How did Warren Buffet get rich?
He started out investing and working as when he was a kid. As a teen he was already in small businesses like pinball machines. As a young man he became a millionaire by forming investment partnerships where he took a percentage of all partnership profits over a certain level. His partners were happy to give him this deal because they still came out way ahead of the market because if his great investment picks. After disbanding the partnerships he invested in various ventures, then acquired control of Berkshire Hathaway, which at the time was a failing textile company. He used Berkshire’s cash to buy other companies, mostly insurance companies. These insurance companies were important because they provided vast cash flow (read about float) which gave Buffett more money to invest. Combine a long time span, great investment skills, and a business model that provides cash flow – and you get a snowball effect that allowed Buffett to become fabulously rich.
