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ENTITY
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🎵Wisdom Density:
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Jacob Harpaz

Jacob Harpaz is the Chief Executive Officer of ISCAR, the Israeli precision cutting-tool manufacturer acquired by Berkshire Hathaway in 2006. Harpaz led the operational and technical scaling of ISCAR into a global leader, and represented the management team at the 2006 Berkshire annual meeting in Omaha.

📝 Role in the Acquisition

Following Eitan Wertheimer's October 2005 letter to Buffett, Harpaz and CFO Danny Goldman flew to Omaha in November 2005 for due diligence meetings. The speed and quality of those interactions reinforced Buffett's conviction that the management team was exceptional.

Harpaz's articulation of ISCAR's strategy at the 2006 annual meeting became one of the most quoted lines from that gathering: "We are not only selling tools, we are selling technology. We are selling the customer a better way to make profit."

This framing — selling outcomes, not commodities — captures ISCAR's moat precisely. The cutting insert is a consumable, but the engineering relationship, application support, and productivity improvement ISCAR delivers are sticky and hard to replicate.

📝 Management Quality

Munger's assessment at the 2006 meeting: "This is a company that, from very modest beginnings, grows to be the best company in its field in the world. The average quality of the people in this company is not only extraordinary, it's off the chart."

Buffett added that the Berkshire delegation's September 2006 Israel visit left every member of the group more impressed than they had expected — a statement Buffett rarely makes about any post-acquisition visit.

🔗 Connections

📚 Historical Mentions & Citations (4)

Click a reference document below to expand and read the exact paragraph(s) containing this concept in the archive.

📜
2006 LetterExcerpt Available
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The highlight of the year, however, was our July 5th acquisition of most of ISCAR, an Israeli company, and our new association with its chairman, Eitan Wertheimer, and CEO, Jacob Harpaz. The story here began on October 25, 2005, when I received a 1¼-page letter from Eitan, of whom I then knew nothing. The letter began, “I am writing to introduce you to ISCAR,” and proceeded to describe a cutting-tool business carried on in 61 countries. Then Eitan wrote, “We have for some time considered the issues of generational transfer and ownership that are typical for large family enterprises, and have given much thought to ISCAR’s future. Our conclusion is that Berkshire Hathaway would be the ideal home for ISCAR. We believe that ISCAR would continue to thrive as a part of your portfolio of businesses.”
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🎙️
2006 MeetingExcerpt Available
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WARREN BUFFETT: But what did happen, and which we announced last night — which was very important — the acquisition of a large, extremely well-managed, profitable, really extraordinary company called ISCAR. And up until October of last year, I knew nothing of ISCAR. I did not know about their extraordinary management. But I got a letter, and I got a letter from Eitan Wertheimer, and — maybe a page and a half, page and a quarter — and he told me something about this business. And sometimes character and talents sort of just jump off the page at me, and this was one of those letters, and it came from Israel. And I expressed an interest, after reading this letter, in getting together with Eitan. And not long thereafter, I met not only Eitan, but his CEO and president, a remarkable man named Jacob Harpaz; Danny Goldman, the CFO. And we met in Omaha. They subsequently met Charlie. And this all came to fruition yesterday when we signed a contract. Now we have — well, before I go on to this, maybe Charlie would like to say a word or two about ISCAR. But, first of all, if Eitan Wertheimer would stand up and we can get the spotlight on him? Over there. OK. Eitan, let me introduce the other two, and then can we have you speak to the group? Jacob Harpaz is the president and the CEO. (Applause) Take a good look at these people because they’re going to make you — they’re going to do very, very well for you. And Danny Goldman. Danny, would you stand up? (Applause) Thank you. And if you’ll give the microphone to Eitan, I think Eitan would like to talk to the group just a bit.
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2007 LetterExcerpt Available
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Turning to happier thoughts, we can report that Berkshire’s newest acquisitions of size, TTI and Iscar, led by their CEOs, Paul Andrews and Jacob Harpaz respectively, performed magnificently in 2007. Iscar is as impressive a manufacturing operation as I’ve seen, a view I reported last year and that was confirmed by a visit I made in the fall to its extraordinary plant in Korea. Iscar continues its wondrous ways. Its products are small carbide cutting tools that make large and very expensive machine tools more productive. The raw material for carbide is tungsten, mined in China. For many decades, Iscar moved tungsten to Israel, where brains turned it into something far more valuable. Late in 2007, Iscar opened a large plant in Dalian, China. In effect, we’ve now moved the brains to the tungsten. Major opportunities for growth await Iscar. Its management team, led by Eitan Wertheimer, Jacob Harpaz, and Danny Goldman, is certain to make the most of them.
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2015 LetterExcerpt Available
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Under CEO Mark Donegan, PCC has become the world’s premier supplier of aerospace components (most of them destined to be original equipment, though spares are important to the company as well). Mark’s accomplishments remind me of the magic regularly performed by Jacob Harpaz at IMC, our remarkable Israeli manufacturer of cutting tools. The two men transform very ordinary raw materials into extraordinary products that are used by major manufacturers worldwide. Each is the da Vinci of his craft.
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