Elon Musk v. Warren Buffett: Pace of Innovation vs Economic Moat Building business models. Differences in investment philosophy
Elon Musk talked bad about Warren Buffett’s investment theory of “moats.” In the words of Investopia regarding an economic moat:
What is an 'Economic Moat' ❓
An economic moat is a competitive advantage that one company has over other companies in the same industry; this term was coined by Warren Buffett, a renowned investor and executive at Berkshire Hathaway. The wider the moat, the larger and more sustainable the competitive advantage of a firm. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies.
In Berkshire Hathaway’s annual shareholder meeting, Warren Buffett made some snarky remarks about his economic moat in selling candy at See's Candy.
The exchange of words showed the egos of Elon Musk and Warren Buffett and their fundamental differences in investment style.
“Moats are lame,” Elon Musk told investors on an Tesla earnings call last week, “What matters is the pace of innovation”.
Warren Buffett
-- owner of See’s Candies -- said later that “Elon may turn things upside down in certain areas [but] I don’t think he’d want to take us on in candy”.Musk later unleashed a Tweet-storm sarcastically describing plans to “build a moat & fill it [with] candy… Berkshire Hathaway kryptonite”.
Two billionaires, who have different investment strategies: Buffett who invests in stable, near-monopolies over decades while Musk’s investment is in fast paced innovation.
Where does this put Steemit ❓
Steemit is a fast developing innovative business that is opensource and looking to disrupt the social media industry.
As long as Steemit keeps innovating, squarely putting this in the Elon Musk camp, we may see a very disruptive business model. Furthermore, we can see that Steemit has a first mover competitive advantage, ie a economic moat.
Where do you think Steemit.com should go ❓
Comment below...
Also comment if you believe or invest like Elon Musk in disruptive tech companies (probably a no brainer question) or if you invest like Warren Buffett in the slow and steady way?
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Musk is innovating but really needs to get better at building a profitable venture
His revenue in continually increasing. Profit doesn't matter when everything is reinvested..
nice comment dear @programmingvalue
These are two "almost pure" approaches to business – Buffett represents the old-fashioned reliance on reliable businesses and their traits that have passed the test of time; Musk represents the promises of disruption, potential for very fast expansion in coming years, and indeed, bubbles and manias where this obsession often leads because it's much easier to pronounce big words and get enthusiastic than to provably produce billions by hard work.
Both approaches have been important. If the Buffett approach were a little bit more extreme and dominating, there would have been no progress. If the Musk approach were a little bit more extreme and omnipresent, everything would have been just bubbles and P.R.
Different industries have different typical time scales of innovation – the timescale τ after which the performance or profits increase by the factor of e or the expenses drop by a factor of e or something of the sort. For some kind of products, like candies, you don't have to watch the innovation every day. In some other fields, like the hi-tech stuff, you do have to follow what's going on every week.
Profit isn't the only marker of success, but i get your point..
Exactly. Look at vulture captialisim. Group buys company, sells off profitable company assets to make some quick cash. Saddles the company with debt from other companies then lets it file bankruptcy to kill that debt.
See Sears or Toys R Us.
I am looking at you Romney.
Buffett and Musk are great at totally different industries/strategies. Elon can call moats lame but Berkshire still has about 20% compounded returns over 50 years now and has become the number two Fortune 500 company currently.
Steemit does have a good moat via the blog aspect, but there still seems to be a breakout moment waiting to happen. I'm bullish long term but it all boils down to simply assuming more people and more money will move into Steemit in the future. I can't really make educated projections on how many humans will start using Steemit, so it does have a speculative element to it insofar as betting on a trend.
I always love to see posts about Buffett here, cheers!
very useful article dear @thefinanceguy
I think both investments can be applied to Steemit.
Being the first decentralized social media, like Bitcoin being the first crypto, will build that moat against other decentralized social media platforms that will emerge and create that value. When the masses wakes up and searches for a crypto-based social media platform, the first thing that will pop out from their search fields will be Steemit. Unless, Facebook decides to share their wealth with the blockchain/crypto that they are developing right now, then that's something else.
Being that this platform is very new, it has that edge in innovation as well. I think that crowd development will also have an advantage in innovation.
Being first gives that lasting perception of being the best. Being a new tech gives it a lot of room for innovation.
People use facebook to feed their ego. They post photos of them doing everything and anything to show off. To show that they have a great and fantastic life even if they don't. They can do that easily and they have their friends as their audience. Their friends do the same thing and they try to outdo each other. Facebook knows how to feed their ego. That's why many people uses facebook. They get to make themselves feel important there. During my 7 days here, I don't see that kind of pull from Steemit. Only the people with money dominates the trending page. The new people with no steem power has no chance to show off like in facebook. They can't feed their ego here. Take me as an example, No one reads my post or upvote my post here. No one even care to listen coz I have no power, my ego is totally bruised here! Lol. I don't use facebook a lot but I know a lot of people's face are stuck onto facebook. But I must admit, I show off sometimes too on facebook. I don't see that here.
Hey, I've just read your comment. As you see it is possible to boost ones ego even on the steem blockhain.
In fact I understand your point, but want to mention that one has the possibility to follow his 'friends' only and read their posts in ones feed only. The main difference with Facebook would be the unidirectional link structure. On Facebook your posts are presented to your 'friends' and vice versa. Not so on Steemit, which is more similar to Twiiter with its 'followers' in this point.
Interesting. Everyone is entitled to their own opinion.
Ya, I get what you mean. I upvoted but my upvote value is so still 0.00.
i like Elon Musk style but I also admire Warren Buffet. They are both geniuses. If I could be just a tiny fraction of what they are, that would suffice for me. They both work very hard though.
Steemit need strive to be like Elon Musk. If not, another technology will out pace the platform.
The battle is not yet over and today’s innovative tech swiftly becomes tomorrow’s standard investment!
Warren Buffet is the past. Elon Musk is the future. Warren Buffet promotes fiat currency. Elon Musk will take us to the stars. Shut up and eat your candy old man.
Nothing wrong with slow and steady growth. Buffet's past is what helps build the capital for investing in Musk's future.
we need both of them. like yin and yang. while Buffet maintain stability and order to economy, Elon roles is to breakthrough new boundary, if i would, i pick Elon side. Only with breakthrough, humanity will trancend.
excellent opinion dear @teachinthai
Steemit is very fast money laundering! This is the biggest online earner platform in the world Which will pay for the publicity of its customer's post.
I'm with Elon till the end
I’m on Elon’s side. If I was smarter I’d be working with him to help change the world.
Elon can change the world, Buffett rent seeks
wow /@programmingvalue
Personally I like elon's ideas more, I think the same...
I think you should make reference in this article not to "Steemit" but to "Steem", see, Steemit it's another social app, like Utopian, Dlive, Dtube, etc... The thing that it's very disruptive here it's not Steemit, it's Steem, because it provides something that has never been possible in a blockchain before, the possibility of building social applications that work in the blockchain, with resistance to censorship, and with the possibility of rewarding the authors and curators of content from person to person.
Not like Facebook, a place where all your data stay there, they make money with you, and they not share nothing with you for sharing the content, not even if it's original.
Its a very curious thing that the "disruptive things" are not the most viable bussiness models, but they are the bests for the people...
I think you are right...Most people don't even know about extent of crypto yet yet it is disrupting...
good idea dear @theaverageman
like getting a good article dear /@joedukeg
I take the approach of wanting to have both Musk and Buffett on my board of directors. That'd be a dream...but will never come true. Innovation and Steadiness can serve as a great ballast to your decision making process.
every steemers do hard work and try to change the world. we should support them. and help them every where.
thank you
good idia.....we will try
I practically love the Elon Musk way, it's inspire radical innovations. However, I still believe that Buffet also inspired hardwork and success model in his time.
When you are talking about investing, Warren Buffet is usually right. He is the best around and everyone knows it.
Now Elon has to promote innovation otherwise no one will invest in his businesses, I don't know if he truly thinks it's thenbest plan for investments.
Personally I am confortable taking risks and investing in new tech but I might loose everything one day..
Elon Musk is the man of todays generation. Buffett is old money by now. Which one is more economical? If economical is best benefit for the larger body or population than Elon Musk. I say that due to the Buffett entry into solar energy industry. The model post his entry for contractions considering installations of solar found flaw in amortization that made it less valuable for the average customer when a benefit was present.
I believe @steemit has its "Moat" is that it pays even if you are a small contributor, if you only read and vote, if you publish everyday or once a week. Depends on your work, but as a social platform it gives the opportunity to share and earn.
In a few weeks that I've been here, I am surprised on how much stories and the amount of people that Steemit has helped just because of the funding they had. One of them has even built a house for his family in just a few months of posting. Of course it is not a mansion in Miami or LA, but it is a house, built with steemit funds... That is something that I had never read before and it is just amazing.
That is its' "Moat" and its "Peace of innovation" so it has both of success worlds!
#DYOR and always, always, always remember to use stop/loss
I have seen the same..children being fed in Venezuela due to steemit
Musk is a world class conman
He works hard, he's a good salesman, but I wouldn't go so far as calling him a conman.
He works very hard and his success was built from hard work
wow. i just love this post. this is helpful post bro/sis i'm waiting for your next post. keep shearing with us
excelente Post amiigo saludos :)
yeah! saludos
I like the Elon way! :)
Entirely different philosophies that can both work, really. Musk's is probably better for society, while Buffet's is better for an individual not otherwise gifted with the abilities to innovate like Elon.
Essentially Buffet seeks to create personal wealth, which is fine for a person.
Elon is attempting to change the world, which is great for everyone if he succeeds and his net worth reflects his level of success.
fantastic article dear @telos
nice one
No question in my mind it's Buffett. Been in the game for years and focused on value. Pulled some real winners with AXP, AAPL and PSX to name a few. Real companies that could run themselves.
It's a pretty tough choice, but as a South African I can't snitch on my homeboy E Musk. I love disruptive tech, otherwise I wouldn't be on Steemit, but I also respect Buffets abilities to create a billion dollar portfolio through traditional stock investing.. This being said Musk is the winner hands down..
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it's god projects
nyimak..
It seems Warren Buffett wins this battle.
Tesla keeps badly missing its production targets, and it is spending cash like crazy, it can not go on forever.
he doesn't just own tesla
I personally favor Warren Buffett's perspective a little more, however I'm not totally disregarding Musk perspective. I believe both are necessary for the success of Steemit. I requires vastly more energy and resources to maintain a fast pace for innovation, and far more difficult to maintain it. It is easy to maintain a moat once you've established one. Take Coke for an example. they maintain the same formula and spend far less on R and D than someone maintaining a fast pace for innovation. I do however believe that you do at some point need both.
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Well, I'm convinced.
telling about the trust that I personally favor Warren Buffett's perspective a little more.But of them are essential for the progress of steemit .
STEEM is a very innovative packaging of relatively recent and very disruptive tech (as someone else pointed out, it's an ecosystem with Steemit just a component)- not quite as old a business as even the newest, most amazing candy-since it's candy.
That alone bespeaks much closer similarities to Musk's various projects, many of which can't be called the kind of commercial success Buffett's had for decades- but you only have to glance at SpaceX, the ancillary companies around Tesla, the Boring Co. (how boring is it?), and other projects to see how one person can actually lever history. You'll have to use a magnifying glass to figure out the impact Buffett will have had on Western civiulization in 20 years...
Focusing on building a moat on something that by design is heavily decentralized strikes me as nearly pointless, if not impossible. Sure, Steemit, Inc. can do that- and perhaps should, but I think it wouldn't protect the larger platform at all, nor would the corporation's demise result in the network's dissolution.
I agree, it's totally impossible...steemit and steem are evolving...
good job
This content is very hard to choose for me, but I know someday I can teach myself to learn more in it. I'm a newbie here ...
innovation always wins after 10 years Musk will be on top 3 will overcome Buffet
Warren isn't an idiot, I believe he sees the value of innovation both in Elon's vision and ambitions, as well as the inherent necessity at the global scale for companies to be both competitive and innovative. Warren was there when he watched Apple turn things around from obscurity to front page relevance. He was there when gates helped spearhead the home PC revolution, and he was there for both telecoms and ISP's. So was berkshire. Watching these two bump heads is comical, as they are two sides of the same coin.
Steemit is probably not the best place to mention Buffet. I have looked up to him for many years but do not support all of his believes. He makes a lot of money by doing what he knows best. Buffet simply doesn't know technology. He knows furniture, candy, soda and all of the other old school industries. On the other hand Musk is awesome. Our own Iron Man, that is even crazier than the one from Marvel. This guy will literally take you to the moon or Mars one day. How cool is that?
What to do to raise the likes?
make good content..
Thank you for your guidance
Ali, you are on the right track. Just keep asking for likes on people's posts - everyone loves that.
Does the rating increase as you see the content?
thank you for share !
this post is very good and I am his service and I have upvote this post and please support i
make
Look lots of our friends are thinking that Buffet is nothing just a Mughol, Musk is obiously future no dout. They both are dynamic in their own field. Hope They both live long to give us more.
Good luck
Good luck
Good luck for you
Dude don't hog all the good luck!!
I think most hugely profitable ventures have been loss makers at a time. Innovation, even if you end up penniless has to be the way forward. The Buffets and Soros' of this world are only interested in competitive advantage and crushing innovation. In my opinion, these "Sharks" have blood on their hands, especially "georgie Boy"
Steemit is a great innovation that has come at the right time..Innovation also needs good timing, right?
I regularly go onto facebook and recommensd steemit but i get banned by over enthusiastic "admins". Enforcing facebooks will on others for free!!
Centralized Social Media is dead
Move over, steemit will take it from here, you had your chance!!