I come from a land of hero worshippers. We like our heroes to be larger than life. Our heroes can do everything right and nothing wrong. Some of us find our heroes in religion, some in movies, some in sports and some in politics.

For me it is Warren Buffett. Of course, my hero can’t do everything and he makes a lot of mistakes. Some people ridicule him and call his track record mediocre, his way of investing as old school etc. I am not here to defend him or his track record.

Somebody asked him how he would be remembered 100 years from now and he said “as a teacher”. He has taught me (and several thousand people) how to invest, how to think, how to behave and how to live.

Today, 30th August is Warren Buffett’s birthday. On this occasion, here are some of his wonderful but lesser known quotes with my commentary.

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A meme is worth a thousand words.

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Looking for one-foot hurdles

After 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them. To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers.

People are naturally attracted to solving hard problems. For example, you can hire a bunch of MBAs and ask them to solve a tough problem and each of them is going to come up with great ideas. But almost none will come to you and say -“what if we got rid of the problem instead of trying to solve it”.

This desire to solve big problems is more common than you think.

• An investment banker quit his job and started a renewable power generation company only to realize that the sector is terrible as payments gets delayed for as long as 180 days.
• A conglomerate goes and buys a defunct airline and is now spending resources to make it world class.
• Two telecom companies merged to form one. Together they were bleeding money so they invested Rs 25,000 Crs and after that they are still bleeding money. Instead of exiting the business they are looking to raise more money.

These are some examples of extremely smart people who go around looking for 7-foot hurdles and then spending resources to clear them. They have my admiration but not my wallet.

The big lesson to me was in investing, you want to find and invest in easy opportunities. Just as people get bored doing the same thing, markets get bored too and look for the next big thing. And this is what creates opportunities to find the one foot hurdles.

Inner vs Outer scorecard

Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover? Now, that’s an interesting question.

To want to be truly best at what you do even if the world ridicules you is to live with an inner scorecard- the first option. The second option is the outer scorecard and is the opposite of the first. Asking this question forces you to reflect on what is important to you. I hope god gives me the wisdom and strength to choose the the inner scorecard every single time. It’s the only scorecard that matters.

Over the years, I have paraphrased this quote in many different ways for myself:

• Would I rather be a successful investor or a famous investor?
• Would I rather invest in great but unknown businesses or invest in fancy names?
• Would I rather invest in a business with great cash flows but lousy PnL or a business with lousy cash flows great PnL?

In each of the above cases the options were opposites and mutually exclusive and I was allowing myself to choose only one option. Asking myself these questions has forced me to think harder about what really matters.

Marrying someone for their money

…marrying someone for money is probably not a very good idea in any circumstances, but if you are already rich, it’s crazy

Don’t literally think marriage. Think of wealthy people doing unnecessary things and losing the house. Here is a small list of observations that I have made of wealthy people who married for even more money:

• Promoters of a very highly profitable entertainment business, pledging their shares and using the money to get into … infrastructure business. That story didn’t end well.
• A CEO of a struggling airline pledging his house to bid for a defunct state owned airline. In my opinion, he should be thankful for losing that auction. What was he even thinking?
• Wealthy businessmen getting distracted and buying an airline or expensive cricket teams or soccer teams just to be the envy of others.
• Think of movie stars and sports men and women who endorse harmful products (tobacco products, sugary colas, crypto currency trading). Did the extra money help them feel contented at last? Chances are probably not.

Associate with people better than you

It has been an article of faith for me that I should always try to hang out with people who are better than I. There is no question that by doing so you move yourself up.

We are the average of the five people we hang around with the most. Their thoughts become our thoughts. Their attitudes become our attitudes and their actions become our benchmark. Therefore be careful who you spend time with. There is an old Chinese proverb: tell me who your friends are and I’ll tell you who you are.

Therefore choosing who you associate with is like choosing destiny.

Shortness of life

I can buy whatever I want, but I can’t buy more time.

My explanation would ruin it.

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So, like I said Warren Buffett has taught me so many things besides investing. My life turned for the better because of him.

Thank you Warren and wish you a very happy birthday!

Cheers!