Sunday, July 26, 2009

The Ulimate Entrepreneur: Warren E. Buffett

Anyone who regularly reads this blog knows I like entrepreneurs. In one post, I went so far as to define entrepreneur. I believe that entrepreneurs are the very foundation of our nation's economy, providing the innovation that supports it.

Well, in recent weeks, I have discovered the ultimate of all entrepreneurs: Warren Edward Buffett.

Until my dad passed me The Snowball: Warren Buffett and the Business of Life, written by fellow University of Texas alumnus, Alice Schroeder, my interest in and knowledge of Buffett was cursory and limited. I have been referred to his Shareholder Letters a number of times, but after downloading them, I would never follow through with the required reading.

Just this year, a close friend of mine, a Buffett fan himself, invited me to Berkshire Hathway's Annual Shareholder Meeting, the boondoggle that attracts as many as 30,000 people to Omaha. I was not able to attend with him, but our plan is to make the trip in 2010.

Back to the book, Schroeder, a former analyst who covered Berkshire Hathaway, spent five years writing the 838-page biography.

In the forced march it must have been, the author received all-access interviews to one of the world's top billionaires as well as the people in his life. She secured a $7.2 million contract and Buffett's word to not change any of her work, a promise he apparently kept.

It is a fascinating look at the evolution of a man, a real personality, who some call an oddball. Aptly named, The Snowball demonstrates Buffett's keen understanding of the compounding effect of money.

The book also details his personal life, which in its beginning stages, was hugely influenced by his father, Howard, whose towering presence led him to the United States congressional seat in the Nebraskan district where Omaha was located.

However, the Republican's isolationistic and right-wing tendencies eventually caused him to be voted out of Washington DC following three terms in office.

As a young man, Buffett read voraciously. One of his favorite books was titled One Thousand Ways to Make $1,000 (or one million dollars, as Schroeder points out to the reader). Buffett announced to one of his best friends at the time that he would be a millionaire by the time he was 35.

His early business endeavors included selling golf balls, publishing horseracing odds and tirelessly managing his own newspaper routes. And it was those business pursuits that would serve as the wet snow which would form the makings of Buffett's "snowball." It had already begun to roll downhill, picking up speed as it did.

Buffett's entrepreneurial drive caused disconnects to form between him and his peers on a social level; the book depicts that Buffett's skills left a lot to be desired. Able to recognize his own social inferiority, Buffett turned to a book entitled How to Win Friends and Influence People.

It was a bit later in life, in college especially, that Buffett began to develop his natural ability as a teacher. He used his firm handle on investing to effectively connect with people, who might have otherwise been more socially adept.

Perhaps the most unrealized trait of Warren Buffett is his mastery as a teacher. He imparts wisdom and life lessons on his investors, students and family. How Buffett can put complex investing concepts into plainspoken language is a gift, and people gravitate to him for it.

To potential entrepreneurs, Buffett advises, "It's crazy to take little in between jobs just because they look good on your résumé. That's like saving sex for your old age. Do what you love and work for whom you admire the most, and you've given yourself the best chance in life you can."

As his own life progresses, Buffett seems to have softened; his views have been shaped by his first wife, Susan, and perhaps even more so, by Bill Gates, to whom he gave 85 percent of his fortune in 2006 so that it could be put to work through the Bill & Melinda Gates Foundation.

Buffett has never lost his uncanny ability to strike as an investor.

While he was not unaffected by the latest economic downturn, it is in these times that he often displays his unique wherewithal to rise above the rest, as he did with his investment in Goldman Sachs, practicing what he often preaches, "Be fearful when others are greedy. Be greedy when others are fearful."

Last year's Goldman investment must have led him to reflect on when he was ten years of age and his dad took him to Wall Street. While there, Howard's connections and persistence afforded them opportunity to meet Sidney Weinberg, a well-known business leader and senior partner at Goldman.

As they left his office, Weinberg asked, "What stocks do you like, Warren?" which left a lasting impression on Buffett. Little did either of them know then that Buffett would later make such a financial impact on the firm.

After returning home from New York City, he realized what money could do to create freedom. In The Snowball, his fondness of money was stated as, "It would make me independent. Then I could do what I wanted to do with my life. And the biggest thing I wanted to do was work for myself."

Warren E. Buffett's life can be distilled to a few key qualities: supreme investor, brilliant teacher and, in later years, heavyweight philanthropist. But above all, Buffett is an entrepreneur, the ultimate in my book.

Sunday, July 12, 2009

A Little Help from Our Friends

Because he is gallivanting on the other side of the planet, Mr. Covey asked me to make a guest update on his b-l-o-g. My name is William Marshall, Jr. I've got my own blog called "The Tilling of the Land" where this and other blurbs have been posted.

So, I've known Chad since we were 14 or 15 years old and consider him one of my best friends. I live in the ATX. In the last couple of months, I've started a business called Austin Auditors that reviews building's energy efficiency (visit the website at Currently, the business is geared towards residential construction. This business was inspired in part by the City of Austin passing an ordinance mandating energy audits for homes being sold that: 1) are over 10 years old; and 2) do not meeting certain qualifications. Ultimately though, the idea is to move into doing energy audits for people who intend to stay in their home and want to make upgrades to their homes to improve its energy efficiency.

Surprisingly, there are a number of home improvements that can be made that cost less than $500 and have a noticeable effect on both home comfort and the energy bill. Examples are: 1) improved insulation, 2) sealing up leaky AC ducts, and 3) improving solar shading.

Moving along with the theme of energy efficiency, I am going to give you 3 tips that can have a real effect on reducing your consumption of resources and won't be monumental adjustments to your lifestyle.

1) Use compact fluorescent light bulbs, a.k.a. CFL bulbs.

These things are ubiquitous nowadays and you probably have a bunch of them up already. If you haven't seen them, they look like the bulb to the right.

If every household in the country used one of these guys rather than an incandescent bulbs, it would be a pollution reduction similar to taking a 1,000,000 cars off the road. The CFL bulb uses about 75% less energy than an incandescent bulb and lasts about 10 times longer. Yeah, they cost more at the store, but over the life of the bulb, you'll save over $30 when compared against the incandescent bulb. Plus you don't have to change them nearly as much. And changing a light bulb is a pain in the heiny.

Don't toss out your working incandescent bulbs though. Wait until they burn out and then go buy CFL bulbs to replace them. Click here for a fun site about CFL bulbs.

2) Drink less bottled water and more tap water.

First off, bottled water produces 3,000,000,000 pounds of plastic waste per year, about as much waste as the combined annual waste of San Antonio and Atlanta.

Second, bottled water is no more healthy than the water coming out of your tap (sometimes the bottled water is the water coming out of your tap - take a look at the fine print of some of the larger Ozarka containers and it reads something like this "Source: Houston Municipal Water Supply"). The FDA regulates bottled water and the EPA regulates tap water. However, because 70% of bottled water doesn't cross state lines the FDA can not inspect it. Furthermore, the EPA has stricter guidelines for the quality of water than the FDA does. I don't think that any water you're going to buy, whether tap or bottled, will have any negative health consequences, I just thought that the regulation was interesting.

Also, you like those pearly whites that so many Americans have? Thank your municipal water supply and keeping drinking the tap water filled with all that fluoride. The Center for Disease Control identifies community water fluoridation as one of 10 great public health achievements of the 20th century.

What if you don't like the taste of tap water? For instance, here in Austin, every fall and spring, the tap water tastes like algae. The solution is easy: a water filter. You can even buy one that attaches to the tap so you don't have to fill up a Brita pitcher.

3) Brush without running the water.

I used to put the toothpaste on the toothbrush, turn on the faucet to wet the toothpaste, and keep the faucet running the whole time I was brushing. I didn't even think of the fact that I was actually using none of that water running down the drain. Over the last couple of years, I turn the water off once I've wet the toothpaste and I'll turn it back on at the end when I actually need the water.

If you do this, you'll save close to five gallons of water per day. If the whole country did this, we'd save close to 1,500,000,000 gallons a year.

Three simple ways to reduce consumption and pollution and none of these will really inconvenience you. Here's a link to list of 47 more relatively easy ways to assure that our resources and our world will stick around for more generations.