Warren Buffett | Charlie Rose | Pt. 1 | July 10, 2006 | Summary and Q&A

Transcript

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Summary

Warren Buffett, the second richest man in the world, is known for his extraordinary generosity and remarkable intelligence. He owns 31% of Berkshire Hathaway, a company with a stock market value of $140 billion. Despite his wealth and fame, Buffett leads a modest lifestyle in his hometown of Omaha, Nebraska. He prioritizes asset allocation and relies on talented managers to run his businesses. Buffett believes in focusing on what's important, investing in businesses he understands, and maintaining a strong ethical compass.

Questions & Answers

Q: Who is Warren Buffett and what made him famous?

Warren Buffett is the second richest man in the world with a net worth of $44 billion. He is the chairman of Berkshire Hathaway, a company valued at $140 billion. His extraordinary generosity made headlines in 2006 when he donated $31 billion to the Bill and Melinda Gates Foundation.

Q: What are some of the famous brand names owned by Berkshire Hathaway?

Berkshire Hathaway owns part of some of America's most famous brand names, including Coca-Cola, The Washington Post Company, American Express, Procter & Gamble, Fruit of the Loom, See's Candy, and the Nebraska Furniture Mart.

Q: How would you describe Buffett's lifestyle?

Despite his fame and wealth, Buffett leads a remarkably modest lifestyle. He still lives in the same house he bought in 1958 and has been in the same office for 42 years. He values his hometown of Omaha, where his family has lived for generations, and feels a strong sense of community.

Q: What is Buffett's approach to asset allocation?

Buffett's job is to allocate the remaining funds coming into Berkshire Hathaway after the needs of the operating businesses are taken care of. He has the flexibility to invest in marketable securities, bonds, equities, whole businesses, or temporarily hold cash. His goal is to find investments that make sense to him.

Q: How does Buffett choose which businesses to invest in?

When Buffett buys a business, he is also buying the manager. He looks for managers who have a passion for their business and love what they do. He wants to ensure that they are not just in it for the money, but also for the love of the business. Buffett wants to work with talented managers who are happy running their businesses.

Q: What influenced Buffett's investing philosophy?

Buffett's investing philosophy was greatly influenced by his mentor, Ben Graham. Graham taught him to look at stocks as pieces of a business and to figure out what the business is worth. This approach helped Buffett focus on the economics of a business and not just on stock charts or price movements.

Q: How does Buffett instill ethical leadership within his organization?

Buffett values reputation and ethical decision-making within Berkshire Hathaway. He asks his managers to judge every action they take not only by legal standards but also by the "newspaper test." He wants them to consider how they would feel if their actions were written up in the local newspaper and read by their family, friends, and neighbors. Buffett strives to create a culture of fairness and reputation within his company.

Q: Why does Buffett enjoy speaking to students?

Buffett enjoys speaking to students because he believes he can make a positive impact on their lives. He wants to share his experiences and advice, particularly with business students who are looking for guidance in their careers. Buffett believes that if he can change the life of even one student, it is worth the effort.

Q: What advice did Buffett's father give him that had a significant impact on his life?

Buffett's father taught him the importance of focusing on his inner scorecard rather than his outer scorecard. He encouraged Buffett to prioritize his own values and beliefs rather than seeking validation from others. This advice taught Buffett to be true to himself and not to worry about external judgments.

Q: How does Buffett measure success?

Buffett believes that success is not measured by external achievements or material wealth. He believes that true success lies in the quality of relationships and friendships. Buffett gives the example of his friend who survived Auschwitz, who defines friendship as "who would hide me." He believes that if you have people who would hide you, you can consider your life a success.