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Last year I read the Warren Buffett biography The Snowball. It was a deeply researched, well written and wonderfully entertaining book that I find myself thinking of often. I arrived at the task with trepidation; after all, I was on the record as a Buffett skeptic. Take for example his well-known ideology of radical frugality— it seemed to me like a dull, uninspired way for one of the richest people in the world to live. How was I, a known lover of Nice Things, supposed to connect with a man worth $137 billion who still lives in a house he bought for $31,000?
To my surprise, I devoured the book and, while I won't be joining the Warren Buffett Church of Immaculate Frugality, I was taken by the unbelievable depth of his intellect, the thoughtfulness behind his philosophy, and his simple ability to win.
One of the enduring lessons I took away from The Snowball was not Buffett’s focus on making money so much as not losing it. He has famously said, "the first rule of investment is don't lose. And the second rule of investment is don't forget the first rule. And that's all the rules there are." Over a 70 year career, I was struck not by the enormity of his wins but rather the utter lack of losses and his maniacal focus on fundamentals.
This is an influencer marketing newsletter so let's cut to the chase, what can we learn from this prodigious investor? I think it's worth asking if we have become virality-obsessed as an industry. Chasing trends, unhinged social stunts, briefs that increasingly have nothing to do with the product or its benefits. It can all start to feel like gambling or speculation. Amongst this frenzied pursuit of virality I think we could all do with a little of Buffett's perspective and remember the fundamentals are still what will create real value in the long term. He famously said,"the line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs."
Here are 4 more lessons we can learn from Buffett:
1. Minimize your losses. The posts that bomb hurt your performance as much as the over performers help. I find it easier to minimize or eliminate the poor performers than it is to achieve virality. Focus on your duds and work to get rid of them.
2. Buy the best. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Companies chasing virality often try to work with a huge amount of mediocre influencers and pay as little as possible. But the end result is just a huge amount of mediocre. Sometimes it makes sense to pay more for someone who is truly great - reducing the chances of being disappointed and increasing the likelihood of truly great results.
3. Focus on fundamentals. Not all eyeballs are the same— chasing virality pushes into audiences who are likely not even your target customers with messages that often don't add up to a compelling product pitch (if they attempt one at all). What are we really gaining from this? Instead of chasing virality, companies that focus on getting their messages to their target audiences in a compelling way, consistently, will more dependably achieve results.
4. "Price is what you pay, value is what you get." While we don't have much control over what an influencer charges, we can work to control the value we obtain from that partnership. Good briefs, collaboration with the creator, straightforward messaging and limited key messages will always drive outsized value.
We operate in a free market and a free market is known for nothing if not the driving inertia of inevitable and unceasing change. And yet: I think it is telling that the most successful investor in history - a man who started investing in 1956 and saw almost everything about the world change - has changed almost nothing about how he wins in that time. "You know ... you keep doing the same things and you keep getting the same result over and over again."
I am in LA for meetings and reminded of the power and perfection of The Sunset Tower, maybe it’s the New Yorker in me but it is one of those magical places where I just feel at home the moment I walk in. If you come to LA and don’t stay there at least make it to the bar for a martini and some jazz from the trio that plays there every night.
I am currently reading The Idiot by Elif Batuman. Coincidentally, this is the second book by that title I’ve read in the last year (the other being the 1869 novel by Fyodor Dostoevsky from which Batumant borrows her 2018 work’s appellation). Which Idiot will reign supreme in the confines of my heart, I will let you know at its culmination.
I’ve been thinking recently about some of the things that pushed me to live a more creative life when I was younger and thought about this surf video I loved when I first saw it 13 years ago. It doesn’t do the same things it did for me all those years ago, but listening to him talk about creativity and cold ocean swells and the weight of water, I can get back into that mindset and place, it feels warm and I remember how far I’ve come and how far I have left to travel.
Cheers,
JAMES NORD
Founder & CEO
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