INTRODUCTION

I am a better investor because I am a businessman and a better businessman because I am no investor.

- Warren E. Buffett, chairman of Berkshire Hathaway

From the moment we are born, what is the fastest-reacting organ in our body? Think about it (there's a clue there). Still not sure? It's our brain. Our cognitive and behavioural functions are the subject of much of this book, so it makes sense that we start our journey together, quite literally, at our beginning. At birth, our brain is about a quarter of the size of the average adult brain. Incredibly, it doubles in size in the first year and keeps growing, to about 80 percent of adult size at age three and 90 percent at five. During this period of rapid growth, our brain 'goes wide'. Trillions of new neural pathways are formed, as we learn from our environment and develop many facets of our personality. From the age of five, until roughly the age of twenty our brain shifts gear and 'goes deep'. It is during this period that our brain specialises and discards the billions of neurons that we no longer need. Our early life experiences are the forge that will shape the rest of our life - our passions, our drive and, most importantly, how we think.

If you don't think like a businessperson, I don't believe it's possible for you to be a successful investor. We all know Warren Buffett to be the world's most successful investor, but I would say he is actually the world's most successful businessman. His business just happens to be investing in other businesses. It is his business acumen that has been instrumental for his investing success. This skill did not develop by chance; it began for Buffett at the age of six when he started buying bottles of Coca-Cola from his grandfather's grocery store for a nickel (5¢) and selling them to his friends at school for a dime (10¢). He then ventured into the coin-operated pinball machine business, newspaper delivery, selling tipsheets at the racetrack, and wedding car rentals, to name a few. Buffett was a practical business learning machine during the specialisation phase of his cognitive and behavioural development. By the age of twenty, Buffett's psychological make-up was essentially fully formed from his experiences as an entrepreneur and businessman. For those of you reading this who are older than twenty, there is still hope for you, but one of the lessons here is to 'go wide' early and then 'go deep' fast. If you do, you can gain an edge that no one can catch, such is the power of compounding that we will explore in the coming chapters.

Investing is, at its core, an entrepreneurial activity. You need to think like a business owner when it comes to investing your capital into other businesses. As Buffett's background shows, to be a successful investor, you must first have a passion for business. How else will you craft your own investment process to develop differentiated insights into how the businesses you research operate; how else will you be able to identify value? How else will you have the intellectual curiosity to read between the lines of the financial statements of a business to pinpoint the business models driving it? Or to fully embrace the 'ownership mentality' and understand just how unbelievable it is that, against all odds, the founder-operated business that you have identified is still flourishing?

Many investors believe businesses can be run from a spreadsheet, but I have never met a businessman or woman who agrees. Real business is messy. Nothing ever goes according to plan. The environment within which each business operates is in a constant state of flux. Nothing teaches this lesson better than founding and growing your own business. Especially one that fails. Only then will you come to truly understand the Darwinian nature of capitalism, the power of competition and the importance of a growing and defensible 'moat' around your business.

To be a great investor, you must first be a great businessman.

Today, I run an Investment Partnership which invests my capital and that of my partners in other businesses. Like Buffett, my entrepreneurial journey began much earlier, in my far-from-conventional childhood. My parents met at university in London. They had both left home at the age of sixteen - believing there was more to life than what was on offer where they had grown up. My mother is from a small steel-making town in North Wales, and my father is from an even smaller farming community in rural Denmark. They can best be described as 'citizens of the world' for their love of travel and adventure.

I believe that entrepreneurship is a trait that we are all born with but that its spark is either nurtured or extinguished by our early life experiences. At its core, it is a mindset, a contrarian streak that encourages us to go against the grain, to push the boundaries and believe that we can provide a product or service which no one else has yet provided or take something that already exists and make it better. My parents embody this mindset as outside-the-box thinkers. When I was a child, they always encouraged me to explore my interests, and their entrepreneurial spirit and love for business certainly rubbed off on me, something for which I will always be grateful.

The first business I can remember my parents starting was, during the infancy of the internet in the 1990s, an e-commerce business selling perfumes online via a website called Scent-Item.com - even today, I think it's a clever name. Their excitement for the business, taking me and my sister to visit trade fairs, finding suppliers and helping to design the packaging for the products were all formative experiences for me. At the dinner table they often talked of little else!

My parents helped me to 'go wide' from a very early age. I took my first flight when I was two months old. By the time I had graduated from high school, I had been to eight schools and lived in eleven different homes across six different countries. My parents even viewed the houses we lived in with an entrepreneurial mindset. They bought only houses that needed significant work. They renovated and then sold them (hopefully for a profit), then repeated the process. My childhood wasn't perfect - there were times when we had a lot, and times when we had very little - but those experiences, especially the painful ones, have shaped my current outlook on both life and business.

At the age of seven, I started my first business, The Console Club, to trade PlayStation and Nintendo 64 games amongst my friends in the school playground. This business taught me that your reputation with your customers is absolutely key, especially when you're trying to grow your business.

My next business was slightly more ambitious, as I graduated from local video game reseller to international gadget retailer. My family had moved to Australia when I was ten years old. On the way, we had made a stop in Hong Kong, where there were fantastic markets selling all sorts of toys and gadgets. I spent all the money I'd saved from my business ventures and from doing chores around the house (around $500) to buy a suitcase full of them. On arrival in Sydney, I began to sell them on eBay. This proved to be a real money spinner, so much so that I started ordering and receiving monthly shipments of merchandise direct from China. I learnt not only the power of 'buying wholesale and selling retail' but also the complexities of inventory management.

Next, I started a dog-walking business and learnt the importance of scalability. Although such a business was lucrative, I couldn't walk more than two dogs at once - and when your employees don't turn up, you really are left holding all the leads!

My first experience with the stock market didn't come until I was eleven years old (better late than never!). My father asked me to help him choose which funds to invest his Australian Superannuation Scheme (pension) into. Together we reviewed all the different fund options, and I remember being amazed at the range of choices and the variation of past returns. We reviewed his portfolio every quarter to see how it was doing. This was my first exposure to the core principles of investing and the importance of having a long-term mentality, as we were investing with a thirty-year horizon for my father's retirement.

My father also had a bookshelf of business books and biographies which he encouraged me to read. I remember being transfixed by the story of how Sir Richard Branson, with no money upfront, started Virgin Airlines and took on British Airways, the industry colossus at the time. This was my first lesson on business moats and also that supernormal profits will, whenever possible, attract competition that will...