Introducing 'Business History': Young Warren Buffett

Robert Smith (0:00)

Rob here, long time listeners will know we love talking about the ultra investor Warren Buffett on the show. So today, we're letting our friends over at Business History, a new podcast from Pushkin Industries, tell us about Buffett's rise from obscurity to become the most famous and richest investor of our age. We hope you enjoy the show, and if you like what you hear, check out more episodes of Business History on YouTube, Apple, Spotify, or wherever you get your podcasts.

Robert Smith (0:40)

Jacob, I wanted you to see one of my prize possessions. I hid it in a bag so that you would not see it in advance. It is a round, cuddly, plushy Warren Buffett.

Jacob Goldstein (0:53)

He's got like an Argyle sweater and a golf club, which is weird. Like it should be a Cherry Coke, a Box of Seas candy, even like a hand-written-

Robert Smith (1:01)

Financial document, yeah.

Jacob Goldstein (1:02)

An annual report. Yeah, why a golf club?

Robert Smith (1:05)

I think people who golf like Warren Buffett, and it's just a product that you can buy. A student got it for me who went to the most recent Berkshire Hathaway shareholders meeting.

Jacob Goldstein (1:16)

The Berkshire Hathaway shareholders meeting. Always wanted to go. It's a famous event.

Robert Smith (1:20)

And this was the one where he announced his retirement. My student eagerly texted me the whole time. So excited. He knows that I love Warren Buffett. And I brought it because it's such a weird, unlikely thing. It is hard to buy soft plushy dolls of billionaires, because who would want to sleep with a little Elon Musk doll at night?

Jacob Goldstein (1:40)

Yeah, this finance seems less likely, right? Like, it's not going to be a plushy Jamie Dimon or a plushy like Ken Griffin.

Robert Smith (1:49)

No, no, no, no. Ken Griffin will cut you in the night. And I think that they made a plushy of him because Warren Buffett is sort of extraordinary in the history of finance. I mean, it's a raw amount of money, right? $145 billion net worth, according to Forbes, right? But there's also the way he earned his billions. Most billionaires, if you think about it these days, started a company, a tiny company that became huge. They owned all the stock in it, and so on paper became rich.

Jacob Goldstein (2:17)

Or the children.

Robert Smith (2:20)

Or the children of the children, yeah. Warren Buffett did it by investing in other people's companies. He hasn't really made a product himself. He buys companies that have good products.

Jacob Goldstein (2:30)

Which, in a way, makes it all the more amazing that he is this, like, beloved, I'm going to say beloved figure, right? Like, people generally don't like finance people, and they like Warren Buffett.

Robert Smith (2:42)

He is a symbol of what people want finance to be, right? Oh, you buy good companies at good prices, and you hold them through thick and thin. Like, he's legendarily honest, you know, his word is his bond. His handshake does not need lawyers, Jacob.

Jacob Goldstein (2:57)

I'm sure he has lawyers.

Robert Smith (2:58)

He has a lot of lawyers, right? But, you know, he eats at McDonald's every morning, he swigs cherry coke all day long, then he goes home to a tiny house in Omaha and plays bridge. I mean, if he didn't exist, you would have to invent a Warren Buffett just for those days, you know, when the stock market, like, does something terrible. You can always just say, well, there's Warren Buffett, right? Why can't you be more like Warren Buffett?

Jacob Goldstein (3:21)

The honest $145 billion financier.

Robert Smith (3:25)

Yeah, you can be a decent fellow. And today, on the show, as part of our investing series, I'm going to show you that Warren Buffett is a complete fraud.

Jacob Goldstein (3:34)

Yes!

Robert Smith (3:35)

No, he's totally not. He's a great guy.

Jacob Goldstein (3:37)

Is he kind of a fraud?

Robert Smith (3:38)

I'm just going to say that he is not as cuddly and feel good as you might think. Well, I would hope not. He is a very shrewd man. He is a shark, really, when it comes to business deals. And today on the show, we are going to show you how he got that way. Young Buffett. I'm Robert Smith.

Jacob Goldstein (3:55)

I'm Jacob Goldstein. And this is Business History, a show about the history of business.

Robert Smith (4:01)

This is part of our series on stock market legends. We already told you the story of Jesse Livermore, a very different story in a very different time, the Wild West of speculation and tomfoolery, you know, in the Gilded Age and right before the great stock market crash. And today we're going to pick up a few years later because Warren Buffett was born in 1930, right at the start of the Depression. And before he was a legend, before he was a billionaire, he was just a young man who didn't want to work hard and figured out a giant flaw in the stock market.