I spent Saturday at Berkshire-Hathaway’s annual shareholder meeting, listening to Q&A with Charlie Munger and Warren Buffett. Here are a few concepts that stood out to me.

Cooperation and Choosing Battles

Warren was asked why he didn’t vote against the Coca-Cola compensation plan he believes is excessive. He said that they did not want to go to war with Coca-Cola. Going to war is almost never a good idea. Charlie agreed and said voicing your disapproval of everything you disapprove of is not an effective way to operate. “If we all did that nobody would be able to hear each other talk. … You have to pick your spots.”

Interesting coming from some very principled and independent-thinking people. They are not stubborn idealists who insist on their way, they value cooperation in the context of disagreement.

Lawsuit Risk

Warren and Charlie are aware their company possesses some of the deepest pockets in the world, and that attracts lawsuits. They intentionally stay out of businesses (athletic safety gear, airport security) that have a high propensity for getting sued when something goes wrong. High-liability industries are for people with a lot less to lose. I hadn’t heard them express this before.

Reputation

Trust earned from a long track record of consistent action is a precious, and fragile, asset.

Warren Buffett has a big advantage in business deals because his integrity is highly trusted. He is keenly aware of this and afraid of losing it due to any illegal or unethical behavior by his 300,000 employees.

Every minute, we are building or damaging our reputation by the choices we make and the way we treat people.

Patience

When asked about why others are not more successful doing what they do (growing a big investment and business portfolio) they said because it’s slow, and people don’t have the patience. It’s not that it’s rocket science, it’s just slow. Charlie joked that “The downside of it being slow is you’re dead before it’s done.”

Simple Truthfulness

They answered questions with simple truthfulness whether controversial or not. Charlie with fewer words and less tact. Both with simplicity. My sense is their great clarity of thought is a side effect of this practice of simple truthfulness.