Many ask:
1. What is a simple business?
2. How should one "think about the economic characteristics of a business"
3. What to look for in a business that's easy to understand
4. Is there a way to figure out the durability of competitive advantage of company
A brief thread 1/5

2/
I thought 2 examples from Warren Buffett would touch upon the above question
When asked about Google, Warren had this to say:
Imagine everytime someone clicks on a Google ad, it helps the company generate "a dollar of sales". And there is no "cost of sales" to generate...

3/
...those additional sales. No capital involved. No working capital, no inventory, no receivables. I mean nothing. Search engine and Google are synonymous. I use google for all kinds of things to search. I knew enough about the terrific economics of the business. It's simple.

4/
It was easy to understand. You click and the company makes money. That's terrific. Yet, I did not act on the insights I had. I was sucking my thumb. That's a different story.
Example 2: When asked what and how he thought about the tobacco business, Warren described...

5/
...economics of the tobacco business this way:
"I’ll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It’s addictive. And there’s a fantastic brand loyalty.”
**End**