Warren Buffett's biographer says he's 'literally not replaceable' as Berkshire Hathaway enters a new era

Berkshire Hathaway CEO Warren Buffett stunned the audience at his annual meeting in Omaha on Saturday when he announced his plan to resign at year's end after a nearly six-decade run as the leader of the trillion-dollar empire.

The legendary billionaire businessman, alongside his late business partner Charlie Munger, spent much of his lifetime building Berkshire Hathaway from a textile manufacturer to the multinational conglomerate and holding company it is today.

Along the way, he developed a reputation for his sage advice, conveyed through his letters to shareholders, interviews, and various speeches, offering insights for being successful not just in business but in life.

Alice Schroeder, a journalist and former managing director at Morgan Stanley, wrote the 2008 bestselling biography of Buffett, "The Snowball: Warren Buffett and the Business of Life," after spending a decade getting to know him and his family. She spoke with Business Insider about the iconic investor's legacy amid news of his planned resignation.

This conversation has been lightly edited for length and clarity.

First things first — what's your initial reaction to the news? How are you feeling?

My initial reaction is: For heaven's sake, he deserves to retire at 94 years old from the day-to-day responsibilities of being a CEO, which are quite considerable. It's amazing that he has kept that role until now. I'm sure he's going to remain involved and will be consulted by those who want his advice — and who wouldn't want his advice? But I think it's a great move on his part, and I hope he enjoys a very well-earned retirement.

Well-earned indeed. Have you been in contact recently? Was this something you knew was on the horizon?

I have not been in contact with him in a few years, not because of any issue, but because he's at an age where he's not chit-chatting on the phone with everybody he knows all the time. But I was not surprised. I knew that he would remain CEO as long as he could, but he would not remain CEO beyond a certain point where he either wasn't enjoying having that responsibility, or for any other reason — I'm not going to speculate about anything related to his health because I don't know enough, but anybody at age 94 has got some things going on. So this day was going to come sooner or later.

What do you think this means for the future of Berkshire Hathaway?

I've been thinking about this since Warren was in his 60s because he's literally not replaceable, and so, of course, Berkshire Hathaway will be different. He has talked about the investment results of his deputies not being as stellar, perhaps, as his earlier record. In addition, Greg Abel obviously has his own style of leadership and management, and it is not Warren's style.

That said, I have never believed Berkshire's decentralized leadership style would survive Warren stepping down as CEO. Warren has been very candid in saying: Don't expect the company's results to be that much better — or necessarily any better — than the market as a whole over the long term after he's gone. Well, the long term has arrived, and now a lot of things are going to change.

I think Berkshire has tremendous advantages. It's got internal diversification, it's got strong, stable businesses. Those will obviously survive. And I think he will achieve the one goal that he told me he had a long time ago, which is that he constructed it to survive and still be a viable, reasonable, successful company for 30 years after he's no longer running it. So I think those who own the stock should not be worried because the business side could be almost put on autopilot, but there's a certain element of magic that is departing now, of course.

Are there any extenuating circumstances you see that could disrupt that stability? Or do you think he's built something steady that is going to survive this moment of economic turmoil and well into the future?

Warren's business career began during the Great Depression when he was a child and has spanned Vietnam, various financial crises, and the pandemic. He has done everything possible to construct a robust business that could survive what I would call normally foreseeable events. Can you think of a black swan that might disrupt the business? Sure, but they'd be very one-off scenarios, and I think you'd have to go many standard deviations away from even extreme outcomes for that to happen.

What about advice for Buffett's likely successor, Greg Abel? Are there any things that you think that Warren might or might not say to him, or things that you would advise him to do as he steps into these shoes?

I think it would be pretty presumptuous for me to give advice that Warren Buffett hasn't given, but with that caveat, his greatest focus for his successor has always been that his successor would allocate capital wisely, not go on a merger spree, overpay for other businesses, start divesting businesses, or repurchase stock at excessive valuations. I believe he has actually hammered that into people's heads, and it's unlikely to happen.

With that said, Berkshire has been, for some time, generating much more capital than it can use. So I think that the possibility of a dividend could be there under someone other than Warren. But I wouldn't expect Berkshire to change its approach to managing risk or asset liability management or anything like that.

Do you think a dividend might be a short-term play to reassure investors after his departure?

I don't think a dividend will be announced in the short term. I think that it will go from being absolutely ruled out to being potentially on the table at some point. But what I think will steady investors is seeing that nothing remarkable happens without Warren in the CEO role, because there is a magic to him and the things that he says, of course, and there will be a reaction to him not being in the day-to-day role. So we'll have to go through a period where he's not in the day-to-day role and see that the businesses actually are robust. You can't predict how investors will react, and I do know that most investors would agree that he's irreplaceable, but we also have known that this was coming for a long time as he's gotten older, so hopefully, people are prepared.

How long do you think it'll take for that confidence to return?

Right now, predicting anything in the market would be foolish. Berkshire would be as affected as any other business by things like tariffs or the fact that the United States has changed its stance on dealing with the rest of the world. So I don't want to predict anything.

Do you think the political environment played a role in his decision to step down in this timeframe?

I mean, he's 94 — it's reasonable for him to step down. I do not want people to think that the political environment is the reason. If it were, he probably would have said so, because he's pretty straightforward about his views on macroeconomics. And if that truly was a major factor, I think he would have identified it.

Looking back at your relationship with him, what lessons did he share with you that you think of now, in light of him taking this step?

I learned almost everything I know about dealing with people, managing people, and negotiating from him, including in my personal life. I credit him with making a major change in my marriage, and I'm now very happily married to my second husband, and that is directly, directly due to Warren Buffett.

I don't think I've ever told this story, but when I got married to my second husband, he had veto power over who I chose. That's how much I trust his judgment about people. I was happy to give him veto power. Thankfully, he liked David.

He is amazing at dealing with people, but there are also the timeless kinds of things that he has hammered home over and over: what makes a good business, how to compare two businesses and know which one is better, how to manage risk personally in your portfolio.

Do you have a favorite Buffett-ism, either personally or something he's shared with the world, that particularly resonates with you?

One thing that he has said to me, in a number of different ways, is that if you are talking to someone, and you say 99 things about them that are positive, and throw in one small criticism, the only thing they'll remember is the criticism — and that's how he manages people. I did not really understand that until I spent so much time with him, but I've seen it since in life, over and over, that you really have to give undiluted praise if you want people to feel it, and if you have something negative to say, tell them privately.

I know you mentioned you haven't been in touch in a while, but have you reached out since you heard the news?

I haven't yet, but I plan to write him a letter. He enjoys receiving mail; he particularly appreciates it, and I know he keeps it. You attract a lot of correspondence if you're as famous as he is, and, of course, some people are unhinged. In fact, that was one of the most important things that he taught me: Being both rich and famous is a terrible curse. You can't trust anybody, you have no privacy, you can't go anywhere without being interrupted, and it really disrupts your life — but if you want to really say 'here's what you've meant to me,' then the best way for Warren is to send a letter.

What else should people know about him?

He's always wanted his legacy to be as a teacher. I think his shareholder letters, all the amazing quotes and stories that are in my book, or things other people have written about him, those are his body of work, and his teachings will have an enduring value. He initially started out wanting to teach investors, but he increasingly branched into the personal, how to live your life — you don't want to wind up being somebody that, if you had a heart attack while you were giving a speech and fell off the stage, nobody would call 911, and he told me about people he knew that were in that situation. So I think he shared lots of lessons like that in terms of deciding what's important. If you really look at it, he's spent almost his whole life teaching people, so I think that will be his greatest legacy.