Bill Gates and Warren Buffett: Keeping America Great

I recently DVR'd the CNBC show Bill Gates and Warren Buffett: Keeping America Great. The show has the two titans of capitalism sitting down with a crowd of Columbia students for a back and forth discussion on 'keeping America great.' It was a great glimpse into a casual discussion between these two business geniuses and a group of driven young business students parched for knowledge. The show exposed me a bit more to Bill Gates, especially in a relaxed setting. And it reaffirmed my admiration for the simplistic character based wisdom of Warren Buffett. I love the reality driven optimism of both of these guys and seeing as they are at the world's forefront in both business and philanthropy there is definitely much to be learned as a business leader and more importantly as a human being living a life of excellence. There were plenty of great questions and great responses from these two icons. I have provided some paraphrased enlightenment from the show but I highly suggest you tune in and watch the entire thing. It is well worth your time.

Was there ever a doubt about this country?
Buffett: I put my money in when we were looking into the abyss.
Gates: This country still has the best schools the best opportunities for entrepreneurs.

Do you think bad ethical business practices are the cause of the financial crisis?
Buffett: It was one of the causes but we have always had greed and we will never get rid of it. We still have a system in place that allows for a quality of opportunity that is unparalleled. Our economy is sputtering but we still have the best engine in the world.
Gates: I was a huge beneficiary of this country's willingness to place a large amount of risk and responsibility on a young person. Other countries are trying to replicate that and it is good for the world.

Mr. Gates can you tell me what you thought when Lehman went under?
Gates: I don't really follow investment banks very closely. I called Warren and asked if I should be worried? He said a little bit.
Buffett:The dominoes were fully lined up and it wasn't realized how close the Lehman domino was to the next one. However I give credit to how the government officials handled the crisis overall.

Many of the villains of this industry were in fact business school graduates. What responsibility do you think the universities like Columbia should hold?
Gates: Remember that capitalism has been enormously successful. Standard of life, medicine, etc. Business schools pay a role in developing the skills necessary to move forward.
Buffett: The best place to learn ethics is in the home. Most of us learn what we know about ethics well before we step in a classroom. It is important to emphasize them but if I had to choose between learning them in the home or the classroom I would take the home. The thing is you can succeed marvelously with ethics. It is not a hindrance at all. Look everyone here has a bright future. Look at the last two centuries. Our country doesn't avoid problems it just solves them.

What industry do you think is going to produce the next Bill Gates because that is the industry I want to get into?
Gates: Information has been the most exciting as far as what has happened. Energy and medicine also has the opportunity to rival information.
Buffett: Find what turns you on and what you have a passion for. If I would have known that Bill's industry was the next big thing I don't think I would have done too well at it. I had a teacher Benjamin Graham that I offered to work for free for and he said I was overpriced but I went that direction and had a passion for it and here I am. You will do well in whatever turns you on.

CNBC took a poll of the attendees and asked if in their lifetime they would ever see a company as transformative as Microsoft and 92% said yes. Bill do you share that belief?
Gates: Yes. Capitalism is great. You have thousands of things going on in parallel and most fail, some are mediocre, but the ones that are truly special can grow and stun everybody.

There have been a of rumors regarding your investment in Burlington Northern. Can you share the real reasons for your exposure to the railroad sector at this time?
Buffett: When I was six I wanted a railroad set and my dad didn't get it for me. Railroads are a necessity within this country. You will have more people and they will be moving more and more within this country in the next 30 years. It is the most environmentally and most cost effective way of doing that. One train will supplant 200 trucks on the road. They will play a big role in the future.

We just went through hopefully the worst financial crises of our lifetime. It has kept a lot of people up at night worrying about their future. What if anything keeps you up at night?
Buffett: I try to live my life so that nothing keeps me up at night. Last fall was really quite exciting for me. There were opportunities available that weren't the year prior. This country was going to do fine no matter what.
Gates: The financial system fortunately has a lot of self correction in it. I think there are a few things that could shake us in the future. One being a large scale terrorist attack and the other a widespread pandemic. You have to keep your eye out for a few outliers like that. I worry about our education not improving as much as it should.

The recent run up in the market has been historic with many people questioning the sustainability. Do you think the rally is for real?
Buffett: What's going to happen tomorrow huh? I bought my first stock in 1942.. Do you know when the best calendar year was since then? It was 1954 of the heels of a recession. But the point is it doesn't matter. It doesn't matter what the market does next week. What matters is whether you are buying a good stock for the money or not. Have the right long term outlook and the right evaluation of the company you are buying and a bad market is your friend. I don't care whether next week, next month or even next year does well.

What are your thoughts on Apple and the job Steve Jobs has done as the CEO of Apple? (Awkward laugh from audience and an almost pissed off smirk from Gates)
Gates: He has done a fantastic job. They are in a bit of different business but he has done well. He brought in a team and inspired them to revive a company. It is great to have competitors and of all the leaders in the industry he has proven most inspirational and he saved a company to bring them back at an incredible rate.

What is the one thing your MBA didn't prepare you for when you got into the real world?
Buffett: It prepared me very well. I was lucky that I knew what I wanted to do. I had two professors that really inspired me so that really propelled me into a field that I already loved. Right now I would pay $100,000 for 10% of the future earnings of any of you so if anyone wants to see me after. If that is true you are a million dollar asset right now. You can improve upon that by working on your communication skills. If you can improve it by 50% its another $500,000 in terms of capital value and see me after class here and i will pay you $150,000.

Mr. Gates you obviously worked very hard to get where you are. Can you share what role pure luck played in your success?
Gates: I was lucky in many ways. Lucky to be born with certain skills lucky to have parents that created an environment that was good for me and I was lucky in terms of timing. The microprocessor invention impacted me incredibly at a young age. Lucky to meet the people I have met.

You have an interesting relationship. What do you both admire most about each other?
Buffett: He admires my athletic ability. What I most admire about Bill is the view he has of what to do with the money he has amassed. As he said he was born in the right country, at the right time, with the right wiring and he was very lucky to be where he is. But in the end he knows he is the beneficiary of a tremendous society and not everyone has that opportunity. He values every human life as much as the next and he is backing it up not only with money but with his time and his wife is backing it up as well. They are going to spend the second half of their lives improving the lives of the 6 and a half billion people of the world and that is what I admire most about him.
Gates: Well with Warren there is a lot you can pick. His integrity is an example to the world, his humor. But I think I would have to pick his ability to teach. He has the ability to take things that are very complex and make them so simple so that everyone has the benefit of the experiences and work that he has put in. He loves to teach and its a real gift that I admire incredibly.

R. Glenn Hubbard the Dean of Columbia business school had the opportunity to present the question that he was most excited to ask. Warren you have said that you never know who is swimming naked until the tide goes out. That says something for knowing when the tide is going to go out but it also says something about knowing context. How do we develop and encourage business leaders who understand context and can connect the dots?
Buffett: I think they have learned alot of that in the last year and some just never learn. I think that what I learned from Ben Graham is that having sounds principles takes you through everything. They take you through the good and the bad and in the end I don't worry about it.

Has your investment philosophy on buy and hold or any of the actual processes of how you invest been impacted by the recent crisis?
Buffett: No it hasn't. We like products like this (holds up coke bottle) how is that for shameless promotion? This started in 1886 and gone through all these events and in the end there are billions of servings of coke next year and more the year after that. I own fruit of the loom too but I am not going to do a product promotion of that!

How would you recommend that an individual investor who follows the Graham and Dodd philosophy allocate their capital today?
Buffett: Well it depends on whether they are active or a passive investor. If you are going to spend a lot of time on investing then look at as many things as possible and you will find some bargains. You have to look for yourself. The world isn't going to tell you about great deals you need to find them yourself and that takes a fair amount of time. If you are not going to do that then I just advise an index fund invested consistently over time. Cash is the worst investment. Cash is not king. Find a good business and stick with it. We always keep enough cash around so I feel comfortable and can sleep at night but it is not because I like cash as an investment. Cash is a bad investment over time but you always want to have enough so that nobody can determine your future.

I actually work at Goldman Sachs so thank you for your investment.
Buffett: Well why aren't you at work?
I would like both your opinions on the development of alternative energy for getting our economy back on track?
Gates: There will be many that are dead ends. But as a nation we want to make sure that we have an environment that encourages all of them because one will eventually lead to much cheaper and better energy. There is quite a bit of R&D but not as much as I would like to see. But it is one of these areas that is emphatic by nature. There is a lot of money going in and the return on investment as a whole is actually quite low much like cars and computers etc. You get these kind of bubbles so you will have to be a bit careful to make sure that it is one that has its cost structure in line and not just pushed along by subsidies. So its a good area but not necessarily one that is great for investment.

If America was a stock would you buy it?
Gates: You bet
Buffett: On Margin!

Manvational Posters - George Patton

I found this on The Art of Manliness and thought it needed to be posted here. I did a similar post on Teddy Roosevelt here on BadskiBlog a few months back. Basically they replicate those cheesy motivational posters that are found in offices across the nation, only instead of some picture of a waterfall and a quote on persistence they are filled with quotes from real leaders and examples of manliness. Pretty cool. Here is an excerpt from the post and a sample of a few of my favorites from General Patton.

George “Old Blood and Guts” Patton was a four star generally who ably led American troops during World War II. In his 36 years of distinguished service to the military, he earned the Purple Heart, 2 Distinguished Service Crosses, 3 Distinguished Service Medals, 2 Silver Stars, and several other decorations as well. Patton was as famous for his efficiency on the battlefield as his colorful personality off of it. He was a sight to behold, with his medals emblazoned on his chest, a shiny helmet upon his head, and two ivory-handled pistols around his waist. The men who served under him groused about his demand for absolute discipline, yet they knew that his strict leadership upped their chances for survival.

Patton, like every single man from history, was far from perfect. His love of war bordered on the crazy, and his behavior and outspoken nature often got him in trouble. His most famous controversial incident occurred when he slapped a man suffering from “battle fatigue” in a hospital and called him a coward.

But he was decidedly good at his job. He was born to lead men in battle. And while one can certainly disagree with his philosophy, he was undeniably a compelling leader and master motivator of men. His words will give any man a needed kick in the pants.

The Waiting Game: The Government and Youth of Iran

I came across this article on CNN today. The article does a good job showing how an Iranian government truly does business. I thought it was an odd play to call out President Obama who is not only extremely popular, but serves as the world's most famous figure as well. A famous figure that to this point has remained fairly restrained in his involvement in the Iran election crisis.

Also Thursday, Mahmoud Ahmadinejad, the declared winner in the disputed June 12 election, told President Obama to stop "interfering" in Iran's affairs, the semi-official Fars news agency reported.

"Do you think that this kind of behavior is going to solve any of your problems? It will only make people think you are someone like Bush," Fars reported Ahmadinejad as saying.

Obama is walking a diplomatic tightrope in finding the right response to the crisis. Since taking office, the U.S. leader has sought rapprochement with Iran, but this week he said he was "appalled and outraged" by the post-election violence.

I think that Ahmadinejad couldn’t be more wrong in his statement. I think this will bring more and more of the conservative Iranian population towards the middle. Ahmadinejad has continued his antagonistic behavior through two presidents that the majority of the world likely views as polar opposites. What is the common denominator in this situation?

My time in the Air Force has taught me a valuable lesson that I think is very applicable in this scenario. When a squadron is stuck with a horrible commander there is some pain and maybe even a few martyrs along the way. Yet on the outside it looks as though people are just mindlessly following orders and carrying on with business as usual. However the underlings have something on their side that the poor leader will never have, and that is time. The subordinates will basically wait out their time under the current regime and look forward to better days ahead. I see a very similar pattern emerging in Iran. I have watched numerous discussions on MSNBC and other outlets about whether or not Iran is ready for freedom, and the ever-present conservative population that supports Ahmadinejad. But that is not the point. The point is that the majority of Iran’s youth are not supportive of the Ayatollah and the current regime. As the youth continues to grow older and continues to be inundated with new information and connections with the world (unless the government continues to limit information rich technologies such as the internet) they will, in essence wait out their poor leader. Whether that time frame is a two year tour in the Air Force or the lifespan of a radical regime the concept is the same.

Leaders Develop Leaders

I found this post on Tom Peters blog. Tom has contributed much to the study of management and leadership alongside Peter Drucker. I really like this post. It is a great reminder to all leaders that it is not all about you. If you are focused only on you, you are missing what being a leader is all about. I started thinking back to all the leaders I have dealt with both good and bad, and this simple habit was a clear differentiators between the two. The good leaders ensured that those below them were becoming better people and they contributed all they could to that practice. The poor leaders were more concerned with what their subordinates or players could do for them. What kind of leader do you want to be?

In New Delhi a couple of weeks ago, I had a general in the Indian Army in the front row. I don't recall the details, but evaluating senior officers for promotion came up. I ventured, boldly, that there "was one issue that stood head and shoulders above the rest."

Namely: What is this candidate's track record—in exacting detail—in developing people. Though hardly locked in concrete, I posited that "the ONE question" might go something like this:

"In the last year [3 years, current job], name the three people whose growth you've most contributed to. Please explain in some significant detail where each was at the beginning of the year, where he or she is today, and where each is heading in the next 12 and 24 and 60 months. Please explain your development strategy in each case. Please tell me your biggest development disappointment this past year—looking back, could you or would you have done anything differently? Please tell me about your greatest development triumph—and disaster—in the last ten years. What are the 'three big things' you've learned about 'people development' along the way."

As I see it, it's not the boss' role, for instance, to make strategy. It's the boss's role to develop the best strategist—and the boss's role to ensure that the process thereof is moving along rapidly and imaginatively. And so on.

Finally, as I see it, this in some form applies to pretty much every promotion. And it even has a bearing on evaluating a non-manager on a 3-month project. That rather junior person will, for example, in several instances be responsible for accomplishing a milestone—and to do so, she must engage her team members, and engage them in a way that they go away with some learnings—that contribute a bit to their development.

What do you think about this riff?

Meeting of the Minds - The Future of Capitalism

I watched a CNBC original called Meeting of the Minds The Future of Capitalism yesterday and it was very interesting. The show brought together some prominent business minds to talk about some of the issues surrounding our current environment.

What will capitalism look like going forward? What will prosperity mean? And ultimately, how will businesses navigate this uncharted landscape?

There were a few things that I found intriguing about the show. First and foremost, I always enjoy watching leaders interact with eachother. Who better to learn from than some of the finest business leaders our nation has to offer. I am always amazed at how much the topic of government is discussed when talking about business. I guess some of the questions were tailored to spark some discussion of the business/government dynamic, but I am sure it would have arisen regardless. The leaders, although all relatively similar with regard to their practicing of business, had political views that ran the gamit of the political spectrum. The short one hour program revealed quite a bit surrounding the leaders political views. Although their political views varied wildly from leader to leader, there was almost unanimous consensus that growth is the answer to get our nation out of the financial prediciment it is in today.

The leader that I found myself most drawn to was Jack Welch, former CEO of General Electric. I have listened to his audiobook before, but seeing him interact and share his views on this program solidified my belief that the guy is a real leader. Some people might not be able to look beyond his fiery personality, but many of the things he stands for resinate with me personally. In the program he used the word meritocracy. He spoke about how we need to not be ashamed to be business people. He said that the overwhelming majority of businesses and business people are inherently good. His answer for getting our nation out of the crisis was establishing and rewarding the winners while taking care of the losers. Not total cutthroat capitalism, yet a recognition that winners and the opportunity to succeed are what makes our country great. He really seems to celebrate personal responsibility and establishing systems that distinguish only based on merit; very noble ideals indeed. Check out some video footage of the show below. I highly recommend checking out the entire show.

Only The Optimists Survive

I found this article in BusinessWeek today on leadership and how true leaders are optimists. The article is kind of fuzzy and subjective but it is a great reminder that amidst adversity there is only one option; to look forward and believe that better days are ahead.

"Only the paranoid survive" was the famous call to action by Intel pioneer Andy Grove, and that hypervigilant motto undeniably has worked wonders during his illustrious career.

For leaders in today's and tomorrow's business climate, however, I suspect that a far more appropriate motto would be: "Only the optimists survive."

I think this article is important because it talks about how optimists define their own reality. To me, that is the same as saying that optimists challenge and break out of the status quo. They do what is not normal and are therefore remarkable. People want to follow people who are unique, people who are extraordinary, people who will lead them confidently into the unknown and succeed regardless of the challenges faced.

Everybody loves a winner....

I came across this article today and it got me thinking http://msn.foxsports.com/nfl/story/9143738/Fitzgerald-an-NFL-paradox:-A-WR-without-an-ego?MSNHPHMA. The older I get and inevitably the farther I am removed from competitive sports the more I appreciate winners and true professionals. No matter what it is, whether its tennis with guys like Federer and Nadal (very different yet very similar in their excellence) or someone like GE's Jack Welch. This article illustrates that this guy is a winner. He just gets it done and does it with class. Guys like this are great role models especially for young kids and even for old guys like me. As the article illustrates there are some sports and in this case positions where true winners and leaders are becoming hard to find. I remember one of my coach's always saying that everybody loves a winner and this rings truer to me now than when I heard him say it every day. People like being associated with winners, they like watching them succeed and see the good in themselves reflected in a winner's achievements and accomplishments. I have been trying to spend extra time and attention studying winners and successful people. Worst case I learn through osmosis. Typically I am reminded of where I am at in the world's pecking order and what it takes to truly be successful at something. Articles like this keep me hungry and going in the right direction. What winners are you studying?