13 Timeless Lessons From Billionaire Warren Buffett

at the Fortune Most Powerful Women Summit in Laguna Niguel, CA.

Warren Edward Buffett is an American business magnate, investor and philanthropist. He is considered by some to be one of the most successful investors in the world; and is one of the top 3 richest people in the world with a current estimated net worth of 65.5 billion USD. His company Berkshire Hathaway, is considered the gold standard of Investment companies. Buffett is well known for his open attitude towards sharing his secrets, philosophies and tips for other to replicate his success. Sharing secrets, as I’ve discussed before, is something practically all of the world richest people do without worry, because they know this one thing. Below is 13 lessons direct from Mr Buffet himself.

#1 ‘Free Cigar Puffing Investors’

If you’re going to invest don’t be what Buffett calls ‘Free cigar puffers’. In his words, “Some folks walk down the street and come across a lit-cigar on the floor–that still has one or two puffs left. So what do they do? They pick it up, take the last puff and put it down again. That is how they treat companies.” If you’re an investor or looking for investment, be mindful of this behaviour.

#2 How can you widen your ‘moat’?

Buffett uses the term ‘moat’ to refer to the coverage, or impact your business is having. The concept of widening the ‘moat’ is essentially spreading the company, growing it, or expanding it. It could be setting up in another country. It could be building another store. It could be growing your audience. There are many methods to growing your ‘moat’.

#3 Think long term

To paraphrase Buffett, “When i think about investing in a company, i always think where is this company going to be in 10, 20, 30 years? Is the need going to be there in 50 years? If not, i don’t bother with them.” Thinking long-term is something that we all could do better. It made Buffett over 100,000,000,000. throughout his life, i’m sure it can do something for you.

#4 Can you create a business that people keep coming back to?

Coca Cola has been so successful because their products have no taste memory–meaning people can easily drink 5/6/7 cans a day without getting bored. Of course this is one cause of addiction, but it is also a cause of billions of dollars of sales. Create a product which people need–or want–to come back to continuously, and you’ve got a winner.

#5 Make mistakes of omission instead of commission

Buffet and his company Berkshire Hathaway have made many mistakes over the years (and he emphasizes this fact in almost every interview). In his words, “There will always be companies that don’t reach their potential, or just turn out completely different to what you expected, and that’s normal, you move on. However, the companies that you did see, but never took action with – they’re the ones that get you. Thankfully, we haven’t done that too often!”

#6 Try and make your money on inactivity

Warren reads several hours a day, works from home and really doesn’t do a lot… “Unless you work on wall street, you want to make your money through inactivity.” Of course, you may say “Yeah, he can do that because he has billions of dollars in the bank,” and you’d be right, but Buffett has spent his life trying to build an empire in which business literally takes care of itself. He doesn’t make money when he invests; he makes money as time passes, as the companies flourish. He makes his money whilst he sleeps.

#7 Learn to be an excellent communicator

In his youth Buffett was very aware of the power of communication. At aged 20 he took a Dale Carnegie course in public speaking–which changed his life. All brilliant leaders know that communication is crucial. If you cannot communicate your ideas, you may as well have no ideas. If you would like to read Dale Carnegie’s timeless book on how to communicate and speak to anyone, click here.

#8 Have sound principles

Warren has been through some tough times with his company. He has made mistakes worth hundreds of billions of dollars. He has been dragged through the media at times. But he always comes out unscathed, and this, he says, is because he has sound principles. Take the Saloman scandal in 1991: Warren made a big mistake when he hesitated to act upon some fishy activity he’d been observing behind the scenes. When the issue was uncovered by the press, Buffett immediately owned up to his mistake, paid the fines, and fixed what he could of the problem. Without solid principles, his company could have sunk–taking him with it. “…If you have solid principles in life, you’ll be ok.” What principles do you have?

#9 Make good decision when chaos is present

During the 2008 world financial crisis Buffett and his company could easily of panicked, become very irrational, and ultimately, sunk with the many other companies. But when the world saw chaos, Buffett saw opportunity. He was thinking long term. He was looking at solutions. “…Learn to make good decision when chaos is underway.” Another brilliant quote from Buffet is, “Don’t Participate in folly, profit from it.”

#10 Get it Fast. Get it Right. Get it out. Get it Fixed

Referring back to the Salomon scandal, Buffett is always open to how he dealt with the problem–along with many other issues during his time as leader of Berkshire. When an interviewer once asked him how he deals with tough issues–along with global scrutinisation–Buffet replied “When you have such problems I always say ‘Get it fast, get it right, get it out, get it fixed.'” Timeless advice.

#11 Abstain when it’s the right thing for you

If you making a decision that requires putting something important on the line for something less important–StopWarren reiterates that he has seen so many companies fail when the director(s) start risking important things (like reputation) for things of inferior importance (like money).

#12 You have everything you need so start now

He is a huge advocate of starting with exactly what you have and not seeking anything more. He picked up the book The Intelligent Investor when just a teen, and he credits that as being perhaps the most important thing he’s ever done. He regularly recites to interviewers the old adage, “The notes are right below your fingers, you just gotta take the time to play the right ones.” The translation of which, is this: With what you have now, take the time to sit and think what decision or changes you could make today, that could change your life or someone else’s. Take what ideas come to your mind very seriously.

#13 Read, learn, seek, and get better every single day

Warren Buffett spends at least 1/3 of everyday reading–newspapers, reports, books, articles, blogs, proposals, etc. He is a lifelong learner and always stresses the importance of such a practice when asked for ‘secrets,’ and his ‘advice to those who want to do well in life.’ One of his best friends and fellow billionaire Bill Gates is also in the same boat when it comes to learning. Maybe this is why they get on so well–next to their love for junk food. “…If you can get at least 1% better everyday, just learn one new thing, then you’re on your way.”


 

Some of Warren Buffets favourite books:

The Intelligent Investor

How to win friends and influence people, by Dale Carnegie

Business Adventures: Twelve Classic Tales from the World of Wall Street by John Brooks

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