Every year, Glide, a San Francisco charity, auctions off a chance to lunch with Warren Buffett, CEO of Berkshire Hathaway and of the world’s wealthiest individuals. For the last four years, the winning bids have reached into the millions. By that standard, this October, twenty DePaul graduate students were afforded a million dollar opportunity to attend a Q&A and lunch with Warren Buffett in Omaha and to visit three of his companies.
Joining the DePaul students were students from several business schools including Harvard, Columbia, Minnesota, and St. Louis among others. DePaul secured its invitation to participate thanks to the generous intercession of Frank Ptak, a DePaul alum and benefactor and the CEO and President of the Marmon Group — a Berkshire Hathaway company. The trip was just over 24 hours long, yet according to the students who participated, the impression it made is certain to last the rest of their lives.
Following are 15 great takeaways from the trip. Most have to do with words of wisdom from Buffett or observations made during visits to three Berkshire Hathaway companies, though some, including the first three, are more DePaul centric:
#1 Pay Attention to Your DePaul Emails
In early September, Christa Hinton, Assistant Dean and Director of the Kellstadt Career Management Center, sent out an email to students informing us of an opportunity to travel to Omaha for the Buffett Q&A. The trip was just over a month away so the selection of students and the purchasing of plane tickets needed to happen quickly. The swiftness of the opportunity was a great reminder to pay attention to your inbox when it comes to DePaul because along with test email alerts from the safety department, and notifications of tuition due, are once-in-a-lifetime-opportunities. And when those opportunities present themselves, fortune favors the quick.
It is easy as students to get caught up in the minutia of day-to-day, class-to-class tasks; nevertheless, there are a lot of great people at DePaul working to provide incredible experiences outside the classroom.
#2 Stay Curious
In her first email, Assistant Dean Hinton asked students interested in participating to submit a question they would most like to ask Buffett. From the pool of 300 respondents, 20 students were selected. During a pre-trip meeting, Hinton and Associate Dean Heiser made it clear that those of us selected were chosen not because we were the best students, or simply the first to respond to the email calling for submissions. We were being rewarded for our curiosity. I think this is an important point that mirrors one of the overarching lessons of graduate school. One does not have to be the smartest or have the best grades to be successful; success is often derived from asking the right questions, being curious, and putting one’s self out there when the outcomes are unknown and un-assured.
When asked why he applied, participant Stuart Schisgall (who started his MBA this fall) said he thought Buffett was one of the most interesting people you could meet and that he (Schisgall) is drawn to competition and wanted to win. But most of all he really wanted to ask Buffett “If you were to begin your career today as a 20 year old with the knowledge you’ve acquired during your life, what would you do similarly and what would you different in 2013 than you did in 1950?”
Schisgall said he spent some time as a financial planner and came to appreciate the extent to which people are struggling out there. In addition to asking his question, he also hoped to personally say thank you to Buffett for the opportunity.
#3 We Are All Important Members of the DePaul Family
At our pre-trip meeting, it was evident how seriously DePaul was taking this opportunity and the degree to which they wanted us to have a great experience — but also to understand that we were traveling to Omaha as representatives of the greater DePaul Community. Frank Ptak had stuck his neck out to get DePaul a seat at the table, and it was up to the students attending to prove we belonged there. Deans Heiser and Hinton brought in another Associate Dean, Misty Johanson, to give a brief talk about professional etiquette. Her presentation was a great reminder that professional and social gatherings are not passive events; instead they are activities that require energy and attention.
#4 “Be Germane to the Business”
The first Berkshire Hathaway company DePaul visited was the Nebraska Furniture Mart (NFM) where students had a Q&A with Bob Batt, vice president of NFM and grandson of the founder. In talking about the successes of NFM, Batt stressed the importance low costs and the value of being a lean company. He summed it up on the employee side by saying, “If you work here, you should be germane to our business. Otherwise you can’t be here.”
Batt credited this philosophy with helping NFM survive the economic downturn without having to resort to layoffs. Furthermore, he credited a good deal of NFMs success on its having experienced employees who provide extraordinary value and who can be empowered to make decisions in the best interest of the company and the customers.
#5 “Don’t Do Anything You Wouldn’t Want to See on the Front Page of the Paper”
A theme DePaul Students heard throughout the day from Mr. Buffett and many of his employees was “Thou shall not embarrass Berkshire Hathaway.” It was a theme that hit home with graduate student Rachel Miklas who said the thing she would remember fifteen to twenty years from now was Buffett’s concept of integrity. Miklas said, “It was encouraging and uplifting to see in business, even today, that it is not all cut-throat, lies and manipulation. Always do what’s right…Always do what you would be proud of.”
In a similar vein, graduate student Steven Corush liked Buffett’s recommendation that the attendees make a list of the qualities they like in others and what qualities they don’t like — and then try to live according to the qualities you like. Try to make those your habits. On that point, Buffett added, “If you write down qualities you like in others and what you don’t like, you’ll notice the qualities on that list are not genetic. They are qualities you can have. Why not set out to do it? It’s not complicated stuff.”
It was clear to the students that this is exactly the way Buffett has tried to conduct himself. When explaining his philosophy on investment partnerships, Buffett said, “Investing should be a partnership; not a situation where the manager is trying to take advantage of the investor. My limited partners are real people. I run it the way I would want it to be run if I were the limited partner and they were the other.”
Batt said Buffett’s instructions to NFM was “Sell cheap, tell the truth, and you’ll be a success.” Batt also said “It can take 50 years to build a great reputation and only 30 seconds to destroy it.”
#6 “Stay Within Your Circle of Competence.”
Not surprisingly, a lot of the students attending the Q&A were hoping to gain insight into Buffett’s success as an investor. On this topic, Buffett recycled one his most well-known concepts, the “Circle of Competence.” He said a lot of his success comes from only making investments in companies and industries he knows something about; in other words his Circle of Competence. He said it doesn’t really matter how big that circle is; instead, the important thing is knowing its border.
As an example, Buffett said when the internet blew up, and money was flowing into that sector, it was outside his Circle of Competence, so he never chased after those investments. The ability to stay within ones Circle of Competence is related to another core Buffett belief, that the most important quality for investing is emotional stability.
#7 “When Others Are Fearful, Be Greedy. When Others are Greedy, Be Fearful.”
While Buffett didn’t say that line during the Q&A, it is one of his more famous quotes and one that was espoused by several of Buffett’s people during the visits to the Berkshire Hathaway companies. A few years ago, Buffett was criticized for an op-ed piece he wrote in the New York Times during the worst of the financial crisis, in which he implored people to invest — saying that it was a great time to invest in American companies.
As a recent Wall Street Journal article (http://blogs.wsj.com/moneybeat/2013/10/31/when-buffett-was-crazy-and-we-were-scared/) by David Weidner recounts, Buffett was largely derided for his hubris at the time. Today, looking at the gains Berkshire Hathaway has made thanks to Buffett’s shrewd investments during that upheaval, it is clear Buffett was right.
Applying these principles to the running of his own business, Buffett said, “Run your business for those who are investing long, not going short. I don’t want our stock to be overvalued. I make decisions based on the shareholder who wants to stay versus one who wants to go.”
#8 “Talent: Can You Define It and How You Spot It?”
The second question of the Buffett Q&A was posed by DePaul student James Wilke, who asked, “You mention that regardless of age, race, gender or any other extraneous factors, of the rare traits you seek out most for all leaders at Berkshire Hathaway is talent. Can you define talent and how you spot it?”
Buffett’s reply was, “A passion for what you’re doing. Very few people succeed at something that doesn’t excite them. Find the job you would have if you were already rich and didn’t need the money. I’m 83 and still excited by what I do. I like to be here because it’s the most fun you can have. Whatever turns you on will bring out the talent! If you’re looking at the clock, you’re in the wrong job.”
When asked how he picks his managers for Berkshire Hathaway, especially those who will be tasked with running the company when he’s no longer able, Buffett said, “We were looking for people we’d feel comfortable marrying our daughter or son… You want someone who isn’t thinking every day, “Is this where I want to be?” They may do very well, but we don’t want them at Berkshire. And you want to associate yourself with others who are better than you. Marry better. You move toward the people you associate with.”
#9 “Would They Hide Me?”
During the Q&A with Buffett, many of the DePaul students were touched by Buffett’s perspective on success. Buffett said he would be the same person he is today without the money — which he pointed out several times was not really his at all. He said, “I am going to give away every single share of Berkshire. I’m not using that money – I want to make as much as I can for philanthropy.”
More importantly, he said the pursuit of materialistic success is hollow, especially at the cost of enjoying one’s life, family and friends. In one of his funnier quips, he said, “This postponed enjoyment is a bad idea, like saving up sex for your old age.”
On a more serious note, Buffett told a story about a woman he knew in Omaha who had survived Auschwitz who said she was slow to make friends because she would wonder: if the Nazis were coming, “Would they hide me?”
Buffett said he knew lots of fabulously wealthy people, who were honored as humanitarians and who had their names on wings of hospitals, whose family would not hide them. He thought those people would say their success felt hollow. He then countered that he didn’t know anyone who had lots of people who loved them who wasn’t happy.
#10 “Reverse Engineer Your Life.”
Buffett’s advice for constructing the kind of life and success that is worthwhile is to “Reverse engineer your life. Know what you enjoy and do that. It’s worth a lot to arrange your life to where you don’t’ have to do what you don’t want to do.”
Those words struck home for Students James Wilke and Kirsten Ambroze. For Wilke it meant, “When you wake up and you’re 65, are you looking back at the things you wanted to do?” Ambroze said, “I will remember Mr. Buffett emphasizing how important it is to be passionate about your job. He made a comment about loving his job so much that he could tap dance to work every morning. He also said that it is hard to be really successful if you don’t enjoy what you do.”
#11 “You Can’t Ignore ½ the Population”
It is Buffett’s belief that the luckiest person in the world is the baby being born in the United States today. He said the U.S. is still the best at unleashing the potential of its people. Buffett credited gains in China and elsewhere on the fact that they are doing a better job of unleashing the potential of their citizens. He then said what’s remarkable about the U.S. is that we’ve done so well for so long while ignoring women, and that in his view, “It is opening up for women. It has to. You can’t ignore ½ of the population.”
Buffett’s contention that the battle is being won by women was roundly supported by three DePaul students: Kate Stevenson, Jessica Milcarek and Kirsten Ambroze. At lunch after the Q&A, the three talked briefly about the opportunities they had in front of them and the empowerment each felt in their careers to make the most of their potential.
Buffett for his part summed it up by saying “A stock doesn’t know if you’re a man or a woman.” And regarding China, “When people learn what works, they don’t go back to what doesn’t work.” The same hopefully can be said about the opportunities for women in the United States.
#12 A Call to Optimism
For many DePaul students, what impressed them most about Buffett were not the words he spoke, but rather, the way he spoke them and the overwhelming optimism he conveyed. Brian James said, “You can tell how he carries himself, he’s not cynical. He’s an optimist. With everything going on, you can critique it; but you have to carry optimism with you.” Mike Marty added, “Wish I could be 83 and that sharp.”
DePaul students also noted and appreciated Buffett’s candidness. James said he was impressed by the informal nature of the meeting and how comfortable Buffett was on a range of subjects. Marty said most of the time folks in business are worried about how they will look and whether people will be upset if they share their thoughts, but with Buffett, “He just said ‘This is what I think.’ You don’t have to discover what he means.”
Buffett’s optimism was not restricted to investments or opportunities for women. When discussing the hot button issues of the day, like politics, the debt ceiling, and tax inequalities, Buffett took the long view (as he does in investing). He did not deny that there were serious issues needing to be addressed, but he expressed his opinion that the “train” is still running in the right direction for the U.S. Buffett’s belief is that the 535 members of Congress won’t really screw it up for the other 300 million of us — because in the end, they generally come close to doing the right thing.
On the issue of inequality (e.g. tax rates, ability to influence Congress), Buffett said that it’s remarkable the U.S. has had the prosperity it’s had in the last few years and that it has not been shared. However, his opinion is that we move slowly, yet we move in the right direction. He then quoted James Russell Lowell, “Truth forever on the scaffold. Wrong forever on the throne. Yet the scaffold sways the future.” Meaning, in the end, it is the people of the United States who will ultimately prevail in their vision for the U.S., not the handful of lobbyists and self-serving politicians.
Thinking about inequalities on a global scale, Buffett asked students which of two worlds would they pick: A) an island of prosperity…where everyone else is much worse off and hostile; or B) one where everyone else is growing at a faster rate — and gaining ground on the position you already occupy? His answer is that the goal should be mutual prosperity. When you go into negotiations, you want to have goodwill. “We have the means to be a little generous.”
#13 “School is Not a Universal Value”
One of the more surprising comments Buffett made came near the end of the Q&A when DePaul student Steven Corush asked about the “mismatch of college education costs to that of average salaries.” Buffett responded that the price has gone up at colleges and universities because it can, saying, “People equate costs with value. It’s circular.” He added that it was the beauty of capitalism, “There’s a little bit of Rockefeller in all of us.”
Buffett also said none of his three kids graduated from college, nor did his wife, and suffered no effect. School is not a universal value. More specifically, he said school is a lot of money and that he “would think twice” about taking on the costs. He said if his father had offered to pay for school or give him the cash equivalent of the cost, he’d have to think hard about that, and would probably take the cash.
Not that he is anti-education, rather his opinion is that “books can provide an invaluable amount of knowledge you can acquire at no cost. Great people have written books that tell you everything they know.” He specifically called out a book by Ben Graham and Dave Dodd that was important to him and his career titled Security Analysis.
Buffett’s views on books were welcome by DePaul student James Wilke, who agreed that one should “never underestimate the power of books.” Understandably, many students — though impressed with Buffett’s candor on the subject of college (especially sitting in front of students paying a lot of money for their education) — were not as quick to embrace Buffett’s view, saying that for certain careers and industries, a degree was required or at least provided great benefit
#14 “Take Care of Your Employees”
The last stop of the trip took students to the Oriental Trading Company where the CEO Sam Taylor provided a guided tour and held a Q&A. When asked his philosophy of leadership, Taylor quoted a modified version of something he learned while working for Land’s End, “Take care of your employees. Let your employees take care of your customers. Let your customers spread the word. And everything else will take care of itself.”
On this front, one thing that was evident from visiting the various Berkshire Hathaway companies and talking with employees at many levels was the extent to which everyone felt a part of the larger Berkshire family. Buffett’s approach and philosophies appear to have been embraced by all and they appreciate the wide-latitude they are given to do their jobs. Over and over again we heard how hands off Buffett is with his companies, weighing in on only the most important decisions. By doing so, Buffett earns his managers respect, loyalty, and (it would appear) their best effort.
#15 Get to Know Your Classmates
As much fun, and as valuable as it was to participate in the Buffett Q&A and to tour three of his companies, perhaps the most lasting value for those involved will prove to be the connections, learning, and friendships that were forged among the DePaul students. As grad students, we spend a lot of time doing parallel activities with other students – reading the same books, attending the same classes, but doing it in a silo and not necessarily taking the opportunity to talk with one another.
For this MBA candidate, the optimism, energy and passion of my classmates were the most inspiring parts of the trip. Furthermore, for the rest of my time at DePaul, knowing what I know now, I will more actively seek out opportunities to network and interact with classmates outside of the classroom.