Warren Buffett is my mentor.
He just doesn’t know it.
It’s a great relationship.
He doesn’t have to take my calls and I don’t have to listen to everything he says.
Buffett has mentored me this way for decades and he’s had a big impact on me.
So big that every year my team and I take a group of 100 Internet leaders out to Omaha for a private workshop on Warren Buffett’s philosophy followed by that campy capitalist Midwestern hootenanny, that “Woodstock of Capitalism”, Buffett’s Berkshire Hathaway annual meeting.
What in particular do Internet CEOs, Chief Product Officers, heads of Customer Experience, and others need to learn from Buffett and his partner, Charlie Munger? Or asked another way – why do companies like Airbnb send groups of leaders to attend this?
Leaders can learn a lot including a new way of looking at something they already know (or should know) – the customer experience.
Buffett has built an alternate business universe that allows managers to make their own long-term and customer-inclusive decisions without interference from him or short-term pressure from Wall Street.
This Buffettverse all starts with the slimmed-down structure of headquarters.
With close to 400,000 total employees across 70+ wholly-owned companies (think Geico, Fruit of the Loom, See’s Candies, Burlington Northern railroad, etc.), there are only about 25 total employees at headquarters. That’s correct. 25.
I don’t think there’s a startup or large company that can match the minimalist HQ of Berkshire Hathaway.
In fact, Buffett has often said his management philosophy borders on abdication.
For example, operating divisions do not submit budgets to Buffett. Buffett doesn’t want to look at budgets, approve budgets, or manage budgets. He wants leaders he can trust making those decisions.
In the world of product development, many of us advocate pushing down decision-making to the lowest levels. No one does that better than Buffett.
He delegates everything.
You want to invest in a new technology? That’s your decision.
You want to hire a new senior executive? That’s your decision.
You want to keep your customer service operation in the United States and not outsource it? That’s your decision.
The key to this radical decentralization is trust. Buffett only buys companies where he has trust for the management, who stay on to keep running the company after the acquisition.
Sam Taylor, my longtime friend and CEO of one of Buffett’s companies, helped us get this workshop started five years ago. Each year he’d wow attendees with the stories of how he sold his company to Buffett. According to Sam, Buffett focused on two things in their negotiations: 1) whether he could trust Sam and, 2) the details of the customer net promoter scores.
Before the sale to Buffett, Sam had private equity owners. They wanted him to lay off people and outsource customer service to India. Sam countered that it was critical to the business that support remain in the U.S. close to customers. When the sale to Buffett went through, Sam – and his employees – cried because it meant those jobs were saved and customers would continue to be treated well.
It’s remarkable what can happen in Buffett’s wacky world where capitalists actually practice good business as opposed to rigging the system to maximize personal rewards. (Note: Buffett’s annual salary is $100,000).
Generate good economics, treat customers well, and leave trusted managers alone – those are the uncommon rules of Buffett World.
– Phil
P.S. I’ve told the story of the wonderful Sam Taylor – who sadly passed away from brain cancer in 2017 – elsewhere including in a chapter I wrote for a best-selling book about the Berkshire Hathaway meetings (see it here).
If you want to join us in Omaha next year for the “Woodstock of Capitalism” and our workshop, then you can fill out this simple Google form telling us about yourself and why you’d like to come (we do this because we limit the number of attendees every year).
