From a very young age, Warren Buffett had so much interest in stocks and used a lot of his time reading and thinking about investing. In fact, at 11 years of age, he invested in his father’s company. At age 13 he filed his first tax returns. His family testifies of his interest in reading about companies mostly in daily newspapers.
In 2018, he is 87 years old, has beaten prostate cancer, is the third richest man in the world with a net worth of $86.1 billion, and controls up to 60 companies which are a part of the Berkshire Hathaway portfolio. He began investing in Berkshire Hathaway in 1962 when it was a failing textile manufacturing business that had found it hard to recover from both world wars.
Admitting later that it would be hard to revive this company as a textile business, Warren eventually invested enough into the company to become the majority shareholder, later venturing into the insurance industry and other investments that have seen this company become a holding company for five-dozen businesses ever since. As of 20th August 2018, to buy one stock in the company would cost you $313,870 – equivalent to a proper house in some high-end locations around the world.
He is nicknamed the “Oracle of Omaha,” and several times during the year thousands of shareholders of both Berkshire Hathaway and other stocks will gather in Omaha, Nebraska, to listen to Warren speak about investments and entrepreneurship.
He has cut down a lot on those conferences and graduation talks lately and now focuses on speaking at events catered for small businesses, women, or philanthropy. He is famously frugal, and even with his high net worth has continued to live in the $31,500 home he bought in 1958. Until recently, he drove a 2006 Cadillac DTS and only did an upgrade to a $45,000 Cadillac XTS after his daughter told him the DTS is embarrassing.
Warren Buffett is a household name in the USA and indeed around the world for several reasons. His investing acumen and great entrepreneurship experience can do so much good to startups launching in 2018 and especially the ones that want to create an impact and be there for the long-haul.
This is why we figured that he should feature in our current series which has so far included Anthony Bourdain, Steve Jobs, Jack Ma, Elon Musk, Gary Vaynerchuk, Jeff Bezos, Simon Sinek, and Chris Sacca.
If there is a virtue that defines Warren Buffett more than any other, it must be patience. Investing in stocks that sometimes take decades to turn around into great investments takes so much patience for the long-term game.
When starting out, he wasn’t very patient. In fact, he recalls that at 11 years old he invested in his father’s business, buying a stock at $38 a share, then sold it after a few weeks when it was at $40 only for the stock to go rallying up to $200 per share in later months.
From this, he missed a big earning opportunity to make so much money due to his lack of patience at the time.
Equally, for startups today, it takes so much patience to build a company that is worth its weight in gold. Every year, so many entrepreneurs quit on their startups, some selling early, while others outrightly quitting if the startup doesn’t turn a profit in a few months. This mentality cannot last you so long.
Coupled with several other attributes, Warren Buffett advocates for patience in entrepreneurship which isn’t a year-long goal, but more of a lifetime goal to make your company successful.
At Pressfarm we see this impatience when dealing with startups a number of times. Public relations is not a short term game, it takes several days, weeks, and sometimes a few months to see the PR wheel moving steadily in favour of the company that has been patient enough to build media relationships while implementing PR strategies in little spouts over time.
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” – Warren Buffett
2. Don’t play too risky
Entrepreneurs are known for their risk-taking abilities. They are courageous and brave to take risks upon which many people do not think very highly of. This is very true for so many stories. However, even Warren agrees that being overly risky in taking up opportunities can sometimes cost you.
He advocates for a well thought out risk-taking personality and does stand for people who expect mountains to grow out of molehills.
“I don’t look to jump over seven-foot bars: I look around for one-foot bars that I can step over.” – Warren Buffett
This can be carried over to startups. Rather than being overly ambitious and taking huge risks, take little risks which the startup can survive if the risks were not to pay off. For instance, if you want to take one huge risk, can you start to do that by breaking this down into small risks or steps that can slowly get you to cumulatively cover the whole risk?
3. Change the things you can change; let the rest be
Even with his investing acumen, he believes that some things can be unchangeable by a mere entrepreneur. There are things we cannot change in every vertical of life, in every field. Depending on your capacity, if you see something you cannot change, let it be. If you see things you can change, change them for the better.
“The most important thing to do if you find yourself in a hole is to stop digging.” – Warren Buffett
Several times, startups find themselves in holes and situations that are tight. When this happens, stop digging and start to rectify the course of the ship. Entrepreneurship can be a good kind of challenging, but sometimes you will find yourself in situations where you can do nothing, or you can only change by changing direction. Do the wise thing and let the direction change to something you can control.
4. You only have to be right a few times
As an entrepreneur, Warren’s whole life has relied upon making the right bets and calls when it comes to identifying what businesses to buy, which ones to let go, which ones to invest in and which ones will pay off big in the long-run.
So many of these decisions have, fortunately, gone right for Buffett. There have been wrong decisions along the way since taking over Berkshire Hathaway. However, the wrongs weren’t too many to affect the health of the company. And to this he advises entrepreneurs:
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffett
Startup founders without the right experience make mistakes, but these are not as important if you don’t make too many. As well, the rights have to be really right, and few in number to push your company to the right direction.
A good mix of right and wrong in business has never been detrimental. The founders will only get better at making the right calls.
5. Think long-term
The mindset of Warren Buffett was never based on the short-term. If it were so, he would never have bought a failing textile business and went on to turn it into the multi-billion business it is today. Additionally, a short-term mind would never have bought up-to 60 companies, most of them struggling to survive, and went on to influence them into becoming highly profitable businesses decades later.
Warren has often said that the goal should be to in and build a brand, position your mindset for the long-haul, and go big on reputation in several years to build a business that stands the test of time.
Startups at times have the incentive that they will exit after a few couples of years and go away rich. While this happens for a few startups around the world – most of them with groundbreaking ideas – it is not the same for millions of new companies every year. For such companies, doing things in the short-term mindset that affect the long-term goal negatively could ruin the business fast.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett
Change your mindset to see the long-term goals, and slowly build towards achieving those goals. It will take several years sometimes, and that is okay. You might even strike some good billions while at it.
6. Hire Women
Women have not been given chances to build themselves and enhance their careers for a long time in the past. This is now changing as the world moves to empower the girl-child and women to bring equality into workplaces and communities. Warren Buffett noticed this problem about 15 years ago and has since then been trying to achieve equality at Berkshire Hathaway.
While it didn’t strike him before then that there were grievous discrepancies between expectations and compensation for women at the workplace, since that realization, he has hired 6 female CEOs who run important companies and hired more in the younger crew of directors where for every 5 directors 3 are now women.
For startups, he has insisted on various talks in the past that founders have to hire as many women as they hire men and provide equal compensation for the same amount of work. Achieving equality at our workplaces is important for significant progress. If America does not give chances to women as well, then it will be like the whole nation is working with one hand tied at the back, and no true potential can ever truly be achieved.
7. Let your customers be happy
One of the most significant philosophies that Warren has cultivated in the Berkshire Hathaway team is the importance of not only providing valuable service to the customer but also making their day.
From product price to marketing, none of these matters if the customers are never really delighted. Loyalty is brewed out of this special part of customer service. It is not enough to provide a service or product for the price it goes for if the customer service is not top-notch.
“If you’ve been treated well and honestly, if you’ve been delighted by the person you’re doing business with, you’re going to return to that person,” – Warren Buffett
Startups can struggle with customer service a lot of times. This eventually affects the retention rates leading to high churn rates. While it can be hard to point out the points when a customer is dissatisfied, empowering the customer service channel can do so much to reduce the churn rate and help find out if customers are having a problem with the service.
On the other hand, if the churn rates are not scary, or the customers don’t have an issue with the platform, how can startups improve the customer experience? The point is to go the extra mile that makes the customer want to return.
One important part of making the customers happy is to make the employees happy. They interact with customers every single day. Warren insists that you cannot achieve customer delight if employees are not happy with how they are treated. It is more of treating the employees better in order to get the best out of them that delights the customers.
8. Focus on your area of expertise
Young Buffet began investing in stocks really early on. He would think a lot and read in the same measure. Most of his investment bets have paid off, that is why he sits high on that billionaires ranking- bettered only by Bill Gates and Jeff Bezos.
This is what he was and is good at it. Predicting outcomes of businesses and stocks from informed points of views. He doesn’t go out there and try to do marketing, sales, programming, etc. He has focused on his one speciality and ended up being right 60 times.
Startup founders need to do what Warren calls “mining your area of expertise.” Find something that you do really well, focus on that and hire someone to do what you cannot.
Understandably, it can be really difficult to hire someone at the beginning to help out with other facets of your business or entrepreneurship venture. However, as time passes it is to know where you are holding the company back. Attempting to be a marketer when you are not good at it could delay the growth of your startup because you are achieving less there. Wanting to be the content writer for your company could delay the uptake of your company’s content because you just aren’t that good of a writer. Trying to do coding for your startup might jeopardize the product making it pass for something very shoddy and poorly done because you are not that great a software engineer.
Find your point of magic, stick to it and make it work. Delegate as much as you can to someone else who is good at what you are not.
9. Read 500 pages a day
At one time, Warren Buffett was asked what he does to become smarter and he said he reads 500 pages per day. He compared reading to compound interest. Every day you get new knowledge that builds onto the last gained knowledge. Eventually, you sound smart, look smart and speak smart. Even more, your decisions become smarter.
He admitted that he spends a lot of time at work reading journals, reports, and financial statements while at home he reads newspapers and books. The cumulative benefit is that he is always one of the smartest in the room.
“I do more reading and thinking, and make less impulse decisions than most people in business.” – Warren Buffett
10. Better the world a step further
In the last few years, Warren has donated over $30 billion to charity and mostly to the Bill and Melinda Gates Foundation. Together with Bill Gates, they founded The Giving Pledge – an organization that brings together several high net worth people to give towards philanthropic causes. Many other billionaires have joined into the program including Facebook’s Mark Zuckerberg and his wife Priscilla Chan.
Warren Buffett has promised to give away to charitable causes around the world and he made a pledge to give a majority of his wealth to the Bill and Melinda Gates Foundation.
For startups, you can touch the world in one way or another. Even as a small company, donating a small percentage of your profits to the betterment of the world and people and animals that live in it is worth it. However, it doesn’t just have to be philanthropy.
It could be that your business is so groundbreaking it makes the world a better place just by it being around and running. It could be addressing world challenges like global warming, environmental sustainability, hunger, famine, drought, floods, cybersecurity, and earthquakes. Whatever you do, touch the world and move it towards being a little better for the next person.
11. Have fun at work
This is really simple, but you will be surprised that billions of people around the world are doing jobs they hate just to be able to survive. Warren doesn’t think you can get to 87 years doing that.
You have to enjoy and love your job for you to be able to do it on a daily basis for many years. Even when things are not looking great, if you are having fun at work that is all that matters.
“Find your passion, find the job that you would hold if you didn’t need to have a job, so that every day is fun,” Warren Buffett
Entrepreneurs who go out to launch startups and businesses catering towards various verticals must find something they love to do so much that the love and fun they get to have at work keeps them running during the tough days. It is all about thinking about your job and saying that you are really enjoying doing it.
12. Be transparent
For most companies worldwide, when the CEO gets sick they would rather hide that from shareholders and customers. Not Berkshire Hathaway. For this conglomerate, transparency is important.
Early in April 2012, Warren was diagnosed with stage 1 prostate cancer. He wrote a letter to the shareholders and employees accepting and admitting this to them and indicated that the doctor had said the cancer was not life-threatening.
Later in September 2012, he announced that he had completed his 44th and last radiation. He was cancer-free. This period had the risk of bringing the company’s stocks down but they did not flinch.
Startup founders and entrepreneurs have to learn that transparency is not a weakness. If anything, it makes your customers and employees trust you more. They can learn from this to make their businesses more transparent.
From one of the biggest investors in the world, all these tips are golden. As a proper guide, these are aspects of the business that have guided Warren to years on end of winning in the entrepreneurship fight. Startups need to borrow from these to build better companies focusing on long-term goals and branding.