Posting in Energy
Look beyond the economic crisis at the world of opportunities emerging, Buffett and Gates urge
What keeps Warren Buffett and Bill Gates, two of the wealthiest business leaders in the world, up at night?
The answer is, basically, not much in a worrying sense -- both are optimistic about opportunities in the economy now emerging from the recent downturn. And it's not just because they have nice cushions in the bank -- their careers were built from day one on a sense of optimism. If anything, the two may stay up at nights thinking about new opportunities. And they shared these thoughts at a live open forum with students at Columbia University last week. (Video here, transcript here.)
Here are some snippets of their responses to student questions:
On the recent economic turmoil: Buffet and Gates gave high marks to Washington's leadership for pulling the financial system from the brink during last year's "Financial Pearl Harbor." Buffett said there are probably more opportunity in downturns than in good times. As he put it: "I don't like to sound... like a mortician during an epidemic or anything, but last fall was really quite exciting for me. I don't wish it on anybody, but there were things being offered. There are opportunities for us to do things that didn't exist a year or two earlier. I did not worry about the ultimate survival of our economic system. We were messed up. Wasn't any question about that. But the plants haven't gone away. The cornfields haven't gone away. The talent of the American people hasn't gone away. The innovativeness of the next Bill Gates hasn't gone away."
On tomorrow's industries with the greatest growth potential: A student asked which industry is likely to produce the next 'Bill Gates.' While Gates responded that "industries do have different paces of innovation," he, not surprisingly, pointed to information technology as "the most exciting," particularly since it "changed the rules for many other industries." Another industry he pointed to as bursting with opportunities is the energy business, especially in the search for "an approach that will provide cheaper energy that's environmentally friendly. And there's a lot of science, a lot of business. That's a global thing. There will be some great careers there."
Another area that may see the next Bill Gates is healthcare, Gates said. "We haven't solved Parkinson's or Alzheimer's or about 20 diseases of these poor countries, and yet we can be sure that we're on track to do that."
For Buffett, one of the greatest opportunities is in a relatively "old" industry given up for dead by the 1970s: railroads. He recently invested $34 billion in Burlington Northern Santa Fe railroad. "You think about it, the railroads are tied to the future prosperity of this country," he said. "You can't move a railroad to China or India or anyplace else. We start out with the premise, and I can't think of a more sound premise, that there will be more people in this country, 10, 20, 30 years from now. They will be moving more and more goods back and forth to each other."
The railroads represent a green industry as well, Buffett pointed out: "You have the most environmentally friendly and the most cost-efficient way of doing that on the railroads," he said. "The Burlington Northern last year moved -- on average it moved a ton of freight, 470 miles on one gallon of diesel. That is far, far more efficient than what takes place over the highways. You have the situation where overall they use one-third less fuel, they put far fewer pollutants into the atmosphere than trucks will. One train will supplant 280 trucks are so on the road. So the rails are in tune with the future."
Buffett urged the students to pursue their dreams, not whatever industry seems "hot" at the moment. "Find what turns you on. Find what you have a passion for. If somebody said to me when I was getting out of Columbia, you know, that Bill's business was going to be the one that would be exciting, you know, I don't think I'd have done so well. But I knew what turned me on."
On business ethics: Don't estimate the role of ethics in business, Buffett said. "The wonderful thing about it is in this country, is you can succeed magnificently with ethics. It's not a hindrance. It's a help sometimes. It's a neutral sometimes. But it's not a hindrance at all. ...this is fertile soil that you're working in and there's no reasons to cut corners."
Over the past decade or so, Bill Gates has stayed out front with the IT industry, and I've had the opportunity to see him speak at many industry conferences. Warren Buffett, for his part, is a highly visible and accessible manager, and engages one-on-one in a personable way with clients at his Omaha confabs. Many successful business leaders can, and have, taken their money and disappeared into reclusive lifestyles on remote islands or compounds. It's a shame, because there's a lot they can teach us. It's refreshing to see two of the top leaders remain fully engaged with helping to move business and society forward.
Nov 16, 2009
Yes, everything would have been the same and the real talent would have developed substantial ways to get our nation working again but those that had created the mess should have suffered from their own failures. That means the financial perpetrators should not have been propped up as they have been. Instead our nation suffers from insecurity, lack of confidence, and a great deal of debt without any remedy. There is a problem of access provided to people that have no right or talent to manage without social support. Those that have been able to obtain "loans" at the egregiously low rates are those that received the bailouts and social support. However they turn around to speculate or enforce usury rates of interest on loans and credit for the rest of the citizens. This giving away of the nation's Treasury has created an entitled oligopoly that put the rest of the nation in debt, reduces opportunity, and corrupts the political system. Mr Buffet, optimism is great when you can afford it but don't be naive that everything has gotten better.