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Buffett as a technology VC !??!!


netnet
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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.

 

 

enjoy!

 

 

Netnet

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