In this interview at the University of Michigan, Charles Munger explains why Berkshire is the world’s most successful conglomerate. Here’s an excerpt from the interview:
That’s the main secret of Berkshire. The reason that Berkshire has been successful as a big conglomerate. More successful than any other big conglomerate. So far as I know any other big conglomerate in the world. The reason it’s been successful is we try and buy things that aren’t going to require much managerial talent at headquarters.
Everybody else thinks they’ve got a lot of managerial talent at headquarters, and that’s a lot of hubris.
If the business is lousy enough and it gets a wonderful manager, and the business has a lousy reputation, and the manager has a good reputation, it’s the business of the… it’s the reputation of the business that’s going to remain intact. You can’t fix these really lousy businesses. You can ring the money out, whatever comes in liquidation and do something else with it, but most lousy businesses can’t be fixed.
You can watch the entire interview here:
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