It’s amazing that Warren Buffett is alive.
Not because he is 84, or because he appears in ill-health (in fact, just the opposite: Buffett is chipper, more alert and energised than I am over the course of Berkshire Hathaway’s 7-hour annual meeting); no, it’s amazing that Buffett is alive because we are all here.
Forty-thousand shareholders,* journalists, students, world-travellers, disciples have travelled from across the country and around the world to be in Omaha, Nebraska, very nearly the geographical center of the US, to listen to Buffett speak, to see Buffett sit in a chair on a stage inside an 18,000-seat arena and answer questions about his company, his life, his failures, his successes, and all points in between.
The event is a celebration and a coronation; something that Buffett surely never imagined would exist when his Buffett Partners investment fund took control of Berkshire Hathaway, a failing textile manufacturer in Massachusetts, 50 years ago. It’s something that I’d wager Buffett himself finds quite strange.
You hear over and over through the weekend that this event isn’t like other shareholder meetings, which is both an obvious and profound point. Most shareholder meetings are sparsely attended, held in hotel ballrooms or even more modest spaces, and a few major shareholders and a few minor shareholders that plan to air grievances with management are generally the only attendees.
And so not only is total attendance at Berkshire’s meeting multiples of what you’d find at any other company’s, but the tone is not one of aggression or displeasure but fawning and deference. And all of this is to say nothing about the shopping event that happens adjacent to the meeting itself. It is a celebration and a party and a spiritual event.
During the 7 hour meeting, not all questions fielded by Buffett and his vice chairman Charlie Munger (or Warren and Charlie, as so many shareholders take to calling them), are softballs. Buffett and Munger are asked about Berkshire’s Clayton Homes unit, which was recently the subject of a detailed and unfavorable report from The Seattle Times. Buffett more or less dismisses the article’s criticisms citing bad maths from the reporter while touting the quality of a Clayton Homes unit and the relatively modest net profits seen by Clayton — and by extension Berkshire — after building and financing is complete.
This is the first question Buffett takes and the topic isn’t broached again.
Buffett is asked about 3G Capital, the private equity firm Berkshire has worked with on deals including their recent takeovers of Heinz and Kraft Foods, and a firm that has been as aggressive as any in “right-sizing” (business jargon for firing a bunch of people) a business after taking it over. “I’d never run a business employing more people than I had to,” Buffett says, adding that he’d never expect one his partners to do the same.
On my flight out of Omaha, a portfolio manager from London tells me was struck by how much of a shrewd capitalist there is under the disarming, grandfatherly nature of Buffett.
And this, perhaps, is what the weekend, the experience comes down to: it all seems like one thing, but it is, in fact, another.
COMING TO OMAHA
Everyone here is a student.
Or at least wants to be.
Warren and Charlie are asked for 5 pieces of advice on how they might identify a company that will have strong earnings power in 10 years. They are asked how to network with powerful business leaders if you don’t have high-ranking business school credentials. They are asked to identify and then answer a question they have never been asked before.
Shareholders ask of them the almost impossible, but if you’ve built a conglomerate that holds an annual meeting attended by 40,000 people, then it almost seems fair to ask this much of them.
In 3 days I met or overheard people from all over the world: a banker from Dubai, an IT consultant from London, a seed-industry worker from Manning, Iowa, a retired Commerce Department employee from outside Pittsburgh, a football player at Notre Dame, a retired couple from North Carolina preparing to travel to Shanghai.
Some of these people are here to celebrate their wealth. Some are here to celebrate Warren and Charlie, to pay respects to people that have changed their lives in some way or another. But more than anything else it seems people are here to learn. They are here to learn explicitly from the words of Warren and Charlie, but also from other shareholders, the other people you meet when you descend on Omaha during the first week of May.
Across the street from CenturyLink Center, where the whole meeting and shopping event takes place, is the Omaha Hilton. The lobby is teeming with Wall Street types wearing suits and no tie, a sort of portfolio managers’ uniform to informally identify one another as “value investors,” not merely folks who have profited from buying Berkshire shares, but who, in theory, make money from actually employing these strategies as money managers.
Whether, of course, the Buffett approach works, or will work, or could work, for anyone other than Buffett is unclear. There is, after all, only one.
In some sense, then, it seems odd on Thursday and Friday that Buffett will appear, like Wizard of Oz, on Saturday morning. He’s called the “Oracle of Omaha,” a mythical name that would seem reserved for someone more secretive, less public, than Buffett really is.
It occurs to me at some point that we, the travellers who have come to Omaha, are in a major way here chasing a ghost. Except this ghost is alive.
A CARNIVAL AND A CHURCH
I take pictures of the event as a spectacle, a carnival, an occasion for people-watching that exists beyond the meeting’s stated and official purposes.
I attempt to remain detached and aloof from the event, but quickly find myself buying Berkshire products to send back to my colleagues and family in New York with as much enthusiasm as shareholders from Macau, Germany, Brazil, and Oklahoma.
And yet by Saturday there is a sort of fatigue, a sadness that settles over the event and myself, the entire project in a way. It is after the meeting’s hour-long lunch break and I’m sitting in the last row of the arena’s upper deck, looking down at Buffett and Munger, amazed that these men are still sitting there, dutifully answering questions and providing thoughtful responses, allowing folks a chance at another question when they’re asked something Buffett or Munger just don’t anything about and as a result decline to answer.
I look across the bowl to the seat I initially scored at 7:15 in the morning, sandwiched between a couple from Omaha and a couple from Charlotte, the soon-to-be world travellers. They haven’t moved. Or least, they have not left their seats for another other than a bathroom break or lunch. They are committed to the meeting. And so am I, of course. At least officially. I’ve been sent here by my company to report back on what it’s like, how it feels, what happens. And with a little under 24 hours remaining in Omaha, it dawns on me that I’m not sure I know, or can know, or want to know.
How I get from my stated goal of chronicling the event to enjoying the event as an excited first-timer to seeing only the meeting’s cynical undertones is the question that eventually appears most pressing to answer. If this event is so happy, why is it making me so sad?
The arena is dark during the annual meeting. You can’t record the event, or at least you’re not supposed to, and before the Berkshire movie that starts the meeting begins, Buffett makes a PSA asking shareholders to police other shareholders: see something, say something. Someone is recording a video? Ask them to stop. If they don’t, get security.
“We’ve never had a problem with this,” Buffett says in a pre-recorded video, and it doesn’t seem like anyone expects there to be one now. It’s as if the priest has come to the altar and said: “Please be seated.”
It’s an amazing thing, this cooperation. Shareholders and media come from around the world, paying thousands of dollars for flights and hotels, waiting in line from pre-dawn hours, standing, no bathrooms in sight, just to get a seat that is a few hundred feet away from a stage Warren and Charlie sit on without moving.
It’s a room full of reverence, respect, something earnest that I can’t seem to fully identify with. I worry that this is because I’m just a young kid, or because I’ve come to foolishly believe that the best way to navigate our “now” is to be coolly detached and hiply aware of what you and you aren’t, what is and what isn’t, what can and what can’t. And what I know is that inside this framework, this worldview, this surely wrongheaded approach there exists a complete lack of the word that captures the zeitgeist of the Berkshire meeting better than any other: sincerity.
The meeting might seem to be about fun and games, about celebration, but it is also extremely serious. Buffett and Munger are old, they will not be around forever, and the prospect of Berkshire Hathaway remaining the company it is today without these shepherds around is a scary one.
The topic of succession comes up at the meeting but it is sort of brushed aside: Buffett is confident the company’s culture will endure long after he and Munger have passed. Whether one chooses to believe that or not, the abyss is a scary place to look into, and with each passing year, the company moves closer to that edge.
At one point Buffett says he has pledged to give away 99% of his wealth because there is no Fortune 400 in heaven. But there is one on earth, which is where Berkshire will remain after he passes.
What then? In Warren the shareholders trust.
YOUNG PEOPLE ARE HERE TO LEARN, OLD PEOPLE ARE HERE TO LAUGH
On Saturday morning I get in line to enter the meeting at 5:05 am. It is not pre-dawn but simply night. I’m standing in front of a couple from Minnesota, a law professor from LSU by way of California who has travelled here alone, and a man from Omaha by way of California who has attended on and off for the last decade.
“Charlie’s the Ed McMahon,” the woman from Minnesota says before the doors open. I am warned that there is something of a comedy routine on stage.
This does not disappoint.
“It’s hard for me to think of many [activist investors] I’d want to marry into the family,” Munger quips at one point, to which Buffett replies, “I’d better stop before you name names.”
At one point, Munger goes on and on about what he thinks are the critical flaws of the eurozone, criticising the governments of France and Germany, as well as the euro’s current problem-child, Greece, during his tirade. He eventually cuts himself off: “I’ve probably offended enough people.”
“I think there’s a few more in the balcony,” Buffett says. The whole place breaks up.
But behind these quips there is real depth, a lesson that can be taken away, and like most all of what happens at the meeting, you only begin to make sense of it when it’s over, when you yourself are moving on.
On marriage, Munger tells the crowd to “look for someone with low expectations.” Everyone laughs, but everyone also maybe knows it’s true. Successful investing, like successful relationships, are about being able to stomach the bad times in exchange for good times in the future. All of a business’s flaws, like all of a person’s flaws, are on full and vivid display when you’re committed to them.
Buffett and Munger preach buying good businesses and good prices, not a really cheap but terrible company, and not an amazing company you have to pay a premium for: good business, good price.
And when you start to run this through how we arrive at the human relationships we foster and value, Munger’s lesson on marriage starts to make more sense. Aim in the middle, succeed high. Or something like that.
Outside of comments that have any real analogical depth, Buffett and Munger’s commentary is, in itself, hilarious.
“If people weren’t so stupid, we wouldn’t be so rich,” Munger says at one point.
“It’s crazy to sweat at night,” Buffett says at another point. “Over financial things,” Munger interjects. Buffett pauses while the crowd chuckles, waiting for the silence to be broken. “Over financial things.”
At one point, a young shareholder asks Buffett and Munger what sorts of “mental models” they might employ if they were trying to build Berkshire again. How did they think about building Berkshire before they built it, in short. Once again, we’re all mostly here to learn.
Of course, the answer is that you don’t set out to build a Berkshire Hathaway, it just happens. Through hard work and incredible luck you end up at Berkshire Hathaway: attempting to build this from the start would lead to certain failure.
This question, and this language (“mental models”), is exactly the sort of anti-Buffett, anti-Munger thinking that you’d half expect to earn this young man admonishment from the stage. Instead Buffett, who answers all the questions first, waits a beat longer than he has before answering any other question.
And so we wait.
The crowd goes wild.
There is something about Omaha that reminds me of downtown Washington, DC. The streets and footpaths are wide. They are clean. Retail stores and places to eat are tucked inside office buildings. You can actually drive.
On Friday I walked around downtown Omaha before the Berkshire shopping day opened. I wasn’t wearing any meeting credentials, anything that obviously identified me as a shareholder. Or so I thought.
I’m standing at the corner of 10th and Dodge in downtown Omaha and a man driving a pickup truck with a trailer full of lawnmowers pulls up next to me. “Insurance is a Ponzi scheme,” he yells. I look at him and sort of shake my head, put my hands up: I don’t know what to say.
“Warren Buffett is running a Ponzi scheme, that motherf****r.” The light turns and he drives off. He knew what I was here for. Maybe because no one really walks in this part of town, or maybe I give away more than I’ll ever know. Either way, I am an outsider.
I have to return my rental car two hours before my flight, so I sit at a bar to kill time. I tell the bartender, Omaha born and bred, this story, and she says he just knew. Most people in Omaha know.
She tells me that the obnoxious out-of-towners who come into Omaha and expect it to be something grand because, well, if it’s good enough for Warren Buffett it must be fabulous, just don’t get it.
At a coffee shop I strike up a conversation with a rickshaw driver from Council Bluffs, Iowa, just across the Missouri River from Omaha. He tells me he doesn’t work this weekend because in his 7 years doing it, the two times he rode during the meeting were the worst-tipped weekends he’s ever had.
When the world descends on Washington or New York or London or Shanghai for an event, it’s not at all obvious that something else is going on. But when 40,000 people — which, all things considered, isn’t that many — come to Omaha for three days to hear and see Warren Buffett and celebrate Berkshire Hathaway, the city’s energy is sort of off-kilter.
I get talking to the rickshaw driver from Council Bluffs because he sees me wearing my “Invest in Yourself” 5K t-shirt. He chortles at me, at the event, at the shareholders, at the company, which leads to us chatting for 45 minutes. Of course, it could’ve gone another way. He would not have cared.
Back at the airport, my bartender Sue (not her real name), tells me about the Sunday night she decided not to take her dogs on their normal walk because it was too hot. They’re Chihuahuas, going out in the yard to take care of their business on a hot July night is enough.
On her normal loop in the Dundee neighbourhood of Omaha, there’s an ice cream shop, eCreamery, she passes on her usual dog-walking loop. When she decided not to go out, the famous selfie with Warren Buffett and Paul McCartney sitting on a bench was taken.
So it goes.
The next night, the line was out the door. “Everyone had to go eat the ice cream that Warren was eating,” Sue said. As if he would come back a second night in a row.
Buffett likes Omaha, Sue tells me, because he can go about his business and not really be bothered. He can sit on a park bench a few blocks from his house and have ice cream with Paul McCartney. Moreover, there is an ice cream shop a few block from his house. He’s not secluded in the woods but on a street corner, his front door less than 60 feet from the footpath.
All the folks that went back the second night, either to eat the same ice cream as Buffett or to hope to find him there again are missing the point, Sue says. He lives in Omaha because it has what he likes and people let him be, she tells me. He could live anywhere, but he chooses to live here. “He’s the real deal,” she says.
When Sue’s children were young, she brought them to a corner store down the street where apparently Buffett likes to have lunch. This was almost 20 years ago now, things have changed, but Buffett was a still a giant in Omaha then. Her daughter, who was 5 or 6 at the time, wanted to sit on a spinning stool at the counter, but with mum trying to corral her younger brother into a booth, that just wasn’t going to happen. An old man seated at the counter turned around and said he’d love to have lunch with the little girl.
That man, of course, was Warren Buffett.
So they sat and ate, as Sue tells it, with her daughter talking Warren’s ear off for a half hour. On his way out he brings her daughter back to the table and said it was a pleasure, adding that he’s here every Wednesday: he’d love to have company.
They never went back, or at least never ran into Buffett at that corner store again, which is the moral of the story. Like any pleasant stranger, he’s in and out, here and there, quite literally just another old man in a quiet Midwestern city. This is the last conversation I have in Omaha.
Buffett lives in Omaha, seemingly hiding from the outside world precisely because he doesn’t have to hide. Shareholders descend on the city once a year to get a glimpse of Buffett: they pack the convention center and Borsheim’s, the Omaha jewellery store Berkshire Hathaway owns, and Gorat’s, Buffett’s favourite steakhouse in Omaha. He makes himself seen, makes himself heard, and then weekend is over.
Everyone files out. Omaha returns to focusing on this weekend’s big Garth Brooks concert.
Buffett goes back to his house just a few miles from the arena.
The same as it ever was, of course: like nothing else on earth.
*Disclosure: I own a small number of Berkshire Hathaway B shares so that I can attend this meeting. I have no plans to buy more or sell any.