What Warren Buffett Taught Me

Yesterday, I attended the 2022 Berkshire Hathaway Annual Shareholder Meeting. Throughout the pandemic, I found myself intrigued from speeches and opinions Charlie Munger and Warren Buffett have given in the past. I was determined so see them both for myself - life is short. I am so glad I did!

The top five important things I learned at the meeting:

1. The mystery of Apperceptive Mass
2. Companies get the shareholders they deserve
3. The way to stop a destructive thing is to not start it
4. The relative absence of bureaucracy have made us much more money over time
5. Those not best served by the system are better off WITH the system than WITHOUT

Apperceptive Mass

When Warren put this term out there, I didn't quite understand what it was. I needed to look it up. Apperception is based on past experience such as knowing a dog is friendly because you've petted dogs before. Our past experience guides our perception. That experience may bias us against looking at things in a new way. To illustrate this concept, the below image was displayed to shareholders to illustrate an illusion.

Depending on how you look at this image, you either see two faces OR a vase. It is a mind-bender to see both in the same moment. Looking at the illustration, you'll flip from one perception to the other when you force your mind to do so.

The experience we all have from our past informs our perceptions of today. To force our minds to flip to a different perspective takes deliberate, critical work. The greater our apperceptive mass, the more difficult it is to flip to a different perspective. Giving people the motivation and grace to start to "see the vase" or "see the faces" takes patience and perseverance.

Pro Tip: Bring empirical, "real life" data to people to help them break from their apperceptive bias. I have found the people who bring the data are held in higher regard. Invest in yourself and your customer by finding and presenting actual data to your colleagues.

Companies Get The Shareholders They Deserve

Charlie Munger, Ajit Jain, Greg Abel, Warren Buffett, and all Berkshire Hathaway stakeholders have helped build an incredible enterprise. The shareholders investing in this are unique. They are not demanding a dividend, a spin-off, a stock split -- anything of the sort. The attracted shareholder audience is patient, frugal and focused on the "fifty years from now" view. They are interested in Berkshire Hathaway growing in value responsibly. This gives Berkshire Hathaway patient supervisors, which shareholders are, to sustain the near-term turbulence.

It led me to also think that companies get the employees they deserve. Not only brilliant, hard-working people, but ethical, principled and trustworthy. I have been lucky to work for many great companies, including Best Buy. Best Buy deeply cares about the communities and customers we serve. That foundation is fuel for everything we do. This attracts people who have a similar mindset. Best Buy truly "customer/employee obsessed" every day with every single customer & employee interaction.

Pro Tip: Your investments are a reflection of your values. Invest in people, assets, communities and efforts reflective of your ethos. Cultivate the best in yourself outwards.

Stopping Destruction

Warren made an aside comment that really struck me. "The best way to stop a destructive thing is to not start it." This is true on so many levels. In our professional lives, if you believe something to be potentially destructive, you should feel empowered to probe for the unintended consequences.

Warren appeared to be criticizing Wells Fargo's account fraud scandal without mentioning Wells Fargo by name. "When a major measure of a company's success is 5.2 services per customer - striving to get to 6 services per customer - it creates a potentially corrosive culture." The leadership is focused on that measure - not the customer's success. Middle managers are motivated to meet/beat that measure, or risk losing their jobs. Were managers at Wells Fargo actively questioning the accounts per customer metric obsession? (Hint: YES, absolutely!) Did executives listen to these managers?

It takes bold courage to help people focus on an ambiguous, aspirational and positive future. Those values and principles, shaped and refined by leaders, help act as an enterprise rudder. Sometimes the ambition or opinion of others in the room may lead others to not question. It is in these moments all of us can be more effective - to help stop a destructive thing from occurring in the first place. I have found working with others in a collaborative, humble way, is effective in achieving a shared view on an unintentionally harmful thing.

Pro Tip: When standing shoulder-to-shoulder with people, it is far easier to influence and inspire as compared to sitting across the table. Strive to achieve a shared view - even if you initially disagree. Humility is the key towards understanding and empathizing with others. Never be the person who thinks they are the smartest in the room. Once you believe that of yourself, you stop learning. It is self-destructive and corrosive.

Reducing Bureaucracy

Mike Martiny, a leader I have always held in high regard, shared with me a book, "The Speed Of Trust". It influenced me in many, great ways. The book shared examples of how to build genuine trust in self, others, and society. When trust is higher, bureaucracy is lower. When bureaucracy is low and trust is high, value creation is possible.

Warren stated, "the relative absence of bureaucracy has made much more money for Berkshire, over time." This struck me. I have found when working with people where trust is high, the path from idea, alignment, and realized value is measured in minutes, not months.

When bureaucracy is higher, it may be a symptom. Needless bureaucracy may be a signal that mutual trust and confidence in your fellow players is not as great as it could be. As players, it's incumbent on us to build that trust with each other - while challenging the unnecessary bureaucracy.

Trust comes first. Bureaucracy reduction comes next. Value creation, what we all want, comes thusly.

Pro Tip: Find a small thing around you which you, and people around you, feel as unnecessary bureaucracy. Together, if you can reduce that bureaucracy, more value will almost certainly be created. As trust improves, bureaucracy will diminish. As bureaucracy diminishes, value will most assuredly rise.

Everybody Wins

When I graduated high school, I was thinking of becoming a Catholic priest. I attended St. Louis University, a Jesuit school, to follow that ambition. Two years into school I realized that vocation was not for me. I chose to pursue a life in business.

My hypothesis was "business" (private enterprise, capitalism, etc.) has done more to feed the hungry than charity. Perhaps I may be of greater use to humanity by dedicating my life to business? In retrospect, I am so glad I made that choice.

I have watched so many colleagues achieve great things to serve others. So many customers' lives were made better, thanks to them. The examples I have are far too many to mention. Each of my colleagues have made significant differences in so many peoples lives!

One, of many, valid criticisms private enterprise has pertains to fairness. Not all the players in a private enterprise system are treated fairly. It could be the property owner adjacent to a garbage dump, the bilked defendant unable to afford premium legal representation, or the swindler able to escape justice. Despite all this - "those not best served by the system are better off WITH the system than WITHOUT."

Imagine a disenfranchised person in our capitalist system. Would that person be better off without capitalism? It is an interesting topic to discuss. The United States free enterprise system has created great injustices - yet all players within the system are better off with the system than without.

All of us benefit from technology companies inventing terrific ways to save, read and retrieve information digitally. Every single one of us, even those without indoor plumbing, benefit from the waste water system. You can never ride a train to benefit from the railroad freight network. The "system" created has benefited all. It is our challenge to ensure it helps all benefit more equally.

Pro Tip: Looking at nearly every circumstance where all parties, "win" takes effort. Driving win/win/win outcomes for the customer, business and our community is challenging. One great recent example is Best Buy offering a "haul away" service. Large, inefficient appliances consume more energy than necessary. Many people do not know how to dispose of these items properly. Best Buy does - and will do so with great responsibility. The community has less hazardous waste, the customer has more room in their home, and Best Buy can serve a genuine customer need. Everybody wins!

Conclusion

These top five lessons from Saturday, April 30, 2022 have truly affected me. If you have the chance to listen to the recording or watch the presentation, I would recommend it. Better yet, if you are going to Omaha next year, please let me know. I would love to learn from you your top five from 2023! If you have observations and lessons from this year, please do share!