MiTek

Acquired by Berkshire Hathaway in 2001, MiTek is the world's leading producer of connector plates and related software for the truss industry.

Business Model

MiTek provides a "system" to truss manufacturers. They sell the connector plates (the "razor") and provide the engineering software and machinery (the "razor blade") needed to design and build roof and floor trusses. This creates a high level of customer stickiness.

Berkshire Acquisition

• Manager: Gene Toombs (CEO at time of acquisition).
• Rationale: Buffett was impressed by MiTek's dominant market position and its "ecosystem" approach to the industry. It represented a classic "brick and mortar" business with a technological moat that was hard for competitors to replicate.

Quotes

"MiTek is the world’s leading producer of connector plates... It’s a textbook example of a business that is the best at what it does." — 2001 Letter