Warren Buffett is famed for seeing opportunity long before other investors do. Yet he generally doesn't invest in start-ups. We're happy to speculate on two key reasons why we believe Buffett avoids start-ups.

A full transcript follows the video.

This video was recorded on May 8, 2017.

Gaby Lapera: One of the things that you talked about a little bit is they have to go for these really big, transformative businesses, so one of the things that they don't really do is buy into start-ups.

Michael Douglass: Yeah. I think there are probably two reasons for that. One is, a start-up often takes a while to start moving the needle. Not everything becomes a Facebook overnight. Almost nothing becomes a Facebook overnight, Facebook didn't become a Facebook overnight. Then, the other thing is, Buffett, for better or for worse, his stance has always been a more value investor way of looking at things. So he's looking for proven businesses. Start-ups, by definition, are not proven businesses. In fact, they're often trying to disrupt proven businesses. So I think that's probably another of the hiccups for him, is that he's tending to look for stuff where he can look at the cash flow and be like, "Yeah, that's a good value for us," as opposed to something small and speculative.

Lapera: And I think another little bit of it is that he only likes to invest in businesses that he understands, and by their nature, start-ups are hard to understand frequently, like, what they will actually do.

Douglass: And that's why he's been shy about tech, generally speaking. It's not necessarily because he's opposed to tech or thinks tech isn't important. It's just that he and [Charlie] Munger don't think they have any advantage in evaluating tech. If they have other businesses where they can understand them better than anybody else can, they're going to go ahead and try to take advantage of market inefficiencies there, as opposed to in a tech space, where they're throwing darts at a dartboard as much as anybody else.