4/11/22, 7:22 AMWarren Buffett’s Protégé Is Building a Mini Berkshire – WSJ
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Tracy Britt Cool spent a decade working for Warren Buffett. She nowwants to buy the kinds of companies that might have interested thefamed investor 30 or 40 years ago.
Those are businesses typically run by founders or family owners thathave solid performance and competitive “moats”—a favorite term ofMr. Buffett’s—yet aren’t big enough to draw Berkshire Hathaway Inc.’s
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BUSINESS | MANAGEMENT | MANAGEMENT & CAREERS
Warren Buffett’s Protégé Is Building a MiniBerkshireLike her mentor, Tracy Britt Cool looks for founder-run companies with ‘moats,’ but she doesn’t share
his hands-o!-approach
Tracy Britt Cool co-founded an investment firm, Kanbrick, that aims to buyone or two businesses a year and hold them for the long term.PHOTO: KANBRICK
By Chip Cutter Follow
Updated April 9, 2022 12:32 pm ET
4/11/22, 7:22 AMWarren Buffett’s Protégé Is Building a Mini Berkshire – WSJ
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attention today.
“Berkshire needs multibillion-dollar acquisitions to move the needle,”Ms. Cool says. “So many of the people who contact us or reach outwould want to sell to Berkshire, but they’re just too small.”
Ms. Cool launched an investment firm with a former colleague in 2020,called Kanbrick, that aims to focus on such companies. It has so faracquired Thirty-One Gifts, a Columbus, Ohio, company that sells totebags, backpacks and other items through independent consultants.Kanbrick is working on investments with a home-services company andconsumer brands.
Picking the right spots takes time. Before buying a business, Ms. Coolsaid she and her team will typically sit down with founders and aim tounderstand not only the fundamentals of the business, but the peopleworking there and the strategy, hoping to answer: “What might be thechallenge here, what might be the opportunity?” she said.
To get to know founders, Kanbrick also runs a three-month program formidsize companies that provides coaching and other support; so far,Ms. Cool and her colleagues have worked with 15 companies, includinga large Arizona farm that sells cantaloupe and honeydew melons to big-box retailers.
The 37-year-old Ms. Coolgrew up on a family farm inKansas that shippedproduce across theMidwest. She attendedHarvard Business Schooland joined Berkshire in2009 at age 25, initiallyworking as Mr. Buffett’sfinancial assistant.
She later became chief executive of a cookware company owned byBerkshire, Pampered Chef, and along the way took on assignmentswithin Berkshire helping struggling companies. She served as thechairman of Berkshire companies such as Benjamin Moore & Co. andJohns Manville, and sat on the board of Kraft Heinz Co. and others.
In an interview in 2019, Mr. Buffett called Ms. Cool “the fireman,”capable of helping to revive companies and of taking on any
4/11/22, 7:22 AMWarren Buffett’s Protégé Is Building a Mini Berkshire – WSJ
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assignment.
Ms. Cool recently spoke with The Wall Street Journal from her homeoffice in Nashville, Tenn. Here are edited excerpts:
WSJ: What was it that made you say there’s a need for this model?
Ms. Cool: Over the years, I’ve talked to a lot of founders and owners,some of whom would come to Berkshire and want to sell theircompanies; other people I met through organizations. What I found isthat most midsize companies struggle with the same things: how tohire the right people, how to develop them, how to incentivize them,how to help them to grow, how to build a strategy. So what we did is webuilt a business system to help in those areas, and that really allowed usto create value with companies.
A lot of families and founders don’t want to sell to traditional privateequity. They don’t want to see their business bought and sold orchopped up or their employees fired. We could provide them a longer-term home, and help them build in the right way.
WSJ: What sorts of companies are you focusing on?
Ms. Cool: We want businesses that are going to be around andsuccessful and strong, and have some sort of moat allowing them tohave above-average returns on capital. Smaller businesses that are $10[million] to $50 million in [earnings before interest and taxes] are sortof our sweet spot in size. They’re beyond the new-growth phase, butthey’re not quite very large businesses.
They tend to be family businesses, founder-owned businesses. We have
Ms. Cool, who spent a decade at Berkshire Hathaway, at the conglomerate’s2014 shareholder meeting in Omaha, Neb.PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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a lot of conversations with families, founders who want a partner, whowant a longer-term home, but don’t really think that maybe a strategicor private-equity firm is the right fit for them.
WSJ: How does your approach differ from private equity?
Ms. Cool: One is just how long we hold companies. Most private-equityfirms own businesses for three or four years. If you’re going to own acompany three or four years, the minute you buy it, you’re thinkingabout selling it, and every decision you’re making is focused on: Whatam I going to do to sell this business? A lot of investments you make inbusinesses don’t pay off in three to four years, and so I think having thatlonger-term horizon is super valuable.
Most people in private equity typically [have] financial backgrounds.Both my partner and I started our careers as investors but thought itwas very important to go get operating experience.
I became the CEO of Pampered Chef, he became the CFO, really withthat goal of: How do we actually become better at what we do? And Ithink having that operating experience helps us make better decisions,understand what’s possible in a business, what’s needed. And then wecan relate with a founder or owner or CEO because we’ve been in theirshoes and we know businesses aren’t run on spreadsheets andPowerPoints, right?
WSJ: So how do you pick your spots—and what industries are youavoiding?
Ms. Cool: There are someplaces that we don’t play. Wedon’t play in real estate. Wedon’t play in financials. Wedon’t play in biotech. There’sjust spaces where we don’thave the expertise, theinsight, and we’re not going tobe better than someone else.Then there’s other industrieswhere you’ve had a lot moreexperience and things areinteresting. And so thosebroad industries are
consumer, industrial, business services, but within those there’s
‘A lot of families andfounders don’t want tosell to traditionalprivate equity. Theydon’t want to see theirbusiness bought andsold or chopped up ortheir employees fired.’— Tracy Britt Cool, co-founder of Kanbrick
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hundreds of subsectors.
So we spend time looking at a lot of different ones and really saying: Dowe think that this is a really great business? Do we think that it’s goingto continue for 10, 15, 20 years and not be disrupted by someone else orby technology? And then, third, is it a space where we can add somevaluable insights or perspective?
WSJ: You’re focusing on midsize companies. How do the challengesthese companies face differ from what larger companies areexperiencing?
Ms. Cool: People and culture is always—in my view—the number oneissue that any company has.
How do we attract really great talent to my company? Perhaps I ambased in a rural part of Minnesota or Missouri or something like that.How do I help people understand why they want to join my businessthat they’ve never heard of? Everyone’s heard of P&G, Coca-Cola.People haven’t heard of most midsize companies. Then, once I havethem in the organization, how do I develop them? Because it’s not likeI’ve got, you know, hundreds of thousands of jobs; I’ve got probably acouple hundred jobs. And so I need to get the right people, but showthem a career path.
WSJ: What’s the long-term plan for Kanbrick? Do you want to gopublic?
Ms. Cool: We don’t have a specific outcome in terms of what we want toachieve via go public or otherwise. It really is: How do we build it in theright way? And then how do we add value to the companies, to ourteam, to our investors, and help support everyone in doing that?
WSJ: How have you funded Kanbrick?
Ms. Cool: It’s a combination of our capital, and then we have a selectgroup of investors, endowments and family offices that are partners.
WSJ: It appears there are a lot of similarities between Kanbrick andBerkshire—a long-term focus, moats, you even wrote an annual letterlast year like Mr. Buffett. How does it differ?
Ms. Cool: Berkshire is very successful, so being similar to Berkshire is agood thing by and large, in my mind. I’d say we differ on twodimensions. The biggest is size. We can focus on much smallerbusinesses that are just too small for Berkshire. That’s where I think the
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biggest opportunity is and why ultimately I left to start Kanbrick. Thesecond differentiator is we’re more hands on. Berkshire famously isvery hands off.
WSJ: Did Mr. Buffett give any advice that sticks with you as you’rebuilding this firm?
Ms. Cool: It’s hard to distill it down because there’s so many lessonsfrom my time at Berkshire and working closely with Warren over 10years. I think just the power of long term, the power of finding high-quality businesses and the power of partnering with high-qualitypeople. When those three things are done in the right way, you canbuild something really amazing.
Write to Chip Cutter at chip.cutter@wsj.com
Appeared in the April 11, 2022, print edition as 'Buffett Protégé Builds a Mini Berkshire.'
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