I’ve been thinking about a Warren Buffett quote:
I am a better investor because I am a businessman, and a better businessman because I am an investor.
Founders may not realize it, but they’re resource and capital allocators. Their goal is to operate a successful and growing business. They must figure out the appropriate allocation of resources and capital to achieve that goal. If founders allocate capital and resources to uses that provide low or no return, the business could fail. If they allocate to uses with a high return, the business is successful.
The question I’ve been wondering about is whether Buffett’s experience is true more broadly. Do operators with a track record of success have a higher probability of investing successfully across various asset classes (not just venture capital)? Meaning, are they more likely than investors who aren’t operators to find the best uses of capital across various asset classes and generate higher returns?
I think operators are the best allocators of capital for venture capital, but I’m not sure about other asset classes. That’s something I want to think about more.