A Warren Buffett protegee strikes out on her own

OMAHA (NYTIMES) - Ms Tracy Britt Cool always knew she wanted to work in business. So, not unlike the star of a high school musical asking Steven Spielberg for a part, she figured she should start at the top.

At 24, fresh out of business school with barely any formal work experience, Ms Britt Cool mailed a letter to Mr Warren Buffett asking the "Oracle of Omaha" if she could work for him.

Soon, his office address became hers, too. Ms Britt Cool joined Mr Buffett's conglomerate, Berkshire Hathaway, in fall 2009 as financial assistant to the chair - a title that Mr Buffett, CEO and chair of Berkshire, made up.

She became one of his top lieutenants, along with Berkshire investment managers Todd Combs and Ted Weschler - Mr Buffett called them "the three T's" - and one of the company's few senior female executives.

In early 2020, not long after people began to include Ms Britt Cool on a short list of potential successors to Mr Buffett, she left. The move surprised many because Berkshire executives rarely leave.

Now, Ms Britt Cool, 37, is parlaying her nearly unparalleled access to the mind and methods of one of the world's most renowned investors to build her own investment firm, Kanbrick.

In doing so, she is perhaps the most direct inheritor of a style of investing that Mr Buffett perfected over many decades and distilled into pithy principles. Among them: Find companies that have "moats", or defensible business models. Don't go outside your "circle of competence", meaning businesses you don't understand. And always buy stocks that have a "margin of safety" between what you're paying for the asset and its intrinsic value.

Ms Britt Cool is not shy about highlighting her Berkshire experience, although she said her challenge was to acknowledge that pedigree without leaning too obviously on the Buffett connection. But she is clear about what she is not doing.

"I'm not building a Berkshire 2.0," she said. "I'm building something different using some of the principles."

She is also quick to establish that Kanbrick is not a traditional private equity firm that buys companies only to sell them a few years later, usually after stripping out costs.

Neither is Kanbrick championing cryptocurrencies or risky startups in ways that promise to remake the investing world.

Similar to Berkshire, the firm wants to buy old-school businesses that are easy to understand and hold them for the long term.

Ms Britt Cool founded Kanbrick in 2020 with Mr Brian Humphrey, a former executive at one of Berkshire's companies. Its name is a portmanteau of "Kansas", where both founders are from, and "brick", a nod to their notion that great businesses are built brick by brick.

"I don't ever want Warren to feel we're trying to ride on Warren's coattails," Ms Britt Cool said at the offices of Kanbrick in Bucktown, a trendy Chicago neighbourhood dotted with boutique hotels and hip cafes serving US$6 (S$8.40) oat lattes.

The firm employs seven people, but three were working remotely that day.

The vibe felt very much like what it was: a startup.

Kanbrick has done only two deals so far, which Ms Britt Cool said was the right pace for the firm. The universe of potential acquisition targets, though, is large.

Mr Humphrey said roughly 30,000 businesses in the United States - many of them owned by their founders or families - had annual operating profits of US$10 million to US$50 million. Those companies may have appealed to Mr Buffett in the 1980s, when Berkshire was far smaller, but wouldn't interest the US$600 billion colossus it is today.

Ms Britt Cool won't divulge how much capital the firm has to invest, but the pool contains funds from her, Mr Humphrey and a group of investors. She declined to say if Mr Buffett had invested.

Mr Buffett declined to comment on Ms Britt Cool. His assistant, Ms Debbie Bosanek, said the investor, who is 91, was turning down most interview requests.

In the past, Mr Buffett showered his protegee with praise.

"She thinks like I would," he told his hometown paper, The Omaha World-Herald in Nebraska, in 2014.

Ms Britt Cool wasn't a complete stranger when she asked Mr Buffett in 2009 if she could spend a summer working for him. She had met him three times while a student, including on trips arranged by Smart Woman Securities, an investing group for women she had founded at Harvard.

When he called her in response to the note to say she should look him up if she found herself in Omaha, Ms Britt Cool didn't hesitate.

"What do you take to a meeting with a billionaire?" Ms Britt Cool wondered as she prepared to stop by Mr Buffett's office.

In the end, she decided on some corn and tomatoes from the farm as a nod to their shared Midwestern roots.

Ms Britt Cool stood out at Berkshire's quiet, modestly furnished headquarters in midtown Omaha, where only a handful of - mostly male - executives sat.

As a blond, blue-eyed woman of 25, she worried about how she might come across. Her solution was to always be put together, wearing a suit when the occasion called for it, and "do the work, come prepared, read up".

"The culture at Berkshire is very difficult for young people," said Mr Robert Miles, who has written several books about the firm.

"It's not a culture of coddling you or training you," he said. "But she got a firsthand look at what Berkshire does."

Ms Britt Cool's Berkshire years had a make-it-up-as-you-go-along quality that provided fertile training.

Over the decades, Mr Buffett bought dozens of small to medium-size companies, including Benjamin Moore, Dairy Queen and running-shoe company Brooks. He also bought NetJets, which sells ownership shares in private jets.

But as Berkshire grew, with gigantic insurance operations and a railroad, some of these companies became too small to merit Mr Buffett's attention. That gave Ms Britt Cool a chance to learn about business operations in real life.

With Mr Buffett's blessing, she travelled to the offices of various Berkshire subsidiaries, meeting with their CEOs and using what she heard to spur connections between executives.

In 2014, shortly after she turned 30 and was pregnant with her first child, Ms Britt Cool became CEO of Pampered Chef. The company's direct-sale model - a version of a classic Tupperware party - meant that people gathered socially to possibly buy a $30 waffle pan or food chopper.

Berkshire had bought the Chicago company in 2002, and revenue and profit were flagging. Customers had moved online, but Pampered Chef's business had not, so only about one-tenth of its sales were digital.

Her immediate mission, to get "the right people in the right roles within the right culture", took two years, including installing Mr Humphrey as chief financial officer.

By the time Ms Britt Cool left in 2019, she said, digital sales were above 50 per cent, including through the company's network of sellers.

In a statement, Ms Doris Christopher, the founder of Pampered Chef, called Ms Britt Cool a "thoughtful and decisive leader" with clear vision.

In 2013, when she married Mr Scott Cool, a corporate lawyer, Mr Buffett walked her down the aisle, knowing that she had lost her father.

When she told him in late 2019 that she planned to start her own firm, Mr Buffett was supportive. He told her, Ms Britt Cool said, that it reminded him of when he parted ways with his mentor Mr Benjamin Graham - a famed value investor - in the 1950s to pursue his own career.

Mr Drew Van Pelt, a former CEO of Larson-Juhl, a picture frame maker owned by Berkshire, said Ms Britt Cool had cleverly positioned Kanbrick as the antithesis of private equity - just as Mr Buffett did with Berkshire.

"The No. 1 reason people don't want to sell to PE is: Who are these jerks?" said Mr Van Pelt, a business school classmate of Ms Britt Cool's whom she recruited to Larson-Juhl. "That's very much the opposite of her style."

In 2020, the firm bought a majority stake in Thirty-One Gifts, a company that sells bags and housewares through a network of sales consultants. Ms Cindy Monroe, the company's founder, had followed the turnaround engineered by Ms Britt Cool at Pampered Chef and was hoping for something similar.

In June, Kanbrick struck its second deal, buying a majority stake in Marine Concepts, which patented a system that simplifies the process of covering boats. During the pandemic, Ms Britt Cool and her husband - whom she met in the elevator of her residential building in Omaha - moved to Nashville, Tennessee, with their three children, ages 7, 4 and 2.

She was able to balance the demands of a young family and a new firm, she said, because Mr Cool stepped into the role of primary parent.

"He spends a lot of time with our kids, which gives me flexibility," she said.

Ms Britt Cool doesn't think success is inevitable, but she refuses to entertain the notion of falling short. Growing up on a farm, she said, forced her to accept hardship and adversity.

"I try to stay humble, to learn and grow," she said by phone recently. "If I do those things, there won't be failure."