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Additives to engine oil and other lubricants still worth more than Twitter and Groupon.

The return to New York meant I started catching on my magazine reading this weekend.

The first thing that caught my eye was this- Warren Buffett's Berkeshire Hathaway just bought Lubrizol.

- Fine, I thought. It probably is a castle, and has a moat.
- They bought it for $9.7B. What the?? What the hell does this company do?? Here's Lubrizol's Wikipedia blurb.

.. a provider of specialty chemicals for the transportation, industrial and consumer markets. These products include additives for engine oils and other transportation-related fluids, additives for industrial lubricants and additives for gasoline and diesel fuel.
So they're in the business of optimizing the performance of a fuel and/or lubricant. And they were just valued (by Buffett - so someone very smart thinks its can be worth even more) for more than either Twitter or Groupon or both combined (give or take a billion or two; or a rumor or three...whatever your prefer.)

I like these intermittent reminders - as important as the things I assume the world revolves around are, they're still less valuable (purely in terms of money) than many, many other business and activities in the world.

So to ground myself yet again, I went over the Fortune 500 (ranked by revenues) and the FT Global 500 (estimated market cap - a little outdated.) On the revenues list, its a while before you hit the first tech company (Samsung.) Its a much earlier on the market cap list (Apple and Microsoft are in the Top 5) - but it gets a little sparse after that.

Of course, this list will change radically over the next few decades. Take a look at the S&P from even 25 years ago - but how radically? In the next 100 years, I don't see us commuting less, constructing less, or needing less engine oil additives (or their equivalents.) for whatever it is that powers our machines. They will continue to be a significant part of our economy and will be larger than they are today, but I'm willing to bet that innovation means they are a slightly lower percentage of the economy.

Comments

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