Warren Buffett on Business: Principles from the Sage of Omaha

4.1. "How Do You Know When You're Dealing with an Honest Person?"

Well, it's a great question, and I would say this. If you—if we get 100 possible sellers to us of businesses, I don't think I can make a correct judgment on all of the 100. But I only have to be right on the ones I make an affirmative judgment on. So I think I can be right a high percentage of time on the six or eight that I might pick out from there, and I think I can sort of pick out the obvious thieves, you know, of the six and eight. But in between, I think, I can't grade everybody in that 100. And—but we have had—I mean, when we bought the Furniture Mart from the Blumkin family, I'd seen them operate for 20 or 30 years. I knew them personally. There wasn't any doubt in my mind whatsoever that they would work harder and more—you know, for me than they had when they owned it all themselves. And we've had good luck in that. But, we've not batted 100 percent. Every now and then I make a mistake.^[]

Charlie and I know that the right players will make almost any team manager look good. We subscribe to the philosophy of Ogilvy & Mather's founding genius, David Ogilvy: "If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants."^[]

Charlie and I try to behave with our managers just as we attempt to behave with Berkshire shareholders, treating both groups as we would wish to be treated, if ...