A friend of mine recently forwarded me a Q&A session FSU did with Todd Combs, which I found very interesting. Below are the entire 10 questions and answers. Original post can be found on FSU alumni’s website (link).
If you could choose just one key to your success, what would it be and why?
I was fortunate to have great parents who emphasized education, hard work, grit, determination and a sense that anything is possible. You try to get a little better, a little smarter each day and let the magic of compounding do its work. I met my wife at FSU, and I wouldn’t be where I am today had she not been by my side. And I’ve had amazing professional relationships that have all built on each other in one form or another. If any of those pieces had been missing, I wouldn’t be where I am today.
What was your FSU experience?
FSU was both an amazing and a formative experience. It’s where I got my start, both personally and intellectually. I had always had an interest across a lot of different fields, and I was able to start testing that at FSU. My interests included engineering, math, sciences, psychology, international studies and business. FSU is where I gained exposure to my first finance and investing courses. I think part of the beauty of college is that you come in as a pretty blank slate and get to create your own canvas.
You first saw Buffett in a grad school class. What was your takeaway?
That he’s brilliant, humble and inspiring. Warren went to Columbia B-school as well and really built BRK through insurance, which I knew well from my days at Progressive. Both investing and insurance are a game of probabilistic science, where you try to get the odds in your favor. So, things he talked about that day and the way he spoke really struck a chord with me. He said, “I read 500 pages a week,” referencing the huge stack he had walked into the room with. “Any of you can do it, and the knowledge just compounds over time.”
You and your wife are Floridians but BRK is based in Omaha. How’s life been there?
Even though I was raised in Florida, my whole family is from the Midwest originally. So I knew it would be an easy fit for me – but it’s really been great for everyone. Having been here almost seven years, our friends are here and we consider Omaha home. It’s a great family town with a real sense of community. People really look out for each other.
Well, this one is hard to describe in words. You have this special combination of an incredible human being as well as the world’s greatest investor. Both are priceless because you learn so much from both aspects, especially when they’re combined. We see so many aspects of business at Berkshire; between our subsidiaries, public and private situations, it’s a pretty robust mosaic. And to be able to discuss those situations, problems and solutions with him is really special. It’s a rare person where the closer you look, the better he gets.
What’s the best part of your weekly lunches with Buffett?
Warren loves teaching, and his ability to weave wisdom into storytelling and combine it with lessons from business history is really special. Warren credits his longtime business partner Charlie Munger (Trades, Portfolio) with the best 30-second mind, but Warren’s ability to simplify the most complex issue is also unparalleled. Einstein lists the order of intelligence as “smart, intelligent, brilliant, genius, simple.” Warren’s mind is just frictionless in its ability to simplify issues to the core.
What’s the most important consideration for investing?
Howard Marks (Trades, Portfolio) wrote a book titled “The Most Important Thing,” and I think it had 20 lessons. So it’s hard to distill into one – but it’s really a judgment business at the end of the day. You want to find the best business you can at the cheapest price you can. You can have a wonderful business at a high price resulting in a terrible investment, and conversely you can have a terrible business at a wonderful price yielding a terrific investment. Charlie Munger (Trades, Portfolio) compares it to the parimutuel system or betting on horses. Everyone may know who the best horse is, but if it’s more than reflected in the odds, then it won’t pay off. You want to find the great horse that no one else thinks is a great horse.
You currently have a portfolio of $10 billion. How do you rationalize that responsibility?
You’re really just making the best decision you can regardless of how many zeroes are in the number. My smallest position is now larger than the fund I was running ($500 million), although several of the positions are the same; they’re just bigger now. So the position or decision-making process doesn’t change.
What’s a typical day like for you?
I read about 12 hours a day. Our offices are like a library. So I read annual reports, conference call transcripts, trade magazines, etc. Most things are routine, mundane and obvious, but every once in a while you find something interesting worth digging into. Warren and I will usually catch up once or twice a day on stuff that’s going on – deals, stocks, stuff with our companies. Sometimes our managers reach out or a banker calls with an idea, but that’s about it.
What’s your advice for students who want to follow in your footsteps?
You really just have to find your passion in life. Warren says to find the job you would do if you didn’t need a job. The earlier you find that, the better – because it won’t seem like a chore to follow your dream, and you’ll outwork everyone in the process. Don’t be afraid to fail. In fact, you kind of want to fail early and often because it doesn’t cost you much when you’re young – and you learn a lot more from failure than success.