A Conversation With Warren Buffett (Extended) | Forbes

first thing I want to talk to you about it we're gonna then we're going to pretty quickly swing it to the to the audience because I know a lot of people and it has two questions these children you know I had a chance actually to get to know your daughter of it Susie it was just incredible it's a wonderful person and everybody's always said that about your kids down earth they are and having Adele with her it's absolutely true they're they're tremendous children and so I've got a easy question and a hard question which one would you like first give me two easy ones we'll give you an easy one and Alessi's okay the easy easy one is we obviously have a lot of people in the room what means we're worried about their children growing up spoiled so what what tips and your kids have come through incredibly well given how much wealth they grew up in theory around how did you do it well it's not what you say but what you do and they had a fabulous mother and and they lived the life of normal kid they went to public schools just like their parents had and their grandparents had now their children and even grandchildren involved on the public schools in a law they lived in a neighborhood where we got 125 trick-or-treaters every Halloween and there are lots of kids and probably in terms of today's income they probably averaged $70,000 a year I live in a house I paid thirty one five four and they saw that we were happy that our happiness was not related how much we spent and that we didn't identify ourselves that way and they had a perfectly normal childhood and and they love the place also when they were starting to grow up I mean you had some children up there white plains and you were wealthy then how did that change as you got wealthier especially they probably just started to kick in when they started to get more cognizant so how did that it didn't change as much as I would have liked we didn't change so that was there really wasn't any change I mean I live very much like I lived 40 years ago and and that gets get that a happy growing up and they want their kids to grow up the same way they they grow up it's not it's really not very complicated the slightly harder question would be then how did you discuss it and you know you've been very outspoken about talking about how you transition with your children but still as much as then you've talked about how your children ever want for anything like their children will never want for anything but still in terms of an emotional discussion saying you know 99% of my money I'm not going to let you control it right how does that conversation well they they feel extraordinarily lucky I mean they they know that they're among the luckiest perhaps 10 to 1 percent of people in the world if you're not happy being in the top tenth of 1% being in the top hundredth of one percent of make any difference and and it you know it they each have a foundation about 15 years ago my my my wife and I got the idea that although we had I have big foundation that they should each have a separate foundation so that they wouldn't get involved and trading off you know my my claws versus yours cause I'm not on that Foundation Board I write them a check I write them all in equal check and and they get to pursue their own interests in philanthropy and three different interests interestingly enough they cooperate more because they don't have to because someone one of them will see a good idea that another one has and don't pick up on that but in terms of money they've always know they'd have enough money and and if you got enough money what's more than I think you don't need more than enough and it's true I've gotten loosened up a little bit as the years go by they like they like it every time I tell them I'm going to change my will because it generally means I go up with him but one thing I do every world I've written in the last twenty five or thirty years I go over with them before I sign it I mean I want them to know exactly what's in it for one thing they're executives and they have certain responsibilities so want to understand it but beyond that I want them to feel that if my son is getting the farm and my daughter is getting a house how I equate that sort of thing and there's anything that they think isn't proper before I sign that will we talk it over again until Monday they read it and we talk about it the next day and and so they're in on all the decisions and like I say they feel that they're extraordinarily lucky in life they do not have to worry about money ever periods do you guys when you get together the family talk about the various philanthropy well some to some extent I mean it depends on who's doing what at the time I've got the Sun the Sun that's very interested in agriculture and he's trying to help people around the world on well he likes to talk about and I like to listen that a daughter that's interested in early education and so I get exposed to what they're doing but I don't express any judgments as to whether one is the period of that I don't know what I want superior in the other and I what I do know is that they're pouring their time and effort into it and and fortunately the money gives them a chance to match their ideas with some with some resources well speaking of resources let's talk a little bit about your decision to put your money with Bono indicates you are somebody obviously is you know arguably not even arguably definitively by numbers the best in the world in terms of figuring out how to allocate capital in dollars a lie and then put it to work and yet with philanthropy you out you basically outsourced that's true but you know when my wife had a baby I didn't deliver either I mean I I didn't fill my kids teeth I mean I Adam Smith in 1776 explained and specialization of Labor in a pretty Java bit and I feel I'm very good at at piling up money and and my wife was very good on piling it I mean it's a very simple formula and she was going to handle the philanthropy big-time and she did during her lifetime and at a moderate level but basically I was going to turn it all over to her and I would plow during my lifetime and and she died moving you know earlier and and therefore I had to make a decision as to what was the best way to use a very large sum of money and yet my goals achieved through other people and their other people learn better I am on all kinds of things I'm either a Roger I mean you know we're not gonna get no or under me so I believe in I believe in I I really do believe in getting people that are younger more energy energetic but also experience and the case of Zola Melinda have their own money up as well and they've got someone they've got identical object is really with me and if I can get them to do the work and I can keep having fun doing what I do I'll do it and it's good at the game sure let's talk about timing because a lot of people again here have that issue to you talked about yeah you were gonna be a pile ER and obviously you know the longer you pile on a better than you an issue of the world when do you think most people and we have a lot of people kind of in their prime accumulation years should they be focused on piling and piling or should they start on filing at an earlier age well it's up to them obviously but it but if you think you're actually I felt this way when I was in my 20s I mean my wife and I had we talked about it a lot and and I told her I was gonna compound money at a very good rate and that therefore it made sense to delay plan to be not all of it but most of it simply because I was going to be a better compound or the most people that would have a greater impact on society and and she went along with that she would have preferred that I give away more money as we went along but I I think it's an individual decision I do think if you've got a million dollars you're going to turn it into a million they're giving away the million is a mistake and I do also believe though that all should get given away within a my case a 10-year period after my death I mean I I have not I do not like the idea of thinking of some unborn great-great grandchild 50 years ago you know by virtue simply of coming from the right womb making these great philanthropic decisions so I want people that I have seen in an action who I trust I want them to spend the money and in that 10 years after I die as all of the wanna go on they can't give anything that involves endowments either I just don't know what's gonna be the situation 30 or 40 years ago I tell people look and I can think outside the box but I'm not sure I think outside that box no six feet down where did you come up with the 10 years also made mine I guess in that dear why not while you're living well it is getting used while I'm living I mean it did and this will be the it was exactly six years ago in June of that I made these commitments and and early in July I'll give away another one point six or seven billion of Berkshire's shot so it's hidden there's a it's getting done consistently throughout my life and then when I die what's left has to get done in in ten years after the estate settled it you know there's no magic formula on it but that that basically will probably coincide pretty well with my children's productive lifetime is there is there any philanthropist who you kind of bottle you're so fun and I know you study please yeah well I thought about it a lot and I did bring along it's kind of interesting I brought along his book and I read this book when I was probably 25 so we're talking fifty six or seven years ago and this is an autobiography and the fellow rope is on a wire if he died in 1959 the New York Times wrote an editorial when he died and the last line of that editorial is no other American of his time has contributed more than the welfare of this country and of humanity in general and I will bet that not more than ten percent of the people in this room ever heard of this fellow's name it happens to be Abraham Flexner Abraham Flexner probably influenced philanthropy as much as an individual in the country not in terms of the money he is but what he brought to the game and he wrote this autobiography he advised well he originally was picked by Carnegie back around 1912 to examine the medical system of the United States a medical education system he was not a doctor he just was smart and straight thinking and after he worked for a couple of years for Carnegie to do this half of the medical schools closed I mean he he actually say medical education john d rockefeller came to him George Eastman came to him Julius Rosenwald came to him finally Louie Bamberger and his sister came and said what can we do with our money and he said he came up with the idea for the Institute for Advanced Studies at Princeton for example and this man lived a life where he essentially influences almost all the great philanthropists at this time so I I have seen I've studied what both people the money do and what the people who were implementing the ideas in people the money and it's that imposed on me very early it's interesting though that you're pursuing a similar path and that by dispersing your fortune 10 years I mean you're not putting it endowment that's gonna keep your name you know your name going pro you know well Carnegie Carnegie did not go out in this with all these medical schools themselves he got questioned didn't do it Georgie's been wanted to start a great Medical School and Rochester didn't know how to do it he call the flexure and said you don't tell me how to do it and same way with the the Bamberger so I believe in getting things done through other people I went to open up to the room but it would get there three days billion dollars worth I think we're gonna no we're gonna keep the cameras rolling this is a real so we've been talking about everything's been off the record when we go to Q&A although I think this is such a truly historic opportunity to talk to such a you know I mean in terms of your philanthropy again in terms of the scale the way you're going the way you're doing it it's it's truly historic and I thought we're going to keep the cameras going it if whenever even later you say I don't want to be on camera will pose a on your face like you're a lava Foreman or something but let's keep also the question to philanthropy as much as you know I'd like to know why you're buying newspapers and things like that you could have sworn that is the kind of philanthropy I guess I don't think I keep but you can ask for privately but let's talk about by three I will ask one question that's not really laughter baby and I just let me how are you feeling you know I feel terrific now I'll be around a long time let's split so let's go to the room and please identify yourself hi [Music] I trust we're working says hi - on the spot [Music] well I wouldn't contribute it for the other shareholders of Berkshire another I do not feel but that's my function and so I I am much more my instincts are to go along the idea of encouraging individual philanthropy but I do not believe in giving away other people's money and so Berkshire Hathaway at the parent company level does not make charitable contributions our individual companies do I just don't feel that's my my function I believe in the courage and we were doing it for the Giving Pledge people participate in philanthropy and it's interesting there will be there'll be two million four hundred fifty thousand people more or less than die this year there will be about in the normal year there's about a half of 1% about 12,000 estates that actually get taxed 1/2 of 1% they will leave about 120 or 130 billion dollars about 20 billion of that will go to philanthropy but there'll be a hundred million that will not I mean and if you can make if you change anybody's thoughts on that subject you know that could have a real impact but I I looked at I look at it much more on an end basis we've already had some luck on the Giving Pledge I this is the last thing I promised I'll read to you but but I got a letter from a woman that I didn't even know a couple of years ago and I don't want this to show up on film where it's comes from but she she said what this is about a year of going ahead these people have a lot of money many many billions and she what's your leadership in forming the group and publicly announcing your intentions to donate a large majority of your wealth of philanthropy during your lifetime I do not without that I do not believe we would have been able to come to terms with donating the majority of our wealth to philanthropy instead of two to two heirs while we did not quite feel quote right and pull about leaving our entire estate to our children and grandchildren neither did we have a viable roadmap for leaving our wealth to the greater good and then she goes on to thank and that family has at least ten million dollars so and they've now pledged to do give away at least five billion I think getting people to focus on it norms are going to change in this society they've changed over the last century or two centuries they'll keep changing and I think they will change in the in the direction of greater philanthropy but I think that examples are enormous ly important I mean I can't tell you whether when I read Carnegie's Gospel of wealth or whether I read flexures book or but my dad sat me down and talked to me about I don't know exactly what form ideas but I know that you do get your ideas from the people that have gone before people you admire their walk before and that's what the Giving Pledge is about is is having people explain why they're doing what they're doing with their wealth so the ten years from now 20 years from now people read those letters and say you know that that's sounds like a pretty good idea and I'll pick up on that and I think that's going to happen not only the United States I think it will spread to some extent from the world because I do think we export our best ideas in the world and I like that better than any kind of a compulsory you know sort of tax on people who do it right here [Music] [Music] [Music] I better be totally qualified to answer that in terms of the efficacy of the two alternatives but but I do think that governments have a big part to play in this I mean private philanthropy can only do so much now I can do things the government's can't do I mean I believe in failure in foundations if you're not failing you're not you're not tackling the really important subjects and and philanthropy is so different than business and business you look for easy things to do you look for one foot bars to step over in philanthropy you're tackling problems that have resisted intellect and money over the years I mean you're taking on the tough ones I mean that when bilam a lender trying to finally wipe out polio that is not easy people have been working on that a long long time but if there's if there's a 20% chance they're successful it's a terrific idea even that means four times out of five but you know the final result says failure it isn't failure I mean you've got to tackle tough things and I think that the individuals to do that but I think the organizations you name I think that they particularly they if they draw money from governments on things that that government might not otherwise be doing and that need are needed by society I'm all for me as to the effort to say of the two groups I I tend to believe large large organizations don't work as efficiently and smaller ones but that's that's a personal bias yeah I I think it's tough to serve two masters I'm giving you some of my personal biases on this but I I I think it's tough I do not if I set up an objective of running a business as well as I can I don't I'm gonna work without a hundreds or thousands of people and getting my objectives carried on I think giving them two different goals gets very tough I so I I think it is I I think I would rather have the investing produce the capital to then have an organization totally focused on the philanthropic a space I've got it I'll tell you one story though John Jim Jim Burke and I went up to see your dad about 25 years ago to make a pitch to raise us a significant amount of money and your dad was trivia whether but he wasn't very interested in our approach but as we left he said well he said I'm not gonna I'm not going to give you a whatever we were asked for but he says I want to give you $50,000 just for your time 50 was worth about 250,000 also I was ready to drop by any day just there's two big reasons the gift and one is particularly understandable to me if they have all of their money or 90% of their net worth tied up in their business they say you know they so they don't really have a lot of liquid assets they say how do I peel how do I pledge fifty percent of my net worth and and not you know in one way or another mess up everything that I've had planned for decades in terms of my own business and sometimes that ties into giving in to their errors or sometimes it's just a question of controlling their business during their lifetime and I've got some answers for that but that is an that's I can understand that reason very much I don't do one fellow for example but really as most of his money tied up in a sports team and that means a lot to him there is no there's really no way to partition off little parts of that to meet philanthropic goals so I that's one read them the biggest reason we get and I think about half the time people are telling it to me with conviction and half the time they're telling it to me to get it to get me off the phone but is that they say well I'll be above I'm worried about privacy they usually don't say they're worried about privacy I usually say their spouse is worried about privacy they say you know if they said we've got young kids you know and and we're worried about you know what will be in the paper and all of that sort of thing or in Forbes and so we don't my spouse is you your wife because I'm usually talking to a husband and my spouse really doesn't doesn't want to get in the limelight anymore and and so if we do this we risk these that exposure and I can I can tell you that of the 81 people they've got no one has had a problem in terms of being much more exposed to the public that they were beforehand I mean somehow you know Randall's out and me and Bill of a few mothers over the years so it doesn't really change anything but I do think that that's real in the minds of good many I also think it's a great have a great way to get me off the phone without just saying I don't want to give so it those are the those are the two that I hear the most when you have some of these pleasure meeting you and I have talked about this before you've talked about how emotional people are about the topic of philanthropy me that's I think that that was surprising then what is it that when you talk to these people what's the emotional trigger well the interesting thing of course is is how receptive people have been right no I mean you know that I I did not dream we would have 81 people uh we've not made that many phone calls and they pull of step forward done no I didn't know it all before and only just heard about that letter that I received from a long I and it people to some extent like to postpone the decision making because it's a reminder of their own mortality I mean it's more fun to think about what's going on in their own life today and then there's a down there and focus you know on what's gonna happen at some point you know there's like people like I think I'm fair enough that several presidents have died without wills I mean people people don't get excited about contemplating their own death for some reason you know but I tell them you know if they're seventy years old my me some was gonna happen with our money and I say are you gonna make a better decision now about what you do with your money now then you know last well counts than when you're 95 with some blonde sitting on your lap they get the point I'm not sure are we making sail back here get too bad gear a blonde in the back her left flaps taken it yeah I listened with interest this point [Music] [Music] [Music] [Music] [Music] we are very we've been very careful to be totally non-judgmental in terms of when people give or what they give to now we have a congregation of people once a year of The Giving Pledge and actually that maybe more often certain areas but once a year we get together and people talk about their experiences they talk about their failures they talk about you know their children they talk about all kinds of subjects people leave that smarter than when they got there and but we are not telling we are not trying to set up prioritize in any way education versus medicine versus you know the line that is that is up to the individual we all we are asking is that they say that during their lifetime or at death at least half of their net worth we'll go to philanthropy and and I've got these three children that are doing three different hitting three different arenas I don't know which one's best they don't know which one's best we may not know that for 10 or 20 or 50 years I mean that there is a long long feedback period on many ask except philanthropy and and it's very easy I mean if you're gonna build the hospital wing or something you know it's done in a couple of years and you know what you've done but there's other things you know in teaching agriculture the people and really aren't making the best use of their land or whatever so the feedback period is very very long on some of these projects so we do not have any intention of telling people that a is better than B and and if they want to talk among themselves and they do and we have these breakout sessions where we talk about different areas they're totally free to talk about it and give their own experiences and listen to other people and they do go away smarter and their philanthropy is going to be better over time but it's not going to be because of any way that we're dictating to them [Music] and something I found very difficult well what I think will work is is when we get the younger people to join the giving budget when the Mark Zuckerberg says he has joined the pledge put their reasons for doing it up on the internet he's going to have an effect on people that I won't have I mean you know his peers look up to him and you know I'm just some name so it's very important to get young people to actually join our giving budget bill and I have you know ready to give even special emphasis to that and we've gotten a number so I think that's going to have an impact I think that I think that when four or five or six very young very rich people that are admired by their by their contemporaries when they see them sign up they start thinking and and and their spouse starts thinking and then and it will have an effect you know you won't see it in three months or six months necessarily but people like to be admired by their peers they they like to listen to what their peers have to say and you take on that behavior I mean they hide it's in a slightly different vein but if you if you go to the internet you can look up by state where the income by state and and contributions by state just a gross income by state and contribution by say of course one state just jumps out as giving away far far far more of their income than any other state and that you talk because of the Mormon influence but Mormon impulse is important but there's other kinds of influences too and I mean you influence certain people that there are people that look at what you do and say you know maybe I ought to think about that too and that's that's really what we're trying to do and then it will be cumulative over time but I will guarantee you that what Andrew Carnegie did not only affected building libraries and all of that it affected people generations later you know Johnny Rockefeller had affected people generations later they hadn't existed there would not be the same level of philanthropy as now I you know there's just no question about it we might have time for one more quick question [Music] people in this room that probably know quite a few of my made any Philip well it's interesting I would say this in a general way I learned enough about investing by the time I was in my early 20s to take care of me the rest of my life and incident I used to come over here to the New York Public Library I worked over at 42nd I'm Lexington Avenue and I would I spent a lot of time in there but my family thought I was a book with legs as they put it the but I learned a lot more about human behavior as I went through life I did not learn that by reading a book by Ben Graham or something of where he's been learn about investments I mean that learning about human behavior I think you really 90 percent of us by experience I don't think you fight a lot of books that teach you about this so I wish I'd gotten wiser about generally human behavior at a younger age but I don't know anyway we need to speed up the process too much other than getting in lots of different situations with lots of different people and finding out why people do what they do so I don't having great prescription to give you I've been so lucky I mean I found what I loved when I was seven or eight years of age so I you know my whole life I've been able to do something I love when people I love I mean that it really doesn't get any better than that and fortunately you know I'm going to 82 in a couple of months it doesn't require hand-eye coordination you know or strength or anything I just have to be able to kind of wander down in the office and I can keep doing it the rest of my life so I I it would be very sure love me to complain about anything has ever happened in my life I you know I had nothing but good luck I want to thank you for two things one I want to thank you I came to your office less than five months ago between two minutes you accepted this idea embraced it and we would not be here without you so thank you and I'd also like to thank you I mean you you're clearly a role model to a lot of people in this room you're also it's funny my eight-year-old daughter Sabrina watches you in your cartoon wars actually in a cartoon the secret Millionaire's Club who has seen their secret Millionaire's Club clearly not enough that you have a five and an eight year old at home but there's actually cartoon on the Internet but with Warren Buffett it's actually really good cartoon she thinks you're like one of the Muppets actually because the habit you yet you know I mean are so important and and you know most of us were lucky enough to be born in a household word you got it from your parents but a lot of people don't and through the secret Millionaire's Club we're able to talk to kids and get them started on some right she thinks you're cool and so I and I told her about you and I asked her what you wanted to ask you actually said she knows that you're getting away 99% of your money which if you're a Keith this means a hundred percent and she's very worried about where you're gonna live and she asked me to not ask you as much just tell you that you can come live with us why do you always have a home in New York thank you for being actually a very positive role

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Length: 36min 0sec (2160 seconds)

Published: Tue Sep 18 2012