1. What are the first things you look for in a management team?
Well, what do you look for in a girl? Seriously, you look for the logical things - passion, an interest in running the business, honesty. Such as, do they love the business, or do they love the money? This is the first filter. I mean real passion; Mrs. B ran Nebraska Furniture Mart until she died at the age of 103 - that's passion. If temperament is the most important personal asset in managing money, in business, it's passion. Secondarily, if you've been doing it a while, you get to know how to do it. But obviously no management team is perfect, so you're often stuck making a judgment call. You don't want to wait forever to find the perfect team. Incidentally, a friend of mine spent twenty years looking for the perfect woman; unfortunately, when he found her he discovered that she was looking for the perfect man.
A shareholder asked how the pair assesses managers at companies in which they invest. Buffett informed the crowd that “a really good business doesn’t need good management - and a poor business can’t do well no matter how good management a management is. There are enormous differences in the talent of American businesses. The Fortune 500 management doesn’t get picked like Olympic team athletes. In some cases, it’s fairly easy to pick out a good management. We think a .350 hitter will continue to be one; we don’t believe the .127 hitter who says, hey I’m different because I’ve got a new bat. In business, those are often the managements who say they’ve hired consultants. Once we see ability, we like to see how they treat their shareholders. Tom Murphy is a good example of a great manager.
Buffett thinks there are two main factors in assessing management:
Buffett later went on to say that one of the two or three most important things a Chief Executive Officer does is to allocate capital (i.e., invest money - either retained earnings or new outside capital). Yet few CEO's are trained for capital allocation because they rose through other streams in the business such as operations, sales or finance. Referring still to capital allocation, Buffett said most CEO's, when they get the top job, are "like a concert pianist arriving at Carnegie Hall - only to be handed a violin".
Often CEOs who are inexperienced in the field of capital allocation will rely on so called "experts" Buffett sees this as extremely dangerous.
[Q: What do you look for in a manager?]
We look for managers that have a passion for their business. We've had terrific luck with entrepreneurs who love their businesses like I love Berkshire. They'll tell me to butt out if I'm going to screw it up. They are part of Berkshire, but guard their businesses jealousy.
We got a book from an investment bank from someone who bought a business a few years ago [and now wanted to sell it]. The business was a piece of meat to them. What are the odds that they didn't doctor the books?
[I look for people who] have a lot of love for their business. There can't be a company in the country, if you could measure passion for the business, no-one would come close [to Berkshire].
[CM: What matters most: passion or competence that was born in? Berkshire is full of people who have a peculiar passion for their own business. I would argue passion is more important than brain power.]
By the time they get to us, if they didn't have brainpower, they wouldn't have gotten to us. We're not going to see an incompetent but passionate manager -- those got weeded out a long time ago. But I do have to weed out a manager who just wants to cash out.
We see lots of businesses that play games with their accounting and just want to cash out.
Almost everything we learn is from public documents. I read Jim Clayton's book, for example. There is adequate information out there to evaluate businesses. We do not find it particularly helpful to talk to managements. Often managements want to come to Omaha to talk, and they come up with all sorts of reasons, but what they really hope is that we become interested in their stock. That never works. The numbers tell us a lot more than the managements. We don't give a hoot about anyone's projections. We don't want even want to hear about it.
It would be tough to evaluate a class of MBAs and pick which ones would prove to be the best managers, just like it would be tough to pick the best golfer by watching them hit on the practice range.
We haven’t tried to evaluate, before they have a record, who will be superstar managers. Instead, we find people who’ve batted .350 for 10-50 years. We just assume we won’t screw it up by hiring them. We take people who play the game very well and allow them to play.
I recall a study that correlated business success with the age at which a manager started. It turns out that those who started young did best. Of course, if you work with what you have, you can develop over time, but a lot of it is wiring – I’ve come to believe more so than I did 4-5 years ago. I’ve never heard Charlie say anything dumb about business – except when he disagrees with me. (Laughter) And I’ve never heard [GEICO CEO] Tony Nicely say anything dumb about business, ever.
[CM: Part of it is intelligence, partly temperament. Rick Guerin, for example, wanted to be rich, he was smart and had the right approach [so I knew he would be very successful]]
It’s interesting to think about the odds that the NCAA basketball Final Four will be cancelled [referring to his comment elsewhere that Berkshire had written a $75 million policy on the Final Four being cancelled]. Some people like thinking about this. My dad wouldn’t let me be a bookie, so I went into investing.
来源：Source: 2005 Tuck School of Business Trip to Omaha ；URL: http://www.thinkfn.com/wikibolsa/Visita_a_Warren_Buffett ；Time: 2005
2. What are three traits of successful managers?
Passion is the number one thing that I look for in a manager. IQ is not really that important. They need to be able to work well with others and the ability to get people to do what you want them to do. I’d say intelligence, energy, integrity. If you don’t have the last one, the first two will kill you. All you have is a crook who works hard. If a person doesn’t have integrity, you want them dumb and lazy.
If you could put 10% of your future earnings on one of your classmates, you would pick the one that’s most effective at working with people. These are qualities that are elective. If you could pick one to sell short, it would be the person that no one wants to work with. You can elect to be the kind of person you want to be. Look at those qualities of the two people you’ve selected (one long and one short). They’re all qualities that you possess. It’s like marriage. If you want a marriage that’s going to last, look for someone with low expectations. Don’t keep score. Keeping score doesn’t build organizations, homes, etc. I have never had one fight with Charlie. When I took over Solomon I had to pick the best person to run it. I interviewed 12 people for 15 minutes each and I asked myself, “Who would I go into a foxhole with?” I never look at grades or where you went to school. When I picked Deryck Maughan, he never asked me about pay or options or indemnity. He went to work.
Chains of habit are too light to be felt until they’re too heavy to be broken. In terms of picking people how do you lead your life in a way that I’d pick you?
The way to get a reputation for being a good businessman is to buy a good business.
来源：Source: Q&A with 6 Business Schools ；URL: ；Time: Feb 2009
3. Our students are always interested in knowing what you look for when you hire someone? What specific qualities do you seek?
You look for three things, you look for intelligence, you look for energy and you look for integrity. You don’t need to be brilliant, just reasonably intelligent, Ray Kroc, for example, has good intelligence, which he combined with good busi- ness principles and passion for business and a passion for his particular business.
Every business student you have has the requisite intelligence and requisite energy. Integrity is not hard wired into your DNA. A student at that age can pretty much decide what kind a person they are going to be at sixty. If they don’t have integrity, they never will. The chains of habit are sometimes too heavy to be broken. Students can forge their own chains. Just pick a person to admire and ask why you admire them, usually it is because they are generous, decent, kind people, and those are the kind of people to emulate.
来源：Source: University of Nebraska Business Magazine ；URL: BuffettNebraskaBusiness.pdf ；Time: 2001
4. Machiavelli said that a man could be feared and loved. But one might want to be more feared than loved. Do you agree with this? Has there ever been a situation where you had to be more feared than loved?
I don’t believe in fear as a manager. Ben Graham, Don Keough, and my dad are the people I have worked for and they never tried to get people to respond by fear. Certain industries may be conducive – platoon operators maybe – but even then, if you turn back and desert your buddies...I don’t operate like that. I don’t like this life. Probably certain circumstances call for it: operate this way for a policeman. I believe the most powerful force is love and that is the most effective way of dealing with people. I would not want to live a life where people are afraid of me. People don’t operate well under fear. Some circumstances where mutually assured destruction is the end result, fear is good. But not at Berkshire Hathaway, love is way better to operate. By the way, how did Machiavelli do? There is no religion of Machiavelli 500 years later, is there?
来源：Source: Student Visit 2007 ；URL: http://buffettspeaks.blogspot.com/2007/01/permanent-value-teachings-of-warren.html ；Time: January 2007
5. Mr. Buffett, it has been well documented that you don’t manage your managers. Do you possess a strong intuition about people or do you have a process when you evaluate the management of companies that you are looking to purchase?
Good question. The question I ask is will they still work after they have sold their business? Do they love the money or the business? If it’s the business, then we have a deal. If it’s the money, that’s ok, it’s just not what we are looking for. I don’t have to identify all of the ten’s out there; I just have to make sure the ones I make deals with are tens. I can’t look at the class and say, “You’re a 6.5. You’re an 8.” I just need to find a few 10s. Do I have an intuition when judging a business owner? Sometimes. People give themselves away; I don’t know what it is. We don’t have any contracts at Berkshire; people stay because they have a passion for their business and I don’t want to screw that up. Not much changes at 65 years old. I have 40 CEO’s working for companies owned by Berkshire. Since 1965, not one of them has left Berkshire Hathaway. If I told Lou Simpson of Geico to be at the office at 9am and he could only get one hour for lunch, he would leave. I don’t need to identify every ten out there, just the ones we invest in.
来源：Source: Student Visit 2007 ；URL: http://buffettspeaks.blogspot.com/2007/01/permanent-value-teachings-of-warren.html ；Time: January 2007
6. What qualities in managers set them apart as great leaders, in essence, where do you find the right balance between "hard" and "soft" skills?
We have 45 managers. Some of them we communicate with once a year, some once a month, some everyday. I usually have dinner with the Blumkins every month, and we go on vacation, because we’re friends. What we look for in managers is a passion for the business. They usually come to us. I’ve never bought from a financial seller. We can’t run the business so I am counting on them to behave well; we have very little in the form of contracts. The business needs to continue just the same after I hand them the check as before. My big question is whether he will still get up at 6 AM just the same with $500 million, and continue to send money toOmaha. I have to look them in the eye and decide whether they love the business or they love the money. It’s fine if they love the money, but they have to love the business more. Why do I come in at 7 every morning, can’t wait to get to work. It’s because I get to paint my own painting and I like applause.
We bought a jeweler, Ben Bridge. It was a 4th generation company, with over 100 stores. They were only interested in selling to us. The family didn’t want to sell to others, the employees didn’t want it. I never met him. He didn’t want to sell either, but the family needed it.
At Borsheims we have a woman from Zimbabwe. She didn’t even have the benefit of an MBA. We didn’t look at a resume, or grades, or HR recommendations, but were looking for passion and we’ll pay fairly because we don’t want the resent that comes with unfairness. We want people that will work regardless.
I got a fax from Pete at Forest River saying this is the type of business you would like to own. He didn’t want to worry about if he died tomorrow, and left his wife and daughter behind. After we made the deal, we had dinner and I brought up the topic of salary. I told him to name whatever number he wanted and I would sign the check. He asked me what I made. I told him $100,000 and he said he didn’t want to make more than me, so we settled on $100,000. Pete called yesterday, and said he wanted to make an offer for another business. We talked for five minutes, I gave him some advice, but I really give them a lot of freedom. I’ve spent $1.7 billion and I’ve never even been to the company, at least I hope it’s there.
I can’t look at this group and tell you which 3 are going to be great managers. I can see it after they’ve been doing it for a while. Look at Mrs. B. She had one son involved in the business and 3 daughters not involved. She wanted a way to fairly distribute the proceeds of the business and this solved her problem. She worked until she was 103, and died at 104. She lived two blocks from the store. She left price tags on the furniture at her home because it made her feel more comfortable, like she was in the store. She left Russia and landed in Fort Dodge, Iowa. She saved $500 for 16 years to start this business that has the top 2 furniture stores in the nation. You can’t hire those kinds of people, no matter what you pay them. We’ve been lucky that we’ve never lost a manager to competitors since 1965. Some retire, some were fired, but we give them the opportunity to paint their own canvas.
来源：Source: Emory's Goizueta Business School and McCombs School of Business at UT Austin ；URL: ；Time: February 2008
7. You take great pride in keeping your schedule wide open. Do you believe that corporate America is overscheduled and overstretched?
[Showed his blank schedule book]. Bill Gates is overscheduled. I am extremely lucky and I can say no to anything because there isn’t an entity that can use economic pressure to make me do something. A lot of CEOs get into a lot of the rituals that are part of the job. I would rather deliver papers than be the CEO of GE. They have too much stuff to do that is a big pain. Don’t get me wrong, CEOs have it pretty good. I’d imagine that every CEO in the Fortune 500 would be willing to take the job for half of the money. The 76 or so CEOs that run companies at Berkshire don’t have to deal with bankers or lawyers. At Berkshire, we’ve never had a meeting for all of them anywhere. There are no presentations and no committees. They can be more productive, and it makes it attractive when they can do what they like to do best.
来源：Source: Q&A with 6 Business Schools ；URL: ；Time: Feb 2009