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Warren Buffett and the Business of Life - Book Review

I just finished The Snowball: Warren Buffett and the Business of Life, which took me much longer to read than I'd like to admit. At 960 pages, it's actually a really great read, and it kept my interest until the end.

It's supposedly the first and only biography on Warren Buffett that is written with his full cooperation and collaboration, which is sad because it finishes around 2008, and there's much more over the last 16 years that I wish was included.

It would take me way too long to write up the full story, but I'm going to share some of the things that I learned or found super interesting about Warren.

Love & Success

The standout passage for me in this book came closer to the end, when Warren spoke about success during a lecture he was giving. Much of his earlier lectures steered away from personal topics, but as time progressed, he started to share more intimate life advice.

"Basically, when you get to my age, you'll really measure your success in life by how many of the people you want to have love you actually do love you."

"That's the ultimate test of how you have lived your life. The trouble with love is that you can't buy it. You can buy sex. You can buy testimonial dinners. You can buy pamphlets that say how wonderful you are. But the only way to get love is to be lovable. It's very irritating if you have a lot of money. You'd like to think you could write a check: I'll buy a million dollars' worth of love. But it doesn't work that way. The more you give love away, the more you get."

Not Everybody Is Perfect

Warren Buffett is famous for always being able to position himself in win-win scenarios. This sometimes takes very unconventional forms. One example of this is how he likes to control his family's weight. His son Howie ran a farm, which belonged to Warren. Howie would pay Warren a percentage of earnings.

Warren one day decided that Howie's perfect weight would be 182.5 pounds, and devised a strategy to encourage him to weigh under that amount. If Howie weighed over the amount, he would pay his father 26% of the farm's earnings; if he weighed under the target, he'd only have to pay 22%. Therefore, Buffett couldn't lose—he either got more money or a thinner son.

Interestingly, the 22% that Howie had to pay his father was still not that great in comparison to market rates. This wasn't unusual, as Buffett was very reluctant to excessively spend or provide for his children, especially in their early adulthood.

Insurance

I knew that Berkshire Hathaway held huge positions in great businesses, but I didn't know of their history with the insurance industry.

One of the first insurance businesses that he bought was National Indemnity, followed by many others including one of his favorites, GEICO.

These insurance businesses receive huge insurance premiums (money paid to an insurance company by a customer), which is then only potentially used in the future to cover claims.

In the meantime, Berkshire is free to use this premium money to make investments, which is especially handy when the markets are distressed and he can scoop up bargains.

Typically, other insurance companies wouldn't make risky investments with this float and would keep it somewhere safe, like bonds. But, since Berkshire has tons of business outside of insurance that already generates cash, they can make riskier investments with the float.

This is one of Berkshire's superpowers, which has enabled them to make amazing investments when the rest of the market was forced to sell.

On Philanthropy

For much of Buffett's life, he believed that his best way to contribute to society was to do what he did best—generate more money. This could then be used for societal good once he was gone. His logic was that this would have more impact than if he were to use his energy on choosing causes to give his existing money to.

Buffett strongly believes and talks about winning the "Ovarian Lottery" because he was born in a society that allowed him to excel, and that people have a responsibility to "take and then give."

In 2006, he made a decision to essentially give his entire net worth away over a number of years, with much of the money going to the Bill & Melinda Gates Foundation. He believed the Gates were already doing great work, so it was an efficient way to give.

Should You Read It?

I think this book is a really great read, especially if you're into business or investing. I like how there's a ton of detail on a huge number of different deals and business scenarios, and the book also does a really great job of digging into Buffett's various relationships.