OtherTonight, a special edition of Charlie Rose.On June 26, 2006, Warren Buffett, Bill Gates, and Melinda Gates came to New York to makean historic announcement that Warren Buffett was giving $31 billion to the Bill and MelindaGates Foundation.The logical question is why.
WarrenIt's something I've always planned.My wife, Susie, and I had planned that whatever I made would go back to society.And originally, I thought she would outlive me and that she'd make the big decision onit, the manner.But since her death, I had to rethink the best way to get the money into society andhave it used in the most effective way.And I had a solution staring me in the face.I'd seen Bill and Melinda do what they have done with their foundation.They've done it with their own money.They've poured themselves into it.The decisions are great.Their goals are similar to mine.So the time is now.
Melinda GatesWell, 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'vebeen looking at for so long just basically doubled by Warren's gift.And it's incredible the depth that we'll be able to go to on some of these global healthissues.
Bill GatesBill?Well, it's a huge responsibility.In some ways, if you make mistakes with your own money, you don't feel as bad about itas if it's someone else's.So now we're 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've been makinggood progress.And with the doubling of resources, we think our impact can even more than double.And so it's thrilling, but it's a huge responsibility.
WarrenWell, I began to mull various possibilities.And I wanted the money to be used effectively.And I've looked at a lot of foundations, Charlie.And there are a number that I admire.But there's none that are in the same class, in my view, as the Bill and Melinda GatesFoundation.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 so I mentioned that I was thinking about it to Bill many, many months ago.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
QuestionerThis friendship that led to this remarkable gift had an interesting beginning.Take me back to the first time the two of you met.
Bill GatesWell, he didn't want to come.Let's start with that.
QuestionerYou didn't want to come meet Warren Buffett?
Bill GatesWell, 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, andkind of insisted that I come out there.So I actually took a helicopter out, thinking, OK, once I've done what my mom expects, acouple hours, I'll be back to my work.But then it was fantastic.
QuestionerI want to get to fantastic.But why didn't you want to meet Warren Buffett?
Bill GatesWell, I was just a heads-down software engineer.And I wasn't quite sure that he'd be interested in what I was interested in.But then, as soon as we met, talking about companies and trends and things, we couldhave gone on for days.We couldn't stop.
QuestionerWhat was that conversation about?
Bill GatesAbout everything in the world.Business and life.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.
QuestionerHow did the friendship evolve?I mean, you knew right that night there was something special, an affinity.
Bill GatesWhat?Right.That it'd be a lot of fun if we could have a chance to talk more and see how the world evolved.And it was just a few weeks later that I got to come to a gathering that Warren was havingof a bunch of his friends and sit around and talk about things like why one session wasabout the companies that were most valuable in 1960 and 1970 and 1980 and how that had changed.And should people have been able to see that?Why did those things happen?Why are the companies on the top not been able to maintain their strength?
WarrenMost people have, and you and I have talked about this before, a few friends in whichthe friendship is so rare, it's almost beyond definition.This is one of those.That's what you want in life.I mean, if you have a dozen terrific friends in life, I mean, you're going to have a great life, Charlie.That's true.And you don't get that many shots at it.I mean, you've got to be – you just have to be in sync.And you know when it happens, and I've been blessed with a number of them.And this is one of them.Bill, yeah, absolutely.
QuestionerDifferent age, different areas of the country, different educational experiences.But at the same time, it has what?
WarrenIt works.We find each other interesting.We find each other funny sometimes.I can't recall a time in any – I mean, we've gone on trips together, different things.But I can't recall a time when we didn't have a good time together.
QuestionerBy jokes on each other?
WarrenHe pulls them on me.Tell me about the time there was a dinner somewhere.
CharlieYeah, it was in Carmel.We had a group of friends 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 take over the whole dining room that night,that there was a couple that would have to sit with us because 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 people there.
WarrenHe's downplaying it.This is not the version I've heard.He was insulting the University of Nebraska.This guy was slobbering all over everybody.And his wife was.
CharlieAnd 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 can join us.So they were getting more and more and more obnoxious.And the guy is sitting straight across.And at some point he says, where are you from?
QuestionerHe's from Nebraska.
CharlieHe's insulting Bill, too.And he says, oh, that's where the convicts play football.At that point, I walked over.
WarrenHe crossed over the threshold.
CharlieYeah, right.He insulted Cornhusker.He said he was from Colorado, too.Yeah, and they knew the fight song and made fun of it.Well, anyway, it turned out that they were comedians we had hired.
WarrenYou had hired.And we had prepped them for all the things that our guests might be sensitive to.
CharlieYeah.And we all fell for it.
QuestionerDid you try to get back at him for that?
WarrenI mean, who knows what I'll do.The night is young.You'll read about it in the paper, surely.
QuestionerMost friendships come in a variety of ways.Is there competition here between the two of you?
CharlieNo, that's one thing that's nice.The only area we ever overlapped in was in encyclopedias.
WarrenThat's true.And that was kind of fun because Warren would say that his encyclopedia smells better than ours.
CharlieYou know, even though ours is a little CD.He had a little CD and ours came in a book.
QuestionerYou had 26 books and he had a little CD.And I said we were developing this musty old spell that would kill him.But no competition at all?No, not at all.Well, we have the $1 bet.You play bridge and you play golf.We play bridge and play golf.We have a dollar bet when we play golf.You're adding to his net worth, are you?Or vice versa?Yeah, yeah.Well, lately I've been adding to his.
CharlieBut 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 had sort of given it up.And my readdiction and seriousness about bridge came because it was something Warren 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 Sharon the captain.Bill and I have worked on projects, or talked about working on 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 talking to you about this.You've got to play for, work at it for about 30 hours maybe before you know what the game is all about.From that point, it's nothing but fun and unfolding.And you're learning curvy straight up.Yeah, but the first, you don't learn it in an hour or two hours or three hours.So people really have to stick with it while they're kind of confused and get through that period.And learn the language of playing.A lot of people, I'd say when my daughter Susan and her then husband Alan, they took bridge lessons for a while.But they just didn't cross, they didn't get that far across the line.
QuestionerWhat have you learned from this young man?
WarrenAll kinds of things, Charlie.I mean, obviously in his own field I've learned things from him.But you learn from all your friends.And you learn good things.That's the nice thing about friendship.So it's, you know, it's a continuous process.
QuestionerYou and I much have talked frequently about values.Right.Some sense of how important it is.
CharlieYeah.You have to share values.Right.Otherwise there's no sense of integrity, a sense of.But also a sense of the way he's.
QuestionerAre you the student in this relationship?
CharlieNo, no.As much as I can be.Absolutely.I would say yes.Yeah.Because you once said to me, I study him.Well, I've learned an incredible amount from Warren.And some of them are things you can express.
QuestionerLike, you know, really looking at the time on your calendar.And valuing having as much free time as you can.
OtherI love it when Warren gets out his calendar book.There's nothing in there.Empty days.I put a few entries in just to show that somebody knows I'm still alive.That is the way to do things.
CharlieBill, I mean, 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 really admire what he's done in the last.And Melinda with him in the last five years.So it's, you know, I'm learning from him all the time.But in a sense of how he's approached philanthropy and the accomplishments.Just how he thinks.But you probably talk to him about that too, don't you?
OtherWe've had a lot of fun talking about philanthropy.In fact, the idea that giving 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, you know, he said that that was going to be his approach.That really convinced me that made sense.And then, of course, it created the issue of how to give it back in the best way.His kids still like me, incidentally.
WarrenI was going to say.Wait until they grow up.I give them Dairy Queen coupons and things like that.Here's some ice cream.Don't worry about the fact that he just got out of the wheel.There's no more.There's only a modicum amount coming.And my daughter always refers to Warren as 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.It's the strange life you've led.I'm big with kids.
CharlieBut 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?So they set a framework first and then they both become extremely smart about the best way to execute within that frameworkso as to get the best results.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 in some of them.
WarrenAnd there's nothing wrong with any of the ways as far as I'm concerned.But people generally aren't as thoughtful about it, in my opinion, as Bill and Melinda have been.And they get better at it all the time.
QuestionerIs it also part for both of you in a sense that if there are two people, you know,who have certain similarities in terms of wealth and 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?
WarrenWell, we're totally comfortable with each other.I mean, you don't have any worry about violation of confidence or misunderstandings or anything of that sort.
QuestionerAnd someone who can grasp the ideas you're thinking about.
WarrenRight, right.That's right.
CharlieWhen there's something that I don't get in business that seems strange to me, I love to say to 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 one like that?And it's so much fun to think about why that might be and explore it.
WarrenWarren will send me lots of articles, you know, rip various things out.
CharlieI just tear them up.You're reading something you wouldn't even know about.
WarrenAbsolutely, I just tear it right out of the publication.They send us the bill.It's the low-tech approach to e-mail.I don't send him e-mails.
QuestionerNo, I was going to ask that.Why don't you guys e-mail each other?
WarrenWell, I can e-mail to his administrative assistant.She gets it.And sometimes he'll have her e-mail stuff to me.
CharlieThat's right.You don't put your hands on his e-mails.I don't know what's going on out there.That's part of his act.
WarrenHe has said, Bill can do everything I can do.That's true.But I can't do some things he can do.
CharlieNo, that's not true.It is true.That's not true.No, it is interesting how curious minds have a few things they're very good at in a special way,like Warren looking at values and companies.But that intelligence can apply to a lot of interesting problems.And so we each have domains that we're very focused on our whole lives,which I think helps you to be good at something.But then we're interested in all the things about business and politicsthat our experience in our special areas give us some ability to think about those.
QuestionerHas he led you to sort of investigate Ben Grahamand try to understand what it is that is at the core of his fundamental outlook about investing?
CharlieDefinitely.Soon after I met Warren, I went back and read The Intelligent Investor.I said, oh, this is about bond yields.I mean, gee, this is pretty basic here.Just so he doesn't go into competition with me.
QuestionerIt is also part of the lure of the two of you.You have never invested significantly in Microsoft.
CharlieAfter I met him, I bought 100 shares just to keep track of it.He spent a day explaining his company to you.Well, 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 it's just not a business or an industry where I think I can see 10 years outas to how the world is going to unfold.Change is happening so fast.And if change is part of a business, then you are a little bit...Maybe I think I'm 60% sure of the answer or 65% sure.But when I go someplace else and think I'm 95% sure, that's where I'm going to go.
QuestionerYeah, and I've never said to Warren he should buy Microsoft.It does not fit his model.
CharlieTechnology is a surfing game.It makes it fun to be part of.And it means when you do get things right, the returns can be pretty phenomenal.That means...It's phenomenal would be what the returns are.The history of our business is where fantastic companies weighing digital equipmentmissed a turn in the road and off they went.So we all study those things.So he's right then.
QuestionerOh, absolutely.With technology, there is change, 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.
CharlieWell, value is a better word.Right, right.But he did...Yeah.Tell me some of the other things 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.Why they shouldn't shut it down.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 what had taken place there.No one else could have done that.He picked a fantastic person to lead the company.He got the regulators to understand the chain of events.And there were many different regulators, some of whom weren't that easy to get a hold of.
OtherThat's just a unique thing.It's very lucky that Warren had enough of a connection so that he could be called into 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.Part of the story is he gets someone on the phone and says,this is maybe one of the most important phone calls.
WarrenI said it was the most important day of my life, actually.
OtherTell me about that.That call was with Nick Brady, who was then Secretary of the Treasury.And we received this terribly adverse order from the Treasury,which would have put us out of business on a Sunday morning.And the U.S. Treasury does not normally issue things on a Sunday morning.And Tokyo was going to open in the afternoon,and they were going to throw billions of dollars of liabilities at us.So I spent that day trying to get that order at least modified.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 phoneand 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'd been trying to get through the problems we were going to have when Tokyo opened,which was at 6 in the afternoon.And I made the statement, this is the most important day of my life, Nick.And he knew me.My voice was probably cracking and everything.And he knew that whether I was right or not, I believed I was right on that point.And he made a modification, which in effect allowed the firm to be saved.
WarrenBecause he had confidence in you.
OtherHe knew I wasn't the guy.That's what it was.The integrity.The whole sense of.
WarrenYeah.
OtherTom 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 to the stock.Without telling him.I mean, this is a quality of a man.They don't come like this.
WarrenNo, Tom Murphy is the quality of a man.
OtherI know.But you had confidence in him.
WarrenAbsolutely.But it was just the point of not telling him.I mean, you did it because it was the right thing to do.
OtherAbsolutely.I want to come back to another quality that 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.Reflect on this.The sense of how you.This is a man with enormous IQ.You're a guy with enormous IQ.
WarrenBut there are a lot of people with big IQs who don't get as much accomplished because.What?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 amazing how.You see a lot of that on Wall Street.It's amazing how people, you know, can play three-dimensional chess and solve all kinds of tough problems.Get tied up in sort of elementary aspects of behavior that are so self-destructive.
OtherBeyond 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.
WarrenWell, someone who loves life.I mean, a lot of people have a philosophy.
OtherNo, 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.
WarrenYeah.And that, you know, I knew how to have fun.But not quite at that level.
OtherTo a new degree.
WarrenYeah.So that's the thing that he gave to you.A sense of insight.
OtherRight.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.You know, I'm not as good at it as Warren.But that's one of the best lessons I've learned.That sense of.That you can enjoy these things.And it should be fun.But you.But we're lucky, too, Charlie.You know, I mean, if we'd been born in a different place or wired different.I mean, if we don't have fun, you know, something's wrong with us.The three of us don't have fun.
CharlieYeah, right.Exactly.
OtherTo each of you in a friendship 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?
CharlieWe wouldn't hesitate to do that.If it was necessary.If you thought he was wrong, you'd say.
OtherSure.
CharlieSure.And anything that I'm troubled about.For example, when Microsoft was having some challenges in court.There were parts of that where just talking it through with Warren.You know, not that he would tell me necessarily to do something completely different.But just to talk through.How should I think about it?You know.That was an incredible gift for me.
QuestionerDid you buy your wedding engagement ring in Omaha, Nebraska?
OtherAbsolutely.
OtherYeah.
OtherWhat 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 was really messed up. And 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.
OtherNo.
OtherBecause I had her distracted. So, then when the jet landed, Warren was there. And he took us over to Borsheim's. And he had a little advice for us.
OtherYeah.
OtherWhat was the advice?
WarrenWell, I said, look at that, Bill. I said, it's really none of my business. But I said, when I got married, you know, I spent 6% of my net worth on the ring. And I said, I don't know how much you love Melinda, you know. But 6% is a place to start.
OtherWell, let's quantify it. Right there at Borsheim's. And we have the ring just for you.
OtherRight, right. We can find 6%. Believe me, your credit's good. You both are at different stages in your life. 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 the ovarian lottery has been good to both of you. We won the lottery the day we were born, you know.
OtherAre you optimistic about America today?
OtherAbsolutely. I'm optimistic about the entire world and, you know, the United States as part of that. We won't, on a relative basis, be as unique as we've been. But our wealth will continue to go up. The medical breakthroughs, the computer breakthroughs will let people pursue their curiosity. This is a great time to be alive. The improvements that will take place will be great for everyone.
OtherBill is an American, but he's basically a citizen of the world. I mean, he has a world view. He thinks that the child in India is as valuable as the child next door. And he lives it. And it comes out in how his foundation operates. It's unusual.
OtherDid you come to that because of the obligation you put on yourself in terms of giving away the money?
OtherWhen we thought about giving away the money, the issue of what is the greatest inequity in the world came up. You know, the United States has been great about thinking through gender equity, racial equity, trying to reduce those things. But the idea that the greatest inequity was the lack of having health intervention that would let children live, it comes from a sense of trying to level things out and let these advances benefit the world broadly, six billion instead of just, say, one billion.
QuestionerAnything else I should say about this friendship?
QuestionerI mean, this is so unique, and everybody is fascinated by it, of what makes it up and how it's so satisfying for both of you.
WarrenWell, we're sort of the odd couple to the rest of the world, I'm sure.
OtherBut nevertheless, it couldn't work better.
OtherWarren Buffett made a historic gift of more than $30 billion to the Bill and Melinda Gates Foundation.
WarrenBy letters which were delivered earlier today, I've committed 12,050,000 shares.
WarrenThey're earmarked, held by me.
WarrenBut every July, I will be giving a million shares to the Bill and Melinda Gates Foundation.
WarrenDid I say 10 million? I meant to say 10 million.
WarrenAnd 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.
WarrenAnd that will continue throughout my lifetime, subject only to at least one of Bill and Melinda being active in their foundation.
OtherBill and I are absolutely honored and humbled by Warren's gift.
OtherIt'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.
OtherWe have, I feel, an incredible responsibility.
OtherI 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.
OtherWe'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.
OtherAnd as that's grown, we've had a chance to share how that's worked out.
OtherI remember one time in 2001 where I got to give a talk to Warren and some of his friends about global healthand how excited I was about the opportunity to do something there.
QuestionerThere is also this, a selfless act.
QuestionerI mean, didn't you have any great desire to see the Buffett Foundation and the Buffett Library and the Buffett this and Buffett that?
WarrenNo, zero.
WarrenNo, I like the Omaha Public Library.
QuestionerWhat will be your role then?
QuestionerI mean, you'll be a trustee, but will you sort of, what?
WarrenIf I have any ideas, they can use me as a sounding board.
WarrenThey can use me any way they want to use me.
QuestionerYou're already doing that.
WarrenYeah, well, that's true.
WarrenAnd so it really, it's not a big deal.
WarrenBut if I, you know, anytime I can be helpful, fine.
WarrenI won't get involved in their investments.
WarrenThat complicates life.
WarrenSo I'm totally out of that game.
QuestionerAre their priorities your priorities?
WarrenYeah, overwhelmingly they mesh.
OtherYeah, I wouldn't be doing it otherwise.
OtherAnd you have the Susan Thompson Foundation, so you're looking at other issues,and the kids have foundations which are involved in a range of issues.I've seen what they're interested in.I mean, and I've seen the way they pour themselves into it.
OtherWill you be able to do things that you couldn't before?
OtherWell, absolutely.In some ways, we have 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 progressand can expect in the next five to ten 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 issuesand then education is the second.That's not going to change.
OtherYou have found that, in fact, if you can change health,it will have an impact on how many children people have.It will have an impact on a whole range of other things beyond their health.
OtherAbsolutely. 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 vaccineor 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 eator 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 foodto 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.
OtherIs there and has there been any kind of dilemma between spending moneyin 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?
OtherAbsolutely. I mean, we have finite resources,and there's 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 being willing to fund the research,and so you should focus more on that.And that's great.Having that ongoing dialogue, people who disagree with this,getting advisors to come in on those issues is very helpful.You know, take AIDS as an example.Spending money on prevention has this incredible impactbecause every case you prevent prevents the cases that might have caused.But then you see the face of the tragedy, the people who are getting ill,and you want to have treatment getting to them as well.And so these problems are big problems that can absorb huge amounts of money,and, in fact, that's why we need to work with governmentsand make sure they get involved.And we've been very pleased to see many governments around the worldstep up and do more in this area of global health.
QuestionerWas it important to you to be able to make this philanthropic giftand have it pay off immediately?
OtherWell, you certainly want it to be used intelligently immediately.The payoffs don't necessarily come that fast.And, frankly, that's why they'll be a lot better at this than I am.I like immediate feedback on things.I'm the kind of guy, if I walk into the ice cream store,I want a triple dipper right there.You don't want to descend down, do you?And, really, philanthropy, you have to have a longer view than that.You have to take delayed results in many cases.Now, they're going to be impatient to get the best results they can,but it's a different game in that respect.And they're very well suited for it.
QuestionerYou weren't convinced that you'd be good at philanthropy, were you?
OtherI think I'd be terrible at it.
QuestionerWhy?
OtherWell, A, I like the fast feedback.But, secondly, it probably requires answering to a bigger constituency,in a sense, than I like doing.I like to look in the mirror and ask myself whether I'm doing okay.And there are a lot of people whose opinions I really don't want to listen to.So you have to be a little more diplomatic, perhaps, than I am.And I'm just delighted.Charlie, 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 of my life,and I could get somebody to substitute for me like Tiger Woods,I would do it anyway.And if I had to sing on television,
WarrenI could just mouth the words and get Sinatra in the back room doing it for me. I'd do it. So the idea that you have various responsibilities in this world, and this money is a responsibility, but if you can get somebody better at doing something that needs to be done in your place, you know, I'm used to that.
QuestionerPeople 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. Suzy's death was one thing. But if you go all the way back, Charlie, I mean, Suzy and I decided when we were in our 20s that money would go back to society.
WarrenWhen you told her you were going to get rich, you could assure her. But she thought I was delusional. But as time went along, I managed to convince her. But, 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 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. That would be you.
QuestionerYeah, and I really thought it made way more sense than to give a million dollars 30 years ago, which might have been all I would have had available, to have it compound.
WarrenAnd 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 were 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 fellow compound for me. So, anyway, it was a convenient way to think, anyway. And, you know, that has been my philosophy on it, but now is the time.
QuestionerDo you think people are surprised you did this?
WarrenProbably, yeah. When you made this decision, you had to ask yourself, will there be consequences for this extraordinary compounding that has been taking place, and will it affect Berkshire Hathaway stockholders?
QuestionerYeah, and I don't think it will one iota.
WarrenAs a matter of fact, 31% of the money that Berkshire Hathaway makes, if we can make another $100 million, 31% of it through my shares is going to philanthropy. So if there's any, if you could have a greater motivation than I've had over the years, I'm not sure you could, but I would have it now. I mean, it's a great feeling to know that as the company becomes worth more and more money,
Otherthat it actually translates into something good for people around the world.
OtherSo I know of no one who loves his work more than this guy does.
OtherAbsolutely.
OtherHe loves to tap dance to work, as he says.
OtherThat will continue.
OtherYeah.
OtherYou'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.
OtherI knew it would benefit philanthropy eventually, but now it's very tangible.
OtherIt's tangible.
OtherIt's very tangible, and every year I hope those shares that are committed to go that year are worth more money.
OtherAnd over time, I think they will be.
OtherSo this can be a lot bigger, and it's up to me to work to make it so.
OtherBut you do grow great satisfaction from the fact that you now have made this decision and you know where it's going.
OtherYeah, absolutely, Charlie.
OtherI mean, it's the second act of the money, basically.
OtherYou amass these claim checks, in effect, which money is on society, and then you figure out the best use for them.
OtherThe philosophy that Carnegie had in the gospel of wealth, Warren handed that out at a get-together we had,and it really helped me think about philanthropy and how you ought to set very high goals.
OtherThis is before you created the foundation?
OtherThat's right.
OtherIt was over in Ireland.
OtherThe whole idea that leaving the wealth to your children would actually not be the best idea for society or for them,that came out of some things that Warren was talking about right around the time we met him.
OtherI was stunned to think, oh, geez, this is a problem I'll have to deal with.
OtherHere's some very good advice about that, and now here we are.
OtherBut I do think energy and pulling people together the right way, getting partners to work together in new ways,it's what's allowed us to move as fast as we have.
OtherCharlie, in business I've had a great partnership with my partner, Charlie Munger,and I've seen what happens when you get two people together that are totally in syncbut also have different ways of looking at things but are working toward a common goal.
OtherAnd you could not have a better pair than Bill and Melinda running a foundation.
OtherI wonder, do you think he'll be drawn into this and so his involvement will deepen?
OtherA little bit.
OtherI think Warren would be an incredible philanthropist, but he loves his job, and that's what he's going to do full time.
OtherYeah, but you love your job, and you have misgivings about leaving Microsoft.
OtherNo, I do.
OtherThis is a tough one.It's unusual to have two things that you love and that you think are important and challenging.And so I've had this debate for several years, and I wanted to be very explicit about the change,and I don't even know what it will be like, but I'm very excited about it,and this just reinforces the importance of having that time and spending it well.But we had Warren at a discussion about microfinance about a month ago,and it was great talking with these bankers, and Warren was asking about their costsand did people repay the loans, and so we're going to draw him in a little bit.We'll do our best.
QuestionerYou said it famously about children, your own children, who you've done wonderful things and created foundations for them.
OtherI'm very proud of them.
QuestionerExactly, and you're very proud of them, and 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.
OtherYeah, that's so they can do anything but not nothing.I don't believe in dynastic wealth.If you contrast, it's nice to leave something to kids,and 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 dynastic wealth, the idea that many generations should be able to go without doing a thing if they wish,simply because they came from the right womb, that really strikes me as flying in the face of really what this country is about.I believe in a meritocracy and equality of opportunity, and 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 having a bunch of people, you know, as they say, that came from the Lucky Sperm Club.
QuestionerYou mentioned Charlie Munker.
OtherYeah.
QuestionerYou called him up and said, I'm thinking about doing this.What was his reaction?
OtherHe says you finally had a good idea.I've been waiting for that for years.
QuestionerReally?
OtherYeah, a bit more or less, yeah.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 people, poor people around the world,with a disease that should be available for just peanuts, really.
QuestionerYeah, the market system just fails in that case,and you have to interject yourself into that and make sure there is a system that will deliver.
WarrenYou know, I'm a big believer in the market system 95 percent of the time.But it's done pretty well for me.And the world.And the world, absolutely.But there are things where the market system is not going to solve the problem,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, if the money is pouring into something, and talent, you know,there's really no reason to duplicate.There's millions of good things to do in the world,and you're looking for something that's important.You're looking for something that you'll be reasonably good atin terms of implementing any ideas that do come to mind,and you're looking for something that really needs more funding.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 do more.Right.You know, I was not holding her back or whatever that was.Oh, not for speaking her mind or for giving away.No one could have had better instincts about doing it,and she would have liked to have started much sooner,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 them with needs now,and she was hit by that, obviously.So, I mean, I don't disagree with that.It was perfectly natural for her to react that way,and if I died when I was 60 or something and there had been a lot of money then,I mean, she would have really gone to town with it.And you would have been pleased that she would be running a foundation dedicated to that.Absolutely.And she cared a lot about these issues.I mean, she talked enormously about women lifting themselves up in their situationand particularly having access and tools to family planningwas 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 if she had made this decision.You hope in what way this will, in a sense, spur other wealthy people.
WarrenWhen people are thinking about amassing wealth,they frequently go to somebody else that they think knows more about it than they do and join in.I mean, 50 years ago, last month, I started a partnership,and seven people gave me $105,000.Now, why'd they do it?They thought I would be better at accumulating money for them than they could themselves.Good bet.Well, it worked out okay.But why not apply that same thinking when you're eventually dispersing wealth?The idea that your old business cronies or some local pals at the country club or whomever,or even a professional staff that may take over the agenda,the idea that you can't also apply that same theoryof getting people that are better than you are at doing somethingin dispersing wealth as well as in amassing wealth,I think it's sort of obvious.I would hope that people, even in modest means,that don't have something specific that they really want to do,and if they have something specific, God bless them.I mean, they have their alma mater or whatever,but if they really are sort of groping for what to do with far more money maybethan they ever anticipated that they would have,they can look around.It doesn't have to be the Gates Foundation at all,but they should look around for somebody that they think will do the job betterthan they could do it themselves, that has somewhat similar goals,and turn the money over to them.I think it makes nothing but sense.
OtherWhen we described to a friend what Warren was doing,we were saying, wow, this is an amazing thing that the two of you metand that this could come together,and they acted like it was almost obvious that this would happen.I have to say, to me, it wasn't.And even when Warren first mentioned it, it was like, wow, is he serious about that?Wow, are we ready for that?And it's only hitting me today.I mean, this is the day Warren's going to actually sign these letters.But how long ago was that, Bill?Do you remember?They first mentioned it to you.
OtherOver the last year and a half or so he mentioned it,and at first it was kind of in passing, just a very nice thing that, gosh,your foundation's doing well, and we'd had that ongoing dialogue.It was in the last few months that it was clear he was getting very serious.Warren, 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 moment of sleep because I might be doing the wrong thing.
OtherI might maybe, maybe, maybe, maybe nothing.
QuestionerNothing.Do you wish you had done this earlier?
WarrenNo, I really don't.I think this is the right time.This is the right time to do it.
OtherYeah, I do, Charlie, yeah.
WarrenI've had a good chance to see what they've done.I feel Berkshire's positioned better than ever for the future.One thing about it is if I'd given the stock 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 want the well-being of their foundation to be sort of concentrated in Berkshirebecause I think it's going to do very well,so I wouldn't want them to be forced to sell it by government bonds or something of the sort.So this way, I don't see how it could be any better.
QuestionerHow will this change your life day to day?
WarrenZero.You go back to Omaha and you 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 an occasional television show.What else is there in life, Charlie?
CharlieWell, I'll tell you what else there is in life.There is the satisfaction to know and to see that you can, while you're alive,when you're dead and not among executors,that you can do something that you can see because it's already taking place, changing lives, saving lives.And see it getting done right, which is really terrific.
QuestionerWith accommodation, yeah.This is a great day for you.
CharlieIt's a great day.It really is.
QuestionerWhen you think about this gift and the reaction to it, which has been overwhelming, tell me how.
WarrenWell, 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 isn't like this required any brilliance or anything.It just was the logical thing to do to get a great, you know, I hope.
CharlieYeah, 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.No other foundations are giving their money to the Bill and Melinda Gates Foundation.
QuestionerWell, they haven't yet, but it shouldn't necessarily be them.
CharlieYeah, but the idea of getting somebody that's better than you are, younger than you are, spent more time at it, is 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?
QuestionerYou said to me in another conversation, and help me understand this, you would give up.
WarrenThe 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 find the world so interesting, and there's so many things I want to see.I'd like to see how they come out and how they play out and everything.So I would, you know, the last two years I'm probably not going to be much of a participant anyway,but I would give up a few years as a participant to be able to sit in the stands for 40 years or 50 years and see how this game plays out.Just the convergence of all the forces that are at work.Everything going on.And the extraordinary technological advances.The world is going to change so much.It may not be for the better, unfortunately, but I'd like to see the rest of the movie, or a good portion of it.
OtherWe 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....