This is the story of Warren Buffett’s latest letter to Berkshire Hathaway and one of the biggest clichés in business. In fact, if you follow the best business leaders, I’m sure you’ve heard it over and over again:
- “Our people are our strength.”
- Or, “All of you – employees, shareholders, stakeholders, people – are making it possible.”
- Or, “We can’t do any of this without our people.”
You’ve probably heard it until (unfortunately) you’re not sure that business leaders themselves really believe it.
Remember that feeling. We will return to it. For now, though, let’s talk about Buffett’s best letter over the weekend.
As every year, there are many things in it. We can start with the numbers: $ 90 billion in net revenue that Berkshire reported in 2021, and $ 3.3 billion in federal taxes that the company paid, which turns out to be about .8 percent of all federal corporate taxes collected by the Department. of US finance.
“I gave in the office is an indisputable statement made by Berkshire shareholders,” Buffett wrote.
Also, as he has done in recent years, Buffett is working on updates to the Big Four’s giant holdings, which currently include Berkshire’s largest investments:
- their insurance companies,
- 5.55% stake in Apple
- railway operations and
- its energy operations, Berkshire Hathaway Energy.
Now, as ordinary readers may know, I tend to review this letter every year when it comes out, looking at it as broadly as possible: I look critically at what Buffett includes, what he doesn’t miss, and the small details he adds make it a little more captivating from many corporate reports.
This year, two things made me sit back and pay attention as I read the letter for the second or third time:
- The first is a passage, which I will quote below, about the life and professional goals that Buffett says encourages an audience of students to pursue.
- The second is the long list of individuals that Buffett mentions – some of them expected, but really two that stood out in my later readings.
Let us first quote the passage. Buffett says that when talking to university students, he advises them to try to find work in the field they are most interested in, but only while working with “the kind of people they would choose if they didn’t need money.”
Yes, he admits, financial considerations can get in the way. But the 91-year-old (his longtime chief operating officer and partner, Charlie Munger, is 98) says he has learned that if you eventually find the situation, then “work” is no longer like work.
Charlie and I followed this liberating course after a few early setbacks. … [A]t Berkshire, we have discovered what we love to do.
With very few exceptions, we have been “working” for many decades with people we like and trust. This is the joy of life … In our home office we hire worthy and talented people – no jokes. The turnover is on average maybe one person per year.
Do you see what I’m aiming for? Indeed, these are the eight words: “We employ decent and talented people – no fools.”
So many business leaders are talking about the good game we saw above. But sometimes it’s hard to really, really believe (and act on conviction) that “our people are our greatest asset.”
It is one thing to share banal words; it is another to have the courage to act on that belief when, say, your need for a specific set of skills collides with your “no kidding” policy.
Here is the second small detail that stood out to me: the people that Buffett takes the time to mention by name.
Of course, some of them are to be expected. Munger is mentioned by name 15 times; Apple’s Tim Cook received only one mention, but Buffett described him as “brilliant.”
There are also vignettes for Ajit Jane and Greg Abel, Berkshire’s top executives, who have been mentioned for years as potential successors to Buffett himself. Abel received the nod last year, so maybe that’s why Buffett spends time with Jaina first, offering an incredible memory of what it was like to hire him.
We met for the first time on Saturday morning, and I quickly asked Ajit what his insurance record was. He replied, “Nobody.”
I said, “Nobody’s perfect,” and I hired him. This was my lucky day: Ajit was actually as perfect a choice as could be made. Even better, he continues to be, 35 years later.
Still, two other names pop up. Buffett dedicated nearly 1,000 words of this 4,500-word letter to Paul Andrews, who was the founder and CEO of the Berkshire TTI subsidiary and who died about a year ago at the age of 78.
I’m not going to reprint the whole story of Andrews’ company and how Berkshire acquired it, but the title used by Buffett at the top of the section clarifies the mood: “A wonderful person and a wonderful business“
Finally, there is another person mentioned by name, which I think leads to the essence. That is, when Buffett talks about another important acquisition, it makes sense to include this otherwise redundant line:
“Deb Bosanek, my assistant, has scheduled the opening dinner on board …”
People who follow Buffett closely already know who Bosanek is. However, it is striking to me that Buffett describes a meeting that took place 12 years ago, but leaves aside who organized the trip and dinner, just so that he could include his assistant’s name in the document.
Again, if Buffett hadn’t been 91 years old and in a clearly thoughtful and advising mood, I’m not sure I would have understood that. But he is, and this is not the only time Buffett has done such a thing.
In my free ebook, Warren Buffett predicts the future, I include some other examples of people that Buffett has mentioned in the past. My favorite example is someone most people have never heard of: the man Buffett describes as his “hero,” Charles Feeney.
I hope that Buffett will have many more years to write these letters and people like me to read and write about them, but this stands out in that it helps to remove only a small part of the skepticism that many of us feel when hear the CEO says something like, “Our people are our biggest asset.”
Is it a cliché? Maybe not, if you really believe. Anyway, maybe it’s a cliché because it’s so true.