Charlie Munger

Buffett: we set up Berkshire so we can never run out of money

Ramit recounts that at Berkshire's conference, Buffett and Munger said they structured the company so they can never run out of money, which Ramit finds more inspiring than squeezing out an extra 1.5% return at far higher risk.

“When I went to Omaha to see Warren Buffett at his conference, one of the things that he and Charlie Munger said was, we set up Berkshire so we can never run out of money.. And to me, that is way more inspirational than I eked out an extra 1.5% return at a much higher risk rate.”

Nobody wants to get rich slow

Sam and Shaan on index-fund investing: the vehicle is available to everyone, but the catch is you need a big base and 15-20 years of compounding. Shaan cites Charlie Munger's answer for why few do it: 'No one wants to get rich slow.'

“And like Charlie Munger once said, when they asked him, hey, your guys' playbook seems pretty simple, why don't more people do it? He said, No one wants to get rich slow. I think that's the problem is that nobody wants to take a small base and let it compound for 20 years, or very few people do.”

Startups need different mental models than companies

Maples notes that Buffett and Munger's investing mental models (operating history, competitive moat, customers) simply don't apply to startups, which have no history, no moat, no product, and no customers. Floodgate spent years developing roughly 30 mental models specifically for evaluating startups.

“If Charlie Munger and Warren Buffett have 90 mental models and they don't apply to startup investing, well, what are the mental models for startup investing then? And so we've spent years, right, just being students of that question. And you know, we've probably got about 30 or so that we've developed.”

Raisins and turds: diversifying junk Amazon FBA roll-ups

Andrew is skeptical of Amazon FBA roll-ups (like Thrasio) buying businesses at 1.5–2x earnings, arguing a diversified portfolio of moat-less businesses is still bad — invoking Munger: combine raisins with turds and you still have turds.

“I think Charlie Munger said, what is it? If you put raisins with turds, you've still got turds. It doesn't matter if you group together a bunch of shit, it's still shit. We've looked at tons of these businesses. They're They're sandcastles.”

Munger: if 10% of people don't complain about your price, you're too cheap

Tai defends charging for value, invoking a Charlie Munger heuristic on pricing. He argues there is so much harmful product sold cheaply that creators shouldn't fear charging for genuine value.

“people, if you bring value, charge money. There's so much stupid stuff. McDonald's makes $25 billion selling diabetes to people, and Coca-Cola. So it's like, hey man, one thing my mentor told me, if you have value, never be afraid to charge. And the people who get— Charlie Munger says if 10% of people don't complain about your prices, you're too cheap.”

Steal thisRaise prices until at least 10% of buyers complain; if nobody complains, you're leaving money on the table.

Incentive-caused bias: share buybacks line the CEO's own jeans

Wilkinson explains incentive-caused bias using buybacks: CEOs paid in stock options benefit when share price rises, and buybacks shrink the share count to lift price — so a 'return capital to shareholders' move can really be self-enrichment.

“a lot of CEOs are compensated based on share price because they get stock options. So their stock options become more valuable when the share price goes up. And what makes the share price go up but share buybacks? So when you buy back shares, there's fewer shares and each individual share is worth more. So it's actually a way for the CEO to put money in his or her own jeans.”

Incentive-caused bias: share buybacks line the CEO's own jeans

Wilkinson explains incentive-caused bias using buybacks: CEOs paid in stock options benefit when share price rises, and buybacks shrink the share count to lift price — so a 'return capital to shareholders' move can really be self-enrichment.

“a lot of CEOs are compensated based on share price because they get stock options. So their stock options become more valuable when the share price goes up. And what makes the share price go up but share buybacks? So when you buy back shares, there's fewer shares and each individual share is worth more. So it's actually a way for the CEO to put money in his or her own jeans.”

Munger on Musk: never underestimate the man who overestimates himself

Shaan relays Charlie Munger's take on Elon Musk: he may overestimate himself but when he's right he's right very big. Yet Munger says he'd never hire Musk for a Berkshire company — he wants the prudent person who understands his limitations over the delusional one who occasionally wins huge.

“never underestimate the man who overestimates himself. I think Elon Musk is peculiar in that he may overestimate himself, but he's not wrong all the time. And when he's right, he seems to be right very big.”