INTegrated ELectronics


I always through the company name Intel was a just the first five letter of “intellegent” or “intellegence”. Wrong. It’s a portmanteau of INTegrated ELectronics.

This was one of the many tidbits of knowledge that have shown up in The Snowball, the “other” biography of Warren Buffett. Turns out Warren had the opportunity to invest $100,000 into the initial $2.5 million round that launched Intel out of Fairchild.

I don’t have the exactly calculation of how much that would be worth today, but $100,000 is 4% of the total raise, and presumably that first round purchased 20%. There would likely be pro rata add-ons in future rounds, if there were future rounds, plus dilution at the IPO, so simply 4% of 20% is 0.8% and round that down to 0.5% for dilution. Intel’s market cap today is $184 billion and half of one percent of that is $92 million.

Berkshire Hathaway’s market cap today is $778 billion. So yes, missing Intel lost Buffett the opportunity to make another 1000x return, but the amazing story of Berkshire Hathaway is that Buffett made multiple 1000x returns, none of which required the foresight and risk of investing in a brand new computer chip company years before the integrated circuit was mainstream, years before silicon memory was common (an Intel invention) and years before the single-chip microprocessor (another Intel invention, albeit simultaneous with TI).

By "Luni"


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