2013 Berkshire Hathaway Letter to Shareholders

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.  Edina Realty is a subsidiary of multiple entities ultimately owned by Berkshire Hathaway.]

napkinPerhaps the ultimate negotiating secret — buried in Warren Buffett’s most recent letter to Berkshire Hathaway shareholders — is  . . . when not to (negotiate):

“I think back to August 30, 1983 — my birthday — when I went to see Mrs. B (Rose Blumkin), carrying a 11⁄4-page purchase proposal for National Furniture Mart that I had drafted.  Mrs. B accepted my offer without changing a word, and we completed the deal without the involvement of investment bankers or lawyers (an experience that can only be described as heavenly). Though the company’s financial statements were unaudited, I had no worries. Mrs. B simply told me what was what, and her word was good enough for me.”

–Warren Buffett; 2013 Berkshire Hathaway Shareholders Letter, page 13

Assuming that Mrs. B was paid mostly (or all) in Berkshire Hathaway stock, and that she and her family held on to it, it’s a safe bet that that deal ultimately made the Blumkins billionaires.

Legal Lessons

Buffet’s anecdote recalls a formative experience from my (increasingly distant) career as a corporate lawyer.

As a summer associate, one of my first assignments was to update the very dated lease for Har-Mar Mall* (still very much alive and well in Roseville, a Twin Cities suburb).

I diligently labored over the new-and-improved document for a full week, and ultimately came up with a state-of-the-art, 44 page retail lease with every conceivable legal bell & whistle.

Instead of praise when I presented my masterpiece, however, I got a tongue-lashing.

“You idiot!,”  the partner yelled at me.

“This mall is full of small, Mom & Pop businesses who are going to be scared silly by what you drafted.

Tear this up, and bring me back a one-page document!”

Corollary to the above:  ‘If there’s trust and good faith between two parties, a one-page contract is plenty.  If there isn’t (trust and good faith) . . . . a 200-page contract isn’t nearly enough.”

*So-named for Harold and Marie Slawik.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply