Back in 1996, Microsoft CEO Bill Gates reviewed a book called Warren Buffett: The Making of an American Capitalist by Roger Lowenstein, where he shared the lessons ‘Oracle of Omaha' Berkshire Hathaway CEO Warren Buffett, taught him.
What Happened: Writing for the Harvard Business Review, Gates remembered his first meeting with Buffett in July 1991. "I was extremely skeptical when my mother suggested I take a day away from work to meet him," Gates wrote.
"What were he and I supposed to talk about, P/E ratios? I mean, spend all day with a guy who just picks stocks? Especially when there's lots of work to do? Are you kidding?" he recalled thinking.
His mother's insistence eventually pushed Gates to agree to attend the gathering Buffett was part of. "He asked good questions and told educational stories," Gates wrote. "There's nothing I like so much as learning, and I had never met anyone who thought about business in such a clear way."
As their acquaintance continued, Gates was particularly impressed by Buffett's investing philosophy. As Buffett once wrote, "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."
"Warren never makes an investment where the difference between doing it and not doing it relies on the second digit of computation," Gates explained. "He doesn't invest—take a swing of the bat—unless the opportunity appears unbelievably good."
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Why It Matters: Buffett's habit of sticking to what he knows well, reading extensively, and saying no to distractions was influential for Gates. "He knows what he likes to do—and what he does, he does unbelievably well," Gates observed.
One quote in particular stood out to Gates: "You should invest in a business that even a fool can run, because someday a fool will." This bit of wisdom shaped Gates's perspective on management and risk.
Buffett also challenged Gates to be more creative with his thinking, once using a set of nontransitive dice to demonstrate a counterintuitive truth in probability. "It was counterintuitive, like a lot of things in the business world."
Gates also highlighted Buffett's parenting approach: "He wants to give his children enough money for them to do anything but not enough for them to do nothing." That statement "crystallized my feelings," Gates admitted.
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