Two titans of the business world, Warren Buffett, chairman of Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B), and Tesla Inc (NASDAQ TSLA) CEO Elon Musk, might appear to have contrasting investment philosophies.
A closer look, however, reveals a shared attraction to businesses that control critical access points, according to Insider.
While Buffett is drawn to the steady income of toll roads, Musk reportedly zeroes in on bottlenecks.
Buffett has always been intrigued by the concept of charging for access, the outlet noted. “From his early days, he saw the potential in monopolistic ventures, including as the sole newspaper provider in town,” said Insider.
While observing a continuous stream of cars passing a friend’s home, the billionaire investor once remarked, “All that traffic … what a shame you aren’t making money from the people going by,” according to “Buffett: The Making of an American Capitalist” by Roger Lowenstein.
Buffett “likens owning a monopoly or market-dominant newspaper to owning an unregulated toll bridge,” Sandy Gottesman, one of Buffett’s friends and a former Berkshire director, told a newspaper at one point, according to Insider. “You have relative freedom to increase rates when and as much as you want.”
One standout example of Buffett’s strategy is his investment in Apple Inc. (NASDAQ: AAPL). Apple’s robust brand and its grip on the App Store have positioned it as a digital toll booth, with the capability to increment prices annually.
Conversely, Musk is laser-focused on managing bottlenecks. He identifies pivotal constraints in sectors and then channels resources to address them, Insider noted.
For instance, the Tesla CEO discerned that battery limitations were hampering electric vehicles. “By pouring investments into battery innovation, he fortified Tesla’s competitive stance,” said Insider.
Musk’s forays into EV charging infrastructures, SpaceX’s rocketry, and the Starlink communication platform all underscore his intent to govern essential industry access points.
Produced in association with Benzinga
Edited by Priscilla Jepchumba and Newsdesk Manager