We startups often get distracted in our own world, management practices, business models, financial structures, etc. We like to think that the “other side” (big business / the dark side) is totally different and lacks the approaches / insights we have. It’s true that the startup / technology space is unique in many ways, but quite often there are very direct parallels between the most successful big business and the most successful startups (once they become a business, that is.)

Berkshire Hathaway, philosophically, get many things right (and their website is amazing.) I ran across an article the other day in which Warren Buffett listed his 6 guiding principles for building a solid business, in the context of acquisition targets:

1. Large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing units)
2. Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations)
3. Businesses earning good returns on equity while employing little or no debt
4. Management in place (we can’t supply it)
5. Simple businesses (if there’s lots of technology, we won’t understand it)
6. An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown.

Source: How Buffett’s Most Recent Big Deals Have Done by Michael J. De La Merced

Perhaps we are not so different after all?

Note: This entry was taken from an article I found via DealBook (NYTimes). If you don’t subscribe, you should. Thanks to Spencer Thompson for the tip.

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