoting fast, easy wins that could only lead to trouble for investors. That’s why he walked away from Wall Street—and what he saw as charlatans—in 1969 to chair Berkshire Hathaway. He didn’t want to be mixed in with the storm he saw coming.
Twenty years later, when one of Berkshire Hathaway’s companies wound up in a debt-laden whirlwind, Warren was able to stake his sterling reputation on righting the wrongs. It was August 1991 when he got dire news from the top officers at Salomon Brothers: The securities firm was under investigation—by the Treasury Department, the Federal Reserve, the SEC and the Justice Department—for improper treasury bond trading. The company owed $150 billion, a greater load of debt than any other private entity in the country. The trust of the public and the credibility of the American market were on the line. The situation was dire in every aspect. Then the Treasury suspended the company from participating the auction of new issues, and Warren had a choice to make and less than 24-hours to do it. He could let the company go bankrupt and let 8,000 employees go down with it, or he could plead for mercy. The second option was unlikely to get most people anywhere, but this was the man who’d preached careful and thoughtful business practices for his entire public life. Warren called U.S. Treasury Secretary Nicholas Brady in an effort to save the company. In a move that speaks volumes for Warren’s influence and the loyalty he engendered with his focus on patient and sensible business practices, the Treasury modified its order. Warren promised to make things right, and the company was spared.
Through a vision for long-term business success—one based on learning and analyzing before moving ahead—Warren has influenced how Bill and Melinda Gates approach worldwide poverty and disease. He was one of the only influencers to warn about the impending doom he saw in the dotcom frenzy, and he was right. People listen to Warren—they are loyal to his advice and approach—because he presents clarity.
To make someone’s life better, you have to inspire and offer purpose in something. You have to provide a cause, a reason, or some discovery or solution to follow before you can win followers. You have to find and share your unique cause or solution and you have to make it definite and understandable. But it won’t work if you stop or let distractions move you in other directions. You must also show that you will pursue that clear vision in every possible direction before, and in spite of, all other demands.
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“The fox knows many things, but the hedgehog knows ONE BIG THING.”
In his 2001 best-selling book, Good to Great, Jim Collins borrowed the quote from the 7th-century Greek poet Archilochus to ask, “Are you a hedgehog or a fox?”
Collins argued that good-to-great companies were like hedgehogs— singularly focused and categorical in their approach. Unlike the fox that spends hours strategizing the perfect attack, the hedgehog has a simple plan. While rolling up into a shiny, spiny ball isn’t a masterful manuever, it is effective and keeps the hedgehog alive.
The value of clarity and focus is not to help us become the best. It is to help us understand what makes us better.