Fancy another “Who am I?” game? At 13, he was filing his own tax returns and earning more than his teachers – and flirting with shop-lifting. He has no computer or calculator in his office, which is rented, small and unpretentious. He’s self-confessed as hopeless with technology, thinks Mr Market is often crazy or psychotic. He has a website, but it doesn’t run to images. He likes burgers, coke and t-bone steaks, and eats in the same restaurant most days. He learned the ukulele to woo his first wife, who later found his second wife for him – and persuaded her to move in with him when she moved out. Without divorcing him. He thinks ‘risk comes from not knowing what you’re doing’ and he’s against borrowing. He tasks his daughter with buying hail-damaged cars because they’re cheaper, and drives them till she tells him they’re embarrassing. Getting warm anyone?

Surprising, he isn’t the owner of a local cab company. He’s Warren Buffett. And he’s the richest man in the world. His wealth – somewhere around $60bn dollars of it – has come from investment, but he seems to be as far from Wall Street as you can get (although Wall Street to Dundee, Nebraska is actually only 1,244 miles). Since 1965, he has achieved an extraordinary 20.3% average annual growth in Berkshire Hathaway’s value, which equates to 336,000% over the years – 84 times that of the standard US index fund, the S&P 500. This kind of success makes him a figure of fascination – he has whole blogs devoted to him – as people try to figure out how he does it and, of course, how they might do the same.

Certainly, he seems – in his disarmingly bling-free, folksy manner – to be out of step with the hugely successful investor stereotype. He dislikes speculation, seeing it as something quite distinct from investment. In one of the few widely repeated Buffett quotes that might seem less than gentlemanly, he observed that:

We believe that according the name “investors” to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a “romantic”.

He likes “the asset itself to produce a return, not the price of the asset” – which, as learning and development specialists, makes him someone we can admire.  We can also admire one of his aphorisms, despite its uncharacteristically poetic tone:

Chains of habit are too light to be felt until they are too heavy to be broken.”

He is, of course, of intense interest to other people for a simple reason: he is massively wealthy and it’s only human nature for the rest of us to be both inquisitive and acquisitive. In a recent TV interview with Evan Davis, he revealed a very short checklist for his working practices: 

  • Invest in things you’re capable of understanding
  • Invest in businesses with intrinsic durable competitive advantage (as he said himself, “We have enough trouble making silk purses out of silk”)
  • Ensure the businesses have management with integrity and talent
  • Buy at a price that makes sense.

In coveting his wealth and wondering how we might ever compete, however, it’s important to bear a few points in mind. He has never started a business. He invests without borrowing, as a portfolio of investment businesses – where customers pay in advance – gives him the cash to do so. (He sees debt and leverage as highly dangerous, and a major cause of business collapses.) He is happy to be unconventional, think independently and ignore bandwagons and passing fads – but, compared to most of us, he is in much more of a position to be able to.

He is also in the investment business – his business makes its money from the performance of other businesses, and he operates the tiller with the lightest possible hand. As an interviewee from a company he had bought explained, he asks for and contacts them little and rarely: “Just send me whatever financials you’re already producing” was the memorable soundbite. The steady returns he has achieved also belie an aspect that the programme did not explore with him: I think we can assume he has a formidable capacity for analysis.

But what are the lessons from Mr Buffett for businesses who produce things or provide services (as he does these things only indirectly)? The first of three that I identified was raised by the man himself. One of the people he says has influenced him most was Dale Carnegie, author of the famous How to Win Friends and Influence People. Buffett might be a man who remains oblivious to corporate vanities and operates with barely a metaphorical frill, but that doesn’t translate into insensitivity. His lesson from Carnegie was simple but powerful – handling people is a key skill. Buffett credits much of his success (and colleagues and commentators agree with his assessment) on his abilities to persuade, engage and charm. He believes that praise is a business tool, and that encouraging people and giving them aspirations is a more effective way of influencing their behaviour than ‘nagging’. Given that his company’s AGM is affectionately referred to as “Woodstock for Capitalists” – and attracts an enormous audience – his ability to inspire devotion is pretty much unquestionable.

The second lesson is again about personal values: integrity. Not everyone would want to join him for dinner, but very few disrespect him. He is, in another interviewee’s words, “always a perfect gentleman”. Not only does his integrity matter to others – the US Treasury came extremely close to closing Solomon Bros in the early 90s, but was persuaded otherwise when Buffett intervened in person on a Sunday morning (why? Because they trusted him) – but it matters to him. To quote the man himself, one of his key messages to the managers of the businesses in which he invests make this very clear:

Lose money and I’ll understand. Lose a shred of its reputation, and I’ll be ruthless.”

The relationship between business and society is also not lost on him. Reknown for his intention to give the vast majority of his money away, he has so far donated $31bn to the Bill and Melinda Gates Foundation. (Bill is Warren’s best buddy: endearingly they meet up to play chess, eat burgers and drink – what else? – Coca Cola.) Despite this largesse, there is no insistence on having theatres, museums and the like named after him: that’s not his reason for giving the money away. A man with no issues with progressive taxation, he believes that the super-rich should acknowledge that “society has done a lot for them” and that his wealth represents “an enormous number of claim checks on society”.

Possessed of a long-term viewpoint (evidenced by his investment behaviour) as well as not just integrity but social grace, he provides many of us with a valuable potential proverb:

Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Indeed, he seems little troubled by the whole issue of personal legacy: his wealth will be largely given away rather than passed on, as he believes that will do greater good. It’s not his value but his values (plural) that he wishes to pass on to his children. For himself, he wants to be remembered for having had a lot of fun – “We enjoy the process far more than the proceeds” – and for having led a rich life.

His apparent down-to-earthness seems to be genuine. This is a man presumably more generally known as ‘The Oracle of Omaha’ as ‘sage’ implies an interest in exotic condiments that simply doesn’t fit. Googling for examples of his wisdom produces many pithy aphorisms that speak of the common sense his shareholders admire so greatly:

You only have to do a very few things right in your life so long as you don’t do too many things wrong.”

The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”

Price is what you pay. Value is what you get.”

We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely. “

Maybe his shortest lesson was one passed on informally. At a dinner with Bill Gates, both men were asked the secret of their success. And both answered with a single word.

Focus.

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