If you are interested in the stock market, there isn’t a chance that you haven’t heard of Warren E. Buffet. He’s the second richest man in America with a net worth of $44 B, only next to Bill Gates’ $61 B.
He is the founder and CEO of Berkshire Hathaway (BRK), a holding company which owns subsidiaries that engage in diverse business activities. When it comes to investing in companies, Warren Buffett is THE MAN! Berkshire Hathaway had an overall gain of 513,055% from 1964 to 2011.
Although super rich, Warren Buffett lives a “simple” life. He still drives
himself to work every day and dines at Gorat’s, a local steakhouse
(which is NOT an expensive restaurant) in Omaha. He is widely known for
being courteous, personable, and humble.
So we weren't surprised when Bill Gates published on his blog about three major things that he has learned from his friend Warren over the years:
1. It’s not just about investing.
first thing people learn from Warren, of course, is how to think about
investing. That’s natural, given his amazing track record.
Unfortunately, that’s where a lot of people stop, and they miss out on
the fact that he has a whole framework for business thinking that is
very powerful. For example, he talks about looking for a company’s
moat—its competitive advantage—and whether the moat is shrinking or
growing. He says a shareholder has to act as if he owns the entire
business, looking at the future profit stream and deciding what it’s
worth. And you have to be willing to ignore the market rather than
follow it, because you want to take advantage of the market’s
mistakes—the companies that have been underpriced.
have to admit, when I first met Warren, the fact that he had this
framework was a real surprise to me. I met him at a dinner my mother had
put together. On my way there, I thought, “Why would I want to meet
this guy who picks stocks?” I thought he just used various
market-related things—like volume, or how the price had changed over
time—to make his decisions. But when we started talking that day, he
didn’t ask me about any of those things. Instead he started asking big
questions about the fundamentals of our business. “Why can’t IBM do what
Microsoft does? Why has Microsoft been so profitable?” That’s when I
realized he thought about business in a much more profound way than I’d
given him credit for.
2. Use your platform.
lot of business leaders write letters to their shareholders, but Warren
is justly famous for his. Partly that’s because his natural good humor
shines through. Partly it’s because people think it will help them
invest better (and they’re right). But it’s also because he’s been
willing to speak frankly and criticize things like stock options and
financial derivatives. He’s not afraid to take positions, like his stand
on raising taxes on the rich, that run counter to his self-interest.
Warren inspired me to start writing my own annual letter
about the foundation’s work. I still have a ways to go before mine is
as good as Warren’s, but it’s been helpful to sit down once a year and
explain the results we’re seeing, both good and bad.
3. Know how valuable your time is.
matter how much money you have, you can’t buy more time. There are only
24 hours in everyone’s day. Warren has a keen sense of this. He doesn’t
let his calendar get filled up with useless meetings. On the other
hand, he’s very generous with his time for the people he trusts. He
gives his close advisers at Berkshire his phone number, and they can
just call him up and he’ll answer the phone.
Warren makes a point of meeting with dozens of university classes every
year, not many people get to ask him for advice on a regular basis. I
feel very lucky in that regard: The dialogue has been invaluable to me,
and not only at Microsoft. When Melinda and I started our foundation, I
turned to him for advice. We talked a lot about the idea that
philanthropy could be just as impactful in its own way as software had
been. It turns out that Warren’s brilliant way of looking at the world
is just as useful in attacking poverty and disease as it is in building a
business. He’s one of a kind.