The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [34]
“It could make me independent. Then I could do what I wanted to do with my life. And the biggest thing I wanted to do was work for myself. I didn’t want other people directing me. The idea of doing what I wanted to do every day was important to me.”
A tool that would help him soon fell into his hands. One day, down at the Benson Library, a book beckoned from the shelves. Its shiny silver cover gleamed like a heap of coins, hinting at the value of its contents. Captivated by the title, he opened it and was immediately hooked. One Thousand Ways to Make $1,000, it was called. A million dollars, in other words!
Inside the cover, in a photograph, a tiny man gazed up at an enormous pile of coins.
“Opportunity Knocks,” read the first page of the text. “Never in the history of the United States has the time been so favorable for a man with small capital to start his own business as it is today.”
What a message! “We have all heard a great deal about the opportunities of bygone years…. Why, the opportunities of yesterday are as nothing compared with the opportunities that await the courageous, resourceful man of today! There are fortunes to be made that will make those of Astor and Rockefeller seem picayune.” These words rose like sweet visions of heaven to Warren Buffett’s eyes. He turned the pages faster.
“But,” the book cautioned, “you cannot possibly succeed until you start. The way to begin making money is to begin…. Hundreds of thousands of people in this country who would like to make a lot of money are not making it because they are waiting for this, that, or the other to happen.” Begin it! the book admonished, and explained how. Crammed with practical business advice and ideas for making money, One Thousand Ways to Make $1,000 started with “the story of money” and was written in a straightforward, friendly style, like someone sitting on the front stoop talking to a friend. Some of its ideas were limited—goat-dairying and running doll hospitals—but many were more practical. The idea that captivated Warren was pennyweight scales. If he had a weighing machine, he would weigh himself fifty times a day. He was sure that other people would pay money to do that too.
“The weighing machine was easy to understand. I’d buy a weighing machine and use the profits to buy more weighing machines. Pretty soon I’d have twenty weighing machines, and everybody would weigh themselves fifty times a day. I thought—that’s where the money is.9 The compounding of it—what could be better than that?”
This concept—compounding—struck him as critically important. The book said he could make a thousand dollars. If he started with a thousand dollars and grew it ten percent a year:
In five years, $1,000 became more than $1,600.
In ten years, it became almost $2,600.
In twenty-five years, it became more than $10,800.
The way that numbers exploded as they grew at a constant rate over time was how a small sum could turn into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn. Warren began to think about time in a different way. Compounding married the present to the future. If a dollar today was going to be worth ten some years from now, then in his mind the two were the same.
Sitting on the stoop at his friend Stu Erickson’s, Warren announced that he would be a millionaire by the time he reached age thirty-five.10 That was an audacious, almost silly-sounding statement for a child to make in the depressed world of 1941. But his calculations—and the book—said it was possible. He had twenty-five years, and he needed more money. Still, he was sure he could do it. The more money he collected early on, the longer the money could compound, and the better his chances of achieving his goal.
A year later, he brought forth