Warren Buffett | Charlie Rose | Pt. 3 | July 12, 2006

on june 26 2006 warren buffett bill gates and melinda gates came to new york to make an historic announcement that warren buffett was giving 31 billion dollars to the bill and melinda gates foundation the logical question is why it's something i've always planned my wife susie and i had planned that whatever i made uh would go back to society and and originally uh i thought she would outlive me and she'd make the big decision on it the manner but but uh since her death i had to uh had to rethink the best way to get the money into society and have it used in the most effective way and i had a solution staring me in the face and i'd seen bill and melinda uh do what they have done with their foundation they've you know they've done it with their own money they poured themselves into it the decisions are great their goals are similar to mine so so the time is now well for us it's just fantastic because we look at it as doubling the impact the diseases we've already been working on and the education and the inequities we've been looking at for so long just basically double by warren's gift and it's incredible the depth that we'll be able to go to on some of these global health issues bill well it's a huge responsibility and in some ways if you make mistakes with your own money you don't feel as bad about it as if it's someone else's so now we're exactly uh you know even more intent on doing it right and it's a very exciting time the advances in medicine and other things we can do to relieve poverty we we've been making good progress and with the doubling of resources we we think our impact can even more than double and so it's it's thrilling but it's a huge responsibility well i began to mold with various possibilities and and i wanted the money to be used effectively and and and i i've looked at a lot of foundations charlie and uh and and they're a number that i admire but there's none that are in the same class in my view uh as the bill and melinda gates foundation and not just because of size they really have looked at the world without regard to gender color religion geography and they said how can we do the most good for the most people and particularly the people that have gotten the short straws in life and and uh so i uh i mentioned that i was thinking about it uh uh to bill well many many months ago yeah uh but i still was playing around in my mind the best way to do it because i wanted something that would work well for the berkshire hathaway shareholders as as well as for the the people are going to be the beneficiaries of the money and and finally i came up with this plan and uh uh when i when i decide on something you know i'm ready to go this friendship that led to this remarkable gift had an interesting beginning take me back to uh the first time the two of you met well he didn't want to come let's start with that you didn't want to come meet warren buffett well i wasn't sure what i was going to talk to him about and i was very busy but my mom had a great group of people coming out including kay graham and warren and kind of insisted that i come out there so i actually took a helicopter out thinking okay once i've done what my mom expects a couple hours i'll i'll be back to my work but then uh it was uh fantastic i want to get to fantastic but why didn't you want to meet warren buffett well i i watched everybody for all my life i've been looking for sorry no we found the first person who didn't at the first time no i was just a heads-down software engineer right and i wasn't quite sure uh that he'd be interested in what i was interested in but then you know as soon as we met talking about companies and trends and things you know we could have gone on for days we couldn't stop but what was that conversation about it about everything business and yeah everything i was interested in what he was doing he was interested in what i was doing and we were both interested in what the world was doing how did the friendship evolve i mean you knew it right that night there was something special an affinity what right that uh that it'd be a lot of fun if we could have a chance to uh talk more and see how the the world evolved and it was just a few weeks later uh that i got to come to a a gathering uh that warren was having of a bunch of his friends and sit around and talk about things like you know why one session was about the companies that were most valuable in 1960 and 1970 1980 and how that had changed and should people have been able to see that and why those things happen and why the companies on the top uh not been able to maintain their strength most people have you and i've talked about this before a few friends in which the friendship is so rare it's almost beyond definition this is one of those that's what you want in life i mean if if you have a dozen terrific friends in life i mean you're gonna have a great life charlie that's true and and and uh and you you don't get that many shots at it i mean you've got a they've got to be well you just have to be in sync and you know when it happens and i i've been blessed with a number of them and and uh yeah absolutely absolutely different age differences yeah right areas of the country different educational experiences right but at the same time it has what it just it it works it's it's uh we find each other interesting you know we fight each other funny sometimes i i can't recall a time what in any kind i mean we've gone on trips together different things but i can't recall a time when we'd have a good time together jokes on each other i mean tell me about the time there was a dinner somewhere yeah it was it was in carmel we had a group of friends uh who were traveling around the country a little bit and we'd gone to this resort and we said to the friends that unfortunately we couldn't uh take over the whole dining room that night that there was a couple that would have to sit with us because they they traditionally always came that time of year and so this couple started to drink a little bit and we were a little insulting to the tv this is not the version i've heard it was insulting the university of nebraska this guy was slobbering all over everybody and his wife was and his wife was sitting next to me and i wanted to punch her and the owner had set me up for this because he called bill over he said gee this couple showed up you know and we weren't expecting them bill very graciously said well they could join us so they are getting more and more and more obnoxious and and the guy is sitting straight across and at some point he says where are you from when i said nebraska he's in salt lakeville too but he and he says oh that's where the convicts play football at that point i i just walked over i'll get rid of the pressure yeah right when you insult the cornhuskers he said he was from colorado too yeah and they knew the the fight song and made fun of it but anyway it turned out that they were comedians we had hired you had hired prepped them for all the things that our guests might be sensitive to yeah we all fell for it did you try to get back at him for that i mean who knows what i'll do the night is young you'll read about it in the paper charlie most friendships um come in a variety of ways is there competition here between the two of you no that's one thing that's nice uh the only area we ever overlapped in was in uh encyclopedias that's true that was kind of fun because warren would say that his encyclopedia smells better than ours uh you know even though ours is a little cd so yeah yeah he said he had 26 books and he had a little cd and i said we were developing this musty old spell but no competition at all no no no no no no well we haven't you have the one you play play bridge and you play golf again play bridge and play golf we have a dollar bet when we play golf and i mean but you're adding to his net worth are you well or vice versa yeah i i think well lately i've been adding but competition just in that way well usually in bridge we play on the same team it's only in golf that we sometimes get to win or lose a dollar against each other did he get you to play bridge i had played growing up but there's no doubt i'd sort of given it up and my re-addiction and seriousness about bridge came because uh it was something more enjoyed doing and i got drawn in warren has friends that i got to know who are very good bridge players and it's an incredible game let's make sure he cares about them [Music] uh bill and i have worked on projects or talked about working projects and we've gotten sharon involved a little to try and bring young people in now the problem with the game is i was i was talking about about this it you've got to play for they said work at it from 30 hours maybe before you know what the game's all about now from that point you're just enough it's nothing but fun and unfolding but yeah but the first you don't learn it in an hour two hours or three hours so so people really have to stick with it while they're kind of confused uh and get through that period and learn the language and a lot of people i see when my daughter susan and their then husband alan they took first lesson for a while but they just didn't cross they didn't get that far yeah across the line what have you learned from this young man all kinds of things that uh charlie i mean obviously in his own field i've learned things from him but you learn from all your friends and you'll learn good things that's that's the nice thing about friendship so uh so it's uh you know it's a continuous process you and i much have talked frequently about values right some sense of how important it is yeah you have to share values right otherwise there's no yeah you know a sense of integrity a sense of but also a sense of of the way he's are you the student in this relationship no no as much as i can absolutely i would say yes because you once said to me i study him well i've learned an incredible amount from warren uh and some of them are things you can express like you know really looking at the time on your calendar and and valuing having this you know as much free time as you can i love it when warren gets out his calendar there's nothing in there empty days and i think i put a few entries in just just to show that somebody knows i'm still alive that is the way the way to do things yeah well bill i mean i i consider for example i consider bill it's not only the size of the gates foundation but i consider it the best run philanthropy in the world that i know about i mean i i really admire what he's done in the last and melinda with him uh in the last five years uh so it's you know i i'm learning from him all the time but in a sense of how he's approached philanthropy and yeah and the accomplishments just how he thinks you know but you'd probably talk to him about that too don't you we've had a lot of fun talking about uh philanthropy in fact the idea that giving uh money to children could actually be a detriment to them i hadn't started thinking about that and then when i first met warren and uh you know he said that that was going to be his approach that really convinced me uh that made sense and then of course it create created the issue of how to give it back in the best way because kids still like me incidentally wait till they grow up i give [Laughter] there's only a modicum amount coming and my daughter always refers to warren is the man who works at dairy queen don keel refers to him his kids used to refer to him as a man who was upstairs playing with trains that's the strange life you've led with kids but the difference about philanthropy which everybody talks about and everybody is admiring of the way you did it and how you came to it what have you learned other than the way he's approached it and how he has organized to do it and melinda of course together they're both incredibly rational in terms of thinking you know what what can produce the best results from society for society from this significant chunk of money and so they they set a framework first and then they both become extremely smart about the best way to execute within that framework so as to get the best results and and you know they're both young so the world is going to benefit enormously you know for decades but i've seen a lot of people give away money and some of them and there's nothing wrong with any any of the ways as far as i'm concerned but people generally aren't as thoughtful about it in my opinion as as as bill and melinda have been and and and they get better at it all the time is it also part for both of you in a sense that if there is two people you know who have certain similarities in terms of wealth but in certain similarities in terms of iq and intelligence there is someone who you feel comfortable with that you can express ideas to and bounce things off with respect well we're totally comfortable with each other yeah you don't i mean you don't have any worry about violation of confidence or or misunderstandings or anything of that sort so and someone who can grasp the idea that you're thinking about right right that's right when there's something that i don't get in business that seems strange to me i'd love to say warren does this seem strange to you too you know why does it work this way why is you know this business like this and this other other one like that and it's so much fun to think about why that might be and explore it and warren will send me lots of articles uh you know rip various things out i just care about that you're reading something you want to know absolutely i just tear right out of the publication yeah [Laughter] why don't you guys email each other well i can email to his administrative assistant she gets it and sometimes she'll he'll have her email stuff to me so you don't put your hands on it it's all a mystery i don't know what's going on that's part of his act he has said bill can do everything i can do that's true but i can't do some things he can do no that's not true it is that that's untrue no it is interesting how how curious minds have a few things they're very good at in a special way like warren looking at values and companies uh and then but that that intelligence can apply to a lot of interesting problems and so each you know have domains that were very focused on our whole lives which i think helps helps you to be good at something but then we're interested in all the things about business and politics that our experience in our our special areas give us some some ability to think about those has he led you to sort of investigate ben graham and try to understand what it is that is at the core of his fundamental outlook about investing definitely uh soon after i met warren i went back i read the intelligent investor i said how this is about bond yields jesus is pretty basic here that's just so he doesn't go in competition with me it is also part of the lore of the two of you you have never invested significantly in microsoft after i met him i bought a hundred shares just to keep track of it no it it's it's uh he spent a day explaining his company well if i'd had if if somebody told me i had to bet on anybody or any company in the business that's what i would have bet on but uh it's just not a business or an industry uh where i think i can see 10 years out as to how the world's change is happening so fast yeah and if change is part of a business and you were a little bit maybe i think i'm 60 sure of the answer 65 sure but when i can go someplace else and think i'm 95 sure that's where i'm going to go yeah and i've never you know said to warren you should buy microsoft that's for sure it does not fit his model technology is a is a surfing game it makes it fun to be part of yeah and it means when you do get things right the returns can be pretty phenomenal would be what the returns are you know the history of our business is where fantastic companies weighing digital equipment you know missed a turn in the road and off they went right uh you know so we all study those things so he's right then i mean absolutely the technology there has changed and with change there is risk change is wonderful for the world but sometimes it isn't so wonderful for investors his friends have said to me carol loomis and others that what he understands better than anyone is price ben graham understood that too cheap price value for values right right but he did you yeah and you tell me some of the things that about him that you haven't seen or you rarely see in a business person well when there was a crisis at solomon warren got called in over the weekend and during that course of the weekend he had to explain to regulators why they shouldn't shut the place down but they shouldn't shut it down uh because it would have created this financial crisis he had to go in and pick a new ceo and he had to deal with all the questions the press might ask about uh what had taken place there no one else could have done that you know he picked a fantastic person to uh lead lead the company he got the regulators to understand the chain of vents and there were many different regulators some of whom weren't that easy to get a hold of uh you know that that's just a unique thing the world is it's very lucky that warren had enough of a connection so that he could be called in to put out something that could have turned into a real problem and that's about judgment judgment of people judgment of values ability to communicate uh there's part of the story is he gets someone on the phone and says this is maybe one of the most important phone calls i said it was the most important day of my life that call was with nick brady who was then secretary of the treasury and and we received this terribly adverse order from the treasury which would have put us out of business on a sunday morning and then the u.s treasury does not normally issue things on sunday morning and tokyo was going to open in the afternoon and they were going to throw billions of dollars of liabilities liability data so i spent that day trying to get that order at least modified and and the treasury department wouldn't tell me where nick was so i would call them but he had to call me back and the phones didn't ring on sunday so i had to stare at this damn phone and see whether a little green light would go on but at one point i said to nick i said to nick at one point i've been trying to get through you know the problems we were going to have when tokyo opened which was at six in the afternoon and i i i made the statement this is the this is the most important day of my life uh nick and and he he knew me and my voice was probably cracking and everything and and he knew that whether i was right or not i believed i was right on that point and and he made a modification which in effect allowed the firm to be saved because he had confidence in you and i mean he knew i wasn't there the integrity the whole sense of tom murphy told me a story about you this is amazing to me when you invested in cap cities you gave him without telling him voting rights yeah sure to this dog without telling him i mean this is a quality of a man they don't come like this no tom murphy is the quality of man but you had confidence but it was just the point not telling him you did it because it was the right thing to do absolutely yeah i want to come back to another quality you believe strongly about and i think bill reflects that it is this time management idea i mean you have you try to tell people and reflect on this the sense of how you this is a man with enormous iq you're a guy with an enormous iq but there are a lot of people with big iqs who don't get as much accomplished because of what they're not they have a 500 horsepower motor and they get 100 horsepower out of it you know because they have all these things that are throwing sand into gears and it's it's amazing how you see a lot of that in wall street uh it's amazing how people you know can play three-dimensional chess and solve all kinds of tough problems get get tied up and then you know and and sort of elementary aspects of behavior and all that are so self-destructive beyond the business acumen beyond the investment philosophy and execution there is it seems to me and i just think about this because you know him so well better than anybody or better than most that quality of someone who has formed a philosophy of life well someone who loves life i mean a lot of people have a philosophy no that's true that's true the thing that stunned me the most about after i met warren of course you know that he was brilliant and interesting but that he really was having fun and that you know i i knew how to have fun but not quite at that level so that's the thing that he gave to you a sense of insight that if you pick the things where you can make a difference if you pick your time the right way you pick your friends the right way you pick the things that you really can contribute to that that can be so much fun uh you know i'm not as good at it as warren but that's one of the best lessons i've learned that fulfill sense of that that you can enjoy enjoy these things and it's but you but we're lucky too charlie you know i mean we're if we'd been born a different place in a different place or why are different i mean we if we don't have fun you know something's wrong the three of us don't have right exactly exactly do each of you in a friendship uh that is so strong tell each other when you're wrong if you think you're wrong is it that kind of candor a part of this we wouldn't hesitate to do that if it was necessary sure sure and anything that i'm troubled about uh for example when microsoft uh was was having some challenges uh in court there were parts of that where just talking it through with warren you know not that he would tell me uh necessarily to do something completely different just to talk through how should i think about it you know uh that was an incredible gift for me did you buy your wedding engagement ring in omaha nebraska absolutely what happened was melinda and i were in california and she thought we were flying to seattle and so when we started to land i distracted her by saying that my schedule's really messed up got her a little riled up about a schedule thing so she wasn't noticing that we landed in omaha she didn't look out the window i know i had her distracted so then when the jet landed warren was there and he took us over to borsheims and uh he had a little advice for us yeah what was the advice well i i said look at that bill i said really done in my business but i said when when i got married you know i spent six percent of my net worth on the ring and i said i don't know how much you love melinda you know but sandler sends a place to this one let's quantify it right there of course i can get it and we have the ring just for you right we can find something your credit's good you both are you're at different stages in your life uh you both could do anything you want to do buy anything you want to do life has been good in terms of family in terms of incredible the the ovarian lottery has been good to both of you we want we won the lottery today we were warned you know um are you optimistic about america today absolutely i'm optimistic about the entire world and you know the united states is part of that we won't on a relative basis be as unique as we've been but our wealth will continue to grow up the medical breakthroughs the computer breakthroughs that let people pursue their curiosity this is a great time to be alive the improvements that will take place will be great for everyone bill is an american but he he's basically a citizen of the world i mean he he has a world view he he thinks that the child in india is as valuable as as the child next door and and and and and he lives it and it comes out and and how his foundation operates and uh uh did you did you come to that because of because of of the obligation you put on yourself well in terms of giving away the money the when we thought about giving away the money the issue of what is the greatest inequity in the world came up uh you know in our the united states has been great about thinking through gender equity racial equity you know trying to reduce those things but the idea that the greatest inequity was the the lack of uh having uh health intervention that would let children live you know it comes from a sense of of trying to level things out and let these advances benefit the world broadly 6 billion instead of just say 1 billion anything else i should say about this friendship i mean this it's so unique and everybody is fascinated by it of what makes it up and how it's so so satisfying for both of you well we're sort of the odd couple of the rest of the world i'm sure but nevertheless it couldn't work better warren buffett made a historic gift of more than 30 billion dollars to the bill and melinda gates foundation by letters which were delivered earlier today i've committed uh 12 million and 50 000 shares they're earmarked held by me but every july i will be giving a million shares to the bill of melinda gates foundation uh did i say 10 million i meant to say 10 million and a million shares to the susan thompson buffett foundation and 350 000 shares each to the three foundations headed by my children susan howard and peter and uh that will continue throughout my lifetime subject to the only to one at least one of bill and melinda being active in their foundation bill and i are absolutely honored and humbled by warren's gift it's really unprecedented in terms of what we can do to do good in the world and it's something that we take very seriously we have feel an incredible responsibility i think when you give away your own wealth it's one thing but to give away the body of somebody else's life work is really quite something we've known warren since 1991 and it was his thought that wealth should go back to society that got us thinking about doing our foundation in the first place and as that's grown uh we've had a chance to share uh how that's worked out i remember one time in 2001 where i got to give a talk to warren and some of his friends about global health and you know how excited i was about the the opportunity to do something there there is also this a selfless act i mean didn't you have any great desire to see the buffett foundation and the buffett library and the buffett this and buffett that no no i like the omaha public library [Laughter] what will be your role then i mean you'll be a trustee but will you sort of what if i have any ideas that they can use me as a sounding board they can use me any way they want to use me but they're already doing that yeah but well that's true and so it they're really it's not it's it's not a big deal uh but if i you know anytime i can be helpful fine i won't get involved in their investments that complicates life so i i'm totally out of that game are their priorities your priorities yeah overwhelmingly they they mesh yeah i wouldn't be doing it otherwise and you have the susan thompson foundations you're looking at other issues and the kids have foundations which are involved in issues i've seen what what they're interested in i mean and i've seen the way they pour themselves into it will you be able to do things that you couldn't before well absolutely in some ways we have a the challenge of success that is every time we get a new drug then you have a much bigger problem of how do you get it distributed how do you make sure it has the impact you have in mind and if you look at the top 20 diseases there's at least 10 of those we're making very good progress and can expect in the next five to 10 years to have solutions and so scaling up is very important in education as you get one high school that's working well it's a model you'd like to see that spread throughout the country and so what we've got here is the opportunity now to really deepen and accelerate we'll add some things that relate to poverty but the top goal being going after the health and poverty issues and then education is the second that's not going to change you have found that in fact if you can change health it will have an impact on how many children people have left an impact on a whole range of other things beyond their health absolutely and i think what this allows us to do is deepen what we do in health so where we're already working on medicines for malaria or tuberculosis vaccine or an aids vaccine we can also start to surround those programs you can't give somebody medicine if they don't have any food in their belly to eat or if they don't have clean water and so looking at some issues around say agriculture to help small farmers in africa give them drought resistant seeds for sorghum or help them get seeds that if there's a virus in their banana doesn't spread from crop year to year help them get their products to market and have more information helping them figure out ways that they can have clean water or healthy food to lift their family up while we're also starting to solve some of these diseases i think is how we'll deepen the impact of what we're doing in health is there and has there been any kind of dilemma between spending money on terms of the future as you did with the grand challenge and spending money today in terms of the logistics of getting existing drugs to people absolutely i mean we have finite resources and there's a a very healthy dialogue that goes on where some say hey you ought to spend more on the immediate solutions and others say no you're kind of unique in in being willing to fund uh the the research and so you should focus more on that and that's that's great having that ongoing dialogue people who disagree with this uh getting advisors to come in on on those issues is very helpful you know take aids as an example uh spending money on prevention has this incredible impact because every case you prevent prevents the cases that might have caused but then you you see the face of the tragedy the people who are who are getting ill and you want to have treatment getting to them as well and so there's these problems are big problems that uh can absorb huge amounts of money and in fact that's why we need to work with governments and make sure they get involved and we've been very pleased to see many governments around the world step up and do more in this area of global health was it important to you to be able to make this philanthropic gift and have it pay off immediately well you certainly want it to be used intelligently immediately the payoffs don't necessarily come that fast and and frankly that's why they'll be a lot better at this than i am i like i like immediate feedback i'm the kind of guy if i walk in the ice cream store i want a triple dipper right there and really philanthropy you have to have a longer view than that you have to you have to take delayed results in many cases now they're going to be impatient to get the best results they can but but that's it's a different game in that respect and and and they're very well suited for it you weren't convinced that you'd be good at philanthropy were you i think i'd be terrible absolutely well i uh like the fast feedback but secondly it probably requires uh answering to a bigger constituency in a sense than i like doing i i like to look in the mirror and ask myself what i'm doing okay you know a lot of people whose opinions i really don't want to listen to you know so you have to be a little more diplomatic perhaps than i am and and uh you know i i'm just delighted charlie you know i as i said in that article i mean if you've got something important in life to do let's say i was going to play the golf match in my life you know and i could get somebody to substitute for me like tiger woods i would do it and if i had to sing on television you know and i could i could i could just mouth the words and get sinatra in the background you know doing it for me i'd do it so the the idea that you have to you have various responsibilities in this world this money is a responsibility but the but if you can get somebody better at doing something that needs to be done in your place you know that's i'm used to that people have been speculating as you know for a long time about why you haven't done this before and you were saying you haven't done it before susie's death was one thing yeah well the bigger you know but if you go all the way back charlie i mean susie and i decided when we were in the our 20s that money would go back to society when you told her you were going to get rich well i was sure but she thought i was delusional but as time went along i managed to convince her but they um uh you know it was always going to society there wasn't any question about that now my logic but it also went down the grade of what i wanted to do but my logic was that that philanthropic needs would be huge today tomorrow 20 years from now 100 years from now and if people were going to devote their money to philanthropy the ones who were high compounders should take care of the philanthropy 20 or 40 years out because that would be you they would pound yeah i really thought you know it made way more sense than to give a million dollars in 30 years ago which might have been all i would have had available to have a compound and people who were low compounders should take care of the current needs i mean if i ran a university and i had two wealthy alumni and they're going to supply all the money i would take the guy who wasn't going to do much with the money and use his money currently and i would have the other compound for me so so anyway it was a convenient way to think anyway and uh you know that that that has been my philosophy on it but now is the time you think people are surprised you did this probably yeah when you made this decision you had to ask yourself will there be consequences for this extraordinary compounding that has been taken place and will it affect berkshire hathaway stockholders yeah and i don't i don't think it will one iota as a matter of fact 31 of the money that berkshire hathaway makes if we can make another 100 million dollars 31 percent of it through my shares is going to philanthropy so if if there's any if you could have a greater motivation that i've had over the years i'm not sure you could but but i i would have it now i mean it it it's a great feeling to know that as the company becomes worth more and more money that it actually translates into something good for people around the world so i know of no one who loves his work more than this guy he loves to tap dance to work as he says that will continue you'll go back to omaha and tap dance to work and make these decisions now knowing that you're not only benefiting the berkshire shareholders but also people's lives far away i knew it would benefit philanthropy eventually but now it's very tangible it's very tangible and every year i hope those shares that are committed to go that year are worth more money and and over time you know i think they will be so this this can be a lot bigger and i you know it's up to me to to work to make it so but you do grow great satisfaction from the fact that you now have made this decision and you know where it's going yeah absolutely charlie i mean i mean it's it's the second act of of of the money you know basically you you amass these claim checks in effect which money is on society and then you figure out the best use for them the philosophy that carnegie had in the gospel of wealth uh warren handed that out at a uh get-together we had and uh you know it was it it really helped me think uh about uh philanthropy and you know how you ought to set very high goals this is before you created the foundation that's right uh this the whole idea is over in ireland yeah the whole idea of not uh that leaving the wealth to your children would actually not be the best idea for society or for them uh that came out of some things that warren was talking about right around the time we met him i was stunned to think oh geez this is a problem i'll have to deal with uh here's some very good advice uh about that and uh and now uh now here here we are but i do think energy and and pulling people together the right way getting partners to work together in new ways it's what's allowed us to to move as fast as we have charlie i've you know i've had a business i've had a great partnership with with my partner charlie munger and i've seen what happens when you get two people together that that you know that are in totally in sync but also have different ways of looking at things and but are working toward a common goal and you could not have a better pair than bill running a foundation which i wonder do you think he'll be drawn into this and so his involvement will deepen a little bit i think warren would be an incredible philanthropist but he loves his job and that's what he's going to do for you but you love your job and you have misgivings about leaving michael's no i do this is a tough one it's unusual to have two things that you love and that you think are important and challenging and so you know i've had this debate for several years and i wanted to be very explicit about uh the change and you know i i don't even know what it'll be like but i'm very excited about it and this just reinforces uh the importance of having that time and and spending it well but you know we had warren at a discussion about uh microfinance uh about a month ago and you know it was great talking with these bankers and you know warren was asking about their costs and their did people repay the loans and so we're going to draw them in a little bit we'll do our best about that you said it famously about children your your own children who you've done wonderful things and created foundations for them exactly and you're very proud of them and and and like they feel the same way about you that you wanted to leave them enough money so they could do whatever they wanted to do but not do nothing yeah that's what they can do anything but not nothing yeah i i don't believe in dynastic wealth i mean if you contrast uh it's nice to leave something the kids and i mean i can understand a person who wants to leave their farm or a small business they built and all of that to their children but but dynastic wealth the idea that many generations uh should be able to go uh without doing a thing if they if they if they wish simply because they came from the right womb i mean that really strikes me as flying in the face of really what this country's about i mean we believe in a meritocracy and equality of opportunity and then dynastic wealth flies in the face of that so i've really felt that if you have a choice between having a foundation like this doing tremendous things for people all over the world or or having a bunch of people you know as they say they came from the lucky sperm club yeah you mentioned charlie munker yeah uh you called him up and said i'm thinking about doing this what was his reaction he says you finally had a good idea i've been waiting for that for years [Music] bill and i sort of have a background mindset of a market system and a market system works awfully well it's worked well in this country but a market system has not worked in terms of of people poor people around the world with something with a disease that that should be available for just peanuts the market system just uh fails in that case and and and you have to interject yourself into that and and make sure there is a system that will deliver uh you know i'm a big believer in the market system 95 percent of the time but but the uh done pretty well for me and the world and the world absolutely but but there are there are things where the market system is is is not going to solve the problem and and that's where bill came in on this you have said to me in other conversations you know that when you were thinking about what foundation you might be involved in not in terms of choosing one but in terms of what your money might that you wanted to choose things that had perhaps been neglected yeah there's if the money is pouring into something and and talent you know there's there's really no reason to duplicate there's a there's millions of good things to do in the world and and you're looking for something that's important you're looking for something that you'll be reasonably good at in terms of implementing any any ideas that do come to mind and you're looking for something that really needs more funding and uh and that's exactly the way that bill and melinda have come at the problem you know who bill and melinda can certainly speak to this who would love this is susie i mean the idea of what you have done because she said to me you know i mean i'm always wanting him to right not do more yeah yeah i was not i was not [Laughter] no one could have had better instincts about about doing it and she would have liked to start it much sooner and and as soon as it could be done on a good scale and i wouldn't quarrel with that i mean she saw people one at a time and she saw him with needs now and and and she was hit by that obviously uh so i i mean i don't disagree with that it was perfectly natural for her to react that way and if she if i died when i was 60 or something there'd been a lot of money then i mean she would have really gone to town and you would have been pleased that she would be running a foundation dedicated to that absolutely and she cared a lot about about these issues i mean she talked enormously about women lifting themselves up in their situation and particularly having access and tools to family planning was something she was very interested in and she traveled extensively especially to vietnam and a lot of places in southeast asia so she cared a lot about these inequities and i keep thinking how pleased she would be she made this decision yeah uh you hope in what way this will in a sense spur other wealthy people when people are thinking about amassing wealth they frequently go to somebody else that they think knows more about it than they do and then join in i mean 50 years ago i 50 years ago last month i started a partnership and seven people gave me a hundred and five thousand now why they do it they thought i would be better at accumulating money for them than they could themselves good day it worked out okay but why why not apply that same thinking when you're eventually dispersing wealth i mean the idea that your old business cronies or some local pals at the country club or or whomever or even a professional staff that may take over the agenda the idea that you can't also apply that same theory of getting people that are better than you are at doing something in dispersing wealth as well as an amassing wealth i i think it's sort of obvious so i would hope uh that people even the modest means that don't have something specific that they really want to do it and if they have something specific god bless them i mean they have their alma mater or whatever but but if they really are sort of groping for what to do with far more money maybe than they ever anticipated that they would have they could look around doesn't have to be the gays foundation at all but it but they should look around for somebody that they think will do the job better than they could do it themselves that has somewhat similar goals and and and and turn the money over to them i think it makes nothing but sense when we described to a friend uh what warren was doing uh you know we were saying wow this is an amazing thing that the two of you met and that this could come together uh and they acted like it was you know almost obvious that this would happen i have to say to me it wasn't uh and even when warren first mentioned it was like wow is he serious about that wow are we ready for that and you know it's only hitting me today i mean this is the day warren's going to actually sign these letters but but how long ago was that bill do you remember i first mentioned to you over the last uh year and a half or so he mentioned and at first it was you know kind of in passing just a very nice thing that gosher foundation's doing well and and we'd had that ongoing dialogue uh it was in the last few months that uh it was clear he was getting very serious with warren once once he decides something it's very crisp the other thing i know about you once you make a decision you don't look back you have not lost one one moment of sleep because i might be doing the wrong thing i might maybe maybe maybe maybe nothing nothing do you wish you had done this earlier no i really don't i think this is the right time this is the right time yeah i do charlie yeah you know i've had a good chance to see what they've done i feel berkshire is positioned better than ever for the future i mean one one thing about it is if i'd given the stock in a in in a lump amount there might be people who say that they were too concentrated in one stock and that sort of thing well i i want the well-being of their foundation to be sort of concentrated because i think it's going to do very well so i i wouldn't want them to be forced to sell it and you know buy government bonds or something of the sort so this way i i think it i don't see how it could be any better how will this change your life day to day zero zero yeah you go back to omaha and your tap dance to work you get on the phone bill once said to me you do three things you talk on the phone you read you play bridge and then watch there is the satisfaction to know uh and to see that you can uh while you're alive not when you're dead not among executors that you can do something that you can see because it's already taking place changing and see it's getting done right which is really true with the accommodation yeah this is a great day for you it's a great day it really is when you think about this gift and the reaction to it which has been overwhelming um tell me how well i've been surprised at the reaction charlie because what else could you do in my position that made as much sense i mean it was it wasn't like this required any brilliance or anything it just was the logical thing to do to get a great you know i hope but i think that's an interesting point because a lot of people say it is only because of warren that you would come to that kind of conclusion a lot of no other foundations are giving their money to the bill and melinda gates foundation well they haven't yet but it shouldn't necessarily be that but the idea of getting somebody that's better than you are younger than you are spent more time at it going to spend more time and who has common ends to actually handle your money for you people do it all the time on the accumulation side why not do it on the distribution side you said to me in another conversation uh and help me understand this you would give up to unders the future was so exciting you would give up a year or two or whatever if you could know what was going to happen the next 40 years if i could be an observer i give up being a participant for a few years at the end to be an observer for 40 years i just sit there and be i find the world so interesting and there's so many things i want to see i'd like to see how they come out how they play out and everything so i would you know the last two years i'm probably not gonna be much of a participant anyway but uh but i would give up a few years as a participant and to be able to sit in the stands for 40 years in our 50 years and see what see how this game plays out just the the convergence of all the forces that are right everything going on and extraordinary technological advances extraordinary it's going to change so much it may not be for the better unfortunately but i i still would like to i'd like to see the rest of the movie or a good portion of it we conclude this three-part look at warren buffett with this observation here is a man of great passion for his work of great love for his friends and who will see his life's work have a tremendous impact on the lives of others thank you for joining us see you next time

Channel: Investor Archive

Views: 16,539

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Id: opOYc5S1zwM

Length: 50min 58sec (3058 seconds)

Published: Thu Nov 12 2020