Why NetJets has cost Berkshire hundreds of millions of dollars · Transcript

WarrenThe biggest mistake made with net jets is essentially we kept, we were buying planes at prices that were fictitious in terms of the price at which we would later be able to sell them. And there's a certain time lapse involved in buying fractional shares. There's a lot of explanations for it, but in the end we didn't properly prepare for what was obviously happening. And we lost a lot of money. a good bit of which was attributable to the right down of planes, which you could call as our inventory, where we bought them at X and we couldn't sell them at X or 90% of X. Some of those were new planes that we should not have taken on, and many of them were planes coming back from owners. We also let our operating costs get out of line with recurring revenues. But, you know, I made plenty of mistakes. I stayed in the textile business for two. 20 years. And when it was, I knew it was a lousy business. Charlie was telling me it was a lousy business in the first year, the second year. And 20 years later, I woke up. I was like Van Winkle. I mean, it was kind of depressing when you think about it. But we, the one thing we will guarantee, we'll make some mistakes. It was a big mistake at Nets. $711 million is the figure. If we buy 30 big businesses and generally let the people who run them successfully and before run them with very little interference from headquarters. And it works out 95% of the time very well. And we have one episode when the basic franchise was protected, but we lost profit opportunities for a while. It's not a big failure record, nor does it indicate that we should stop being pretty easy with the remarkable people who join us with their companies. No, it is not going to change our management approach at all. I think that we have gotten performance overall from managers that are beyond the dreams I would have had when I was first putting this company together. So it's been a, it's, uh, we let managers do their stuff.