Warren Buffett on Mistakes and Terrible Businesses
- By Rupert Hargreaves
In 2013, Warren Buffett (Trades, Portfolio) sat down with Caroline Ghosn, the co-founder of Levo League, an enterprise set up to help young women in the first phase of their careers.
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The interview covered many different topics, everything from how to invest to how to advance up the career ladder. The most interesting part of the interview was towards the end when Ghosn asked a few questions from the "audience," members of the Levo League and other Buffett followers who sent in questions via Twitter.
One of these participants asked Buffett about his thoughts on success in business or, to be more specific, if he thinks success in business is dependent upon having a "good plan, excellent education and execution driven mindset." The questioner also wanted to know if Buffett had any idea why some businesses did not succeed even with these desirable qualities present in the manager.
Buffett responded, "Some businesses are just tough. I mean a significant percentage of the restaurants that open up this year are going to fail. There are a lot of tough businesses."
He went on to say that if you want to be a good business manager, it is probably best to find a good business to own in the first place. No matter how good you are as a manager, how much experience and relevant education you have, if you enter a tough business, it is always going to be difficult to make that business work. He summed up with the following analogy:
"When I got out of Columbia one of my best friends was a terrific talent and he went to work in the steel business. He did OK, but it was the wrong business to be in. It's very important to be on the right train. You want to get on a train that's going 90 miles an hour and not one that's going 30 miles an hour and you're gonna push it along a little faster. So it really does make a huge difference. There are some businesses that are inherently far more opportunity than others. So you want to give a lot of thought to which train you're getting on."
The next question asked of Buffett was about how he deals with business failure and his advice to young entrepreneurs on how to deal with failure.
The Oracle of Omaha's advice in response to this question was relatively simple. He said that if you do fail, all you should do is "dust yourself off and get back in." Buffett continued, "You are going to fail at some things." Once again he illustrated with an example. He said he traveled for 10 hours to interview at the Harvard Business School when he finished at the University of Nebraska and was almost immediately turned down.
As it turns out, this was the best thing that ever happened to him because he went on to meet Benjamin Graham at Columbia. "Almost everything in my life that looked like a failure has usually turned into a success," he said, and then went on to summarize with the following statement:
"If something goes wrong, if you find yourself working for the wrong employer and they're doing things you don't approve of or they're not treating you fairly, the world isn't over yet. You just go out and find somebody else."
There was also a question on what daily habits Buffett has cultivated to help him get where he is today. He answered that in addition to playing bridge, he likes to read five or six hours a day. Apart from that, there is very little that he does apart from building Berkshire, reading and socializing:
"I just love getting more information, and I like building Berkshire. It is my canvas. So I spend a lot of time doing that. I play some bridge, I talk to my friends and I pretty much don't do anything I don't like to do."
Disclosure: The author owns shares in Berkshire Hathaway.
Read more here:
John Bogle: Wall Street Says Goodbye to a Legend
Charlie Munger: When You Find Good Businesses, Back the Truck Up
Warren Buffett and Real Estate Investment Trusts
This article first appeared on GuruFocus.
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