If you want to run a decentralized conglomerate, you have to look at what service you're providing the managers who actually run the business units. Otherwise, they're better off remaining independent, and you'll end up with a portfolio of mediocre businesses that consume more than they produce.

For Berkshire Hathaway, that service is liquidity. Buffett provides businesses with a large lump sum of cash, enough to ensure that they and their heirs will never have to work again unless they choose to. In return, they can continue running the business exactly as they did before. For many entrepreneurs, that's a very useful service.