I have always admired Warren Buffett. No, not just because he’s a mega-billionaire. I’ve always been fascinated by his approach to investing and business building. Mr. Buffett is not just an investor but an owner of many many businesses.
When I decided to create TriClare Business Holdings, Inc. I wanted to “do my own thing” in the “Warren Buffett Way”.
So, what is Buffettology? Well it’s actually both a business philosophy and a book. The book is written by Mary Buffett, Warren Buffett’s former daughter-in-law. It’s the best book I’ve ever read about how Warren does what he does - his business/investing philosophy.
In order for you to better understand what I do with my partners here at TBH let me draw for you the parallels between Venturepreneuring and Buffettology.
Warren Buffett invests for the long term ONLY in companies, run by management teams he respects, whose future earnings he can predict.
As venturepreneurs we "invest" in business opportunities where we understand the business, like and respect the entrepreneur(s), and believe the business is doing something interesting.
Warren Buffett looks for companies with excellent business economics. This gives the business the cash flow to either buy other businesses with excellent economics or further invest in itself thus making a good business even better.
Through TriClare I partner with businesses that provide the cash flow to partner with and/or acquire other highly profitable niche businesses.
A key aspect of Buffettology is knowing the relationship between the price you pay for a stock and your ultimate return on investment. Thus Mr. Buffett looks for excellent companies whose stock is selling at a discount.
TriClare typically partners with early stage entrepreneurial businesses - those business with systems that have been developed and are on the road to be proven. This increases our Return on Investment because we don’t have to invest capital to develop the concept.
Warren Buffett believes you should determine the types of businesses you would like to own then buy them when the price is right. This philosophy is counter to mainstream investment thinking. Many others try to “time the market” and buy as a stock goes up.
Conversely, we don't pre-determine a niche we’d like to be in or a type of business we’d like to own. We are open to any type of business if it meets our three primary criteria - (1) we understand it, (2) we like and respect the owners, (3) it's doing something interesting. The other side of the coin is, we only partner with businesses where we can easily see how the value and talent we can add will dramatically improve a businesses upside.
So there you have it. My approach to Buffettology - Running my business the Warren Buffett way! Will my partners and I become mega-billionaires? Well, as I believe Mr. Buffett would say… “only time will tell”!