Who is David Cheriton and Why Should You Care?

david cheriton

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David Cheriton cuts his own hair. David Cheriton drove a 1986 Volkswagen Vanagon, until he “splurged” on a 2012 Honda Odyssey.

When David Cheriton goes out to eat, he usually saves half of the meal for the next day. David Cheriton lives in the same colonial-style home he bought more than 35 years ago.

David Cheriton took a vacation. Once. He went to Maui and windsurfed. Afterwards he called himself “spoiled” and was even upset with himself for the money he spent.

David Cheriton is frugal.

David Cheriton is also a billionaire. He's one of the wealthiest people in the world, with a net worth over $3 billion.

What do you think he does for a living?

David Cheriton is a professor at Stanford University. He made his money because he knows his field inside and out – IT and computer technology. He's also an incredibly intelligent investor. Here's a blurb from a story about him at The Stanford Daily:

As an “impoverished university professor,” Cheriton paired up with Andy Bechtolsheim–who later went on to co-found Sun Microsystems–to start a tech company in 1995. After existing for about 18 months, the startup was bought up by Cisco for $200 million. In his own words, the venture took Cheriton “from the category of having to work for a living to the category of not having to work for a living.”

That's just what got him started. David Cheriton's big break came when he Sergey Brin and Larry Page, the founders of Google:

Meanwhile, Google founders Sergey Brin and Larry Page were working on their Ph.D.s on the fourth floor of Margaret Jacks Hall, Stanford building 460. Though Cheriton had never personally taught or advised either of the two, the rumor that the Canadian professor down the hall knew a thing or two about both the Internet and business drove Brin and Page to seek out Cheriton for counsel.

As the story goes, David Cheriton met with the two on his front porch (of the home he still lives in today) and ended up cutting them a check for $200,000 (although some sources say it was $100,000) to start Google.

It's fair to say the investment paid off. Google's market cap is over $450 billion today.

The dynamic duo didn't even have a bank account at the time of the investment. Check out this hilariously crappy-quality video from Forbes on David Cheriton:

Pretty crazy, right?

So this guy is sitting on billions. Yet he lives a life of frugality. So what can we learn? Here are a few lessons I'm taking from David Cheriton:

  1. If you can't explain it, don't spend it. He says his “rule is never spend in a way that I can't explain to my parents without apology or embarrassment.” Now that gives you something to think about.
  2. If you have to make time to spend your money, you're not frugal. As a professor at Stanford, this guy is mad busy. He believes that “spending his money would take too much time” and uses the example “If you buy a fancy car you have to figure out which car and who’s going to look after it and all that sort of stuff.”
  3. If a billionaire isn't buying it, why the hell am I? Dude drives a super modest car and has lived in the same home for more than half his life. It's not like he can't afford to upgrade his lifestyle, he just chooses not to. So if he's not upgrading, how does it make sense that I would?
  4. Think big or go home. One of his Ph.D students says that David Cheriton's standards are crazy high and he tells his students to think big and make an impact on the world. If we're not setting the proverbial bar extremely high, we're settling for mediocrity, right?

There are tons of (real) rich people who live a life of frugality, in fact Excellence Reporter has a list of 15 of them right here.

The question to think about is why they choose to live this way. You and I are not billionaires. We probably will never be billionaires. Yet we (I say we loosely here) seem to have all kinds of time to finance that new car, buy a bigger home when we get a raise instead of downsizing, or take a luxurious vacation that will make our friends envy us.

Why?

Good question. Think about this post. Click around on some of the links. Do a little research on people like David Cheriton. Then answer the question…

Why do we as a society find time and reason to buy newer, bigger things when folks like David Cheriton don't?

Photo courtesy of Buzzquotes.com

 

2 thoughts on “Who is David Cheriton and Why Should You Care?”

  1. Nice story, and it definitely puts things in perspective. Why are so many Americans going deeply into debt buying a bunch of useless shit when this man (whom I admit I didn’t recognize before reading this article), who can easily afford almost anything he’d could ever want, lives a relatively modest life without these things.

    My late grandfather used to be a wood worker. He was great at building things with his hands, like furniture and other things made of wood. My family used to visit my grandparents every summer and invariably a part of our visit would involve making something out of wood. Both me and my grandfather would make the same thing, or he’d help make some of the more complex parts of whatever we were building.

    I remember that when it came time to sand the wood with a piece of sandpaper, I’d naturally exclaim “I’m done”! just a short time after starting. My grandfather was, of course, still sanding.

    My dad would say, “No you’re not, Steve. If he’s not done (meaning, my grandfather), you aren’t either”.

    I see this as a very similar scenario. If my grandfather, an expert at wood working, isn’t done sanding a piece of wood, then me – some 12 year old kid vacationing at my grandparent’s place, isn’t done either.

    And likewise, if this billionaire doesn’t need the expensive car and huge house, then you know, regular Americans probably don’t either. Of course everybody’s NEEDS are different, but we aren’t talking about NEEDS here.

    We’re talking about diving into deep debt spending money we don’t have on shit that we don’t need.

    Maybe people should start acting like smart and successful billionaires – like this guy. Ironically, they’d save money.

    1. What a great story Steve. I love the connection you’ve made. It’s true too… If billionaires are saying they won’t buy new stuff, what the hell gives us justification!??

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