Warren Buffett Q&A Transcript || University of Georgia (2001)

Warren Buffett’s speech at the University of Georgia on July 18, 2001, is pretty much as good as it gets. In a little over an hour, he hit all of the high notes of his investing career — as well as explaining his approach to life in general. This Q&A session is widely considered to be among his best and most informative. Enjoy!

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UGA: Would you please give a very warm welcome to the Oracle of Omaha — Warren Buffett!

Buffett: Testing… One million, two million, three million.

[Crowd Laughs]

I came in from Nebraska today and you’re probably all familiar with us mainly by our football team. We have those fellows with the big white helmets with those red N’s on them. I asked one of our starters the other day, “What’s the N stand for?” and he said, “Knowledge.” (Laughs)

We make it tough on them, though. You don’t coast through Nebraska just because you’re a football player. They major in agricultural economics and there’s a two-question final for all of the players.

The first question is: “What did Old MacDonald have?” They were giving that to one of our potential Heisman Trophy winners the other day and he started to sweat. Finally, he brightened up and said, “Farm!” The professor was delighted, of course. You don’t want to flunk a Heisman candidate.

He said, “You’re halfway home. Just one more question. How do you spell farm?” Now, the guy really starts to sweat. He looks at the ceiling and he looks around. Finally, his face brightens up and he says, “E-I-E-I-O!” (Laughs) So watch for that guy next year — he’ll be dynamite.

I really want to talk about what’s on your mind, so we’re going to do a Q&A in a minute.

There are a couple of questions that I always get asked. People always say, “Well, who should I go to work for when I get out [of college]?” I’ve got a very simple answer — we may elaborate more on this as we go along — but the real thing to do is to get going for some institution or individual that you admire. It’s crazy to take in-between jobs just because they look good on your resume or because you get a little higher starting pay.

I was up at Harvard a while back and a very nice young guy picked me up at the airport — a Harvard Business School attendee. He said, “I went to undergrad here and then I worked for X and Y and Z and now I’ve come [back] here.”

He said, “I thought it would really round out my resume perfectly if I went to work now for a big management consulting firm.”

I said, “Well, is that what you want to do?”

He said, “No, but that’s the perfect resume.”

And I said, “When are you going to start doing what you like?”

He said, “Well, I’ll get to that some day.”

I said, “Your plan sounds to me a lot like saving up sex for your old age.”

It just doesn’t make a lot of sense. (Laughs)

I told that same group, “Go to work for whomever you admire the most and you can’t get a bad result. You’ll jump out of bed in the morning and you’ll be having fun.” The dean called me up a couple of weeks later and said, “What did you tell those kids? They’re all becoming self-employed.” (Laughs)

So you’ve got to temper that advice a little bit.

Play one game a little bit with me for just a minute and then we’ll get to your questions. I’d like, for the moment, to have you pretend that I’ve made you a great offer. I’ve told you that you could pick any one of your classmates — and you now know each other probably pretty well after being here for a while — you have 24 hours to think it over and you can pick any one of your classmates and you get 10% of their earnings for the rest of their lives.

I ask you, “What goes through your mind in determining which one of those you would pick?”

You can’t pick the one with the richest father — that doesn’t count. You’ve got to do this on merit. But you probably wouldn’t pick the person that gets the highest grades in the class. There’s nothing wrong with getting the highest grades in the class, but that isn’t going to be the quality that sets apart a big winner from the rest of the pack.

Think about who you would pick and why — and I think you’ll find, when you get through, you’ll pick some individual… You’ve all got the ability. You wouldn’t be here otherwise. You’ve all got the energy. The initiative is here, the intelligence is here throughout the class — but some of you are going to be bigger winners than others.

It gets down to a bunch of qualities that, interestingly enough, are self-made. It’s not how tall you are, it’s not whether you can kick a football 60 yards, it’s not whether you can run the 100-yard dash in ten seconds, it’s not whether you’re the best-looking person in the room.

It’s a whole bunch of qualities that really come out of Ben Franklin or the Boy Scout Code or whatever it may be. It’s integrity, it’s honesty, it’s generosity, it’s being willing to do more than your share. It’s just all those qualities that are self-selected.

And then, if you look on the other side of the ledger — because there’s always a catch to these free gifts and genie jokes — you also have to (and this is the fun part) sell short one of your classmates and pay 10% of what they do. So who do you think is going to do the worst in the class? This is way more fun. (Laughs)

And, again, it isn’t the person with the lowest grades or anything of the sort. It’s the person who just doesn’t shape up in the character department.

We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don’t have the latter, the first two will kill you — because if you’re going to get somebody without integrity, you want ‘em lazy and dumb. (Laughs) You don’t want them smart and energetic.

It’s that third quality [that is important] — but everything about that quality is your choice. You can’t change the way you are wired much, but you can change a lot of what you do with that wiring.

It’s the habits that you generate now on those qualities — or those negative qualities… [Like] the person who always claims credit for things they didn’t do, that always cuts corners, that you can’t count on. In the end, those are habit patterns — and the time to form the right habits is when you are your age.

It doesn’t do me much good to get golf lessons now. If I had gotten golf lessons when I was your age, I might be a decent golfer.

Someone once said, “The chains of habit are too light to be felt until they are too heavy to be broken.”¹ I see that all the time. I see people with habit patterns that are self-destructive when they are 50 or 60 and they really can’t change them. They’re imprisoned by that. But you’re not imprisoned by anything.

So, when you write down the qualities of that person that you’d like to buy 10% of, look at that list and ask yourself, “Is there anything on that list that I couldn’t do?” And the answer is there won’t be.

When you look at the person you sell short and you look at those qualities that you don’t like, if you see any of those in yourself — egotism, whatever it may be, selfishness — you can get rid of that. That is not ordained.

Ben Franklin did this and my old boss Ben Graham did this at early ages in their young teens. Ben Graham looked around and he said, “Who do I admire?” He wanted to be admired himself and he said, “Why do I admire these other people?” He said, “If I admire them for these reasons, maybe other people would admire me if I behave in a similar manner.” And he decided what kind of a person he wanted to be.

If you follow that, at the end you’ll be the person you want to buy 10% of. That’s the goal in the end. And it’s something that’s achievable by everybody in this room.

That’s the end of the sermon. Now, let’s talk about what’s on your mind.

You can ask anything. The only thing I won’t tell you is what we’re buying or selling. I don’t even tell myself that. It’s like the Coca-Cola formula — only two people can get into the trust department and find out what [the ingredients] are —and I don’t know who the two are. We don’t talk about we’re buying or selling, but anything else is fair game. Personal, business, anything you’d like to talk about.

And, actually, the tougher the questions are, the more interesting it is for me — so don’t spare my feelings. Just throw at my head. Stand in line and I’ll be Regis Philbin.

The first question is asked off-screen, but seems to be something along the lines of “How do you decide which companies to invest in?”