Warren Buffett: How I Started a Business at 7 YEARS OLD

Warren Buffett: How I Started a Business at 7 YEARS OLD

Everyone knows him as the “Oracle of Omaha,” an investment wizard whose name has become synonymous with investing skills and wealth accumulation. But have you ever wondered how Warren Buffett, one of the world’s richest and most successful investors, embarked on his entrepreneurial journey? Let’s wind back the clock to when this icon was just a young boy. At an age when most kids are learning to ride a bike, he was dipping his toes in the world of business. This is the intriguing tale of a young boy who turned the ordinary summer heat into a lucrative opportunity, marking the onset of a remarkable journey in entrepreneurship.

Warren Buffett’s First Business

Here is a transcript of Warren Buffett explaining his first business as a 7-year-old.[1]

“I was seven years old, and the summers were hot and humid. People went out on their lawns at night just to try and cool off, and I got the idea that maybe I could sell them what you would call ‘soft drinks,’ and we called ‘pop.'”

“So, I went around to a bunch of gas stations. In those days, every gas station had a cooler with various soft drinks in it, and it had a little opener on the side and something to catch all the bottle caps.”

“I went around and collected all the bottle caps for weeks from these various gas stations. I collected 8,000 of them, and then I sorted them all out. I saw that Coca-Cola overwhelmed everybody else, so I decided to hook myself up to them. There were these little silver-like ones in those days.”

“My grandfather had a grocery store, so I went to my grandfather, and I said, ‘How about giving me a deal on Coke so I can sell it around the neighborhood?’ He sold me at the rate of six bottles for a quarter, and I went around and sold them for a nickel each.”

“I sold out every time. I had no inventory; I had no receivables; I had the best business I ever had.”

Warren Buffett Coca-Cola Investment

Warren Buffett’s early experience selling Coca-Cola products as a seven-year-old was arguably a formative one in shaping his investment philosophy later in life. It introduced him to the principles of supply and demand, inventory management, cost control, and the importance of offering a product that consumers love.

When he was looking for potential investments for Berkshire Hathaway years later, these early experiences likely echoed in his mind. Buffett has often expressed his philosophy of investing in businesses that are easy to understand, have a reliable customer base, and offer a ‘moat,’ or competitive advantage, that makes them difficult to rival. Coca-Cola ticked all these boxes.

Coca-Cola had and continues to have, a global consumer base and a strong brand that has been loved and trusted for more than a century. It was a company that Buffett understood deeply, not just because of his childhood experience selling Coke but also because of its simple and transparent business model.

The product, Coca-Cola, hadn’t changed significantly over the years, demonstrating its timeless appeal. This consistency is another aspect that Buffett appreciates in businesses.

It’s plausible that Buffett’s childhood business venture played a role in molding his investment principles and may have influenced his decision to invest in Coca-Cola for Berkshire Hathaway. This decision has proven immensely profitable over the decades.

Berkshire Hathaway bought about $1 billion worth of Coca-Cola shares in 1988, which amounted to a 6.2% stake in the company. Berkshire Hathaway still owns those shares, which had grown to be worth over $20 billion, excluding dividends.

Given that Coca-Cola has paid a consistent dividend, which has also been rising over time, and considering that Berkshire Hathaway is known for holding its investments rather than selling, the total value of the Coca-Cola investment for Berkshire Hathaway would be even greater when including dividends.

Warren Buffett has a well-documented investment philosophy, and Coca-Cola ticks many boxes he looks for in a solid long-term investment. Here are a few key aspects that likely attracted him to invest in Coca-Cola:

  1. Simple and Understandable Business Model: Buffett prefers to invest in businesses he understands thoroughly. Coca-Cola’s business model of producing syrups and concentrates for a range of popular beverages, which are then distributed globally, is relatively straightforward to comprehend.
  2. Strong Brand and Consumer Appeal: Coca-Cola has one of the most recognizable brands in the world and a loyal consumer base. The consistent appeal of its products to consumers globally provides it with a sustainable competitive advantage.
  3. Consistent Earnings Power: Coca-Cola has demonstrated an ability to generate stable and predictable cash flows over the years. Its consistency in producing strong financial results likely appeals to Buffett’s preference for businesses with reliable earnings.
  4. ‘Moat’ or Competitive Advantage: Buffett often looks for companies with a ‘moat’ or a significant competitive advantage that makes it hard for other businesses to compete against them. Coca-Cola’s strong brand, global distribution network and extensive portfolio of beverages provide such a moat.
  5. Capable and Honest Management: Buffett values companies run by competent, trustworthy executives. Over the years, Coca-Cola has had a history of strong leadership that has maintained the company’s market position and profitability.
  6. Reinvestment Opportunities and Dividends: Coca-Cola has been able to reinvest in its business and pay consistent dividends to its shareholders. This balance between growth and income generation is another appealing aspect for Buffett.

So, in Coca-Cola, Buffett found a business that was easy to understand, had a robust and durable competitive advantage, had reliable earnings, and was run by competent and honest management — all hallmarks of a classic Warren Buffett investment.

Key Takeaways

  • Embrace initiative: Warren Buffett demonstrated a go-getter attitude at an early age, identifying opportunities around him and not hesitating to leverage them.
  • Understand the market: Collecting bottle caps wasn’t just for fun; it served as a primitive form of market research. He could make an informed decision by noticing that Coca-Cola was the most popular drink.
  • Capitalize on available resources: Buffett used his grandfather’s grocery store to get the best deal possible for his products, showcasing the importance of leveraging existing resources in a business venture.
  • The power of simple economics: He understood and implemented the concept of buying low and selling high, a basic yet powerful economic principle.
  • Superior customer service: Buffett ensured he had no leftovers. This meant he was attuned to his customers’ needs, ensuring they had access to what they wanted when they wanted it.
  • Zero overhead: Buffett kept his overheads low by having no inventory or receivables, emphasizing the importance of managing costs in a business.


Buffett’s story of his first business venture teaches us the essence of entrepreneurship: harnessing opportunities, understanding market dynamics, leveraging existing resources, practicing basic economic principles, meeting customer needs, and maintaining low overhead costs. Even at seven years old, he could discern these vital entrepreneurial principles that would later underpin his investing empire. Buffett’s entrepreneurial journey reinforces that the roots of successful business leadership lie in an understanding of the basics, the willingness to seize opportunities, and the tenacity to persist.