The proven business principles of Warren Buffett.
Warren Buffett is one of the most admired and prolific investors and managers in corporate America. Warren Buffett on Business is a timeless guide to strategies that can help you run a successful business. This book is a one-of-a-kind collection of Buffett's letters to the shareholders of Berkshire Hathaway written over the past few decades, and in a clear, simple style distills the basic principles of sound business practices.
Through Buffett's own remarkable words, this practical management handbook shares valuable insights on communicating with, and treating employees and shareholders fairly; responsible corporate governance; ethical behavior; patience and perseverance; admitting mistakes; and having a passion for work.
Contains priceless pearls of business and management wisdom, woven into a delightful narrativeDesigned in an accessible manner and organized by business and management topics with strong lessons from BuffettProvides direct, hands-on information on major topics concerning managers, entrepreneurs, business students, and anyone interested in business
Informative and inspiring, this unique book puts Warren Buffett's business beliefs in perspective.
Shareholders as Partners
Although our form is corporate, our attitude is partnership.
Charlie Munger and I think of our shareholders as owners-partners,
and ourselves as managing partners.... We do not
view the company itself as the owner of our business assets but
instead view the company as a conduit through which our
shareholders own the assets.
CEOs must embrace stewardship as a way of life and treat
their owners as partners not patsies. It's time for CEOs to walk
Charlie and I hope that you do not think of yourself as merely owning
a piece of paper whose price wiggles around daily and that is a
candidate for sale when some economic or political event makes
you nervous. We hope you instead visualize yourself as a part owner of a
business that you expect to stay with indefinitely, much as you might if
you owned a farm or apartment house in partnership with members of
your family. For our part, we do not view Berkshire shareholders as faceless
members of an ever-shifting crowd, but rather as co-venturers who
have entrusted their funds to us for what may well turn out to be the
remainder of their lives.
The evidence suggests that most Berkshire shareholders have indeed
embraced this long-term partnership concept. The annual percentage
turnover in Berkshire's shares is a small fraction of that occurring in
the stocks of other major American corporations, even when the shares
I own are excluded from the calculation.
In effect, our shareholders behave in respect to their Berkshire
stock much as Berkshire itself behaves in respect to companies in
which it has an investment. As owners of, say, Coca-Cola or Gillette
shares, we think of Berkshire as being a non-managing partner in
two extraordinary businesses, in which we measure our success by the
long-term progress of the companies rather than by the month-to-month
movements of their stocks. In fact, we would not care in the least if
several years went by in which there was no trading, or quotation of
prices, in the stocks of those companies. If we have good long-term
expectations, short-term price changes are meaningless for us except
to the extent they offer us an opportunity to increase our ownership
at an attractive price.
Charlie and I cannot promise you results. But we can guarantee
that your financial fortunes will move in lockstep with ours for whatever
period of time you elect to be our partner. We have no interest in
large salaries or options or other means of gaining an "edge" over you.
We want to make money only when our partners do and in exactly the
same proportion. Moreover, when I do something dumb, I want you to
be able to derive some solace from the fact that my financial suffering
is proportional to yours.
* * *
At Berkshire, we believe that the company's money is the owners'
money, just as it would be in a closely-held corporation, partnership, or
* * *
What we promise you-along with more modest gains-is that during
your ownership of Berkshire, you will fare just as Charlie and I do. If
you suffer, we will suffer; if we prosper, so will you. And we will not
break this bond by introducing compensation arrangements that give
us a greater participation in the upside than the downside.
We further promise you that our personal fortunes will remain
overwhelmingly concentrated in Berkshire shares: We will not ask you
to invest with us and then put our own money elsewhere. In addition,
Berkshire dominates both the investment portfolios of most members of
our families and of a great many friends who belonged to partnerships
that Charlie and I ran in the 1960s. We could not be more motivated to
do our best.
* * *
Though our primary goal is to maximize the amount that our shareholders,
in total, reap from their ownership of Berkshire, we wish also
to minimize the benefits going to some shareholders at the expense
of others. These are goals we would have were we managing a family
partnership, and we believe they make equal sense for the manager of
a public company. In a partnership, fairness requires that partnership
interests be valued equitably when partners enter or exit; in a public
company, fairness prevails when market price and intrinsic value are in
sync. Obviously, they won't always meet that ideal, but a manager-by
his policies and communications-can do much to foster equity.
Excerpted from "Warren Buffett on Business: Principles from the Sage of Omaha" by Warren Buffett. Copyright © 0 by Warren Buffett. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.