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Thank you for remaining silent.

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Jason Coombs   Friday, 02/12/21 05:42:27 PM
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Thank you for remaining silent.

I have shared the following perspective privately, and here it is for public consideration. Debate is welcome. Prove me wrong.

When deciding whether to combine my new startup with ADIA because doing so is beneficial to others, there is a similarity to Warren Buffett's decision to grow his new business in Berkshire Hathaway.

"Finally, our subsequent acquisitions would have been owned in their entirety by my partners and me rather than being 39%-owned by the legacy shareholders of Berkshire, to whom we had no obligation."

"Despite these facts staring me in the face, I opted to marry 100% of an excellent business (NICO) to a 61%-owned terrible business (Berkshire Hathaway), a decision that eventually diverted $100 billion or so from BPL partners to a collection of strangers."
Berkshire – Past, Present and Future

Question: Did Buffett make a catastrophic mistake that served no useful business purpose, or was his decision necessary and helpful to the long-term growth and his access to new capital from investors who care about ethics and proper conservative value-creating management decision-making?

My answer is that Buffett might consider it his biggest mistake in hindsight, but by choosing to give 39% ownership to "a collection of strangers" the position and method of participation in the economy that Buffett enjoyed as his investments produced shared prosperity with those strangers became more important, more impactful, and more investable in the future. His choice might have been crucial to his ability to attract capital and high-quality partners. It says something about the quality of his equity partners that they did not object to his plan in an attempt to maximize their own profit.

Also, by sharing ownership with strangers, instead of keeping 100% of the company for himself and Charlie and their initial backers, Buffett forced himself to consider a different mix of governance factors and he also voluntarily submitted his actions to a different set of legal obligations. Buffett preferred the more complicated duty to the public for reasons that, in hindsight, he might have forgotten that he chose for a purpose when faced with such a choice in his youth after putting other people's legal and economic rights first in his thinking on a daily basis for seventy years.

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