(Editor’s note: Lou Hoffman is CEO of The Hoffman Agency, a public relations firm with multiple offices in the U.S., Europe and Asia. He submitted this story to VentureBeat.)
It’s not enough that Warren Buffett has become one of the richest men in the world. He’s also a world-class storyteller – and nowhere does this gift go on public display more than in his annual letter to shareholders.
His latest letter on the Berkshire Hathaway Web site offers terrific lessons for startup ventures in shaping their communications.
Lesson No. 1: Converse Like a Real Human Being
There’s something about a position of power that often causes perfectly normal executives to embrace “corporate speak.” Their communications become stiff and jargon-filled drivel.
In contrast, look at how Buffett explains his philosophy of empowerment:
We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree. That means we are sometimes late in spotting management problems and that both operating and capital decisions are occasionally made with which Charlie and I would have disagreed had we been consulted.
Just take the phrase “That means we are sometimes late in spotting management problems …” I think I’m on safe ground in saying Buffett didn’t ask Legal for input.
He goes on to share that this hands-off approach creates an “owner oriented attitude” that far outweighs the periodic downside:
We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly – or not at all – because of a stifling bureaucracy.
You don’t need an M.B.A. to translate the shareholder letter and the premium Buffett places on nimbleness.
The antithesis to “control the message,” Buffett essentially serves as the narrator in telling a story with characters, greed, trains and a relatively happy ending. I’m surprised Nashville hasn’t turned Buffett’s narrative into a country song.
In short, he’s figured out that a conversational tone trumps striving for the smartest-kid-in-the-class crown.
Lesson No. 2: Admit Mistakes and Move On
Buffett takes ownership for what he bluntly calls “a very expensive business fiasco” in which he cajoled GEICO’s management to create a credit card product.
By the time Buffett woke up – his words, not mine – to the mounting losses, GEICO could only get 55 cents on the dollar in unloading its $98 million credit card portfolio.
In the shareholder letter, Buffett lets the world know that accountability for the $44 million mistake rests with him:
GEICO’s managers, it should be emphasized, were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO’s customers we would get the – – – – – well, let’s call it the non-cream. I subtly indicated that I was older and wiser.
I was just older.
Forget the shareholders. Imagine how this mea culpa played with the GEICO’s executives who were originally overruled. There’s something about seeing the big boss fall on his sword that allows everyone to move on.
This is quintessential Buffett, turning to self-deprecation as a mechanism to disarm.
For startup ventures where course corrections are a way of life, nothing says “we’re all in this together” like a senior executive uttering the three words “I was wrong.”
Lesson No. 3: The Power of Humor in Business
Like self-deprecation, humor has a disarming effect.
Buffett recognizes this dynamic and the fact that if he wants to hold the reader over the course of 20 pages, he damn well better entertain as well as inform.
A perfect example comes in his discussion of how to solve the housing market debacle. Rather than jump right to the punch line – reduce new housing starts below the rate of household formations – he poses two other hypothetical solutions:
1) Blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program
2) Speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.
The man has a sense of humor and he’s not afraid to use it, a trait that surfaces again in addressing investment bankers trying to rationalize a risky deal as “it’s only a small deal”:
Charlie’s reaction at the time: “Are we supposed to applaud because the dog that fouls our lawn is a Chihuahua rather than a Saint Bernard?”
To pull the reader through 13,000+ words, Buffett peppers the letter with one-line zingers like:
Charlie and I enjoy issuing Berkshire stock about as much as we relish prepping for a colonoscopy.
Even if you’re not a middle-aged man, you get the drift.
But to say that Buffett has honed the art of a sound bite sells him short.
He knows how to apply the techniques of compelling storytelling to put forth his position in a way that engages others.
If they work for a guy who’s worth roughly $47 billion at last count, they probably have relevance for those in the early stages of building their companies.
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