Warren Buffett: “Really Successful People Say No To Almost Everything”
Author’s Note: This article was written over 60 hours with love and care using the blockbuster mental model.
When Bill Gates first met Warren Buffett, their host, Gates’ mother, asked everyone around the table to share the single most important factor to their success. Gates and Buffett both gave the same one-word answer: “Focus.”
Well, he can do that because he’s Warren Buffett, one of the richest people in the world. I could never do that.
While this response may help people feel better about themselves, it certainly won’t make them smarter.
Because the reality is: Buffett has spent most of his time reading and thinking since he was in grade school. Having more money or managing a large company doesn’t magically give you free time.
Having free time is never the default. People don’t just fall into huge blocks of free time unless they retire. Rather, free time is the result of strategy. It’s the result of looking at time differently.
Curious about Buffett’s unique strategies, I’ve read several books about him, read most of his annual letters to stockholders, and watched nearly all of his interviews.
And make no mistake about it… behind Buffett’s jovial demeanor is the most stone-cold, ruthless prioritizer (in a good way) in the world.
Below are the top six strategies Warren Buffett has used throughout his career in order to have lots of reading and thinking time. I invite you to copy them so you can have more time to do what’s most important to you every day.
As you read these strategies, be aware that these aren’t just random strategies that are thrown together like the typical listicle you see online. There’s a deeper pattern that most people miss—his #1 mental model.
Buffett Strategy #1: Kill busy work
Buffett has eliminated almost all of the obligatory CEO tasks from his schedule:
He never talks to analysts (Buffett estimates that 20% of the typical public CEO’s time is spent talking to Wall Street).
He rarely talks to the media.
He doesn’t attend industry events.
He has lived outside of NYC in Omaha, Nebraska for almost his entire career.
He barely attends any internal meetings like typical CEOs.
What’s important to see here is that these decisions don’t happen by accident. They require continually resisting immense social pressure.
We get insight into how Buffett deals with distractions and obligations via his personal pilot, Michael Flint. Buffett once walked Flint through his three-step strategy for prioritization , and I invite you to try it right now in order to truly get the message:
First, Buffett had Flint write down his top 25 goals on a piece of paper. Go ahead and write your goals down now.
Next, he had him circle the top 5. So far, nothing special.
Finally, he had Flint take the 20 goals he did NOT circle and put them on an “avoid-at-all-cost” list. This is the step where you see Buffett’s true prioritization genius. At this point, most people would simply just focus on the top 5 goals and intermittently work on the rest of the goals. Not Buffett though. He advised Flint: “No matter what, these things get no attention from you until you’ve succeeded with your top 5.”
Buffett’s strategy gets at a few fundamental truths:
20% of our priorities typically account for 80% of our results. Buffett’s top five priorities are 20% of 25. For more on the 80/20 Rule, read my article: This Is Exactly How You Should Train Yourself To Be Smarter [Infographic].
The real threats to our time are not obvious distractions that we know are wrong. Rather, the real threats are the wolves in sheep’s clothing—activities that make us feel like we’re working hard, but that do not ultimately move the needle. Buffett’s three-step approach inoculates against these!
The real challenge to prioritization is saying, “No!” It’s easy to say yes. What’s hard is saying no to busy work that gives you the satisfaction of checking an item off your to-do list—meeting an obligation to someone else, doing an easy task, or writing an email.
Buffett Strategy #2: Only work with people you could see yourself working with forever
If you can’t see yourself working with someone for life, don’t work with them for a day.
Similar to how Buffett audits his work activities, he also audits who he works with.
Buffett ONLY works with CEOs he trusts, who get results, and who he can see himself working with for decades. As a result, he does incredibly little negotiation and due diligence before he buys a company, and doesn’t actively manage the CEOs of the business he owns. Furthermore, he enjoys the conversations he has with the CEOs.
(Notice the word “trust.” Buffett has passed up on purchasing many companies with attractive financials who had CEOs he did not trust.)
Buffett applies the same criteria to the people on his team—many of them have been with him for decades.
Buffett Strategy #3: Keep things super, super simple
Buffett has cut out nearly all of the bureaucracy in his company. Berkshire Hathaway’s portfolio companies have nearly 400,000 employees, but its actual headquarters has only two dozen employees or so. Here is a photo from the 2014 Christmas Party of one of the largest companies in the world:
Buffett’s personal life is also very simple. He lives in a modest home (the same one he has been in for 60 years), and he only spends $100,000 per year personally.
As we grow in our careers, in our companies, and in our lives, it’s extremely easy to add complexity. In fact, it’s the norm.
As you get more profit, it’s normal to hire more employees. As you earn more money, it’s normal to spend more and more.
What’s truly powerful and unique is to keep things simple. That takes effort and skill. And, that is part of Buffett’s genius.
It’s odd to say this, but one of the world’s richest people may also be one of its biggest minimalists when you compare the lifestyle he could live to the one he chooses to live.
Buffett Strategy #4: Focus on a few, high-quality bets
Warren Buffett only makes a handful of investments per year.
I remember when I first heard this, I was shocked. “How can the wealthiest investor in human history do so few deals?”
William Thorndike gives us the answer to this question in his book, The Outsiders:
Buffett believes that exceptional returns come from concentrated portfolios, that excellent investment ideas are rare, and he has repeatedly told students that their investing results would improve if at the beginning of their careers, they were handed a twenty-hole punch card representing the total number of investments they could make in their investing lifetimes. As he summarized in the 1993 annual report, ‘We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort level he must feel with its economic characteristics before buying into it.
Buffett explains his philosophy in the following clip from the Becoming Warren Buffett documentary:
In short, Buffett says:
The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. If people are yelling, ‘Swing, you bum,’ ignore them.
Buffett Strategy #5: Focus on long-term bets
Buffett holds his bets for extraordinarily long periods.
According to investor William Thorndike, author of The Outsiders…
He has held his current top five stock options for over twenty years on average. This compares with an average holding period of less than one year for the typical mutual fund. This translates into an exceptionally low level of investment activity, characterized by Buffett as “inactivity bordering on sloth.
(I wrote more about how Buffett focuses on a few big bets in this article.)
Buffett applies a similar concept to investing in knowledge that will pay him back forever. In the only authorized biography of Buffett, his biographer comments on what she learned from him:
The things you do learn and invest in should be knowledge that is cumulative, so that the knowledge builds on itself. So instead of learning something that might become obsolete tomorrow, like some particular type of software [that no one even uses two years later], choose things that will make you smarter in 10 or 20 years. That lesson is something I use all the time now.
(I wrote more about how knowledge compounds in Why Successful People Spend 10 Hours A Week On “Compound Time”)
Buffett is not alone in thinking long-term.
Sam Altman, the president of Y Combinator, the largest accelerator in the world, refers to long-term thinking as “one of the few arbitrage opportunities left in the market.” Jeff Bezos measures the success of new programs over seven-year time frames, while most other public companies think in three-month increments. (I go deeper into Bezos’ long-term thinking philosophy in this article.)
Buffett Strategy #6: Avoid the technology bandwagon
One would think that the greatest investor of all time (the GOAT if you will) stays on top of the latest technologies in order to stay up-to-date.
Interestingly, the opposite is true. Here are a few examples:
He has never had a computer at his office.
He has never used a stock ticker.
These unique choices show a few things about Buffett:
Buffett is very clear on what data he needs to know in order to make an investment.
He is confident enough in his thinking that he is willing to NOT do what is popular.
He proactively removes potential distractions from his environment rather than depending on willpower.