The snowball : Warren Buffett and the business of life

Warren Buffett displayed early entrepreneurial drive, selling gum, soda, and magazines. A trip to NYC and reading "One Thousand Ways to Make $1,000" fueled his obsession with compounding interest. His first stock purchase at eleven taught him patience and financial responsibility. Experiences at his grandfather's store instilled a lifelong aversion to manual labor and the importance of negotiating.

After Harvard's rejection, Buffett studied under Benjamin Graham at Columbia, embracing value investing. This philosophy taught him to view stocks as ownership in real businesses, focusing on intrinsic value and a margin of safety. A pivotal visit to GEICO revealed the power of direct-marketing insurance, leading to a significant investment.

Returning to Omaha, Buffett established Buffett Associates, Ltd., pooling capital from family and friends. He viewed himself as a fiduciary, determined to grow capital through disciplined investment. His operations expanded rapidly, transitioning him into a professional money manager. A pivotal meeting introduced him to Charlie Munger, fostering an immediate intellectual connection and shared investment passion.

Buffett initially acquired Berkshire Hathaway, a textile manufacturer, intending a profitable buyback. However, a dispute led him to seize control. He soon realized the textile business was a mistake, a "soggy cigar butt." This prompted a strategic shift toward acquiring more promising businesses, notably insurance companies like National Indemnity and consumer brands such as See’s Candies, transitioning Berkshire into a diverse conglomerate.

Warren's wife, Susie, was deeply involved in civil rights activism and community work in Omaha, often exposing herself to risks. Warren supported open housing legislation through financial influence. His personal life was complex, involving a long-term triangular relationship with Susie and Astrid Menks, managed with mutual acceptance. He later recognized his obsession with wealth came at the cost of marital harmony.

Influenced by Charlie Munger, Buffett shifted from cheap, dying companies to high-quality businesses with enduring competitive advantages. This led to significant acquisitions like American Express during a crisis, and the Nebraska Furniture Mart from Rose Blumkin. He embraced owning "wonderful businesses at a fair price" over "mediocre ones at a bargain," showcasing an evolving, qualitative investment approach.

Buffett stepped in as interim chairman during the Salomon Brothers bond scandal, facing the firm's potential collapse. He prioritized integrity and transparency, famously stating he would be ruthless toward reputation loss. His decisive actions, including congressional testimony and full cooperation with regulators, saved the firm from criminal indictment and restored trust, though at the cost of top executives.

Buffett's philanthropic vision was shaped by his "Ovarian Lottery" theory, acknowledging that birth circumstances largely determine fate. Realizing the impracticality of his original plan, he decided to give away 85% of his Berkshire Hathaway stock to several foundations, including the efficient Bill and Melinda Gates Foundation. This historic act aimed to address global inequities without creating a personal monument.

In his later years, Buffett embraced his role as an educator, emphasizing the "inner scorecard"—prioritizing self-satisfaction over external praise. He encouraged pursuing passions and highlighted the compounding benefits of both financial and social capital. His life was a "snowball," constantly gathering momentum and knowledge, a testament to relentless focus and an early start.