Key Takeaways:
- Pitch like you are pitching to Warren Buffett
- Focus on management and the 5-10 years trends in your favor
- Be sure you have a well-balanced team – Vision Master and Execution Master
Our Not interview series focuses on Vision Masters vs. Visionaries. A Vision Master is often both. No innovation comes to fruition without Vision Mastery.
Think Tesla (Visionary) and Westinghouse (Vision Master). Tesla’s legacy lives on, not because he made it so, but because Westinghouse was a Vision Master and combined the vision + the necessary actions to bring electricity to the world. While Tesla died broke, Westinghouse when on to commercialize electricity, which gave rise to 1,000’s other innovations and products. Judgments aside about motives or outcomes, the Vision Master sees the future and makes it HAPPEN.
For our interviews, we choose people that you cannot get an audience with BUT our Not interviewee has spent a considerable amount of time getting into the head, heart, and the philosophy of the person they are representing, which brings to life their brilliance in actionable ways. Today we are interviewing Not-Warren Buffet.
Warren Buffet is a Vision Master. He is the king of investment and long-term king at that. He envisioned a way of looking at investing, acted on it at the highest level, and has become one of the wealthiest people in the world. When Buffet speaks, listen. It might be the moment you become a Vision Master of the highest order.
Buffet wisdom: You give me that right leadership balance and a killer trend to take advantage of; you’ve got my attention, and you certainly have the attention of the people you’re trying to raise capital with.
Robert Steven Kramarz (Rob): Well, okay. Hi everybody. This is Robert Steven Kramarz, co-founder of Intelliversity and this is your Vision Master podcast. And today we are featuring an interview with Not-Warren Buffett. Mr. Buffet, how are you today?
Not-Warren Buffet: I’m doing great. It’s really great to be here with you, Rob.
Rob: I bet you are. You’ve got a lot to teach our startups and scale-ups who are raising capital, right? I mean, that’s not your specialty, but you’ve got something to say on that.
Not-Warren Buffet: I do. I do.
Rob: It’s really, you don’t hear this very often. So by the end of this session our Vision Masters will have something really unique from you, I’m hoping to hear it in a moment. But for the moment, tell us… You’re known as the Oracle of Omaha, the world’s greatest investor, how’s that doing? How much is Berkshire Hathaway worth?
Not-Warren Buffet: I think obviously the two market caps exceed a trillion dollars now, so we’re very pleased with that benchmark.
Rob: So, Berkshire Hathaway is a conglomerate, and mix of companies that you’ve acquired control and a mix of companies you own a minority share in. So you might think of it as a giant venture capital firm or giant private equity firms, is that correct?
Not-Warren Buffet: That’s a good analogy.
Rob: It’s actually, I think better than most people realize and that’s one of the things we’re going to get to here in a moment. And how much are you personally worth out of all this net worth for the last 30, 40 years?
Not-Warren Buffet: Well, I don’t look every day but we’re certainly in excess of 80 billion.
Rob: You personally, you and your wife, right?
Not-Warren Buffet: Me personally, yeah.
Rob: So, as the world’s greatest investor, what do you do that’s different than other stock market investors?
Not-Warren Buffet: Well, I mean, most other stock market investors have a very short-term horizon, one day to 18 months. And people are always focused on the end of the year or the end of the quarter. And I think what makes us different is I invest with my intelligence and my eye, and I’m thinking five to 10 years out. So I could be defined as a growth investor and our process involves investing in value stocks, so…
Rob: Growth investor in value stocks, and that’s-
Not-Warren Buffet: Right.
Rob: …that is different?
Not-Warren Buffet: Yeah, and obviously that’s the secret to the whole thing is figuring out what is going to become a value stock. So a good example is our investment in BNSF railroad, I think that was 2010.
Rob: It’s BNSF railroad, right?
Not-Warren Buffet: BNSF, yeah. Their stock was really beaten up during the recession, but we were sitting there and realizing that with American oil production increasing, there was going to be a dramatic increase in oil shipments and other things like oil over at least a 10-year timeframe. And then we made that acquisition, we were right, and it’s still generating outsize profits for us. I mean, we were very pleased with that kind of strategy and that’s just a good example of how to get that done.
Rob: So in general, what do you look for? A few key rules and what companies you acquire or invest in?
Not-Warren Buffet: Well, it is interesting. I’ve read Born to Star and I agree with your concept of having a balance between vision mastery and execution mastery. We have that in our own team, but we also expect to find that on the companies we invest in. So in our team, I’m the vision master and my longtime partner Charlie Munger is the execution master, he’s my noman. So what I mean by that is I spend 80% of my time reading and researching trends and companies, Charlie then takes my ideas and then he basically looks for risks and red flags. And so most of the time he says, “No.?” And he rejects my ideas” And our balance is that we both have to agree on an acquisition before we move forward with a deal. So that’s actually a very, very important measure for us, and of course, the company has to be in our mind, undervalued. So we’re looking for companies with proven management teams that are undervalued by the marketplace.
Rob: Any five or 10-year trend that you’re going to take advantage of?
Not-Warren Buffet: Right.
Rob: Because you want to hold five or 10 years or longer?
Not-Warren Buffet: Or longer.
Rob:: Yeah. I’ve had Coca-Cola for decades, for example,
Not-Warren Buffet: We have too.
Rob: So in order to invest in companies with a five, 10-year timeframe, great management right? Balanced management, and undervalue, that’s the current time you need your own team to be balanced so that you can spot the trends. And then Charlie can reject the ones that have problems on their management team or financial issues.
Not-Warren Buffet: Correct.
Rob:: So balance looks for balance.
Not-Warren Buffet:: Amen brother.
Rob: Perfect, okay. So now let’s bring this back to what you recommend for the smaller scale ups and startups that we are involved in. Admittedly, you don’t invest in them now, but the same principles apply right? In many ways?
Not-Warren Buffet: You mentioned earlier that we were similar to a venture capital company, and if you think about it. A venture capital company also has a five to 10-year horizon before they’re going to get their money. So the difference is, we’re looking for proven companies that we think are undervalued but the same principles apply. And to be fair, I guess, it’s a form of balance but we made an exception when we invested in the Snowflake IPO and we made a billion dollars so far. So we’re looking for the same thing that smart [inaudible] and angels look for, although we’re not willing to take on some of the risks that they will be entertaining.
Rob: And so in some… You would recommend that smart vision masters, smart scaling up companies present themselves to investors in the same way that the larger companies have to present to you in order to win your [inaudible]
Not-Warren Buffet: Correct. I mean, I would want to be presenting if I was in that position, a strong management team balanced between execution vision history. And just let people know that this is the team that can evolve and adapt and pivot when needed. And that you have an execution master to make sure that you minimize the risks that are inherent in any one of these startups.
Rob: Especially since you’re shooting for a five-year, 10-year trend, during that five or 10-year period, there are going to be many pivots and changes as the real world changes. So your management team that you invest in has to be able to adapt to those changes while still taking the advantage of the long-term trend?
Not-Warren Buffet: Correct.
Rob: So balance is an issue, something that keeps coming up in your recommendations. So tell us a little bit more about what you look for in a balanced management team.
Not-Warren Buffet: Balance is extremely important to me and to Berkshire Hathaway in general and here’s why. You need to balance persistence with the willingness and ability to pivot, you have to balance being decisive with the willingness to be coached, you have to balance vision with execution as we both said before. So you have to balance your drive with the need to be sensitive to people, and I guess now it’s called the cue. But you also have to balance analysis and action, and you have to bring that balance everywhere because that’s where when I see that balance, I can sit there and I can imagine that this management team is going to be able to lead through all of the challenges that they will face in the upcoming five to 10 years. You give me that right leadership balance and a killer trend to take advantage of you’ve got my attention, and you certainly have the attention of the people you’re trying to raise capital with.
Rob: Oh, you really got my attention to that last remark, not Warren, let me just summarize. You present the vision, master the scaling or startup company. You present a killer five or 10 year trend, a solution to it. It takes advantage of it and a balanced management team. And I’ve got your attention.
Warren Buffet: You do?
Rob: I’ll take that to the bank. And I hope the listeners to this podcast take it seriously, cause it really… It really does work, I can speak to that myself. So thank you very much not Warren, I wish we had more time. Maybe we’ll do this again soon. This is Robert Steven Kramarz and that’s the way it will be.
