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Most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration, or sometimes, institutional politics.
Capital allocation is the process of deciding how money is spent inside a company. It’s easy to forget how critical it is to the success of any business.
emotion is the glue that makes any lesson stick.
the price of anything is the amount of life you exchange for it.
All of the suspicions I was raised with about the grotesque nature of capitalism were confirmed when I saw real people being hurt.
I can only recently explain to you what “private equity” actually means. Here’s the simple version: they buy entire companies, make changes, and usually sell the company off to someone else after a few years and a couple coats of paint.
Most private equity companies borrow a lot of other people’s money to “acquire targets.”
When private equity “make changes” at a company, there’s a wide spectrum of what that means. On one end is being an owner of the business. Investing in assets and people, coaching existing management, paying down debts, and improving operations. Think of a white knight riding in to slay the dragons. The hero saves the day and makes everything in the kingdom right again.
On the other end of the spectrum is behaving more like a short term renter--a squatter even. Getting control, selling off assets, stripping down the workforce to a skeleton crew, downsizing previous management, adding debt, and hollowing out operations. It’s pillage and plunder with a thin veneer of civility. All of these actions create a one-time surge in profits. Everything looks better, for a while. Not an issue if you find someone to sell to before it all turns into a pumpkin. This style of private equity is like someone who undergoes heavy doses of plastic surgery. It may look
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leopards don’t change their spots, regardless of the environment.
When you’re in a room full of blood-thirsty economic savages, it’s best to just keep your mouth shut and avoid drawing unwanted attention.
hope was that business school would be a magic decoder ring for my work at Big Rock. Suddenly, everything might make sense. This was not the case. In many ways, I was more confused than ever--like if you handed a foreigner a dictionary and expected them to just suddenly be fluent.
for seventy-seven years now, I’ve tried to go to bed a little smarter than I woke up. Constant improvement is the only way to succeed. It makes what is difficult to achieve become inevitable. Success is a few simple disciplines, practiced daily. Failure is simply a few errors in judgment, repeated daily.”
Nothing will have a bigger impact on your life than your spouse.
“There are three qualities you want: integrity, intelligence, and energy. If you don’t have the first, the other two can kill you. If you hire someone without integrity, you really want them to be dumb and lazy.”
“It is remarkable how much long-term advantage I’ve found by trying to be consistently not stupid. You should try it sometime. Instead of aiming to be very intelligent, just don’t be a dumbass. If you avoid most of the big mistakes, you don’t have to be that smart to succeed.” Good news for us dumbasses of the world.
spend less than you earn. Automatically tuck away ten percent of whatever you make. You don’t even have to be an investment genius with that ten percent. You will have a staggering amount of money by the time you’re my age with even a modest level of compounding.
Barring some miraculous advances in medicine, you’re only going to get one body in this lifetime. Don’t crash it. Take it in for regular maintenance. Give it premium fuel. Don’t let it just sit in the driveway and rot. Wash it and wax it, metaphorically speaking... but also literally if that’s what floats your boat.”
we each only have twenty-four hours in a day, no matter what’s in our bank account. What we focus on is what differentiates us.
Every morning, ask yourself this question: ‘What’s the one thing I could work on today that if I did a good job, it would make everything else easier, or maybe even unnecessary?’ Keep four hours carved out of your calendar to work on that one answer. Make it sacred time with no interruptions. Put everything else away, including your phone and whatnot. Focus deeply during that four-hour stretch at making progress on your most important thing. I can guarantee you a huge advantage in life if you do this. Unfair even.
Most people overestimate what they can get done in a day, but radically underestimate what they can get done in a month… in a year… in a decade, with four hours of dedicated work. You could goof off the rest of the day and still run cir...
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“Think about the return on investment a book offers. For around ten dollars, you get to have an in-depth conversation with an expert who dedicated years to distilling all the information about a topic. For the cost of a mediocre dinner, you get access to years of another human’s effort. I did the math. If it took the author one year of work, you’re paying them about one penny per hour. How much time does this penny-per-hour investment save you in culling through information? We’re talking lifetimes.” That is a pretty good deal.
“I like to think of books as the ‘oil of information.’ You all probably think oil is evil, but it’s actually a blessing. We’d all be sitting around a campfire in loincloths right now without oil.
oil is made up of millions of years of concentrated sunlight.
oil has ten times the energetic density of a stick of dynamite?
“Instead of energy, books are an extreme concentration of information. Oil is formed under Herculean pressures inside the Earth. The human equivalent of that amount of mental pressure is applied to the information that becomes distilled into a book.
“Throughout your life, you should follow your own inner scorecard. What does that mean? Don’t spend a lot of time worrying about what other people think of you. Progress is only accomplished by those who are stubborn and a little weird. It’s easier said than done, but if you stay true to your own principles and follow your own inner scorecard, it’s your best shot at happiness.
being an outcast might be a stepping stone to something better.
it’s the struggle that gives you inner-strength.”
you should leave your children enough to where they can afford to do anything. But not so much that they can afford to do nothing. You want to avoid a Vanderbilt situation where wealth ruins your offspring.”
“There are many definitions of leadership that are useful. Here’s my version: I view it as a five-step process.
Step one: see a problem for what it is. Not worse than it is; not better than it is. I often ask myself ‘Why?’ three or four times to help drill down to the root problem. That’s what you want to address.
“Step two: have a vision of what could be. It often helps to have a strong why behind what you’re trying to improve. Where there’s a why, there’s a way. That motivation keeps you going when you want to quit.
“Step three: set high standards for yourself first. In just about every situation in life, you have to be willing to go first. Hold yourself to the highest standards.”
“Step four: set high standards for others. Notice how you have to set high standards for yourself first? No one wants to follow a hypocrite. Expectations for others have to be clear and agreed upon.”
five: take action. Perfect is the enemy of good enough. Yes, it’s important to make decisions supported by data, but realize you’re never going to have all the numbers to feel completely confi...
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There are very few decisions you can’t undo, so just making a decision and being willing to chang...
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life is full of dark moments. You can’t hide from them.
“To get the most out of your bird, you have to keep it at the perfect weight. The bird has to be slightly starved before it will hunt. A fully-fed bird just sits there fat and happy. But too hungry and the bird’s performance suffers from low energy. ‘Hungry, but not weakened,’ was how Eric described this perfect state.
you take money out of your account every month in an automated way to save for the future, and then you live on whatever’s left. Pay yourself first before you pay everyone else. Sometimes you have to get creative to make ends meet and not dip into your savings. You create an artificial constraint, a hunger, this state of yarak in yourself. Yarak sparks a creativity that can only be unlocked when your back is against the wall. You become the bird that has to hunt.”
Most businesses hustle to create revenue, pay out their various expenses, and with any luck, there’s a little profit left over for the owners. Here’s what you’re probably learning in business school: Revenue minus expenses equals profits. Sounds sensible, right?” He paused for the group of nodding heads. “Well, it’s not! It is completely backwards. It should be taught: Revenue minus PROFITS equal expenses.”
“Don’t wait to see if there’s anything left over for a profit. By carving out a margin before you address expenses, you create a constraint on the resources available. This constraint unlocks your creativity to meet customers’ needs, streamline operations, and only spend money on that which truly generates value. There’s no room left for fluff and bloat.
Business is very competitive, and the difference between the Hall of Fame and the graveyard can be remarkably thin.
Everyone says they want to run a tight ship, but the best way to harness your entrepreneurial verve is to tie your own hands to the yarak mast. It will turn all of your business SHOULDS into business MUSTS.
When you have the winning hand, you can afford to slow play it.
Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger. If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength. But if we treat customers with indifference or tolerate bloat, our businesses will wither. On a daily basis, the effects of our actions are imperceptible; cumulatively, though, their consequences are enormous.
When our long-term competitive position improves as a result of these almost unnoticeable actions, we describe the phenomenon as “widening the moat.”
“We can’t be too radical with any changes, especially if they go against our brand. A brand is like a promise of a specific experience. If we were to make big changes, it’d be confusing for our customers. You can’t come in for a hamburger and find only tacos on the menu.”
many in business are looking for a silver bullet. Something you fire once and it’s game over. It’s human nature to look for these shortcuts. My view is that there are no silver bullets. You’re either getting slightly better or worse every single day. There’s no stasis, and one percent change is barely noticeable in isolation.
“Humans evolved in a linear environment, so we’re not wired to appreciate the power of compounding.
