Originally published 2007, part of a series I did for a biography website. Can’t even remember who now, but it’s long gone.
Warren Buffett is consistently ranked by Forbes magazine in the top-ten richest people on Earth, with a net worth last clocked at $84 billion USD. So, how did he manage that?
“The Oracle of Omaha”, as he is sometimes known, was born August 30, 1930, in Omaha, Nebraska, to Howard and Leila Buffett. The senior Buffett was a stock investor and four-term U.S. Representative. It is then no surprise that the junior Buffett followed in his father’s footsteps to the world of business investing, minus the political career. Warren Buffett’s first step in this direction after high school was to enroll in the Columbia Business School to study under his mentor, Benjamin Graham, the economist and professional investor. Ironically, Mr. Buffett had originally applied to Harvard Business School but was turned down.
At the age of 21, Warren Buffett paid a personal visit to Benjamin Graham after discovering he was on the board of GEICO insurance at the time, where he made a huge impression on the Vice President. This same year, he graduated Columbia Business School and went to work on Wall Street as a common stockbroker, and furthered his education with a public speaking course. He then started teaching a night class on investment principles at the University of Nebraska.
In 1954, a mere 3 years later, he was offered a position working under Benjamin Graham in a partnership, with a salary of $12,000/year. However, this position was only to last two years, until Graham retired. Nevertheless, Buffett’s personal savings at this point was $140,000, and he moved on to form his own investment partnership as Buffett Partnership Ltd. Working through his many partnerships, he eventually became a millionaire in 1962 and the age of 32.
It was at this point that he began purchasing Berkshire Hathaway, originally a textile manufacturing company which had been founded in 1839. By 1965, he had taken control of Berkshire Hathaway and appointed a new president to run the company. He remains the CEO of the corporation to this day. By 1967, he had expanded the company’s core business into insurance, which eventually became the sole focus of the company. The biggest move in this effort was acquiring an equity stake in the Government Employees Insurance Company, better known to the public as the insurance company GEICO.
Seeing as how the company slogan “fifteen minutes could save you fifteen percent or more on car insurance” and the CGI-animated gecko are familiar to us all, it should come as no surprise that the aggressive marketing of the GEICO brand contributed even further to the success of the parent company Berkshire Hathaway, and to Buffett’s fortune. GEICO became a wholly-owned subsidiary of Berkshire Hathaway by 1996.
Meanwhile, Buffett did not rest on his laurels. Throughout the 1970’s, either directly or through Berkshire Hathaway, acquired stock in the Washington Post Company, purchased the Buffalo Evening News, acquired stock in the American Broadcasting Company, and performed or oversaw numerous other mergers and investments. By 1980, Warren Buffett’s net worth had reached $620 million, although he continued to live only on his salary of $50,000/year. Continuing into the 1980’s, Buffett became a 7% shareholder in the Coca-Cola Company.
Today, Berkshire Hathaway is celebrated as the most highly-priced stock on the New York Stock Exchange, in part because the stock has never split, which is an unusual attribute for a company of such size. Perhaps the most remarkable ally to Buffett is Bill Gates, CEO of Microsoft and himself among America’s top billionaires. Buffett and Gates have had ties going back nearly a decade, with Gates’ Cascade Investments LLC owning a 5% stake of class B shares in Berkshire Hathaway and Buffett, in turn, donated the majority of his charitable contributions to the Bill and Melinda Gates Foundation. In addition, they are known to play bridge together.
There is no secret to Warren Buffett’s success. He has demonstrated a “nose to the grindstone” philosophy and his earliest childhood showed his ambitions to acquiring wealth through hard work and diligence. Throughout the decades, Buffett has shown a radar-like focus on spotting the next big business opportunity, and he has almost never made a business deal that went wrong. Lately, he has announced his intentions of seeking out a successor to his vast empire, and to donate the majority of his fortunes to charity.
