Berkshire Hathaway's Warren Buffett and Charlie Munger have some tips for the class of 2016.
1. Work for the person or company you admire the most
Buffett says that he often gets asked the question: “Who should I go to work for when I graduate college?”
“I’ve got a very simple answer... the real thing to do is to get going for some institution or individual that you admire. I mean it’s crazy to take in-between jobs just because they look good on your resume, or because you get a little higher starting pay.
I was up at Harvard a while back, and a very nice young guy, he picked me up at the airport, a Harvard Business School attendee. And he said, ‘Look. I went to undergrad here, and then I worked for X and Y and Z, and now I’ve come here.’ And he said, ‘I thought it would really round out my resume perfectly if I went to work now for a big management consulting firm.’ And I said, ‘Well, is that what you want to do?’ And he said, ‘No,’ but he said, ‘That’s the perfect resume.’ And I said, ‘Well when are you going to start doing what you like?’ And he said, ‘Well I’ll get to that someday.’ And I said, ‘Well you know, your plan sounds to me a lot like saving up sex for your old age. It just doesn’t make a lot of sense.’
I told that same group, I said, ‘Go to work for whomever you admire the most.’ I said, ‘You can’t get a bad result. You’ll jump out of bed in the morning and you’ll be having fun.’ The Dean called me up a couple weeks later. He said, ‘What did you tell those kids? They’re all becoming self-employed.’ So, you’ve got to temper that advice a little bit.”
Why would you want to be around the people you admire most? Here’s a lesson Buffett learned spending part of the first summer after graduating college fulfilling his obligation to the National Guard:
“It’s a very democratic organization. I mean, what you do outside doesn’t mean much. To fit in, all you had to do was be willing to read comic books. About an hour after I got there, I was reading comic books. Everybody else was reading comic books, why shouldn’t I? My vocabulary shrank to about four words, and you can guess what they were.
I learned that it pays to hang around with people better than you are, because you will float upward a little bit. And if you hang around with people that behave worse than you, pretty soon you’ll start sliding down the pole. It just works that way.”
2. Copy the habits of the most successful people you know
Here’s another thought exercise that Buffett had a class of MBA students play: Imagine that you can pick any one of your classmates and you could get 10% of their earnings for the rest of their lives. Who would you pick?
“What goes through your mind in determining which one of those you would pick? You can’t pick the one with the richest father, that doesn’t count. I mean, you’ve got to do this on merit. But, you probably wouldn’t pick the person that gets the highest grades in the class.
I mean, there’s nothing wrong with getting the highest grades in the class, but that isn’t going to be the quality that sets apart a big winner from the rest of the pack… You’ve all got the ability, you wouldn’t be here otherwise. And you’ve all got the energy. I mean, the initiative is here, the intelligence is here throughout the class. But some of you are going to be bigger winners than others.
It gets down to a bunch of qualities that, interestingly enough, are self-made. I mean it’s not how tall you are. It’s not whether you can kick a football 60 yards. It’s not whether you can run the 100 yard dash in 10 seconds. It’s not whether you’re the best looking person in the room… It’s integrity, it’s honesty, it’s generosity, it’s being willing to do more than your share, it’s just all those qualities that are self-selected.“
Now, imagine that you can sell short one of your classmates – you have to pay 10% of what they do. Who would you pick?
“Again, it isn’t the person with the lowest grades or anything of the sort. It’s the person who just doesn’t shape up in the character department.
We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don’t have the latter, the first two will kill you, because if you’re going to get someone without integrity, you want them lazy and dumb. I mean, you don’t want a spark of energy out of them. So it’s that third quality. But everything about that quality is your choice.”
Now look at those two people. Wright down the qualities of the person that you’d like to buy 10% of and ask yourself, “Is there anything on that list I couldn’t do?” Buffett says there won’t be. Now look at the person you sell short and look at those qualities that you don’t like. Do you see any of those in yourself that you can’t get rid of? Buffett concludes:
“Ben Franklin did this and my old boss Ben Graham did this at early ages in their young teens, Ben Graham looked around and he said, ‘Who do I admire?’ And he wanted to be admired himself and he said, ‘Why do I admire these other people?’ And he said, ‘If I admire them for these reasons, maybe other people would admire me if I behave in a similar manner.’ And he decided what kind of a person he wanted to be.
And if you follow that, at the end you’ll be the person you want to buy 10% of. I mean that’s the goal in the end, and it’s something that’s achievable by everybody.”
3. Invest in yourself first
Buffett explains how Charlie Munger became successful long before the duo ever even met each other:
“Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s my most valuable client?’ And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.”
Jonathan Ping from MyMoneyBlog elaborates:
“Now, I’m sure just being a successful lawyer would be plenty for many people. But if you aren’t satisfied with your current situation, why not work for yourself an hour each day? Instead of just idle dreaming, set aside specific time for action.”
Shane Parrish of Farnam Street points out the importance of sacrificing short-term comforts for your long-term goals during this time:
“It’s important to think about the opportunity cost of this hour. On one hand you can check Twitter, read some online news, and reply to a few emails while pretending to finish the memo that is supposed to be the focus of your attention. On the other hand, you can dedicate the time to improving yourself. In the short term, you’re better off with the dopamine laced rush of email and Twitter while multitasking. In the long term, the investment in learning something new and improving yourself goes further.”
As Munger explains:
“I have always wanted to improve what I do, even if it reduces my income in any given year. And I always set aside time so I can play my own self-amusement and improvement game.”
See the rest of the story at Business Insider