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Warren Buffett and Elon Musk have found value in similar types of businesses.
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Buffett likes payment methods that provide monopoly buying power and the ability to easily increase prices.
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Musk has a big impact on solving bottlenecks like EV charging and space transportation.
Warren Buffett and Elon Musk work at Different extremes of riskBut both are drawn to the same types of trade: toll roads and bottlenecks.
Taking payment
Buffett, world famous investor and CEO Berkshire Hathawayhas dreamed of making people pay since childhood.
“All That Traffic” When he once told a friend’s mother about the endless cars driving past her house, “Buffett: Making America Capitalist” by Roger Lowenstein. “It’s a shame you don’t make money off the passers-by.”
Buffett told his friends that owning the only newspaper in town was like controlling the only bridge, since readers and advertisers had no choice but to pay the price.
Years later, one of Buffett’s companies owned a 24 percent stake in the Detroit International Bridge Company, which owns the nation’s only toll bridge. He also highlighted toll roads as one of the specific assets he wanted to buy in his Buffett partnership letters in the 1950s.
One of Buffett’s friends and a former Berkshire director, The late Sandy Gottsman“Warren likened ownership of a monopoly or market-based newspaper to ownership of an unregulated toll bridge. You have relative freedom to increase the amount and time you want,” he once wrote in a newspaper.
Asked about the quote during the legal battle, Buffett replied, “I don’t argue with that character.” “I said that in an inflationary world, owning a toll bridge is a big deal if it’s not regulated.”
“Because you’ve incurred capital costs,” he continued. “You build the bridge with old dollars, and when there’s inflation, you don’t have to keep replacing it — you only build it once.”
The investor has extended his passion for business lines that dominate their markets, require little capital investment, and raise prices without losing customers to competitors. Apple, the largest stock in Berkshire’s stock portfolio, is one example, as its strong brand allows it to increase in value each year and is deducted from all purchases on the App Store.
“Buffett has found his way to pay, and the best way to pay ever is the iPhone,” says the Berkshire shareholder and host of the “Business Brewing” podcast. He said last year.
Controlling obstacles
Elon Musk also understands the importance of owning limited resources or infrastructure and limiting access to them.
“He likes to control obstacles,” says Bill Cohan in A The latest episode The “On with Kara Swisher” podcast. “He is very good at knowing what they are and exploiting them,” the author and journalist added.
Kohan was commenting a A recent New York article This underscores how much the US government relies on Musk’s infrastructure, whether it’s charging stations for electric vehicles, Starlink access for Ukrainian forces, or SpaceX rockets for transportation.
Targeting choke points has been a key part of Tesla’s corporate strategy for years.
“By investing in batteries – producing them at scale and better – Tesla will control the bottleneck and thereby control the profit center for the future of the industry” Nathan Furr and Jeff Dyer He wrote By Harvard Business Review in February 2020.
Muck recognizes that batteries are a key limiting factor for electric vehicles, and developing an advanced one could give him a huge competitive edge in the nascent industry, the professors said. He also emphasized that field investment in EV charging networks is a way to overcome the long-term barriers to long-range driving and give Tesla an advantage over other electric cars.
The serial entrepreneur is still thinking along the same lines. As one X user posted earlier this year, typing is “the biggest obstacle to human progress,” Musk They replied In one word: “Neuralink.” His startup focused on building a brain-computer interface, suggesting that typing could replace typing as an input method.
Shared values
Buffett seems to like payment methods because it’s a simple, safe and reliable way to make money. Musk seems to be drawn to bottlenecks because solving them allows for technological advancements and makes a big impact—he needs to build better batteries, charging networks, reusable rockets, communications satellites, mind-control devices, or whatever.
However, it is clear that both men recognize the very limited resources and means of access and the great value they place on all they control.
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