Facebook Pixel
Searching...
English
EnglishEnglish
EspañolSpanish
简体中文Chinese
FrançaisFrench
DeutschGerman
日本語Japanese
PortuguêsPortuguese
ItalianoItalian
한국어Korean
РусскийRussian
NederlandsDutch
العربيةArabic
PolskiPolish
हिन्दीHindi
Tiếng ViệtVietnamese
SvenskaSwedish
ΕλληνικάGreek
TürkçeTurkish
ไทยThai
ČeštinaCzech
RomânăRomanian
MagyarHungarian
УкраїнськаUkrainian
Bahasa IndonesiaIndonesian
DanskDanish
SuomiFinnish
БългарскиBulgarian
עבריתHebrew
NorskNorwegian
HrvatskiCroatian
CatalàCatalan
SlovenčinaSlovak
LietuviųLithuanian
SlovenščinaSlovenian
СрпскиSerbian
EestiEstonian
LatviešuLatvian
فارسیPersian
മലയാളംMalayalam
தமிழ்Tamil
اردوUrdu
The Snowball

The Snowball

Warren Buffett and the Business of Life
by Alice Schroeder 2008 960 pages
4.15
52k+ ratings
Listen
10 minutes
Listen to Summary (10 minutes)

Key Takeaways

1. Warren Buffett's early life shaped his obsession with money and business

"Warren was already a cautious child, who had kept his knees bent and stayed close to the ground when he learned to walk."

Childhood entrepreneurship: From a young age, Warren Buffett displayed an unusual interest in money and business. He started various ventures, including:

  • Selling chewing gum and Coca-Cola door-to-door
  • Collecting and reselling lost golf balls
  • Operating pinball machines in local barbershops

Family influence: Buffett's father, Howard, was a stockbroker and later a congressman, exposing Warren to financial concepts early on. His grandfather Ernest owned a grocery store, further immersing young Warren in the world of business.

Early lessons: Buffett's childhood experiences taught him valuable lessons about:

  • The power of compounding and reinvesting profits
  • The importance of understanding customer behavior
  • The value of hard work and perseverance

2. Buffett's investment philosophy evolved from Benjamin Graham's teachings

"Graham's investing method was not simply about buying stocks cheap. As much as anything it was rooted in an understanding of psychology, enabling its followers to keep their emotions from influencing their decision-making."

Value investing foundation: Benjamin Graham's teachings formed the basis of Buffett's investment philosophy:

  • Focus on intrinsic value rather than market sentiment
  • Look for a margin of safety in investments
  • Treat stock ownership as partial ownership of a business

Cigar butt approach: Initially, Buffett followed Graham's strategy of buying undervalued, often troubled companies (cigar butts) for a quick profit. This approach included investments in:

  • Berkshire Hathaway (initially a struggling textile mill)
  • Dempster Mill Manufacturing
  • Various other undervalued securities

Evolution of strategy: Over time, influenced by Charlie Munger, Buffett shifted towards investing in high-quality businesses with strong competitive advantages, even if they weren't extremely cheap. This led to investments in companies like:

  • See's Candies
  • The Washington Post
  • GEICO

3. The power of compound interest drove Buffett's investment strategy

"The way that numbers exploded as they grew at a constant rate over time was how a small sum could turn into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn."

Long-term focus: Buffett understood the exponential growth potential of compound interest, leading him to:

  • Prioritize reinvestment of profits over immediate consumption
  • Focus on businesses with high returns on invested capital
  • Maintain a long-term investment horizon

Snowball effect: Buffett's wealth grew dramatically over time due to:

  • Consistent reinvestment of profits
  • Leveraging insurance float for investments
  • Acquiring businesses that generated strong cash flows

Teaching others: Buffett emphasized the power of compounding to:

  • His investment partners
  • Berkshire Hathaway shareholders
  • The general public through his annual letters and speeches

4. Buffett's partnerships and early investments laid the foundation for his success

"I had about $174,000, and I was going to retire. I rented a house at 5202 Underwood in Omaha for $175 a month. We'd live on $12,000 a year. My capital would grow."

Buffett Partnership Ltd.: In 1956, Buffett started his investment partnership with:

  • Seven initial partners, including family and friends
  • A unique fee structure that aligned his interests with partners
  • A focus on undervalued securities and special situations

Key early investments:

  • GEICO: Buffett's largest early investment, demonstrating his ability to identify undervalued companies
  • American Express: A significant investment following the salad oil scandal
  • Berkshire Hathaway: Initially a cigar butt investment that became Buffett's primary vehicle

Partnership dissolution: In 1969, Buffett decided to close his partnerships due to:

  • Difficulty finding attractive investments in an overheated market
  • A desire to focus on long-term ownership of businesses rather than short-term trading

5. Berkshire Hathaway: From textile mill to conglomerate powerhouse

"So I bought my own cigar butt, and I tried to smoke it. You walk down the street and you see a cigar butt, and it's kind of soggy and disgusting and repels you, but it's free ... and there may be one puff left in it. Berkshire didn't have any more puffs."

Transformation: Buffett transformed Berkshire Hathaway from a struggling textile mill into a diverse conglomerate:

  • Shifted focus from textiles to insurance and investments
  • Used insurance float to fund acquisitions and investments
  • Acquired high-quality businesses across various industries

Key acquisitions:

  • National Indemnity Company (1967): Provided significant insurance float
  • See's Candies (1972): Demonstrated the value of strong brands and pricing power
  • Buffalo Evening News (1977): Entry into the newspaper industry

Investment strategy: Berkshire's approach evolved to focus on:

  • Businesses with strong competitive advantages ("moats")
  • High-quality management teams
  • Companies with potential for long-term growth and profitability

6. Buffett's relationship with Charlie Munger transformed his investment approach

"Charlie had a lot of children early on. That hindered him a lot in getting independent. Starting early with no encumbrances is a big advantage."

Meeting of minds: Buffett and Munger's partnership began in 1959, leading to:

  • A shift from Graham's strict value investing to a focus on high-quality businesses
  • Emphasis on the importance of competitive advantages and brand power
  • Willingness to pay fair prices for excellent businesses

Complementary skills:

  • Buffett: Financial analysis, deal-making, capital allocation
  • Munger: Broad knowledge, strategic thinking, intellectual rigor

Key collaborations:

  • Blue Chip Stamps: Joint investment that led to the acquisition of See's Candies
  • Wesco Financial: Munger's company that eventually merged with Berkshire
  • Berkshire Hathaway: Munger became vice chairman and Buffett's trusted advisor

7. The Washington Post investment: A pivotal moment in Buffett's career

"Her skill," wrote reporter Bob Woodward, "was to raise the bar, gently but relentlessly."

Strategic investment: Buffett's purchase of Washington Post stock in 1973 was significant because:

  • It demonstrated his ability to identify undervalued, high-quality businesses
  • It established a long-term relationship with Katharine Graham and the Graham family
  • It showcased the power of investing in companies with strong competitive positions

Building trust: Buffett's approach to the Washington Post investment included:

  • Signing an agreement not to buy more stock without Graham's permission
  • Providing business advice and support during challenging times
  • Respecting the editorial independence of the newspaper

Long-term impact:

  • The Washington Post investment became one of Berkshire's most successful
  • It enhanced Buffett's reputation as a trusted advisor to business leaders
  • The relationship with the Grahams opened doors to other media investments

8. Buffett's personal life and relationships influenced his business decisions

"Warren, those are your children—you recognize them, don't you?"

Family dynamics: Buffett's relationships with family members impacted his business approach:

  • His father's influence instilled a strong work ethic and interest in investing
  • His wife Susie's support and social skills complemented his business acumen
  • His children were expected to make their own way, without relying on inherited wealth

Key personal relationships:

  • Charlie Munger: Business partner and intellectual sparring partner
  • Katharine Graham: Friend and confidante in the media world
  • Bill Gates: Later in life, a close friend and philanthropic partner

Work-life balance: Buffett's intense focus on business often came at the expense of personal relationships:

  • Limited time spent with family
  • Delegation of personal matters to his wife
  • Difficulty in maintaining close friendships outside of business circles

9. The importance of reputation and integrity in Buffett's business philosophy

"I said, 'We represent Wilson's Coin-Operated Machine Company, and we have a proposition from Mr. Wilson. It's at no risk to you. Let's put this nickel machine in the back, Mr. Erico, and your customers can play while they wait. And we'll split the money.'"

Building trust: Buffett emphasized the importance of maintaining a strong reputation:

  • Refusing to engage in unethical or questionable business practices
  • Providing transparent communication to shareholders and partners
  • Honoring commitments, even when financially disadvantageous

Long-term perspective: Buffett's focus on reputation led to:

  • Preferential treatment in deal-making and acquisitions
  • Ability to attract high-quality managers and businesses
  • Sustained success and positive public perception over decades

Lessons for others: Buffett's emphasis on integrity influenced:

  • Berkshire Hathaway's corporate culture
  • The broader business community's approach to ethics
  • Public perception of successful investors and business leaders

Last updated:

FAQ

What's The Snowball: Warren Buffett and the Business of Life about?

  • Biography of Warren Buffett: The book chronicles the life and career of Warren Buffett, detailing his journey from a young boy with a passion for business to becoming one of the world's most successful investors.
  • Investment Philosophy: It explores Buffett's investment strategies, including his focus on value investing, long-term growth, and the importance of understanding the businesses he invests in.
  • Personal Life Insights: The narrative delves into Buffett's personal relationships, particularly with his late wife, Susie, and how these relationships influenced his life and decisions.

Why should I read The Snowball: Warren Buffett and the Business of Life?

  • Inspiration from Buffett's Journey: Readers can find inspiration in Buffett's humble beginnings and his relentless pursuit of knowledge and success, which can motivate anyone to pursue their own goals.
  • Investment Wisdom: The book provides valuable insights into Buffett's investment strategies and principles, making it a great resource for both novice and experienced investors.
  • Understanding Human Nature: It offers a deep understanding of Buffett as a person, showcasing his values, ethics, and the impact of personal relationships on his business decisions.

What are the key takeaways of The Snowball: Warren Buffett and the Business of Life?

  • Value Investing Principles: Buffett's core investment philosophy revolves around buying undervalued stocks and holding them for the long term. He emphasizes understanding a company's intrinsic value and competitive advantages.
  • Importance of Relationships: The book illustrates how personal relationships, particularly with family and friends, play a crucial role in Buffett's life and decision-making.
  • Learning from Mistakes: Buffett's reflections on his past mistakes highlight the importance of learning from failures and adapting strategies accordingly.

What are the best quotes from The Snowball: Warren Buffett and the Business of Life and what do they mean?

  • “Cash combined with courage in a crisis is priceless.”: This quote reflects Buffett's belief in the importance of having liquidity during challenging times, allowing for strategic opportunities.
  • “The most important investment you can make is in yourself.”: This reflects Buffett's philosophy that personal development and education are crucial for success, encouraging readers to prioritize self-improvement.
  • “Risk comes from not knowing what you’re doing.”: This quote highlights the significance of understanding investments and markets, suggesting that informed decisions reduce risk.

How did Warren Buffett's upbringing influence his investment philosophy in The Snowball?

  • Early Exposure to Business: Buffett's childhood experiences, such as running a paper route and selling gum, instilled in him a strong work ethic and entrepreneurial spirit.
  • Family Values: His parents emphasized the importance of education, integrity, and hard work, influencing his approach to investing and commitment to ethical business practices.
  • Mentorship from Ben Graham: Buffett's education under Ben Graham, a pioneer of value investing, played a crucial role in shaping his investment philosophy.

What investment strategies does Warren Buffett advocate in The Snowball?

  • Long-Term Focus: Buffett advocates for a long-term investment approach, emphasizing that “time is your friend” when it comes to compounding returns.
  • Value Investing: He stresses the importance of buying undervalued companies with strong fundamentals, which he refers to as “buying a dollar for fifty cents.”
  • Circle of Competence: Buffett advises investors to stay within their “circle of competence,” meaning they should only invest in businesses they understand well.

How does The Snowball illustrate the concept of compounding?

  • Metaphor of the Snowball: The title itself refers to the idea of a snowball gaining size and momentum as it rolls down a hill, illustrating how small, consistent investments can grow significantly over time.
  • Long-Term Investments: The book highlights Buffett's strategy of holding investments for the long term, allowing them to appreciate in value and exemplifying the power of compounding.
  • Patience in Growth: Buffett's success is attributed to his patience in allowing investments to mature, reinforcing the idea that wealth accumulation is a gradual process.

What role did personal relationships play in Warren Buffett's success as described in The Snowball?

  • Building Trust: Buffett's ability to build and maintain trust with partners, investors, and employees has been crucial to his success, emphasizing the importance of reputation and integrity.
  • Mentorship and Learning: His relationships with figures like Ben Graham and Charlie Munger significantly influenced his investment strategies and decision-making.
  • Family and Personal Connections: The book illustrates how Buffett's family relationships, particularly with his late wife Susie, shaped his values and priorities.

How did Warren Buffett's investment strategies evolve throughout The Snowball?

  • From Cigar Butts to Quality Companies: Initially, Buffett focused on "cigar butt" investments—cheap stocks with little left to offer. Over time, he shifted to investing in high-quality companies with strong growth potential.
  • Emphasis on Management: Buffett began to prioritize the quality of management in his investment decisions, believing that strong leaders are crucial for a company's long-term success.
  • Adaptation to Market Conditions: Buffett's strategies evolved in response to changing market conditions and economic environments, learning to be flexible while staying true to his core investment principles.

How does The Snowball address Warren Buffett's personal life and relationships?

  • Family Dynamics: The book explores Buffett's relationships with his family, including his children and his late wife, Susie, highlighting the challenges and complexities of balancing personal and professional life.
  • Philanthropic Efforts: Buffett's commitment to philanthropy is a significant aspect of his personal life, believing in using his wealth to make a positive impact on society.
  • Struggles with Fame: The narrative addresses the challenges Buffett faced as he gained fame and wealth, discussing how he navigated public scrutiny while maintaining his values and principles.

What challenges did Warren Buffett face in his career as described in The Snowball?

  • Market Volatility: Buffett faced significant challenges during market downturns, such as the dot-com bubble and the 2008 financial crisis, testing his investment strategies.
  • Criticism and Scrutiny: As a high-profile investor, Buffett has faced criticism and scrutiny from analysts and the media, often defending his investment decisions against public opinion.
  • Personal Loss: The death of his wife, Susie, was a profound personal challenge, impacting his emotional well-being and requiring him to navigate his grief while continuing to lead Berkshire Hathaway.

How did Warren Buffett's relationship with Susie Thompson impact his life and career as described in The Snowball?

  • Emotional Support: Susie provided Buffett with the emotional stability and support he needed, helping him navigate personal and professional challenges throughout his life.
  • Social Skills Development: Her influence helped him improve his social skills, particularly in public speaking, which was crucial for his career as an investor and businessman.
  • Shared Values: Their partnership was built on shared values, including a commitment to philanthropy and community service, which shaped Buffett's approach to wealth and responsibility.

Review Summary

4.15 out of 5
Average of 52k+ ratings from Goodreads and Amazon.

The Snowball is a comprehensive biography of Warren Buffett, offering insights into his personal life, investment philosophy, and business acumen. Readers appreciate the book's depth and detail, though some find it overly long. The biography portrays Buffett as a complex individual, driven by an intense focus on making money while maintaining strong moral values. It covers his childhood, early business ventures, and rise to become one of the world's wealthiest individuals. While praised for its thoroughness, some critics argue the book could have been more concise and balanced in its portrayal.

Your rating:

About the Author

Alice Schroeder is a former CPA and insurance industry analyst who became a managing director at Morgan Stanley. Born in Texas, she earned her undergraduate degree and MBA from the University of Texas at Austin before moving to the East Coast to work in finance. Schroeder's expertise in finance and her insightful research on Berkshire Hathaway caught Warren Buffett's attention, leading to a friendship that granted her unprecedented access to his files and personal life. This unique relationship positioned her as the ideal author for The Snowball, Buffett's biography. Schroeder currently resides in Connecticut with her husband.

Download PDF

To save this The Snowball summary for later, download the free PDF. You can print it out, or read offline at your convenience.
Download PDF
File size: 0.31 MB     Pages: 22

Download EPUB

To read this The Snowball summary on your e-reader device or app, download the free EPUB. The .epub digital book format is ideal for reading ebooks on phones, tablets, and e-readers.
Download EPUB
File size: 3.09 MB     Pages: 10
0:00
-0:00
1x
Dan
Andrew
Michelle
Lauren
Select Speed
1.0×
+
200 words per minute
Create a free account to unlock:
Requests: Request new book summaries
Bookmarks: Save your favorite books
History: Revisit books later
Recommendations: Get personalized suggestions
Ratings: Rate books & see your ratings
Try Full Access for 7 Days
Listen, bookmark, and more
Compare Features Free Pro
📖 Read Summaries
All summaries are free to read in 40 languages
🎧 Listen to Summaries
Listen to unlimited summaries in 40 languages
❤️ Unlimited Bookmarks
Free users are limited to 10
📜 Unlimited History
Free users are limited to 10
Risk-Free Timeline
Today: Get Instant Access
Listen to full summaries of 73,530 books. That's 12,000+ hours of audio!
Day 4: Trial Reminder
We'll send you a notification that your trial is ending soon.
Day 7: Your subscription begins
You'll be charged on Mar 22,
cancel anytime before.
Consume 2.8x More Books
2.8x more books Listening Reading
Our users love us
100,000+ readers
"...I can 10x the number of books I can read..."
"...exceptionally accurate, engaging, and beautifully presented..."
"...better than any amazon review when I'm making a book-buying decision..."
Save 62%
Yearly
$119.88 $44.99/year
$3.75/mo
Monthly
$9.99/mo
Try Free & Unlock
7 days free, then $44.99/year. Cancel anytime.
Settings
Appearance
Black Friday Sale 🎉
$20 off Lifetime Access
$79.99 $59.99
Upgrade Now →