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My most surprising discovery: the overwhelming importance in business of an unseen force that we might call “the institutional imperative.” In business school, I was given no hint of the imperative’s existence and I did not intuitively understand it when I entered the business world. I thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play.

For example: (1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction;

(2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds;

(3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and

(4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.

Institutional dynamics, not venality or stupidity, set businesses on these courses, which are too often misguided. After making some expensive mistakes because I ignored the power of the imperative, I have tried to organize and manage Berkshire in ways that minimize its influence. Furthermore, Charlie and I have attempted to concentrate our investments in companies that appear alert to the problem.

– Warren Buffett

It is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, i.e. the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang onto.

– Elon Musk

Because biographies of famous scientists tend to edit out their mistakes, we underestimate the degree of risk they were willing to take. And because anything a famous scientist did that wasn’t a mistake has probably now become the conventional wisdom, those choices don’t seem risky either.

Biographies of Newton, for example, understandably focus more on physics than alchemy or theology. The impression we get is that his unerring judgment led him straight to truths no one else had noticed. How to explain all the time he spent on alchemy and theology? Well, smart people are often kind of crazy.

But maybe there is a simpler explanation. Maybe the smartness and the craziness were not as separate as we think. Physics seems to us a promising thing to work on, and alchemy and theology obvious wastes of time. But that’s because we know how things turned out. In Newton’s day the three problems seemed roughly equally promising. No one knew yet what the payoff would be for inventing what we now call physics; if they had, more people would have been working on it. And alchemy and theology were still then in the category Marc Andreessen would describe as “huge, if true.”

Newton made three bets. One of them worked. But they were all risky.

– Paul Graham

Thinking about how disturbingly herdlike people become in so many different contexts—mimetic theory forces you to think about that, which is knowledge that’s generally suppressed and hidden. As an investor-entrepreneur, I’ve always tried to be contrarian, to go against the crowd, to identify opportunities in places where people are not looking.

Peter Thiel

To be a highly successful leader in war four things are essential, assuming that you possess good common sense, have studied your profession and are physically strong.

When conditions are difficult, the command is depressed and everyone seems critical and pessimistic, you must be especially cheerful and optimistic.

When evening comes and all are exhausted, hungry and possibly dispirited, particularly in unfavorable weather at the end of a march or in battle, you must put aside any thought of personal fatigue and display marked energy in looking after the comfort of your organization, inspecting your lines and preparing for tomorrow.

Make a point of extreme loyalty, in thought and deed, to your chiefs personally; and in your efforts to carry out their plans or policies, the less you approve the more energy you must direct to their accomplishment.

The more alarming and disquieting the reports received or the conditions viewed in battle, the more determined must be your attitude. Never ask for the relief of your unit and never hesitate to attack.

– George C. Marshall

Change produces information. This is something I often tell founders and CEOs when they sense that something is wrong in their companies but they can’t quite figure out what it is. Depending on what you think it might be, pick a change and see what new information you get from that. Change the organization. Change the pricing. Change the marketing message.

– Albert Wenger

The beauty of the VC business is you don’t have to be right that often, as long as you are right about something big.

– Fred Wilson

You have to strike the right balance between competency or knowledge on the one hand and gumption on the other. Too much competency and no gumption is no good. And if you don’t know your circle of competence, then too much gumption will get you killed.

But the more you know the limits to your knowledge, the more valuable gumption is.

– Charlie Munger

If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your ass. That’s a good thing.

We’re partial to putting out large amounts of money where we won’t have to make another decision.

– Charlie Munger