Musk and Buffett make a natural pair trade

Jeannie Matthews
May 8, 2018

Musk criticized Buffett's use of "moats".

After revolutionizing the rocket industry and making cars that can drive by themselves, what does a billionaire think of making next? And until the candy business actually comes to fruition, keep an eye out for Musk's cyborg dragon.

"I am super super serious", Musk wrote in a tweet on May 5 after a series of Twitter users expressed incredulity over Musk's sweet plans. Or does he really want to start his own candy company to prove Buffet wrong?

Not much is now known about this notional candy company, let alone whether Musk is indeed serious about starting a company of such stark contrast to his other ventures, including cars, power walls, solar panel roofs, and colonizing Mars. While it might've seemed like another random venture Musk made a decision to embark on, like his sale of flame throwers or hats, the billionaire was actually teasing Berkshire Hathaway CEO Warren Buffett.

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Musk in his earnings call last week said that he thought moats were lame.

Musk suggested the idea of a moat was outdated, suggesting that companies relying on one would soon find themselves out of business by "invading armies" of competitors and that consistent innovation is a far better tool for a company to employ. Buffett is also a longtime proponent of what he calls competitive advantage "moats" as an investment strategy. During a recent Berkshire Hathaway shareholder meeting, he responded to Musk's comments about moats, claiming that "there are some pretty good moats around". A company with an economic moat has a widely recognized brand value that makes it nearly impossible for rivals to compete on an even playing field. "And Elon may turn things upside down in some areas", Buffett said. Musk himself said Tesla would be evaluating the positions of contractors that work with Tesla, but aren't officially Tesla employees, when he spoke on the company's first-quarter conference call last week.

Eventually, Musk began crowdsourcing ideas for his hypothetical candy company, and his followers began suggesting all manner of products for him to develop, from healthy candy to candy that doesn't cause cavities. It's hard to determine what his actual plans are, as Musk has proven to be quite unpredictable in the past.

Of course, the inevitable comparisons to Willy Wonka began to pop up, though Musk seemed to balk at the suggestion.

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