Story of Warren Buffett | There’s no greater, more fascinating achievement out there than seeing your name in the history books as an entrepreneur who played a game-changing role in revolutionizing the business world in one way or another. These leaders possess contextual intelligence – the ability to understand the context of different eras and seize the unique opportunities within them, often before anyone else.
In this articles, I’ll share the story of Warren Buffett, a man who redefined entrepreneurship and investing, creating an empire in the form of Berkshire Hathaway Inc.
Warren Buffett is a renowned businessman, investor, and philanthropist, currently serving as chairman of one of the largest conglomerates in the world, Berkshire Hathaway. The multiple industry tycoon currently has holdings in over 60 companies ranging from the media to insurance, food & beverage, energy, and the healthcare industry, thus, making him one of the richest men in the world, just behind the likes of Elon Musk (Tesla), Jeff Bezos (Amazon), and Bernard Arnault (Louis Vuitton). As per Forbes, his net worth in 2021 is close to $104 billion.
Background and Education
Warren Buffet was born on August 30, 1930, in the small town of Omaha, Nebraska. His father, Howard Buffett, was an avid investor and later became a U.S. congressman. His grandfather, Ernest Buffet, owned a local grocery store. With business running through the family, Warren was naturally good with numbers and even started reading books about the stock market, laying the foundation for his many entrepreneurial ventures in the future. When he was 10, he spent a lot of his time at a local brokerage and even visited the New York Stock Exchange. In 1947, after years of venturing into different businesses, Buffett entered the Wharton School of the University of Pennsylvania and transferred to the University of Nebraska after two years, graduating with a Bachelor of Science in Business Administration. Buffett wanted to pursue a Master of Science degree in Economics so he applied to Harward Business School. After being rejected, he enrolled at Columbia Business School instead and also attended the New York Institute of Finance.
Early Career and Berkshire Hathaway Inc
By the age of 13, Buffett was already running several businesses across town. He sold magazines and newspapers, Coca-Cola, and also a custom horseracing tip sheet. He also became one of the youngest citizens to file his tax returns. When he was in high school, he co-invested in a pinball machine with his friend for $25 and later installed it in a barbershop. Using the profit, they were able to purchase more machines before eventually selling the business for $1,200.
In 1956, Warren Buffet started a brokerage firm in his hometown of Omaha called Buffett Partnership Ltd. By investing in several undervalued companies at the time, he quickly became a millionaire. One of the companies on his list was a textile company called Berkshire Hathaway, which he assumed control of in 1965 after accumulating most of its stock. Despite the success of his firm, he dissolved it in 1969 to develop Berkshire Hathaway by expanding through domain transformation, acquiring companies like The Washington Post, GEICO, and Exxon. In 1989, Warren Buffett made one of his best investments by buying stock in Coca-Cola, ultimately becoming the company’s director until 2006. Today, Berkshire Hathaway Inc owns 65 distinct companies with over 260 subsidiaries, including nearly 10% of Apple and nearly 27% of Kraft-Heinz. Here is a list of the top 25 companies the business tycoon owns today:
1. Wells Fargo
2. American Express
4. International Dairy Queen, Inc.
5. Jordan’s Furniture
6. Home Services of America
7. Buffalo News, Buffalo NY
8. Marmon Holdings, Inc.
12. Charter Brokerage
13. Pampered Chef
14. Oriental Trading Company
15. Business Wire
16. Precision Steel Warehouse, Inc.
17. Clayton Homes
18. CTB Inc.
19. Forest River
20. United States Liability Insurance Group
21. Shaw Industries
22. Scott Fetzer Companies
23. Star Furniture
24. See’s Candles
25. Garan Incorporated
Warren Buffet’s Impact on the U.S. Economy
Warren Buffet’s selective approach to reinvestment of his parent company Berkshire Hathaway’s earning has a significant impact on the wider economies. During the 70s, he used his profits and cashflows to invest in stock and acquire other smaller companies from various industry sectors, diversifying his portfolio. He believed in investing in assets that are needed in the American economy which is why his company slowly drifted away from manufacturing buggy whips in the rapidly-growing age of automobiles. His unique, cutting-edge strategies allowed him to shift profits and resources between different companies to aid their overall performance, thereby, benefiting the larger economy.
Warren Buffett is also known as one of the pioneers of modern-day passive investing, contributing to the success of several small businesses and startups, such as Fruit of the Loom, Nebraska Furniture Mart, See’s Candles, and Dairy Queen. Warren Buffett also transformed the health insurance industry by figuring out how to deliver insurance more efficiently and lowering the cost. His innovative resource allocation strategies allowed him to expand his empire quickly and spread low-cost products to a wider customer base.
It’s impossible to fathom or estimate the impact Warren Buffett has had in the business world, especially the stock market. His investing strategies and efficient management techniques have become lessons in most modern business books. On a personal note, he still lives in the same house he bought in 1956 back in Omaha, Nebraska, and has promised to donate nearly 99% of his wealth to charity, showing his humble side and giving back to the world. Fascinating.