GEICO
Strategic Concepts & Mechanics
Primary Evidence
"GEICO was a Texas brainstorm from the 1930s. Its creator, Leo Goodwin, added two brilliant features that distinguished this auto insurer from the white bread version. GEICO sold policies by mail, cutting out the expensive sales brigade. It only sold to government geeks. Goodwin once read a study that showed federal, state, and local bureaucrats caused fewer car wrecks than blue-collar or corporate types. A bureaucrat might be boring as a date, but he or she was a dreamy client for an insurance company.Lower expenses and fewer accident claims formed a winning combination for GEICO. Ben Graham figured this out and bought half-ownership in the company in 1947. GEICO soon went public, so anybody could buy the stock by 1951, the year Buffett got interested in it. One Saturday that year, Graham's star pupil hopped a train from New York to Washington to behold GEICO in person. Finding the place locked, Buffett banged the door and roused the janitor. The 23-year-old grad student talked his way around the janitor and into a four-hour interview with the CEO."
"As a result, I met Lou Simpson, whom Buffett had handpicked to invest GEICO’s money in stocks and whom he once described as “the best I know.”"