Billionaire Warren Buffet’s MBA talk at the University of Florida should be required viewing for every business owner, manager and aspiring entrepreneur.
The lecture (which you can find by googling Warren Buffet MBA talk) includes a number of highly effective insights into staying ahead of the pack. I would like to share some of them with you.
Where is Kodak nowadays? When I grew up, Kodak was the only film we would buy; the others were almost traif (non-kosher). If the store was out of Kodak, we looked elsewhere; we never considered Fuji or AGFA as alternatives.
Buffet explains that Kodak was the brand of film. If you were shooting an important experience, be it wedding, vacation or child’s birthday, you wouldn’t entrust the memories of that occasion to just any film; Kodak was the safe choice when you needed to know your pictures would come out just the way you wanted them.
This changed when Fuji became the official film of the Olympics. People reasoned, “If Fuji’s good enough for the Olympics, it’s good enough for me, too!” To quote Warren: “You want a business with a big castle and a moat around it, and you want that moat to widen over time. Coke and Kodak both had marvelous moats, 20 or 25 years ago. Kodak’s has narrowed, while Coke has been building its moat. We want an economic castle.”
Make it a gift Another of Buffet’s investments is See’s candy. (That’s the place where Lucille Ball trained for her famous chocolate-factory episode.) Warren suggests getting your brand into the “gift market” because people don’t give second-class gifts.
If you price your new whiskey brand at 5 percent less than the leading brand, you’ll have a hard time gaining customers. “The higher-priced one is both better known and more expensive,” reasons the customer. “Why get something inferior just to save a few dollars?” This is especially true when the product will be a gift; no one wants to be seen as second class. The new whiskey would actually market itself more successfully in Grey Goose style: as a premium brand with a matching package that helps the potential buyer overcome much of his hesitancy. “Even though I’ve never had it before, it looks elegant and costs just a bit more than the brand I was planning to buy. It makes an impressive-looking gift that my host would enjoy. I’ll give it a try,” the thinking goes.
Cola memory Buffet also talks about “cola memory” and how people can keep drinking it, every single day. Contrast this with See’s candy, where a new hire might eat 50 pieces of candy on his first day on the job, but will get sick of that pretty quickly as his sweet tooth decays. In other words, how much candy does a normal person eat in a week, compared with how many times will someone buy himself a Coke? So while Buffet owns See’s and has a stake in Coke, it’s important to look at how often and in what quantities a product can be sold repeatedly to one individual.
What is important to a buyer? Consumer Reports tests cars by a variety of gauges that can make or break a sale. Some of these criteria (Where is the handle that moves the seat backward? On which side is the gas-tank door located?) may not be on your list of things to look out for when you buy a car, but once they are brought to your attention, you realize how important they are to you (“When my wife is filling up late at night, I don’t want her to have to walk around the car.”). The type of car you are interested in will then adjust, based on criteria you had not considered moments earlier.
When offering a product or service, ask: What do I offer that is unique? How do I protect that moat? What can I do, if anything, to keep my clients from tiring of my product or service? What points might I be unaware of that are affecting consumer decisions? I highly recommend the Buffet MBA speech to you – and your teenagers.
firstname.lastname@example.org Issamar Ginzberg is a business adviser, marketer, professional speaker and rabbi who has been published in more than 50 business publications.