What Does It Take to Finish? (Charlie Munger)
Posted June 23, 2023.
Est. Reading Time: 5 minutes.
“There is a greater chance of concluding a reaction when “what is needed” to start and finish is considered.” – Shane Parish.
The Berkshire Hathaway Annual Shareholders Meeting took place on May 6, 2023. Over 30,000 people attended to hear Chairman Warren Buffet and Vice Chairman Charlie Munger respond to questions.
Buffet does much of the talking. Munger does less – seldom giving to-the-point responses.
In Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger, Munger’s stepson Hal Borthwick shared,
Yet Buffet is indisputably the star of the event, and his personality takes the spotlight. Charlie Munger has perfected his role as the curmudgeonly sidekick, and in fact seems to enjoy the straight-man role. But the guy you see sitting next to Warren, that isn’t Charlie. That’s an image he’s cultivated… at the end of the day, that isn’t the real Charlie Munger that’s sitting up there.
What does the Munger persona accomplish for the Buffet-Munger duo? It is a constant throughout Berkshire’s history of annual meetings. On its surface, it’s simply a sharp contrast between the duo that allows Buffet to shine. Yet digging deeper, the ever-present persona holds harder-to-see wisdom.
In response to a question, Buffet shared, “Charlie and I said it, if you want to figure out how to live your life, you write your obituary and reverse engineer it.”
Cultivation of your image starts with who you already are, to produce who you want to become. This is why the Munger persona works for Munger. This is also why it cannot be guaranteed to work for you.
Having revisited Janet Lowe’s Damn Right, here are three examples of how Munger reverse engineers to cultivate something or someone of value, first considering who he really is and what he really wants to achieve.
1. Start by understanding what you’re born with.
In the foreword to Damn Right, Buffet spoke about Munger’s “special character”: “He was born, though, with these abilities. It’s how he has elected to use them that makes me regard him so highly.”
Munger had to understand his nature – strengths, personality, limitations. He then had to figure out how to use it and what to achieve with it.
Lowe shared multiple examples of Munger’s reflective process: After joining the Army Air Corps in 1942, Munger recalled, “I said I wanted a lot of children, a house with lots of books, enough money to have freedom.” After being ordered to study meteorology, Lowe shared, “he knew he wasn’t as talented as his best teachers… Charlie realized he never could be as good as that… To go into a calling where he would not be exceptional was not in Charlie’s thinking.” Munger also had to adapt over the years: “He had grown up in the households of a judge and a business lawyer and had been exposed to lawyerly thinking all of his life. He also was opinionated, almost to the point of arrogance… Munger later came to realize that conversational gambits of that type were foolish and impeded his progress in life.”
To figure out what you can use, first understand what you’re born with and what you’ve developed. Reflecting on your strengths is half the process: Often, your assets depend on your current context. Emphasizing these current assets overlooks your potential value given different circumstances.
2. Build your reputation, preserve your reputation.
Munger is known for championing behavior as an investment: “Aways act as honorably as possible. How you behave in one place will help in surprising ways later.” Yet building reputation only for individual benefit is a misinterpretation. For Munger, reputation has always circled back to something greater that he has built. Reputation became important because it helped him establish and preserve legacies.
First, Munger understood the value of inheriting fruitful legacies. He recalls Buffet’s early advantages due to family legacy: “Being surrounded by right values from the beginning is an immense treasure. Warren had that. It even has a financial advantage. People touted Warren partly because he was a Buffet and people trusted the Buffets.” Munger also preserved his own inherited legacy: “For years after his father died, Charlie carried Al Munger’s [his father] briefcase to work. He had it engraved “Alfred C. Munger 1891 – 1959. Charles T. Munger 1924 – .” He no doubt he liked the briefcase, but it also served as homage to a loyal and supportive father.”
Second, Munger understood legacies require people who want to inherit and preserve them. After his divorce in 1953, his daughter Molly Munger recalled, “Charlie went to great lengths to help the children realize that he was still their father and responsible for their well-being… Every Saturday he was there. Every Saturday he was cheerful. He took us to the zoo, pony rides, took us to see his friends.” In business, an example comes from Ron Olson, an American attorney who came to work at Munger’s law firm after he left: “Charlie was not with the law firm. But his values were very much part of it. I heard stories about him when I was recruited, and to this day, recruits who come through this firm hear Charlie Munger stories.”
Build reputation for a higher purpose other than personal gain. Reputation alone can surely lead to personal advantages. But only legacies have the potential to be inherited by others. In essence, they are an extension of your reputation. They account for what you started with and what you ultimately leave behind.
3. Be intentional about your partnerships.
Munger could have been successful had he ventured into business alone, yet he often established partnerships. Knowing his own potential for success, why has Munger sought partners? Because he understood certain people could allow him to use his special character to the fullest.
What makes finding the “right” partners difficult is the temptations of personal advantage in every possible human interaction: the consequence of only prioritizing immediate needs and goals. The danger lies in confusing partnership value for the value of something else you’re after.
Once you find the “right” partner, it becomes easier to value it above personal gain. Buffet shared of his own partnership with Munger: “He has knowingly let me and others have the better end of a deal, and he has also always shouldered more than his share of the blame when things go wrong and accepted less than his share of credit when the reverse has been true.”
Munger will reach his 100th year next January. His age hasn’t stopped him from sharing practical wisdom in business and many other aspects of life. And given his age, one might often wonder why he continues to reverse engineer. The answer might be quite simple: because he hasn’t finished: “To finish first you have to first finish. Don’t get in a position where you go back to go.”
