Ten Most Valuable Companies – Resume of thinking of Warren Buffett by GR Florin after reading his Biography
Durable competitive advantage is difficult to keep in the water cooler business
Why do the most valuable companies have an edge and why didn’t they keep it? We are all familiar with Nestle purchasing Pow Wow water for Euros 500 million and selling the UK business five years later for only £1 million having racked up huge losses.
What prevents Living-Water from retaining the lead in the London water cooler company market?
- Arrogance
- Complacency
- Institutional imperative – copying peers instead of keeping ahead
I would like to think we aren’t guilty of any of those other than perhaps this website where we have been late to the table recognizing the importance of google rankings and how to improve them.
The need to bring in young people and ideas is a key element of Buffet’s thinking and we have now appointed a trendy and vibrant web design company to do all our SEO work and appointed Mellissa Gilbert as our in house graphic designer – keep up the good work guys, we need to keep up our reputation as London’s best water cooler and drinking water company.
Warren Buffett highlights a major danger to growing businesses, the burgeoning payroll – “Cancerous growth in the co†– the water cooler business is highly competitive with most companies charging lower rates than they were ten years ago, despite delivery costs having increased exponentially. Unfortunately at Living-Water we have not been immune from this criticism and refuse to cut back staff and compromise our services and have in the past 12 months added 20% to our workforce.
Buffett was always a major investor in Coca Cola and is a major critic of the Coca Cola IT Project Infinity
- Out of control IT spending for ever diminishing returns
- How will it solve the basic problems
- IT guys want always latest whiz bang thing
- No matter how smart and how much you know, who can challenge them???
- Not going to sell more cola and will simply add people instead of cutting jobs + vendors ensure you need updates constantly
- Controlling Technology spending is the hardest thing
Unfortunately we have largely failed on the IT side – we began developing a PDA hand held automated delivery system five years ago – after an insolvency by a third party we lost considerable funds and had to start our own PDA water delivery system.
We started to develop this in house three years ago and it was supposed to take three months – three years later and at enormous cost though the system is underway and being tested, it is still not at the point of being fully implemented. Its extremely tough, because having committed such resource to its development, its almost impossible to stop.
Hopefully, we can learn for Warren Buffets vast experience to try to avoid the pitfalls he has learnt over years of successful investing.
