For one, Buffett went out of his way to inject an element of adversariality to the event. This kind of a thing is so diametrically opposite of what we are used to in India, that for us it’s hard to believe that someone would actually do this. To question him, Buffett invited Douglas A Kass, a hedge fund manager and a known Berkshire bear. And Kass obliged. Buffett’s son Howard has been named Berkshire’s next non-executive chairman. Howard has never managed a business and has no relevant experience. Kass wanted to know what justified Howard's choice for the post, “Other than accident of birth?”
Buffett replied that Howard would have no say in the business and that his role would be “only to safeguard the company’s culture”. Buffett was reported as saying that the idea was to a have a chairman who cared about the company’s culture. It’s a perfect answer to the whole problem of professional vs family businesses. Family members often don’t have what it takes to run the business. However, they often do have an emotional investment in the business in a way that professional managers just don’t. Perhaps more Indian patriarchs should take a lesson from what Buffett is trying to do.
Another interesting bit that has some relevance to current events in Indian business are Buffett’s answer to a question about investing in airline. Here’s what he said: The airline industry has this situation where they have very, very low incremental costs with enormous fixed costs. And the temptation to sell that last seat at a very low price is very high. It’s a labour-intensive, capital-intensive, largely commodity-type business.
It takes a lot of pain to figure that out!