Drill to Molecular Understanding Before Acting

"One must have a clear understanding of what a company does and how it actually makes money out of doing it, or even sometimes how it could make money out of doing it."

"We look for businesses that possess a sustainable competitive advantage. Over time we have found that excellent businesses will possess many of the following attributes: •High returns on equity •A strong balance sheet with minimal debt •Attractive operating and profit margins •A dominant position in its industry •Significant brand recognition •Pricing power for its products •Growing revenues and earnings over time •Consistent free cash flow generation •Does it have honest capable management?"

"Most important of all, I discovered that if I was trying to solve a complex problem, I seemed compelled, *literally compelled,* to drill down to its essence, because when I got there—at the base level of understanding—my instinctual abilities would give me a surprisingly accurate sixth sense, allowing me to tease out the very core of the matter."

"It’s a lot harder to come in on top of an organization than at the bottom if you want to know how a company actually works. And I’m no good unless I understand everything down to the smallest molecule. No one really wants to tell the chairman anything other than good news and no one at Paramount was volunteering anything given how I was dropped onto the top of the Paramount mountain."

"At the time, there was no such thing as “media.” Movie studios dominated entertainment, and the five majors (Paramount/Warners/Columbia/Fox/Universal) had worldwide importance. If you ran one of these film companies, you were a prominent figure wherever you went. In those early years, though, I wasn’t swanning anywhere; I was just trying to figure out this weird and dysfunctional studio I was now in charge of. Because I’d offed Yablans in such a public and brutal way, everyone was now afraid of me. And I was petrified that they would find out just how unqualified I actually was. Only if I slowed everything down could I begin to understand all the parts and then try to rearrange them into something coherent. I tend to make things worse in the beginning as I fumble around trying to get to base truths. Instinct, which I prize almost above all else, doesn’t work very well for me in abstruse matters. I have to get to the core DNA on any matter, its logical essence, before I can add anything of value. For me this takes a lot of time, often to the irritation of faster thinkers. But when it does crystallize, I can’t be deterred."