1995: What is Berkshire's succession plan?

AUDIENCE MEMBER: Good morning. My name is Patrick Terhune from Fort Lauderdale, Florida.

And first of all, I see, per your request, there are a lot of people who wore red in honor of the Cornhuskers. (Applause)

Of course, my team was the — or is the Miami Hurricanes. And I’ve got my green and orange on under my clothes. So — but if we were to lose, I’m glad we lost to Nebraska and Tom Osborne.

I’ve got a request for Warren and Charlie, and that is, recognizing that the value, both intrinsic and extrinsic, of Berkshire Hathaway, is the result of your combined skills in acquiring growth companies and with your prudent and expert investing of the company’s capital for growth, I’d like to know if you have a plan — a succession plan — to be executed in the event, God forbid, something happens to one or both of you, which would remove your input to the strategic decisions.

I sincerely hope you’re in the process of developing individuals to carry forward your collective visions and to manage the company’s resources as effectively and as profitably as is being done now.

WARREN BUFFETT: Well, I appreciate that question. And the answer is, obviously, we do care enormously about that because both Charlie and I — in addition to a lot of other reasons, but in — we both have a very significant percentage of our net worth in Berkshire.

And neither one of us has figured out how to sell it all exactly, you know, 15 minutes before we get hit by a truck. So, we will not have the jump on the rest of you.

And therefore, our continuing interest will go — financially — will go well, well beyond our deaths.

And it will — in terms of foundations or something like that, it will go to organizations that we care very much about having maximum resources available to.

So, we do have some plans. We don’t name names or anything of the sort.

It’s not quite as tough as you might think because we have a collection of fabulous businesses. Some of them owned totally, some of them owned in part.

And I don’t think razor blade sales or Coca-Cola sales are going to fall off dramatically the day Charlie or I die. It — we’ve got some great businesses. And then same is true of the wholly-owned businesses.

So the question is more that of allocating capital in the future. And you know, that’s a problem for Charlie and me right now, simply because of the size with — it’s not easy to find things to do that make sense with lots of money.

And sometimes a year will go by and we don’t find anything. And other times a year goes by, and we think we found something, but it turns out we were wrong.

So, it’s not easy. But we think we will have some very smart people working on that.

And we don’t think it will be the end of the world if they don’t find anything the first year, because the businesses will run very well.

We have a big advantage in that, as contrasted to virtually almost every other company, we, now and in the future, are willing — eager — to buy parts of wonderful businesses or all of them.

I mean, most managements have a — most investors are limited to buying parts of businesses. And most managers, psychologically, are geared to owning all of something that they can run themselves.

We — you know, it’s like, I think Woody Allen said some years ago, the advantage of being bisexual is it doubles your chances of a date on Saturday night. (Laughter)

And we can go either direction, in that respect. (Laughter)

And our successors will also. So very — Charlie, you want to add anything?

CHARLIE MUNGER: I think few business operations have ever been constructed to require so little continuing intelligence in corporate headquarters. (Laughter)

An idiot who was willing just to sit here would have a very good record long after the present incumbents were dead.

WARREN BUFFETT: I think that’s true.

CHARLIE MUNGER: Yeah. I think it would be a little better if Warren would keep alive, in terms of allocating the new capital. I don’t think we’ll easily replace Warren.

But, you know, we don’t have to keep getting rich at the same rate we have in the past. (Laughter)

WARREN BUFFETT: That’s a tie vote. (Laughter)