This Week I Learned #67
Learnings from the Berkshire 1996 afternoon session meeting.
1) Buffet on Disney: "But going back, if I had to — if I thought the children of the world were going to want to be entertained 10 or 20 years from now, and I had my choice of betting on who is going to have a special place, if anyone has a special place, in the minds of those kids and their parents, I think I would probably rather bet on Disney." Disney still dominates the media industry with ownership of Lucasfilms, Marvel, Pixar and the like. It's crazy how consistent the company has been over the 20 years that Buffet spoke about. He also says: "It’s a pretty good trade name. I mean, when you think about names around the world, it’s interesting that, you know, it’s very hard to beat the name Coca-Cola. But Disney’s got a — it’s very, very big name."
2) Munger on thinking like an owner: "Managers say they want their people to think like shareholders.. not very hard if they just write a check and become shareholders." Executives at Berkshire have to buy the stock for cash in the open market. Not through the use of stock options.
3) Capital allocation: Berkshire companies are charged a 15% cost of capital for their retained earnings. That means, with the 15% pre-tax that has been charged, Buffet and Munger have a duty to achieve even greater results with that money since they've taken that out from the portfolio company.
Amor fati, latin for "love of fate". A popular phrase used often by Friedrich Neitzsche to not sabotage yourself with a bitter attitude. To not lament against fate. Accept the fate and move forward. Don't blame fate. He believed life as a series of facts that needed to be accepted. Thus, he felt the many who went through it complaining about this and that were anti-life. Though I understand the stoic effect of accepting fate and not complaining, improvement requires a dissatisfaction with the accepted fate. Guess you can approach it as accepting the facts but having the determination to change the facts for the future.
Zappos' culture book. It's amazing that the company continues to produce a culture book. It's like how we collect yearbooks in high school. It just seems like an obvious thing for a company to do if it actually gave a shit about its culture. Just 200 pages of pure love here. They even give tours so people can get an understanding of their culture. Now it's a bucket list item. https://www.zapposinsights.com/culture-book
"Without rules all answers are suggested by common sense. No, I can't define what common sense is, but I know it when I hear it. Some of our people stay in four-star hotels and others, sometimes with much higher salaries, choose less digs. Some people spend $200 a day on meals; others get by on half as much. The point is, if w can't trust a manager to use good judgment about such things, we sure as hell shouldn't be sending him off to do business in our name." - Ricardo Semler on creating a company driven by common sense.
"By failing to prepare you are preparing to fail" - Ben Franklin