Warren Buffett can be called the greatest investor of all time. Under his leadership, the stock price of Berkshire Hathaway has gained 5,500,000% in the last 60 years. But Buffett wasn’t just a great investor—he was a unicorn entrepreneur in disguise, mastering capital, control, and competitive strategy to dominate his industry without hype. Here are 6 venture success secrets from Buffett’s career for your own success.
#1. Focus on Your Passion.
Buffett started investing, which was his passion, at the age of 11. Not coincidentally, many billion-dollar entrepreneurs, including Gates, Jobs, and Zuckerberg, also focused on their passion starting from their teen years. And their passion was in the emerging industry of their teenage years. For Buffett, it was investing and money management. For Gates and Jobs, it was personal computers. For Zuckerberg, it was the Internet.
Lesson for Entrepreneurs: Billion-dollar entrepreneurs knew emerging trends because that is what they were enthusiastic about in their formative years, and they knew more about the trend than many adults who had not studied it. As they became adults, they jumped onto the emerging industry created by this emerging trend and excelled at it by learning skills.
#2. Learn Skills that Fit the Times – and the Trends
Buffett rose with America’s post-war boom by dominating the emerging field of money management. He realized that he was born in the right country at the right time with the right intelligence, demographic, and interests. But he also knew that passion was not enough.
He followed his passion and learned value investing skills from Benjamin Graham, perhaps the pioneer on the subject. This was the foundation.
Lesson for Entrepreneurs: Buffett found the emerging industry (money management) for his skills and passion. Do the same.
#3. Pivot Strategically to Find Your Unicorn
Like Buffett, many unicorns pivoted into the competitive strategy that made them legends. This list includes Sam Walton (Walmart), Bill Gates (Microsoft), Steve Jobs (Apple), and Mark Zuckerberg (Facebook).
Initially, from 1956 – 69, he worked as a money manager but with a twist – he did get a portion of the gain above a certain threshold, but he also assumed some of the losses. His investors were mainly members of his family and his friends. In 1965, Buffett acquired a controlling interest in Berkshire Hathaway, a struggling textile mill, and used it as a vehicle to pivot into investing and acquisitions. Buffett later admitted he would’ve done better starting with an insurance firm—something he later corrected. Buffett then switched to a holding company format when he realized that that was a better organizational format for aligning his interests with that of his investors.
Lesson for entrepreneurs: Merge your skills and passion with your ethics. Buffett shifted to a holding company format to align his investing style with his long-term, ethical approach to managing capital. Importantly, Buffett also kept control. He did not raise VC initially but obtained financing from friends and family – the best path to controlling your unicorn (along with investments from crowds, angels and strategic alliances).
#4. Control Capital: Why Buffett Loved Insurance.
It is not enough to be in the right emerging industry. You also need to find the unique strategy that can help you launch and take off. Buffett acquired his first insurance company in 1967 as his base for the launch of his conglomerate. Insurers can better predict cash needs using actuarial models, helping Buffett manage capital over time. The insurance company was central to Buffett’s strategy to have capital to invest without worrying about short-term needs.
Lesson for entrepreneurs: It is not the idea or the innovation that leads you to glory. Nearly all (99%) the billion-dollar entrepreneurs in my study of 87 relied on their strategy and skills, not on their idea, and on maintaining control of their venture and hand it over to the financiers.
#5. Build Your Inner Circle: Buffett’s Role With Munger
Billion-dollar entrepreneurs may not start with a team because many of them want to control and lead. But they add the right partners to balance the leadership team. Buffett partnered with Charlie Munger who had the same background as Buffett and complementary skills.
Lesson for entrepreneurs: Find the right team that balances your skills and temperament. And keeping control.
#6. Lead With Temperament, Not Just Intelligence
With Charlie Munger at his side, Buffett grew from a good money manager to a great leader. Here are some lessons from his track record and writing:
- Be patient. Some companies, including Coca Cola and American Express, have been in his portfolio for decades.
- Check your emotions at the door. Buffett suggests that you keep your fear and greed in check. As he noted, “be fearful when others are greedy and greedy when others are fearful.”
- Do not be swayed by what others do. Many managers follow the crowd. Buffett followed his compass. This is also true of VCs – one reason only about 20-30 VCs are said to earn about 95% of industry profits.
- Get the right balance of IQ and SS (Street Smarts). Buffett noted that investing success is not about intelligence but about temperament.
MY TAKE: After studying 125 billion-dollar and mini-unicorn entrepreneurs, here’s what I found about venture success secrets: The biggest wins for entrepreneurs don’t come from chasing VC or being first – they come from founders who have a blend of intelligence and street smarts, build purpose-driven skills, launch with finance-smart strategies and control, and are focused like a laser to beat their competitors. Like Buffett – who followed his passion, learned the key skills, entered money management when the industry was taking off, then pivoted to a model aligned with his strengths, passion, and ethics, and focused on his own analysis rather than being swayed by popular opinions or the fears or greed of the day.
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