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April 2015

Brokerage Design

Warren Buffet is a Great Read

By Jeremy Conaway, NWREporter

April 2015

Jeremy ConawayThe explosive developments within the American real estate industry over the past several years have produced remarkable opportunities, some significant threats, exciting new directions, astounding knowledge, and some really impressive insights. These developments have been brought into the industry by some remarkably competent minds that have, to our everlasting benefit, undertaken to share their experiences, inspirations and efforts through a number of especially impressive publications and presentations.

History is certainly one of the treasures that make life rewarding. However, being able to observe current events by accessing the thoughts of those who are actually creating them takes the power to observe to an even more exciting level. One of the things that makes being part of our industry during this "high impact" era so exciting is the opportunity to share the knowledge and experiences of key industry thought leaders while they are still engaged in their achievements. Over the past several weeks three of these unique experiences have presented themselves and deserve special notice. They will be the subject of this and next month's column.

The industry leaders whose thoughts have contributed to the following observations are Warren Buffet of Berkshire Hathaway, Mo Anderson of Keller Williams and Spencer Rascoff (along with Stan Humphries) of the Zillow Group.

Mo has chronicled her experiences and wisdom in a volume entitled A Joy Filled Life. As one of the primary architects and advocates of the powerful corporate culture created for the company that currently leads the industry with the most agents, Keller Williams, her thoughts are especially relevant as the industry continues its journey from being a "people business" to an automated and "Wall Street" driven business model. Mo's thoughts will be discussed in next month's article.

Spencer Rascoff and Stan Humphries have encapsulated their thoughts and experiences into a volume called The New Rules of Real Estate. Given the significant impact that portals are currently having on the entire industry, this work is not only highly relevant but also highly insightful. Spencer's thoughts and efforts will be discussed next month.

That leaves us with Warren Buffet who is the subject of this month's observations and comments. Mr. Buffet's thoughts as reported here where not taken from a leather bound collectors volume, but rather from the very recently issued (last week) 2014 Annual Report of Berkshire Hathaway, Inc; his iconic corporate masterpiece. Perhaps no greater compliment could be paid to any business leader than to recommend his annual report (such documents are famous for being mind numbing and irrelevant) as a source of knowledge, insight and, yes, entertainment.

So, yes, I am actually recommending that readers download the Berkshire Hathaway, Inc. annual report and spend a couple of hours (actually 3.5) hours learning about a unique business model, a phenomenally successful mindset and a quality individual with whom we should be proud to share an industry.

Special attention should be given to the following elements.

Unless you are fortunate enough to own Berkshire Hathaway stock don't feel compelled to read the financial and accounting information in the report. The universal value proposition inherent in the document can be found in discussions relating to leadership, management and just plain respect.

This is not a document solely prepared by a CPA to broadcast financial details to shareholders or regulators. Very quickly into this read one is captured by the spell cast by a man who is writing about something that he loves, something that he has created, almost an art form and something that he believes makes the world a better place.

  • Page 19: The story of the annual shareholder meeting, AKA "the Capitalist Woodstock." May all of you be this gracious with your business partners.
  • Page 19: The story of Carrie Sova reminds us that everyone on a great team makes a contribution.
  • Page 24: "Berkshire - Past, Present and Future" - An amazing story of mistakes, more mistakes and lessons learned. Keep this one on your desk as a lasting example of the true test of experience and partnership.
  • Page 30: Lessons learned about those who have been on the ground for too long. Highly relevant to our industry's current challenges.
  • Page 34: The value and function of cash.
  • Page 36: The importance of recognizing and taking care of one's stakeholders. Something we forget on occasion.
  • Page 36: The attributes of a great CEO and the transition process. With hundreds of senior real estate industry executives poised for retirement or replacement these are lessons best learned vicariously.
  • Page 45: Berkshire's business activities. Imagine the innovation and creativity that was required to put this conglomerate together.
  • Page 117: a statement of business values that has lasted since the company founding. Some things in business do not change regardless of personalities, economic times or business cycles.

Ordinarily it would be considered bad form to share the outcome of a novel one is reviewing. However, in this case, nothing could provide as appropriate a closing comment as Mr. Buffet's own words. Near the end of the report and after a very inspirational discussion of the future he offers the following insight.

Lest we end on a morbid note, I also want to assure you that I have never felt better. I love running Berkshire, and if enjoying life promotes longevity, Methuselah's record is in jeopardy.

May each of you be able to say the same.