Warren Buffet: Why do millions love a billionaire?

By Carlos Rodriquez

A key to Warren Buffett’s success is his ease in communicating and building relationships. Anyone can pursue an MBA and become a successful businessman/woman but only the select few who possess rare and unique skills will become billionaires.

Warren Buffett speaking to a group of students from the Kansas University School of Business (Photo credit: Wikipedia)

Warren Buffett was born on August 30, 1930, in Omaha, Nebraska. He is chairman and CEO of Berkshire Hathaway and in 2012 ranked as the world’s third wealthiest individual (net worth $44 billion).I will address two of his numerous skills in written communication: his ethos and simplicity.

Ethos (credibility) 

In rhetoric, ethos refers to the art of persuasion through which the communicator gains the audience’s trust. Mr. Buffett is the only CEO who has struck me as a humble yet goal-oriented leader. Every time I read a letter by Mr. Buffett, I am surprised by how quickly he gains my trust. In “Owner-Related Business Principles,” Mr. Buffett provides 15 principles through which he guides himself in running the business. Even though his ideas are brilliant, I am captivated by the way in which he expresses and transmits them to the reader. He persuades the reader in saying that he would never do anything with the investor’s money that he wouldn’t do with his own money. His ‘down-to-earth’ attitude boosts his credibility; he doesn’t brag or leverage the fact that the intrinsic value of his corporation has typically outperformed the market.

His business grows by acquiring firms on a regular basis. Mr. Buffett doesn’t sell any of the businesses his firm owns with day-trading, rushed decisions. He will not sell a firm because it’s underperforming or its price suddenly plummeted; he will allocate more capital and try to make it more profitable. Such behavior emphasizes his dependability, which strengthens his ethos. For example:

… gin rummy managerial behavior (discard your least promising business at each turn) is not our style. We would rather have our overall results penalized a bit than engage in that kind of behavior.

His attitude is very different from the typical “Wall Street attitude” stereotype because of his conservative approach to growing the business. The aftermath of the ’08-09 financial crisis left a culture of distrust and hatred in the business world because of the enormous capital losses that outside investors suffered. Luckily, Mr. Buffett had been acquiring his investors’ trust for many years; therefore his influence and power remained unharmed.

Mr. Buffett has never hesitated in delivering bad news to his investors–further strengthening his ethos. He delivers both good and bad news with the same tone and honesty. Never has he attempted to hide any facts in order to protect the share price from undesired volatility. These examples and many other characteristics about his written communications skills make him the businessman with the highest credibility profile in the world.

Simplicity

An average business writer will sometimes get sidetracked and forget about the target reader and, specifically, the appropriate way to communicate toward him/her. In business, the language we use can be complicated and unnatural to anyone who is not used to interacting frequently in the business world. Mr. Buffet is interested in attracting long-term investments to his corporation; hence, he tailors his communication perfectly to target those professionals who are not immersed in the business world by being extremely simple in his terminology and the way in which he explains his tactics. Sometimes the business term will be the only viable option of communicating; in those cases he will give a personal definition:

Now let’s focus on a term that I mentioned earlier that you will encounter in future annual reports… Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.

Furthermore, by using such simple language, the readers get the impression that Mr. Buffett is actually in the room with them having a casual conversation about important matters. By transforming his communication into a “casual conversation,” Mr. Buffett stimulates better understanding of his arguments and further strengthens his credibility.

Communication  Matters

Warren Buffett is the great public figure he is today because of his communication skills – his written communication in particular. I am not trying to encourage prospective business students to change to a more communication-intensive major. Mr. Buffett is also an extremely wise businessman, and part of the success of Berkshire Hathaway has to be attributed to those skills. However, how the public perceives a company drives investment, and Buffet’s written communication has certainly positioned his corporation above all others in this respect.