You can put all your eggs in one basket (just watch the basket!)
We’ve all heard the saying that you shouldn’t put all your eggs in one basket. While sometimes wise, I think there are many exceptions.
Mark Twain wrote that you should “put all your eggs in one basket and watch that basket.” I agree in many circumstances, including for business.
If you are super-selective and focus on one business (whether as investor or founder or employee) at a time, you can reap huge rewards. Look at Bill Gates of Microsoft (who loves using the word “super” by the way) — he invested purely in Microsoft for 30 years.
I had the good fortune of meeting Bill Gates a few times and I recall how reporters and other people were highly critical of the fact that he was reinvesting his Microsoft profits in Microsoft and not, for instance, in Philanthropic endeavors.
He told me that he believed his most valuable contribution at that time was focusing on Microsoft and that he would later focus on investing his money elsewhere.
Well, in 2000 Bill and his wife Melinda French (who I also had the pleasure of meeting once) created what is now the largest charitable foundation in the world and Bill turned his focus to investing in creating value elsewhere (specifically, helping solve many of life’s diseases).
So, Bill had his Microsoft basket for 30 years and now has his Foundation basket.
Similarly, Warren Buffett, who has created more wealth investing than anyone to date, has focused primarily on one business — Berkshire Hathaway — most of his life.
If the stock in Berkshire were to tank, Warren’s net worth too. But it probably won’t, because Warren is watching his one basket!
It’s no coincidence that when Warren finally decided to put his eggs (his money!) in a second basket, he chose to put them in the Bill and Melinda Gates Foundation basket – one that he trusted would be watched closely for years to come by his younger friends Bill and Melinda.!