What does the University of Montana have in common with Texas A&M, UC Davis, University of Missouri, University of Kansas, UC Berkeley, University of Maryland, and Purdue? Well, a select number of graduate business students from each school spent the day with Warren Buffett. And what a day indeed...
The morning started with about 150 dapper-looking students assembling in the lobby of the Doubletree Hotel in downtown Omaha. The UM group of students and faculty, looking smart themselves, piled into their three vans and headed for an 8:30 AM visit with the Nebraska Furniture Mart, an early Berkshire Hathaway portfolio company purchased in 1983 from the Blumkin family. Upon arrival, we were greeted by members of the family who to this day manage this discounter of furniture, electronics, and appliances. Then, the entire body of 150+ students was invited to lounge comfortably in recliner chairs and sofas on the sales floor as Juan Blumkin shared the ins and outs of the furniture retail business in a global economy and what it's like to be a Warren Buffett acquisition that, incidentally, was made on a handshake deal.
With the students primed for visit with Mr. Buffett himself, we drove a short distance to the Berkshire Hathaway headquarters in the Kiewit building. Lucky for our group, our early arrival (and some strategic nuggets attained in preparation of the trip) provided us with front-row seats in the conferenc room. It wasn't long until everyone was settled in and Mr. Buffett walked to the front of the room. Silence fell over the crowd as Mr. Buffett wired up with a microphone and laid out the plan for the rest of the morning: for the next two-and-a-half hours, the schools would take turns asking questions that he would answer. And then, we were off and running...
The questions posed by all schools were sharp and well-thought out. Two UM students, John Beltrone and Casey Chumrau, lobbed questions into the mix that reflected challenges, concerns and viewpoints particular to Montana (see Comments for the questions). Of course, it was incredibly fascinating to have Mr. Buffett at the front of the room in person, sharing his wisdom and knowledge on topics ranging from regional economic development to ethically evaluating a business' to addressing wage inequalities in the U.S. Just as interesting was watching the crowd of students - tomorrow's business leaders - completely transfixed and hanging on to every word Mr. Buffett spoke. Mr. Buffett, who will be 81 years old in August, stood for the entire session and answered each question with fervor and humor. By the end, we had been allowed an opportunity to see the world through his lens, and our minds were snapping, crackling and popping... and ready for the refreshing Cokes provided by Mr. Buffett (he owns approximately 9% of the company).
I was very interested to hear Mr. Buffett's answer to John's question about what kind of investments rural states like MT should make to achieve sustained economic growth in the future. Mt. Buffett said that Omaha was all about railroads and meatpacking and now plays a huge role in insurance. Agriculture has become more efficient and requires less labor. We should not fight the trends and the government cannot say "build a new industry". Instead, we need entrepreneurs with new and innovative ideas who have a reason to stay home.
ReplyDeleteAs MBA Director, I am so proud of our graduate students! They're smart, strong, and fun - to quote Holly, they have moxy. I looked and listened to the Berkeley MBAs - they were so serious and uptight in their black business suits. I know they worked very hard to make it here but they didn't seem to have any fun. Our students worked equally hard but they looked like kids in the candy shop: laugh and chatter, big wide smiles, sparky eyes. And what a joy to see Casey stand up and confidently address Mr. Buffett. He invited the 8 schools one at a time to ask a question and after hearing the questions posed by 15 men, Mr. Buffett looked absolutely delighted to finally talk to a smart young woman. Casey's question was tough: how did he weigh in ethical issues such as human rights when considering acquiring or investing in companies, especially when they have foreign operations. He started with an example of a situation in which he and Charlie Munger were considering buying a smokeless (chewing)tobacco company somewhere in Asia. The company had an impenetrable moat (easily to defend competitive position) and great financials - the perfect opportunity. However, after a lengthy discussion they decided not to buy the company because they didn't want to own an unhealthy product. Mr. Buffett acknowledged though that he owns a significant amount of stock in Walmart which is the world's largest seller of tobacco products. It seemed like he engaged in self-reflection, evaluating his own ethical boundaries: I will not own and produce a bad product but I am OK investing in companies that sell such products (among many other good products)because such is business. I appreciated his candid response.
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ReplyDeleteI quite enjoyed our day visiting the Furniture Mart and socializing with the students from other schools around the nation. I personally spoke with students from Kansas University, UC Davis, UC Berkeley, U of Maryland, Purdue University, and Texas A&M. I was very stimulated by the conversations I had with each and was impressed with the questions each school raised to Mr. Buffet. That said, I think that each student I spoke with was more impressed (and awestruck) that such a sharp group of students could come from Montana! I think they all expected a group of roughnecked cowboys that had no business at all being here. Boy were they wrong!
ReplyDeleteI spoke exensively with a couple students from Berkeley and UC Davis over the course of the day and night on Friday that gave me a good idea of why people from these schools attain an MBA. I was not impressed by the condescending nature the "President of the Investing Club" took with me over our lunch discussion. I think she had stereotyped me to be unintelligent and not worth her time, until later in the conversation when I was challenging her with many interesting questions and facts about MBA programs. When I mentioned that an in-state MBA from Montana costs as much as her student fees alone I could see her trying to justify the $100k in loans she was going to be paying off until she retires. I am sure UC Berkeley offers students opportunity that Montana does not, but I think in the end, she was very troubled by the fact that she was a dime a dozen in the U.S., and that anyone in the room could be vying for and attain the same jobs as she. It gave me pride to be from the University of Montana, as I believe that we have a spirit and tenacity that many big schools do not. Our small group of students has grown so close that we are able to laugh and be ourselves around one another. That is something that other schools cannot take away from us or compete with.
The beginning of the day was a great insight into how Berkshire Hathaway and Mr.Buffett invest in companies and what it is like to be a part of this dynamic company under such an legendary leader. Meeting and making friends with fellow MBA's from across the country throughout the day gave many insights into how different regions of the nation bring different viewpoints and culture to the table in discussing the nations future as future business men and women. Broadened my view on several different points this day!
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ReplyDeletePrior to arriving at Berkshire Hathaway, the group met several times to determine what questions to ask Mr. Buffett. I was given the privilege of asking Mr. Buffett the group’s first question. After waiting a nerve-racking forty minutes, Mr. Buffett finally called for a question from The University of Montana. Although still worried about stumbling through the question, Mr. Buffett’s welcoming presence prompted me (perhaps inappropriately) to address him by his first name:
ReplyDelete“Warren, in coming to Omaha from Montana, we couldn’t help but notice a thriving economy in a rural setting. Given your experiences living in Nebraska and given your global perspective, what should rural states and communities invest in for the future?”
Warren responded first by detailing Nebraska’s economic history. The state had previously relied primarily on railroads and meatpacking but managed to become a major player in the insurance industry. He then detailed some of the challenges rural communities face. He explained how there is less need for human labor as farming becomes more efficient, leading to a decreased need for services, and ultimately making rural communities less viable. Warren then responded candidly to the question by stating that rural governments are not the appropriate vehicle to create a sustainable industry or economic trend. Instead, Warren suggested rural areas should focus their efforts on recruiting entrepreneurs who are committed to building new businesses and growing with the community.
Given Warren’s track record of investing in established companies and avoiding emerging businesses, I was pleasantly surprised to hear his response in support of entrepreneurship. The experience he provided us, and the advice we received is certainly something I will not forget anytime soon.
I was also honored to ask Mr. Buffett a question from our group. As Simona mentioned, he gave a very thoughtful answer. It was apparent that this was an issue he and his partner Charlie had discussed in great detail many times. I was glad we had decided on a question with which he still struggles because we were able to hear his thought process and his current stance.
ReplyDeleteFor me, the interaction with Mr. Buffet was only half of what made the experience so special. Equally as satisfying was the support of my classmates and professors. As I sat down after asking my question, I received encouraging pats from both sides, winks and thumbs ups from all around. This class of MBAs has become particularly close with one another, evolving from classmates into true friends. I think the relationships we have built this year will be one of the most important things we take away from this MBA program. I came to appreciate this point even more when comparing ourselves to the other schools. Some students seemed to view their classmates only as competition and some didn't even know one another because of large class sizes. I have learned a great deal from my intelligent and thoughtful classmates because we have created a challenging yet "safe" environment to share our opinions and debate complex issues. In that moment after asking my question, I was overwhelmed by a sense of pride, satisfaction, and pure joy to be associated with this class of Montana MBAs.
I was really excited to see Warren Buffett in person. I have read about him a lot, and I truly admire him. From previous readings and watching him on the Internet I knew that he was smart and entertaining and a nice person, but I was still surprised how sharp he is. He answered questions very concisely, not losing focus for a moment, supporting his claims with data that he actually remembered. His head must be full of numbers neatly organized, ready for retrieval whenever needed. He continued talking for two and a half hours without ever pausing to think of what to say.
ReplyDeleteFor me one of his most amazing abilities is to think through complicated questions considering a great deal of information and then come up with one or two simple sentences that cut right to the heart of the matter. This is a skill that very few possess.
He is also very honest, and he does not try to look better than what he is. When Casey asked him about how they weigh ethical issues when deciding whether to invest in a business or not, he took the question very seriously and said that he has talked a lot about this problem with Charlie. The question is where to draw a line. For example, should they not invest in companies that are connected to tobacco in any way? Their answer is that they do not invest in tobacco manufacturing but they invest in companies that sell tobacco products, such as Costco or Wal-Mart. He acknowledged that this might not be the perfect solution, but this is what they decided to do. His clarity of thinking also shows in how he thinks about other ethical issues. He thinks the topic in question through and comes up with a thought or solution that may or may not serve his interest. In the latter case he does not try to bend his opinion or reality to better fit his situation. For instance he said that the US tax system favors rich people including him. Even though he is in the favored group he does not find it fair. And he airs this opinion wherever he can.
I love people who don’t take themselves too seriously. Warren Buffett doesn’t. He has a great sense of humor, and he is willing to make jokes about himself, too. This made his talk really delightful. He does not seem to be wearing a mask, he is who he is. I really believe him that he does not need much money for his everyday life. He just does not desire fancy things, because in many ways he is an everyday person. He seems to be at ease with being rich, he treats this as a matter of fact. And this makes him easy to accept even for people who are the most prejudiced against rich.