I’ve met Warren Buffett, in fact have interviewed him several times. He is without a doubt, based on those meetings and everything else you know about Buffett, the real deal. He is an amazing businessperson and seems like one of the nicest guys you’d ever meet. Nobody is that good an actor for him to be fooling you with his common sense, ethical and decent approach not just to business but to life overall.
I knew I liked him when he talked about his initial ownership of Berkshire Hathaway when I was a reporter covering the textiles industry. Back then the company was a struggling New England textiles and apparel company but Buffett saw something and took it over. Very quickly he made a major decision. “We decided we needed to make money so we got out of the textiles business,” he often said in approximately those words. You had to love it if you were in that industry…but maybe didn’t have the wherewithal to do anything about it.
Buffett’s big news this past weekend that he would be retiring at the end of the year was long coming even if the exact timing was a bit of a shock. He’s had a remarkable run and at age 94 he is doing — as he usually does — the right thing and handing over the reins to his designated successor.
Will Berkshire continue to be so damn good once he’s no longer running the place? Good question. His type of business organization — it’s a conglomerate no matter how hard the company tries to avoid using that description — has a pretty rotten track record once the guiding light moves on…voluntarily or involuntarily. Once the men (always men) behind giant corporations like ITT, Litton, Teledyne and of course Gulf & Western — lampooned so brilliantly as Engulf & Devour — had left, those conglomerates became unraveled, often with disastrous results. The legendary General Electric is just the latest, even if its conglomerate days were unusually lengthy and successful. Still the end result was the same.
Berkshire has close to 200 different individual businesses under its rather tiny umbrella — Buffett used to talk about the corporate office in Omaha having barely a dozen employees and that included the secretarial pool. They range from giants like Geico and Burlington Northern down to relatively obscure divisions like See’s Candy and a couple of furniture stores. Plus it has holdings in such well-known global brands as Apple, American Express and Coca-Cola.
To say it must be unwieldy is to offer a textbook dictionary of a conglomerate. Its hands-off approach to these businesses is legendary as is its due diligence sometimes. I was friends with the owner of a small company, left unnamed, that said one day he called Buffett and offered to sell him his company because the owner knew he needed a benevolent parent. By the end of the week Berkshire had bought it.
You can pull all of this off if you’re as smart and hard working as Warren Buffett. He is said to be able to read a balance sheet better than any human — not to mention AI drones — and he seems to have the amazing ability to juggle all of these disparate pieces like a plate spinner on the old Ed Sullivan show.
You have to wonder if his successor Greg Abel will be as good at this clever trick. By the way, Abel says he was surprised when Buffett announced the timing of his retirement at this past Saturday’s dog-and-pony carnival extravaganza in Omaha. Maybe not the best way for a leader to tell his successor, ya think?
Buffett has made a shit-load of money for Berkshire, its shareholders and, not to mention, he and his family, even though he takes a very modest $100,000 annual salary. That alone should qualify him as perhaps the best businessman in history. I sure wouldn’t argue with that.
But now comes the thing that will ultimately define his run: can he hand off the company to someone who will continue this amazing achievement? It’s pretty much never been done. You have to hope Abel and his execs can pull off this ultimate act. Buffett deserves it.
And one more thing I hope Warren Buffett can do…something I wish he would teach another Warren: How to actually retire.
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