$100 Blueprint: How Buffett’s 1956 Partnership Still Beats Venture Capital

Good Morning!

1. Feature: $100 Blueprint: How Buffett’s 1956 Partnership Still Beats

   Venture Capital (5 min read)

2. Dear TCoL: Creating “Holes” After Meetings and Taking Notes

3. From the Archive: Will Your SMB Beat the 2025 Tariff War? Read it here.

Take the day to reset. A new week’s coming.

-TCoL

Missed our last feature article? Your LLC Is Missing Its Most Important Document. Read it here.

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A Tribute to the End of an Era

Today marks the close of one of the most extraordinary business chapters in American history. At Berkshire Hathaway’s 2025 annual meeting, Warren Buffett announced he will step down as CEO by year’s end. After six decades of unparalleled stewardship, he leaves behind not just a $1.1 trillion company—but a blueprint of clear thinking for generations of business builders. This article pays tribute to where that journey began: a short partnership formed in Omaha with $100 and seven allies. For entrepreneurs today, it remains one of the clearest models of how to start—and grow—something great.

Buffett’s Partnership: The Power of Simplicity

On May 1, 1956, Warren Buffett formed Buffett Associates, Ltd., in Omaha, Nebraska. Capital: $105,100. His share: $100. The rest came from seven trusted allies:

• Sister Doris Wood (1/42 profit share)

• Brother-in-law Truman Wood (1/42)

• Friends Charles Peterson Jr. (1/42), Elisabeth Peterson (5/42), William

  Thompson (5/42), Daniel Monen Jr. (1/42)

• His wife, Alice Buffett (7/42)

The partnership’s Certificate of Limited Partnership—later reprinted in Buffettology (1997)—laid out the rules in plain language. No jargon. No fluff. Just one page of common sense:

Purpose:
“To engage in the business of buying and selling stocks, bonds, securities, commodities, and other investments for the partnership’s own account.”

Structure:
Buffett was the general partner and managed all investments. Limited partners had no say in decisions. (Rule IX)

Capital:
Total capital: $105,100. Buffett contributed $100; the limited partners,$105,000—divided into 42 profit shares (e.g., Alice’s 7/42).

Profit Sharing:
Each year, limited partners earned a guaranteed 4% annual interest on their capital (2% in 1956, a half-year). Anything earned above 4%? Buffett took half. The rest was divided among the partners, based on their shares. (Rule VI)

Losses:
Buffett guaranteed 25% of any losses. The partners took the other 75%. If returns dipped below 4%, Buffett covered the shortfall. He risked more than his $100.(Rule VII)

Restrictions:

• No new partners allowed. (Rule XI)

• No substitution of assignees. (Rule X)

• No priority among partners. (Rule XII)

• Partnership dissolved on Buffett’s death, retirement, or insanity. (Rule

  XIII)

• Partners couldn’t ask for non-cash assets back. (Rule XIV)

Fees:
No management fee. Buffett only profited if he performed—taking 50% of gains above the 4% baseline. (Rule VI)

Execution:
Signed by all partners, witnessed, notarized, and kept private. Not filed with the state. Dated May 1, 1956.

That short document turned Buffett’s $100 into $1 million by 1962, per The Snowball. The brilliance? Simplicity. One goal (investing), one manager (Buffett), one clear set of rules.

Why It Worked—and Why It Still Does

Buffett ignored startup noise. No venture capital, no pitch decks, no bloated teams. Just a clear bet on his skill.

Today’s founders can learn three things:

1. Pick One Thing:
Buffett picked stocks. He didn’t dabble. If you run a bakery, focus on your signature cupcake. If you’re launching a tech product, build the core—ignore trends. One thing done well beats five done halfway.

2. Keep Rules Clear:
Buffett’s rules fit on one page. If at all possible, yours should too. Write your mission and profit split in one sentence:

“We sell pastries and split profits 60/40.”
Clarity prevents lawsuits—and friendships from turning sour.

3. Start Small:
Buffett raised $105,000 in 1956—equivalent to about $1.1 million today. But he started with just $100 of his own. You can launch with $5,000–$10,000. A food truck, laundromat, or consulting service doesn’t need millions.

Do This:

Spend 20 minutes writing a one-page plan. Your goal, who does what, and how profits are split.

Friends and Family: Your Fast-Track Investors

Buffett didn’t pitch VCs. He called his inner circle and raised $105,000 in days. In 2025, venture capital often means:

• 20–50% equity gone

• Board seats lost

• Exit pressures in 5–7 years

• Legal fees of $10,000–$50,000

Friends and family are faster, simpler, and cheaper:

• Speed: Buffett’s partners said yes in days. Your cousin or friend might

  invest $5,000 over coffee. No pitch deck required.

• Trust: People back you—not your spreadsheet. Buffett’s investors trusted

  his brain.

• Flexibility: You can offer 5% interest or 10% of profits—no equity

  needed.

• Risk: Without clear terms, things go south fast. Buffett guaranteed 25%

  of losses. That likely calmed nerves.

Partnerships: A Lean Alternative to LLCs

LLCs are the go-to for SMBs. They're useful, but Buffett’s model shows another option—especially for very lean startups:

• No Filing Needed: In Florida, for example, general partnerships don’t need to file anything. Just draft a partnership agreement.

• Privacy: LLCs show up in state records. Partnerships stay private.

• Speed: Buffett launched in days. You can sign a deal in an hour.

• Insurance: General partners have unlimited liability—so insurance

  ($1,000–$2,000/year) is an absolute must.

• Flexibility: Partnerships can split profits however they like—50/50,

  60/40, or Buffett’s 4%-then-split. That can be done in an LLC, but an LLC is usually more rigid.

Drawbacks? Yes.

• You’re on the hook for debts.

• Partnerships can end if a partner dies or leaves.

But for short-term projects (pop-up shop, consulting, friends-only fund), a simple partnership might work.

Do This:
A two-member LLC is really nothing more than a partnership. So, try writing a simple, Buffett-style partnership agreement defining roles, profits, and exits. Have it reviewed by a local attorney and then decide if you need an LLC.

It Matters in 2025

Buffett’s 1956 deal was as lean as it gets: $100, seven allies, and a short agreement. In 2025, with tariffs rising, clarity is your edge.

• A bakery can launch with $5,000 from three cousins.

• A SaaS startup can define a clean profit split.

• A tutoring business can use a partnership instead of a pricey LLC.

Buffett didn’t need a pitch deck. He needed a plan, a promise, and the courage to make both count.

$100, a clear head, and seven people who believed in him. He ends with billions and a legacy. You don’t need billions—or permission—to start. Just a simple plan and a little courage.

Cut the noise. Start small and be the next Buffett.

Dear TCoL: Creating “Holes” After Meetings and Taking Notes

Question: I want to take notes at all my meetings but I am terrible at it mainly because I like to totally focus on what is being said. I have other people working for me that are great at focusing and taking notes, some using a notebook and others with laptops. Part of the problem is that I seem to go in and out of back to back meetings and calls which makes it hard to catch up on notes between meetings. Any suggestions?

Answer: Let’s start with the second issue first. Sounds like you need to create some short breaks or holes between meetings. The easiest way to do that is to try cutting all your one-hour meetings down to 45 minutes and your 30-minute meetings to 20. I’m a note taker and that simple change created breaks that I never had before. I’ve been cutting down all my hour-long meetings for over two years and it works.

Next, if it is my meeting, I briefly outline the agenda ahead of time in my notebook and just fill in notes as I go along. That seems to give me more time to focus on the conversation.

Last, maybe you should skip taking notes during the meeting and try using 3-5 minutes after the meeting (during the hole you created) to make your notes. Write them in the room your meeting was in or right after a call. Only write down what was important. Hope this helps!

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!