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The Remarkable Early Years of Warren Buffett

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For most people, the “Oracle of Omaha” needs no introduction. With a self-made net worth of $84 billion, some experts consider the 87-year-old to be the greatest investor of all-time.

Despite his incredible achievements and decades in the public eye, the modest Midwesterner is frugal, relatable, and full of humility – and his life story is an endless source of lessons to aspiring business professionals around the world.

The Warren Buffett Series
Part 1: The Early Years

Today’s infographic, which is done in partnership with finder.com, is Part 1 of the Warren Buffett Series, a five-part biographical series about the legendary investor.

The Warren Buffet Series: The Early YearsInside Warren Buffett's BrainPart 3Warren Buffett's Biggest Wins and FailsComing soon

The Warren Buffett Series: The Early Years
Note: Stay tuned for future parts with our free mailing list.

The young Warren Buffett was clearly a special kid. He ran his first “business” when he was five years old, and he invested in his first stock when he was 11. Buffett even managed to emerge from high school richer than his teachers.

But what lessons can we learn from Buffett’s prolific childhood – and how did his experiences as a young man shape him into the magnate we know today?

From Numbers to Dollar Signs

Even for someone as gifted and focused as Buffett, a serendipitous insight played a crucial role in charting his future course.

During a visit to the New York Stock Exchange when he was 10 years old, the sight of a young man rolling custom, handmade cigars on the floor made an outsized impact on him. In particular, Buffett realized that such a job couldn’t exist without massive amounts of money flowing through the stock market.

This unexpected epiphany planted the seed for stocks in his brain, and Warren’s long fascination with numbers soon shifted towards dollars.

The Buffett Growth Mindset

Warren Buffett famously spends 80% of his day reading – and the written word was just as important to his younger self. As a lad, one book that caught Buffett’s eye was One Thousand Ways to Make $1,000 by F.C. Minaker

Specifically, the book showed Buffett how $1,000 could compound over time – and that the earlier you had money working for you, the better.

An important lesson from the book? There’s a massive difference in returns between 60 and 70 year compound interest scenarios. In other words, annualized returns are just one part of the equation – but how long the money compounds is the other crucial part. This is a big part of the reason why Warren Buffett got started early.

Warren Buffett’s First Stock

Through his various activities, Buffett had $120 saved by age 11. Naturally, he invested it in a stock, co-investing his sister’s money. They each bought three shares of Cities Service Preferred for $38.25 each.

The share price promptly dropped to $27, but Buffett waited it out. When it got to $40, he sold to net a small profit – however, the stock soon after went all the way to $202!

Warren calls this one of the most important moments in his life, and he learned three lessons:

  1. Don’t overly fixate on what he paid for the stock
  2. Don’t rush unthinkingly to grab a small profit. He could have made $492 if he was more patient
  3. He didn’t want to have responsibility for anyone else’s money unless he was sure he could succeed

These important lessons would eventually tie in well to his value investing philosophy.

Odd Jobs

The young Buffett wasn’t afraid to try new things to build up his capital. He collected golf balls, sold peanuts and popcorn, sold gum and Coca-Cola, and even created tipsheets for horse races on a typewriter.

Some of his stranger endeavors? He launched Buffett’s Approval Service and sold stamps to collectors around the country, and he also launched Buffett’s Showroom Shine – a car shining business that didn’t last too long.

Warren’s Work Ethic

By the end of high school, Buffett had launched multiple businesses, sold thousands of golf balls, read at least 100 books on business, and hawked 600,000 newspapers.

This hard work led to him having a fortune of $5,000 by high school graduation time, the equivalent of $55,000 in today’s currency. He even owned land at this point, after buying 40 acres of Nebraska farmland with his newspaper profits.

Knocked Off Course

After high school, Buffett decided he was a shoe-in for Harvard. He knew it would be stimulating for him intellectually, and that the famed business school would allow him to develop a strong network.

The only problem? He got rejected.

Instead of letting this get to him, he discovered Benjamin Graham’s book The Intelligent Investor and fell in love. It was the methodical investing framework he needed, and he would later call it the “best book about investing ever written”.

Buffett would soon be accepted at Columbia Business School, where Benjamin Graham and David Dodd taught finance. Graham became Buffett’s idol, and his second-biggest influence behind his own father.

Other Notes

Part 2 of the Warren Buffett Series will be released in early January 2018.

Credits: This infographic would not be possible without the great biographies done by Roger Lowenstein (Buffett: The Making of an American Capitalist) and Alice Schroeder (The Snowball), as well as numerous other sources cataloging Buffett’s life online.

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Entrepreneurship

10 Proven Ways to Build Trust With Employees

Trust is the glue of modern organizations to ensure collaboration and healthy conflict. Here are proven ways to build trust with employees.

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Making progress towards ambitious and complex organizational objectives can be a tricky endeavor for even the most accomplished of teams.

But if there was ever a surefire recipe to make this undertaking more difficult, it’d be embarking on these kinds of goals with a team that doesn’t actually trust each other.

Not only does trust enable individuals to work outside of their silos and collaborate with other people on the team, but trust is also associated with improved communication, job satisfaction, and higher performance levels within organizations.

The Trust Imperative

Today’s infographic comes to us from The Business Backer, and it highlights 10 proven ways to build trust with employees in teams and organizations.

10 Proven Ways to Build Trust With Employees

Many of the complex challenges that dot the modern business landscape cannot be solved by a myriad of solo efforts.

Teams are necessary, and working together cannot take place only at a superficial level. To tackle the big problems, teams must have deep-rooted commitments to each other, creating potential for collaboration, healthy conflict, and differences of opinion.

Managers need to trust employees and vice versa, but different types of teams need to trust each other across other business functions as well.

10 Ways to Build Trust

It’s not possible to build trust with employees overnight, but there are some easy ways to kickstart the process.

  1. Show them the big picture
    Ensuring employees have a view of the big picture creates a space for communication and openness.
  2. Set clear expectations
    A lack of clarity of what to expect can lead to confusion, which erodes trust.
  3. Listen actively
    Asking open-ended questions like “How’s the project going?” builds trust and respect.
  4. Delegate low-risk projects
    A cycle of trust can be created, moving up to bigger and more important projects.
  5. Schedule weekly catch-up meetings
    Regular meetings create a trusting environment for people to give and receive feedback.
  6. Be honest
    Even when it is uncomfortable, being honest helps build trust and creates healthy conflict.
  7. Commit to your word
    Trust depends on integrity, and seemingly erratic behavior undermines this.
  8. Recognize excellent work
    This has the biggest effect on trust right after a goal has been met.
  9. Share a bit about yourself
    Oxytocin is released in the brain when we socialize and build trust.
  10. Let employees work on projects they enjoy
    This allows employees to focus on what they care about most, fostering trust.

Consequences of Inaction

It doesn’t matter how smart or experienced your team is.

Without the element of trust, they will not be able to work together in an effective fashion. For this reason, undertaking a mission to enable and build trust with employees is crucial for the success of any modern organization.

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Chart of the Week

Tech Founders Predict the Next Wave of Startup Growth

Which U.S. startups are best poised for growth and spin-off success? This chart shares insights from over 500 tech founders about the state of startups.

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Tech Founders Predict the Next Wave of Startup Growth

Today’s tech founders have unique insights into the evolving arena of innovation and are keenly aware of why some companies succeed more than others. Many have worked with multiple startups and have gone on to invest in successful tech unicorns.

This week’s chart comes from First Round’s State of Startups 2018 survey, in which 529 founders shared their predictions on the tech startups best poised for growth and spin-off success.

Tech Startup Valuations

Stripe, the payments startup darling, has already grown from $1.8 billion in valuation in 2013 to over $22 billion today. According to the tech founders surveyed, 19% see Stripe continuing on this path in the years to come.

Q: Which U.S.-based tech startup’s value will increase the most in the next 10 years?

RankStartup% of respondents
#1Stripe19.0%
#2SpaceX12.7%
#3Coinbase12.1%
#4Slack11.3%
#5Airbnb9.8%
#6Palantir6.8%
#7WeWork6.3%
#8Uber5.3%
#9Lyft4.7%
#10Pinterest1.6%
Other10.3%

It’s worth noting that this list includes some startups that have already IPO’d since the survey was released in December 2018.

In fact, in the first half of 2019, we’ve already seen Pinterest, Lyft, Uber, and Slack hit the market. Slack’s public offering was the most notable, as they chose to go the direct listing route. The share price still jumped 48.5% less than 24 hours after they went public.

The Next PayPal Mafia?

The PayPal Mafia is a legendary group of billionaire investor-entrepreneurs that have had far-reaching influence in the tech world since they parted ways with PayPal.

Not only did members of this group go on to start many major unicorns, including YouTube, SpaceX, LinkedIn, and Palantir, but some members have invested in over 100 startups each. This “giving back” has had a monumental impact on the Silicon Valley ecosystem, planting the seeds that would emerge as many of today’s star companies.

Q: Which U.S.-based company is most likely to spin out the next generation of notable founders over the next five years?

RankStartup% of respondents
#1Uber22.5%
#2Slack15.7%
#3Stripe15.2%
#4Airbnb13.9%
#5Coinbase10.6%
#6Palantir9.1%
#7SpaceX4.2%
#8Lyft1.8%
#9WeWork1.8%
#10Amazon1.1%
Other4.2%

Current tech founders predict that the companies listed in this survey will be perfect launching points for many of the world’s future tech founders.

Of all U.S.-based tech startups, Uber is predicted to be a top contender for producing the next generation of startup talent by 2023.

Other Survey Findings

Interestingly, over 60% of founders believe that the world is in a technology bubble, with evenly split reviews on whether it’s either nowhere close or very close to popping.

While 57% of founders believe the U.S. will continue to dominate the tech world, 39% predict China’s growth will become the world’s hub for tech innovation by 2028.

Only time will tell, as tensions between the U.S. and China continue to heat up, and the global recruitment of tech talent becomes increasingly competitive.

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