2012: What risks does Berkshire's culture face after Buffett leaves?
AUDIENCE MEMBER: Hi. Dan Lewis (PH) from Chicago.
I wanted to get your thoughts on two of my concerns about a post-Buffett Berkshire.
Do you worry that some of your key operating and investing managers might leave for more lucrative opportunities once they realize they’re working for one of their peers instead of a legend?
And do you think it’s possible that a large investor or hedge fund could ever gain enough control of Berkshire to force a change in the unique culture and structure?
WARREN BUFFETT: Yeah. I think that — I would say I virtually know — that the successor we have in mind will not be the kind that will turn off our managers because that — the manager in mind is a — successor in mind — has got the culture as deeply embedded in as I do.
They would not — our managers would not — I don’t think it would be a question of leaving for more lucrative jobs.
I think it would be because they love the kind of environment in which they exist. And if that environment didn’t exist, it wouldn’t be a question whether the alternative was more lucrative.
Many of them, a majority, could retire, wouldn’t need to work at all. They’re only going to work if it’s more fun for them to work than to do anything else, you know, in the world, because they’ve got the money to leave, in a great many cases.
The conditions — it’s the same reason I work. I mean, I’m 81, and I am doing what I find the most enjoyable thing to do in the world, and there are a couple reasons for that. I get to paint my own painting and, you know, I have a lot of fun, working with the people I work.
And our managers work for the same reason. They do get to paint their own paintings. And my successor will understand that just as well as I do. And there would be a lot of people that might very well manage other companies that, I think if stuck in my position, would lose a fair number of managers. They just have a different style. And our managers don’t need that style.
In terms of a takeover, I think that really gets unlikely. The size is a huge factor. And, even because of the A and B shares, the A shares get converted to B shares when I give them away.
And even 10 years from now, it would be likely that I would own, or my estate would own, something in the area, you know, perhaps, of 20 percent of the votes, thereabouts.
So the Buffett family will probably have 10 times the voting power, for a long time, of anybody else. So I really — I think it’s extraordinarily unlikely for both those reasons, size and the concentration that will exist.
And the longer we go, the larger we’ll get. So the — as the voting power aspect goes down, the size aspect goes up. So I don’t think there will be a takeover of Berkshire.
And I really — you do not need to worry about my successor. You know, in many ways he’ll be better than I am.
He will be totally imbued with the culture. The company is imbued with the culture. It would reject anything. The board of directors reflect that culture. It’s everyplace you look around.
Berkshire stands for something different than most companies, and, that’s not going to change.
Charlie?
CHARLIE MUNGER: Well, what I said last night was that the first 200 billion was hard, and the second 200 billion, with the momentum in place, is likely to be pretty easy compared to what’s been accomplished in the past.
So, I don’t think it’s going to hell at all. I think the momentums are in place and the right kind of people are in place and the culture is, by and large, pretty well loved, I would say, by the people who’ve chosen to be in it. Nobody’s going to want to change it.
WARREN BUFFETT: Yeah, the businesses are in place to take it to 400 billion.
CHARLIE MUNGER: Hmm?
WARREN BUFFETT: The business — we have the businesses to take it to 400 billion.
CHARLIE MUNGER: Well, but in addition to that, I think people of the type who have sold to us when we were the only acceptable buyer, I think will come to our successors because they will be the only acceptable buyer, at least for some significant part of what’s done.
So I don’t think it’s going to be all that difficult.
WARREN BUFFETT: Don’t make it sound too attractive, Charlie. (Laughter)