A FRUGAL SQUILLIONAIRE

Warren Buffett is a one-off in the world of global business.

The American mid-westerner has built a huge corporate empire from next to nothing, he’s amassed an enormous personal fortune, and he’s attracted a band of aspirational followers around the world that must number in the millions.

Yet, personally, he is so frugal.

Buffett is chief executive and chairman of Berkshire Hathaway, the struggling textile manufacturer he transformed into a $US360 billion conglomerate over five decades. Yet he draws an annual salary of only $US100,000, a figure that hasn’t changed in 25 years.

He is the third richest person in the world, with an estimated personal wealth of $US70 billion. Yet he still lives in the three-bedroom corner house he and his wife bought in a suburb of Omaha for $US31,500 back in 1958. And he still heads off to his local barber for a cheap haircut every few weeks.

Buffett, the son of a stockbroker, has dedicated most of his life to accumulating wealth. The maths prodigy made his first stock investment at the age of 11 and he started his first business, a newspaper round, at 13. Yet he now plans to give away virtually all his fortune. And he means it: he’s already dispersed $US30 billion, much of it to the Gates Foundation.

Obviously, it’s not money or ego that drives him – is it the challenge, the intellectual engagement, the journey?

Known as the Sage of Omaha, Buffett is happy to freely share his pearls of investment wisdom. And he does come with huge credibility: every $US1 invested in the original Berkshire company is now worth $US18,261.

His letters to shareholders and his marathon question-and-answer sessions at annual meetings are transmitted around the world and eagerly read. They are sprinkled with humour and humble, practical advice about investment strategies, often contrary to whatever orthodoxy rules the financial sector at that time. And he’s candid: he readily acknowledges the big mistakes he’s made along the way and the lessons he’s had to learn.

Buffett bucks the corporate trend in other ways too. He says the rich should pay more tax, as should companies. He swears by the merits of conglomerates – reduced risk in diversity and internal sources of capital – at a time when contemporary business thought has turned strongly against them.

After 50 years at the helm, and at the age of 84, he has started to talk about corporate succession, stepping aside for a younger leader. That person, he’s indicated, will be drawn from those groomed internally and immersed in the company culture and, contrary to global corporate trends, that person will be young enough to be able to lead Berkshire for a very long time. Elsewhere, the average term of a CEO is seven years – and falling.

Warren Buffett is far from a charismatic leader and yet he inspires millions. Apart from his business acumen, the prime source of that influence is: he’s authentic, to himself and to all those who enter his realm.