Focus

“Well, focus has always been a strong part of my personality. If I get interested in something, I get really interested. If I get interested in those subjects, I want to read about it and I want to talk about it, I want to meet people who are involved in it.” - WB

“We both love to work hard and neither of us like frivolous things you know, he doesn’t know much about cooking or art, or a huge range of things.” - Bill Gates

“I don’t have a mind that relates to the physical universe well. But the business universe, I think I understand reasonably well.” - WB

“Warren has the ability to size-up people, businesses… It’s a pretty magical thing… We should all try to be 20% as good at that.” - Bill Gates

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Sit and Think.

He spends a significant amount of time doing that. He says that sometimes, it’s pretty unproductive but he finds it enjoyable to think about business or investment problems. -They’re easy for him. It’s the human problems that are the tough ones. He also believes that there aren’t always answers to human problems but there are always answers with money. He is a loner in a sense and it’s difficult for his friends to connect with him on an emotional level (though Bill Gates seems to be one of the exceptions). Maybe making emotional connections is not one of is ‘default’ settings during ‘normal operation’.

“He was there physically but he was upstairs reading all the time. I was told my mother we have to talk in sound bites. I learned that early on that if you start going into some long thing, unless you have explained to him ahead of time that it’s going to be a long thing, and you need him to hang in there, you’ll lose him. You lose him to whatever giant thought he has in his head at the time that he was probably thinking about before you came in and he really wants to get back to it.”

“He’s not like the rest of us. I don’t think my dad ever took anybody for granted but it you are a little bit blind, I think to what other people might be doing behind the scenes. Then my dad has got a little bit of a pass. ” - PB

Nonetheless, Warren’s then, wife, Susie says that when he’s ready for connecting, he’s able to connect with people too.

It’s a Level Playing Field

Warren likes compounding and his wife didn’t understand it. They say some of their disagreements were rooted there. Warren doesn’t buy many luxurious houses but rather reinvests what he earns. This earning power seems to be his scorecard or his very asset. He also says that anybody can win and that it is a level playing field.

How to Juggle Many Things

“I’ll tell you how you do it. Have you ever seen a juggler juggle 25 milk bottles? How did he ever get to do that? The answer is he started with one bottle then two, then three, and just kept doing it and pretty soon, he’s at 25. -And that’s the way we did it.” - Charlie Munger

They started out with cash,then bought one company after another, including insurance firms. Insurance in itself is a profitable business. But it has the additional advantage of creating something that's called ‘float’.

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Float

It is the money that hang around Berkshire while claims are waiting to be payed. Warren turned out to have an extraordinary ability to use the money from the float to buy companies that fed the growth of Berkshire.

Investing in What You Know and Understand

Berkshire grew into proportions never imagined by many. How did he do it? - By investing in what he knows and understands. -Old fashioned American brands like Coca Cola, Fruit of the Loom and Dairy Queen.

“Today, the Coca Cola company will sell almost two billions 8-ounce servings of one former another Coca Cola product. If you get an extra penny a serving, that’s $20M a day, $7.3B a year from one penny more. If you own Coca Cola, you own a little piece of the minds of billions of people." -WB

Establishing a Reputation

In 2006, his net worth was $46 Billion. He’s created Berkshire from virtually nothing into hundreds of billions of dollars of market cap. Nobody else has a record like that. He wanted to have an outstanding reputation. He doesn’t replace the management of the business he buys if he doesn’t have to. He was establishing a reputation that paid off later in life.

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Too Big to Fail

Just after he bought 12% of Solomon Brothers, a scandal blew out from its past mistakes and put his reputation on the line. Instead of quitting, Warren stepped up and basically helped turn things around to prevent the firm, which then employed about 8000 people, from going out of business. If Solomon went down, it would have taken important parts of Wall Street with it. He believed it was too big to fail.

“Lose a shred of reputation for the firm and I will be ruthless.” - WB

Love What You Do

A celebration is part of making a group of people work well together. The annual Berkshire Hathaway shareholders’ meetings is partly a fun festival where people come together and meet Warren and friends. It has become a huge public spectacle. He truly loves to do what he does. He even says: "Look for a job that you would do even if you don't need a job." Investors who own Berkshire see themselves as part of a community. There are more long-term holders at Berkshire than any other company. It’s pretty reasonable to think that a good investment is like buying a farm. You don’t buy it only to sell it weeks later.

I am of the opinion that it’s not only the math and the probability that counts. Investing in a company or project that follow sound principles and aligned with your vision will give you peace of mind.

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Love People, Love Charity

Warren says that over 50 years, he not only learned a lot about business but about human beings as well. After his wife, Susie died, he made a big decision of giving away most of his fortune to The Bill and Melinda Gates Foundation. He’s also given away more than 15% of his money to foundations started by his three children and his late wife. One global health activist called this decision “one of the most remarkable selfless acts that history will ever record”.

“My wife, Susie, and I have planned that whatever I’ve made would go back to society and originally, she thought she would outlive me and she’d make the big decision on them. But since her death, I had to rethink the best way to get the money into society and have it used in the most effective way and I had a solution staring me at the face.” - Warren Buffett.

More powerful than Buffet’s gift is the message that he’s sent to other Americans, that those who have the least should benefit from those who have the most.

Part 1 - Becoming Warren Buffett

Part 2 - Becoming Warren Buffett

Part 3 - Becoming Warren Buffett

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