Perhaps more than anyone in the late 20th and early 21st centuries, Warren Buffett represents the peak of American capitalism’s potential to build a fortune. The Oracle of Omaha, as he is known, was worth an estimated $84.9 billion as of early February 2018, making him No. 3 on the Forbes list of 400 wealthiest Americans.
Buffett is known primarily as the chairman and CEO of conglomerate Berkshire Hathaway, which owns more than five-dozen major subsidiary companies – including KraftHeinz, a union of the famous Kraft and Heinz brands that created the third-largest food company in North America.
Buffet was 87 years old by the beginning of 2018, and his dual legacy as an uber-successful businessman and generous philanthropist already is well established. He built Berkshire Hathaway into the massively diversified entity it is today, and he pledged to give away most of his multi-billion-dollar fortune to charity.
As of early 2018, Buffett still lived in the same relatively modest home in Omaha, Neb., that he bought for $31,500 in 1958.
Buffett was born in Omaha in 1930. His father served four terms in the U.S. House of Representatives. Young Warren divided his youth between Omaha and Washington, D.C. By the time he graduated high school, he knew entrepreneurship was in his future.
He attended several colleges – Wharton, Nebraska and Columbia Business School – and spent time at the New York Institute of Finance.
After graduation, he worked as an investment salesman and as a securities analyst before founding venture capital firm Buffett Partnership Ltd.
When the 1960s began, Buffett was well on his way to becoming a millionaire. By the time that decade ended, he had put into place the mechanism that would lead him to the top of most lists of American billionaires – he and his partners invested in a textile company called Berkshire Hathaway.
By the mid-1980s, Berkshire Hathaway was no longer in the textile business. Insurance and real estate propelled Buffett’s personal worth into the multi-billions. Along the way, Buffett invested in some of the most iconic brands in the world – the Washington Post, Coca-Cola, the ABC TV network, Duracell, GEICO insurance, Dairy Queen, Heinz ketchup and Kraft foods.
Through his philanthropy work, Buffett developed a close friendship with fellow mega-billionaires Bill and Melinda Gates.
In 1999, the Carson Group named Buffett the top money manager of the 20th century.
The annual Berkshire Hathaway shareholder letters written by Buffett provide rare insight into the leadership concepts he embraces. As business journalist Geoff Colvin pointed out in Fortune (Feb. 26, 2016), three of Buffett’s leadership traits are revealed through his writing:
- His undying optimism
- His willingness to admit his mistakes and accept the consequences
- His ability to explain complex ideas in simple language
The optimism is easy to understand. Much of what Buffett touches turns to virtual gold, and that has been the case throughout most of his business career.
That said, he has made major mistakes – mistakes that might have destroyed business people with less innate optimism. Yet, every year in his shareholder letter, he shows accountability by owning up to those missteps and laying out a plan to avoid similar gaffs in the future.
His plain-spoken approach to business influenced the very language of commerce. In 1998, Buffett spear-headed the creation of a document designed to clarify jargon-filled disclosure documents filed with the U.S. Securities and Exchange Commission.
The publication, “A Plain English Handbook,” is a masterpiece of orderly syntax and verbal clarity, and it is required reading in many finance classes around the world. Absorbing its lessons on clear writing in plain English gives the reader a great deal of insight into how Buffett’s mind works – and how he prefers to lead.
Words of Wisdom
- “One unoriginal but useful tip: Write with a specific person in mind. When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters. I have no trouble picturing them: Though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them. My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I don’t need to be Shakespeare; I must, though, have a sincere desire to inform. No siblings to write to? Borrow mine: Just begin with ‘Dear Doris and Bertie.’” – From the preface of “A Plain English Handbook: How to Create Clear SEC Disclosure Documents”
- “I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner.” – From “The Audacity of Hope: Thoughts on Reclaiming the American Dream,” by Barack Obama (2006)
- “Long ago, (Columbia Business School professor) Ben Graham taught me that, ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” – From the 2008 Berkshire Hathaway Chairman’s Letter
Image credit – Warren Buffett