Writing Lessons From Warren Buffett’s Annual Reports
As usual, the rules don’t apply to this unconventional man
I used to make nice money writing annual reports, but I can’t recommend my output for your leisure-time reading. As a copywriter I was paid to follow orders, and the orders were: “Safe, bland, reassuring.” Lawyers and regulators were involved. So, I did as I was told, and the checks never bounced.
Warren Buffett — the 88-year-old chairman of Berkshire Hathaway, the multinational conglomerate based in Omaha — has no such restraints. He gives the orders and writes his own annual reports, which is why they’re unlike any other annual reports you’ll ever read. It’s also why the Berkshire Hathaway website looks, shall we say, utterly unlike any other Fortune 500 company’s website.
Now, most company heads are best advised to stick to the spreadsheets and the meet-and-greets and let pros handle the prose. But Warren Buffett, in addition to being a smart guy, the third-richest man in the world, and a renowned philanthropist, is a hell of a writer.
You may at first be surprised by what’s missing from a Berkshire Hathaway annual report. Buffett doesn’t talk about leveraging our core competencies. He never touts his business’s proactive solutions. He’s not on speaking terms with impactful or customer-centric. His annual reports don’t even have a mission statement or (thankfully) a vision statement.
Here, instead, is what Buffett does so brilliantly — and how any professional writer can learn from his example.
1. He Tells Stories
Reading a Berkshire annual report is like sitting across a booth in a diner with a great conversationalist possessed of both intelligence and insatiable curiosity. Here’s how, in the 2006 annual report, Buffett introduces a discussion of reinsurance, usually a guaranteed snooze:
“Our tale begins around 1688, when Edward Lloyd opened a small coffee house in London. Though no Starbucks, his shop was destined to achieve worldwide fame because of the commercial activities of its clientele — shipowners, merchants and venturesome British capitalists. As these parties sipped Edward’s brew, they began to write contracts transferring the risk of a disaster at sea from the owners of ships and their cargo to the capitalists, who wagered that a given voyage would be completed without incident.”
Notice “Though no Starbucks…,” which brings us 21st-century readers into the story. Notice, too, “sipped” instead of the duller “drank” and “brew” instead of “coffee.” And notice how none of those usages feel forced.
2. He Uses Vivid Language
Metaphor, simile, analogy: Buffett is an expert wielder of figurative language. “When it’s raining gold, reach for a bucket, not a thimble,” Buffett wrote in the 2009 report. In the 2017 report, Buffett wrote disapprovingly of “an army of optimistic purchasers” in corporate America who went on a buying “frenzy” without regard to “a sensible purchase price.” Why did it happen? “In part, it’s because the CEO job self-selects for ‘can-do’ types. If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it’s a bit like telling your ripening teenager to have a normal sex life.” I especially like that modifier ripening.
3. He Talks about People
It’s one thing to say, as almost everyone does, that business is about people. It’s another thing entirely to bring those people to life with memorable language. Here’s an example from back in 2006: “Jack [Ringwalt] was a long-time friend of mine and an excellent, but somewhat eccentric, businessman. For about ten minutes every year he would get the urge to sell his company. But those moods — perhaps brought on by a tiff with regulators or an unfavorable jury verdict — quickly vanished.” How can you not keep reading?
4. He’s Generous with Humor
Every Berkshire annual brims with drollery, wit, and jokes (including some groaners). He’ll deploy an apt quote: “Abraham Lincoln once posed the question: ‘If you call a dog’s tail a leg, how many legs does it have?’ and then answered his own query: ‘Four, because calling a tail a leg doesn’t make it a leg.’ Abe would have felt lonely on Wall Street.” He knows the power of a folksy analogy: “Don’t ask the barber if you need a haircut.” He even brings in humor where you’d least expect it, as in this line about one of Berkshire’s holdings: “After you’ve flown NetJets, returning to commercial flights is like going back to holding hands.”
5. He Gets to the Point
“Be fearful when others are greedy and greedy when others are fearful,” Buffett writes. That’s an entire business philosophy in 12 words. Few mission statements, no matter how labored over, convey as much essential information.
6. His Enthusiasm Shows
After more than 60 years in business, Buffett still loves going to work every day. He writes in the 2018 report that he and his vice-chairman, Charlie Munger, continue “to hope for an elephant-sized acquisition. Even at our ages of 88 and 95 — I’m the young one — that prospect is what causes my heart and Charlie’s to beat faster. (Just writing about the possibility of a huge purchase has caused my pulse rate to soar.)”
Perhaps most important of all, Buffett writes conversationally, even when — especially when — he’s talking about some specialized aspect of finance.
Back in 1998, the U.S. Securities and Exchange Commission (SEC) asked Buffett to write the preface to “A Plain English Handbook: How to Create Clear SEC Disclosure Statements.” Here’s part of what he wrote:
Write with a specific person in mind. When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters. I have no trouble picturing them: Though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them. My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I don’t need to be Shakespeare; I must, though, have a sincere desire to inform.
No siblings to write to? Borrow mine: Just begin with “Dear Doris and Bertie.”
Good advice then, good advice now — for all of us who depend on written communication to make a point, a sale, or a livelihood.