Warren Buffett leaves most innovation to other people, but he said last week that businesses must be ready to change at all times to keep their customers happy.
Buffett, chairman and CEO of Omaha-based Berkshire Hathaway Inc., said Amazon CEO Jeff Bezos is an example of an executive whose drive for innovation is important to the nation's economic progress.
“I know Jeff Bezos, and he will never stop,” Buffett told Cathy Baron Tamraz, CEO of Berkshire's Business Wire subsidiary, at a conference on innovation sponsored by PYMNTS.com.
“Every aspect of retailing, payments, now even IT, with his cloud operation, he looks at as fair game,” Buffett said. “So if you're in competition with anything that he might be thinking about doing, you'd better be thinking about it, too.”
The late Steve Jobs of Apple could anticipate what people would want, but that's unusual, Buffett said. “I don't think you have to be that good. You just have to be there very fast when somebody does come along with something like that and then figure out how it applies to your customer and your business.”
Buffett said he doesn't know what will replace the credit card with the magnetic stripe (“You're talking to a guy with a land-line phone who likes to read a print newspaper”), but “as we talk, there are tens of thousands if not hundreds of thousands of very intelligent people working on ways to make everything we're doing obsolete. And some of them will succeed.”
Buffett said payment methods are changing, but consumers still like to use debit and credit cards. Berkshire owns 13.7 percent of American Express Co. “I think the American Express card is very entrenched. ... I've got a card in my pocket that says, 'Member since 1964.' ”
Writer is jealous
Journalism professor Ben Yagoda objects to Buffett's latest letter to Berkshire shareholders, saying he got a sinking feeling because Buffett seems to be the better writer.
Mark Twain had praised Ulysses S. Grant's memoirs for “clarity of statement, directness, simplicity, manifest truthfulness, fairness and justice toward friend and foe alike and avoidance of flowery speech,” Yagoda wrote for the Chronicle of Higher Education, and Buffett's letter has the same qualities.
“What's initially most striking is the contrast with most corporate writing, which is dense, dull, impersonal, abstract, often deliberately obfuscatory and thickly interlarded with deadly jargon,” Yagoda said. “It grasps for any available credit and deflects any possible blame. Not so Buffett.”
He praised Buffett's use of expressions such as “cover the waterfront,” “shot the lights out,” “left me in the dust,” and “no sense going crazy.”
“As with most first-rate writers, his language limns a personality,” Yagoda wrote. “Midwestern wry humor, understatement, modesty: that's what you will find in Buffett's prose.
“Especially appealing is the last quality, which stands in blessed contrast to the hyperbole and hokum that tarnish most communication today (and which I can suggest merely by setting down the words 'Donald Trump').”
Doesn't want Bills
Buffett once owned part of Omaha's minor-league baseball team, but he's not in the market for the National Football League's Buffalo Bills.
“If I were rich and somewhat younger, and lived in Buffalo, I'd buy them in a second,” he said while visiting Buffalo last week for Stan Lipsey's retirement as publisher of the Buffalo News. Berkshire owns the newspaper.
“But I'm not taking on new things that my heirs will want to wrestle with,” Buffett said, according to the News. “There would have been a time when I would have been very tempted.”
There's also a price difference. In 1991 Buffett paid $1.25 million for one-fourth of the Omaha Royals, the Kansas City Royals' AAA affiliate. The team now goes by the name the Storm Chasers and was sold last year.
The Bills are valued at more than $800 million.
Interest across seas
Berkshire's interest in international businesses sparked some recent comment.
The Sunday Independent of Ireland said Buffett sent “key lieutenants” to Ireland in January 2012 to meet with Irish energy minister Pat Rabbitte about buying state assets, followed by a “breakfast meeting” in March.
The energy department said the “introductory meetings” were at Berkshire's request. The department has a role in the sale of Bord Gais Energy, a state-owned natural gas and electricity company in Ireland. Ireland also is considering the sale of its national lottery license and Coillte, a state forestry company.
In 2008, Buffett invested $244 million in two Irish banks but lost all but $27 million. “The tennis crowd would call my mistakes 'unforced errors,' ” he wrote in his letter to Berkshire shareholders.
In Japan, the Nikkei Weekly reported that few Japanese stocks meet Buffett's criteria for acquisitions, including stable earnings, good financial health and undervalued stock. Among them:
Hitachi Ltd., Makita Corp., Nakanishi Inc., Mitsubishi Heavy Industries Ltd., Pilot Corp., Arcs Co., Create SD Holdings Co., Okinawa Cellular Telephone Co., Ohsho Food Service Corp. and Workman Co.
Insurance great hailed
Buffett once referred to John “Jack” Byrne, who died recently in Hanover, Vt., at age 80, as “the Babe Ruth of insurance.”
Buffett told the Valley News of White River Junction, Vt., that Byrne turned around the fortunes of Geico, the auto insurer now owned by Berkshire, when nobody else could have.
“There are 27,000 people working at Geico now that only have a job because of what Jack did back in the mid-1970s when he saved the company,” Buffett said. “(Byrne) had the ability to talk to his troops,” telling them, “Even though you can't see over the next mountain, I can, and I'm going to lead you to that.”
Byrne rescued several faltering insurance firms by combining an “old-school” emphasis on fundamentals of accounting, personnel and operations with innovation, the newspaper said.
Buffett called Byrne “a remarkable individual and businessman, both a human being and a CEO. ... He could inspire other people to take on tasks that they otherwise might have thought were impossible.”
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
Have a question for Steve Jordon about the Oracle of Omaha? Submit your questions now, then join Steve at 11:30 on Tuesday to discuss the latest news about Warren Buffett.