Let’s go straight to insight Bezos and Buffett have articulated so often. Then, we’ll summarize the main point, add a few brief caveats, and add three short guidelines that make the whole thing more attractive and practical for a younger generation.
We’ll start with Bezos, if only for the reason that his name comes alphabetically before Buffet’s. Here’s what he had to say back in 1997, when he was asked how he got the idea to start Amazon.com:
“I came across this startling statistic, that web usage was growing at 2,300 percent a year. … And I picked books … [after compiling] a list of like 20 different products.”
Bezos has kept to this story almost verbatim for more than two decades.
“Anything growing that fast, even if its baseline usage was tiny, it’s going to be big,” he said in 2018. “I looked at that, and I was like, I should come up with a business idea on the Internet.”
To sum, it all came down to recognizing growth, and then building an idea around that growth.
‘Not like the Olympics’
Next, an indelible quote from Buffett — making the same point, but in a different situation.
For context, Buffett’s company, Berkshire Hathaway, has its roots in a 19th-century textile company that Buffett bought in the early 1960s. Even while Buffett invested in other, more profitable industries, he held onto the failing textile business for two decades.
Finally, he gave up and closed down the mills. He’s talked about this lesson many times, but here’s an apt quote:
“The interesting thing about business, it’s not like the Olympics. You don’t get any extra points for the fact that something’s very hard to do. So you might as well just step over one-foot bars, instead of trying to jump over seven-foot bars.”
What was the 7-foot bar? The textile industry, because it wasn’t growing. Much easier to go after one-foot bars, like the burgeoning insurance industry that became Berkshire’s biggest concern.
Go toward growth
Synthesize both of these perspectives and what do you get? Short, practical advice for people who are just starting out in the world. It comes down to something like this:
Or perhaps even better:
- Go toward things that are growing.
It applies whether we’re talking about starting careers, or building businesses, or exploring life, or choosing where to live or what passions to pursue.
For people with the potential to be successful in many different fields, it can be paralyzing. So, all else being equal, teach kids to orient themselves towards places and things that are growing. Bigger is better; small now but growing big is likely even better, still.
- Trying to decide between a few cities to live or study in? All else being equal, go to the one that is growing faster.
- Weighing different careers that interest you? Take a more careful look at the one for which the market is increasing, or (perhaps related) where jobs and salaries are going up.
- It even works for personal relationships: Wondering which friends to hang out with this weekend, or what social events to go to? All else being equal, choose the people or experiences that you think will likely help you to grow as a person.
It sounds so simple, until we realize that it’s the exact opposite of the advice that many young people follow. Perhaps the most obvious and quantitative examples will come from higher education.
For example, consider the graduates of Columbia University’s film program, who The Wall Street Journal recently reported take out federal loans totaling a median of $181,000 in order to compete for jobs that can pay as little as $30,000.
Or graduates of the speech pathology program at Northwestern University, half of whom borrowed $148,000 or more in order to compete for jobs with a median income of $60,000.
These are talented people pursing something they’re interested in. But, they’re reportedly doing so in an environment in which the economics suggest a lack of growth. The result?
As one passionate film student put it in the article: “financially hobbled for life.”
Balancing passion and growth
This is a good time to mention a few short caveats. The first is that you don’t have to like or respect Bezos or Buffett as people in order to impart this advice to your kids.
For that matter, even though both Bezos and Buffett would likely qualify their self-worth in part as a result of their net worth, you don’t even have to think about monetary rewards for this advice to make sense.
Second, “going toward growth” isn’t the only factor in success. For one thing, it would be silly to suggest that young children should think about things like market size or consumer trends or population growth.
That’s the time to explore and learn the things that you become passionate about, not to worry about how they’ll fit into a life plan.
But as kids get a bit older, and they start to think about decisions that will have a more profound effect on their long-term success, it becomes an important factor.
Finally, this doesn’t mean kids should ignore the things they’re interested in or passionate about, in favor of dispassionate market analysis. (Even if that’s what Bezos largely suggests he did.)
It’s more a matter of doing the hard work to figure out how they can best pursue their interests but do so in a context of growth rather than stagnation.
In other words, the film students in the Journal’s example might be better off looking for ways to harness their creativity in front of audiences and markets that are growing rather than shrinking. The speech pathology students might focus on careers that help people overcome speech or developmental problems, but in a more promising marketplace.
It’s about balancing passion and interests with economic realities.
Authentic, measurable, and actionable
So, how do we make this all a bit more practical? Three things:
First, teach kids to seek out authentic growth.
Basically, this means things that you can understand and articulate. A big, broad example of this would be the census data released last week, which shows how the United States is becoming a more ethnically diverse society, and an older one — with people living longer but birth rates dropping.
Second, you want things that are measurable.
This is what Bezos kept talking about in terms of the statistic that prompted him to start Amazon: 2,300 percent annual Internet usage growth in the 1990s. Numbers, data, and trends.
Finally, teach them to look for things that are actionable.
In short, that means teaching kids to have the courage to cast aside growth insights that don’t match their personalities and concerns.
It’s less relevant to explore growth in medical careers if the health industry isn’t appealing to a young person exploring careers, or to consider other parts of the country if a someone is adamant for personal reasons about not wanting to leave the place where they grew up.
All of that is fine. We don’t want kids to become slaves to any single consideration.
But all other things being equal, teach kids to think about the reflection that Bezos and Buffett (and frankly, many other successful people) keep articulating: Your odds of success are better if you play and work in places where the forces of growth are with you, rather than against you.
And who wouldn’t want the odds to be more in their kids’ favor?