Warren Buffett’s Berkshire Hathaway 2011 annual shareholder letter was just published this week. For years, Buffett has provided a glimpse into his strategies for success through these letters. I look forward to reading the letter each year. Never fails, I learn from Buffett’s insights and am reminded of fundamental business concepts that never go out of style.

The other day I was with an entrepreneur, and I mentioned I had just read this year’s letter and found it full great insights. She asked me to summarize a few of the gems that are relevant to entrepreneurs. I’ve shared some here:

Identify and nurture your competitive advantage. Buffett is famous for finding businesses with “a competitive moat” to allow them runway to grow fast for a long time and protect them from competition.

Coca Cola is one of the best examples in the Berkshire portfolio. The brand is iconic and powerful, and the competitive hurdles are high for any other players attempting to encroach on Coca Cola’s turf. Some similar examples of competitive advantage from technology include Apple, where product quality and brand seem to reinforce each other, creating rabid loyalists that virtually lock out other contenders from large swaths of market; Google, where core intellectual property led to a demonstrably better user experience, enabling the company to dominate the search marketplace; and Facebook, where network effects have made life very difficult for other players aspiring to build general purpose social networks.

Building and motivating your team is a top priority. In this year’s shareholder letter Buffett begins by gloating about the addition of two new investment managers,Todd Combs and Ted Weschler. He also singles out several of the CEOs in his portfolio for doing a great job such as James Hambrick at Lubrizol, Jordan Hansell at Netjets, Vic Mancinelli at CTB, and Grady Rosier at McLane.

Buffett clearly takes the time to get to know his team well and views the prospects for his various businesses as a function of the strength of these managers. The current breed of top entrepreneurs in technology, regardless of focus area, all seem to echo this sentiment – build a top quality team and great things can happen. Successful public companies like Google, and private ones like Palantir, are well known for their incredibly selective screening processes, and the correlation between great people and value creation is clear.

Measure your performance consistently and don’t be afraid to admit mistakes. Buffett starts this year’s letter with a bunch of good news, but he quickly offers counter-examples and mistakes. He exclaims that his purchase of bonds in a Texas utility a few years earlier was “a big mistake” where he committed “a major unforced error.” He also tells us that he was “dead wrong” when he predicted a year earlier that a housing recovery was set to begin.

It’s human nature to sugar coat mistakes, but like Buffett, the best entrepreneurs are quick to point out challenges and decisively address them. In late 2008 when the market for enterprise software slowed abruptly, Successfactors CEO and founder Lars Dalgaard, reduced staff by one-third immediately. While painful to dismantle much of the growth investments he had made, Lars didn’t hide from the challenge. Three years later, Lars was rewarded with a $3.4 billion price for his company by SAP.

Buffett has reported change in Berkshire’s book value and compared this with the S&P 500 for the past 47 years. That’s consistency! Like Buffett, the best entrepreneurs seek to consistently measure their own performance and those around them as well.

Play the long game and stick to your vision, even if it’s out of style. Buffett reminds us that the key to his success has been to focus on investments in “productive assets,” those companies that can grow without the need for significant additional capital. These companies efficiently deliver goods and services that are consistently in demand, through good times and bad.

He avoids “unproductive assets,” things that don’t produce anything else but that are purchased in the buyer’s hope that someone else will pay more for it in the future (such as gold). He points us to the Internet stock bubble as a similar example, where “extraordinary excesses [were] created by combining an initially sensible thesis with well-publicized rising prices.” Because he knows that “bubbles blown large enough inevitably pop,” he’s missed the opportunity to invest in several companies where he could have made a quick buck, but this strategy is to focus on “productive assets” only and he’s stuck to it successfully for nearly 50 years.

Similarly, great entrepreneurs don’t look for validation from the outside world too often, rather they trust their own instincts and don’t stray from their ultimate vision. Steve Jobs is a terrific example. He was kicked out of the company he started, re-joined when it was down and out, and never lost sight of his vision for what Apple would become.

There you have it. Thanks for another year of great teachings Warren!

[Image Credit: Asa Mathat, Fortune]