In 2017, the vice chairman of Berkshire Hathaway and Warren Buffett’s longtime business partner, Charlie Munger, visited the Ross School of Business at the University of Michigan. He was interviewed by Dean Scott DeRue, sharing insights into his and the company’s phenomenal success. His key message: long-term business success stems from thinking like an owner, not a corporate climber.
What Happened: Munger recalled how Buffett, in the early stages of his career, followed Ben Graham’s approach of buying companies simply because they were undervalued, even if they were doomed.
Eventually, they abandoned that model in favor of acquiring high-quality businesses with lasting advantages. The turning point, Munger explained, was a change in mindset. “A lot of people running the businesses think like careerists,” he said. “My advice to you is you never want to be a careerist so much that you don’t see it from the owner’s point of view.” Reflecting on their journey, he added, “We thought like capitalists, because we were always in the shareholder mindset.”
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Why It Matters: Munger pointed to General Motors as a cautionary tale. “The mightiest company in the world went bankrupt,” he said.
“They had a bunch of careerists, and an owner would have seen immediately that situation was hopeless. And they just romped through it with a lot of denials and stupidity and pomposity, and of course they went bankrupt,” Munger noted.
Munger was referring to what was then the largest bankruptcy in history, when, on June 1, 2009, General Motors filed for bankruptcy in New York, listing $82 billion in assets and $173 billion in liabilities.
“None of those hotshot executives thought like an owner, or they would have seen that it was hopeless,” Munger reiterated.
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