The afternoon Q&A session of the Berkshire Hathaway 2018 Annual Shareholders Meeting began with a seemingly simple question as to why Buffett’s Berkshire Hathaway has never invested in — or purchased — Microsoft.
But the question itself was loaded — Bill Gates sits on the Board of Directors of Berkshire Hathaway and is known to be a very close friend of Buffett’s.
It seems as though transacting a business deal between both companies would be a no-brainer, especially given Microsoft’s unparalleled success, as Buffett bluntly answered the ‘Why’ question with:
“In the earlier years, it’s very clear … the answer is stupidity!”
Buffett, however, continued on with an even more honest explanation: It’s hard to conduct business with friends without people assuming there is information being passed around under the table.
Buffett talked about the dangers and potential implications of teaming up with Gates, especially with how it could possibly be perceived in the media and amongst other companies:
“It would be a mistake for Berkshire to buy Microsoft because if something happened a week later or month later … both Bill [Gates] and I would incorrectly be a target of suggestions … I try to stay away from a few things just totally because the inferno would be drawn that I might’ve talked to somebody about something. I’ve told the fellows, Ted [Weschler] and Todd [Combs] for example, that there’s just a few things that are off the list, because there would be a lot of people that wouldn’t believe us if something good immediately happened … both that and my stupidity have cost us a lot of money!”
It seems as though there are some caveats to having friends in high places!