BRK 2015: The Learning

So far I’ve talked about lots of things from Berkshire Hathaway weekend that have really had not that much to do with the actual point of the annual shareholders meeting: listening to Warren Buffet and Charlie Munger hold forth for approximately five hours.

We did that too!  Along with 40,000 other people who silenced their phones and refrained from talking the entire time. If you want to see rapt attention, walk through the CenturyLink arena on Berkshire day because it is surreal.  Especially with the number of distractions we have in 2015. 

I took some notes during the question and answer session and I thought I’d share them here as well.  You’ll either read the below and it will stimulate some internal discussion, or it’s going to be snore city from here until the next post.  To give you an idea of how the annual meeting proceeds, the format of the session is as follows: one question from a reporter (Becky Quick, Carol Loomis, Andrew Ross Sorkin), one question from an analyst, one question from the audience.  Eat some peanut brittle, swig a Coke and repeat.

And so we begin with the caveats that these seven points were not the only seven points of the meeting, and that I am only an average transcriber.

One crowd member asked Warren and Charlie to share five characteristics of a company that would help to predict successful earnings 10 years in the future.  While no characteristics were shared, Warren played the opposition team and said that he spends more time thinking about things that would stop the company from moving forward with a purchase.  He also observed that they wanted to have a reasonable idea of how the business would look in 5-10 years and asked the question, Would we want to be in a partnership with this person when they do not own the business anymore?

Another questioner who name-dropped their new firm (srsly – I can’t) asked about Berkshire’s corporate culture and how other companies should set about creating their own culture.  Warren’s response was that culture has to come from the top.  It has to be consistent in written communication.  Employees need to be rewarded when they adhere to corporate culture and punished when they do not.  All of these things?  Take a lot of time.

A popular question to ask Warren that seems to resurface on a fairly regular basis is what mistakes he has made/regretted.  The #1 answer is always issuing additional Berkshire stock.  Where that is not a factor, Warren said that he works to be cautious because his net worth as well as that of many others are in Berkshire.  To that end, he chooses caution as a first strategy and there are some things that he has missed because of this.

Where the power of incentives were concerned (around a question about earnings forecasts), Warren discussed hidden incentives with the ultimate message being to eliminate incentives related to ego satisfaction.

One audience member asked about estate planning.  Warren, keenly aware of his own financial position said that he asks: where will the money do the most good?  Furthermore, if the money has no utility to him, where can it do the most good now?

Another question touched on corporate philanthropy.  Warren said that he is a believer in personal philanthropy versus corporate philanthropy.  In essence, corporate dollars belong to the shareholder and thus the company should not spend the money in a “personal” way.  I believe that this bucks quite a few corporate citizenship trends in 2015 and yet the rationale behind it makes a great deal of sense.

The last take away I was a real fan of was Warren’s discussion on savings and habits.  He invoked the quote, Chains of habit are too light to feel until they are too heavy to be broken.  He said that developing good habits very early on is essential and that you cannot start with these early enough, as good financial habits very literally change lives.

I know that for Marcus and I, all of this was a lot to consider, especially in the context of five hours of sitting and listening.  It will be interested to see how some of these concepts come into practice in our own lives.

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