- Warren Buffett has made many mistakes while leading the $990 billion Berkshire Hathaway for over five decades—and he’s just candidly revealed them in his latest letter to the holding company’s shareholders.
Warren Buffett has built up Berkshire Hathaway as a $990 billion empire. But even the most successful businessmen slip up sometimes. In the latest letter to Berkshire Hathaway shareholders this month, he’s confronted his faults as CEO of the holding giant since 1970.
Buffett opened the statement by addressing mistakes he’s made in leading the company. Before even getting into performance metrics, the billionaire wanted to share errors and words of wisdom that have stuck with him along the way. He harkened back to one comment made by a Berkshire Hathaway chairman, which has altered his view of messing up.
“The cardinal sin is delaying the correction of mistakes or what Charlie Munger called ‘thumb-sucking,’” he wrote. “Problems, he would tell me, cannot be wished away. They require action, however uncomfortable that may be.”
It can be very nerve-racking to admit defeat in the first place, let alone publicly disclose it with shareholders. But this is a part of Buffett’s ethos; he called attention to the fact that in the letters he sent out in 2019 and 2023, he used the words “mistake” and “error” a total of 16 times. His openness feels stark in comparison to leaders who put on a smile for investors no matter what chaos is raging in the background.
“Many other huge companies have never used either word over that span,” he added. “Elsewhere, it has generally been happy talk and pictures.”
He said that when he was a director of large companies—including Coca-Cola and Dairy Queen—it was looked down upon to use words like “mistake” or “wrong.” Leaders were discouraged to use that kind of negative language during board meetings and analyst calls—but that sanitized behavior often made him uncomfortable
“That taboo, implying managerial perfection, always made me nervous,” he wrote.
Buffett’s investing mistakes
Buffett is seen as the pinnacle of success, being the world’s sixth-richest person with $156 billion to play with. But you can’t make an omelet without breaking a few eggs.
“Sometimes I’ve made mistakes in assessing the future economics of a business I’ve purchased for Berkshire—each a case of capital allocation gone wrong,” he wrote in the letter.
One of the “worst deals” Buffett made was back in 1993 when he purchased Dexter Shoe Co. for $433 million with Berkshire Hathaway stock. The investment proved to be a huge mistake, and in a 2007 letter to shareholders, he admitted it cost shareholders $3.5 billion. It was a mistake Buffett couldn’t get over—and later in his 2014 letter, he winced at the decision again, with the shares at that time being worth $5.7 billion.
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“As a financial disaster, this one deserves a spot in the Guinness Book of World Records,” he wrote.
Buffett has also admitted regret over purchasing a massive amount of ConocoPhillips stock and U.S. Airways shares. In some instances, Buffett agonized over not jumping the gun sooner, missing critical periods to invest in trillion-dollar businesses like Google and Amazon.
Management mistakes are always overshadowed by wins
Another blunder Buffett fessed up to was making uninformed personnel decisions.
While the CEO hopes for a “decent batting average” when it comes to making the right staffing choices, he noticed managers weren’t always being well-vetted in hiring.
“I’ve made mistakes when assessing the abilities or fidelity of the managers Berkshire is hiring,” he wrote. “The fidelity disappointments can hurt beyond their financial impact, a pain that can approach that of a failed marriage.”
However, the billionaire doesn’t like to sweat the little things; on the right course of action, the wins will overshadow the losses. Buffett pointed to one manager who gave him hope throughout the years. “One of a kind” Pete Liegl was the CEO of Forest River, which Berkshire heavily invested in. He passed away last year, but his legacy as a trusted and competent manager has stuck around. Over his 19 years working with Buffett, Leigl’s A-class leadership compounded to great success.
“Pete shot the lights out. No competitor came close to his performance,” Buffett wrote. “Our experience is that a single winning decision can make a breathtaking difference over time… Mistakes fade away; winners can forever blossom.”
