Eating Your Own Cooking

"Eating Your Own Cooking" is Buffett's term for the principle of having the investment manager's own capital (and their family's) invested alongside the partners under the same terms.

🔑 Usage (1960, 1962, 1964)

• 1960 Letter: Skin in the Game as a Ground Rule.

  • In the formal Ground Rules, Buffett establishes that "the manager's own net worth is invested alongside the partners." This is the earliest formal articulation of the principle — making manager-partner alignment a constitutional requirement, not a voluntary gesture.

• Definition: It represents total alignment of interest between the general partner and the limited partners.

• Practice: In the 1962 Letter and 1964 Letter, Buffett notes that his wife, children, and numerous relatives have a combined interest totaling nearly $2 million in the partnership, representing virtually their entire net worth (with minor exceptions like Mid-Continent Tab Card Co.).

• Goal: To ensure that the manager experiences the same "destiny" as the partners, whether success or failure.

🔗 Connections

• Source: 1962 Letter, 1964 Letter
• Related: The Ground Rules