Reflections from my dinner with Charlie Munger

0:00What you're about to hear, I have never released on this feed before. Earlier this year, I got to have dinner with Charlie Munger. I spent over three hours with him. Shortly after that happened, I was asked the question, what did you learn from that experience? And I actually recorded my answer to that question. And so you're about to hear that recording now. Before we get to that, I want to tell you one of the first thoughts that I had when I woke up this morning. I heard the news of Charlie passing away yesterday. and I was actually surprised at one of the first things I thought about this morning was it was actually a quote of something that Sam Walton had said in his autobiography.

0:36Sam Walton said that he borrowed more ideas from sole price than anyone else and Sam was in the business of learning from other entrepreneurs. In fact, in that same book, he says everything that I've done, I've copied from somebody else. I'm in the same business. That is why founders exist. I'm in the business of learning from other entrepreneurs. And I realized this morning that I've borrowed more ideas for my own life and my own business from Charlie Munger than anyone else. Charlie's a hero to me. Charlie changed my life and I'm going to miss him. I hope you enjoy these notes from my dinner with Charlie Munger.

1:14What did you learn from having dinner with Charlie Munger? In case you haven't seen it yet, I just made an episode. It's episode 295. It is about the book, The Tao of Charlie Munger, but it is also about the fact that I got invited to have dinner at Charlie Munger's house. I got to spend over three hours with him and I got to ask him any question. No, no limits. Like you could ask him whatever you wanted. And so the first thing that I learned is he's exactly as advertised. The Charlie that you see at the Berkshire meeting, the Charlie that you've maybe watched speeches on, the Charlie that you've read books on.

1:48That is the same guy. He really does read all the time. His bookshelves were filled when he says, hey, you should become friends with the eminent dead. He says he's a biography nut. I thought, you know, close to 300 biographies for the podcast so far. He makes me look like a biography amateur. He had books on his shelves and don't worry, he let me look through shelves and I'm going to order a bunch of these books. They're really hard to find. I've already tried to track a bunch of them down, but he lives what he preaches, the fact that, hey, you should become friends with the eminent dead, the fact that you should find what you're good at and you should pound away at it forever.

2:18It took him 41 years to find his life's work. But once he became a full -time investor, he knew that that's what he was going to do for his whole life. He's just obsessed with it. He loves this idea where he could design his own schedule. He never wanted to have people to manage a bunch of people. He wanted to read all the time and make money with his mind. And so while I was with Charlie, it was so incredible to be able to meet one of your heroes. He had a heavy influence. I've stolen so many of his ideas that I had prepared a list in advance of a ton of questions and things that I wanted to talk to him about.

2:51I never looked at my phone once. So the way I'm going to answer this question is what I did is when I got back to my hotel after, I knew I was like, this is like a night Charlie Munger may never remember, right? Because you think he's 99 years old, think about all life experiences that this guy's had, what's in his brain, right? It's a night that he may never remember and it's a night I'll never forget. So I just wrote down like, what are the things that I wanted to remember? And so to answer this question, I just want to run through some of my notes with you. There's like one main theme. What's interesting about Charlie is like a lot of his ideas interact with each other and they combine and they become even more powerful.

3:29It's like this Lollapalooza effect that he talks about all the time. So what I would say is like the main thing that I took away from the dinner that I think is something I've already tried to put in practice. It's really important to me, like something that clicked when I was reading. It's episode 286. I think the book is called, has a terrible title. It's like, all I want to know is where I'm going to die so I won't go there. But while I was going through the words of Charlie and Warren Buffett in that book, something clicked. And I think it clicked with a lot of people because when you put a podcast out, right, I just do these things by myself and then I release it and I have no idea what the reception will be.

4:05And what's interesting to me is like people will pick up on specific lines and like those lines will resonate far and above everything else that you said in the podcast. And so something I said on that podcast that clicked for a lot of people and clicked for me was that learning is not memorizing information. Learning is changing your behavior. If I spent all this time reading about Charlie Munger, watching his Q and A's at the Berkshire meeting, listening to his speeches, reading books, reading people that were influenced by him, and it doesn't change my behavior. I'm just wasting time. And so the main theme, the thing that jumped out the most was Charlie has an almost complete indifference to problems.

4:39His perspective, if I could summarize it, it would be like, hey, troubles from time to time should be expected. They're an inescapable part of life. So why let it bother you? Just handle them and then move on. And this idea he's talking about in business, there's problems that are inescapable and in your personal life. And this idea combines with two other ideas that he talked about at the dinner. And he talks about, you know, in the books and in speeches and everything else. And that Charlie looks at nearly everything through the lens of history. And his perspective, if I could summarize it, it's like, you're not changing human nature.

5:14Things will just keep repeating forever. And so the fact that this guy has deep historical knowledge, right? He knows that human nature just repeats over and over again. And the fact that because of that deep historical knowledge, he knows that no one's getting through life without problems. So then that leads to the summation and what's going to change, hopefully changes the behavior, which is actually the learning part, right? Well, it's like, okay, just because problems are inevitable, it doesn't mean you want an abundance of them. So his whole thing is like wisdom is prevention, which is only three words.

5:40And it's crazy if you just sit there and think about what that actually means. And his whole point is like, listen, problems are inescapable, but you need to do your best to avoid problems. And the way you do that, this is the third idea that ties together, is you go for great. It's harder to do, but it makes your life easier if you go for great. Great businesses are rare. Great people are rare, but they're worth the time to find. Great businesses throw off way less problems than average or poor businesses. Just like great people will cause way less problems in your life than average or low quality people in the podcast.

6:20I hope you listen to the whole thing. I hope it's even good. I was just so excited. and on such like a high, I don't even know if it made sense. I listened to it back. I'm like, okay, I think this is good. But, you know, I was just so influenced by just being able to meet him. You know, I'm just incredibly grateful for it. And like I didn't want to try to hide my excitement, you know, and the fact that, yeah, he is my hero. Like I know he's a human being just like you and I, but I do admire him and I do think he's the wisest person I've ever come across. And I am, you know, trying to in many ways like pattern my life after him, like in my own unique way.

6:54On that episode, I talk about like a description of, you know, if you're around like a low quality or average quality human, there's this phrase that my wife says in Spanish that it's just perfect and it describes it and it says that person could drown in a cup of water. And so that one thing, go for great, like spend the time to find a great business. I already think like this, you know, took me 30 something years to find my life's work, which obviously I think founders is my life's work. I believe it to be my life's work. I think it's a absolutely great business. It's something I'm obsessed with.

7:25And so now taking Charlie's advice, I know that the likelihood is that I'm not going to be, my business isn't going to go away because of competition. My business is going to go away because humans can't handle success. And so they always say it's like another line that Charlie says is fantastic. He's like, it's not getting rich that you have to worry about. It's staying sane. Most people never find a great business, right? Then once they get into a great business, they get bored or their attention span dwindles or whatever the case is, and then they just screw it up by jumping around. And that's why a lot of Charlie's theme is like patience, patience, patience.

7:56He said something in the dinner that was fantastic. I wish I could have wrote it down, but he said that like the advantage that him and Warren have, you know, they repeat this. It's like, it's temperament. And he used an adjective. I couldn't remember what it was, but he's like, we just, part of our success is we had this, this unusual combination of extreme patience, extreme patience and like ferocious aggressiveness when they find like a good business because they're just sitting, sitting, sitting, waiting for something. They find it and they act incredibly fast. So I just want to tie this up before I go on to other, because I can go off a bunch of tangents on here.

8:27But this idea, it's just like, okay, go for great. It'll make your life easier if you go for great. Just find great business. And you know, maybe that's one great business. Maybe it's two. It's certainly not 50. And I really think you just need one. So find a great business and then surround yourself with great people. And if you do that, you're still going to have problems in life. You'll just have a lot less and then you'll know what did Charlie say, right? I got a little Charlie Munger on my shoulder. Oh, this is a problem. That's fine. I'm going to handle it. I'm not going to whine about it.

8:55I'm going to handle it. I'm going to move on my life because problems are just part of life. If you're truly getting wiser, you'll learn how to avoid most of the problems that are underneath that are under your control. So that is the main lesson. Here's a few other ones that we talked about. Do not spend time on regrets. That doesn't mean you shouldn't be learning from your mistakes. It's like everybody's going to make mistakes, rub your nose in your mistakes. So you're making sure that you're not making that mistake again. He talked about the early part of his career when they were just buying quote unquote great values, but crappy businesses.

9:24And he's like, you have to learn from that. It's like, no, these crappy businesses are, you're getting them for that price for a reason. It's like, just pay a little bit more and get a great business and then just keep that business forever. And so that's part of him saying, Hey, I don't regret that I made these mistakes and getting in these bad investments or getting in these bad businesses. Like they taught me something. and then I just moved on. I'm not going to worry about it. And then I also got to ask him, I was like, well, what I love to do, and you see this in the podcast, hopefully, he's like, I spent a ton of time in these books thinking about like their earlier life and not the 90 or 70 or 80 year old version of Charlie, but like, what was Charlie doing when he was 20?

9:58What was he doing when he was 30? What was he doing when he was 41 when he decided, hey, I'm going to be a full -time investor. I'm not going to practice law anymore. And I was talking to him about that. I was like, man, I'm like reading about you at this young age and you kind of see they're stumbling onto their ideas. They're kind of trying to figure them out and they're getting closer and closer to like what Berkshire is going to be. And at that time, Berkshire didn't even exist. And I was just like, looking back at this now, you know, at your age, like, are you surprised how successful? Because I'm thinking about the young Charlie Munger, the young Warren Buffett.

10:30I'm like, are you surprised how successful that you and Warren turned out to be? And he goes, how could you not be? And then that led to this tangent because you could tee Charlie up with a question, but Charlie's going to talk about whatever Charlie wants to talk about. And he should because the amount of information that's in this guy's brain and the entire night he just told story after story after story of this amazing business they bought or this amazing deal or this went bad or, oh, I thought this was right. And his recall was absolutely incredible. And this went on a tangent. He's like, actually, I think that me and Warren get too much credit.

11:04He thought that was interesting. and he was talking about the fact that he finds it really odd to be so wealthy and so loved and his point is like that's not a normal human reaction like there is this egalitarianism in human nature that you know the people just in general like you have any level of success especially on his level right multi multi billions of dollars of wealth produced for himself and his family, like that's not usually, you know, people can react. Most people react poorly to that. And what I thought about this after I was like, you know what? I wonder if it's because he spent him and Warren spent so much time teaching other people.

11:45Like if you think about what poor Charlie's Almanac is, what the questions that he takes at the Berkshire meeting is or are what what the share Warren Buffett shareholder letters are like, those are their lessons. All they're doing is saying, hey, we learned all this stuff, and this is what we learned. Let's take time into writing out the lessons in the form of shareholder letters and then sharing the lessons that we learned through answering the questions at the meeting. And in aggregate, you have, what is that, four or five decades? I think it's like 50 or 60 years they've been doing this. Let's just say half a century.

12:17A half a century of documented lessons, and then they turn it out and they just make it available for free for everybody else. And so how many entrepreneurs, investors, executives, people interested in business have been educated by Warren and Charlie over their lifetimes? Millions. That's not an understatement. Millions of people. And this is certainly the way I feel. Like, I don't look at, I don't do this anyways, because it's remarkable how many smart and successful people I meet that are still, like, caught up in envy, that are worried about, like, this is crazy to me. And it's something I learned from Charlie.

12:47He's like, the world isn't run by greed. It's run by envy. And like, you just have to have a good life. You have to cure yourself of envy. like somebody else is getting richer than you who gives a shit that is always going to happen that has nothing to do with you why does it bother you and i think that's how most people view warren and charlie like yeah these guys are super rich way more successful but like look at all the information they put out there that's valuable look at all the information that could change your life um so that's my own personal opinion like i didn't get a chance to ask him i didn't even have that thought at the time i just thought about that when i was writing these notes i was like oh that is kind of like, why, why is that so different?

13:21You know, there's no, there's nobody outside of Warren Buffett's, uh, or Charlie Munger's house, you know, uh, protesting or like with a guillotine or all those crazy things that people do when you, you get to like the top of like the world's richest people list, you know, there is like a, an interesting, like, why is that the case? Like, why are they the exception? So my guess is again, they spent a ton of time teaching others another thing ask the question like what role did like your parents play and like your drive for success like were you trying to like show mom and dad like hey this is what i could do and you know charlie's like no he's like i always had an inner clock i just do what i want to do and i don't care about the ideas or thoughts of other people and as a result this inner clock he talks about like deals like they turn down they could make they get all kinds of crazy deal flow from their positions, as you can imagine.

14:12I think the teaching aspect of that is a huge part of it. And yet they have opportunity to make like a bunch of money risk free. And it's like a business that, you know, may harm other people or they just didn't like it and they would turn it down. So that's this whole like inner clock thing. It's like, I'm just going to do what I want to do. And that was a larger theme too, where Charlie's not, his whole thing is like, he likes people that like one of his favorite entrepreneurs is Jim Senegal from Costco. I got to ask him, I was like, why can't I find any information on Jim? He doesn't give speeches.

14:38There's no books. He's like, because he's busy working. I thought that was hilarious. But he just like, if you think about it, he's like, well, just go out and build a business that helps other people. Like, what is the whole business model of Costco is like they use their size to get unbelievably deals, unbelievable deals for their customers. And then instead of like marking up more than they could, they just pass that savings on to their millions and millions of customers. And I think I read in the Tao of Charlie Munger, they have like 150 million checkouts a year That information is, you know, maybe a decade old.

15:09So it's probably even more now. So, like, what is the aggregate goodwill of, like, just the amount of savings that this idea that Jim had and that he grew over multiple decades? Like, what is the benefit to his customers and to society at large? Like, it's large. Like, you're saving a ton of money because of this unique business that Jim built. And I think that's what Charlie would give you advice to do is just, like, do something that other people value and then do it for a long time. and really, really, really give a shit about the business. You can tell. His whole thing is like, hey, you're going to have more success.

15:43Another hack of his, and I hate using the word, or another good idea of his, maybe that's a better way, is if you just move yourself into a business where you have an intense interest, that's going to cure most of your problems. You're just going to think about it all the time. You're going to constantly improve it. You're not going to quit. And that right there is probably 80 % to 90 % of it. And then something else that I was lucky about is the fact that the night started in Charlie's library. So he was sitting there, we're in a small group, and his back is to like, behind him is all his bookshelves.

16:14And I was just scanning his bookshelves while he was talking, and I noticed a bunch of books that I had read. So I was able to like bring up these obscure books. Like I brought up the fact that I saw Henry Kaiser's biography on the shelves. And I read that book like four years ago. It was episode 66 of Founders. And so then Charlie just goes into, I just bring up Kaiser and like what he thought about him. And like his recall was just unbelievable. You know, he hadn't read that book in a long time. Winds up knowing Henry Kaiser's partner could tell you about the businesses that Henry built. Could tell you about the role that he played in World War II building the Liberty ships.

16:49We talked about the fact that Kaiser was one of the people that helped build the Hoover Dam. And so this kind of thing just happened. You just mentioned one person, he could talk about it forever. and that really made me realize it's like okay anybody at 99 years old is going to have some kind of cognitive decline but imagine like just how powerful this guy's mind was when he was younger and like that's he did a lot of work to do that you know he's read thousands and thousands of books spent thousands and thousands not even tens of thousands i don't know a hundred thousand hours deep in thought thinking about the stuff he's learning thinking about the things that are going on in the world thinking about what he wants like how the business that he wants to build And so that knowledge, firsthand, he always talks about how knowledge compounds, like be a learning machine.

17:31He says, go to sleep every night a little smarter than you were. And if you do that over a long period of time, it really makes a difference. You see that in his conversations. Like, oh, this guy lives his ideas. He's not just out there BSing people. He's like, I'm just telling the ideas that I used in my life. And if it was valuable for me, it's probably valuable for other people. Like, I just think that's part of his wisdom is just how simple it is. And what Charlie would tell you is like, okay, well, if it's simple advice, like why are more people using it? It's just like it's in human nature to overcomplicate things.

17:58And so that's his whole point is like why he repeats things over and over again. Because like you just have to keep it as simple as possible because you're likely just by like your natural tendency is going to overcomplicate your life. And then, of course, one of the questions I had to ask him was I wanted to talk to him about Ben Franklin because Ben Franklin was his hero. So Charlie makes like these busts of people he admires. And two of the people he has busts of are Ben Franklin and Lee Kuan Yew. He calls Lee Kuan Yew like the Warren Buffett of Singapore. But when we were talking about Ben Franklin, I brought up this book that covered, I think it was episode 251.

18:31It's Franklin and Washington about their partnership they had. And he hadn't read the book yet, but he knew all about like Franklin's relationship with Washington. And so what he was talking to us a lot about, like, you know, he believes it's unlikely to ever have another life as remarkable as Ben Franklin. He was number one in business, number one in science, number one in politics, all like at the same time in one life form or lifetime. It's just like that's never we're never going to see that again. And he just thinks he's just absolutely wise and remarkable. And if you read Ben Franklin, you realize that what Charlie did is just take a lot of Franklin's ideas and then update them and reword them.

19:05but a lot of it's they think very similarly uh and the way they communicate uh it's very it's it's very similar as well but what i thought was interesting is the important part that jumped out of him is the fact that ben franklin did something very smart he says ben franklin did something very smart his whole life was that he sought out other impressive people like george washington he did this when he was young he did this when he was old he did it his entire life and then charlie went in he says andrew carnegay did this too and then i got to ask him a follow -up question i was It's like, well, is this something that you did in your life?

19:34And immediately he says, absolutely and still do. And he was pointing out, it was like, you find, go for great. Goes back to that main idea, right? Go for great. Find other, first of all, build yourself up into an impressive, formidable person. That takes a lot of work, right? But once you do that, you find other people that are like you and then you build relationships with them. And they made, in many cases, they had friendships and business relationships with the same people that they met in their youth, their entire lives. A lot of them have, you know, passed away since then. But it was something very important.

20:03And Charlie still does this where he seeks out other, you know, young, interesting, smart people or whatever the case is. Every single person at this dinner with me, it was only, I think, five of us. We're all 50 years, 60 years younger than Charlie. And he was also talking about, like, if he doesn't see people in person, like he'll seek out and he'll talk to other smart people on Zoom. You know, he's still doing this at 99. He's still curious. He's still reading, still paying attention to what's going on in businesses. This is, he's never going to stop. He's like, the only way this is going to stop is when he dies.

20:33Another thing goes back to like just building your business around a set of simple ideas. They have that notoriety, that like cult -like following because of their just constant teaching, constant sharing everything they learn. You know, a lot of people call them first. They see a lot of deals first. And so they combine that idea with the fact that they made so much money because they had, they always had a ton of cash and they could move fast. And he would tell deals, you know, crazy examples where like somebody calls on like a Saturday and they're like, hey, this business is like having a bunch of trouble.

21:07There's maybe one subsidiary that Charlie Moore knew about in advance because they're like they know what's going on. They know what they're interested in. They're just waiting for the opportunity to get it. And in one case, they're like, hey, if you want this, we need four hundred fifty million dollars. And this is like on a Saturday morning or something. And we need it by Monday. and it was interesting because the lawyers are telling Warren and Charlie no we can't do this like we don't have a contract yet we have to go through it we should inspect it and because of their relationships because of the fact that they know in their mind like what assets they want and Charlie said like Warren and Charlie ignored the lawyers they're like no we think this is a good deal Warren wired the money first thing Monday morning without even an email no contract no email just on the strength of the relationship of the person calling them and the fact that they knew the actual value of the asset that they were buying.

21:55And Charlie said something like they made a couple billion dollars on that deal risk -free. And so that's just like one example of a bunch of, he just walked us through like the way they thought about things. And again, it's like, yes, if you look at Berkshire today, unbelievably complicated. You can't imagine like how the hell this thing came to exist. But if you look at it from their perspective, it was like, okay, we started out doing one thing. I mean, like 40, he's like 41, I think Warren, let's say he's mid 40s, the Warrens like late 30s, you know, as they're like trying to figure this out.