Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.
Author: Robert Hagstrom.

Legend is often focused on extraordinary people in life. It seems that people are particularly interested in the early glimpses of these people, wanting to know if they can discover the clues to their success if they observe closely.

Warren Buffett is widely regarded as the greatest investor in the world today, and there are many popular stories about him circulating in society, many of which you may have heard of.

At the age of 6, Buffett set up a stall on the roadside selling candy, chewing gum, and soda. He also wholesaled 6-bottle packs of Coca-Cola from his grandfather's grocery store for 25 cents each, then split them up and resold them for 5 cents per bottle, with a return on investment of 20%. The following year, he made a wish to Santa Claus and received a book about bonds. The following year, wanting more books, he started reading his father's books about stocks. At the age of 11, he made his first stock investment. At 17, he and a friend invested $25 to buy a second-hand pinball machine and installed it in a nearby barber shop. With the money they earned, they bought two more machines. A year later, they sold the business for $1200.

But there is one story you may have never heard of, and it is likely the most important of all the stories.

A unique book.

In 1941, 11-year-old Buffett discovered a unique book at the Benson branch of the Omaha Public Library. The cover of this book was shiny silver and it was a publication by Dartnell Corporation, written by F.C. Minack. The title of the book is '1000 Ways to Make $1000,' with a subtitle of 'Doing Business in Your Spare Time.' Following the popular practice at the time, the author, Frances Mary Minack, used the initials of their name to hide their gender.

Let's think back to the 1940s, when a young boy living in Omaha, Nebraska, didn't have a television, electronic games, personal computers, or smartphones. True, there were radio programs, and downtown movie theaters would show rare movies on Saturday afternoons. But for most people, including Buffett, the greatest form of entertainment was reading. The objects of their reading were newspapers, magazines, and books.

Now, imagine young Buffett running home from the library, clutching his newfound treasure, rushing into his room, plopping down in a chair, and eagerly flipping open the first page, diving into a world of making money, a world that he didn't fully understand but yearned for.

Minack's book was thick, totaling 408 pages, and covered a wide range of topics. In addition to hundreds of specific money-making suggestions, it provided lessons on developing good sales skills, covering advertising, marketing, customer relations, and more. The book also told many stories of turning good ideas into successful businesses, some of which achieved remarkable success.

Some of the names in the book should be familiar to everyone. For example, there is a story about the founder of the famous clothing chain company, J.C. Penney (James C. Penney). Penney's first job paid only a meager $2.27 per month. Penney, along with two other partners, opened the first J.C. Penney department store on April 14, 1902. In the first year, the store had sales of $28,891, and Penney's share of the profits exceeded $1,000! It's an exciting story!

Buffett turned to another page of the book and read the story of John Wanamaker at the age of 23. He convinced his brother-in-law, Nathan Brown, to pool their meager savings and open a gentlemen's clothing store in their hometown of Philadelphia. At that time, they faced a nationwide internal conflict, against the backdrop of the 1857 banking crisis, which led to mass unemployment and nearly destroyed the entire manufacturing and wholesale industry. They bravely opened for business on April 27, 1861. Eight years later, Wanamaker-Brown became the largest men's fashion retailer in the United States.

Young Buffett immersed himself day after day in such dreams of getting rich.

When flipping to page 153, Buffett definitely smiled. This chapter is about the story of entrepreneurship on the side of the road, a scene he is very familiar with because he has more than five years of experience in roadside stalls. The tenth chapter is about dozens of ideas in the service industry, one of which mentions placing coin-operated pool tables in local shops and bars. Looking back with today's perspective, we can see a clue from this story all the way to Buffett's pinball machine business six years later.

In the same section of the tenth chapter, 'Sell your services,' we found another story that had a greater impact on Buffett's thinking, and the story goes like this.

In 1933, a man named Harry Larson was shopping at a local pharmacy when someone (we don't know exactly who) asked him how much he weighed. Harry turned around and found a coin-operated weight scale. He put a coin in and got the answer, then he went to line up to buy cigarettes. In the few minutes he was in line, 7 other customers decided to try the coin-operated weight scale. This caught Harry's attention, and he began to learn more. The store owner explained that these machines were rented, and he could get 25% of the income, about $20 a month (approximately $384 in today's value), and the remaining 75% belonged to the company that owned the coin-operated weight scale.

Harry later told the book's author Minak how understanding these situations was just the beginning. He took $175 from his savings, bought 3 weight scales to put in the shop, which could bring him $98 in profit each month. According to Harry, 'the return on this investment is quite good.' However, what he did next caught Buffett's interest. Harry said, 'I bought a total of 70 weight scales... the other 67 were bought with the money earned from the first 3... the money I earned was enough to buy these scales and live a good life.'

Earning a little bit each time, this is the essence of compound interest. We usually think that the concept of compound interest only applies to interest, but you might know Albert Einstein's saying, 'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.' The core concept of compound interest is actually more extensive and powerful, using profits to gain more profits. Harry instinctively understood this, and Buffett was also such a genius.

Many years later, Buffett used the 'penny scale' to describe his ideas. He said, 'The weight scale is easy to understand; I will buy a weight scale and use the money earned to buy more weight scales. Soon I will have 20 weight scales, each scale weighing 50 times a day. I think this is the source of money, what could be more wonderful than this?' It is this kind of mental architecture that built today's Berkshire Hathaway.

The richest high school student in Omaha

So, when we go back to Minak's book and look at its impact on Buffett, '1000 Ways to Make $1000,' the book is true to its name, even setting aside the literal meaning, I counted a total of 476 new business suggestions in the book. In today's high-tech era, many of these ideas are outdated from the horse and buggy age, but some ideas are quite visionary.

For us today, the true value of this book lies in the basic principles it provides. The author explains important fundamental concepts about money, especially hoping that readers understand the mindset of those mentioned in the book, as well as the important qualities for achieving financial goals. In conclusion, these words about the essence of making money helped Buffett form an important part of his financial mindset.

The author Minaik wrote: "The first step in starting your own business is to understand the situation...So, read all the publications about the industry you intend to enter, synthesize the experiences of others, and start your plan based on them." She firmly believes that this means you need to approach learning from two aspects: how to succeed, and how to avoid failure.

The author believes that reading a business is like sitting down and discussing with an entrepreneur. She writes: "Only those who think they know everything would consider exchanging ideas foolish." She points out that the real foolishness is spending hundreds of dollars (equivalent to spending tens of thousands, or even millions of dollars today) to discover that your idea is not feasible, when others have already made such attempts and written about them, "it can tell you why your idea is not a good one".

In order to allow readers to conduct a deeper study, Minaik lists a 35-page list of publications in the appendix of the book, including books, magazines, journals, pamphlets, with content relating to entrepreneurship and business operation. In total, the book contains 859 different citations, all about how to succeed in the industry you choose.

Buffett has not forgotten these things. Now, at the Berkshire Hathaway headquarters in Omaha, the largest room on the administrative floor is not Buffett's office, but the library below the hall, where rows of file cabinets are arranged, filled with the stories of businesses. The information in these file cabinets includes annual reports of all major listed companies, past and present, all of which Buffett has read. From them, he has not only learned what is useful, where profits can be found, but more importantly, he has also learned what kind of strategies lead to failure and loss.

The second step in cultivating a financial mindset is simple, but difficult for most people. It can be summarized as taking action, or as Minaik puts it, "the way to start making money is to start taking action." She points out that thousands of people dream of starting a business, but they have never started because they procrastinate, always waiting for expected improvements, a better future, or the right time. Minaik writes that the reason they fail to take action is, "the future is unclear, and the road ahead is not visible." It is important to note that the so-called perfect moment can never be known, and waiting is just an excuse to do nothing and try to avoid.

Minaik points out that another manifestation of this phenomenon is people becoming rigid, because they spend too much time seeking the advice of others. To this, she writes: "If you seek enough advice from enough people, you will definitely accomplish nothing." On the surface, this seems somewhat contradictory to the first point (learn everything that can be learned), but in fact, finding the right balance between self-education and knowing when to take action is a key element of a financial mindset.

Those who study Buffett can effortlessly draw the same conclusions as Minaik's advice. Indeed, Buffett will discuss important ideas with his long-time business partner Charlie Munger. But, if Buffett believes that Berkshire Hathaway can make a good acquisition, he won't spend all day making phone calls, as is the fact. He never pauses his final decision because of stock market fluctuations, economic growth or recession, interest rate increases or decreases. If it is a good business at a reasonable price, Buffett will take immediate action.

In addition to the suggestions made, Minak also offers compelling ideas. She wrote, "A business that is established is like a ship leaving port. In the sea of commerce, you must rely on your own judgment and abilities." This is also the most appealing part of business life.

It is easy to imagine that a young Buffett must have realized this. Starting from selling candies and sodas at the age of 6, Buffett became his own boss. He was resolute, confident, and independent. By the time he graduated from high school at the age of 16, he was already the richest high school student in Omaha. He could have become the wealthiest self-made teenage millionaire in the world, but at that time he did not dream of becoming a millionaire. His dream was to become a better version of himself, which motivated him to continue his studies.

Editor/rice