Now, here is what you call a little-known fact. Billionaire Warren Buffett, the world’s third-richest man and one of the most successful investors of all time – the “Oracle of Omaha” – got his start as an amusement machine operator.
As a kid still in high school, Buffett purchased used pinball machines and operated them with a partner under the auspices of their very own route, Wilson Coin-Op. The year was 1946 and Buffett was 15 years old. Reportedly, Buffett and his pal purchased their first pinball game for $25, installing it in a barbershop. They soon had three machines in different locations.
Actually, coin-op was only one of many ambitious boyhood ventures of Buffett. He also sold cans of soda, by hand, at age six (apparently he couldn’t afford a vending machine at the time). As a teenager, Buffett worked two newspaper routes, and used his paper-route earnings to acquire 40 acres of farmland (which he rented to farmers).
Now, the obvious question: how did Buffett evolve from a nickel-and-dime amusement operator into a net worth of $52 billion? And what lesson can today’s amusements industry members learn from his success?
Reporter John Canzano recently penned a story for The Oregonian newspaper, asking the same sorts of questions as they relate to the success of Oregon State’s outstanding college baseball program. (As an aside, this raises the obvious question of whether Warren Buffett played ball as a kid. Canzano doesn’t say, but it’s hard to imagine this hard-charging entrepreneur devoting time to anything as unprofitable as Little League, even at age 10.)
According to Canzano, along with many others who have studied the sage of Omaha, “Buffett’s fundamental investing philosophy centers around investing [only] in what you understand.” Obviously, the most successful business people in the amusements industry follow this wise counsel. Operators and distributors take one or two units of an intriguing machine that embodies a brand new concept, and test it. The real pros don’t merely wait to see how the cashbox performs, but how the entire product works.
Next, wrote Canzano, “When Buffett acquires controlling interest in a new company, he insists on not being involved in the day-to-day operations. He only wants to hire and set the salary of the Chief Executive Officer, then give the manager the creative room to perform at a high level.”
At first glance, this is not an option for most operators, who are sole proprietors or who have, at most, one or two employees. Yet even a business owner who has just one employee should give that person full authority over their area of responsibility. It’s worth noting that the largest amusement operators do follow this Buffett “hands-off” credo, as well. There is a sign on the desk of Dick Hawkins, a past-president of the Amusement and Music Operators Association, given to him as a joke gift (but with a serious message) from his employees at D&R Star in Rochester, MN. The sign reads: “The business runs better when the Hawk isn’t here.”
Third, continued Canzano, Buffett still does his own tax return. Meaning, he remains intimately involved in his personal financials, even if he doesn’t micromanage the companies that he owns or invests in. Not overlooking the basics, and not getting too self-important for crucial details, are the lessons here. And it’s why even the outstanding CEOs of the world’s largest amusement machine manufacturers insist on visiting locations and chatting with players and location owners on a regular basis. They do not attempt to run corporate empires from some ivory tower.
Canzano concluded with this thought: “Why is Buffett one of the world’s richest men? You’re going to hear people suggest [that the answer has] something to do with miracle working, or being an oracle or prophet, or luck. The truth is it’s far more fundamental than any of that. Simplicity, combined with philosophy, wrapped in an unpretentious package.”