Warren Buffett and Charlie Munger, the iconic investing duo behind Berkshire Hathaway Inc.,  revealed their unique approach to sizing up businesses and acquisitions during their 1997 annual meeting. The key takeaway? A five-minute test that circumvents the typical due diligence process, focusing instead on the core economic characteristics of a business.

According to Buffett, he and Munger can evaluate a company in five minutes. They don’t need exhaustive studies, legal examinations or checking leases and titles to make an investment decision. "We really can tell you in five minutes whether we’re interested in something," Buffett said. The test is a culmination of their collective wisdom gathered over decades in the business, alongside a series of mental filters that they’ve developed to assess companies.

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One example Buffett cited was Flight Safety, a company Berkshire had never invested in but had known about for over 20 years. When they finally decided to make a move, they did so without the conventional rigors of due diligence. Buffett said they never looked at leases, set foot in any of their global training centers, or visited the headquarters. Yet, this strategy has never cost them significantly. "What costs us money is when we mis-assess the fundamental economic characteristics of the business," Buffett said.

While the average person may not have the resources or the experience of Buffett and Munger, the concept of a quick assessment can still apply, particularly when looking at investing in startups. Investors can use a simplified version of the five-minute test to gauge their initial interest in a new venture. For example, Mode Mobile, a new company that aims to offer side-hustle opportunities using smartphones, could catch your eye for its innovative approach. While you may need more than five minutes to make an investment decision, the test can at least help you quickly identify ideas that pique your interest, warranting further investigation.