Every week I meet people who are too scared to make their writing simple.
They say: “It’s all very well for you, but I have to sound professional. We don’t talk like that in my business.”
For a long time I’d try to convince them otherwise. But now I’ve given up. Instead, I introduce them to Warren Buffett.
Next month, Buffett will write his annual update to Berkshire Hathaway shareholders. Every year, this letter is gospel to investors. It’s picked apart on CNBC and makes headlines in the Wall Street Journal.
But it’s also a masterclass in communication. You know why? Because it’s the annual report of a $340 billion organisation and it’s written in a way a 9 year-old can understand.
Warren Buffett writes in plain English. Is he ‘professional’ enough for you?
Because I think the world would be a better place if more people wrote like Warren Buffett, I studied 50 years of his writing. I was able to identify 12 writing techniques he uses to keep people engaged – all without ‘dumbing down’ a single idea.
Here they are:
Secret #1: Be Humble
They say if you don’t blow your own trumpet, there is no music. Yet throughout Buffett’s writing you get a strong sense of humility:
We continue to look for ways to expand our insurance operation. But your reaction to this intent should not be unrestrained joy. Some of our expansion efforts—largely initiated by your Chairman have been lackluster, others have been expensive failures.
The overall effect is one of strength, not weakness. Honest self appraisals communicate a strong sense of confidence.
Secret #2: Don’t Take Things Too Seriously
Warren Buffett is worth $80 billion. And yet he’s curated this image of himself as some hayseed from the heart of the Midwest.
Here’s an introduction to a paragraph of accounting rules:
“You can live a full and rewarding life without ever thinking about Goodwill and its amortization.”
A note on long term inflationary trends signs off with:
Despite the overriding importance of inflation in the investment equation, we will not punish you further with another full recital of our views; inflation itself will be punishment enough. (Copies of previous discussions are available for masochists.)
He loves the subject matter, but he loves poking fun at it. What a great way to communicate confidence.
Secret #3: Get Emotional
Most people use distanced language to communicate bad news: sales were soft, the deal lapsed, figures came in below expectations.
Something else happening to somebody else. Not Buffett: he’s always ready to get real:
Intense competition in the reinsurance business has produced major lossesfor practically every company operating in the area. We have been no exception. Our underwriting loss was something over 12% — a horrendous figure, but probably little different from the average of the industry.
Frank DeNardo came with us in the spring of 1978 to straighten out National Indemnity’s California Worker’s Compensation business which, up to that point, had been a disaster.
(NB: Emphasis added.)
All this communicates honesty of course, but it also shows he’s in control. You get a strong sense that he’s spotted the alligator AND he’s already draining the swamp.
Secret #4: Follow Fact with Metaphor
This is a subtle one – but incredibly powerful.
Metaphor is a magic wand in financial communication, bringing corporate manoeuvring to life. But they come at a price: metaphors can ‘dumb down’ your communication and alienate intelligent readers.
Buffett has a solution: he never uses metaphor to replace the underlying financial story, only to illuminate it.
He follows fact with metaphor.
Let me show you. Here, he’s talking about Berkshire Hathaway’s experience with bonds:
However, the mild degree of caution that we exercised was an improper response to the world unfolding about us. You do not adequately protect yourself by being half awake while others are sleeping.
(NB: Emphasis added.)
I’m not saying it’s the metaphor of the century, but it’s a welcome visual. A little goes a long way.
Here’s a couple more. Again, emphasis is added:
During 1981 we came quite close to a major purchase involving both a business and a manager we liked very much. However, the price finally demanded, considering alternative uses for the funds involved, would have left our owners worse off than before the purchase. The empire would have been larger, but the citizenry would have been poorer.
“We have no ability to forecast interest rates and—maintaining our usual open-minded spirit—believe that no one else can. Therefore, we simply borrow when conditions seem non-oppressive and hope that we will later find intelligent expansion or acquisition opportunities, which—as we have said—are most likely to pop up when conditions in the debt market are clearly oppressive. Our basic principle is that if you want to shoot rare, fast-moving elephants, you should always carry a loaded gun.
You see this throughout Buffett’s writing: fact followed by metaphor.
I wish Buffett would get wider credit for this. I think it’s a beautiful technique for really ’pinning a rose on the nose’ of a careful explanation.
Secret #4: Praise your Team
Buffett might be self-critical, but he never knocks his management team. In fact, he goes out of his way to praise his star-talent in each annual letter. He paints himself as a cheerleader rather than a leader, applauding their performance:
It is commonplace, in corporate annual reports, to stress the difference that people make. Sometimes this is true and sometimes it isn’t. But there is no question that the nature of the insurance business magnifies the effect which individual managers have on company performance. We are very fortunate to have the group of managers that are associated with us
Praise of others is very difficult to overdo.
Bonus Fact: Buffett’s writing gets EASIER as he get older
I couldn’t let this pass without running a statistical study of Warren Buffett’s writing.
So I threw over 30 years of his annual letters (about 400,000 words) into a readability calculator. Here’s what I found: over the years, Buffett’s writing gets steadily easier to read.
- The Grade Level falls from 11.7 to 7.8.
- The Reading Ease score rises from 42.1 in 1977 to 62.9 in 2013.
- Syllables per word drops slowly but surely from 1.7 to 1.5.
I think you can see a virtuous cycle here: as Buffett grows richer and becomes more feted, his confidence grows and people come to expect this down to earth writing style.