Great writing that flies in the face of perceived wisdom

Want to see great business writing? This might surprise you, but try an annual report. Or – to be precise - Warren Buffett’s. Every year, the US investor pens a fantastic 30-page ‘Letter to Shareholders’ for his company, Berkshire Hathaway. Wonderfully written. Educational. Straight-talking. Laugh-out-loud funny.

And as we'll see, it really flies in the face of perceived wisdom. (Also, if you're a banker, do read the P.S. at the bottom of this email.)

Let's start...his 2015 Letter includes a quote by Woody Allen (page 7, para 5) and Einstein (25, 6). There’s home-spun philosophy on marriage (6, 6). It mentions “charades” by Wall Street analysts (16, 4) and takes a pop at rating agencies (18, 3). Then there’s Pascal’s Wager on the Existence of God(!) (25, 9). Warren even ponders whether his advancing years (he’s 85) mean he’s “drifted off into la-la land” (26, 7). All in all, it’s far removed from the usual outpouring of dull corporate-speak.

And here are six other ways the Letter differs from most other annual reports.

1. There are no photos. (How do visual readers cope?!) Or, rather, there weren’t until 2013. Since then, there’s been just one every year. On the last page. A group photo of Head Office staff (about 25 people).

2. There are no graphs. Again, how do visual readers cope?! When the Letter says such-and-such was up 5%, surely we need a graph to better grasp it…

3. There is no colour (except, to be precise, in the group photo). (Maybe I shouldn't have the occasional bit of blue in my emails..?)

4. There are no infographics. You’d probably guessed that.

5. Until 1996, the Letters’ typeface was Courier New, the one that looks like it’s done on a typewriter. Dreadful… but readers didn’t mind because the writing was so good. (OK, yes, Warren delivers great returns, so readers probably cut him some slack for that too.)

6. It doesn’t use the word ‘strategic’. Often, this word is the absence of a real reason for doing something. “Why have you priced this so low?”, someone asks. “It’s strategic pricing”, comes the empty reply. Or: “Why pay this new hire so much?”. “It’s a strategic hire”. Again, empty. I went through five years of Letters, and never found the word once.

The 2015 Letter includes, of course, a review of the business. If insurance doesn’t float your boat, you may wish to quickly skim - or even skip - pages 9 to 13, for instance. (In fact, if you're in rush, just read the first page or two - and the last two pages... they'll give you enough of a flavour.)

Other years' Letters have gems in them too. His 2014 Letter had a fascinating look back at 50 years of his business (page 24 on). I’ve a soft spot for his 1992 Letter (the first one I read) – its section on acquisitions mentions toad-kissing princesses, and tells us what his golf pro says: “Practice doesn’t make perfect; practice makes permanent”.

Finally, there’s his acquisition criteria – he talks about collies, cocker spaniels and even a line from a country & western song (these criteria aren’t in his Letters, but on page 32 of this). Marvellous stuff.

Let’s finish with a slightly obsessive point on the 2015 Letter - and it’s on how to show numbers. A table on page 2 shows the 1999 figure as ‘0.5’ (don’t worry what it is 0.5 of). Until 2011, that figure was shown as ‘.5’. No leading zero. As cricket fans know, it’s how to show unfinished overs. And I like it. Shame the zero got added.


A quick PS, and it’s more for bankers: the 2015 Letter denounces ‘EBITDA’ as a useful measure: “When bankers tout EBITDA as a valuation guide”, it says, “watch their noses grow” (16, 5). The Financial Times seems to concur, given the brilliant heading to its Lex column in 2002 when WorldCom went bust with a $4bn accounting hole - "EBITDAzed".


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