1: Monday through Thursday, we explore ideas from authors, thought leaders, and exemplary organizations. On Friday, I share something about myself or what we are working on at PCI.
Searching for a bit of wisdom as we push to end 2024 on a solid note and start 2025 with a bang? Read on!
Imagine we adopt a new puppy from the pet shop, suggests Peter D. Kaufman, CEO of Glenair, Inc. and editor of Poor Charlie’s Almanack, the Wit and Wisdom of Charlie Munger. Charlie was the Vice Chairman of Berkshire Hathaway and has been called “one of the great minds of the twentieth century.”
Why do we bring this puppy into our home?
“It’s to have an engaged, contributing, all-in new member of our household,” states Peter.
So how do things go the first night we bring home our puppy?
“It’s a disaster,” Peter observes. The dog is “over in the corner shaking like a leaf. It’s anything but engaged. It’s anything but contributing and it’s anything but all in.”
The good news?
“Human beings are really good at solving this problem,” Peter observes. “We know we need to create a calm, reassuring, secure, and safe environment. . .
“We know that even though this puppy can’t understand what we’re saying, we need to communicate in soothing tones. And we also know that we need to provide food and water for this puppy.
“But underlying all these things, stitching them all together, we really know we have to be constant, don’t we?”
What happens if we don’t feed the puppy one day?
“The puppy freaks out,” he says. “The puppy becomes a neurotic puppy. It doesn’t know whether it can trust us or not. The trust that this puppy needs to go all in is dependent upon our being constant in these behaviors.”
What happens if we are constant?
“Usually, in about seven days,” he notes, “this little puppy will trot over to our side, and it will attach itself to us. And for the rest of its life, it will be willing to die for us. That puppy just went all in, didn’t it?”
Did the puppy go “all in” because that’s what we want?
No! “It doesn’t even know what our idea is, does it?” Peter asks. “Why did it just go all in? It was the puppy’s idea!”
2: Next question: What is the most powerful force in the universe?
Albert Einstein reportedly said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it”.
Peter defines compound interest as the “dogged, incremental, constant progress over a very long time frame.”
Assume we want to win a gold medal in the Olympics. Or learn to play a musical instrument. Or learn a foreign language. Or create the next Berkshire Hathaway.
What’s the formula?
“Dogged, incremental, constant progress over a very long time frame.”
3: So, what gets in our way? What trips us up?
We don’t like to be constant.
“Nobody wants to be constant. We’re the functional equivalent of Sisyphus pushing his boulder up the mountain,” Peter observes. We push it halfway up and say, “Aw, I’ll come back and do this another time.” The boulder goes back down.
“I’ve got this great idea, I’m going to really work hard on it,” we say. Then, we push it up halfway and, “Aw, you know, I’ll get back to this next month.”
“This is the human condition. In geometric terms this is called variance drain,” Peter states. Whenever we interrupt the constant increase, we lose compounding. We’re no longer on the “log curve.” We fall back onto a “linear curve or, God forbid, a step curve down,” says Peter.
His suggestion? “We have to be constant.”
“How many people do you know that are constant in what they do?” Peter asks. “I know a couple. Warren Buffett and Charlie Munger.”
Warren is Chairman of Berkshire Hathaway. Charlie was the Vice Chairman until his death at 99 in 2023. Berkshire Hathaway is worth more than $1 Trillion and is the 9th largest firm in the world.
“Everybody wants to be rich like Warren Buffett and Charlie Munger,” Peter observes. “I’m telling you how they got rich. They were constant. They were not intermittent.”
More next week!
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Reflection: What is my #1 goal right now?
Action: To achieve my goal, commit to dogged, incremental, constant progress over a very long time.
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