Here we find a somewhat unusual man. Let’s start with his name. His full name is Warren Washington Albert Johnothan Samuel Armididajad Buffett.
Over the past several weeks, I’ve asked friends, neighbors, relatives, and clients what they knew about Warren Buffett. The majority of them had heard the name before. Few knew why. Some knew him for his wealth, a few for his relationship with Bill Gates, a smattering knew him as a noted philanthropist, some knew him as one of the world’s greatest stock market investors, a couple knew of his sense of humor and frugality, others knew him as ad advisor to governments and organizations, and several knew him as the largest shareholder, Chairman & CEO, of Berkshire Hathaway. Oddly enough, those in the last category knew little or nothing about Berkshire Hathaway. All were correct.
This is indeed a very complex man who has little concern for being in the spotlight. Let’s take a quick look at each of the areas mentioned above in hopes of gaining greater insight into a man we should know more about.
The 78-year-old Warren Buffett happens to be the richest man on the planet. He has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. As of February of 2008, this tidy bundle puts him ahead of his good friend, bridge partner, and Microsoft co-founder Bill Gates who was the richest man in the world for 13 straight years.
Buffett’s current salary as CEO is a mere $100,000 per year with no stock options, which is among the lowest CEO salaries in the U.S. among larger companies. He lives in the same house in his Omaha, Nebraska, neighborhood that he bought in 1958 for $31,500—today valued around $700,000. He does not carry a cell phone, does not have a computer at his desk, and drives his own car. Not one for dining out at fine restaurants unless absolutely necessary, Warren Buffett is reputed to usually eat burgers; he drives himself to McDonalds for meals—steaks and Cherry Cokes.
When Buffett plays golf with his friend, Bill Gates, who’s on his board, their typical bet is $1. He chooses to fly coach rather than first class. His children will not inherit a significant proportion of his wealth. Buffett once commented, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”
Buffett is a noted philanthropist. He also announced plans to contribute additional Berkshire stock valued at approximately $6.7 billion to the Susan Thompson Buffett Foundation and to other foundations headed by his three children.
In June of 2008, e-Bay conducted a five-day online charity auction for a “Power Lunch with Warren Buffett.” It was won with high bid of $2,110,100 allowing the winner to dine with Buffett, at New York’s Smith & Wollensky Steakhouse, along with up to seven companions for the private lunch. They were allowed to ask Buffett anything at all, except what he’s buying or selling. Auction proceeds benefit the San Francisco Glide Foundation.
In 2006, he auctioned his 2001 Lincoln Town Car on eBay to raise money for Girls Inc. Also in 2006, Buffett announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation. The donation, which will come from his Berkshire Hathway shares, will amount to about $31 billion, based on current values, making it the largest charitable donation in history.
Sense of Humor
Often called the “Oracle of Omaha,” he was listed in 2007 among Time Magazine’s 100 Most Influential People in the World. Buffett’s speeches are known for mixing business discussions with humor. Each year, Buffett presides over Berkshire Hathaway’s annual shareholders’ meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname “Woodstock of Capitalism.” Buffett’s writings are known for containing literary quotes ranging from the Bible to Mae West, as well as Midwestern advice and numerous jokes.
In 1962, investor Warren Buffett began buying stock in Berkshire Hathaway. After some clashes with the owners, he bought up enough shares to change the management and soon controlled the company. Buffett initially maintained Berkshire’s core business of textiles, but by 1967, he was expanding into the insurance industry and other investments.
Today, Berkshire Hathaway is a holding company headquartered in Omaha, Nebraska, whose core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. However, it also oversees and manages a large variety of subsidiary companies which include: International Diary Queen, Benjamin Moore & Co., The Pampered Chef®, H.H. Brown Shoe Group, Helzberg Diamonds, GEICO Auto Insurance, See’s Candies, Fruit of the Loom®, Star Furniture, Nebraska Furniture Mart, Boat U.S., Buffalo NEWS, NetJets®, and the Acme Brick Company to name just a few. It also has a controlling stake in Anheuser-Busch, Coca-Cola, and Wells Fargo.
Buffett, son of a Nebraska politician, was the second of three children, and displayed an amazing aptitude for both money and business at a very early age. He delivered newspapers and would go door-to-door selling chewing gum and Coke from his grandfather’s grocery store. He purchased six packs of Coca Cola for a quarter and then sold them for a nickel a bottle. He bought his first stock at age eleven and filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He bought a 40-acre farm at the age of fourteen, using money he had saved from his paper route. Acquaintances recount his uncanny ability to calculate columns of numbers off the top of his head—a feat Buffett still amazes business colleagues with today. In his senior year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within a few months, they owned three machines in different locations.
Buffett graduated from Columbia Business School. While working as a stockbroker on Wall Street, he purchased a Sinclair gas station as an investment. During that time, Buffett also took a Dale Carnegie public speaking course. Using what he learned, he felt confident enough to teach a night class at the University of Nebraska, “Investment Principles.” The average age of the students he taught was more than twice his own. His investments and partnerships continued to grow until his destined relationship with Berkshire Hathaway. The rest is history.
He admits his inability to put up with bureaucracy and inefficiency. Though Berkshire has about 190,000 employees, he runs the $141-billion company with 17 employees at its Omaha Headquarters. He says, “We delegate almost to the point of abdiction.”