Warren Buffett, Philip Green and a tale of two billionaires
One is probably not as angelic as portrayed; the other likely not as diabolical, writes Andrew Hill
Sir Philip Green and Warren Buffett — the permanently tanned, ostentatious rag-trade entrepreneur and the soft-spoken, frugal Sage of Omaha — could not be more different.
Yet they share a fierce desire to protect their reputations and bear the scars of having held on to certain investments for too long.
When Mr Buffett took control of Berkshire Hathaway in 1965 it was an ailing owner of textile mills in New Bedford, Massachusetts. Now, it is best known as a highly successful listed holding company. For two decades, though, the declining mills were a thorn in his side that he refused to excise.
Sir Philip’s purchase and turnround of BHS in 2000 confirmed his talent as an entrepreneur and owner, but as he told me and my colleague Andrea Felsted last year, a few months after finally offloading the BHS stores to a consortium of little-known buyers for £1: “I wish I’d have sold it a long, long time back . . . I should have sold it, but didn’t.”
Reputational risk motivated both investors. Sir Philip’s words may ring hollow for BHS’s 11,000 staff now it is tumbling into administration, but he told us he had been reluctant to cut his longstanding ties to the business: “At the end of the day, I’ve got people here who have been with me from the beginning . . . I don’t want to just close the door. You do your best to ensure that the people there are OK.”
Mr Buffett, who had been appalled by the adverse reaction when he quit an earlier investment in a Nebraska windmill manufacturer, was afraid of the local backlash that might occur if he closed Berkshire down with the loss of jobs. Justifying his continued ownership of the textile mills to his partners in 1969, he wrote: “I have no desire to trade severe human dislocations for a few percentage points [of] additional return per annum.”
Nevertheless, in 1985, he finally had to close the last remnants of the original Berkshire, granting the 400 workers he laid off only “a couple of months’ extra pay”, according to The Snowball, Alice Schroeder’s biography. Spending 20 years trying to revive the business was one of his biggest mistakes, he admitted in 2001, even though by the time he sold it, it was, in Ms Schroeder’s words, “a flyspeck” on the holding company.
Since those early days, Mr Buffett’s fear of public opprobrium has led him on the whole, to choose discretion over publicity, and to promote an avuncular niceness. The policy has turned him into an acceptable face of capitalism.
Sir Philip’s well-publicised tabloid lifestyle and belligerent relationship with the press have instead made him a high-profile hate figure. Mr Buffett is probably not as angelic as he is portrayed; Sir Philip is probably not as diabolical. But there are lessons there for would-be billionaires everywhere.