Up Close with Warren Buffett
By Scott McDermott, Lecturer
Carroll School of Management Graduate Programs
On April 12, 2013, 20 Carroll School MBA students joined management students from five other universities in Omaha, NE, for an intimate Q&A session and lunch with a man widely considered the most successful investor of the last century.
Hosted by Berkshire Hathaway in a small dining room at the Field Club of Omaha, one hundred students and their faculty advisors anxiously awaited the arrival of Warren Buffett—one of the wealthiest and most influential individuals in the world. The room was charged with electricity as if in anticipation of a rock star’s imminent arrival.
In the front of the room were a simple stool, and a table with a couple of old books and a bottle of ketchup, and six index cards bearing the name of the visiting schools.
And then, unaccompanied, 82-year-old Mr. Buffett ambled in through a side door with a can of Coca-Cola in hand and greeted the crowd: “Thanks for coming to Omaha.” His next words, picking up the index cards in alphabetical order, were “Do we have a question from Boston College?” Afsheen Namdaran, MBA ’13, stood, thanked our host for the honor of being invited to the session, and asked him about the use of judgment and his decision-making strategies and methods. With this question, Mr. Buffett began a two and a half hour odyssey of warmth, knowledge, tales of experience, humor, deep-focused intelligence, charm, and reflection—a mix of investing lessons, business stories, and parables about the big questions of life.
The format was simple. There was no script. Mr. Buffett stood a few feet in front of the students, greeted each of them as they stood to ask him a question after he read the school’s name from the index card:
Mr. Buffett, you are obviously often solicited for advice, but I’m interest in knowing the best advice you’ve ever received?
Mr. Buffett, you once said that the most important thing to do if you find yourself in a hole is to stop digging. Which hole that the U.S. is currently digging, concerns you the most?
Mr. Buffett, your partner Charlie Munger has long extolled the benefits of employing models and checklists when approaching an investment opportunity. How has Mr. Munger’s approach to investment decision-making over the 54 years you have known him, particularly his use of checklists, influenced how you evaluate a potential opportunity?
With each question, Mr. Buffett either launched into a favorite story (usually ending in a laugh out-loud punch line), or he paused, turned a little, sipped from his Coke, scratched his head, and gave an answer which seemed to flow from the kind of wisdom that can only come from years of experience and reflection. He moved around the small room, addressing each student with grace, and the students followed him as if transfixed by the presence of a living legend. Without an ounce of pretention, Mr. Buffett addressed the students as almost a homespun gent, radiating charisma, intelligence, and common sense. He alternately espoused lessons from a conversation with Bill Gates about technology and the future, and lessons from his roots in a Nebraska farming town; each lesson carried the same weight and influence of his life experience and perspective.
One of the most impressive features of Mr. Buffett's talk was his still tremendous enthusiasm for companies he acquired and deals he completed years ago (for example, Geico and Sees Chocolate) and his passion for discussing his philanthropy; he has intentions of giving-away 99% of his $40B of wealth. He believes that 1954 was likely his best year as an investor, but he still relishes the “high class problem” of continuing to grow a $260B Berkshire Hathaway. His favorite acquisition is “the next one.”
Following the Q&A session at the Field Club, Mr. Buffett hosted the entire student group for a luncheon at his daily lunch spot, Piccolo Pete's Restaurant in downtown Omaha. The students were able to feast on Mr. Buffett’s favorites: a chicken parmesan sandwich with French fries, Heinz ketchup (Berkshire Hathaway’s $28B acquisition of the historic Pittsburg ketchup maker H.J. Heinz Co. closed in June), and Coca Cola products (Berkshire Hathaway owns almost 9% of Coke). The students also had the opportunity to tour and visit with the executive teams of three Berkshire Hathaway portfolio companies located in and around Omaha.
“There was one great lesson after another: take the job you would take if you were already rich; work for the person you admire the most; emotional stability is more important than a high IQ because not having emotional stability results in playing in the world of bubbles and crashes.” Sumayya Essack, MBA/MSW '13
“To me, the most valuable aspect of meeting with Warren Buffett was gaining an understanding for how he makes decisions. Mr. Buffett has unwavering discipline and is able to stick to a core set of principles when others cannot escape the mania of speculation, rumors, and investment bubbles. He remains rational at all times and grounds his decisions in personal accountability. Mr. Buffett's decision-making framework is something I will remember and apply throughout my career as a manager." Mark Haser, MBA '13
"Being able to stand face-to-face with one of the most fascinating and influential business leaders of our time, and ask him any question was an extremely valuable experience. The tendency might be to ask Warren Buffett a business question, but his unique views on questions related to society and life were the most meaningful. Warren Buffett's answers were articulate, and he was able to provide logical reasoning dressed up in a 'story' to nearly every question. During my visit, Warren Buffett was able to shift my views on important concepts such as poverty, societal influence, decision making, and most importantly the true meaning of success. Each of these concepts is important to conducting business, as well as living a fulfilling life." Afsheen Namdaran, MBA '13
- The market system just happens to reward what he does — re-distribute capital. It doesn't mean that he is superior to anyone else. He said that Bill Gates reminds him that if he were born a caveman in the prehistoric era, he would've have been the first one to be eaten since he can't run very fast or jump very high.
- When thinking about a career, look for the job you would do if you were independently rich. Try to go work for someone you admire. Learning what you don't want to do is just as important as learning what you do want to do.
- When asked about what advice he would give young professionals starting out, Mr. Buffett at one point talked about finding a partner who shares the same values and has the same goals that you have. He then said, and what is the most important factor to a successful marriage? Is it finding someone who is loyal? Has charisma? Is smart? No, the key to a successful marriage is to have low expectations.
- How does he make decisions about what companies to buy? He looks for companies who are owned or run by people who are in love with their business: do they love the business or the money? He looks for those who are in love with the business.
- He said going to work every day is like going to work at the Sistine Chapel; he feels like he has a paintbrush and each day can decide how and what he wants to paint. He lets his managers hold their own paintbrushes and decide how to paint as well. Today he has 208,000 people working for him; they each hold their own paintbrush. He seeks to applaud those who paint well.
- Charlie and Warren have had lots of disagreements, but no arguments. At the end of the day, Charlie says to Warren, we will come to an agreement because you're smart and I'm right.
- Price is what you pay. Value is what you get. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
- It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
- In the business world, the rearview mirror is always clearer than the windshield.
- You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ. In fact, if an investor says he has an IQ of 160, tell him to go out and trade 30 points of it for more emotional stability.
- Mr. Buffett is committed to always run Berkshire with more than enough cash. He does not want to ever count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, he will not trade even a night’s sleep for the chance of extra profits.