Letter #179: Walter Scott Jr. and Greg Abel (2020)
Kiewit CEO and Berkshire Hathaway Vice Chairman | UNMC iEXCEL Holographic Interview Series
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With Berkshire Hathaway’s annual meeting coming up this weekend, I think it’s the perfect time to share this transcript of a conversation between one of Warren Buffett’s childhood friends & longtime collaborator and his chosen successor.
PS/ I’ll be making the pilgrimage to Berkshire this year and have the capacity to meet a few folks. If you’d like to try and meet up, shoot me a note (DM on X or respond to this email).
Walter Scott Jr. was the CEO of Kiewit Corporation and a board member of Berkshire Hathaway, as well as one of Warren Buffett’s childhood friends (he was also famous for being able to convince the famously frugal Buffett to buy a private jet). Born in the midst of the Great Depression, Walter began working at an early age, first shoveling snow for his neighbors at the age of eight and later working on farms and ranches during the summer. In college, he interned at Kiewit during the summers, starting as a water boy. After graduating, he joined Kiewit as an engineer. He briefly left Kiewit to serve in the US Air Force during the Korean War. After returning to Kiewit, he moved his family to 17 different job sites in 12 years and worked his way up from job foreman to superintendent to district manager. Along the way, Peter Kiewit became a mentor, and in 1979, Walter was named Chairman and CEO.
“You cannot find a better model for a citizen than Walter Scott…He was basically a builder, whether he was building Kiewit and physical things or building his vision of Omaha or Nebraska. He was nonstop.”
—Warren Buffett (Omaha World-Herald)
Greg Abel is the successor to Warren Buffett for CEO of Berkshire Hathaway. Currently, he serves as the Vice Chairman of non-insurance operations of Berkshire Hathaway and the Chairman and CEO of Berkshire Hathaway Energy. Like Walter, he worked a number of jobs during childhood, including distributing flyers, returning bottles, and working as a laborer for a forest product company. He started his professional career at PwC in San Francisco before joining CalEnergy. In 1999, CalEnergy acquired MidAmerican Energy and adopted its name. Later that year, Berkshire Hathaway acquired a controlling stake in MidAmerican Energy. Greg remained at the company through both acquisitions, and in 2008, became CEO of MidAmerican. In 2014, MidAmerican was renamed to Berkshire Hathaway. In 2018, Greg was named Berkshire Hathaway’s Vice Chairman for non-insurance operations and appointed to Berkshire’s board. In 2021, Warren confirmed Greg would be his successor as CEO of Berkshire Hathaway.
I hope you enjoy this conversation as much as I do!
[Transcript and any errors are mine.]
Relevant Resources:
Berkshire Hathaway
Transcript
Greg Abel: Well, we're here in the new Davis Global Center for Advanced Interpersonal Learning with Walter Scott, a successful business leader and generous supporter of the Omaha community. Personally, I would add, an extraordinary mentor and a great personal friend. I always appreciate talking with you and hearing your perspective on a variety of matters. Walter, you grew up in Omaha, and I know the city is special to you. How has Omaha changed over the years?
Walter Scott, Jr.: Well, when I grew up in Omaha, I think the western part of the city was about 60th Street. And I lived on 56th, in a peppercorn type of box that was called a house. And I lived there up to the time I was... actually, going to school. And then, we moved all of two blocks to another location.
Greg Abel: And when you were in that peppercorn box, any special memories, Walter? I know you were a boy scout, an Eagle Scout. That was obviously...
Walter Scott, Jr.: Well, this was long before that. This is where you shoveled coal into the basement--and down a sliding elevator to get it down by the furnace. Because they were all coal-fired furnaces at the time.
Greg Abel: And then you moved into the new neighborhood, and that would have brought some new technology? Advancements?
Walter Scott, Jr.: No, it was a little larger, because I had been born. And it was my mother and my father and my sister. And when I came along, whether they think they--I think they thought I was enough of a problem that they needed a little bit bigger house. So we moved about four or five blocks.
Greg Abel: And Walter, what about Boy Scouts and being an Eagle Scout? Is that a memory? And was it a--back then, it--i.e., as you're going through it--it's an amazing accomplishment.
Walter Scott, Jr.: Yeah, that's the place where I got into the Boy Scouts, was when we lived over on Jones Street. Down the street from our house, about four or five houses, was a Mr. Rippy, who was the Scoutmaster. I learned a lot from him. He was a very interesting character and he kept me in line.
Greg Abel: That's what counts. That's not easy. And then as you think how the city's continued to develop, what would you--what have been the primary drivers of where Omaha was to where it is today?
Walter Scott, Jr.: Well, I think the biggest thing is it's moved a lot, and I think moved west. I don't think it's gone north much further and I don't think it's gone south much further. And of course you got the river on the east side. It has grown out to the west by a substantial portion. And it's it's a substantially bigger city than when I was a boy scout.
Greg Abel: Walter, after high school, you attended Colorado State University, earning a degree in civil engineering. What drew you to the school?
Walter Scott, Jr.: Well, it was all in the family. My mother was a good friend of a lady that lived in Lexington, Nebraska. And we would go out there and visit with him. And I got to where I knew her older son--who was about two years older than I was--and he had made the decision to go to Colorado A&M. So I figured that if he wanted to go to A&M, I probably ought to go to A&M too.
Greg Abel: I love it.
Walter Scott, Jr.: And in those days, you didn't go around looking at all the schools in the country. You went to *a* school.
Greg Abel: Walter, it's interesting--at least I've heard this story--that you originally weren't planning on studying civil engineering. Did you have some other aspirations?
Walter Scott, Jr.: Well, when I originally went there, my original goal was to go into farming and ranching. But Gene Miller, who was the gentleman I was talking about before, he was taking engineering and he said, Oh, you don't want to get into the agriculture. He said, you're going to like engineering a whole lot better. You should take engineering, and if you want to go into it after you've graduated from engineering, you can go back into it without any problems.
Greg Abel: Well, he gave you some great advice, obviously.
Walter Scott, Jr.: So I decided to go in and take civil engineering.
Greg Abel: Wow. Great outcome for Kiewitt and all of us that have been involved in seeing you apply those skills. Walter, you've continued to support the school. Is it really around the engineering programs? Or is it the broader school, now, when you think of Colorado State?
Walter Scott, Jr.: Well, I'm getting a little broader. I started out as strictly helping young people in the engineering classes and engineering degree. And then, as I've gotten more familiar with the school and what they're accomplishing and what they're doing, I've decided that I probably could be helpful in other areas.
Greg Abel: While you were in college, you spent summers working for Kiewitt Construction Company, where your father also worked. The Garrison Dam--I don't know if you remember that project. I'm sure you do.
Walter Scott, Jr.: Oh, year.
Greg Abel: It was on the Missouri River in North Dakota and was one of your first summer projects. Do you recall that first work experience?
Walter Scott, Jr.: Well, the first year I was up at Garrison--well first of all, we lived in bunkhouses. Everybody lived--all the workers. It was an isolated project and it was not near any cities. So you lived there on the on the property. You ate and slept and got up and went to work. I started out working on a survey crew. I got the pleasure of going around and painting a little blue [line] on top of a block or something like that. That's what I got paid for. It wasn't very much.
Greg Abel: There you go. Walter, one thing I do when we're traveling around the West, and we're looking at energy projects--it's often amazing. You'll identify a project, and often a dam project, that you were personally involved in. Other ones in the West, or in your career, what's some of the projects that stand out in your mind as far as what you--you learned a great deal from, what you thoroughly enjoyed.
Walter Scott, Jr.: The one the one in the West that--other than Garrison Dam--was one out in California, which was a thin arch concrete dam, that I learned after I got there, that they were in trouble. They were not making their estimate. And they basically closed the whole job down. It had not been well thought out. It did not have the equipment that they needed. There were just a lot of changes that we made on it. And then, from my perspective, I was a foreman on the trash rack on the back of the dam. And water kept running down off the dam all day. On top of me. And I had--I was a foreman--I had two people work for me--
Greg Abel: Keeping the debris away from the dam.
Walter Scott, Jr.: Yeah.
Greg Abel: Yeah. Wow. Probably lasting experiences from a job like that.
Walter Scott, Jr.: You remember--I didn't have any place to live. So I lived in a room in the back of the superintendent's house, which--was interesting.
Greg Abel: But you were always working. I know that. After graduating, you continued to work at Kiewitt, and moved to a number of job sites. Obviously, Walter, you pursued new challenges, new opportunities. Was each job a new learning experience? What drove that desire to--I think it's it was 16 job sites in 12 years, or something like that? I've heard you reference that.
Walter Scott, Jr.: Yeah. The--but I think it was more--this goes back to Peter now. Peter Kiewitt. Peter was the kind of person that was always looking to see what else you could do. He was not interested in the fact that you were doing a good job today. He was always interested in what else you could do that was beneficial for the company. And so I got--I guess you would say, the opportunity to prove yourself again and again.
Greg Abel: I like it. You do a lot of different things.
Walter Scott, Jr.: Yeah, absolutely. To find out what you're good at or weren't good at. And I think it was more because of his guidance and instructions that I ended up doing a lot of different things around the country.
Greg Abel: What were Kiewitt's guiding principles in building the business and making it so strong?
Walter Scott, Jr.: Peter used to say there were three things that were important in the business. And it was people, machinery, and money. People came first.
Greg Abel: I love it.
Walter Scott, Jr.: And Pete was--he tend to always be that way. It wasn't just with me--he did it with a lot of people. He was always spending time talking to them about what they were doing, how they were doing it, what else they thought they could do. That was his whole goal and objective was--to know and understand what his employees were interested in, what they were doing, what else they thought they could do. And I think he did that with intent and purpose with all of his people.
Greg Abel: Yea. So Walter, when you became CEO, there was a great foundation there. And I know you continued to embrace those principles. But under your leadership, Kiewitt continued to prosper, and really grew significantly.
Walter Scott, Jr.: Well, there was a bit of a problem or a bit of an issue, that led to some of the things that we did. We had had a couple of people that had not acted appropriately within the company. There was *a* period of time, early 80s, there was a period of time in which I felt there was a good chance that we were not going to be able to bid on government work. And that's what put me in the position that I started looking at other things that the company might be interested in, or might do, or might be favorable to them.
Greg Abel: Started to expand your expertise in the areas or the type of projects you were willing to take on?
Walter Scott, Jr.: Yeah.
Greg Abel: How do you see the industry now--the construction industry--as you look at it today? And you're still obviously very involved in Kiewitt.
Walter Scott, Jr.: What I thought might happen didn't happen. So then we were--at that point in time--we were looking at other things as well as running the contracting business. Over the years, we subsequently split off what was non-construction, and got the construction people back to where they're strictly running contracting as best they know how in today's world. And it is different. It's completely different. At the time that we were--when I originally took over as running the company, you went to the highway department, and you got a set of plans and bid documents, and you went home and you estimated it, and then you went and you bid on it. And that was true of much, if not most of the work. And the work that we looked at was all kinds of government work. They've subsequently taken on the responsibility of design and build and... it's a completely different company. It's still run on the same general principles.
Greg Abel: Yeah, yeah. Those principles still reside. That's the amazing thing.
Walter Scott, Jr.: The principles still apply, and they still are applying them. And they're doing a very good job.
Greg Abel: Exceptional. So Walter, when I met you in 1992, it was shortly after Kiewitt had purchased a significant portion of Cal Energy,
Walter Scott, Jr.: That was an effort to get into some other things that we thought might be worthwhile during the period of time we didn't know what was--I didn't know what was going to happen to the company, and felt we ought to take a look at other things. And that's when we got into California Energy.
Greg Abel: California Energy. And I remember, at Cal Energy, us embracing the principles that Kiewitt had embraced. We were a small company, and young, and were able to embrace those principles. Your leadership was invaluable, and the company went from Cal Energy to MidAmerican Energy Holdings Company--now we're part of Berkshire and Berkshire Hathaway Energy. As you look at that journey, because you've been part of it every step--how do you describe that experience, or... some thoughts around it?
Walter Scott, Jr.: Well, I think it was a fabulous experience. Because we we had the opportunities to look at a lot of different things, and be part of a lot of [different] now. They were all in the the energy business or the utility business. But I always thought the utility business was a very good business. Because everybody needs electricity and power.
Greg Abel: It's an essential service product that people people consume.
Walter Scott, Jr.: And I think it's just as good today--the opportunities are just as good today as they were back then.
Greg Abel: Well, we're fortunate to still be both part of it. And I know we have a great deal of passion around it. Walter, you're actually the one that introduced--at that time, we were just becoming MidAmerican Energy Holdings--we had just acquired MidAmerican--and you introduced Warren Buffett and Berkshire to the opportunity that they should potentially acquire MidAmerican at that time.
Walter Scott, Jr.: His sister was having some kind of party out in California. And I decided to go to the party. So--and the reason I decided to go to the party, I was going to talk to Warren about the fact that we were talking about a public company that we were going to take private. And wondered if--and I went through the whole explanation of what it looked like, and opportunities, and what have you. I'm not sure how much he bought, but he bought the idea. Buying the company. And that's how we got to be part of Berkshire.
Greg Abel: Well, we're very fortunate. And I would say--I would sort of describe it in one of those--more like how Charlie likes to describe things, Charlie Munger--it was really a win-win. It was good for everyone involved, including our stakeholders, our shareholders, the Berkshire shareholders. But equally for all those that we serve. It's one of those unique situations where we're able to deliver a lot of benefits to all stakeholders.
Walter Scott, Jr.: It's actually become an important part of what Berkshire does--which I'm proud of.
Greg Abel: I'm proud too. We can be proud. There's obviously a strong connection between you and the fellow Omaha native, Warren Buffett. You grew up in effectively the same neighborhoods, or relatively close.
Walter Scott, Jr.: Yeah, generally the same neighborhood.
Greg Abel: You share a passion for Nebraska football. And you even have a greater passion for business--both of you. And I would just add, I personally admire both of you. And thank you for never retiring. Was that ever a consideration?
Walter Scott, Jr.: No. I never thought anything about retiring. I just took a few more vacations and came to work a little later.
Greg Abel: It's been a great approach. And we've all benefited from that approach. So one of the projects you supported recently is this very center, which uses advanced technology to research and train those in the medical field. What did this--or maybe more importantly--why did this project garner so much support in the in the community?
Walter Scott, Jr.: Well, it--I think it raised the imagination of people as of what could be done and what might be done and what will be done. I think this particular project was one that there were a lot of people interested in. Yes, as you go through life, you always have to have a few issues and problems. We did turn the entrance around down to the south side--which the building was half built. And we turned it around and put it on the south side, and stood it on the north side, which was fun and interesting. Did that on a Thanksgiving weekend.
Greg Abel: And I think you touched on something--it's a center like this that Omaha the community will continue to build on. It's truly advancing the the well-being of--well, how they train everyone. But in the end, that makes Omaha even a stronger and better community.
Walter Scott, Jr.: It's a pretty diverse building.
Greg Abel: So Walter, there's so many different opportunities to provide assistance to in this day and age, and there's different ways to approach giving. What factors should be considered when evaluating projects and where support should be provided, or what's been your sort of approach?
Walter Scott, Jr.: Well, I've picked out a couple of things that I in particular am interested in. Probably the principal thing that I'm interested in is education. And education in all facets. Not just college, but having a lot of young people have the opportunity to go to trade school and that type of thing. We've principally looked at things that are of benefit to Omaha, that we think on a long term basis are going to be a value to the people of Omaha.
Greg Abel: Right. And I know when you discuss education, it started with the Scott Scholars, and a very prestigious scholarship within the Nebraska school systems. But as you said, you took that really to another level with the Avenue Scholars, and that's really a focus on ensuring people are positioned to receive support so they can develop an expertise in a technical field.
Walter Scott, Jr.: Yeah, that's principally young people coming out of high school--the Omaha high schools--giving--most of which would not otherwise get any additional education--to help and make sure that they are getting the kind of education and that they'll be a value to them.
Greg Abel: And I love how the scholarship programs advanced to that Avenue Scholars, with really that focus. And then it must be a great experience to be working with the local community college and seeing how they've embraced it.
Walter Scott, Jr.: The fellow that runs it, I think a lot of him. I think he does a--really a great job of looking after the local colleges that are principally two-year college. It's a full education for a lot of young people after they get out of high school, to get the background and the knowledge of all kinds of industrial type occupations and allows them the opportunity then--after they graduate. We also tend to try to help them get jobs.
Greg Abel: So Walter, when you're looking at programs like that, and I think I've heard you discuss this before, you start off when you're looking at opportunities to support a community--in some ways, it's a civic duty, but I can see how, really, it's become just a fundamental passion to yourself. You've embraced it to--want to have an impact, but you clearly enjoy being part of the outcome and ensuring it's successful. Did it evolve that way? Or how do you see it?
Walter Scott, Jr.: Well, I think it evolved. I mean, I think I started out saying that you help them by giving them some money so they can go to school. Now we help them through school, we give them some money, we give them some additional education outside of the regular schooling, and then get them through school, and then we make sure that they have the opportunity to have a job. So, that all evolved over a period of time.
Greg Abel: If we looked at another--I know what's a very specific project, but one that's been of great interest to you for decades--the Omaha Zoo.
Walter Scott, Jr.: Yeah, I got tied into the zoo back in the--I think the 70s. But I've always--that, and going out in those ranches and being out with the animals in that, in the zoo, that all kind of fits me.
Greg Abel: Right. Well said. It does fit you. And it's your commitment to it--the zoo's truly become one of the finest zoos in the world. Looking ahead, the Suzanne and Walter Scott Foundation and the Scott Family Foundation will truly have a number of opportunities in front of them to continue to support the community. There's no question there's some very significant ones, and sizeable ones, in the Omaha community. As you look at that, how do you see Omaha continuing to thrive and move forward? And what will be the priorities of the foundations?
Walter Scott, Jr.: Well, the S&W Foundation, Suzanne and Walter Scott Foundation, they're gonna do principally education. What the family foundation, we'll be looking for other things. There's always various projects that come up that have a real interest that don't fit in any category.
Greg Abel: Yeah. I know you're supporting, for example, the riverfront project.
Walter Scott, Jr.: Yeah. And it doesn't fit in *a* category.
Greg Abel: Into the other buckets. Yeah.
Walter Scott, Jr.: I think Omaha has grown with--like the riverfront, things that are of interest to people and things that people participate in. I'm not sure that we've attracted enough businesses to keep Omaha growing that it has in the past. And I think it's an area where we really need to work pretty hard at growing or getting businesses to come in to Omaha, or growing businesses within Omaha so that there's a good reason for people to live here and enjoy some of the other things that we've participated in.
Greg Abel: I like the... and the priorities is that when you enhance the community for all, people will enjoy it and businesses will be attracted to Omaha for many years to come. Well Walter, thank you again for taking this time with me today to reflect on your distinguished career. And really, your remarkable commitment to the community. Your clear leadership, your extraordinary vision, and your generous giving to this community has truly created a lasting legacy, and we we just owe you so much thanks. And a true thanks from all of us that get to enjoy this community. So thank you, Walter.
Walter Scott, Jr.: Well, I appreciate the comments. And I hope I'll continue to be able to do it going forward for many more years.
Greg Abel: We're counting on it, Walter. I'm looking forward to it. Thank you, Walter.
Walter Scott, Jr.: Yeah, thank you.
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