Warren Buffett’s approach to judging people has always fascinated me. In a conversation with Mohnish Pabrai, Buffett revealed something surprising: he doesn’t consider himself particularly skilled at figuring people out. Instead, he employs a simple yet powerful filtering system.
At a hypothetical cocktail party with 100 people, Buffett claims he could identify just 3-4 exceptional individuals and 3-4 people to avoid completely. For the remaining 92? He’d have no opinion due to insufficient time to evaluate them properly.
What’s remarkable is what he does next: he treats those 92 unknowns exactly the same as the people he wants nothing to do with. He excludes them all.
This “harsh grader” approach might seem unfair or even cruel at first glance, but the wisdom behind it is compelling. By only allowing truly exceptional people into your inner circle, you create an environment that elevates you rather than drags you down.
Buffett explained to Pabrai that there’s a gravitational pull in relationships. Spend time with people better than you, and you’ll improve. Associate with those who exhibit lower standards, and you’ll decline. Most people struggle with this concept because loyalty gets in the way – they maintain relationships with ethically questionable or negative individuals simply due to history.
The Quality of Your Circle Determines Your Trajectory
Charlie Munger, Buffett’s long-time business partner, exemplifies this principle perfectly. When Pabrai began spending time with Munger’s friends, he was astonished by their exceptional quality. He realized there was an enormous gap between the top 1% of humans and everyone else.
This led Pabrai to a brilliant shortcut: making Munger’s friends his own. After all, Munger had already done the filtering work, and you couldn’t ask for a better filter than Charlie Munger himself.
The concept aligns perfectly with Adam Grant’s categorization of people in his book “Give and Take”:
- Takers: Those who extract value from others without giving back
- Matchers: Those who keep mental score and reciprocate accordingly
- Givers: Those who selflessly help others without expecting anything in return
The givers are the ones you want in your life. More importantly, you should strive to be a giver yourself. When you genuinely give without expectation, the universe seems to conspire to help you. Buffett and Munger are perfect examples – as givers, they have countless people eager to help them in any way possible.
The Mathematics of Exclusion
There’s compelling game theory behind this approach. The cost of excluding someone who might be good is actually quite low. However, the cost of including someone toxic can be extraordinarily high.
Buffett applies similar thinking to investments with his “too hard” pile. As he explains using baseball analogies, there are no called strikes in investing. You can let a thousand opportunities pass by without penalty, swinging only when conditions are perfect – the famous “fat pitch.”
The same logic applies to relationships. In a world of billions of people, there are effectively infinite good humans available. Therefore, excluding someone good because you can’t properly evaluate them carries virtually no penalty – there will always be more exceptional people to meet.
But bringing in someone substandard? That decision can drain your energy, time, and potential in countless ways.
I’ve found this harsh grader approach transformative in my own life. By focusing exclusively on relationships with truly exceptional people, I’ve experienced remarkable personal growth. It requires difficult choices and sometimes feels unfair, but the results speak for themselves.
The next time you’re evaluating relationships – personal or professional – consider adopting the Buffett-Munger filter. Be selective. Be a harsh grader. Your future self will thank you for it.
Frequently Asked Questions
Q: Isn’t it unfair to dismiss people without getting to know them properly?
While it may seem unfair on the surface, this approach recognizes a practical reality: our time and energy are limited resources. By focusing these resources exclusively on relationships with exceptional people, we maximize our potential for growth. The alternative—spreading ourselves thin across many mediocre relationships—often leads to stagnation.
Q: How can you identify who the “givers” are in your life?
Look for people who help others without calculation or expectation of return. They contribute value freely, support others’ success, and don’t keep score. Their generosity extends beyond transactional relationships. Pay attention to how they treat people who can’t benefit them—this often reveals their true character.
Q: Does this mean cutting off existing friendships that don’t meet these standards?
This approach doesn’t necessarily demand cutting off existing relationships, but rather making conscious decisions about where you invest your time and energy going forward. For existing relationships that may be draining or negative, consider gradually reducing their prominence in your life while building new connections with exceptional people.
Q: How can I become more of a “giver” myself?
Start by looking for opportunities to help others without expectation of return. Share knowledge freely, make introductions that benefit others, offer support during difficult times, and celebrate others’ successes genuinely. The paradox is that by focusing on giving rather than taking, you’ll likely receive more in return through strengthened relationships and new opportunities.
