I was watching a PBS special of Warren Buffet and Bill Gates sharing the stage while speaking to a group of college students – possibly the only time the two richest people in the world shared the advice giving stage at the same time.
There were two stories from that show that I’d like to share with you today.
One of the students asked Bill Gates to recall the biggest mistakes of his career-which I thought was a great question.
Gates said one of the big mistakes was realizing the importance of the Internet very late in the game.
As you may recall, the growth of the Internet in the mid 1990’s was NOT powered by Microsoft. It was being driven by Marc Andreesen, the inventor of the first web browser, and his company Netscape.
I remember the time very well.
Gates had one of his infamous “Think Weeks” where we locked himself in a retreat for 1 – 2 weeks — no telephone calls, no email – with nothing but time to think.
He realized he totally missed the Internet opportunity.
The next day, he issued a company wide memo that pretty much said EVERY project and product in Microsoft had to incorporate the Internet.
Overnight, tends of thousands of Microsoft employees and tens of billions of dollars in R&D (the corporate equivalent of acquiring new skills) was now ear marked towards the Internet.
He spent billions acquiring third party companies with skills and assets Microsoft did not have. Early on this included paying $400 million for Hotmail which formed the basis for MSN Hotmail.
Within 24 months, Microsoft pretty much terminated Netscape (not to mention got a whole bunch of anti-trust lawsuits in the process).
The lesson is this.
When you’re chasing a new opportunity, especially one that you were ignoring previously, it’s impossible to succeed without acquiring the new skills needed to succeed with that opportunity.
This is exactly what’s going on with many entrepreneurs today. The recession has taken away opportunities that many business owners have grown accustomed to.
It is also creating NEW opportunities that many entrepreneurs are flat out overlooking and stubbornly insist on ignoring.
The problem is many entrepreneurs simply lack the skills to notice and take advantage of these opportunities.
This leads me to my second story.
On the same PBS special, Warren Buffet was asked what advice he would give to a new college graduate in terms of building a business or career.
His answer was very revealing:
INVEST IN YOURSELF
In his words, investing in yourself has an incredibly high return on investment.
Do you know where Warren Buffet learned to invest?
He learned from his college professor and mentor Benjamin Graham. After graduating from college, he begged and pleaded to work with Graham.
He interview for the job, got the job, accepted the job and never once asked for what the job paid. It wasn’t until he got his first paycheck that he saw the amount.
But Buffet KNEW that this guy Graham could teach him how to be a better investor.
Truth be told, he would have paid Graham to allow him to work under him just to have the opportunity to acquiring better investing skills.
Considering Warren Buffet today has a net worth of $40 billion or so, I’d say that Buffet got a pretty good deal.
Invest in yourself – advice from the 2nd richest man in the world… advice worth listening to.
If you have been reading between the lines of what Bill Gates and Warren Buffet do and advise, you see the vital role that acquiring new skills plays in being successful at the highest levels.
This is frankly an approach I firmly believe in and practice myself.
Over the past 5 years, I’ve invested over $200,000 in building my own skills. I go to seminars, conferences, speeches, and workshops. I invest in mentors and coaches. I invest in tons of books, home study programs, audio/video programs and more.
I have tons of bookshelves to house all this information. I rent storage facilities to store these skill building materials that don’t fit on the shelf.
Keep in mind this does NOT include the investment I made in my wife’s Harvard MBA. It also does not include any of the education costs incurred when I attended Stanford.
It is my investment in myself in continuing education — not because I’m required to – but because I personally find it easy to win in a competitive marketplace.
Early on in my career, this investment was not easy to pull off financially. I made a number of tradeoffs.
I only buy and drive used cars (can’t stand a 10% depreciation loss on day #1 of owning a new car).
I wear a $19 watch with a plastic wrist band (it keeps better time than a $10k Rolex… and has a nightlight which is handy for checking in on the little ones when they’re sleeping.. and I can hold my 2 year old with the wrist band scratching her).
I buy a lot of my personal clothing at Costco (though I do buy most my work related clothing from Nordstroms)
I own a 10 year old Sony television (NOT a flat screen) – (If I had a flat screen, I’d be tempted to watch tv more.)
I am told that I’m very extreme in my habits. I suppose I am. But it is all driven by a very simple philosophy.
I will invest incredibly aggressively in anything that helps me win… which is very different than spending money on things that give me the appearance of winning without actually making a difference.
Everything else doesn’t matter to me.
I figure if it works for Warren Buffet and worked for the late Sam Walton (founder of Wal-Mart), it works for me.
This type of philosophy seems to be coming back in vogue these days… and I predict will continue for some time.
But it has not always been easy to practice day to day. When I go workout at the gym, I always end up parking next to the guy with the Ferrari (I must admit it’s a pretty sweet ride). I pull up in my 13 year old Toyota.
If someone ever broke into my home, they would be seriously disappointed. There isn’t anything to steal – other than books that line 125 linear feet of book shelves.
My most valuable financial asset has always been my brain… in other words my skills.
It is those skills that pay the bills. It is those skills that provide the financial future for my family. Everything in my life as an entrepreneur revolves around and is built on the foundation of those skills.
It is the same skills that has given me (and by proxy my clients and even readers of this newsletter) perspective over the recession.
When others are in a state of massive panic, the people who work with me or follow my work benefit from a sense of calm based on a factual understanding of economic reality…. and yes, all of this at the end of the day comes from skills.
Based on these skills, I’ve found that the path to a better business for most entrepreneurs is fairly simple. The mistakes entrepreneurs are making in this recession are very common and unfortunately for many will be fatal.
It doesn’t have to be this way, but most stubbornly insist on continuing to do what is NOT working.
Look the environment has changed.
The rules of the game have changed.
If you are not winning in this environment, then you are losing. There is very little middle ground.
If you don’t have the skills needed to win, then go get them or quit. But whatever you do, don’t just sit there doing nothing. That’s the worst thing to do.
In a few weeks, I’ll be introducing a new program to help entrepreneurs like you acquire the skills, confidence, and direction needed to build a growing and profitable business in a tough economic environment.
(Incidentally if you think the recession has been rough, wait till you see the “flat” recovery or the “double-dip” back-to-back recession.)
Certain business practices don’t work in this kind of environment. Sloppily run business get killed in this environment. Don’t be one of them.