2015: What are the most important mental models for someone at the start of their career?

AUDIENCE MEMBER: Yes. Hey, Warren and Charlie. How are you guys? Congratulations on 50 years.

WARREN BUFFETT: Thank you.

AUDIENCE MEMBER: So, in this year’s annual letter, Charlie wrote about the peculiar attributes that made the Berkshire system, and the leader of the system, a historically organizing entity — organizational entity.

So, my question to both of you is what practical mental model or mental models would you impress upon a young, enterprising individual at the infancy of their career to build an important enduring enterprise of that particular distinction and impact?

And if you could give, like, maybe some contrasting examples, like why is a Microsoft able to build itself into a dominating monolithic company, versus a See’s Candy, which can be a great enterprise to spin off cash flow but not necessarily be an enduring — or not necessarily enduring — but an impactful enterprise to the level of a Berkshire or Microsoft?

CHARLIE MUNGER: Thank you, Warren. (Laughter)

WARREN BUFFETT: You’re the guy that wrote it. (Laughter)

This is pineapple juice, incidentally. People were questioning that. (Laughter)

They say it’s good for your throat if you’re going to talk a long time.

CHARLIE MUNGER: Yes. Well, of course, reputation you get over a long period of time.

Very few people are like Charles Lindbergh where you just suddenly have a great reputation.

Most of us have to acquire one very slowly, and that was true in Berkshire’s case.

And any individual you just have to get the best reputation you can in the years you’re allotted and the time available.

And it may work out well, it may work out poorly. But it’s a wise investment.

I see, all the time, opportunities come to people where it’s the credibility they’ve gotten in the past that causes them to have the new opportunity.

So, I think hardly anything is more important than behaving well as you go through life.

And — I think we actually try to behave better as we got more prosperous, and I think you’d be crazy if you didn’t.

So, I’d certainly recommend that you follow those old-fashioned principles.

And I don’t think there’s any way of guaranteeing a total powerhouse brand, nor can — if a result is a one in 50 million-type result, you’re probably not going to get it.

WARREN BUFFETT: Gianni Agnelli of Fiat, back in — I think it was 1988 — I was at dinner with him one time, and he said something to me that stuck with me. He said, “When you get old,” he says, “You’ll have the reputation you deserve.” He says, “For a while you can” —

CHARLIE MUNGER: Fool people.

WARREN BUFFETT: — “fool people,” but he says, “When” — he was talking about himself at the time — but he said, “When you get to be my age,” he said, “Whatever reputation you have, it’s probably the one you deserve.”

And I think the same is true of companies. And, frankly, you know, it has helped Berkshire a whole lot that it has gotten a reputation to be a somewhat different sort of company.

I mean, I don’t think we set out to do that, exactly, but it has worked out that way.