Last month, I went to Omaha for the annual Berkshire Hathaway shareholders meeting. Its always a lot of fun, and not just because of the ping-pong matches and the newspaper-throwing contest I have with Warren Buffett. Its also fun because I get to learn from Warren and gain insight into how he thinks.
Here are three things Ive learned from Warren over the years:
1. Its not just about investing.
The first thing people learn from Warren, of course, is how to think about investing. Thats natural, given his amazing track record. Unfortunately, thats 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 companys moatits competitive advantageand 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 its worth. And you have to be willing to ignore the market rather than follow it, because you want to take advantage of the markets mistakesthe 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 thingslike volume, or how the price had changed over timeto make his decisions. But when we started talking that day, he didnt ask me about any of those things. Instead he started asking big questions about the fundamentals of our business. Why cant IBM do what Microsoft does? Why has Microsoft been so profitable? Thats when I realized he thought about business in a much more profound way than Id 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 thats because his natural good humor shines through. Partly its because people think it will help them invest better (and theyre right). But its also because hes been willing to speak frankly and criticize things like stock options and financial derivatives. Hes 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 foundations work. I still have a ways to go before mine is as good as Warrens, but its been helpful to sit down once a year and explain the results were seeing, both good and bad.
3. Know how valuable your time is.
No matter how much money you have, you cant buy more time. There are only 24 hours in everyones day. Warren has a keen sense of this. He doesnt let his calendar get filled up with useless meetings. On the other hand, hes 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 hell 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 Warrens brilliant way of looking at the world is just as useful in attacking poverty and disease as it is in building a business. Hes one of a kind.
Photo: Bill Gates
* * *