Warren Buffett’s Storytelling Transforms Shareholders Letter into Branding Event

Who cares if Warren Buffett is still getting the hang of this Twitter thing?

The man knows how to apply storytelling techniques to business communications (heard he’s a pretty good investor too).

There’s no better example of Buffett’s storytelling acuity than his annual letter to Berkshire Hathaway shareholders that came out over the weekend.

The typical shareholder letter is so dry that an action verb comes off as racy. But Buffett treats his letter to shareholders as a platform to bring out his humanity and show he’s just “one of the guys,” no easy feat when he’s one of the wealthiest people in the world with a worth of $53 billion and change. His shareholder letter as much as his regular TV appearances — “Hi Charlie, good to see you again” — is a tool for brand building.

Turning to his 2014 letter, even as he walks the reader through a narrative on the numbers, he breaks up the cadence with an “aw shucks” moment:

In a year in which most equity managers found it impossible to outperform the S&P 500, both Todd Combs and Ted Weschler handidly did so. Each now runs a portfolio exceeding $7 billion. They’ve earned it.

I must confess that their investments outperformed mine. (Charlie says I should add “by a lot.”) If such humiliating comparisons continue, I’ll have no choice but to cease talking about them.

Self-deprecation plays in Peoria. It’s a pattern in all of Buffett’s shareholder letters and one repeated in his most recent composition:

Fortunately, my blunders usually involved relatively small acquisitions. Our large buys have generally worked out well and, in a few cases, more than well. I have not, however, made my last mistake in purchasing either businesses or stocks. Not everything works out as planned

Buffett’s storytelling also makes ample use of metaphors and analogies.

Woody Allen stated the general idea when he said: “The advantage of being bi-sexual is that it doubles your chances for a date on Saturday night.” Similarly, our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for our endless gusher of cash.

Not every executive can get away with 266-word anecdotes. Still, the following offers a storytelling lesson in how to take the reader behind the curtain with words that ring with realism:

I think back to August 30, 1983 – my birthday – when I went to see Mrs. B (Rose Blumkin), carrying a 1 1/4-page purchase proposal for NFM that I had drafted. (It’s reproduced on pages 114 – 115.) Mrs. B accepted my offer without changing a word, and we completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly). Though the company’s financial statements were unaudited, I had no worries. Mrs. B simply told me what was what, and her word was good enough for me.

Mrs. B was 89 at the time and worked until 103 – definitely my kind of woman. Take a look at NFM’s financial statements from 1946 on pages 116 – 117. Everything NFM now owns comes from (a) that $72,264 of net worth and $50 – no zeros omitted – of cash the company then possessed, and (b) the incredible talents of Mrs. B, her son, Louie, and his sons Ron and Irv. The punch line to this story is that Mrs. B never spent a day in school. Moreover, she emigrated from Russia to America knowing not a word of English.