Warren Buffett’s View On Real Estate CEOs
Would Warren Buffett pick you to run his $100 billion Berkshire Hathaway empire? Warren Buffett leaked new indicators as to who he might pick to take over the investing giant during a May 2015 annual shareholder meeting. More important than the names thrown around is the qualities Buffett says he is looking for in a successor. Given Warren’s wisdom and experience, we can expect that these are great qualities to develop. So what should real estate CEOs be like? Warren Buffett’s Real Estate Empire Buffett might be most well-known for his involvement in the stock market. However, stocks are really just a part of what Berkshire really does. Warren Buffett’s favorite investments continue to be real estate. This includes his own home, investment properties, businesses that own and operate real estate, the Berkshire Hathaway real estate brokerage brand, Clayton Homes manufactured homes, and a substantial amount of real estate lending. Real estate is also tightly woven into many of the other companies that Berkshire holds a stake in, like Wells Fargo. When Buffett talks about picking a successor, he is also talking about who he thinks will make the greatest real estate CEO. One that can successfully manage a $100 billion plus empire better than anyone else. A Significant Array of Skills Buffett says a CEO should have “a significant array of skills.” A real estate business leader may not be a master in everything, but they need to be able to conduct a wide range of activities and functions. They may make the final decisions, but they will also leverage an army of generals that specialize in different functions. Operational Experience Warren says a great CEO shouldn’t just be someone who is only great at picking investments, but should have operational experience too. Being good at operations is what differentiates a great freelancer from a CEO. You can be a great product sales person, innovative thinker, or organizer of data, but that doesn’t make you a great manager or CEO. For example; you could be the best real estate agent at signing up sellers or buyers in your area. You might be able to single-handedly sell or list more than entire other offices, but running a brokerage or franchise and maximizing the potential of 100 employees is a totally different ball game. The jump from small business owner to CEO of a $100 billion firm is a big leap. This also reminds us that any investment is only as good as the management running it. This is a lesson all real estate investors, agents, and CEOs need to remember. World Leading Executives Buffett’s right hand man Charlie Munger described two of the potential candidates as “world leading executives.” This might not only hint at the caliber of person needed to manage that size of an empire, but also to Berkshire’s future plans. The world is getting smaller. Real estate CEOs now not only need to think about serving international clients in the U.S., but how they will infiltrate and interact on the global stage. It won’t be long before the real estate map extends to the oceans and space too. Ready to Give it All Way The leadership of Berkshire Hathaway is so important because it holds the fate of so many individuals at stake, but running an operation like this is not about personal gain. It might sound crazy, but Buffett has said he will give all of his Berkshire stock away to good causes when he passes. This will be mind-blowing to some. Others get it. They understand running a conglomerate like this is about helping others at grand scale, and also about fulfilling your full potential. Understanding Competition Another characteristic mentioned was understanding the competitive strengths of businesses. Every business has its strengths and weaknesses. Berkshire has a big weakness due to its size, and Buffett admits that. Conversely, many small business owners underestimate the benefits that their size affords them.