Warren Buffett's 'business gene' built an empire that changed history

As he celebrates his 80th birthday, Warren Buffett shows no sign of slowing down. Stephen Foley looks at the secret behind the philanthropist's global success

Warren Buffett has never revealed when he had his ego surgically removed, but it must have been at a very young age. As he turns 80 today, the billionaire investment guru remains as cheerfully good-hearted, funny and self-deprecating as ever – so much so, in fact, that it is easy to miss just how significant a figure he is in the history of American business. He has been lucky beyond his dreams, he said in his more recent letter to shareholders in his conglomerate Berkshire Hathaway. He and his business partner, Charlie Munger, were born with "a 'business' gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society's well-being". Indeed. His net worth of $47bn (£30bn) makes him the third-most wealthy person on the planet, according to Forbes magazine.

Forgive the highfalutin claims (Mr Buffett would choke on them), but while other corporate legends might spend their 80th birthday surveying a long career that peaked decades before, Mr Buffett celebrates his at the height of his powers, with a reputation that is stronger than ever, and cementing a legacy that will live for generations. Why?

He has created the fourth-largest company in America

Berkshire Hathaway is the name of a small Massachusetts textile firm that Mr Buffett acquired in the Sixties. By that time he had already been investing for half his life. The son of an Omaha stockbroker and politician, he had first expressed that business gene in his teens by installing pinball machines in local venues. By the time he alighted on Berkshire, he had established a strong local following for his investing nous, using principles he learned at the knee of Ben Graham, the father of value investing, who tutored Mr Buffett at Columbia University and gave him an early job.

While Berkshire itself eventually failed along with most of the US textile industry, Mr Buffett had long since turned the company into a mini-conglomerate, adding businesses in insurance and retail, and stakes in all-American staples such as Coca-Cola and McDonald's. Today it is one of the world's largest reinsurers and owns the largest US railways business, and has a market value of $200bn, eclipsed only by Exxon-Mobile, Apple and Microsoft. General Electric, the icon among American conglomerates, is worth only $160bn.

He has educated generations of investors

Mr Buffett is a teacher, by explication and by example. His homespun investment philosophy delivered in pithy bon mots – "Rule No 1, don't lose money. Rule No 2, don't forget Rule No 1" – and his determination to avoid the investment fads of Wall Street and the business school crowd won him the moniker the Oracle of Omaha and inspired a whole industry of Buffett-watching. You can find dozens of books from "How to build a business Warren Buffett would buy" to "The Tao of Warren Buffett".

But his own legacy will be those annual letters to shareholders, where he teases out the difference between short-term accounting tricks and long-term value, and makes good jokes. Meanwhile, a record 40,000 Berkshire shareholders now attend the annual meeting in Omaha, for a one in 1,500 chance of getting an answer from their guru to a question.

He proves that human relations matter in business

Author Andy Kilpatrick – whose contribution to Buffettology is Of Permanent Value: The Story of Warren Buffett, which runs to 2,000 pages over three volumes and was described by the man himself as "puny, but at least it's a start" – says Mr Buffett's winning personality is a key to his financial success.

"You can't help but be attracted to him because of the way he speaks and the way he writes. His sense of humour is what makes him different from other brilliant businessmen. It gets him in a lot of doors.

"And he can judge people well – he can look and someone and size them up – a lot of his deals are handshake deals, done by looking someone in the eye and judging whether they just want the money or whether they really want to run the business at Berkshire. That human factor has become very important, and if you look at the top of Berkshire, seldom has there been any firings, or even anyone leaving. Buffett is the glue that holds all these human relations together."

He helped saved the world economy

Under-appreciated is the role that Berkshire played in keeping the world economy from the brink during the panic of 2008, in the weeks after the failure of Lehman Brothers. "We poured $15.5 billion into a business world that could otherwise look only to the federal government for help," Mr Buffett pointed out, in a single reference in his 2009 letter. "Berkshire was a supplier of liquidity and capital to the system, not a supplicant."

Berkshire pumped $5bn into Goldman Sachs and $3bn into General Electric when they were desperate for funds. He extracted a price, of course, but Mr Buffett's vote of confidence helped stave off disaster for two companies whose collapse would have had unthinkable consequences.

And now he is raising the bar for philanthropy

A century ago, John D Rockefeller, after a pioneering life in business, was revolutionising philanthropy, establishing the modern principles for targeted donations and well-endowed foundations. Mr Buffett's friend Bill Gates (with whom he has long tussled for title of world's richest man) has retired from Microsoft to concentrate on his own foundation. Since Mr Buffett does not plan to retire ("I plan to work past 100," he said this weekend), he is blazing a trail in philanthropy in a different way.

In 2006, he pledged to give 90 per cent of his wealth away to the Bill and Melinda Gates Foundation. With typical absence of ego, he said that the organisation was already doing more effective work in areas of health and education than any foundation with the Buffett name on could hope to achieve on that scale. "What can be more logical, in whatever you want done," he asked at the time, "than finding someone better equipped than you are to do it?"

Now, he is exhorting other billionaires to pledge similarly to give away a majority of their wealth, and has induced 40 of America's richest so far to agree. It's only fair, he says – and his three children will be just fine. As he wrote in 2006: "They've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
Katie Hopkins makes a living out of courting controversy
General Election
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Ashdown Group: Head of Client Services - City of London, Old Street

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders