QuestionerIn the past, you have said that people should operate within their circle of competence. My question is, how does one figure out what one circle of competence is?
WarrenGood question. Some of the people in the audience are identifying with it, I can hear them. They, uh, it's a, you know, it is, it is a question of being self-realistic, and that applies outside of business as well. And I think Charlie and I've been reasonably good at identifying what I would call the perimeter of that circle of competence, but obviously we've gone out of it. I would say that in my own case, I've gone out of it more often in retail than in any other arena. I think it's easy to sort of think you understand retail and then Subsequently, find out you don't, as we did with the department store in Baltimore. You can say I was outside of my circle of competence when I bought Berkshire Hathaway. Although I bought it really to resell as a stock originally, I probably was out of my circle of competence when I decided that I should go in and buy control of the company. That was a dumb decision, which worked out. The being, being realistic and appreciative in a raising your own talents and shortcomings, I think. I don't know whether that's innate, but some people seem a whole lot better than the others. And I certainly know of a number of CEOs that I feel have no idea of where their circle of competence begins and ends. But we've got a number of managers who I think are just terrific at it. I mean, they really, they really know when they're playing in the game. they're going to win in and they don't they don't go outside of that game. I can't tell you the best way to develop a great sense of that about yourself. You might get some of your friends that know you well to offer contributions. Charlie's given me a few contributions occasionally saying what the hell do you know about that and that's one way of putting it of course. I don't think it's as difficult to figure out competence as it may appear to you. If you're 5'2, you don't have much of a future in the National Basketball League. And if you're 95 years of age, you probably shouldn't try and act the romantic lead part in Hollywood. And if you weigh 350 pounds, you probably shouldn't try and dance the lead part in the Bolshoi ballet. And if you can hardly count cards at all, you probably shouldn't try and win chess tournaments playing blindfolded and so on and so on.
QuestionerYou're ruling out everything I want to do.
WarrenBut competency is a relative, is a relative concept. And what a lot of us need, including the one speaking, is what I needed to get ahead was to commit against idiots. And luckily there's a large supply.