Warren Buffett's early lessons in entrepreneurship and action
21-Aug-2023 •Dhirendra Kumar
'A thousand ways to make $1000.' As book titles go, it doesn't sound very impressive that someone should buy a book to try and earn such a trivial amount. However, the book was published in the US in 1900, and its target audience was the young man who had just started in life and did not know how to earn money. It was written by an author F C Minaker, who seems to have no details available about him on the internet now.
Today, for anyone interested in investing, the book's chief claim to fame is that Warren Buffett read it as a small child of seven! Growing up in his hometown, young Buffett was captivated by topics related to numbers and finances. "Very early, probably when I was seven or so, I took this book out of the Benson Library called 'One Thousand Ways to Make $1,000,'" he recalled in HBO's 2017 documentary, "Becoming Warren Buffett."
The child Warren not only read it but practically memorised it. The introduction of the book begins, "The object of this work is to help people who are out of employment to secure a situation; to enable persons of small means to engage in business and become their employers; to give men and women in various lines of enterprise ideas whereby they may succeed; and to suggest new roads to fortune by the employment of capital." The book is a simple compendium of advice on how to make money, written in an easy and conversational style. It is literally what the title says. From the perspective of 2023, it's like a time capsule of what American entrepreneurship was like at that time. Among the thousand ways are quaint tips such as this one to start manufacturing an accessory for milking cows: Construct a pail in two parts, the upper part to receive the milk directly from the cow while a strainer separates it from the lower part. Thus the milk can be taken from the barnyard already strained.
So what did the young Warren do with all this advice? The one that fascinated him most was number 531: Pocket Scale - A little scale capable of being carried in the pocket to be instantly at service in weighing small articles would be appreciated and purchased by almost everyone. The child imagined himself becoming the pocket scale tycoon of the world and constructed small tables of how his income would grow in a compounding manner as he would put back earnings into buying more pocket scales! While the pocket scale was just daydreaming, as a child, he started door-to-door delivery of newspapers and Coca-Cola.
I feel that this book and its impact on the young Buffett is far more than an interesting tidbit from a famous person's childhood. The early exposure to the idea of entrepreneurship seems to have been invaluable. Reading the book at such a young age introduced Buffett to the entrepreneurial spirit, planting seeds for his later life. It offered practical, actionable advice that a young mind could comprehend and aspire to. As someone who has spent many years analysing numbers, I'm also quite fascinated by the analytical bent of mind displayed by the child Buffett. Daydreaming is one thing, every child does it, but drawing projection tables and seeing how income would compound is special.
What does this mean for us today? The biggest takeaway is to start early: Passion and interest, when identified early, can lead to a lifelong journey of success. Buffett's early exposure to the world of money-making shaped his future. The other takeaway, equally important, is the importance of taking action. While many read and daydream, taking action is the key. Buffett didn't just imagine businesses; he started them as a child. The real story here is not the book and the dreams but the move from idea to execution.
Lots of people earn, but only a small proportion save, and an even smaller proportion invest. That's what makes the difference.
Suggested read: We interviewed Warren Buffett!
This editorial appeared in Mutual Fund Insight September 2023 issue. To read the cover story and other insightful analyses, columns and articles