II. Breakthrough Years — GEICO, Graham, and the Birth of a Professional Investor

Warren Buffett’s true turning point did not happen in a classroom. It happened on a Saturday afternoon when he got into his car and drove from New York City to Washington, D.C. to meet a company he knew almost nothing about: GEICO. He discovered the company because he learned it was one of Benjamin Graham’s favorite investments. That fact alone made Buffett curious enough to drive hundreds of miles unannounced.

When he arrived at GEICO’s headquarters, the building was closed for the weekend. Most students would have gone home. Buffett knocked until someone answered. By sheer luck, the person inside the building was Lorimer “Davy” Davidson, GEICO’s future CEO. Buffett introduced himself as a student of Graham’s. That single sentence opened every door. Davidson, recognizing the connection, invited him inside, sat him down, and spent four hours explaining the economics of insurance: underwriting discipline, the power of float, why direct-to-consumer distribution mattered, and how the entire business model worked.

Buffett later said that meeting changed the trajectory of his life. It showed him that business wasn’t theoretical—it was understandable. It also revealed that a young person with initiative, humility, and genuine curiosity could learn directly from operators if they simply asked.

After business school, Buffett’s goal was simple: work for Benjamin Graham. At that time, Graham’s firm—Graham-Newman—followed strict hiring policies and only hired Jewish analysts due to industry discrimination and hiring norms of the era. Buffett was told, politely, that he would not be considered. He didn’t argue; instead, he wrote a letter explaining that he would work for free. Graham relented. Buffett joined the firm, and it became one of the most formative experiences of his life.

Inside Graham-Newman, Buffett learned the mechanics of value investing:

• how to calculate intrinsic value

• how to develop a margin of safety

• how to identify special situations

• how to behave rationally when markets behave irrationally

He also learned about insurance float—years before he controlled billions of it himself.

Graham respected Buffett’s talent so much that he eventually offered Buffett the opportunity to take over the firm. It was an extraordinary gesture. Instead of accepting, Buffett returned to Omaha. He didn’t want to build a career in New York. He didn’t want the lifestyle, the culture, or the pressure. He wanted independence.

Back home, Buffett briefly considered retiring. He was 24 and already financially comfortable. Instead, he began teaching night classes at the University of Nebraska, reinforcing his thinking through teaching and refining his philosophy by forcing himself to explain it clearly.

Soon after, he launched his first investment partnership. His earliest investors were not wealthy industrialists—they were ordinary people: doctors, neighbors, family friends, and small business owners in Omaha. They invested because they trusted him—not because they understood value investing. Buffett structured the partnership to protect them:

• no management fee

• he only earned money if they earned money

• losses came out of his pocket first

This alignment of incentives wasn’t marketing. It was an extension of Buffett’s character and the values shaped by his upbringing, his encounter with Graham, and his view of stewardship.

These years—GEICO, Graham-Newman, the D.C. trip, the hiring barrier, the teaching, and the launch of the partnerships—are where Buffett became Buffett.
They are the bridge between his childhood curiosity and the disciplined investment operator he became.

Everything that followed—the partnerships, Berkshire, the empire—rests on the lessons he learned in this breakthrough stage:
study businesses directly, learn from people who know, align incentives, stay rational, and use structure—not emotion—to guide decisions.