The Warren Buffett Interview

The “Sage of Omaha,” as the media likes to call him, is one of the world’s richest business tycoons. Yet, his spending habits would make Mother Theresa blush. He would rather have a McDonald’s burger than a $100 steak because “a fancy meal won’t make me any happier,” says Buffett. His self-effacing style isn’t just for interviews; it’s on full display when he’s driving around Omaha, the headquarters for five hundred billion dollar Berkshire Hathaway which he founded in 1959. In 2019, it was the second-largest and second most profitable company in America (behind Apple, where he is the second-largest shareholder), according to Forbes. Buffett runs it like a large convenience store with only 25 people on the payroll to oversee 350,000 employees. By comparison, New York City’s Mayor Bill de Blasio requires thirty times as many to manage an equal number of employees. Perhaps it’s time we turned over complex organizations to people who, like Warren Buffett, know what they’re doing?

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Buffett’s secret isn’t efficiency, just common sense. He lives simply, he governs simply, and guess how he invests? Simple is right. He understands that spending money on bureaucracy doesn’t create value, just a bigger bureaucracy. When he gathers more than 40,000 Berkshire shareholders for the Berkshire annual meeting, it is a love fest for people who are torn between admiration for making them rich and curiosity to learn how he does it so well. What is even stranger, at the same time as he’s minting money, he turns people into smarter, more reasonable versions of themselves. Call it the Buffett way.

If you are lucky enough to be in Buffett’s inner circle, he will even invite you to a shindig he throws the day after at the Omaha Country Club. I was lucky enough to be included and had a chance to chat with the man about various subjects. My conclusion is that while many of us want to be Warren Buffett, the smarter play is to learn to live by the same rules.

Here are a few insights that Buffett shared with me:

Buffett proposed marriage to his wife as part of his Dale Carnegie public speaking homework:

I was terrified of speaking in public. I avoided any class that would require it. Then I finally signed up for a Dale Carnegie course when I got out of school. I spent 100 bucks. I got this little diploma. I proposed to my wife during the term of the course, so I got my money’s worth there.

Buffett on the outlook for America

I’ve never been pessimistic about the United States. I bought my first stock in the spring of 1942. I was 11, and we were getting creamed in (World War II) in the south Pacific, and the Philippines fell, and the death march at Bataan. I was optimistic about the country then, and I’ve been optimistic about the country ever since. Incidentally, the Dow Jones average then was 100, and now it’s at 17,000. No one has ever been a success betting against America since 1776, and they’re not going to be a success in the future doing it either.

Encourage employees to aspire to the highest levels of ethical behavior

Every two years, I write a very simple letter. It’s a page and a half. I don’t believe in 200‑page manuals because you put out a 220‑page manual, everybody’s looking for loopholes. I tell them that my reputation and Berkshire’s reputation is in their hands, and (although) we’d like to make more money, but we’ve got all the money we need. We don’t have an ounce of reputation beyond what we need, and we can’t afford to lose it. We never will trade reputation away for money. They’re the ones that are the guardians of that. I want them to not only do what’s legal, obviously, but I want them to judge every action by how it would appear on the front page of their local paper written by a smart but semi‑unfriendly reporter. Then it would be read by their family, neighbors, and friends. It has to pass that test. I tell them I don’t want anything around the baselines. I tell them there’s plenty of money to be made in the center of the court. I’m 84, and my eyes aren’t that good anymore. I can’t quite see the baselines that well, so just keep it in the center of the court, and if they have any questions, call me.

How to handle bad news

The first is that when you find out bad news, correct it, and if it’s necessary to report it to the authorities, notify them immediately. You’re going to get bad news. I got 330,000 people. I will guarantee you that probably dozens of them are doing something wrong right now. I just hope I find out about it early, and the person below me finds out and lets me know if it’s bad enough, and that they stop it. You can’t have a city of 330,000 without an occasional crime of some sort. It’s going to happen, and you’ve got to do something about it fast when it does happen.

The biggest sin in journalism:

As a CEO, I have spent more time talking to journalists than perhaps any CEO in the country. Partly that’s because I’m 84, but it’s partly because I like to speak to journalists. The greatest sin they commit — You’re looking into something because you have a working hypothesis, but you have to give up that hypothesis if it turns out not to be correct or if it’s misleading. Once you’ve invested a lot of hours, and your editor knows you’ve spent a lot of hours — now you got to go back and tell him he or she is wrong. There’s a lot of momentum toward a lousy story, but you have to be able as a writer to say, “My hypothesis is no longer correct.” But it’s hard to do.

Reporters and headlines:

I ask reporters, “You may not write the headline, but I want you to be able to tell me after this story runs that you were okay with the headline because the headline is what ten times as many people are going to carry around in their mind as the story. Don’t tell me you’re absolved of everything because you don’t write the headline.” Good reporters will do that. If they feel the headline misrepresents their story, then they should complain to the editor.

On CEO compensation

I disagreed with the level of options issued, according to the Coca‑Cola Company proxy. I thought it was excessive. I abstained from voting. I announced my abstention after the vote. I did not want to be leading a proxy contest or anything of the sort. I think the management of Coca‑Cola is first‑class. I thought if they were reasoned with, they might well change things, and they have. They’ve dramatically changed that plan so that instead of over four years, it’ll be over 12 years. That’s cutting it by two‑thirds. The chairman of the compensation committee is a very first‑class person, very smart. She picked up on all the points on it, and they made the changes. The abstention accomplished something very significant for Coca‑Cola shareholders.

The financial crisis

I think that there have been individuals do things in business that they should go to jail for, and they have, and sometimes, they should, and they haven’t. You just have to decide about when the activity of some individual is criminal, and I think that they should be prosecuted. Still, every time something goes wrong at the corporate level — it is not necessarily criminal. I will promise you, in the next five years, something will happen at Berkshire that will be the wrong thing for somebody at the corporation to do. We’ll correct it, but it’s going to happen from time to time. I don’t think I should go to jail if one of our 330,000 people does something they shouldn’t do.

On the media

Mickey Mantle once said, “it’s amazing how easy this game is once you get up in the press box.” There is that problem. Of course, you don’t need to have experience in everything to write about it. Still, if you’re going to be a business journalist or a political journalist, you really should understand business. Going back to our boardroom example, I can tell you that most journalists probably, and most Americans, really don’t understand the dynamics within a boardroom. It’s a little hard for journalists to be planted in boardrooms around the country, but I do think that business journalists have to understand accounting. I run into a lot of journalists that don’t understand accounting, and that’s too bad.

The best business journalist

The best business journalist I’ve known has been Carol Loomis. She didn’t start out knowing about business, but she wanted to learn. She is smarter at the end of every day than she is at the start of the day. That’s not true of many people. She learned accounting and all aspects of the business. As a result, she became the best business writer in the United States or maybe the world.

Outlook for journalism

Everybody’s a reporter. It’s changed the world, and you can see it in daily newspaper circulation in the United States. I guess there are 1,400 or so daily papers left. There were 1,700 not long ago. Their numbers are going to go down, and their circulation’s going to go down, and then their earnings are going to go down. I used to have to wait until the next day to look at the box score of what the Cardinals did the night before and find out how Musial had hit and everything. Now I can go to ESPN.com, and I’ll get a play by play. The world has changed, and people demand instant reporting. That means that they get a lot of stuff before the facts are out, but it means they get the facts very quickly too. (Looking forward) There will be first‑class journalism in publications devoted to that. There is a big enough market for that. (but) It’s not where most of the money will be, and money will drive what the public sees.

Advice to business journalists

If I didn’t do what I do in my life, I would have wanted to be a journalist. I consider myself a journalist, to some extent. I assign myself a story. I say, is the Washington Post company worth $22.00 a share in 1973? Is the BNSF Railroad worth us paying $34 billion? I assign myself the story. It’s my working hypothesis that it is, but then I go and look for the facts, and I try not to be selective about the facts that I use as input. Journalism is fascinating. I love it.

I would say that you should always observe that rule about not letting the hypothesis determine the story, and secondly, you’ve got to learn about accounting. You’ve got to learn about how business works. You can always get smarter. If you do the right kind of job, you will attract the right kind of sources. I’m a source for certain journalists, and the reason I am is that I admire their work. The others get no place with me.

It’s essential to — if you want to become a great journalist, to behave like one as you go along, and then all the other pieces will fall into place. You want to have a curiosity about business. There are so many good stories that haven’t been written yet, and I know a few of them. You couldn’t be working in a better area. Business is always going to be relevant to the body politic as well as interesting to a lot of readers, and if there are so few that are good that you’re going to stand out if you work at it.

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