Three Things
I have Learned From Warren Buffett
Bill Gates
I’m looking forward to sharing posts
from time to time about things I’ve learned in my career at Microsoft and
the Gates
Foundation. (I also post frequently on my
blog.)
Last month, I went to Omaha for the
annual Berkshire
Hathaway shareholders meeting. It’s
always a lot of fun, and not just because of the ping-pong matches and the
newspaper-throwing contest I have with Warren Buffett. It’s also fun because I
get to learn from Warren and gain insight into how he thinks.
Here are three things I’ve learned from Warren over the years:
1. It’s not just about investing.
The 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.
I 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.
A 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.
No 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.
Although 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.
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