Interview with Lawrence Cunningham, author of Berkshire Beyond Buffett
“Berkshire practices a philosophy of capitalism that does well by doing good, is sensitive but unsentimental, lofty yet pragmatic, and public-spirited but profitable.”—Lawrence Cunningham
Question: What inspired you to write this book and what are some of its key implications?
Lawrence Cunningham: People have been asking for 20 years what happens to Berkshire Hathaway if Warren Buffett gets hit by the proverbial bus; the question now has added urgency since the billionaire businessman is 84. The popular answer became paradoxical: Buffett tried to build an enduring institution at Berkshire and yet even great admirers doubt that the company can survive without him. My book demonstrates how Berkshire’s corporate culture is designed to make the company outlast any one person, making the culture part of its succession plan.
Q: How did you research this book and what did your research reveal?
LC: Background research dates to the 1990s when I published The Essays of Warren Buffett: Lessons for Corporate America, based on a symposium with Buffett and Berkshire vice chairman, Charlie Munger. In that era, Berkshire looked like a mutual fund, primarily owning stocks. Today, the company is instead defined by its 50+ wholly owned businesses and so my immediate research focused on them. In addition to traditional archival material, I interviewed, with Buffett’s permission, many Berkshire insiders, including numerous subsidiary CEOs. I also surveyed 500 Berkshire shareholders. The result is, I hope, a comprehensive portrait of Berkshire Hathaway.
Q: Who is Tom Murphy and why did he write the foreword to your book?
LC: Tom Murphy is a legendary manager who built Capital Cities/ABC into a broadcasting powerhouse in which Berkshire invested. When I saw Warren during the weekend of Berkshire’s 2014 annual meeting, I asked him who he thought should write the foreword. He immediately named Murphy, explaining that he learned most everything he knows about management from Tom. Readers will discover that Murphy, now a Berkshire director, fostered the same culture at Capital Cities/ABC that characterizes Berkshire today. Tom writes, “From afar, it may look like Berkshire’s wide-ranging businesses are very different from one another. In fact … they span industries, they are united by certain key values, like managerial autonomy, entrepreneurship, frugality and integrity.”
Q: What is appealing about Berkshire culture?
LC: It boosts returns on capital from intangible virtues, such as autonomy, entrepreneurship, frugality, and integrity—and especially a sense of permanence. In doing so, Berkshire practices a philosophy of capitalism that does well by doing good, is sensitive but unsentimental, lofty yet pragmatic, and public-spirited but profitable. It’s a way of doing business that matches today’s zeitgeist, with its sense of stewardship and fair play, and also has a timeless horizon.
Q: What are some of the surprises in store for your readers?
LC: This book is the first about Buffett as a manager as well as an investor, and the first about Berkshire as a corporate entity rather than merely a collection of investments. Besides being a “legendary investor,” as he is often simplistically identified by journalists, Buffett built a formidable corporation, demonstrates unsung managerial prowess, and chartered a course for American capitalism that is more profound and wide-reaching than simply finding valuable investments at discounted prices. Moreover, the integrated telling of the stories of Berkshire’s businesses and their colorful personnel offers a new way of seeing Berkshire, more a coherent whole than a fragmentary portfolio.
Q: What is the audience for the book?
LC: It is obviously of interest to Berkshire’s million shareholders and 300,000 employees. But the audience is broader because Berkshire is a case study of a distinctive but not inimitable culture. The book offers valuable lessons for everyone involved in shaping American business: managers, entrepreneurs, owners, shareholders, directors, policymakers, gatekeepers like accountants and lawyers, as well as scholars of corporate life.
Q: What’s the rationale for your book tour with the participation of Berkshire insiders?
LC: As with the book’s portrait and thesis the book tour will feature diverse voices speaking to the traits behind the strong and distinctive corporate culture at Berkshire Hathaway. Guests at these events will hear about Berkshire from a variety of people with intimate knowledge of the company from multiple vantage points, like subsidiary founder Jim Clayton, director Susan Decker, director-and-investor Sandy Gottesman, long-time investee Don Graham, Gen Re chief executive Tad Montross, and many others.
Q: On the book tour, why are most of your hosts universities?
LC: Universities and other learned societies are ideal locales for this discussion because the book’s purpose is to educate and encourage thoughtful dialogue. We are grateful to our hosts, starting with my employer George Washington University, my alma maters—University of Delaware and Yeshiva University (Cardozo Law School)—and spanning geographically from Columbia to Stanford, along with stops in Chicago, Des Moines, Knoxville, Minneapolis, Richmond, St. Louis, and elsewhere.