Warren Buffett's 'Professor' Teaches 12 Steps To Financial Success

Warren Buffett's 'Professor' Teaches 12 Steps To Financial Success

Brazil’s richest citizen, Jorge Paulo Lemann, may not be a household name–yet. But the brands he controls are already quite familiar to consumers around the world. With his partners, Lemann runs the makers of Budweiser beer, the Whopper and soon even Heinz ketchup.

Lemann made international headlines when he partnered with Warren Buffet in the largest deal in the food industry’s history, the $23 billion acquisition of Heinz.  Buffet is excited to partner with Lemann, “this is my kind of deal and my kind of partner… I want to learn more about Brazil and Jorge [Paulo Lemann] is a great professor,” said the Oracle of Omaha to Brazilian Magazine EXAME.

In a speech to students in 2011 organized by Jorge Paulo Lemann’s foundation, Estudar, which provides merit-based scholarships to young Brazilians willing to study in universities like Harvard, the intensely private and media-shy billionaire, worth $17.8 billion, revealed 12 principles that guided him to achieve financial success:

1. Dream Big.

“I always say, to have a big dream requires the same effort as having a small dream. Dream big!”

“Maybe I was accepted to Harvard only because of my tennis skills since I definitively had no great academic achievements. I was 17 and only thought about surfing and playing tennis. I had almost never left Rio de Janeiro and had never been to the United States. Suddenly, I was at Harvard, that place so full of ideas. In my freshman year, I was forced to read Plato and Socrates. I was learning things I had never even heard before. Up to that point my biggest dreams were to surf bigger waves or win a tennis championship.”

 2. Choose partners well.

“The three short years I spent at Harvard, where I lived with excellent people, taught me not only that I must know how to choose my partners but also that choosing excellent partners is a skill you can learn. Obviously, when you spend time with the best, you learn how to choose among them.”

Lemann knows the importance of being among the best. He was chair of the Latin American Advisory Board of the NYSE and in the 1990s was nominated to the board of razor maker Gillette, where he met Warren Buffett.

At Banco Garantia, Lemann worked with Marcel Herrmann Telles, who started as a trainee at Garantia, and Carlos Alberto Sicupira, whom he had met while surfing in Rio de Janeiro. The trio became inseparable and have been acting together in every major transaction ever since.

3. Develop your own long term vision.

“In our bank Garantia we [Lemann, Sicupira and Telles] developed the basic ideas that are part of every single business we engage in. Some of the decisions we made, such as leaving financial companies and buying industrial/commercial companies, [like Burger King and AB Inbev, Budweiser makers] were based on the vision we set up 20 years ago.”

What you do today will cause effects in years to come. Don’t limit yourself to make decisions only focused on the short term. Good ideas have a bigger effect than any temporary fact.

4. Always try to get better. You can always improve.

“You have to be always trying to do something better, or improve yourself all the time.”

Does it sound a bit overwhelming? Well, maybe that’s why you need to focus on the three first principles. It is going to be much easier to get in the habit of constant improvement if you have a big dream, are surrounded by the right people and have a long term vision.

5. Develop your own method to achieve the results you want.

“Look at the four or five essential points of any issue. I’ve always tried to nail questions down to what is essential. Most of our companies have a maximum of five goals and employees working for us also have 5 personal objectives.”

“I developed a system for choosing new classes [at Harvard]. I interviewed former students and professors before signing up for any classes. I also found out that previous exams were available in the library. Soon, I realized that professors usually repeat their questions. This methodology allowed me to know exactly what I would learn before signing up for any class.  It also helped me to change my status from one of the students with the worst grades to a top student while taking six or seven classes per semester instead of only four as most of my peers. I graduated when I was only 20 and was on the dean’s list.”

6. Simple is always better than complicated. Be careful with too much theory.

Einstein once said: “If you can’t explain it to a six year old, you don’t understand it yourself.”

Not only look for simplicity but learn how to explain anything in a simple manner.

7.  Ethical behavior is the best long-term strategy.

“I have learned that the ethics of the so-called markets can be different from what we learn at school. In day-to-day life you have stimulus to behave unethically, but in the long term it always pays off to be ethical.”

“There are some basic principles that are embedded in every company I have a stake in.”

8. Meritocracy  

Those who perform the best must be those who are best rewarded.

9. Ownership: It is fundamental to have partners. Always work with people who are also owners.

Talent retention is one of the hottest topics among corporations of all sizes, from startup to multinationals. I believe principles eight and nine go together. The bottom line is: you want to be surrounded by the best. However, the best must also be willing to be with you as well. To keep the best close to him, Lemann imitated Goldman Sachs’ method of rewarding the most brilliant executives at bank Garantia with stock shares.

10.  Take risks.

“A lot of people study too much, but to do the exceptional you need to take risks.”

“You need to do more than only study. When I was on vacation from Harvard, I would go back to Brazil and enjoyed my summer break playing tennis and surfing. I was always looking for the biggest wave.”

“Every two or three years there would be a storm and some huge waves would show up on Copacabana beach. We were used to surfing only 3- or 4 meter-high waves, but those were at least three times higher. My friends knew it was almost impossible for me to surf such huge waves, but I decided I would do it. I went for it and experienced the maximum adrenaline ever; I felt blood running fast all through my body.”

“For me that was enough. It was dangerous, too dangerous. I mention this story because I think that in life it is important to take some risks. In college we usually don’t learn how to measure risks, we only learn theoretically, but in general college teaches you not to take risks. However, in life, you have to risk.”

Some other of my favorite quotes about risk:

He who risks and fails can be forgiven. He who never risks and never fails is a failure in his whole being. – Paul Tillich

If you are not willing to risk the unusual, you will have to settle for the ordinary. – Jim Rohn

It seems to be a law of nature, inflexible and inexorable, that those who will not risk cannot win. – John Paul Jones

 11. Know thyself.

Focus on what you do best. Focus on your main strengths.

Do you have the opportunity to do what you do best every day? Don’t let your natural talents go untapped. Each one of us has a unique combination of personal traits and capabilities. Do not spend more time building up your weakness or finding shortcuts. Instead, develop you strengths.

Don’t try to be everything for everyone. The only way to achieve excellence is to spend most part of your day doing what you do best.

12. Get your hands dirty

“The best way to learn anything is by doing it.”

Lemann concluded his speech reaffirming the importance of being among the best and said, “I am ready to help, on one way or another, anyone who was accepted to Harvard.”