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How Warren Buffett Built a $500 Billion Company on the Basis of Trust
When it comes to finances, acquisitions, and management, Berkshire Hathaway does things differently
Trust is the essence of the business model Warren Buffett developed at Berkshire Hathaway. This trust fuels the most consequential recurring activities that define Berkshire’s business methods: self-reliant finance, internal capital allocation, decentralization, and acquisitions.
The value of trust explains Berkshire’s preference to finance operations and growth internally rather than through third-party lenders. They trust themselves more than they trust bankers.
Trust is a sine qua non for Berkshire’s decentralized autonomous approach as well as a primary reason for this model’s success. Trust is earned and must be nurtured, which explains many preferences Berkshire has in the acquisition arena. It also explains Buffett’s preference to look to personal networks over brokers when hunting for acquisitions, as well as his unusually minimalist due diligence.
Buffett brags of employing only a couple dozen people at Omaha headquarters in a conglomerate brimming with nearly 400,000 employees.
