Bill Gates has a brilliant method for making decisions—and he says it’s ‘similar to Warren Buffett’s’

Bill Gates takes risks that very few people in this world will.

He took a risk in 1975, when he dropped out of Harvard to build Microsoft. In 2008, he took a risk in leaving Microsoft to work full-time at The Bill & Melinda Gates Foundation.

And in 2013, he took another gamble, when his foundation contributed to a $5.5 billion initiative to tackle one of the most ambitious public-health goals ever set: eradicating polio.

Those big bets have paid off — polio still remains a problem in certain parts of the world, but significant improvements, such as the development of effective vaccinations, have been made since Gates got involved — which proves that taking big risks and achieving great success can go hand in hand.

But how does one determine which risks are worth taking, and which ones aren’t?

That’s a question the Microsoft co-founder explored in a recent blog post, in which he talks about Netflix’s new series, “Inside Bill’s Brain: Decoding Bill Gates.” A major theme in the documentary is Gates’ willingness to invest time and money into projects that have no guarantee of success.

“Watching the series got me thinking about what the word ‘risk’ really means,” Gates wrote in his post. “Whether we invest $100,000 or $100 million, the decision is always calculated. I spend a lot of time thinking, analyzing data and talking to experts to judge whether we can really help make a difference.”

But Gates says no matter how much analysis one does, it’s important to be comfortable with uncertainty. “We are tackling problems where progress is measured not just in years, but often decades — where your end goal doesn’t change, but your path to get there might have to.”

Gates’ trick to being comfortable with uncertainty, he explained, is to continue learning and be open to new strategies that can bring him closer to his goals. “That approach has guided every big bet I’ve made in my career from Microsoft to today, including polio.”

A willingness to take risks is important, but Gates emphasized another key point: a good bet is based on proper models, not a hunch. In the decision to take on polio, Gates said he had a model in mind, and that model was the history of smallpox: the only human disease ever successfully wiped out.

Ultimately, Gates said his approach to taking risks is “very similar to what Warren Buffett does when he makes an investment on on a bet, that it will be worth 10 times as much down the road.”

“Warren spends a lot of time looking for a company that has great long-term prospects. Then he makes a big investment and holds it for many years,” Gates explained. “He’s famous for staying the course through market gyrations and economic cycles.”

Like Buffett, Gates also picks his projects carefully, looking for ones that will make a difference and create better lives for generations to come. Analyzing whether achieving a certain goal can really help make a difference is what Gates loves most about his job: “I’m never happier than when I’m diving deep into the details of a problem.”

Of course, deciding what risks to take is never easy. “I also feel pressure to make every dollar and every day count,” he wrote. “I say no to a lot more opportunities than I say yes to.”

Tom Popomaronis is a commerce expert, cross-industry innovation leader and Vice President of Innovation at Massive Alliance. His work has been featured in Forbes, Fast Company and The Washington Post. In 2014, he was named one of the “40 Under 40” by the Baltimore Business Journal.

This article first appeared on CNBC https://www.cnbc.com/2019/09/28/bill-gates-brilliant-method-for-taking-risks-is-like-how-warren-buffett-invests.html and is republished with its permission.

Related Content

The business book billionaire Bill Gates wants you to read right now

“In my experience, it is rare to find one that really captures what it’s like to build and operate an organization or that has tips you could really put into practice,” says billionaire and Microsoft co-founder Bill Gates.

Here’s why Twitter billionaire Jack Dorsey wants to give all his money away

“I live by the principle of everything is connected, so if someone is in pain, I’m in pain, ultimately, over time,” Dorsey told former Democratic presidential hopeful and universal basic income advocate Andrew Yang on an episode of the “Yang Speaks” podcast published Thursday.

Bill Gates: ‘I wish I had done more’ to warn world about pandemic danger

Billionaire and Microsoft co-founder Bill Gates says he wishes he had “done more” to warn the world about the potential dangers of a global pandemic before coronavirus became one of the biggest public health issues in decades.

Billionaire Elon Musk: I am not Warren Buffett’s biggest fan

On an episode of “The Joe Rogan Experience” podcast, Musk said he’s not the “biggest fan” of Buffett, whose job is “boring” but “important.”

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

BFA Asset Management on Angola’s annual budget outlook

Chinese debt relief given to emerging markets that are facing the pressure from the Covid-19 pandemic may pose some threats to countries that already have vast amounts of debt owing to facilities. Joining CNBC Africa to unpack debt relief implications for Angola and Mozambique and as well as the Angolan annual budget outlook is Rui Oliveira, CEO at BFA Asset Management.

L’Oreal’s Hlengiwe Mathenjwa on how Covid-19 has impacted the beauty & skincare industry

The 111 year old French beauty giant L’Oreal has appointed Hlengiwe Mathenjwa as the new director of its largest manufacturing facility in the Africa and Middle East region. This appointment comes amid the Covid-19 storm that is ravishing most industries globally, Hlengiwe Mathenjwa joins CNBC Africa for more.

COVID-19 lock-down: How the Gauteng government plans to safely reopen schools

Since the gradual opening of the economy after lock-down there has been a sharp incline of COVID-19 cases. The government has the task of balancing the health of the people with keeping the economy going and opening the schools. How is the Gauteng provincial government helping? The Gauteng MEC for education is laying out the plans to welcome back school goers....

COVID-19: Rwandan bound containers held at Mombasa port

Over 2000 Rwanda bound containers of goods have been held in Kenya and Tanzania due to the delays in cargo clearance. According to Rwanda's Private Sector Federation, the move contradicts a comprehensive regional COVID-19 approach that was agreed on in dealing with the challenges of the virus on the cross-border businesses between member states. Economic Analyst, Ted Kaberuka joins CNBC Africa for more.

Partner Content

Maktech’s Godwin Makyao: Now Is A Time of Entrepreneurial Opportunity in East Africa

As an executive decision-maker in both the telecommunications and tourism industries, Godwin Makyao could not have experienced a more diverse set of...

Sanlam launches urgent job-preservation initiative in response to COVID-19

Sanlam Investments is responding to the COVID-19 pandemic through large-scale support of the recovery of South African companies, from small enterprises to...

Trending Now

Kenyan sports minister Amina Mohamed to bid for top WTO job

The Geneva-based body is seeking a replacement for Brazil’s Roberto Azevedo who is stepping down a year early at the end of August at a critical juncture for the trade watchdog.

COMMENT: COVID_19 – Crazy times call for crazy measures

On the 10th of September, 2001 – you could walk up to an airline counter, buy a ticket with no ID, walk straight through to the gate, get on a plane, pop into the cockpit to say hi to the captain, and within reason do what you wanted.

How COVID-19 could condemn millions of Africans into extreme poverty

The African Development Bank says an additional 49 million Africans could be pushed into extreme poverty by the Covid-19 pandemic and its aftermath. This was in the updated forecast of the Africa Economic Outlook, where they expect Central Africa and West Africa to be the hardest-hit regions. Kayode Akindele, Partner at TIA Capital joins CNBC Africa for more.

Implement substantive reforms, Paris Club creditors tell Zimbabwe

HARARE (Reuters) - Zimbabwe should implement sustainable political and economic reforms and successfully complete an IMF monitoring programme in order to normalise...
- Advertisement -