Tracy Britt Cool on Warren Buffett, Capital Allocation, and Building Enduring Businesses

Tracy Britt Cool — who spent a decade at Berkshire Hathaway as Warren Buffett’s financial assistant, ran Pampered Chef as CEO, and now co-runs Kanbrick, a long-term partnership that buys and helps build mid-size businesses — explains what she learned working directly for Buffett, why good businesses are so often ruined by poor capital allocation, and what the move from the boardroom to the operator’s chair taught her.

Key ideas

1. Good capital allocation is the operator’s most under-practised skill. Cool argues that a strong business can be wrecked by a handful of bad capital decisions — a value-destroying acquisition at the wrong price being the largest — even while daily operations look healthy. CEOs mostly rise through sales, marketing, or operations and seldom learn capital allocation along the way, so she treats finance as ‘a vocabulary and a language’ that leaders can be taught, and puts every hire, factory, and new market through the same discipline as a capital-expenditure decision.

2. Long-term thinking needs a structure, not just a stated intention. Everyone claims to be long-term; Cool separates the claim into three parts — do you think long-term, does your structure let you, and to what degree? A firm that must sell in three to five years will make short-term decisions whatever it says, because human incentives follow the exit clock. Kanbrick’s permanent capital removes that clock, so it can make investments that only pay back in year five or six.

3. The shift from investor to operator is where value now gets created. Capital has been commoditised — roughly 25 private-equity firms in the 1980s became close to 20,000 by 2020 — so sellers capture more of the value at the point of sale, and the returns must be built after the partnership starts. Few investors have ever operated a business, which makes their operating advice hollow; Cool left Berkshire for the Pampered Chef ‘war room’ precisely to earn that credibility.

4. People and culture come before performance, and are the hardest promise to keep. Kanbrick sequences every business the same way: people first, purpose second, performance third. Firms keep a disciplined calendar for KPIs and budgets but rarely a ‘people calendar’ with the same rigour across attracting, developing, and engaging talent. Saying people are the most valuable asset is easy; living it means lowering margins at times and taking a structured, disciplined approach rather than throwing holiday parties.

5. A repeatable operating system creates value only under a long horizon. Modelled on Danaher, Marmon, and Toyota, the Kanbrick Business System is a set of mutually reinforcing components — strategy, KPIs, talent, culture — that lose most of their value if implemented piecemeal. Few copy such systems because the discipline is punishing and the payback lands in years three and four, past the exit window of a short-term owner. Kanbrick’s patience is what lets it invest in the system at all.

Content

Learning from Warren Buffett: compounding, autonomy, continuous improvement

Cool joined Berkshire Hathaway in her twenties after a letter-writing habit she began in college — writing to CEOs simply to learn, not for jobs — first landed her an afternoon on Ace Greenberg’s trading floor at Bear Stearns and later a relationship with Buffett formed when she brought a student group to Omaha. Ten years there gave her, in her words, a front-row seat to timeless maxims. Three lessons stuck. First, the value of long-term thinking and compounding — ‘the eighth wonder of the world’ — and of being structurally set up to think long-term. Second, finding people of high integrity who care about the work, then giving them great autonomy paired with high expectations. Third, continuous learning: Buffett reads every day and gets better, and the whole Berkshire ecosystem follows, a discipline that echoed what she had seen in her father on the farm. The maxim she returns to most is Buffett’s instruction to his CEOs: run the business as if it were your family’s only asset and you could not sell it for fifty years.

Why good businesses fail to adapt

Companies stall, Cool argues, for two structural reasons rather than mere complacency. Change now arrives faster than ever — COVID, tariffs, supply chains, now AI — and it is genuinely hard to watch the outside world while running the daily business, not least because many shifts are false starts that may or may not last. Second, leaders usually grow up inside one business and become deep experts in it, but lose the cross-industry perspective that would let them see a coming curve because a similar pattern already played out elsewhere. Depth is bought at the cost of breadth. Part of Kanbrick’s job, as she frames it, is to lend leaders that outside perspective.

Pampered Chef: operating the turnaround

Cool took the Pampered Chef chief-executive role with no prior operating experience, on the thesis that she would become a better investor by getting into the ‘war room’. The business — a direct-sales kitchenware company founded by Doris Christopher in her basement — had declined for a decade after the internet moved its customers online, yet its brand and sales channel kept the moat intact. She rebuilt much of the team, reframed technology from back-office support to a genuine revenue generator, and moved the business from 10% digital to 75% while still selling through its consultant channel rather than defecting to Amazon. Attracting talent to a declining business meant selling a story and a meritocracy — people came to learn, grow, and be rewarded quickly, not because they loved kitchenware. Two years in, the turnaround stumbled: the team had leaned too far into long-term initiatives and lost the ‘blocking and tackling’ of the present, a reminder that the short-term must be managed alongside the long-term, never instead of it.

The Kanbrick model: permanent capital and a hands-on playbook

Cool co-founded Kanbrick with Brian Humphrey — he had been her CFO at Pampered Chef — to be the resource they had wanted as operators: lonely, unsupported, searching for anyone who had sat in the seat before. Kanbrick buys one or two companies a year out of roughly 500 it examines, seeking the highest-quality businesses with a long runway. It screens on five M’s: moat (competitive advantage, tested first quantitatively through returns on capital, then qualitatively for width and durability); market (growth rate relative to GDP, and the competitive dynamics); management (strong today, or buildable); more potential (an under-leveraged growth lever, such as building a dealer network for boat-cover maker Marine Concepts, or geographic expansion for JM Test); and margin of safety (Cool wants slack so that a COVID or a tariff shock does not force short-term decisions). Leverage stays conservative — two to three times rather than private equity’s four to six — often with a seller note, because leverage amplifies returns on the downside as well as the up.

The five M’s and the discipline of return on capital

On the numbers, Kanbrick centres on return on invested capital — earnings (usually EBIT, not EBITDA, since depreciation and amortisation are real in most industries) over the capital the business genuinely requires: property, plant and equipment, receivables, inventory. An okay business earns perhaps 20% on capital; a great one, 50% or more. A moat shows up in those returns, but the qualitative read matters more, because the financials lag: newspapers still looked strong quantitatively long after their moat had begun to erode. Cool expects AI to erode many moats by lowering the cost of entry, while strengthening a subset — businesses whose existing structured systems, sales forces, or credentialled workforces let them use AI to cut costs and reinforce their position.

Boards, hiring, and capital allocation as a daily act

Cool has sat on the boards of Dairy Queen, Johns Manville, and Kraft Heinz, and her verdict is blunt: most boards add little value, going too deep on the trivial — packaging detail, slide 112 of a 112-slide deck — and too shallow on the three-to-five big levers that actually move a business. The best boards find those levers, then spend their time in discussion, not presentation, which requires psychological safety and a management team open to feedback. On hiring, Kanbrick follows Geoff Smart’s Who, augmented with its own additions: a detailed scorecard (mission, three-to-five outcomes, functional and cultural competencies) agreed with stakeholders before any job description; proactive sourcing of happy high performers rather than waiting for applicants; and a selection panel where each interviewer owns one area, backed by behavioural and cognitive assessment, a case study, and a Who-style topgrading interview. Writing down a candidate’s past managers by name — and shifting from ‘if I call’ to ‘when I call’ — makes references markedly more forthright.

Long-term thinking, quarterly reporting, and defining success

Cool would err against quarterly earnings, which she calls a net negative that pushes CEOs toward pulling sales forward and hitting a number rather than building the company — though she insists management must still run the business far more frequently than every six months. She is not a macro investor: rather than predict inflation, she buys businesses with pricing power that can pass it on, and drives the 2–5% annual productivity gains she believes most disciplined businesses can find. Asked, as every Knowledge Project guest is, what success means, she answers: leaving things better off than she found them — the companies, the people, her family, and the lives around her.

See also

• Shane Parrish — host
• Tracy Britt Cool — guest; co-founder and CEO of Kanbrick, former CEO of Pampered Chef
• Ron Shaich on Building Panera, Long-Term Greed, and Betting the Company — a fellow Knowledge Project operator on long-term greed, permanent capital, and value as the byproduct of building a better business
• Michael Ovitz on Power, Dealmaking, and Building CAA — another founder-operator on reading people and building durable institutions
• Morgan Housel on Contentment, the Independence Spectrum, and Why Survival Is the Only Strategy — the counterpart on long-horizon thinking, avoiding ruin, and defining success beyond accumulation
• Nicolai Tangen on Managing $2 Trillion, AI Bubbles, and Contrarian Investing — a large-scale investor on moats, AI’s effect on business durability, and long-term discipline
• Value Investing — the moat-and-margin-of-safety frame behind Kanbrick’s five M’s
• Compounding — the long-term engine Cool names as Buffett’s central lesson