The Snowball Summary

"Someone's sitting in the shade today because someone planted a tree a long time ago." This book explores how Warren Buffett planted countless seeds to grow his financial empire.

1. Warren Buffett’s Early Fascination with Numbers

From a young age, Warren Buffett sought solace in numbers and probabilities, which became the foundation of his career. Growing up during the Great Depression, Buffett spent much of his time immersed in numerical activities as a way to cope with his challenging home environment.

His love for numbers went beyond mere childlike curiosity. While other kids played games outside, Buffett would memorize baseball statistics and playbridge, refining his analytical skills. Even as a schoolboy, he showed an interest in finance, helping his father in his stockbroker office by jotting stock price figures on a chalkboard.

This passion soon bled into unconventional hobbies like tallying license plate statistics and assigning probabilities to outcomes in card games. These childhood habits showcased Buffett’s innate ability to find patterns and connections in data. This early interest would shape both his professional life and the exceptional analytical style that set him apart.

Examples

• As a child, Buffett learned about probabilities from bridge, a skill that translated to business decisions later in life.
• Memorizing baseball stats honed his ability to work with numbers quickly and effectively.
• His time spent in his father’s broker office revealed his fascination with finance at an early age.

2. Early Investments Showed Discipline and Vision

Buffett began earning and investing at an incredibly early age, laying the groundwork for his now-famous snowball metaphor. By age nine, he was turning small profits from selling items like Coke bottles and gum to his neighbors.

Inspired by the book One Thousand Ways to Make $1,000, Buffett developed a resolute goal: to become a millionaire by age 35. At just eleven years old, he purchased his first stock in Cities Service Preferred. While this initial investment had ups and downs, it taught Buffett patience and the importance of understanding the market’s ebb and flow.

Throughout his teenage years, Buffett used his earnings from newspaper delivery routes and ventures like renting pinball machines to amass significant savings. His strategy foreshadowed the methods that would define his later career: low risk, consistency, and a long-term outlook on growth.

Examples

• Purchased his first stock at age eleven, a bold step for a young boy in 1941.
• Delivered newspapers to senators in Washington, earning $175 a month as a teenager.
• Saw potential in renting out pinball machines and continuously reinvested his earnings.

3. Education Shaped His Investing Philosophy

Buffett’s college years were formative in his journey as an investor. Although he initially struggled with shyness, he excelled academically, memorizing entire sections of textbooks with ease. Rejection from Harvard Business School turned out to be a blessing in disguise when he instead attended Columbia University, where his investing philosophy took root.

At Columbia, Buffett studied under Benjamin Graham, author of The Intelligent Investor. Graham’s lessons on value investing—buying stocks at lower prices than their intrinsic value—had a profound impact on Buffett's strategy. Graham taught Buffett the importance of analyzing a company's overall worth and not just its stock price.

Graham’s teachings about finding undervalued assets would influence Buffett’s lifelong habits, such as an aversion to speculation and a data-driven approach to decision-making. This education helped him remain consistent during other market trends that valued profit over fundamentals.

Examples

• Attended Columbia University specifically for Benjamin Graham’s investment teachings.
• Adopted Graham’s method of comparing intrinsic value versus market price.
• Rejected speculative approaches, focusing instead on enduring, measurable value.

4. The Origins of His Partnership Business

Warren Buffett’s first business partnerships taught him the value of trust, patience, and reinvesting earnings. He established Buffett Associates, Ltd. in 1956 as a way to manage family and friends’ money based on a simple philosophy.

His thorough, transparent communication style reassured partners that he would invest cautiously and with consistency. He often compared his investing strategy to rolling a snowball—starting small but reinvesting to grow larger and larger over time.

Over the years, Buffett gained credibility within both Omaha and Wall Street circles by outperforming market expectations. Despite his success, Buffett remained focused on his midwestern roots and avoided the allure of flashy, speculative ventures that dominated the market.

Examples

• Started with eight distinct partnerships involving close friends and family.
• Grew these partnerships’ earnings consistently, often beating market gains by large percentages.
• Consolidated multiple partnerships into Buffett Partnership, Ltd. for streamlined management.

5. Building Berkshire Hathaway

Buffett’s acquisition of Berkshire Hathaway became synonymous with his identity, though it was not without challenge. What began as an undervalued textile manufacturer quickly turned into a struggling operation, one that Buffett regretted buying.

Rather than abandon Berkshire Hathaway, Buffett repurposed the company into an investment vehicle for his growing stock portfolio. This shift echoed Buffett’s aversion to failures: he keeps even failing ventures alive if they can serve another purpose.

By transforming Berkshire Hathaway into a holding company, Buffett gained a long-term investment vehicle to build his empire slowly but surely. Today, Berkshire Hathaway represents the ultimate embodiment of Buffett’s disciplined business model.

Examples

• Bought Berkshire Hathaway shares in 1965 at $11 each because of its undervaluation.
• Later used Berkshire Hathaway as a holding company for major subsidiaries.
• Despite textile losses, transformed it into a global investment powerhouse.

6. Friendship Influenced Buffett’s Perspective

Warren Buffett frequently relied on trusted relationships to guide his decisions, and his friendship with Charlie Munger proved key. Munger’s view of investing encouraged Buffett to look beyond “cigar butt” stocks and focus on companies with high growth potential.

Buffett also forged strong relationships with business leaders like Kay Graham, publisher of The Washington Post, and Bill Gates, who later influenced his philanthropic outlook. He built bonds based on mutual curiosity and shared values, many of which led to lasting collaborations.

These relationships not only provided valuable business insights but also helped Buffett grow emotionally, becoming someone more attuned to the human side of investing and leadership.

Examples

• Munger pushed Buffett to transition toward acquiring entire businesses.
• Bonded with Kay Graham through board involvement of The Washington Post.
• Bill Gates inspired Buffett to think about global inequality and philanthropy.

7. Staying Simple Despite Industry Trends

Buffett resisted the lure of trendy industries, including the tech boom of the 1990s, choosing instead to stick to businesses he understood. He declined investments in technology companies, focusing instead on stable, long-term gains, much to the frustration of critics.

As firms rushed to engage with unpredictable tech markets, Buffett focused on timeless products and industries, such as insurance and retail. Over time, he proved that a patient approach to lower-risk investments could outperform speculative tech ventures.

Despite avoiding technology stocks, Buffett’s engagement with Microsoft founder Bill Gates affirmed his focus on simplicity. Even when asked why he didn’t massively buy tech stocks, Buffett confidently held to his belief in tangible value.

Examples

• Avoided speculative tech stocks even during the internet bubble.
• Held onto trusted investments in companies like Coca-Cola and GEICO during volatile years.
• Viewed Microsoft’s Gates as a friend rather than just a stock-buying opportunity.

8. Life’s Challenges Brought Perspective

Personal tragedy reframed Buffett’s understanding of wealth and fulfillment later in life. The loss of his friend Kay Graham and his wife Susie made Buffett reflect on life outside of business. These events encouraged him to rely more on his close friendships and led him to spend more time with his children.

This period of grief forced him to reevaluate the concept of “success.” For Buffett, true wealth came down to being loved by the people who mattered most. In turn, he grew closer to his family and prioritized charitable endeavors.

Examples

• Cared deeply for Susie during her cancer battle, setting aside business matters.
• Reflected on his life goals following Kay Graham’s passing.
• Emerged with a stronger connection to his children and philanthropic missions.

9. The Legacy of Philanthropy

Over the last two decades, Buffett’s focus has shifted toward philanthropy. Inspired by Bill Gates and his own realizations about the global disparity in resources, Buffett committed to giving away most of his wealth.

Buffett donated the majority of his fortune to the Bill and Melinda Gates Foundation, an act that expressed his gratitude for his fortunate life. By leveraging his investments for global positive change, Buffett exemplified the core philosophy of reinvesting wealth for enduring impact.

He remains a testament to the idea that financial success is a tool—a way to better the world rather than simply accumulate personal gains.

Examples

• Donated $36 billion to the Gates Foundation in 2006.
• Promoted the Giving Pledge to encourage billionaires to commit to philanthropy.
• Divided $6 billion among charitable foundations for his children’s causes.

Takeaways

1. Approach investments as finite resources: pretend every decision comes with a limit, as Buffett’s “20 Punches” method teaches.
2. Prioritize understanding a company completely—its value, management, and internal challenges—before investing.
3. Look for opportunities to give back after achieving success, using wealth to benefit communities in meaningful ways.