Warren Buffett’s son Howard said he has been preparing all his life to become the successor to his father in his role as chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B).
In an interview with Betty Liu on Bloomberg, Howard said he has had a great opportunity to observe his father’s behavior and interaction with people, and he has been a member company’s board for 20 years, which has helped him prepare for this new role. According to him, it is important for him to spend time with the board of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) to understand the business.
Howard said Berkshire Hathaway has great managers who are responsible for managing each of the company’s businesses, and he is not worried about running them.
“Berkshire is built on great managers, as non-executive chairman, I’m not running those companies and that’s not what I have to worry about, I have to worry about keeping the managers…that’s the critical component of the future,” he said.
The younger Buffett also emphasized that following his father as chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) requires continuing the practices that helped the company achieve it growth. Berkshire Hathaway has a market value of approximately $242 billion.
He explained that preserving Berkshire Hathaway’s culture means that “I need to make sure that people feel that they’ve been treated fairly, that whatever my dad committed to them remains committed.”
Jeff Matthews, shareholder of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and author of “Warren Buffett’s Successor: Who It Is and Why It Matter,” commented that the transition to a second generation of the family on top of the board makes sense if Howard Buffett doesn’t have operational duties. According to him, Warren Buffett encouraged public policies that reward people based on merits, rather than connections citing his statement in 2007 that he favors “equal opportunity.”
In a telephone interview with Bloomberg, Mathews said, it is “hard to argue that out of all the potential successors to Warren Buffett, Howard Buffett is absolutely the best guy, unless you take into consideration what the role is. The role as chairman is not CEO. It’s to preserve the Berkshire culture. And when you look at it that way, he’s probably the right guy.”
During the interview with Betty Liu, Howard emphasized that keeping the company’s culture is critical. “You don’t want a CEO who’s going to change that and drive managers away. That’s probably one of the key parts of it, is just making sure that part of the culture remains intact. And people that are best suited to run the business run the business,” he said.
Howard is the second of Warren Buffett’s three children. He is the only one who has a seat on the board of the company. He also serves as executive director of the Howard G. Buffett Foundation.
UPDATE: 4:00 PM EST We have inserted the transcript from the Bloomberg interview with Buffett:
BETTY LIU: Berkshire Hathaway, led by billionaire investor, Warren Buffett, is in transition…the reality is that one day Buffett won’t be at the helm of the company he took over 48 years ago.
Which leaves his son Howard Buffett…I’ve covered the Buffetts for years…Howard’s the middle kid… and the man people say will keep his father’s legacy alive.
I’m here in Willcox, Arizona…population 4,000… there are several hundred thousands of acres of farm land here…1,400 of which are owned by Howard, the future chairman of Berkshire Hathaway.
HOWARD BUFFETT: Now Betty, since you’ve dropped into the middle of nowhere in the high desert of Arizona, you want a ride or you wanna walk?
LIU: Definitely a ride
BUFFETT: Ok, I’ll give you a ride. Jump in the truck.
LIU: I’m gonna jump in your truck.
LIU: Howard discovered farming when he bought his first bulldozer at age 21…And now he’s a veteran…driving around checking on his new equipment, and surveying the area he’s reserved for college researchers…Howard rarely slows down – the son of a billionaire who’s managed to work hard his whole life, WITHOUT directly working for his father.
BUFFETT: I’ve published 7 books, I think of myself as a photographer…
LIU: What do you think of yourself first?
BUFFETT: The very first thing that comes to mind is either a businessman or a farmer.
LIU: On that front, he’s on four boards including Berkshire and Coca-Cola and among his many other jobs, he’s the Ambassador against Hunger for the United Nations…The father of five is constantly in motion – one minute he’s checking on a well… the next… he’s joking with Eva Longoria over email. Their unlikely friendship started with a $1 million donation to her foundation that helps 1-in-4 Latinas in the U-S under the poverty line. In fact, many famous people visit Howard…From Tony Blair to Bono to Shakira. He likes to take his visitors for a ride on his monster machines, including me.
BUFFETT: Stop! Now that’s too far (both laugh) That’s alright, you didn’t kill anybody.
LIU: High-powered and homespun… the Buffetts are unlike any billionaire family I’ve ever met.
Just some Midwest boys…Howard and Warren combined are worth more than 52 billion dollars.
That’s enough to buy Starbucks. Not a cup or a store… but the entire company. And with the spare change…more than 50 Boeing Dreamliners! Over sandwiches and diet soda at the local diner, Howard contemplates his future…
BUFFETT: I’ve been preparing all my life. I’ve always had this great opportunity to observe my Dad and watch his behavior and watch his interactions with people. In another way, I’ve been that on Berkshire board for 20 years. That’s a preparation. But I think today, I probably think about it a little differently than I did — you know — maybe even 5 years ago. 00:14:27 Just from the standpoint that the board’s been expanded, so I think it’s important for me to spend time with the board. You know, Ajit came back ridin the combine this Fall and make sure I understand the insurance business…He just wants to make sure I’ve got the basics, you know.
LIU: So you think you have that down pat?
BUFFETT: No, I don’t have it down pat. You know, the thing is, Berkshire’s built on great managers. So, you know, as a non-executive Chairman, I’m not running those companies. I mean, that’s not what I have to worry about.
LIU: What are you gonna have to worry about?
BUFFETT: I’m gonna have to worry about keeping the managers for one thing. That’s a critical component of, you know, the future. And I should, you know, make sure I communicate with the board and I should make sure that I help execute anything that would be helpful to the CEO. But there’s no way to know how much that is. I mean it could be very little, it might be more sometimes, it could be more in the beginning. You know, is everybody adjusted.
BUFFETT: It’s very hard to predict it.
LIU: But in the meantime, Howard’s full-speed ahead running his foundation — looking to improve the quality of life for the world’s poorest populations….
BUFFETT: In 2013, depending on the stock market valuation of the Berkshire stock, we could give away $105/$110 million dollars.
LIU: That fight to help the world’s poor is mixed with a sensitivity over the family’s enormous wealth. Apparent when I went the next morning to make breakfast for my crew, Howard, his wife Devon and Bolek, his beloved German Shepard.
BUFFETT: (Howard says sit to the dog, feeds the dog and the dog barks) Good Boy.
LIU: Oh, nice catch
BUFFETT: I spend half my life in places where people will never have what I have and half my life in places where people live on $10, $5, $2 a day.
LIU: That drive to help those less fortunate is why the Buffetts have become an admired American family… and why Howard still thinks about his Dad in everything he does.
BUFFETT: Every morning when you get out of bed think about what you do because it might be on the front of the newspaper.