Author Topic: Buffett as a technology VC !??!!  (Read 1739 times)

netnet

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 972
Buffett as a technology VC !??!!
« on: February 10, 2011, 03:31:29 PM »
Here is an interesting video with Alice Schroeder discussing an investment Buffett made in the 50's in the Mid-Continent Tab Card Company.  He invested in company that made what I assume are punch cards for computers.  They called them tab cards.

The title of this thread is a bit of a come on, but only a bit; in today's lingo, this would have been somewhat of a late stage VC investment.  Buffett would not invest at the start because
  • of what Schroeder calls catastrophic risk, i.e. could they compete against IBM
  • plus the lack of historical data, proving the viability of the business.
   
The questions she said he asked were: Can this company compete in this high margin business against IBM? And can I (and the company) make 15% per year compounded

To me, what is most important is Schroeder's discussion of his investment process--no (projected) earnings models rather sound business analysis plus historical data.

One good quote or paraphrase: With a good margin of safety, you don't need an earning projection.

I won't step on the punchline and tell you what he made on the investment.

http://www.youtube.com/watch?v=KwAkiVUnKx0

enjoy!


Netnet
« Last Edit: February 11, 2011, 10:39:44 AM by netnet »


twacowfca

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2665
Re: Buffett as a technology VC !??!!
« Reply #1 on: February 15, 2011, 07:24:45 AM »
Thanks for posting, netnet.  That's a great example of WEB's careful approach to investing.