Pete Liegl may not be a household name, but he has touched Warren Buffett’s Berkshire Hathaway in a way that almost no one has. In his annual letter to shareholders, Buffett peered behind the curtain of the man who helped inject billions into the company, calling Pete Liegl “uniquely special” and pointing to his near-clairvoyant business smarts as the engine of Berkshire’s phenomenal growth.
When Buffett first heard of Pete Liegl in 2005, he was the head of Forest River, one of America’s leading recreational vehicle (RV) manufacturers, who wanted to sell the company to Berkshire Hathaway. A man of few words, Liegl presented the price of Forest River without a preliminary discussion. Buffett, who has always preferred direct and clear language, fell in love with this approach. “I liked this no-nonsense approach,” Buffett recalled.
It remains unknown when exactly the two began to work together more closely after Buffett also purchased real estate from Pete Liegl, not only that, but he did so based on the valuation that Liegl gave the property without so much as a second thought. When it comes to Liegl’s compensation, the discussion was just as clear-cut. “Whatever he said, I would accept,” Buffett noted. This is a rare demonstration of humility and integrity, and Liegl asked for a very modest $100,000 per year salary, he didn’t want to overtake his boss’s salary. However, he suggested a contingent incentive, a bonus of 10% of all the profits realized beyond the company’s usual earnings.
This is a rather basic, yet very successful model of the agreement. During the last 19 years, Pete Liegl always exceeded all the expectations. “He shot the lights out. No competitor came close to his performance,” Buffett declared. Chaired by Liegl, Forest River broke into the market and propelled Berkshire Hathaway’s results to new heights.
Buffett also focused on the fact that Pete Liegl has a great tendency to develop effective business solutions. “There are not many owners or managers like Pete, and every company does not have a simple business,” he said. He argued that a big part of Liegl’s ability was inborn, which means that sometimes nature does override nurture. He never learned to humanize companies; he just knew how to build businesses, and his intuition was spot on every single time.
Pete Liegl not only created Forest River RV as one of the biggest companies in the industry but also showed how a business should be run according to the highest ethical standards. This is a great example of how hard work, honesty, and natural ability can help to create a great legacy in a company. As for the latter, Buffett said, “Peter Liegl was a natural” – a natural, he contributed immensely to the success of Berkshire Hathaway.
