October 4, 2005
Bill Gates and Warren Buffett Talk With UNL Students About Much More Than Money
By Steve Jordon, Omaha World-Herald, Neb.
Oct. 3--LINCOLN -- The world's two richest men talked mostly about human values -- personal relationships, leadership, pleasing customers --and less about dollars Friday in a rare Q & A session with University of Nebraska-Lincoln students.Warren Buffett, chairman of Berkshire Hathaway Inc. of Omaha, and Bill Gates, chairman of Microsoft Corp., agreed on nearly everything, from the danger of nuclear terrorism to the unlimited potential of students to Buffett's superior bridge-playing skills.
Both believe they and other wealthy people pay too little in income taxes in relation to average wage-earners. That their fortunes will go to help resolve global disparity. That true success is measured by the love of those around you, not by money.
Student Stefanie Tomkins asked how an individual could leave the world a better place and not be discouraged by the size of that task.
"You're changing the world every day," Buffett said, such as by the way you behave around other people.
Gates said true change takes a long time and requires broad experience. "A small number of people can actually make a very dramatic difference."
The formal topic was ethics, and both said that the ethical character of a business starts at the top and filters through the organization. But they answered any questions the students posed, including one about how much cash they had in their billfolds.
Turns out Gates has an assistant who keeps his money, while Buffett had enough to get into a friendly poker game the two planned for later in the day.
About 1,700 people, nearly all of them business students who received tickets to the event, attended the 1 1/2-hour session at the Lied Center's concert hall. The two held a similar session at the University of Washington in 1998, near Gates' hometown of Seattle. Nebraska Educational Television will broadcast a program on the event sometime next year.
Gates and Buffett sat on stools with a table and Cokes between them, and about 50 of the students sat on risers on both sides of the stage.
The students on stage, selected by their professors to ask questions, drew numbers and stepped to microphones in order, with 27 getting to ask questions.
Buffett arrived early, wearing a red-and-white Nebraska athletic jacket over a red shirt and white pants. Gates was a bit late and wore a dark red Harvard sweat shirt, the university he famously abandoned to start up his software company.
Asked by student Tara Steinbach whether he would succeed Buffett at Berkshire, Gates said the job wouldn't fit his expertise and that he is content to act as an adviser since he joined its board of directors in December.
"It won't be me," Gates said of Buffett's successor.
The two said they have been friends since 1991, when Gates' mother invited Buffett and the late Katharine Graham of the Washington Post to a gathering in Seattle and then called her son to attend.
"Mom, I'm busy," Gates said he protested at first, figuring he didn't know much about investing.
He eventually flew to the party in a helicopter, planning to leave after a few hours. Instead, he and Buffett began talking about their many common interests, and since then the two get together frequently, either in person or via the Internet.
At Friday's event, Buffett took the leadership role, usually answering first or saying, "You take this one, Bill."
The two friends have a 25-year age difference -- Gates turns 50 this month, and Buffett turned 75 this summer -- and while Gates is just starting to raise a family, Buffett is a great-grandfather.
Buffett got more laughs than Gates. As he took a drink of Coke -- Berkshire is a big Coca-Cola shareholder -- he urged students to drink lots of it. Actually, he said, "I don't care whether you drink it. Just open the can."
Nichole Brockhoft, a business administration major, asked what was the best advice they had ever received, and Buffett turned to Gates, saying, "What did I tell you that impressed you most?"
Gates said he once saw Buffett's calendar and it was almost blank. That's a good lesson on keeping control of your time and learning how to say no, Gates said.
"The truth is, I don't get invited anyplace," Buffett said.
Seriously, Buffett said, his father had told him that it's more important to do well on your "inner scorecard" of personal success rather than the "outer scorecard" of exterior accomplishments.
Several times Buffett praised the work in education and health of the Gates Foundation, which already holds a large share of Gates' $51 billion fortune. He said his own wealth, mostly $40 billion worth of Berkshire Hathaway stock, will go toward similar causes, applied "as intelligently as possible" by the Buffett Foundation's board of directors.
Student Allison Mack asked what the two thought they would be doing 10 years from now.
"I'm doing what I love, and health will determine how long I do," Buffett said. He said he has told his children to tell him when it's time to stop working.
Gates said that in the coming years he expects to spend more time on philanthropy and less time on work at Microsoft. There, he spends most of his working hours in meetings, brainstorming new product ideas and reviewing progress of other projects. He takes two weeks of "think leave" away from daily business to ponder new ideas.
Buffett said he has 50 weeks a year of "think leave" and has almost no work schedule.
"I read a lot," he said, and he spends a fair amount of time on the telephone.
Student Ryan Mendlik asked what habits young people should develop, and Gates said one habit to avoid is procrastination. His fellow students used to think it was fun to put things off until the last minute, Gates said, but that didn't work in business.
Buffett recommended not cutting corners and doing more than your share. He said it's important to "have the right heroes" as role models.
Student Christin Lovegrove asked how the two could raise children in a wealthy environment. Buffett said his children weren't raised that way, since his home and lifestyle were no different from the average Omaha neighborhood.
Gates said it's important to expose children to the realities of life, including poor areas outside the United States.
Some students said afterward that the session was enlightening.
Genevieve Truong, an accounting major from San Francisco, was on the stage but didn't get to ask her question about private enterprise's role in higher education. Tuition is rising rapidly and government seems to have other spending priorities, she said.
But Truong said she was pleased that the two men gave "very thoughtful answers," especially Gates' comment that to succeed in business you should develop three key abilities: to think strategically, to lead other people and to be a good individual performer.
"It's something to focus on," Truong said.
Mark Ketcham of Omaha, an actuarial science major, said he had expected Gates and Buffett to discuss mainly business. "They really care about global issues," he said.
Tyler Kaps, an accounting major from Arcadia, Neb., said he was impressed with their recommendation to find an occupation you love rather than looking for the biggest paycheck. "I was surprised at how down-to-earth they are," he said.
Many of the students picked up Dilly Bars provided by Dairy Queen, one of Berkshire's subsidiaries, on the sidewalk after the talk.
Other Buffett-Gates observations:
--No corporation can ensure that all its employees act properly all the time, Buffett said. With 190,000 employees at Berkshire, "somebody's always doing something wrong."
--Recent tax cuts have benefited the wealthy, Buffett said. "Bill and I should have a much higher tax rate." Gates said a rate as high as 40 percent or even 50 percent would be "not that bad" for very wealthy people. Buffett drew applause when he said, "There are people fighting in Iraq that are paying higher tax rates than mine."
--Video games of the future will be more social, Gates said, allowing people to interact with each other and attracting more women and a wider range of age groups.
--Their biggest business mistakes have been deals they have missed. Gates said he miscalculated the direction of Internet search engines, and Buffett said he failed to invest at times when he knew he should. But both said they don't dwell on past mistakes but rather move ahead to new things.
--Asked what super powers they would want, Buffett said he'd like to read faster and Gates said he would like the power to resolve the sorts of problems his foundation tackles.
--Buffett said that reading Benjamin Graham's investment book, "The Intelligent Investor," in college changed his life, but as a child he had read investment books at his father's office.
--Gates said a key moment in his life was when his school, using the proceeds from a mothers' rummage sale, bought a computer. He and a friend, Microsoft co-founder Paul Allen, became obsessed with finding out what the machine could do.
--Buffett said he makes most decisions without consulting others. Gates said he has a trusted circle of advisers.
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