Make sure it includes these 4 things
In my recruiting experience, I came across very few thank you notes—which is a shame.
A thank you note is one more opportunity for candidates to stay front of mind with employers. Sending a timely thank you note shows professional courtesy and follow-through (one hiring manager I worked with knocked out candidates who didn’t send a thank you!). Plus, a well-crafted thank you note is a marketing tool that can promote your candidacy after memories of your interview have faded.
The best thank you notes go beyond simple gratitude. Here’s what a productive thank you note includes:
1. Personalization by Name and Quote
Don’t just write to HR or your immediate hiring contact.
If you have met several people, write an individual letter to each and every interviewer, and quote or paraphrase something specific they said. “Dear Alan, thank you for taking the time to meet with me. I particularly enjoyed hearing about your upcoming project with Really Cool Builders…” If you have a panel interview and meet several people all at once, still write individual notes.
A personalized thank you deepens your relationship with that person and enables you to maintain that relationship separately long after the hiring process plays out.
2. Reiteration of Your Strengths
If a particular interview response seemed to resonate or there was something you discussed that elicited strong interest, build on these items in your thank you note.
You might share another related example or point to additional ideas along the theme of what you discussed. This reminds the interviewer(s) why they liked you. “My experience working with creative at Really Funky Advertising seemed to dovetail exactly with what you need for your designers. In another role at Really Inventive Copy, I supported the creative team….”
3. Shoring Up of Your Weaknesses
At the same time, if there was a hiccup in the interview—a question you stumbled on or a strength you failed to highlight—address this in the thank you.
Let’s say you were asked for an example of when you worked with finance and operations, as opposed to creative, and you didn’t think of anything or you gave one example but thought of a better one after the fact. Include the additional information in the thank you: “I’m excited that the opportunity gives me the chance to work with creative, finance and operations. At Really Stylish Retail, my role as the planning analyst meant I supported our finance team on forecasting, budgeting and trend analysis. This also involved the operations team as I reviewed inventory levels and logistics…”
4. A Suggestion to Meet Again
When you’re introducing new information, include enough so that they realize you have more to say, then invite yourself to a future meeting so they can hear more about it: “As you can see from these additional roles we didn’t get to discuss, I have more to share and would love to schedule another meeting to go into detail.…”
In addition to more of your own experience, you might add an idea you have or point to a relevant article and suggest you discuss these further.
One final note: People often ask me whether to send the note via mail or e-mail. I say the latter. E-mail ensures that the note will reach recipients in a timely manner.
If you’d prefer to mail a note—to use nice stationary or to include additional material—I’d still send a quick e-mail first, alluding to the upcoming material then follow up with the hard copy.
Snail mail can take a really long time to wind its way through large corporate entities. One time, a thank you card I’d sent to a mentor arrived months after I’d mailed it—and right before our next scheduled lunch!
Caroline Ceniza-Levine is co-founder of SixFigureStart® career coaching. She has worked with professionals from American Express, Condé Nast, Gilt, Goldman Sachs, Google, McKinsey, and other leading firms. She’s also a stand-up comic. This column appears weekly.
Read more from Caroline Ceniza-Levine:
Take a look at these 10 simple tips for getting your brand out there at trade shows
Every startup CEO needs to sell. Nothing is more important than getting your product out in the market and finding folks to pay real dollars for it. There’s no shortage of sales approaches — emails, cold calls, networking events, catchy banner ads, knocking on doors, etc. They’re all worth a shot.
But I’ve found that for my companies, I get the best ROI from attending conferences, conventions or trade shows. In two days at a conference, you can achieve what could take months sitting at your computer, all in a fun location. I’m writing this surrounded by palm trees in Miami, where it’s 75 degrees.
As with anything else, it pays to prepare for a conference. Based on my experience, I’ve come up with 10 tips to help you get the most out of every conference you attend.
- Plan ahead. Figure out the conferences that work best for your business (hint: they’re rarely the hyped startup conferences like SXSW, although those are a lot of fun). You’ll be amazed by how many associations and trade groups there are in every industry. Get creative. Go where your competitors aren’t. Keep a running list of all the conferences you hear about, and prioritize that list based on two key metrics: Who you will meet and how much it will cost.
- Do your homework. Look through every detail on the conference website. Check out who’s sponsoring, speaking and exhibiting. If that information isn’t available on the website, look at last year’s program. Decide whether it’s a conference worth attending. And once you pull the trigger, plan for specific sessions. Leave plenty of time to walk the exhibit hall floor. I’ve found that the best time to do this is during a keynote speech you don’t mind skipping. The floor is empty, so vendors will spend more time chatting with you.
- Be frugal but smart. Don’t let a limited budget get in your way. Go to a few conferences as an attendee before shelling out the big bucks for an exhibit booth. Find conferences that are close to your home. When traveling, crash with friends or use AirBnB to save on hotels. Conference registration fees aren’t cheap, so always ask for startup discounts. They’re not listed on the websites, but the organizers may just hook you up. Even if they say no, they may offer to walk the floor with you to show you around and make valuable introductions.
- Schedule meetings. Reach out to industry experts, vendors, and conference organizers in advance. Introduce yourself and ask them for a few minutes of their time while you’re at the conference. I’ve found that sending an email and a LinkedIn message at the same time gets the highest response rates. Before sending out cold emails, check LinkedIn for mutual contacts who may be able to introduce you. And write concise messages (five sentences max)!
- Be persistent. You won’t hear back right away from most contacts. Conference speakers and organizers tend to be busy folks. Give it a few days, then send a follow-up note. If they don’t reply before the conference, don’t take it personally.
- Stay organized. I email anywhere from 50 to 200 people per conference. There’s no way to keep track of all those emails without a system. I use Google Docs spreadsheets, where I list all the key information for each contact (name, title, email, status, interesting facts, etc). Use whatever system works best for you to stay organized. And stick to it.
- Know what you’re looking for. On the plane to the conference, write down key objectives and critical questions. Then show up with a laser focus. It’s all too easy to get distracted by the overwhelming number of sessions, exhibit halls full of tchotchkes you’ll never use and free booze. But remember that you are there to learn and establish connections. Ask questions. Sales will come if you approach the conference with patience and humility. Companies want to help you if you’re a startup looking for advice, rather than a nagging salesman.
- Be social (media). You’re probably younger and more social-media savvy than the rest of the attendees. Use that to your advantage. Tweet about the conference using the official hashtags. I did that recently, and on the last day they presented a wrap-up full of attendee’s tweets. Mine kept popping up on the screen, and the presenter thanked my company for its “terrific tweets.” As you can imagine, this was great free publicity for us.
- Be social (-izing). Don’t get stuck on your phone or sitting in conference sessions all day. Networking events are where you’ll strike up those all-important conversations. Even if they cost an extra few bucks, sign up. Remember to bring lots of business cards, and go light on the vodka shots (unless you’re at the U.S. Drinks Conference, in which case the shots may be acceptable). And don’t just limit your socializing to the formal events. The more open you are to striking up conversations, the more doors you’ll open.
- Follow up. If you follow these tips, you’ll collect dozens of business cards at the conference. But that’s just the beginning. On the plane back home, write a personalized email to every contact. Briefly rehash what your company does and why it could be interesting for that contact. Send emails that are friendly, personal and short, and watch the replies fly in.
Happy hunting! Looking forward to seeing you at a conference soon.
David Adelman is the Head of Business Development and Growth Strategy at Snagajob, America’s largest marketplace connecting hourly job seekers and employers. Prior to Snagajob, David founded two video startups- Reel Tributes and ReelGenie. David graduated with an MBA from Wharton and an AB from Harvard, and lives in Washington, DC, with his wife Melissa and Shih Tzu puppy Samson.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Does your boss steal the credit for your work? MONEY's Donna Rosato has some tips for how to navigate this sticky situation.
The biases many female technologists face are unfair — but women in STEM fields can still get ahead by using smart, unintuitive strategies.
A recent Center for Talent Innovation study found that women in science, engineering, and technology are 45% more likely than male peers to leave their industries. Many cite a feeling of being stalled in their careers and excluded from their workplace’s culture; a whopping half say their coworkers believe men have a genetic advantage in math and science. And 44% agreed with the statement, “A female at my company would never get a top position no matter how able or high-performing.”
Meanwhile, a gender discrimination trial now under way has highlighted the ways female employees can be shut out of high-level positions in Silicon Valley. Reddit interim CEO Ellen Pao is suing her former employer, venture capital firm Kleiner Perkins Caufield & Byers, alleging that senior managers systematically excluded her and other women from promotions available to less-accomplished male colleagues.
Though it’s unclear whether Pao will win—the bar is high to prove gender discrimination, and the firm is arguing that she simply was not qualified for the role—her story has undoubtedly struck a chord among many women with experience in the tech world.
If these scenarios resonate with you (or someone you care about), there’s still some good news: Despite the odds against women in technology, both research and anecdotal evidence suggest there are approaches female techies can use to rise up. Here are five of them.
1. Be Assertive, Not Aggressive
Most women in tech are pretty used to holding minority status at work. But that doesn’t make being the only female among many male peers any easier, says Kellye Sheehan, a Hewlett Packard senior manager and president of professional association Women in Technology.
“A lot of times I would be the only woman in the room, and I would notice patterns of male colleagues testing me,” Sheehan says. “One once tried to steal my employees and give me bad business advice.”
Being put in that sort of situation can feel like a Catch-22: If you fight back, you might be seen as overly sensitive or shrill, but if you do nothing, you could come off as weak.
Indeed, a recent study suggests that women with more “masculine” traits like self-confidence are seen as more competent than stereotypically “feminine” women—but they are also seen as less “socially skilled” and therefore suffer backlash effects.
The good news? The researchers found that when a “masculine” woman also exhibits social grace and self-awareness, she gets more promotions than other women and men. So while both men and women should of course keep it classy when they stand up for themselves, women have even more to gain by doing so.
As for Sheehan? She held off on responding right away and chatted with her husband, a fellow engineer, about how he’d handle the situation. He suggested she “throw a brushback pitch,” a move pitchers make in baseball to get batters to stop crowding the plate. That advice worked out, says Sheehan.
“In front of the group I said, ‘No, you can’t have Joe and Tom, and here’s why your advice doesn’t make sense,'” she says. “I spoke plainly and wasn’t overly aggressive and he stepped back immediately and said, ‘No harm meant.'”
2. Dream Big
A common mistake that female entrepreneurs make, says Women Who Code CEO Alaina Percival, is getting too hung up on the plausibility of their ideas. It makes sense: Being prepared with facts and figures seems like an important defense against those who don’t take you seriously.
“Women pitching to investors can be overly analytical, focusing more on reality than their vision,” says Percival. “The truth is you have to embrace a kind of ‘fake it til you make it mentality’ in tech. If you say your idea is worth 100 million dollars, an investor won’t ever imagine it as one billion.”
In fact, pitching yourself as a risk taker can really be a great move for women leading startup companies, a new study suggests. Researcher Sarah Thébaud of U.C. Santa Barbara found that switching a male name for a female name on a business pitch made people rate the idea lower, suggesting a bias against female entrepreneurs. But when she did the same experiment using proposals for especially unusual or novel startup companies, that bias was reduced significantly.
Such a finding is not immediately obvious. You might think that if a woman presents “a business idea that’s particularly risky, it might further undermine her ability to gain credibility and support,” says Thébaud. But instead, she found, “innovation signaled possession of the stereotypically ‘entrepreneurial’ traits and abilities women are otherwise perceived to lack.”
The takeaway? Don’t be afraid to share your bigger visions—they might just earn you big money.
3. Don’t Promise—Surprise
Conventional career wisdom is that you should always underpromise and overdeliver when trying to impress at work. That may seem especially true for women in STEM (science, technology, engineering, and math) fields, who already have to overcome beliefs that they are less competent as leaders.
“You’ll often see, in a meeting of equal engineers, that women are asked to take notes,” says Percival. “Or when discussing a new position, people will use gendered language and say, ‘We need to hire a really awesome layout guy.'”
As a consequence, women may feel they have to do additional work to get the same recognition a man would get. But all extra effort is not created equal: Recent research suggests that you aren’t helped by going above and beyond what you commit to doing. That’s because the very act of making a promise mutes the potential happiness your boss or client will feel when you deliver—even if you exceed expectations.
The solution, according to study authors Ayelet Gneezy of U.C. San Diego and Nicholas Epley of University of Chicago: When you really want to impress, hold back on making any promises and just surprise people with your finished product.
4. Brag Better
It is often said that women in technology need to be better at “selling themselves” to compete with male peers, who typically find it easier to trumpet accomplishments. But that is easier said than done.
“Women are culturally expected to still come off as especially humble,” says Percival. “That makes it hard to overcome the embarrassment associated with bragging.” Sheehan agrees: “We stay quiet and hope that if we work hard and have lots of output, we will get promoted.”
The problem is that staying silent about your accomplishments often means you’ll get passed over, as others are rewarded with more responsibility and higher salaries.
Of course, the idea of boasting might make you uncomfortable—and rightfully so. (One of the criticisms Ellen Pao faced from her employer was that she was arrogant.)
One way to overcome your discomfort with bragging is to do it in writing, suggests Sheehan. You could send your boss an email, for example, documenting your team’s successes for the year, making it clear that you played a leading role. The benefit of email is that you can have a few trusted friends or colleagues read over it first, to help you fine-tune your tone.
And worst-case scenario, if you ever find yourself having to prove you were the victim of discrimination, it can’t hurt to have messages about your accomplishments—as well as your boss’s response—in writing.
5. Find Sponsors, Allies, and Resources
Many accomplished women in tech cite mentors and “women-helping-women” channels as key factors in their success. But getting ahead takes more than a little networking or advice. Having good relationships with your colleagues in general and garnering support from higher-ups makes a huge difference, says Sheehan.
“A mentor is someone who will teach you and help you learn and grow,” she says. “A sponsor is someone convinced of your abilities high up in the organization who will advocate for you when you are not there.”
A key factor in winning the support of bosses and coworkers is showing you are a team player and have a thick skin. Society teaches women to be sensitive to criticism, Sheehan says, so it’s especially important to show you are the bigger person after a disagreement. You might even want to take a page from the stereotypically male playbook and invite a difficult colleague (plus a group, if that’s less awkward) to grab a beer after work, which could allow you to hash things out in a more laid-back way.
Finally, consider the power of new female-friendly initiatives sprouting up all throughout the tech world. Half of women who leave the science, technology, or engineering industries keep using their training, whether at a startup, government or nonprofit job, or working for themselves. That suggests that opportunities outside of the box are growing more common.
For example, there’s PowerToFly, a company that matches women in technology with jobs they can perform remotely. Cofounder Katharine Zaleski has explained that she created the business in part because she felt biased against mothers in the workplace—until she became one herself.
“There’s a saying that ‘if you want something done, then ask a busy person to do it.’ That’s exactly why I like working with mothers now,” she wrote this week in a FORTUNE commentary. “If they work from home, it doesn’t matter if a kid gets sick.”
If you have tech skills you want to improve or showcase, there are engineering schools explicitly for women, such as Hackbright Academy, and contests like a new hackathon restricted to female entrants—starting today, March 6—in which women can compete for prizes like a MacBook Air or iPhone 6.
And when all else fails, don’t overthink it.
As Kelly McEvers at NPR wrote, perhaps the best way for women in tech to approach obstacles isn’t to “Lean In,” but “Lean To The Side, And Let It Pass By.” If you’re tired of all the unsolicited advice given to women in tech—as well as the balancing acts you’re asked to perform—just take a breath and remember you’re already beating the odds.
Be an ally—and benefit from your altruism, says Sheryl Sandberg.
Supporting women in the workplace is just a decent thing for men to do. But there’s also a selfish reason for men to care: Helping a woman get ahead on the job can help your career, too.
That’s the message from #LeanInTogether, a new campaign from Sheryl Sandberg’s women’s career empowerment organization LeanIn.org.
Coming on the second anniversary of the launch of Sandberg’s Lean In initiative, the campaign makes the case that changing women’s roles in the workplace can’t happen without a change in behavior from their male colleagues and partners. #LeaninTogether kicked off this week with PSAs from NBA and WNBA stars on ESPN (which has mostly male viewership) and an editorial in The New York Times.
“From stronger marriages and healthier, happier children to better outcomes at work, the benefits of men leaning in for equality are huge,” Facebook COO Sandberg and Wharton Professor Adam Grant wrote in the Times.
So, guys, are you ready to lean in together? These are the five best ways to be advocates for women—and indirectly, yourselves—in the workplace.
1. Be a Mentor.
Women often seek out other women as mentors. But research shows that women who also have male mentors get more promotions and make more money than those who have only female advisors.
A study of MBAs by Harvard Business School found having a mentor raised a man’s salary an average $9,260 vs. just $661 for women. That’s because the mentors for men tend to be male and higher up the corporate ladder (where there are fewer women) than women’s mentors, who are more likely to be female.
Offering to mentor an up-and-comer has some kickback for you as well: “Mentoring is a great way to identify future leaders, which can raise your profile,” says Anna Beninger from Catalyst, a nonprofit that works to expand opportunities for women in business.
2. Be an Advocate.
Look for ways for female employees to be better seen, heard and recognized, says Kathy Caprino, who runs a women’s career success and leadership coaching business.
For example, if you see female colleagues get interrupted in meetings, interject and say you’d like to hear them finish. Openly ask women to contribute to the conversation.
If you manage a team with women, give them chances to lead, present projects and manage others.
Women are less likely to toot their own horns, so help make sure your colleagues get the credit they deserve. So look for opportunities to acknowledge women when their ideas are implemented, both publicly and to higher ups. When you introduce female coworkers, emphasize their accomplishments.
3. Recruit women.
Hiring women can be a good thing for your company. One study found that start-ups that had more women on staff have greater odds of success. For start-ups with five or more females, 61% were successful and only 39% failed.
But know that some of the most promising candidates won’t come to you: Men will apply for jobs when they meet 60% of the hiring criteria while women wait until they meet 100%. So go after them, finding qualified candidates using LinkedIn and references.
Also when you see a job listing you think would be a slam dunk for one of your former colleagues, send it to her. She might not otherwise think of herself for it. Consider it good karma.
4. Promote women.
Make sure you’re helping to give the women who are already a part of your organization an opportunity to rise.
When it comes to performance reviews, be specific about what constitutes top performance so that both men and women equally know what to do to get ahead. Also get to know your female employees’ ambitions and make clear to them what they need to accomplish to get to the next step.
When you think a woman is ready for the next step and you’re not in control of the promotion process, tell her manager.
Tell her, too, so that she can advocate for herself. And push back when she says she’s “not ready” or “not qualified” for an opportunity—or when others say that about her.
5. Share the office housework.
Changing gender stereotypes about duties isn’t just for the home front.
Women often take on more “office housework”—things like taking notes at a meeting, organizing the office parties and training new hires. Those tasks steal valuable time away from core responsibilities and can keep a female colleague from participating fully, says Sandberg.
“The person taking diligent notes in the meeting almost never makes the killer point,” she writes on the LeanInTogether website.
Two-thirds of women in Fortune 200 companies are in support roles, but line roles with profit-and-loss responsibility more often lead to senior leadership positions.
Don’t fall into the trap of expecting women to take on stereotypical support roles like note taker. Raise your own hand. Not only will you make sure that a woman doesn’t get held back, but you may find yourself having new opportunities to collaborate with different coworkers and develop new skills.
Above all, understand that your actions can help set the tone for other men in the office. Be aware of your subtle biases when it comes to gender. You may not realize it about yourself – or others who work with you. “Walk the talk, be a role model,” says Caprino.
Read next: 5 Ways Women in Tech Can Beat the Odds
More from Money.com:
3 major economic indicators show why this might be the best time in a long time to start searching for other work.
Economists are pretty good at accounting for the unemployed and underemployed, but there’s one group that’s gone largely ignored during the economic recovery: people who have a job they don’t like, but are afraid to quit.
That’s probably because having a bad job was, at least until recently, seen as a pretty lucky problem to have. When times are tough and employment is scarce, any work is good work. But now the economy has sufficiently improved to the point where employees should stop feeling trapped in their current position and seriously consider making the change they’ve been longing for. Here’s why:
Hiring is way, way, up
Friday’s jobs report showed 295,000 jobs were filled in the month of February. That’s the 13th month in a row with more than 200,000 hirings, and the economy has added nearly 11.5 million jobs in the past five years.
That’s a lot of jobs you could have instead of the one you’re stuck in.
Open positions are way up as well
Not only has hiring increased, but the number of positions has surged to a 14-year high. There were 5 million job openings at the end of last year, the most since 2001, and the ratio of unemployed job seekers to openings was 1.7, the lowest number since 2007.
Employees are feeling more confident about quitting
A lot of smart people, including Federal Reserve Chair Janet Yellen, think one of the best indicators of economic progress is whether people have enough faith in the labor market to quit their current jobs. That statistic, known as the quit rate, has been rising and is now closing in on pre-recession levels.
If you’re feeling like it’s time to leave for greener pastures, you’ll have a growing amount of company.
Facebook CEO Mark Zuckerberg reveals the one question he always asks himself before he'll hire someone.
Working far from the home office creates some challenges. MONEY's Donna Rosato offers tips for telecommuting effectively.
Why did Berkshire under Buffett do so well?
Last week, Berkshire Hathaway BRK 0% released its 2014 shareholder letter. Warren Buffett’s letter, always closely followed, was particularly anticipated this year. Indeed, as this year will mark a half-century of Berkshire Hathaway under “current management,” Buffett had promised two “looking back/looking forward” analyses, one from his pen and one from that of his partner, Berkshire Vice Chairman Charlie Munger.
Here are some of the key quotes from this year’s letter. (I’ve identified those that come from Munger.)
Buffett’s successor: one of two men?
With Buffett now 84, Berkshire’s succession plan is a matter of intense speculation. His latest comments on the matter (my emphasis):
Our directors believe that our future CEOs should come from internal candidates whom the Berkshire board has grown to know well. Our directors also believe that an incoming CEO should be relatively young, so that he or she can have a long run in the job. Berkshire will operate best if its CEOs average well over 10 years at the helm. (It’s hard to teach a new dog old tricks.) And they are not likely to retire at 65 either (or have you noticed?). … Both the board and I believe we now have the right person to succeed me as CEO — a successor ready to assume the job the day after I die or step down. In certain important respects, this person will do a better job than I am doing.
Who might the successor be? Munger offers a clue that appears to narrow it down to two individuals (my emphasis):
But under this Buffett-soon-leaves assumption, his successors would not be “of only moderate ability.” For instance, Ajit Jain and Greg Abel are proven performers who would probably be under-described as “world-class.” “World-leading” would be the description I would choose. In some important ways, each is a better business executive than Buffett.
The timing of the elusive Berkshire dividend
Another recurring debate in the financial media is the value and timing of a potential Berkshire dividend — although, as we shall see, it’s not much of a debate among shareholders. Buffett provides his first time-bound guidelines:
Eventually — probably between 10 and 20 years from now — Berkshire’s earnings and capital resources will reach a level that will not allow management to intelligently reinvest all of the company’s earnings. At that time our directors will need to determine whether the best method to distribute the excess earnings is through dividends, share repurchases, or both. If Berkshire shares are selling below intrinsic business value, massive repurchases will almost certainly be the best choice. You can be comfortable that your directors will make the right decision.
That doesn’t appear to be a problem for current shareholders:
Nevertheless [in response to last year’s proxy motion requesting a dividend], 98% of the shares voting said, in effect, “Don’t send us a dividend but instead reinvest all of the earnings.” To have our fellow owners — large and small — be so in sync with our managerial philosophy is both remarkable and rewarding. I am a lucky fellow to have you as partners.
Munger’s contribution to Berkshire
Although he has remained in Buffett’s shadow over the past 50 years, it’s almost impossible to overstate Munger’s contribution to Berkshire Hathaway. Buffett pays tribute to it:
From my perspective, though, Charlie’s most important architectural feat was the design of today’s Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices. … Charlie never tired of repeating his maxims about business and investing to me, and his logic was irrefutable. Consequently, Berkshire has been built to Charlie’s blueprint. My role has been that of general contractor, with the CEOs of Berkshire’s subsidiaries doing the real work as sub-contractors.
The 4 keys to Berkshire’s success
Munger returns Buffett’s compliment:
Why did Berkshire under Buffett do so well?
Only four large factors occur to me: (1) the constructive peculiarities of Buffett, (2) the constructive peculiarities of the Berkshire system, (3) good luck, and (4) the weirdly intense, contagious devotion of some shareholders and other admirers, including some in the press.
I believe all four factors were present and helpful. But the heavy freight was carried by the constructive peculiarities, the weird devotion, and their interactions. In particular, Buffett’s decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza. Buffett succeeded for the same reason Roger Federer became good at tennis.
Buffett was, in effect, using the winning method of the famous basketball coach John Wooden, who won most regularly after he had learned to assign virtually all playing time to his seven best players. That way, opponents always faced his best players, instead of his second best. And, with the extra playing time, the best players improved more than was normal.
And Buffett much out-Woodened Wooden, because in his case the exercise of skill was concentrated in one person, not seven, and his skill improved and improved as he got older and older during 50 years, instead of deteriorating like the skill of a basketball player does.
The Berkshire system: 15 rules for building a world-leading conglomerate
What is this “Berkshire system” Munger refers to, which has been at the core of Berkshire’s unparalleled success? He codifies it in 15 points:
The management system and policies of Berkshire under Buffett (herein together called “the Berkshire system”) were fixed early and are described below:
(1) Berkshire would be a diffuse conglomerate, averse only to activities about which it could not make useful predictions.
(2) Its top company would do almost all business through separately incorporated subsidiaries whose CEOs would operate with very extreme autonomy.
(3) There would be almost nothing at conglomerate headquarters except a tiny office suite containing a chairman, a CFO, and a few assistants who mostly helped the CFO with auditing, internal control, etc.
(4) Berkshire subsidiaries would always prominently include casualty insurers. Those insurers as a group would be expected to produce, in due course, dependable underwriting gains while also producing substantial “float” (from unpaid insurance liabilities) for investment.
(5) There would be no significant systemwide personnel system, stock option system, other incentive system, retirement system, or the like, because the subsidiaries would have their own systems, often different.
(6) Berkshire’s chairman would reserve only a few activities for himself. […]
(7) New subsidiaries would usually be bought with cash, not newly issued stock.
(8) Berkshire would not pay dividends so long as more than one dollar of market value for shareholders was being created by each dollar of retained earnings.
(9) In buying a new subsidiary, Berkshire would seek to pay a fair price for a good business that the chairman could pretty well understand. Berkshire would also want a good CEO in place, one expected to remain for a long time and to manage well without need for help from headquarters.
(10) In choosing CEOs of subsidiaries, Berkshire would try to secure trustworthiness, skill, energy, and love for the business and circumstances the CEO was in.
(11) As an important matter of preferred conduct, Berkshire would almost never sell a subsidiary.
(12) Berkshire would almost never transfer a subsidiary’s CEO to another unrelated subsidiary.
(13) Berkshire would never force the CEO of a subsidiary to retire on account of mere age.
(14) Berkshire would have little debt outstanding as it tried to maintain (i) virtually perfect creditworthiness under all conditions and (ii) easy availability of cash and credit for deployment in times presenting unusual opportunities.
(15) Berkshire would always be user-friendly to a prospective seller of a large business. An offer of such a business would get prompt attention. No one but the chairman and one or two others at Berkshire would ever know about the offer if it did not lead to a transaction. And they would never tell outsiders about it.
Both the elements of the Berkshire system and their collected size are quite unusual. No other large corporation I know of has half of such elements in place.
The continued success of Berkshire after Buffett
Will the “Berkshire system” ensure continued success, despite its size, and after Buffett? Buffett says yes:
Despite our conservatism, I think we will be able every year to build the underlying per-share earning power of Berkshire. That does not mean operating earnings will increase each year — far from it. The U.S. economy will ebb and flow — though mostly flow — and when it weakens, so will our current earnings. But we will continue to achieve organic gains, make bolt-on acquisitions, and enter new fields. I believe, therefore, that Berkshire will annually add to its underlying earning power.
The next to last task on my list was: Predict whether abnormally good results would continue at Berkshire if Buffett were soon to depart. The answer is yes. Berkshire has in place in its subsidiaries much business momentum grounded in much durable competitive advantage. Moreover, its railroad and utility subsidiaries now provide much desirable opportunity to invest large sums in new fixed assets. And many subsidiaries are now engaged in making wise “bolt-on” acquisitions.
Provided that most of the Berkshire system remains in place, the combined momentum and opportunity now present is so great that Berkshire would almost surely remain a better-than-normal company for a very long time even if (1) Buffett left tomorrow, (2) his successors were persons of only moderate ability, and (3) Berkshire never again purchased a large business.
These quotes provide some of the important lessons from this year’s letter, but the document is extraordinarily rich in business and investing lessons and will be analyzed and debated for years to come — including here on Fool.com. Be sure to check back in the next few days for more coverage of the 2014 Berkshire Hathaway shareholder letter.