Warren Buffett: The Billionaire Next Door || Q&A Transcript (2006)
"I’ve always said, on my tombstone, I just want it to say, 'My God, he was old.'"
On November 20, 2006, CNBC aired The Billionaire Next Door — an hour-long special about Warren Buffett hosted by Liz Claman. The centerpiece of this program was a lengthy interview with Buffett that walked viewers through his life and career. Plus, Claman also spoke to others (like Bill Gates and LeBron James) about their friendship with the Oracle of Omaha. I’ve transcribed the complete Q&A with Buffett — and put other relevant segments from the televised special down in the footnotes. Enjoy!
Liz Claman: I recently had the opportunity to spend the day with the world’s most famous investor in his hometown. I found him down to earth, funny, and eager to share his secrets of success. To understand how Warren Buffett has gotten so rich — $41 billion according to recent estimates — it helps to look back to his childhood days in Omaha. Back to his grandfather’s grocery store.
Warren Buffett: This store was in the Buffett family until 1969 when my uncle finally retired. It went back to my great-grandfather starting in 1869 — so we lasted 100 years.1 Not always at this location. This was the last 50 years or so. We had a credit and delivery store and my grandfather told me [about] the people who didn’t pay their bills on time — and he got appropriately unhappy about that. I would go out in delivery trucks. It was quite an education.2
So you worked?
I worked.
You worked hard. What was your first business?
My first business, actually, my grandfather would sell me Wrigley’s chewing gum and I would go around door to door in my neighborhood selling that. He would also sell me Coca-Cola — six for a quarter — and then I’d sell them for a nickel each, also around the neighborhood on a hot night.
So you got your little five cent profit.
Right. I had a little thing that I sold the chewing gum in. I was always trying to do something or other.
What’s the first piece of real estate that you bought?
Well, I bought a farm when I was in Washington. I bought a farm out here in Thurston County.
How old were you?
I think I was about 14.
14?!?
Yeah, I had a 40-acre farm.
Where did you get the money?
From paper routes.
And you saved the money?
Yeah. But I got kind of bored with the farm. (Laughs) Once a year, the guy would tell me we sold so many bushels of oats and that was it. Not as much fun as stocks.
What was the first stock you bought?
The first stock was Cities Service Preferred stock.
How old were you?
I was 11.
You bought a stock at age 11?
Yeah. I don’t know why I wasted that time beforehand. (Laughs) I got started late.
How did you do with Cities Service?
I made all of $5 on it. I had three shares. I bought it at $38.25 and I sold it around $40. It went down to $27 in between. Then, after I sold it at $40, it went to over $200.
You say you tap dance to work.
I tap dance to work. Don’t ask me to do it! We’re talking figuratively now. (Laughs)
I want to see this.
Yeah, well, you would.
But that’s how much you love it?
I love it. I wouldn’t be doing it if I didn’t love it. I’d be crazy if I was doing something at age 76 with all the money in the world that I didn’t want to do, right?
I know business students ask you this all the time, but what do you look for when you want to buy a business?
I’m looking for something I can understand — to start with. There are all kinds of businesses that I don’t understand. But so what? As long as I’ve got some in what I call my circle of competence. So I’m looking for things I understand.
I don’t understand what car company is going to win ten years from now or what software company is going to win ten years from now or what chemical company is going to win ten years from now. But I do understand that Snickers bars will be the #1 candy bar in the United States, just like they’ve been for forty years or something.3
I look for durable competitive advantage. Durable competitive advantage. That’s hard to find — in something I understand. I look for an honest and able management. And I look for a price that I’m willing to pay.
You just had a great adventure recently. You bought 80% of Iscar, the Israeli metalworks company. What was it that put that company on your radar? How did you find out about it?