Young Warren Buffett had Several Side Hustles. Here’s what we can learn

Warren Buffett is one of the wealthiest people in the world. He amassed his wealth by following sound investment principles and making clever and patient moves in the stock market. When we talk about Buffett, we have this vision of a sage 90-year-old man. When Buffett speaks, the entire business world pays attention. But if you want to understand this great man we need to first study who young Warren Buffett was.

Tens of thousands of investors and financial analysts have tried to mimic his strategy with the hope of enjoying similar returns on their wealth. However, only a few have come close to his success.

I feel that all these people trying to mimic Warren Buffet are looking in the wrong place. They tend to focus on his latest investment tactics rather than focusing on who young Warren Buffett was before becoming a successful investor.

In The Snowball: Warren Buffett and the Business of LifeAlice Schroeder tells some fascinating stories about Warren Buffett’s teenage years. Warren Buffett was still in school but had several side hustles going on at the same time. These were in the 1940s. The United States was fighting world wars in Europe and the Pacific. Industrial production and consumer goods were being rationed for the war effort. And yet, in these very challenging conditions, Buffett would figure out how to make money.

The Pinball Machine business

Warren and one of his friends bought a used pinball machine for $25. They fixed it up and offered a deal to a hairdresser. Put this pinball machine in the back of your salon, so customers can play while they wait their turn to get their hair cut. Buffett offered a 50–50 split of the earnings with the owner of the hair salon.

The deal was a win-win for both sides. The hair salon had a new source of revenue, and the barber was able to keep his customers entertained while they waited for their turn. Young Warren Buffett quickly made back the money on the cost of acquiring the pinball machine and enjoyed a steady stream of income after that.

After the first pinball machine was a success, Buffett went out and bought more used machines. He pitched the pinball idea to every single hair salon in Omaha. After these businesses had seen the success the first hair salon was having, they were keen on putting in their own pinball machine to cash in on the opportunity.

Selling Newspapers and Magazines

Warren Buffett was also a paperboy. Every morning he would distribute his newspapers along his paper route. But he was also keen on taking extra copies and selling them to people in the street.

He had the keen eye for knowing on which days newspapers would sell out. When Roosevelt was re-elected in 1944, the Buffett household was devastated. His father was a congressman and heavily opposed to Roosevelt. But young Warren Buffett saw it as an excellent opportunity to sell more newspapers.

Six months later, and as World War II was approaching the end, Franklin D. Roosevelt would pass away. The 14-year-old Buffett knew that would be a sell-out day. He got up earlier to sell more copies. According to Schroeder, Buffett was making an extra $175 each month selling newspapers. At the time, this was more money than his teachers made!

Warren Buffett had acquired the skill of measuring the public’s pulse. In an age long before the internet and Google Trends, Buffett could read the publics’ sentiment by the type of newspaper headlines that interested them. He acquired skills that would later in his career prove priceless when he anticipated moves in the stock market.

Young Warren Buffet dealt with used Golfballs

Another fascinating side hustle business that Warren Buffett had developed was re-selling old golf balls. Many kids would look for abandoned golf balls in all the difficult-to-reach parts of a golf course: sand bunkers, ponds, and shrubs. They would collect the balls, clean them and resell them to golf players at a reduced price.

Warren Buffett went a step further. He found a wholesaler in Chicago that sold cheap golf balls. He would buy them in bulk and sell them at a profit. Most people assumed that Buffett was finding these in abandoned sand bunkers and ponds.

But Buffett had figured out that searching for forgotten golf balls was a time-consuming and costly venture that barely produced any profit. He was more interested in scaling, and he realized that the only way to grow his market was to find wholesale suppliers of balls.

What can we learn from these stories?

I see wantrepreneurs today complain over trivial stuff, like Facebook not showing enough of their posts or people not responding to their email reach outs. We freak out if Instagram is down for an hour.

In the 1940s, the world was at war. Everything was being rationed. Thousands of young men went to fight, never to come back again. And yet, Warren found ways to make money. Imagine a 15-year-old kid walking into hair salons and cutting 50/50 affiliate deals with the owners of the salons. By the time Warren was 16, he had saved up over $5000 in his bank account. In today’s dollars, these would be about $60.000!

By running several side hustles, we can figure out what types of ventures are profitable and which ventures are not. We can figure out if we should, metaphorically speaking, collect golf balls one by one, or buy them from a wholesaler.

We learn to appreciate the risk of making a new investment in a pinball machine and wondering if we will ever make our money back.

Buffett used these principles to understand what types of businesses he was investing in. Behind the fluffy numbers that appear in balance sheets, Buffett learned to ask the fundamental questions: How is this business making money, and does this business have a bright future?

Ultimately this is what we should learn from Warren Buffett. Being a scrappy entrepreneur will make you street smart and wise. You will figure out which businesses are actually turning a profit and are not just fooling their owners. Whether you are a solopreneur or a Fortune 500 company, the fundamental principles of running a business are the same.

Join my weekly bulletin, where I send you a collection of the best internet content on Entrepreneurship

You May Also Like