Today marks the 25th anniversary of the September 11 terrorist attacks.
A day that left almost no home, office, or heart untouched across America.
Two weeks after the towers fell, Warren Buffett wrote to the many managers of Berkshire Hathaway’s subsidiaries, trying to make sense of what would come next.
Every time I read this memo, I’m struck by Buffett’s mention of the psychological side of risk management. Most discussions of catastrophe risk in insurance focus almost entirely on the financial machinery like reserves and capital ratios. But, here, Buffett directly links psychological preparation as a key component to survival.
It means leadership doesn’t blink when “the big one” finally arrives — as it inevitably will — and won’t dismantle decades of sound strategy the moment the ink turns red.
When Buffett says Berkshire is financially and psychologically prepared for super-cats and the monster losses that come with them, he’s telling the world that Berkshire’s long-term, rational mindset is every bit as impregnable as its fortress balance sheet.
“You do the managing and I’ll do the worrying” might be my favorite distillation of Berkshire’s management philosophy. Buffett runs the conglomerate with almost no corporate overhead or centralized control. Operating managers receive real autonomy to run their businesses in whatever manner they see fit.
What Buffett keeps for himself, though, is something heavier: risk oversight and the fiduciary responsibility that comes along with that. He is, in effect, Berkshire’s designated worrier — willingly absorbing the anxiety of a crisis so that his managers can keep their heads down and do their jobs. Buffett handles the scary stuff.
Alice Schroeder, author of The Snowball, once mentioned that Buffett had (in some ways) seen this tragedy coming. Six months before the attacks, he asked the leaders of National Indemnity and General Re to size up their insurance exposure to the World Trade Center. And, when the numbers came back, he told them to reduce it ASAP.
Ajit Jain at National Indemnity listened. The head of Gen Re did not. And, as a result, Berkshire got socked with a $2+ billion property loss.
Buffett didn’t “predict” 9/11 in the sense of foreseeing the particulars of that fateful day. But he recognized signs of trouble: the site had already been attacked once before, insurance exposure was dangerously concentrated there, and — in his own words — the world is generally not a safe place.
While he was undoubtedly less-than-impressed with Gen Re’s inaction, Buffett publicly shouldered the blame himself. “Why, you might ask, didn’t I recognize the [risks] before September 11?” he asked in that year’s letter to shareholders. “The answer, sadly, is that I did — but I didn’t convert thought into action. I violated the Noah rule: Predicting rain doesn’t count; building arks does.”
More news and notes from the Berkshire Hathaway orbit…
Apple unveiled the iPhone Duo — a foldable phone that opens and closes like a passport — at its “Surprise and Shine” event on Wednesday. In the company’s own framing, this represents the most radical redesign of its flagship product since the original iPhone debuted — and redefined smartphones — nearly two decades ago.
The Duo itself has been engineered to minimize (if not eliminate) any visible crease on the screen when unfolded. And, this being Apple and all, it does not come cheap. The iPhone Duo starts at $1,999 — a full $800 above the new base iPhone 18 Pro.
In his preview of the “Surprise and Shine” event, Mark Gurman of Bloomberg noted that it was no coincidence that John Ternus took over as CEO just days before such a momentous slate of product announcements. Ternus, formerly senior vice president of hardware engineering, led the development of the Duo and other future releases still working their way through Apple’s pipeline — so Tim Cook wanted him to be the one who showed them off to the world. Hence Cook’s September 1 retirement date.
Speaking of Apple, I was honored to be quoted in this Business Insider piece about Tim Cook and Warren Buffett’s similarly active approaches to retirement. We all know the story with Buffett. He still comes into Berkshire Hathaway HQ every day, spearheads major investments like Alphabet/Google, and speaks with CEO Greg Abel regularly. Cook may not remain that hands-on at Apple, but his $47 million pay packet as chairman is not the compensation of a man quietly fading into the background.
I keep coming back to something Buffett said earlier this year: “Somehow, [Cook] gets along with everybody in the world.” The former Apple CEO built relationships across politics, regulatory agencies, and the tech giant’s global supply chain over the past fifteen years — which will undoubtedly prove useful in the future. If I had to guess, he will continue to be a diplomat of sorts for Apple both at home and abroad. Which should allow John Ternus to devote his full attention to creating killer products.
On the latest episode of Fortune’s “Titans and Disruptors” podcast, General Motors CEO Mary Barra credited Warren Buffett with shaping how she leads. “He gave me just phenomenal advice,” she said. “I will be forever grateful for the time he gave me, the leadership wisdom he shared with me, and also the support through some pretty dicey times.” On one memorable occasion, Buffett asked Barra if there was anything she would do differently if GM were a private company, free from the relentless churn of quarterly earnings reports and calls with analysts.
“I stopped and I’m like, ‘No, I don’t think I would,’” she said. “Great!” replied Buffett. “I don’t want you running the company for the quarter. I want you running it for the long term. That’s how you’re really going to create value.”
NetJets plans a new 100,000-plus-square-foot campus at Dallas Love Field airport. According to the Dallas Morning News, the Berkshire-owned private aviation company recently filed paperwork with the Texas Department of Licensing and Regulation for the $35-70 million project, which will unfold in three phases:
Demolition of six existing hangars and a terminal building to clear ground
Construction of a sleek 14,000-square-foot private terminal for NetJets clientele
An 80,000-square-foot aircraft maintenance hangar
If all goes to plan, NetJets aims to have the whole thing done by May 2028.
Chevron CFO Eimear Bonner talked Venezuela at the Barclays Energy-Power Conference this week. The oil major will more than double the number of drilling rigs in the country over the next five years — and, crucially, on unusually friendly terms. Any disputes will go to international arbitration, a not-unimportant detail considering Venezuela’s history of seizing and nationalizing foreign assets.
Chevron’s new acreage also sits right next to its existing operations, so any expansion will not require costly investment in new infrastructure. Once the rig count doubles, the company expects to reach a plateau level of 600,000 to 700,000 barrels per day — and to sustain that level for five to ten years. “This is an enormous resource base,” said Bonner, “[with] a total cost less than $20 a barrel [and] lots of run room.” She summed up the arrangement as a “win-win-win” for Venezuela, Chevron, and the United States.
The most important line here is “I did recognize the risk, but I didn't convert thought into action.” Knowing about a risk and actually managing it are two very different skills.