BILL & BUFFET
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.
Photo:
Bill Gates
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