Audley’s Unconventionally Wise Person of the Year 2023
At Audley, we draw on our principle of ‘Unconventional Wisdom’ to find solutions to the challenges facing our clients. This award recognises a leader who over the past year thought or acted in a unique way to achieve their goals.
At Audley, we have a soft spot for the loyal aides, confidants, and fixers who operate outside the spotlight. Those who enable great leaders to succeed.
That is why this year our Unconventionally Wise Person of the Year is Charlie Munger. The Vice Chairman of Berkshire Hathaway and Warren Buffet’s right-hand man who passed away a month ago aged 99.
A lawyer by trade, but not satisfied by the income the profession promised, Munger began investing. With a gift for mathematics (he often repeated Galileo’s maxim that maths was ‘the language of god’), Munger had already made his first million in investments before he met Buffet aged 35.
When they did meet it was an instant melding of minds, prompting his wife to question Munger’s sudden interest in Buffet and daily calls to discuss investment ideas. With an ability to recognise the talent before him, he said, “You don’t understand. That is no ordinary human being”, and so one of the most enduring and successful collaborations in the business world began.
Once a textile company turned investment company, together they built Berkshire Hathaway into a powerhouse with a stock market valuation of $785bn (£618bn). While Buffet was always the frontman, with Munger known for repeating ‘I have nothing to add’, after his lengthy speeches at shareholder meetings, he was the mastermind that crafted Berkshire’s investment blueprint. As Buffet once quipped, ‘Charlie does the talking, I just move my lips’.
In the past Buffet had made his name buying failing companies at bargain prices – known as ‘cigarette butts’, but Munger moved him away from this. He championed an approach marked by investing in strong brands and companies that had promise in the long term and required minimal reinvestment. For Munger, it was all about finding ‘wonderful businesses’.
Despite the world’s attention increasingly moving to riskier investments and cryptocurrency, Munger did not budge on this philosophy and his common-sense approach to investing. He was cautious, making a concerted effort to ‘avoid all standard ways of failing’ and was skeptical of Wall Street hypes like AI and cryptocurrency. He described the latter as ‘stupid gambling’ and akin to ‘rat poison’.
Beyond his eye for financial opportunity, less is spoken about Munger and Buffet’s unconventional approach to corporate culture. Munger described the importance of having a “seamless web of deserved trust” that did away with needless compliance checks and processes. As a result, the culture of Berkshire Hathaway is one of extreme decentralization and autonomy, allowing Buffet and Warren enough time to sit around think, read, and prepare. The company’s 400bn worth of assets is managed by a lean team of 28 decision-makers in head office, and there are no corporate-wide central functions.
Munger’s wisdom was also matched by the conscience he brought to Buffet’s business, and many consider him a modern-day capitalist philosopher. While embracing the market forces of capitalism, he had an enduring sense of moral duty and urged business owners to take the long view, focusing on sustainable growth and value creation over quick profits. He was openly critical of investment bankers, who he blamed for the 2008 crash, and after a series of banking failures in the US this year he called CEOs and directors to be punished for their ‘messed-up incentives.’
During his lifetime, Munger gave away at least $550 million to charity. His big public gifts primarily went to higher education, and he directed many of those donations toward student housing and other building projects.
With his sharp wit, the wisdom that he spread far and wide, and the impact he had on Berkshire Hathaway and the business world at large, most people would be eager to step into the top role, but not Charlie Munger. No one has ever played second fiddle better and that is why he is our Unconventionally Wise Person of the Year.
By Lucy Thompson, Senior Associate at Audley.