Warren Buffett has seen a lot of crazes in his 82 years investing. The Nifty Fifty, the dotcom bust, and the 2008 crisis. Through it all, he kept doing the same thing: buying great businesses at reasonable prices.
Today, I dug into the sixth hour of Berkshire’s recent annual meeting. I learned a lot about avoiding fads, having a prepared mind, and moving quickly when opportunity knocks.
Avoiding Manias
Warren sticks to what he knows well: buying great businesses at reasonable prices. Real estate booms and crypto crazes swirl around him, but never move him.
“Getting a decent result should be reasonably easy so long as you don’t get talked out of doing what’s worked in the past, and don’t get carried away with fads, and don’t listen to people that have different interests…”
When I first started angel investing in 2021, I saw crypto startups raising Seed rounds at a $100 million valuation every day. They had nothing but a deck.
“Am I missing something?” I thought to myself. “Maybe. But I’m going to keep doing what I think makes sense.”
Instead of backing the buzzy cryptos, I invested in little startups doing unglamorous things. One was Rilla, an AI tool to help contractors sell more that I invested in during the fall of 2022.
Today, Rilla is at $14 million ARR. Most of those crypto startups are probably gone.
Moving Fast
“There is an aspect of knowing a whole lot, and having a whole lot of experiences, and then seeing something that turns on the light bulb.”
Warren rarely sees a deal that suits him, especially in today’s pricey market. But when he does, he moves fast.
He’s able to do that because he knows what he’s looking for. His perspective is informed by scads of research and thought over generations.
He also knows that great opportunities don’t last long.
I try to take the same approach in startupland. Last year, I invested in a wonderful company with rapid growth and an intensely focused founder. I put in my commitment quickly, concerned the round would fill up.
Turns out it didn’t — the angel allocation only filled 60%. The round closed and that was that.
A lot of other angels who saw that deal probably hemmed and hawed and wound up missing out. But I knew that a giant market, rapid growth, and an intensely committed founder checks my boxes, so I was comfortable making a bet quickly.
That little startup has more than tripled revenue in less than a year and is nearing the $10 million ARR mark. It pays to be decisive.
Wrap-Up
There will always be another investment fad. And there’s nowhere more prone to them than tech, home of the new.
I don’t care if it’s AI, crypto, or anything else, you need paying customers who love your product. When I see that, I move fast.
What have you learned from Warren? Leave a comment and let us know!
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More on investing:
The Berkshire Annual Meeting in Five Days: Day 3
The Berkshire Annual Meeting in Five Days: Day 2
The Berkshire Annual Meeting in Five Days: Day 1
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