During the 2008 Berkshire Hathaway Annual Meeting, Warren Buffett outlined his very simple formula for building a multinational conglomerate holding company. Here’s an excerpt from the meeting:
WARREN BUFFETT: Well, Berkshire was a small business at one time. I mean, it just takes time. I mean, it’s the nature of compound interest. You know, you can’t build it in one day or one week.
So Charlie and I — you know, we’ve never tried to do in some master stroke — convert Berkshire into something four times as large. People have done that sometimes in business.
But we’ve sort of felt that if we kept doing what we understood, and did it consistently, and had fun while we were doing it, that it would be something quite large at some point.
But there’s nothing magic — it would be nice to attract a whole bunch of money into some great idea and have it — you know, multiply it manyfold in a few weeks or something of the sort. But that has really not been our approach.
We have just — we have done — in a general way, we’ve done the same thing. Now, we do little variations of it, but we kept doing the same thing for years and we’ll keep doing it.
You know, we will have more businesses a few years from now than we have now. And we’ll have all the ones we have presently. Most of them will do better. Some won’t. And we will have added something.
And that’s an automatic formula for getting ahead, but it’s not an automatic formula for galloping ahead.
But we don’t really feel — we’re not unhappy because we’re not galloping. We’re not happy if we’re not moving at all.
But, you know, we’ve got 76 or so, in most cases, pretty darn wonderful businesses. And, like I say, we’ll have more as we go along. So it’s a very simple formula.
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