Collection: Warren Buffett - #158 'Internet and Trust'


Video Link: https://youtu.be/YsLvpVz4Oko


In this episode, Warren Buffett was asked whether he thought about ways to use that Berkshire Hathaway name on the internet to capitalize on the reputation that he had built over the past decades?


In this episode, you’ll learn:

  • Why reputation is a huge asset on the internet?

  • How Warren Buffett capitalize the Berkshire Hathaway name?

To check out all Collection: Warren Buffett <click here>

[Transcript]

(Source: https://buffett.cnbc.com/video/1999/05/03/morning-session---1999-berkshire-hathaway-annual-meeting.html)

~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting.

AUDIENCE MEMBER 00:08

Good afternoon. Wes Thurman from Stanford, California.


You mentioned earlier about the power of the brands on the internet. And I really can’t think of a better brand, at least in my name, as the Berkshire Hathaway brand.


And, I guess, going forward, have you thought about ways to use that Berkshire Hathaway name, you know, further on the internet to capitalize on the reputation you’ve built over the past decades as a —


WARREN BUFFETT 00:34

Yeah. That’s a very good point and it is something that could be of real value. It’s already probably of some value to us with the brands that we’re associated with.


I mean, I do think that Executive Jet or the NetJets program associated with Berkshire Hathaway, that — Borsheims associated with Berkshire Hathaway, Berkshire Hathaway Life associated with Berkshire Hathaway — I think those brands are enhanced by the association with Berkshire, as some other brands would be.


But I think that’s got a long way to go. I think you’re dead right on that, that the internet reinforces the necessity for trust in dealing with people.


I mean, you are getting further and further removed from the face-to-face dealing where you can go back to the store the next day or look at the person who sold it to you the next day and get an adjustment or something of the sort.


You’re really having to place more and more trust in somebody you’re never going to see. And I think you’re right that Berkshire Hathaway, if it behaves itself properly, can get a reputation for trust that will be far greater than that possessed by the average company.


And that when we properly associate that with some of our brands that those brands will be enhanced by the association.


So I — no, I’ve thought a lot about what you’re talking about there and so have our managers. And it’s something that we intend to capitalize on in the future.


It’s rather interesting, I mean, if you look at the companies that do business with people where there’s no face-to-face interaction, either with the company itself or some intermediary like a retailer or anything of the sort, I mean, you’ve got Dell Computer, now you have Amazon.com.


But GEICO is doing business with, now, 3.7 million policy holders and it’ll do — before the year is out — it’ll be close to 4 1/2 million, and probably 4 billion-8 or so of business with people that have never met anyone from GEICO, they’ve talked to someone on the phone.


But we are one of the largest companies in the United States, in terms of doing business on a direct-to-consumer basis. We’re doing it with people who on average are paying us $1,200 a year or thereabouts for a promise.


So we have a connection that people that talk about the Amazons of the world, where people are buying X dollars’ worth of books, we’re — have a much more direct connection with people who tend to renew with us year after year.


That is based on trust. I mean, it’s not based on the neighbor next door who is — who they can go to if they have a problem. It’s based on the fact they trust this company that’s in — back in the District of Columbia, Washington, to perform in the future.


And that’s a huge asset. And it’s growing daily. I mean, we are adding policy holders every day who are signing up with us, who have never met anybody from the company. And that, already, I mean, it’s a very big asset. It will be many times bigger, in my view, 10 years from now.


The Berkshire Hathaway umbrella that gets involved in one company after another like that, that people trust, I mean, we can be in an awful lot of homes over the years.


And as more and more business becomes done on an indirect basis, or a direct basis with the consumer, the power of that, in my view, should grow. And we just have to be very smart about how we maximize that growth.


Charlie?


CHARLIE MUNGER 04:45

Nothing to add.


WARREN BUFFETT 04:47

OK. Zone 1.

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