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Warren Buffett's Biennial Letter

Warren Buffett is one of the richest and most famous people to have ever lived and he made the fortune himself. Buffett leads Berkshire Hathaway, a holding company that owns 76 businesses (See's Candies, Geico Insurance, Fruit of the Loom, NetJets, Pampered Chef, Johns Manville, etc.), employs more than 250,000 people and is always near the top of any Most Admired Companies list.

This simple 2-page memo dated 7/26/2010 from Buffett to the managers of the 76 businesses includes the following points that I though were interesting, considering the scope of his operations and that these are the points he sees as most critical to communicate to his organization:

  • "... to reemphasize Berkshire’s top priority... that all of us continue to zealously guard Berkshire’s reputation. We can’t be perfect but we can try to be... We can afford to lose money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation. We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper..."
  • "... your associates will say 'Everybody else is doing it.' This rationale is almost always a bad one if it is the main justification for a business action. It is totally unacceptable when evaluating a moral decision."
  • "There’s plenty of money to be made in the center of the court. If it’s questionable whether some action is close to the line, just assume it is outside and forget it."
  • "... let me know promptly if there’s any significant bad news. I can handle bad news but I don’t like to deal with it after it has festered for awhile."
  • "I need your help in respect to the question of succession. I’m not looking for any of you to retire and I hope you all live to 100. (In Charlie’s case, 110.) But just in case you don’t, please send me a letter giving your recommendation as who should take over tomorrow if you should become incapacitated overnight... Please summarize the strengths and weaknesses of your primary candidate as well as any possible alternates you may wish to include."