In this comprehensive three-part series, co-hosts Ben Gilbert and David Rosenthal of the "Acquired" podcast delve into the intricate saga of Berkshire Hathaway and its legendary leader, Warren Buffett. They explore the conglomerate's evolution, from its early days as a struggling textile mill to its transformation into a colossal holding company. The series examines Buffett's investment philosophy, his notable acquisitions like GEICO and Coca-Cola, and his partnerships with influential figures such as Charlie Munger and Bill Gates. The hosts also scrutinize Buffett's later investments, including his foray into technology with Apple, and discuss the company's future under successors like Greg Abel and Ajit Jain. The narrative culminates in a reflection on Buffett's legacy, his impact on philanthropy through the Giving Pledge, and the cultural and financial shifts that challenge the "status quo" investing strategy he championed.
"I'm going with just water as my beverage this time. And no peanut brittle." "I'm going with a vitamin water zero because we are going to need the electrolytes for this marathon."
These quotes highlight the hosts' beverage choices and imply a lengthy and energy-demanding podcast episode ahead, prompting a more health-conscious selection.
"I was on my run this morning and I was listening to the Adam Mead book that I referenced, and I ran by Berkshire Hathaway properties like House for sale. And I was just like, it's pretty hard to go through your day without using a Berkshire product or service."
This quote underscores the extensive reach of Berkshire Hathaway's portfolio, emphasizing the company's influence in various sectors of the economy.
"I'm so excited. I literally woke up in the middle of the night last night and couldn't go back to sleep. I was so excited."
The quote conveys Ben Gilbert's eagerness to delve into the topic of Berkshire Hathaway, suggesting a significant and engaging episode ahead.
"Welcome to season eight, episode seven of acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I am the co-founder and managing director of Seattle based Pioneer Square Labs and our venture fund, PSL Ventures." "And I'm David Rosenthal, and I am an angel investor based in San Francisco."
These quotes serve as a formal introduction to the podcast and its hosts, providing listeners with context about their professional backgrounds and the focus of the episode.
"We told you about Warren's literally perfect record with the Buffett partnerships in the 60s, where he generated a positive return and beat the stock market every single year for twelve years." "When we last left off, Warren and Charlie were, in 1992, finishing up an absolutely monster run of returning over 27% per year for 22 years."
These quotes summarize the historical success of Warren Buffett and Charlie Munger, setting up a contrast with the challenges and changes in the investment philosophy they would face in the years to come.
"A story of what happens when a time-tested investment philosophy gets confronted with systemic changes in the world, like the PC and the Internet." "So when you now need to write billion-dollar checks to move the needle. There's only so many places you can go knocking, and all those places are quite visible to other investors, too."
These quotes introduce the theme of adapting to significant technological and economic shifts, which pose challenges to Berkshire Hathaway's traditional investment strategies.
"Well, listeners, are you an acquired Slack member? If not, come join us." "Our next sponsor for this episode is one of our favorite companies and longtime acquired partner pilot for startups and growth companies of all kinds."
These quotes emphasize the importance of community engagement and introduce the sponsorship that supports the podcast, demonstrating the hosts' connection to their audience and the startup ecosystem.
"As always, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only."
The quote serves as a disclaimer to listeners, ensuring transparency and setting appropriate expectations regarding the content of the podcast.
"But Mary, his mom, forces Bill to come out. Bill would say later, as I told my mom, I don't know about meeting a guy who just invests in money and picks stocks." "Gates then, he's probably, like, pretty annoyed by this first question, given that he doesn't care about stocks. He's like, look, there's two. You should buy these. Don't do anything else."
These quotes narrate the beginning of a significant friendship between Warren Buffett and Bill Gates, showcasing their initial skepticism and eventual deep engagement with each other's perspectives on business and investment.
"Warren is a little reluctant to go on this, know, this is not sort of his thing, but as he puts it, quote, anything for Kay. So he goes out." "Warren has drawn him away from his work. Amazing. So they become fast friends. Buffett goes back to Omaha after the holiday."
These quotes highlight Warren Buffett's opportunistic investment in Coca-Cola and his ability to recognize the enduring value of a strong brand, which aligns with his long-term investment philosophy.
"Bill kind of goes off script here. So Bill would later say that he meant this as a compliment, but he trots out Warren's ham sandwich phrase when talking about Roberto and Don on stage."
This quote captures a critical moment where the differences between Warren Buffett's and Bill Gates' business philosophies are starkly presented, signaling a shift in the economic paradigm towards technology and adaptability.
"It's not that the world wasn't changing quickly between the mid-fifties and the early nineties. It was that the rate of change hadn't compounded to the point where it was suddenly like, the whole world is changing all at once."
The quote highlights the shift from gradual change to a world where changes are rapid and compounding, affecting the investment landscape.
"So, for Warren, he's just like, okay, back to business as usual. He is, though, concerned about the tech bubble that is forming that he and so many others see."
The quote reflects Buffett's business-as-usual approach and his awareness of the tech bubble's risks.
"He decides that he is going to do a stock offering for a new class of shares, what he's going to call the baby B class of shares versus the newly recrissened Berkshire A shares."
This quote explains Buffett's strategy to create a new class of shares, allowing broader investment in Berkshire without altering the company's investor base significantly.
"In 1998, he makes another shocking announcement. Berkshire is going to buy Gen Re, one of the world's largest reinsurers, for $22 billion."
The quote marks the announcement of the Gen Re acquisition, which later proved to be problematic for Berkshire.
"He is going to give away 85% of his Berkshire stock, which was worth $37 billion at the time. And five-sixths of it is going to go to the Bill and Melinda Gates Foundation for them to manage."
This quote details Buffett's massive philanthropic commitment, delegating the management of his donation to the Gates Foundation.
"Berkshire has $37 billion of cash sitting on its books at this point, which today seems kind of quaint compared to Apple and Microsoft and the like. But back then, nobody else had that kind of cash anywhere."
The quote underscores Berkshire's strong cash position during the financial crisis, which was significant compared to other companies at the time.
"I have to assume the most valuable company in the world at that point probably was an oil company when probably was in the neighborhood of two to $300 billion."
This quote indicates that in the past, the most valuable companies were likely in the oil industry and had valuations significantly lower than today's top companies.
"So instead of making a lot of equity investments at this time. They decide instead to pursue a different strategy. They're going to make debt and preferred equity, fixed income investments in companies that need capital."
This quote explains Berkshire's strategic shift from equity investments to debt and preferred equity to avoid the risks associated with being the primary equity holder in a crisis.
"So they invest six and a half billion dollars to fund this deal of Mars, not Berkshire buying Wrigley."
This quote describes Berkshire's role in financing Mars' acquisition of Wrigley, emphasizing that Berkshire provided capital but did not purchase Wrigley itself.
"So you've got this crazy situation where government is making capital available for free, basically, and Berkshire can come into these situations and make capital available in fixed income, guaranteed return with ten to 15% yields."
The quote highlights the disparity between government-provided capital and the high-interest rates Berkshire could charge, illustrating the lucrative opportunity for Berkshire during the crisis.
"So, all told, in 2008, during the crisis, Berkshire would deploy about $18 billion of the $37 billion of cash that it had on hand."
This quote summarizes the extent of Berkshire's capital deployment during the financial crisis, indicating a strategic and successful investment period for the company.
"All in. To date, Berkshire has made about $26 billion in profits on the b of a deal."
The quote reveals the enormous profit generated from Berkshire's investment in Bank of America, underscoring the success of Buffett's investment strategy.
"I intend to hire a younger man or a woman with the potential to manage a very large portfolio who we hope will succeed me as Berkshire's chief investment officer when the need for someone to do that arises."
This quote from Warren Buffett indicates his intention to find a successor for the investment management role at Berkshire, highlighting the importance of continuity in the company's investment strategy.
"One of the fellows in the office who manage money, aka Ted. Yeah, it's never been said whether it was Tod or Ted, but I think it was Ted here, because Tod really focuses on financial stocks, and Ted does everything else."
This quote suggests that it was Ted Weschler who convinced Buffett to invest in Apple, leading to one of the most successful investments in Berkshire's history.
"In investing, it's the same way nobody cares what your thesis is. Nobody cares if you're right or wrong. Nobody cares why you bought the stock. At the end of the day, you just want to be in a position to be right."
The quote emphasizes that in investing, the ultimate goal is to make successful investments, regardless of the approach or rationale used to select them.
"I didn't go into Apple because it was a tech stock. I don't think that it required me to take apart an iPhone or something and figure out what all the components were or anything. I think it's much more the nature of consumer behavior."
The quote reveals Buffett's investment rationale for Apple, which was based on the nature of consumer behavior rather than the technical complexities of the product.
"Greg will preserve the culture."
This accidental revelation during the annual meeting indicates that Greg Abel is seen as the likely individual to maintain Berkshire Hathaway's corporate culture post-Warren Buffett.
"As long as capital markets remain overvalued and private investors, flush with cash, persist in investing at low yields, share repurchases are a magnificent use of capital."
This quote from Christopher Bloomstrom's letter suggests that in an environment of overvalued capital markets, share repurchases are a wise use of capital for Berkshire Hathaway.
"Because Crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers."
This quote explains the advantage of Crusoe's cloud services, which are designed specifically for AI and powered by underutilized energy sources, leading to cost-effective and environmentally friendly computing.
"They don't see a better opportunity out there in the market to deploy capital than the businesses they already own."
This statement reflects Berkshire Hathaway's current investment strategy, where the company prefers to reinvest in its existing businesses through stock buybacks rather than seek new investment opportunities in an overvalued market.
"Warren has been successful in a lot of environments, and the thing you kind of should cheerlead about Warren Buffett is that he's reasonably consistent."
This quote summarizes the admiration for Warren Buffett's consistent investment success across various market conditions, despite recent criticisms of his approach in the modern investment landscape.