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as I walked past the Plaza Hotel on a glorious May morning in 1994 I heard someone call out Warren Buffett turning in the direction of the voice I saw a woman stop Buffett on the sidewalk and start a friendly conversation with them
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Buffett listened patiently to the woman who as it turned out was a shareholder of birkshire hathway at the time the legendary investor was the second richest man in the United States as it happened I was in New York that day to
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meet with our financial advisers at Morgan Stanley to talk about our company which at the time operated 143 jewelry stores nationwide personally I felt uncomfortable expanding the company beyond my ability to know every single
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manager on a firstname basis we had grown well beyond that point and we were still growing we had no interest in going public and we certainly didn't want some Financial butcher carving up this Jewel and selling it peacemeal as the woman said her goodbyes and and
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turned to go and as Buffett prepared to cross the street I saw my own opportunity stepping forward I thrust out my hand hello Mr Buffett I said I'm Barnett hburg of hburg diamonds in Kansas City I didn't sense any recognition in his face but he politely
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shook my hand and said hello willing to hear me out then right there on the sidewalk I told one of the most astute businessmen in America why he ought to consider buying our family's 79-year-old jewelry business I believe that our
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company matches your criteria for investment I said to which he replied simply send me the information it will be confidential my conversation with Buffett lasted no more than half a minute my idea of course was to grab his attention how often do you encounter
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Warren Buffett on a sidewalk and pique his curiosity in your family company as I walked away I wondered whether my Approach might have seemed abrupt if not downright presumption ous yet I felt certain that our successful three
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generation family business made a perfect fit with Buffett's birkshire hathway which fortun magazine had repeatedly named as one of the 10 most respected companies in America in 1994 berkshire's $ 11.9 billion net worth was
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greater than Coca-Cola and pepsic Co combined it was at the time a collection of 30 businesses including such signature names as C candies World Book and Nebraska furniture mark it was the largest shareholder in Gillette Coca-Cola and American Express imagine
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our gut-busting pride when as the third generation owners of hellborg Buffett later explained why he decided to buy our business we associate ourselves with some real jewels of the American Business world he said and I think it's quite fitting that hburg joins this collection of jewels it's just exactly the kind of company that we like to invest in it's got outstanding management I would hate to compete with you fellows I'd rather be on your side
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of the fence and that's the side we're going to be on my dream buyer for the family business all along was Warren Buffett I knew we could trust him to keep the headquarters in Kansas City resist changing the company's character and retain the jobs of all of our
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Associates it might have been simpler to sell to the highest bidder but that notion seemed as sensible as choosing a brain surgeon based on the lowest price rather than on talent and reputation that sounds like something Buffett would
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say himself but that notion seemed as sensible as choosing a brain surgeon based on the lowest price rather than on talent and reputation I had purchased four shares of burshire haway stock in 1989 just so I could attend berkshire's
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annual meetings and pick up some of Buffett's wisdom so that is four year five years before he randomly runs into them on the sidewalk in New York city so said I'd P purchase the shares so I could attend bur's annual meeting and
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pick up some of off its wisdom his presentations are warm and unpretentious he genuinely enjoys people he's often quoted saying great people do great things he also likes to say we only buy companies that we trust my first visit
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to a burshire hathway annual meeting was quite a revelation and taught me a great deal about Warren Buffett and his philosophies my notes included hire seven-footers that is hire people with Incredible abilities another very very strong impression was obtained through
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an answer he gave a Kellogg business school student who asked him how do I determine which job to take Warren's answer was simply get a job you love at a company you respect his people orientation was obvious and since I had
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been taught from day one by my dad that business is people this was most impressive Buffet recounted the story of how he acquired our company to shareholders this way Bernett said he had a business that we might might be interested in when people say that it
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usually turns out that they have a lemonade stand with potential of course to quickly grow into the next Microsoft so I simply asked Barnett to send me the particulars that I thought to myself will be the end of that in fact it
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almost did end there I promptly went home and sent Buffett nothing Afflicted with Hang-Ups about confidentiality but one night I reread the Chairman's letter in the birkshire annual report and I'm can interrupt this real quick this is
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another example of why I've repeated it over and over again I've said this many times to you I think birkshire Warren Buffett shareholder letters maybe the greatest example or the most successful example of content Marketing in the
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history of business the amount of opportunity unique opportunity that flows to buffer that has flown flowed uh to Buffett as a result of this is just remarkable this is another example of that but one night I reread the Chairman's letter in the birkshire
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annual report there was Buffet again inviting companies that meet his acquisition criteria to send him information and he would Promise complete confidentiality while shaving the next morning I looked at the slow learner in
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the mirror and began to scold myself for procrastinating he told you in person it would be confidential he told you in writing do you want it set to music send him the information so I finally did not long after we sent Buffett our financial
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information so Buffett also talks about the fact that you'll get a response from him really rapidly not long after we said and this another example of that not long after we said Buffet our financial information he called us and told us he wanted to talk soon we were
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in his office in Omaha negotiating a sale and this is more on the speed of the process this can be the fastest deal in history Buffett said but what about due diligence I asked surprised at how fast the negotiations were moving most
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suitors demand to see every scrap of paper you've ever generated and to interview every top manager this wasn't Buffett's way I can smell these things he said and this one smells good that would not be my last surprise surpris I
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asked about a non-complete clause you'll certainly want that won't you I said Buffett Shrugged you wouldn't do anything to hurt this company he said when a guy says that to you he has you on your honor for the rest of your life when Buffett buys a company he's not
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looking for a quick resale to make a buck he told us someone asked one time what my favorite holding period for Securities is and I said forever and that's exactly the way we feel about our businesses when we were ready to leave
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his office and asked if a cab could be called he insisted on walking us to the elevator riding it down with us and standing on the street to wait with us for the cab typical Buffett treatment Warren Buffett's approach to purchasing
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companies is very straightforward he will give you an answer immediately if he has any interest and he will immediately give you a non-negotiable price let me interrupt this real quick I read another I read an entire book called uh Jim Clayton first
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Dream It's episode number 91 of founders about this non-negotiable price Buffett bought that guy's company as well and in that book it was hilarious I think I talked about it in episode number 91 but they start out Buffett's like okay I'll
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give you you know 1250 bid if I remember correctly and they're like okay what about 16 Buffett's like 1250 bid okay what about 15 1250 bid what about 13 1250 bid and they're like okay fine 1250 bid so apparently I'm curious if you if
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you have any other examples of of him of Buffett not of Buffett actually willing to negotiate a price but this is something i' I've seen a few times the fact that he will give immediately give you a non-negotiable price so back to
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this after buying Hillsburg Buffett explained to his shareholders that our ownership structure Ena sellers to know that when I say we are buying to keep the promise means something Buffett continued we like dealing with owners
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who care what happens to their companies and people a buyer is likely to find fewer unpleasant surprises dealing with that type of seller than with one simply auctioning off his business explaining how he makes this hands off approach
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work Buffett said that it was because the managers operate with total autonomy and they do such a terrific job we don't really need anyone to supervise them managers of birkshire subsidiaries run their own shows when we get somebody who
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is a 400 hitter we don't start telling them how to swing now back to Barnett I think if my dad Barnett senior and my grandfather Morris had still been alive they too would feel proud and comfortable that our family business which started in 1915 from a single
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store in Kansas City Kansas had grown by 1994 into a group of 143 stores in 23 states with total sales of $282 million our business was in capable hands as Buffett himself finally described the deal that began on a New York sidewalk we weren't talking
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lemonade stands that is an excert from the book I'm going to talk to about today which is what I learned learned before I sold to Warren Buffett an entrepreneurs guide to developing a highly successful company and it was written by Barnett C
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hellberg Jr okay so I want to jump to the very first page even before the instruction I just read you and he has a very unique uh I guess you almost consider it's like a preface it says a confession of plagiarism and he says I was always
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taught that many many people were out there developing ideas that I could use I have found that to be true throughout my life these thoughts and ideas have all been borrowed or stolen from many wise people therefore this confession I
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have always solicited other other people's opinions and try to listen intently when they were espousing things even this is such an important part too even when I was in pretty violent disagreement therefore I claim only one original idea in my entire life and with
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this book wish only to reveal myself as a plagiarist of wonderful ideas from a lot of great people through the years years think of the world this I love this part think of the world as your garden of marvelous people and ideas
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with unlimited picking rights for you enjoy the flowers and so it's obviously an idea I very much agree with obviously I'm dedicating my life's work to uncovering the ideas from people in the past and and hopefully like push those
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ideas and help help push those ideas rather uh down the generations but it do this idea of like we all use other people's ideas is something almost every single person you and I study on this podcast also did I was telling a friend
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of mine uh one of my favorite quotes which comes from poor Charlie's Almanac which is that uh he obviously uh Charlie Monger is a very an advocate for this idea he's calls himself a biography nut he said he's run he's read hundreds and
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hundreds of biographies he says if he ever had a chance to teach I think he said teach Finance maybe teach business but I'm pretty sure he said if I ever had a chance to teach finance my entire curriculum would just be studying a
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hundred different companies that did something right and did something uh incorrectly uh but my one of my favorite quotes from from Munger is that Cicero is famous for saying that a man who doesn't know what happened before he's
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born goes through life like a child right so you have now it's me quoting Monger who's quoting Cicero back to Monger that is a very correct idea cisero is right to ridicule somebody so foolish as to not know history and so Barnett Jr two of the people that he
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constantly references learning from are his grandfather Morris who started the company over hundred years ago and his dad and so I'm going to tell you this right up front because I discovered this as I went through the pages almost to
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the very end of the book he's constantly talking about what his father taught him he is the third generation that has been trusted to manage this family business right and what's crazy about this is that his dad had been dead for almost 30
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years by the time that this book came out and the book is almost 20 years old itself and that is a main this is such an important part I'm getting like tears in my eyes I don't even know why this is such an important part to reading all
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these books over and over again and you see this pattern the fact that I had no idea maybe it's just because I was younger but I had no idea how it was possible that our the decisions that you and I are making now are going to
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resonate through the generations and in many cases the people that we study are fixing poor gen poor decisions made by previous generations like some of them are positive I um I was just recently thinking about this because when I read
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the book cable Cowboy uh on episode 268 the founder of the cable company TCI that that John Malone's going to come in and and try to rescue really uh his name was Bob Magnus it blew me away in that book right he Bob didn't have a lot of
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money he goes to his father and his father loans him $2500 on a very speculative you know decisions like hey I'm going to jump into this new industry called cable and you know see what happens and it hit me later on in the
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book I'm like Oh my my God that $2500 loan that Bob's father gives him winds up because of business is so successful obviously milone plays a part in that that $2500 loan turns into hundreds of millions of dollars for his grandsons imagine the difference in his
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Grand that one decision had on the effect of the lies of people that weren't even born yet and so the book that I'm holding my hand is an example of like a great dad that took time to to teach his son by example and through action all of the
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importance that he learned the lessons he learned most of which were how to build and run a successful business that generated unbelievable wealth for that family and so when I read a book like this and I get to the end it's not okay
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well I learned all about Barnett hburg Jr and his dad and maybe his grandfather Morris I'm like how do I do that so that was playing through my mind as I worked my way through the book Let's I have a lot of highlights so let me jump into he he gives us the
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background he starts off there's like you know 70 miniature chapters just about lessons he learned what he said what I what did I learn before I sold to Warren Buffett but he starts the book talking about what like what he learned
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as a young child growing up in this family business my father was 14 when he took over the family business my grandfather Morris had a stroke and there was no one else to run this little jewelry shop in Kansas City Kansas
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because Dad was in school the family persuaded an uncle to watch the story each day until Dad arrive from school I don't believe my father ever questioned the family's decision so the year that is happening his dad is 14 has to take
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over the jewelry shop that would mean this is the year 1917 uh at 17 so now 3 years later dad moved the business into a larger grander building and with High Spirits of Youth proclaimed himself a diamond mer Merchant the shop sold the same mix of
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rings and watches as everyone else but that label let the world know that he had big plans for himself and his family business and so we see his dad through his action saying hey I was forced I was kind of like thrown in you're going to
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teach me how to swim he threw threw me into the deep end of the pool uh as like a metaphor for that he does the same exact thing to his son so he says he nurtured and demanded that same positive drive to succeed whatever the challenges
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in his three sons he gave me summertime employment when I was 15 dad knew the importance of learning by doing so of course he started me off in selling and so he immediately feels the thrill of making his own money he starts making his first sale and he says I began to
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have confidence that I could do this it wasn't work it was fun and another main theme of the book is like Hey listen I didn't start this business I didn't found this business people might not even consider me an entrepreneur but he
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has founder mentality and that's the way he thought about himself he had thought about even at such a young age like I'm going to take ownership of this I was an entrepreneur a master of my own destiny I could do whatever I set my mind to
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anything was possible listen to these are all lessons that he got from his dad like I try to do the same thing with my kids I try to Hype them up it's like I don't care what you do just know that if you really love to do it you can do
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whatever you want to do I could do whatever I set my mind to anything was possible I can't tell you where other entrepreneurs get their drive but I'll bet many catch the bug young like I did that feeling that you're Your Own Boss
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that your future is in your hands is a frightening and thrilling Prospect that's something you and I talk about Euphoria and Terror right frightening and thrilling we are addicted to the ones and the tens we are not living how most people like most people live lives
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of quiet desperation right that famous throat that famous quote rather you know they're their range bound between maybe four and sixes entrepreneurs they we get a lot of ones but we also get a lot of tens I became president of hburg
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diamonds in 1962 at age 29 when my father became ill so think about that his dad his dad's at 14 has to take over because his father had a stroke got sick now he now we see that Barnett Jr 29 his father's ill so he's like I need to jump
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in and do exactly what my dad did I was nervous and definitely not ready I made mistakes and had my my share of failures all successful people have failures and the one thing I love about this guy he's just super positive I mean maybe you
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could say yeah you'd be positive too you sold your your family business for a fat bag of cash to to buff it but I do love his optimism his his POS it we're going to uh one of my favorite um lessons that his dad taught him uh which is actually
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lesson number one which I'll get to I think uh indicates like the kind of the kind of family that he that you know his dad set out definitively to try to build it's this idea that you're the master of your own destiny like everybody has bad
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that happens to them so what what are you going to do about it uh so he says I made my mistakes and had my my share of failures all successful people have failures despite missteps entrepreneurs are a special breed who do not give up on their larger goals and
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then this is another example of him having positive role models he he finds Role Models through books he finds Role Models through his family he finds Role Models through mentors and talking to other uh entrepreneurs and business
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people this is the first one I got to see if there's a book on this guy because this is remarkable his name is ying Kaufman uh who W up being uh Barnett's Mentor he says he was a founder of Marian Laboratories and a former owner of the Kansas City Royals
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baseball team he became a pharmaceutical this is why I want to read a book about him he's giving us like one paragraph description of his life uh he became a pharmaceutical salesman in the 1950s and turned his love of people into a
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phenomenal success he beat every quota and earn more than his boss the next year the boss reduced his territory up for the challenge Kaufman sold even more again earning more than his boss the next year his boss cut his commission
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his boss sounds like a terrible person by then Kaufman had had enough he quit and started his own pharmaceutical business packaging his own products in his basement and selling them from the trunk of his car that's exactly how Phil
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Knight and the story of Nike begins he did the exact same thing sold shoes out of the trunk of his car how bad do you want it in 1989 Kaufman sold Maran labs for $6.5 billion and so he's going to bring up uh some lessons that he learned from Yan
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Kaufman several times that's the first time we hear his name but that won't be the last back to Barnett no one has an easy prescription to become a successful entrepreneur if they say they do they're fibbing we just covered this last week
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in that book when I reread 0 to1 Peter teal says it's like there is no formula for entrepreneurship no one can teach you how to innovate the next paragraph is going to Echo uh when in Paul Graham's fantastic essay relentlessly
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resourceful he mentions the best metaphor to describe like the best Founders just like their running backs they they had like if if you think about the running back has one goal he's like I got to get to the end zone but he's
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willing to cut to the left go forward go backwards go to the right he's very flexible on how he's going to get there we see the same idea here entrepreneurs possess an almost naive belief that nothing can stand in their way they are
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mentally deaf to those who belittle their chances they love to compete and they have the skills of Broken Field Runners who take the bumps and bruises along the way change course when necessary and stay focused on the goal if this is not you do not try to fool
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yourself it is not worth it thinking you could search your own business or wanting to Be Your Own Boss just because you hate your job when you really have no desire or stamina to go in on your own is cting disaster where there is no
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real will there is no way some people are more enamored by the concept than by the reality they would rather contemplate the beauty of the mountain from the base the entrepreneur wants to climb the mountain first briefly appreciate the gorgeous Vistas from the
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summit and then find the next Mountain this is fantastic line here if you possess this Obsession of seeing your own creative Notions succeed and are willing to pay the price then you have no choice but to pursue the life of an
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entrepreneur I'm telling you right now you prob already know this talk to all your founder friends they we don't have a choice I've heard A variation of the statement I think it was even Mark hin that made the point he's like I'd rather
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make a $100,000 with my own business than 10 million uh working for somebody else that is irrational but you just have this fire in your belly you must have control over how you spend your time over the work that you're doing and you want the
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independence and as as you and I have talked about before like those kind of people usually have also larger egos or more self-belief so they feel okay if I have the control of the independence I will get the money anyways but I love
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what he said this he like listen if you possess a Obsession of seeing your own creative notion succeed and are willing to pay the price you have no choice but to pursue the life of an entrepreneur my own particular motivation included an
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obsession with proving wrong this is really fascinating proving wrong the shirt sleeves to shirt sleeves in three generations myth he calls it a myth it is something that's repeated over and over again because usually this this
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plays out where you have somebody I call them generational inflection points some people say it's like the founder the family founder or the founder of the family I think it's probably a better uh line to use usually they come from you
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know not doing too well financially they are the ones that change their financial trajectory of their family forever then you have usually passed on to the next person but by the by their grandkid time people that did not have to work for the
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wealth usually are the ones that squander it so that is a a well-known uh you know idea through history that shch sleeves to shirt sleeves in three generations you start poor that one family founder gets you rich and then by by the time you get to their three
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generations later they're back to shirt sleeves the other way I heard this was uh Dan Carlin talked about this in his fantastic podcast hard hardcore history it's like uh wooden wooden clogs wooden shoes walking upstairs glass slippers
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walking downstairs it's the same exact idea it's just a different way to describe it and then I'm going to finish a section with his mentality on this you don't have to start a business in order to be an entrepreneur I certainly did
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not I think founder having founder mentality is more important than if you actually founded the actual company you're working with I know a ton of CEOs that did not start their company but they have founder mentality so this is exactly what he's talking about here you
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don't have to start a business in order to be an entrepreneur I certainly did not some people inherit small businesses or are thrusted in leadership in them like I was others run entrepreneurial departments within larger Enterprises
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there's a ton of people that listen to Founders that are that this describes them completely the ideas in this book will help those entrepreneurs too I just think the idea of thinking thinking of yourself like a Founder thinking of
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yourself like an entrepreneur is the important part there it can be the greatest job in the world okay so now we jump into all the different lessons that he learned before he sold to Warren Buffett starts out with one that he learned from his father
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says you should only concern yourself with things that you can control when growing up I was intrigued that my father only concerned himself with those business elements that were controllable he refused to acknowledge the depression
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and did quite well during that period he was unwilling to talk about recessions or 20 and snowfalls his he only thought about and talked about those conditions within his control dad was a great believer in not sweating the small stuff
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he taught us to concern ourselves only with those things which we have over which we have control I thought he was unique in this until I realized this is one of the key common traits of Highly Successful People those folks are never
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victims they take what comes and handle the situation the rest is a waste of time then we jump ahead to another lesson remember he started out the book saying hey I don't even have any UniQue Ideas I just listen when other smart
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people say things and if it makes sense I'm going to use that for my business we see this uh idea so the not myself is upgrade the herd annually or what is the highest and best use of your time um I guess you know what I'm going to read
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you my this Charlie muger quote that that popped my mind when I got to this section Charlie says intelligent people make decisions based on opportunity costs so in other words it's your Alternatives that matter that's that's
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how we make all of our decisions he's saying that's how him and Warren make all their decisions let's jump into this lesson that Barnett learned from another founder when you're when you're operating a group of retail stores there's always a usual bell curve of
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weak to Great performing stores at one point we were struggling with the store doing $800,000 in volume and through gargantuan efforts trying to get to 850,000 in annual sales so one store trying to increase it it's struggling they're trying to bump it up by another
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$50,000 a year much conventional practice dictates commit great effort to the weakest segment when I discussed this with my friend Steve liberman uh he he's a hot dog magnet who ran hundreds of Carol snack bar bars uh in shopping
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centers for many years he said you make more money closing bad stores than by opening new ones his philosophy made sense we decided we would rather spend time and effort on a $4.5 million store that could ultimately achieve 6 million
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in Revenue than on lower volume store with less potential so instead of trying to bump up 50,000 and dedicating all these resources let's focus on something is already doing well and get and get an extra 1.5 million is what he's saying
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here did this mean we gave up immediately when things did not work absolutely not if the store lack great people proper merchandising or other controllable variables there's that word control again by all means we fixed it however our attitude became to upgrade
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the herd annually closing the weakest stores each year and then he goes into his reasoning behind this each activity you undertake exacts the price of not being able to pursue pursue alternative activities this is sometimes called
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opportunity cost what is the actual cost of sending a highly talented person to create an average performance out of a dry well rather than sending him or her to a gusher that can be turned into a super gusher then he extends this idea
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by talking about something he learned from Warren Buffett perhaps one of the key reasons Warren Buffett has been the world's most successful investor he does not buy turnaround opportunities something that Buffett spends a lot of
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time discussing over many years in his shareholder letters he doesn't believe turnarounds turn turnaround uh he does not buy turnaround opportunities only successful companies focus is your lever to success do not underestimate the
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incredible amount of mental discipline it takes to focus yourself and your teammates wonderful Alternatives and seductive opportunities abound and temptations to go in multiple directions are unlimited that is he's writing these words in 2003 now imagine how much
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Temptation and distraction we're exposed to on a daily basis almost 20 years later way more than than the world in 2003 uh this sings to this is the last thing I'm going to read to you from the section but this sings to my soul commit
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yourself to be the best Define what that means and focus on the head of that pin like no one in your industry I got to read that again commit yourself to be the best Define what that means and focus on the head of that pin like no
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one in your industry and he's got another great idea uh I'll probably reference Estee Lauder several times uh episode 217 if you haven't listened to it yet highly recommend you do so she was maybe the best practitioner of Paul
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Graham's idea that you should do things that don't scale uh what Barnett has says here is that just providing Super Service is actually a friend to the entrepreneur it's something that you can do that giant companies can't and so he talks about
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you know going to a locally owned grocery store he says I went to the grocery store to get a few items unloading the groceries I found that the home phone numbers of the owners Mike and Libby were listed right on the sack
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with the invitation to call if I was not happy with the store it was clear that the owners took responsibility for good service what I also liked about the book is at the end of every chapter he's got all these quotes that he loved usually
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from other Founders or other interesting people throughout history you know I'm a sucker for maxims this one I actually read a biography on Thomas Watson uh it's called the Maverick and the Machine Thomas Watson senior in the making of
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IBM I did that a long time ago uh I think it's episode 87 uh but he put this at the end of one of the chapters that I really loved a quote from Thomas Watson who said to be successful have your heart in your business and your business
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in your heart another lesson from his father the importance of keeping your ego in check that it could be used to to drive you but you have to you should hide it people do not like arrogance on other people and his father so his
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father um has quoted a bunch in the book at the end of these chapters like I was just referencing these maxims he puts in there and this is the way I could basically you could summarize the main idea in the entire chapter in one sentence and it's quote from his father
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it says big people grow little people swell so again the name of the chapter is keeping your ego in check big people grow little people swell so then he talks about another idea that he learned from his father this is going to happen in the mid 1960s
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his father had this idea of uh he calls it the the two supplier principle and then this is the first time he mentions this uh or the first time I mentioned to you but it's mentioned a lot in the PO that they were his father and everybody
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in the company's like don't burn a bridge this is repeated not do not burn a bridge is repeated over and over again in this book and so this was the first introduction I heard about the two supplier principal one bitterly cold
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January in the mid-1 1960s I went to our bank uh one of the banks actually uh to the First National Bank of Kansas City to make our routine loan we needed to cover the checks that we sent out the day before to our suppliers for the immense amount of merchandise we had
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bought for the Christmas season the month prior we had a long-standing relationship with First National Bank going back 30 years we had gotten the usual letter reassuring us that a $500,000 line of credit was available to us when we needed it we hardly noticed
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at the last paragraph of the letter which would resend the bank's obligation if our cred Credit Credit worthiness changed to our shock and surprise the bank refused to loan us the money one particular director of the bank felt
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that we were not creditworthy so they just sent out a bunch of checks there's not enough money in their bank account to cover those checks they're in dire need and so they the bank's not budging even though they've been uh had a
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relationship with them for 30 years we'll come back to that in one second so what did they do we immediately drove over to the Security National Bank uh where the family that owned the bank had served my dad for Untold years now that
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guy who had worked with his dad now his son is in the bank so this guy named Morris Brendan Thal Jr had only one question for us how much do you want so back to Barnett we came to the precipice and we were saved by the two supplier
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principal when at death's door you may be saved by a relationship we were did we continue to now this is what he means about you know maybe other people would be mad hey we we're customer reviewers for 30 years how dare you you change uh
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our relationship overnight you put like you could have put us out of business you know we're done here Barnett did not do that he says did we continue to do business with both Banks yes absolutely never burn a bridge was our Mantra and
32:50
we still wanted two suppliers and then he has parting advice in this chapter get your second sources now when you do not not need them and then he quotes this great African proverb on this chapter that's about the need the need to test uh your new ideas and it says
33:07
only a fool tests the depth of the water with both feet and so in the 1970s and before it was a long-established uh like idea in their industry that you should handle the financing and the credit for extending the credit uh to your
33:23
customers yourself and then one of uh Barnett's Executives is like no I'm pretty sure like we could Outsource this and then just focus on the one thing that we're actually really good at which is selling diamonds so he says the stakes were high in terms of the loss of
33:34
interest income and fees from outside providers of credit so Marty chose one of our best store managers to test his idea that jewelry stores could make more money if they focused on selling diamonds so this is his hypothesis right
33:47
we're actually going to make more money if we focus on selling diamonds and left the credit business and interest income to Banks and other lenders who were experts in such things and so one principle at play here he's like listen
33:58
if you're going to test something you think is important it's going to be really important to the future of your business put one of your best people on it that's what they did they picked a great store they didn't do a test in a
34:06
crappy store and then couldn't figure out did it work because it's a crappy store did it did it work because it was a crappy idea it's like well no this guy's really good he's really smart he's one of our best let's let him test it
34:15
after and it wind up being success and then this is what they did next after our test of Outsourcing customer credit we could now say to the other stores it had proved to be successful as each of our stores began to implement the new
34:25
system our total focus on buying and selling diamonds remember he talked about the importance of focus he said in a previous chapter that focus is your lever to success and the implementation of that is obviously a competitive Advantage because I'm not sure humans in
34:38
general can focus on many things and certainly not in today's day and age so that is also going to be a main theme over and over again that focuses a lever to success we just see this here it says Hey as each each of our stories began to
34:51
implement the new system our total focus on buying and selling diamonds and not being in the banking business brought incalculable dividends and so reducing that lesson down back to that proverb which is fantastic only a full test the depth of
35:05
the water with both feet and so then Barnett talks about this maximum that he learned from his dad that business is people and he actually if you just treat people better and don't create inhospitable environments you wouldn't
35:16
Imagine That C that companies do this for their customers but you probably see it every day in your day-to-day lives that that's actually an advantage and an edge that you can have this is going to remind me of uh Paul or pH I always
35:28
pronounce his name incorrectly but it's the founder of kikos uh I covered his fantastic autobiography called copy this uh back on episode number 181 but uh let me actually read that section from the the copy of this book because I think
35:40
it's F it's fantastic and it's gonna it's going to Echo uh what Barnett discovered uh with rival jewelry stores and how he actually just did the opposite and so Paul writes uh Paul is essentially just spent his time traveling all over the country visiting
36:00
Kinko stores looking for the best and the worst ideas and then spreading those ideas through the network of stores and so Paul says some of our partners created an inhospitable climate for customers some posted negative signs
36:11
remember this for what I'm about to read to you in this book at one store a manager hung a sign in red warning customers that they would be charged a steep fee if they bounced the check it said the bank doesn't make copies and we
36:23
don't cash checks that really got me boiling I jumped on the counter and ripped it down as customers and co-workers looked on amazed that may sound extreme but I needed to make the point in a memorable way I don't want signs like this staring our customers in
36:40
the face I told our co-workers so Paul wouldn't ever use the um the term employees he hated that term he considered everybody co-workers I told our co-workers that the occasional hit that we took for a bounce check cost far
36:54
less than we lost and and could not quantify by creating a subtly hostile atmosphere and so this is Barnett's version of that you've probably seen this this sign everywhere if you go into like a a a shop or or store rather says
37:09
hey don't bring your food and drink no food and drink he's like well I'm just going to do the opposite bring it all in let's go one of the best things we did was to invite Shoppers to bring their food into the store with them ice cream
37:19
cones hot dogs with mustard no problem the standard store sign in a mall says no food or drink r said your food and drink are welcome here we were trying to say we are here on your terms and we are different just a few quick lines here
37:37
which I thought was fantastic he puts a a premium on speed and urgency he says you need a constantly be moving with a sense of urgency by acting with a sense of urgency you are modeling the behavior that you want from your Associates so
37:49
he's saying this starts with a leader and works its way down nearly any action or communication means far more when done UR urgently and he quotes this fantastic uh I I love this maximum this is from Alfred Adler who apparently was
38:03
a psychologist and author and he says trust only movement I've been rereading a lot of my highlights from the two or three books that I read on Andrew Carnegie and I'm pretty sure I'm getting ready to reread his autobiography because it's just been
38:20
top of my mind so much and I've been spending so much time thinking about it but he says something very similar it's like I love that Maxim it's like hey we're only going to trust trust only movement Andrew Carnegie says as I grow
38:30
older I pay less attention to what people say and I just watch what they do that makes me think of my favorite one of my favorite maximums which is actions Express priority we are only what we actually do not what we profess to believe here is a few great quotes uh
38:45
one person the this is the importance of of belief one person with the belief is equal to a force of 99 who have only interests and the second one is is uh this is actually anonymous quote quality is never an accident it is always the
39:01
result of high intention sincere effort intelligent direct Direction in skillful execution it represents the wise choice of many Alternatives and I guess I should have told you what that chapter is from his his whole point is that it's
39:17
the the execution that matters a ton of people have ideas execution is actually the key so I just skipped over that and gave you the two maximums at the end because I thought it illustrates that point better so I'm jumping ahead a
39:27
little bit this I absolutely loved because you and I have talked about this theme over and over again none of this works if you can't trust your own judgment when you're learning from history when you're learning from other people you're going to find conflicting
39:39
advice the only one that knows if it's actually going to work is you so it says one of my most prized mentors shared his wisdom you don't need shopping centers you need business districts I took that as gospel and did not think things out
39:53
on my own remember none of this works if you can't trust your own judgment I took that as gospel in this case he's not even using his own judgment right and uh I took that as gospel and did not think things out of my own the country was
40:04
about to explode in the muling of America we elected to pull out of our lease in one of the first 11 covered malls in United States his this is this winds up being his entire business it takes place almost exclusively in malls
40:19
and he's like hey we'll just run away from this giant Trend that could help our business so that's what he's describing here we elected to pull out of our leas and of the first 11 covered malls in the United States this was a
40:28
nearly fatal error causing us to waste years of precious time and resources and he did it because one of his prize mentors is like hey get the hell out of malls years later we and our adviser realized that our avoiding malls was not
40:42
the right posture we pursued malls locations slowly at first and then vigorously later and so this is what he learned from that he who takes bad advice is the one and only culprit in the scenario advice is advice not a command that is fantastic advice is
40:58
advice it's not a command the mall locations later became the success of the company we nearly put ourselves out of business by staying out of them and then he quotes one of my heroes Benjamin Franklin who said the only place where fools May learn is the school of
41:17
experience I spent a few hours actually in a used bookstore yesterday this place was a treasure Trove I left with like six or seven books I think I think I got seven books for $100 and one of them the most expensive book was actually a
41:32
biography first on Benjamin felin first published in 1938 it is a beautiful like leatherbound book it was like wrapped in plastic uh never been uh like actually opened and used and that was for that one book alone was 40 so it's 40% of the
41:50
cost because it was $40 out of the 100 um I can't wait to get to it though so I'm almost going to feel bad about taking notes and and marking up that book but I'm going to and then we move ahead this is about barring wisdom and
42:02
knowledge about your business again main theme of the book book he's going to talk about his father he's going to talk about his grandfather he's going to talk about his mentor he's going to be talk about the books he reads fact he leaves
42:12
at the very last page is just like a a reading list of all these books that were helpful for his business and the main theme of the book is like learning from the experience of others he talks about the fact that he does not think he
42:21
was the smartest person in his company by far and so one way to fix that problem was just find out what people smarter than him had thought humans have accumulated incredible amounts of knowledge over hundreds of years and it's constantly being refined through
42:33
experience this reservoir of knowledge and Human Experience creates tremendous opportunities and advantages for you as an entrepreneur you are heir to the discoveries of many entrepreneurs who skin their shins trying something new it
42:46
is likely other entrepreneurs before you have experienced the same challenges and problems and found ways to surmount them you do not need to invent a new industry to start a new business studying an existing industry and do just study in
42:58
existing industry and just do it lots better Henry Ford did not invent the automobile nor did Kinkos invent copying that's funny then he mentions Kinkos because I just referenced the fact that they had similar ideas uh a few chapters
43:12
ago you have the experience of thousands of experts and mentors at your fingertips and then he brings up something that Steve Job said that I I've tried to use as well because I think he just genius advice he like just reach out and ask somebody in his case
43:27
like pick up the phone call that's exactly what Steve Steve would say too but he's like listen Maybe you try to get in touch with some maybe they're going to be unwilling to talk to you but what's the worst case scenario you
43:35
wasted a phone call what a fabulous risk reward ratio many business people will reach out to share what they've learned why not listen to many people Ponder what they have to say and then follow your own instincts the incredible wonderful and
43:48
unavoidable truth is that seeking the help of others can put you light years ahead of other people who beat their heads against the wall trying to reinvent the wheel there's an interview I've mentioned this a million times
43:59
according to this I took first took notes on this in August 4th 2019 and Steve was talking about the fact that he just picks up the phone and call he's just like I always ask for help and more times than not people will help and he says I never found anybody
44:12
that didn't want to help me if I asked them I called up Bill huet that's obviously one of the co-founders of HP when I was 12 he answered the phone himself I told him I wanted to build a frequency counter I asked if he had any
44:21
spare parts I could have and he laughed and laughed and laughed he gave me the parts and then he gave me a summer job HP working on the assembly line putting together frequency counters I have never this is this punchline here I have never
44:31
found anyone who said no or hung up the phone I just ask most people never pick up the phone and call and that's what separates the people who do things versus the people who dream about them you have to act and so Barnett's point is like
44:45
what's the risk reward ratio right they say no they never answer or they don't want to talk to you okay I wasted you know a couple minutes of my time or you wind up having a conversation you learn something valuable for your business may
44:55
make you million ions and millions of dollars over the course of your lifetime or you and and or you develop like a lifelong friend it's like that's a fantastic and I don't mean just go out and spam people I would find a way if I
45:06
was doing this I find a way to like provide value to them first you know and then ask them the question I had one of the best uh cold messages I ever received was from this like think it was like a 21 year old kid still in college
45:17
at the time uh his name is Michael actually and he just messaged me I didn't know who he was then he had listened to the podcast and he's like hey I took this idea that I learned from your podcast I made a video on it and I got I don't remember it was like 3
45:30
million or 10 million views or some I forgot it was some crazy stuff like that I was like he's like can we talk I'm like you did what that is a really good because he's like hey I can show you how to do this you can like G take the ideas
45:41
rehash them gain attention and then you get more listeners that he got attention by showing hey I actually have Val I can actually provide value to you as well so I just like that idea most people never pick up a phone and call that's what
45:51
separates the people who do things versus the people who just dream about them you have to act so then Barnett gets into the importance of at the more uh the more experience you get the more you should start to trust and actually
46:02
follow your gut this is something Steve Jobs talked about like the later in life he got the more he valued his own intuition he said intuition is a very powerful thing more powerful than intellect in my opinion and it's had a big impact on my work so it's Steve Jobs
46:15
this is what Barnett said about that to some people his ideas put the company he's he's talking about his dad I I should have backed up and and read something on the next the previous page so it says like many successful
46:25
entrepreneurs I've since met dad relied on his intuition as much as he relied on his business plans and Market forecast to some people his ideas put the company on on the limp but to him the ideas felt right and usually they were right on Dad
46:37
listened to other people he loved mentors but perhaps because he started out so young and had to rely on himself remember he started out on the business he's 14 he learned the value of tuning out other people's voices when they
46:47
became a distraction and listening to that pristine inner voice that is in all of us your inner voice talks to you through your gut feelings your gut feelings or intuition emanate from your unconscious mind he he he says uh your
47:02
your unconscious mind is a repository for all of your life experiences and then some and he Compares uh Warren Buffett using his intuition to buy as part of the way he bought hburg diamonds when Warren Buffett bought hburg diamonds he felt so positive about the
47:15
deal that he cut out the usual due diligence to speed negotiations sure Buffett did his homework but he also had a strong intuitive response I can smell these things he said and this one smells good trusting your gut isn't meant to
47:28
mean isn't meant to replace using your conscious brain the two work together and then he's got another great quote uh to end this chapter from Warren Buffett who says my idea of a group decision is to look in the mirror and then this is Barnett on
47:43
making sure that you're prepared to take advantage of luck he calls this on how to have uncanny luck this is going to remind this reminded me actually I think we talked about this uh I'm pretty sure it was in the Peter tals books 0 to one
47:54
it might have been in Paul Graham's essay but it was a quote from this famous explorer called Ral amiton and he says Victory awaits him who has everything in order or luck as some people call it this is what Barnett says an example of
48:08
luck would be my chance meeting with Warren Buffett on the streets of New York I was prepared because I'd been attending his annual meetings for a few years and I felt I knew the kind of person he was I was also in New York dealing with the very subject I spoke to
48:21
him about which was selling the company and there was top of mind and it was a top of Mind awareness of my mission add in the unmitigated goal to walk up to him introduce myself and offer to sell the company to him and you have an
48:35
uncanny case of luck and then like almost every entrepreneur Barnett spent some time talking about the importance of making sure you're only working with and hiring the very best people you absolutely can he actually got something uh from
48:49
another entrepreneur says Larry BOS former head of Allied signal said good people hire good people I fear the reverse is true also when I got to that page made me think of something Max leevin said uh my in that book uh the
49:03
founders which is a story of PayPal and the entrepreneurs who shaped Silicon Valley written by my friend Jimmy Sony that's actually episode 233 if you haven't listened to it but Max said something that was very interesting is like at the very early days of PayPal
49:14
they kept the bar for talent like exceedingly High you know this is like the the Genesis of the PayPal Mafia which is well known in uh like the Silicon Valley the technology industry and Max would repeat over and over again
49:27
and he was doing this you know 20 almost 25 years ago and he says something very similar to what this guy just said good people hire good people but I fear the reverse is also true max kept repeating a players hire a players b players hire
49:40
C players so the first B player you hire takes the whole company down and he ends this chapter with a quote from Bill Gates that I've never seen before which illustrates this point effectively the greatest thing you could do for your
49:53
competition is hiring poorly this is another example of the importance of focus uh and not only focusing like your time and attention what you're focus on but also focusing your product line you wouldn't think that a company called hellborg diamonds
50:10
uh sold luggage or radios but at one time they did and so this is him correcting that mistake we had decided that the future course of hburg diamonds was indeed in diamonds and that we should discontinue non- jewelry lines of merchandise we phased out lines of
50:24
merchandise such as China Crystal silver luggage and radios we believed that the dollar volume of business would decrease but the profits would increase so saying on a store an individual store level we're like Hey we're going to cut all
50:40
this crap out the dollar volume of the business might go down so our Revenue might go down but our profit would increase our profit margin would increase wrong we were wrong both volume and profit went up this was when we
50:52
found out that less is indeed more focus is a lover of your success so then he brings up another lesson that he learned from his dad in a chapter called digging out the answer I'm always delighted when someone in a group can view a scenario in a wholly
51:06
different way and suggest an unexpected solution to what seemed to be an intractable intractable problem I've seen it happen so often I'm convinced nearly any problem can be solved by bringing together a variety of smart people to brainstorm my dad quoted a
51:20
slogan for the tactic that was printed on the agenda for every executive meeting all of us know more than one of us and then he quotes his dad again at the end of this chapter there is always an answer and he goes back to this idea
51:37
of the importance of having mentors of learning from other people but I like the way he thinks about this my personal vision of mentoring is that no individual advice will necessarily fit you I see mentoring as a process of
51:49
brain marination when your brain is adequately marinated you will look in the mirror and a light bulb on top of your your cranium will Flash the answer that best fits you and your situation it may be a combination of your thoughts
52:02
and some you received from your mentors and he ends this chapter with one of my favorite Charlie marger quotes where Charlie's really talking about the role that he played with Buffett in birkshire I just the discipline this is
52:16
so important just the discipline of having to put your thoughts in order with somebody else is a very useful thing and then he talks about towards the end of the book he talks about the more successful you get the more people around you that rely on you for the
52:30
success it's really hard to get honest feedback the greatest the great I don't know why things like uh like certain things stick in my mind when they do but I read um the founder of UPS Jim Casey I read a biography of him back on episode
52:43
192 and he realized this too where he's just like man I can't I'm can't sure if like the information I'm getting from my executive team is not filtered so he would just every time he was out and about when anytime he saw a up UPS uh
52:55
you know the UPS Brown trucks he'd ask his driver to pull over and he would just go and talk to him he like these are the people that have the best information for me because they're on the the front lines they have direct contact they're lifeblood of my
53:08
organization but they have direct contact with the customer and so Barnett has three questions where he's like this is I ask these people three questions in a way to force to get honest feedback number one what am I doing that you like
53:19
number two what am I doing that you do not like and number three what am I not doing that you would like I highly suspect you may get like muddy answers for the first two questions but that third question will probably give
53:31
you some useful ideas what am I not doing that you would like another lesson from his dad Bad Boys move in silence you and I talk about this over and over again Dad was the ultimate extrovert yet he told me that the right strategy was
53:44
to be quote a sleeper that is not to be known for Success when it did come interestingly this thought was also confirmed by Leonard Lauder of Estee Lauder when I covered so in that book The Autobiography of sa Lauder Leonard is still like a young man
54:00
um part the beginning of the book he's in college actually now I think he's still live to the stat I think he's like late 80s uh but this is a quote that uh that that Barnett her learned from him Leonard Lauder of Estee Lauder uh told
54:12
an audience of entrepreneurs don't communicate your success so that's another idea from his dad be a sleeper uh Leonard ler says don't communicate your success and then he actually ends the book on something that's very important
54:25
to me it's why the title of episode 222 is my personal blueprint it's this idea that entrepreneurs are prone Founders are prone to get wrong like how do you balance your life how do you balance your work play meaning having fun Children Health and money and this also
54:43
ties into what you and I talked about at the very beginning of this podcast like the decisions that we're going to make are going to resonate they're not they don't just affect our lives they affect the lives of everybody around us right
54:53
now that we're actually going through life together right but also future generations and I think if we view you and I view our decisions like that we're going to make better decisions like hey this what not just today what is this
55:05
going to happen what what's the consequence of this 10 20 years from now what if my grandkids read about the decision I'm going to make today will that will I change that like will that change what I'm about to do here what do you want to look back on when your
55:19
children or adults and then he ends on this fantastic quote that puts this into perspective I wish that I had known sooner that if you miss a child's play or performance or sporting event you will have forgotten a year later the
55:33
work emergency that caused you to miss it but the child won't have forgotten that you were not there and that is where I'll leave it thank you to the person uh that actually sent me this book the person on Twitter that actually sent me this book I did
55:49
not know it existed if you want the full story if you buy the book using the link that's in the show notes in your podcast player or by going to Founders podcast.com you'll be supporting the podcast at the same time if you want to
55:59
use the same app that I use and that I love to store all the highlights for the books that I read and all the notes so I constantly remind and go back and reread them you can test it for free for 60 days and see if you like it as much as I
56:11
do it's an app called readwise I'll leave the link down below but you can go to readwise doio Founders and they'll give you 60 days for free that is 279 books down 1,000 to go and I'll talk to you again soon and