Warren Buffett’s failure to capitalize on the economy’s digital shift over the past two decades has hurt his otherwise enviable track record as an investor. His blind spot regarding tech didn’t stop at the stock market: It bled into how he ran Berkshire Hathaway’s operating companies as well. Across many of his wholly owned businesses, Buffett neglected technological upgrades, and Berkshire’s business value has suffered as a result.
It’s important to understand this because the majority of Berkshire Hathaway’s assets are invested not in publicly traded securities, but in operating subsidiaries like Burlington Northern Santa Fe Railway, Berkshire Hathaway Energy, and Geico. While it’s true that Buffett invested aggressively in wind energy, that was largely because of government tax incentives. In the main, he preferred to milk his operating subsidiaries for cash rather than reinvest in them for the digital age. Exhibit A is Geico, which, thanks to a lack of IT investment, has fallen behind Progressive as the nation’s leading for-profit auto insurer.
