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What Musk and Schmidt can learn from Buffett’s ‘Woodstock for capitalists’

JOHANNESBURG — Berkshire Hathaway’s annual shareholder meetings have become the stuff of legends as the hours-long spectacle includes the ‘Oracle of Omaha’, Warren Buffett, taking questions at the event. In comparison, many other companies have a lot to learn, writes Barry Wood. One would think that ‘disruptors’ such as Google and Tesla would put on incredible shareholder meetings, but, in fact, they have quite tame affairs. Also, participation in those meetings is seemingly low when compared to Buffet’s extravaganza. – Gareth van Zyl

By Barry Wood*

MOUNTAIN VIEW, California — These two Silicon Valley companies make investors swoon, but their top executives could learn a few lessons from Warren Buffett on how to put on a shareholder meeting that wows and engages their fans.

Telsa’s June 6 shareholder meeting and the Alphabet version the next day each attracted fewer than 400 people. Tesla’s gathering at the Computer History Museum was over in 60 minutes. Alphabet’s, held in a Googleplex auditorium, finished in 95 minutes.

Warren Buffett laughs while playing cards on the sidelines the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska, U.S., on Sunday, May 1, 2016. Photographer: Daniel Acker/Bloomberg

By contrast, the Berkshire Hathaway gathering on May 6, dubbed “Woodstock for capitalists,” drew 35,000 to Omaha and was an all-day affair in the city’s main sports arena.

It must be conceded that Berkshire’s long-running Warren Buffett/Charlie Munger show is unlike any of the meetings that publicly traded companies must convene annually to comply with securities law. And neither Tesla nor Alphabet have as long a history.

But Berkshire shouldn’t have a monopoly on excitement. Both Alphabet and Tesla have tremendous potential to turn their shareholder meetings into learning experiences for young people.

Beyond requirements that only registered shareholders can vote, companies can develop their own procedures. Unlike many others, Berkshire welcomes the press. Berkshire, Tesla and Google all provide real-time video of the event.

Read also: Dream Big – Author Cris Correa inspirational book on Buffett’s pals, Brazil’s 3G Capital

But the trio aren’t alike in how they interact with shareholders. Buffett and Munger spent six hours answering shareholders’ questions. Eric Schmidt, Alphabet’s executive chairman, answered all questions put to him by those in the auditorium during the far-briefer meeting

In Omaha, eager shareholders arrive early and rush for the best seats when the doors open.

It was more sedate at Tesla and Alphabet — no rush, plenty of spare seats.

At Tesla, Musk is a rock star, just like Buffett is with his investors. When he walked onstage, dressed in jeans, collared shirt and blazer, enthusiasts jumped to their feet in sustained applause. The crowd was a mix of young and old. Dozens of Tesla cars were outside. Like at Berkshire’s giant gathering, it was an audience of true believers, and a palpable buzz enveloped the small auditorium.

Lawyer Renee Becker and her 19-year-old son Christian Rayfield were typical attendees. They had traveled from Las Vegas and Los Angeles. Christian is studying engineering and pushing his mom to purchase a Tesla. They had hoped to ask a question but didn’t get the chance.

Renee Becker and son Christian Rayfield outside the Tesla shareholder meeting. (Photo Barry Wood)

Three steelworkers from Oakland, Calif., and local union president Mike Miller also came, hoping to ask Musk questions about wages at the retooled Tesla solar roof tile factory in Buffalo, N.Y. Only two were admitted. The men only learned when they arrived that they were supposed to tweet questions in advance to even have a chance at a response, and their tweets from inside the meeting were ignored.

A trio of steelworkers from Oakland, Calif., who own Tesla shares through their union. (Photo: Barry Wood)

By contrast, the scene at Google parent Alphabet was circumspect. There were no cheers for the 61-year-old Schmidt, who was dressed in a suit and tie. The small audience was older, a sharp contrast to the hundreds of youthful Googlers going about their business outside. The attendees appeared content with the windfall earnings they’ve reaped from a company that in only 18 years had become a powerful global brand.

Both Musk and Schmidt delivered exciting, future-oriented presentations. Schmidt emphasized artificial intelligence and the new organizational structure of strong, independent subsidiaries he said was inspired by Warren Buffett. Whether the product is Google, YouTube, or Waymo (the company’s self-driving car project), Alphabet is “helping people live their lives, making lives more powerful,” he said.

In his remarks, Musk said Tesla, which is on track to deliver its first affordable Model 3 next month, will unveil a semi-truck in September. It also will build a new plant to produce its next car model because Tesla’s sole assembly plant in Fremont, Calif., has reached full capacity.

Read also: Buffett hunting another elephant – with $100bn available, who’s the target?

By combining solar shingles, a power wall in the garage, and an electric car, “Tesla is building an integrated future and providing a solution to the energy equation,” Musk said.

So, if the Berkshire meeting was an academic seminar for those seeking lessons on how to be better investors and emulate Buffett and Munger, the Tesla and Alphabet gatherings were company-specific looks into the future.

There was one additional difference. In Omaha, Uncle Warren makes shareholders pay for everything, including Dairy Queen treats in the exhibition hall. At Alphabet, shareholders got access to one of those trademark cafeterias where the food was plentiful and free.

  • Barry Wood is an acclaimed and respected American broadcaster and writer who started his career at the Financial Mail in the 1970s under George Palmer, Follow him on Twitter @econbarry or read more of his work at www.econbarry.com
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