Transcription
Disclaimer number one, this is the hardest introduction I've ever had to write my whole life. Disclaimer number two, I'm very nervous.
First and foremost, I would like to thank you, Dean Noria, for all of your support and your patience in the coming together of this conference. We would not have never done it without you.
Just to put things in perspective for the audience, because in the past week, so much trouble to HBS that if I wanna someday have a shot at getting to Harvard Business School, I'll probably have to change my hair and apply under a different name. But on a more serious note, it's an immense honor to have you moderating this final panel. Can you guys hear me?
Noria is one of the world's leading intellectuals in leadership and human motivation. He has served as the dean of this phenomenal school since 2010 and has contributed to make it more global and more diverse.
Foreign trouble. [Applause] Important advisor. If Allah did you know that that's under Brazilians global myself. Foreign. Foreign.
For this final introduction for Joshua Paulo Lemon. In one month, before some of my friends and I graduate and leave Harvard, we could not find good enough words to make justice to all these past years and throughout, Josh, you have meant to us. So Professor Shapiro once said, "If you don't know how to end the story, just make the building catch on fire." So here's to surpassing expectations. You're still listening to the higher calling of serving better our country and our kind. Here's to the power of ideas and to eternal gratitude. Here's to you, Josh Pal. Ladies and gentlemen, please welcome Mr. Warren Buffett. [Applause] What a surprise! [Applause] [Laughter]
I'm gonna give you one of each of these. I gotta get away from these cameras. Nobody wants me in the picture. Okay, we should get started. So look, if the, if there was ever an example of jesinio, this is it, right? I mean, how, how much more could you conspire to create the most remarkable surprise for someone? So thank you, Warren, for coming to this amazing event. Thank you, George Paulo, for who you are, for these students, for all that you've done for so many at Harvard, and for what a wonderful man you are that you're able to bring with you friends from all parts of the world. And especially, it just tells you how special you are that the world would come for this event as well.
So, you know, I've always felt that when I was growing up, my nickname was Little. I was a small guy. And so I feel particularly little today in the presence of of two giants. Just think about it, you know, one of, two of the greatest investors, people who have done so much in business, who have done so much philanthropically. So, my only goal at the end of this is to just say, "Let them say the most," and allow you to have the opportunity to ask questions of them as well. But let me just talk because the two of you have had wonderful partners through the, through all of your lives. You know, Charlie Munger. I've had the opportunity. Before you start, can I add to Dean Noria's biography? Okay. You know, I think most of you came here and you think you're going to have the conservative dean of the Harvard Business School asking me questions, me, an entrepreneur that takes risks and that sort of thing. And that's not really true. And I'm going to explain why.
Last year, I went to Warren's annual meeting, and and Dean Noria came also. He was a guest there. And so we, we decided we would go to dinner together, a dinner that Warren was giving. So we, we were exiting the hotel. Another good friend of ours came up and said, "I have a Ferrari here, and would you guys like to drive it?" So the Ferrari was like, I was terrified. But Dean Noria immediately said, "I'll take it." He got into the Ferrari. He didn't even know how to put on the lights. He took off. And we tried to follow him. We couldn't follow him. We didn't know. But he did get to Warren's dinner anyway. So this is the real Dean Noria, a risk-taker. [Laughter] Well, George Paulo didn't tell me is the opportunity to drive a Ferrari is something that he can get every day. For me, this was the one time it was ever gonna happen. So I better take that opportunity when you get it.
So, so look, you know, again, it's such a true privilege to have both of you here. And I had the great privilege, because of your invitation, to get the opportunity to see Warren and Charlie regal a room full of 60,000 people. And you could just tell that these were the dearest of friends. They had been business partners for all of their lives, and they could finish each other's sentences. Their jokes were remarkably common. And I've had the same experience with you. I've seen you with your partners, I've seen you with Beto and Marcel. And, you know, your company is called 3G. You're called by everybody else, "The Three Musketeers." I mean, these are remarkable friendships, remarkable friendships that have endured, that have allowed you to build great businesses. And now, later in your lives, the two of you have decided to kind of hook up and do things together. Tell me, what was it in your life, early in your life? There's a lot of life in both of you, I know that for sure. [Laughter] So, how did the two of you decide that this partnership was something that you were going to form and start to work with each other? Or maybe you just saw them. They're not like George Paulo. Go ahead.
Well, we met. You know how to work. I don't know how to work anything. Yeah, here's my flip phone, incidentally. I was on the board of Gillette, and I'm not sure exactly. No, I don't think it's working. Yeah, now it should be okay. Is it working out? Yeah, it's working now. Yeah. Testing one billion, two billion. After all, I'm talking at Harvard. Each other, but we didn't get much of a chance to talk at these meetings. They were fairly well-scripted in terms of time. And I consider it one of the larger mistakes in my life that we didn't really team up as partners still considerably later. But he and I are, we're on the same wavelength. And we were out in in Colorado, I don't know exactly how four years ago, were thereabouts. And and as we went to go to the plane to leave, George Paulo brought up Heinz. And he sent me. And I said, "Sounds good to me." And a little later, he sent one page of financial terms, on one page of governance terms. And and just as would have been the case if I was doing something with my partner Charlie Munger, you know, basically, I didn't have to change a word. I mean, he's, you know, it's who you have as partners in life. And you start with, in most cases, with your spouses. But in terms of it, it's a lot more fun, and it actually is a lot more profitable to have wonderful partners. But the most important thing is it's just a lot more fun in life. And we've had a good time. We'll always have a good time together. And that applies with my partner Charlie, and it applies with my partner George Paulo.
Well, I met Warren at the Gillette board, and many of you have heard this story, but it's significant, so I will repeat it again. And we were, he was asking me at that point, I was selling the bank. And he was asking me if I was happy that I was selling the bank. And I said I was happy. And then he asked me why, why was I happy? And I said, well, because I really didn't want to be somebody running a Goldman Sachs or say, I'd much rather be like him. And he said, "Why is that?" And I said, well, you, you have better control of your time, you have a better sense of humor, and you're much richer. So, so he said, "Well, I'm going to show you how rich I am." And then I didn't know exactly what he would do. But he brought out this little agenda, you know, and he leafed through it, and there was nothing written there. So he said, "Look at how rich I am. I have, I don't have much to do. I only do what I like, and I only do it with my friends." So, you know, so I'm very, very rich. So my wife complains till this date, "How come you don't have so much time as Warren?" I mean, you know, [Laughter] you can't buy her time and love, you know. You know, and that's the most important things, obviously, in the world. But then on the on the Heinz deal, we knew each other already. And we sent him a memorandum, etc., short, short memorandum. I called him up and I said, "Well, Warren, are you interested?" He said, "Yeah, I'm interested." I said, "Okay, would you like us to come by and explain in greater detail the transaction?" And he said, "How much money do you need?" And I said, "14 billion." He said, "Okay." So [Laughter] so that sort of shook me up. And then I said, "How about governance?" He said, "Well, send me a memo, and if it's okay, it's okay." And so that's it. So you get answers from him right away. They're very clear, and they're very objective. So what a wonderful, what a wonderful partnership.
So, I thought, you know, even though this gets us to the present, I might start this conversation by asking you both to remember back. And I've heard from writings about both of you how important your fathers were to both of you. But maybe you could share something about your formative years. What were some of the most important formative influences before you got to the age of, at least some of the people in this room? So, in your growing up, what ended up being the most important influences in your life?
Well, I had a father I worshiped, and he never disappointed me. And if the people that you love never let you down, you're going to have a wonderful life. And I was lucky in that I found out what I like to do very early on. And that was, that was really accidental to quite a degree. And I always tell students to look for the job you'd have if you didn't need to have a job. And I found that really when I was maybe seven or eight years old. And so I was lucky in that respect. But my dad was my teacher and my best friend. And if you've got some heroes in life, I've had maybe a dozen heroes. And you go through life, and they never let you down. You're going to feel very good about life. And it won't be how much, how much money you have. I mean, I've never met anybody whose kids love them when they're 65 or 70 that felt like a failure in any way. You know, whether they were rich or whether they were living on a modest dimension. And I was lucky enough to have a father like that. And then, for various reasons, which I won't get into in detail, I was kind of a mess for a few years, but not for not quite that long. But in any event, it carried forward. And then I married a woman who, who really helped me become less lopsided in life. And so it, I've been lucky at a very few crucial times. And I've had a wonderful partner in Charlie Munger. We've been partners in 1959. We've never had an argument. So if you're lucky, and I always advise people to hang out with people better than you are, because you're going to go in the direction of the people you hang out with. And there's nobody going to hang out with much more than your spouse. So it's very important to marry somebody that's better than you are, which in my case wasn't very difficult. But I'm, that's, that's for me. You know, the IQ isn't that important. I mean, it's, you've got to be intelligent. But but you know, you don't have to, you know, you don't need a 170 IQ or anything like that to succeed in life. What you, what you need to do is develop the talents you do have, find the places where those talents lead you the happiest and produce the best results in a mark of society, and enjoy life as you go along. I mean, you don't want to say, "I'm doing this and that and this and that until, you know, I'm at 70, I'm going to finally have a perfect resume and finally find something I like." I always say that's a little like saving up sex for your old age. You know, I mean, really, it's, it's not the greatest plan in the world. So, it's been simple. You know, it just comes down to finding the right father, in my case, in my case, finding the right spouse, and then finding a job you love, and good things are going to happen.
Well, in my case, the dominant figure was my mother. I lost my father when I was 13. So she was the dominant figure. And she loved me very much, and I could do anything, and she thought it was okay. And, you know, when I was here at Harvard, and I almost got expelled the first year, and so I received a letter from the administration suggesting that I take a year off. Because and she was absolutely furious and wrote back a letter saying that her son was a genius, actually. And I don't know why. [Laughter] So I had a mother who was, I didn't take the year off. I came back. And but anyway, so that was that was my mother, and she was, she was really important. And it took me a little while to get going. I graduated when I was 20, then I played tennis for a while, finally got into business, went broke the first attempt, learned a lot, learned a lot. So by the time I got going, I was 30, and then it was pretty good, and I sort of found my way. If you, if you dropped out, you might have created a place so I could have gotten in. I mean, I've been trying now for 19, from 86, 67 years. I mean, well, you know, should have left the slot open for me. I had an uncle, an uncle who lived in the U.S. And after I got out and after I started doing well, he kept saying, "See, would I see what I did for you by keeping you at Harvard?" And like that. And I said, "What do you mean? You cost me a couple of billions. Look at Bill Gates. I mean, Bill at least got in. I didn't even get in." That was the greatest mistake Harvard ever made, by the way.
So, you know, one of the things that I have personally been fascinated about is leadership. And it's a complicated word. There are as many definitions of leadership as there are people. And people have tried to decipher what leadership is for a long time. How do you think about leadership? What is your definition of leadership?
Well, I've been friends with some great leaders. And Tom Murphy, who's still on our board, for example, is, I mean, he is, if he says, "Follow me," we just all line up. I mean, you know that you're going in the right direction. You may not be able to see over the hill, but you know that Murph can. And he was a class of '49 in the business school there. They're the ones that you have not only confidence in their judgment and that they can see over the next hill, even if you can't, but also, you know, they know you know they've got your interest at heart. And and it's not all about self-enhancement themselves. But I've seen, you know, a few really wonderful leaders. I'd probably start with with Tom Murphy. This is my number one example. I've never known anybody that had anything to do with him, and I've known him 45 or plus years, that if the phone rang and he said, "It's Murph," and here's what we're going to go out to do, that wouldn't say, "I'm on board." And incidentally, I mean, George Paulo was a sensational leader that way. I mean, if if the phone rings on this jersey, Paulo on the other end, I'm glad that I'm glad it's ringing. And and I am ready to listen when he says, "How about what do you think about Heinz?" And, you know, my question was whether it be friendly. But once there's a yes to that, I mean, you know, I'm ready to merge. And Don Keel was a great leader, Paul, that ran Coca-Cola for many years. That Jeff Bezos is a sensational leader. You know, when you see them, they're very different in personality and style somewhat, but they have that common quality that you believe in the fact that they can see where they're not able to say. Then you get it in the military command and all that sort of thing when you have a D-Day, but you get it in business when other people are skeptical of your ideas and are there, and somebody comes along like a Murph, and you know, he's going to get you. You know, if you're out on a mission together, you know you're going to come back. It's that simple.
George Paulo. Oh, well, the way I look at leadership is, you to lead, you have to point a direction. And in my case, it's usually a big dream of some sort that everybody can understand. And you have to have the right people to do it with. I mean, it's hard to be a leader by yourself. You know, Warren has all these people in his companies that he trusts. And basically, I have all these people that have trained with us or have been brought up with us somehow or another. And like that, I think you have to have a have a lot of focus. If you, if you don't focus, if you try to do too many things, it doesn't work. And I think you have to have a be efficient also in anything you do. There's efficient ways to do it, and there's a way that's not so efficient. So you always have to try to be as efficient and as rational as possible, keep the cost down, and like that. And I think involved in leadership is taking a little bit of risk also, like like you took with a Ferrari. I mean, you know, you've got to. Warren has a slightly different view of risk, I think. So that's, that's basically the way the way I look at at leadership.
And is there a particular leader that has, you know, like Warren talks about Tom Murphy, who is, you know, an example of a great leader? Has there been someone in particular who has been a role model or an example for you in the early days?
We had a retail company in Brazil, Lojas Americanas. And so we became friends with Sam Walton. And so we visited him a lot, and we used to live with him at his house, and we used to visit stores with him and like that. So we obviously picked up a lot from his style of management and the way he ran the company. Like that, so he was very important. And for a while, we didn't really know him, but we followed very closely what GE was doing, and how they were managing people, and how they were picking the best people, and how they had targets for everything and measured everything. And like that. So those were some of the things we followed. We were also very close to Goldman Sachs in the beginning when Goldman Sachs was still a partnership. And so we learned from them the partnership spirit and the importance of having a lot of good trainees and picking good trainees and a meritocracy, really, which made these trainees evolve. Like that. So those were some of the things that had big influence. And lately, you know, Warren. Warren, and his good common sense and his analytical skills when you're looking at something or like that, are incredible. And so we've learned a lot from him. I should have mentioned Jack Welch too. Jack was an incredible leader. And and I would say one characteristic of the leaders that stood out to me is they have big ideas. I mean, that doesn't mean that they're dreamers totally, but they, they, they, they, they, they, they, they always have got a big idea. And then they may be taking steps to get there or anything, but they don't settle cheap.
Yeah. So, you know, each of you have had this great ability to pick remarkable people whom you can trust. In your case, George Paulo, sometimes very young people with very little experience, in some sense, someone might almost say untested people, to whom you give responsibilities of running, you know, multi-billion dollar businesses. What gives you that sense that this is the person to bet on?
Well, most of these people, we haven't just hired them, or they've come from, you know, most of them have. They may be very young, but they've been around for a couple of years already, and they were being tested. And gradually, that's our system, really, of training and evaluating people. Give people an opportunity where they can make a mistake or not, or they can prove themselves. So most of these people have been have been around.
And how do you know that they're ready for the really big one?
Well, you know, Warren and I both agree that what we really like is fanatics, in a certain way. You know, guys who are gonna go out and really, really try hard, and they really want to do that well, and they want to do it exceptionally well. I think that is the main, the main characteristic. You know, and but there are different types of people. Some people are good for this, some people are good for that. You sort of have to pick what people are good at. And, you know, the only thing you cannot accept is somebody that is ethically not totally there. So you have to test that. I mean, people can be different, but you know, not ethically. If there's, you can't, you can't do that at all in an organization because then it all falls apart. So work.
Yeah. Well, I've always said, we have a one-line employment form, and it just says, "Are you a fanatic?" You know, and the answer to that, yesterday, you know, just hand it in. And I want people that are in love with the business. You know, I'm in love with Berkshire. I mean, I will never, I've never sold a share of Berkshire, I never will. It'll all go to some other place. It's, it's not money, it's just I'm in love with the company. And if Berkshire is doing well, I'm feeling good. And there's no way I can feel good if Berkshire did not do well. And so I want people that, that we've got to follow Tony Nicely, that runs Geico. He went to work for the company when he was 18. He's now 73. And when we talked, I mean, he's, if they've had a good week in the previous week, in terms of closure ratios or whatever, he'll know it out to a decimal, you know, decimal points. And he's proud. And I, you know, it's his kid. And then I love it when we find people like that. And, uh, often Berkshire is the most, you know, it is the most decentralized place you've ever seen in terms of the management. And I buy these businesses where I hand somebody billions of dollars and then count on them to run the business after they've got the money and I've got the stock certificate. And I'm not always right. I mean, I'll make some mistakes on that. But I really have to look into people's eyes when I hand them a lot of money sometimes for businesses and ask myself, "Do they love the money, or do they love the business?" No, they all like money, but they've got to like, they've got to love the business that they're going to keep working for me after I hand them billions of dollars. You know, at, because we don't use contracts, I find people that are in love with their businesses. And that deepens with people as they go along. I mean, once they've, you know, I had a woman that couldn't read or write that came to this country and put finally put $2,500 into a business and became the largest home furnishing store in the country. And she worked till she was 103. And then when she quit, she died the next year, which I use as an example to any of our managers. And think about it. You know, she didn't, until the day she died, I mean, she would look at the sales figures at the end of the day and that determined how she felt. And those kind of people, you find them. And then you've got to be sure that they want to go in the same direction you want to go. And you make some mistakes on that. That's the one thing I probably improved on over the years is judging the future behavior of people. I encounter everything else goes downhill. But that, that you do get some experience helps on that. And it's enormously important, particularly at Berkshire, where we just hand them the keys to the place.
And you two have found that you can spot it early, or you two have found that you can spot it quite early in a person, almost instantly.
Yeah. Now, I, I can tell. I can tell within a few minutes, usually, whether we're going to make a deal or not. You know, and and whether I'm going to be willing to. And I make mistakes on it. But there's a lot of fill it goes. There's about 15 filters in the first couple of minutes. And I don't like to look rude with people, but I mean, the answer is, I know the answer.
What have you found out about management? And that may apply to us, or that we can learn from you.
And your look, I, General Schwarzkopf once, I heard him talk at the at West Point, and he made a very simple point. He says, "You know, leaders are people of competence and character." There's got to be people who use whose judgment you trust because there's something about their competence. But in the end, you have to trust them for their character as well. And it, I just found those two simple things, competence and character, to be one of the most important ways of thinking about leadership. It's quite simple, I think. As you said, you know, those are the people when, if you pick up the phone, you're happy that they're called, and you're willing to listen to them. So it's not, I do think that this is a field that people make more complex than it needs to be. There's actually something quite simple about leadership, and it's having the judgment that other people will trust, and then the integrity that people know that they can do business with you for a long, long time, and you'll never fail them. So, and you two are masters of that. I just think that, you know, we are in the business. Always one of the reasons why I asked about young people is that every year we admit 900 people to our business school, and we admit, you know, 1,700 people to the college, or 2,000 people to the college. And you always wonder who among them will be the next George, who among them will be the next. And I'll be honest, even though I've taught for 30 years, I can't tell. And the one thing, it won't be the person with the highest IQ, for sure. No, no. I was, when the schools come out to see me, and there's a bunch of students out there, I say, "You know, I'm going to give you an hour, and I want you to pick the person that you'll own 10% of for the rest of their lives." And then, and why? List the qualities. And it won't be, you won't be looking for the guy with the highest grades or the, you know. Just write the qualities down. And then I say, "They always like this better. You've got to short one of your classmates also for 10%." Now, that's way more fun. They now look around. If that happened, and I ask them what are those qualities, and the truth is, the qualities they admire, they can acquire. They're smart enough. There's any problem about that. And the things that turn them off, they can get rid of those qualities in themselves. I mean, if it turns you off in somebody else, you're going to be turning off people if you have those same qualities yourself. And those are things, those are habits and behavioral patterns that you can actually, young people particularly, can adjust to. And why in the world wouldn't you want to have the qualities of the one that you'd want to buy 10% of? And why in the world would you keep any of the qualities the one you want to short 10% of? And the time to start is now.
So, each of you have been very selective in the businesses that you buy. Certainly, Warren, you've written a lot about the kinds of businesses you like. Maybe just, since there are a lot of people in the room who some may have heard about that, some of them may not have, what is it that you look for in a business? And George Paulo, I'll ask you the same question. What is it that you look for in a business that you want to acquire? And as in your case, you own them for a long, long time.
Well, the first thing I want is a business I can understand. And by understand, I mean, I think I know in a general way where it'll be 10 or 15 or 20 years from now. And I have to decide whether there is some economic castle that's surrounded by an economic moat that has a lot of sharks and piranhas and things like that. And then I have to decide whether the knight in the castle is going to be any good when the marauders come across. Because in capitalism, that's exactly what they do when they see a castle. So it's not very complicated. So the first decision is, does this fit within my circle of competence? And there's a lot of businesses I don't think I can see out 10 or 15 or 20 years on. And then there's some I can. And then, when I get beyond that, you know, I have the question. I care a lot about that moat. And and they don't know. And what are the characteristics of a good moat? Well, the ideal moat, you know, obviously, is something that would be protected from any competition. But usually, usually earnings are regulated in businesses like that. But but the, I, you know, perfect, perfect product is something that costs a penny and sells for a dollar, and it's habit-forming. You know, basically, that's a Coca-Cola, right? Here. Yeah. Well, I mean, that was in 1886. You know, some guy named John Pemberton down in a pharmacy in Atlanta hit the wrong spigot or something, and it came out. And every year, pretty much since then, sales have increased around the world. So that. And and it's to come along and say, "I've got a cola that." Well, just take the number of candy bars. Snickers happens to be the number one candy bar. And you don't buy candy bars very often. But if you walk into a 7-Eleven or someplace, and the Snickers is 60 cents, and the guy says, "Well, I got this other candy bar that I, my wife and I mix up in the back room, and it only sells for 45 cents, and it's as good as Snickers." You say, "I'll still buy Snickers." And if they don't have Snickers, and there's a 7-Eleven across the street, and you really want it, you'll walk across the street. And the products you want are the ones you'll walk across the street for, and have some price flexibility in, and have a ubiquity to demand. Coca-Cola travels. See's Candy, which we own, does not travel. We can make all kinds of money in California, but if we try to move it East, we're in Bloomingdale's and different places. It doesn't, it doesn't travel. Candy bars don't travel very well. I mean, Cadbury doesn't do very well, or Hershey doesn't do very well. Coca-Cola travels. It's universal. And so there's different qualities you're looking at. But basically, you're trying to find something where you think you've got a very high probability about being right about predicting the earning power out 5, 10, and 20 years. And that does depend on competitive positions. You don't want to depend too much on great management. I mean, if a business needs great management, you know, it probably isn't much of a business. I really like a business. Ideally, that, you know, that your idiot nephew can run, and then put in a good manager and do way better. And then put a great person. And then, yeah, that's what Tom Murphy. I mean, you know, he just, he left Harvard here, and he just, he looked for a good business. And he'd be the first to tell you this, you know, if he'd gone to the textile business, which we were in, and stayed in it, there's nothing you can do. And so it's very important to get in the business that, one way or another, you have some pricing flexibility, that one way or another, the competition is under control, at least. And then turn a terrific manager loose in it. And, you know, then just sit back and cash the checks. Send it to all mall. That's the important thing.
We've come from a slightly different background. We started in Brazil. There wasn't the option to pick amongst various businesses to buy. Basically, so, you know, we don't, we don't have that many businesses. We have a few businesses, and we sort of picked one which we thought looked very, very good, which is the beer company, and really focused on it. And all along the way, building up these management teams, which we now have. And then the beer company went abroad. And from there, we found out that we could buy things abroad also. So we did Heinz together, Warren, like that. So it's been slightly different. So we have fewer businesses, and we're probably more focused because we didn't have that option in the beginning to pick amongst various businesses to buy. And when we bought them in Brazil, we had to run them because they were usually badly run. So, so I think our skill sets there are a little bit different. But in the end, we're running things for the long run, and to build them to last forever, if possible.
So it seems to me that one of the ways in which Warren has often bought businesses are great businesses where there's some market decline, like what happened in 2008 to Goldman Sachs. You go in and you say, "Here's a great business. It doesn't deserve to be devalued by what it was. This is a good time for me to come in and help." And you've done this many times in your life. In your case, you seem to buy businesses that seem to be fat, dumb, and happy, that have been run for a long period of time, where you believe that at least in the near term, we can go out and make them much more efficient. But both of you hold on to these businesses for long periods of time. So a lot of people think that the 3G formula is to come in and just cut. But you've run some businesses after that initial phase for very, very long periods of time. What happens after the first opportunities for, like, once you've taken the fat out of Heinz or of Anheuser-Busch or any one of these things that you first go in and do, and it gets all the headlines, but you run these companies for long periods of time? George Paulo, what's the secret after the first cut?
Oh, the secret has been, after the first cut, you buy something similar. There's a lot of such businesses out there. You cut there. And oh, well, in the case of beer, you've done this three, four times now. Yeah. There's not that much more. If you're doing what we have been doing, you're obviously not quite as good as you should be in marketing or developing new products. So we're catching up there, but we're going to get good at it. You know, if you focus on something, we're going to get good at that also. So that's that's what it is. And in the food area, there's a lot to be done still. I mean, you know, that can probably be bigger than the beer area, possibly. But we do have to, the world is changing. There's a lot of disruption going on. Consumers are forever more fickle. There are new ways of distribution. You know, Amazon's coming in. So we have to adjust. And we have to be ready for the changes. We have to be much more nimble in terms of giving what the consumer really wants and what he wants to buy. And so that is a change. And the only way we will be able to do that is by having the right people. So we're very focused on finding the right people for what it's going to take to run these consumer goods companies in the long run.
So, you know, you're from Brazil. You're from clearly a great American. You've always said there's no better country than America in terms of a country to invest in. You know, we've had 240 years. It's a remarkable country in terms of what it's accomplished. You know, and then in the last 20 years or so, there's been this great excitement about emerging markets. They started off as the BRICs. I mean, in some ways, the bloom is off the whole emerging market thing a little bit. But one would argue that in some other parts of the world, people are also anxious about about America. I mean, I remember as someone who came to this country, I walked around the world, and people used to always envy the fact that I had this great opportunity to come to this country. Now, you don't feel sometimes the same level of envy again. I like you, believe that it's misguided. I think that this is a great country. But how would you think about the future of these emerging markets? Because if you think about the fundamentals, at some level, one would argue that with demography, with growth, there should be enormous possibilities. So how do you think about the opportunities in America versus the opportunity in some of these emerging markets? And maybe we should just get rid of the R and just focus on the B, because I'm not betting on the R part of the BRIC.
Well, to move a market cap of $400 billion, we're not going to do it in some small economy. That doesn't mean that the businesses we have shouldn't look for opportunities to extend their own operations in those. So, but but America, you know, is a wonderful place to live and to invest capital. And there may be other countries that are going to be somewhat better, but from so much lower base that it wouldn't move the needle much at Berkshire. It'll move it for some of our subsidiaries. I'm delighted. You know, I got a letter from a fellow in Israel, 10 years ago or so, and he says, "You don't know who I am, and you don't know who my company is, or anything about my company, but here are a few facts, and we want to sell to Berkshire, and we only want to sell to Berkshire. And if you're interested, I'll come over." So we bought a company in Israel. Now, and it's done very well for us. But it's, if we're going to prospect, we're going to, this is where this is a huge, huge, huge market. And if there's something modestly better where I don't understand the culture that well, or the laws, or the just have an acquaintance with the business people, and we're missing that, that doesn't bother me at all. I mean, that, I think America's a pretty darn good place to invest in. If I get a call from Germany tomorrow, or the UK, or someplace, and they've got a $5 billion or $8 billion or $10 billion deal for us, I'll be delighted to try and make a deal. But I don't want to get a call on the $200 million. I mean, we just can't, it's not going to move the needle.
George Paulo. America is a wonderful place. I mean, you know, this business of letting people in, foreigners in, and the free market, the technology that's coming along, the rule of law here, it's wonderful compared to the rest of the world. But there are opportunities abroad. And in our case, beer is a, not a growing market in Europe or the US anymore. So we have to look. We have to look at other places. And we have to go to even an extreme where, like we've done now, where we've gone into Africa in a big way. I mean, we took on a lot of debt to buy SAB. And basically, the big attraction there is Africa, which now has a billion people, which will have two billion people in 30 years' time. Hot climate, young population, the ideal market for us in beer. We have to learn how to operate in Africa. But you know, the potential is there. And yeah, Africa, maybe 30 years from now, will be much bigger than the U.S. in terms of beer consumption. I like that.
So, one last question, which has been on so many people's mind. And clearly, this election and the rise of nationalism in so many parts of the world has raised this question. On the one hand, there's no doubt that if, you know, I'm dean of our business school, so I'll show my stripes fully. I deeply believe in free trade. I mean, there's nothing more powerful than free trade as a way to create. And you have said this many, many times, that society as a whole, and the world as a whole, is always better off with free trade. But as you have yourself said, Warren, it doesn't mean that the steelworker in Pittsburgh or the textile worker in Burlington ends up benefiting always from free trade. There are specific people who get hurt. And it looks like these specific people are now raising their hand ever more loudly in every part of the world and saying, "If you don't listen to me, I'm going to stop free trade," or at least I'm going to push very hard to stop free trade. How do we manage this tension? It feels like one of the most important tensions for the world to manage, because in an odd way, if they were successful, they'll just hurt themselves even more. That's at least how it feels to me.
You need the leaders in countries, and particularly the leaders in the United States, the president of the United States, should always be the educator in chief. And the truth about free trade is that it benefits 320 million plus people in a way that they really can't see and protect and never think about. And it's not itemized on the check, on the slip, when they pay at the register at Walmart or anything of the sort. So it's diffused, it's unrecognized. And nobody goes to sleep at night thinking how much better they're living because we have free trade. And on the other hand, the people that it hurts, and it does hurt people, it's very specific, and they know what happened to them, and they don't feel it's fair that.
It happened to them, and I happen to agree with them. But that doesn't mean you stop free trade. It means you have policies that, in a very, very, very rich society with almost closing out on sixty thousand dollars of GDP per capita, that you take care of the people that get hurt by having by this policy, which benefits everybody generally.
And you can talk about retraining and all of that. But when we took over Berkshire and New Bedford, not very far from here, it had 2,000 workers, and a thousand of them spoke only Portuguese. And then they'd spent 25 years on looms, and they weren't going to find other jobs. So you have to take care. And if you don't take care of the people that are specifically hurt by that, you can't blame them for voting to anybody that promises them that they'll end their pain.
So, if you've got something that's beneficial to all of society, and it's going to hurt a few individuals, part of a wise administration of government policy is to make sure you take care of the people that are going to be hurt specifically. Because in a democracy, otherwise, they will, they'll get organized. And I, I've got every sympathy in the world for the steelworker, but you do not want to give up free trade.
Just postulate two kinds of worlds, you know. One where the United States is isolated by itself and is doing fine, and much of the rest of the world is suffering because of nationalist policies we have. And then, or one where everybody is improving, and the emerging comes in, poor countries are growing faster in GDP per capita than the United States. Well, you want the second world. I mean, particularly when people have nuclear weapons around it, you do not want a lot of jealous countries around the world that have nuclear weapons or cyber capabilities or whatever it may be.
So I, I just think, I think it's very important that the leader of the United States gets very candid and can deliver a message to people. And, you know, this is going to hurt a lot of people who don't deserve to be hurt. If we're importing shoes or whatever it may be. And, uh, if you are at an age where it's sensible to retraining and all that, fine. But if it isn't, we're going to have some sort of credit essentially that takes care of you, because you're, you're contributing to society by screwing up, screwing up your life. And we can afford to do it. That's, that's the amazing thing.
I mean, you know, we are an abundant, abundant country. We have six times the real GDP per capita that we had when I was born in 1930. You know, six for one in one person's lifetime. And we started from a reasonable base. I mean, this, we have abundance coming out of our ears. But we can't have a situation where the Forbes 400 had a 93 billion of aggregate net worth in 1982. When they started, now they have 2.4 trillion, 25 for one. The top guy on the list was Dan Ludwig with 2 billion. Heard of? Well, the rewards in a specialized society, market society, uh, have gone and will go to disproportionately more to the people who, who are at the top of the game. And, and people get left behind. But we can take care of that. We can have earned income tax credits like we have and make that system a lot better. And not give up the benefits of the free trade in the market system, which causes the guys like Jeff Bezos and Steve Jobs and all those to do things that work wonders for millions of Americans.
I'm all in favor of free, free trade and globalization. I think if you look back into history, countries that have engaged in commerce have, you know, have benefited enormously. They've learned a lot from whoever is they've, they've become more efficient. So I think this current trend of stopping trade or like that is something temporary. I think with the internet, you know, the world is becoming closer and closer. And I think there's no other way that we can go, uh, but then have free trade and globalization on a, on a big scale. I think it's good for the world. And, you know, it won't happen. So this is a matter in which we clearly hold three yards deeply, deeply aligned. So I'm, uh, listen, that's, uh, I think that, I don't know, what do we have time to have a few questions at the end? Okay, whatever. So no time for questions, right? Larissa, I would like to.
Free trade essentially is a market system for the world. I mean, we believe in what the market systems produced, and it's just a world extension of a market system. It seems so obvious to me. But, but it's also obvious that people should not have their lives ruined by the fact that sometimes we should be able to, um, real leadership should be able to do both, right? You have to explain it though, first. I mean, the, the, when Roosevelt came in and said, you know, we're going to, we're going to close the banks because a lot of them are no good and, you know, and we'll sort this out and open up the good banks in a couple of weeks. Well, a couple of weeks later, he comes out and says, you know, these banks are okay to open. Well, Roosevelt didn't know a debit from a credit. I mean, he didn't know which banks were good or anything. But the American public was getting, they believed in them. And, and, and the system to work had to get the banking system working again. I think you really need somebody in the White House that, that will explain to the American people what's good and bad about certain economic developments and, and promising that the government is on the side of doing the thing that's right for society and on the side of the people that get hurt by it. Thank you.
Uh, so I think we have, uh, where we started late, we're running late. We have time for maybe one or two questions. Uh, that gentleman there seems to be leaping out of his feet. So, so.
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Says that there is one thing in common between Adam Smith and Karl Marx, and this is the, the freedom of people going everywhere. And today, since you are talking about the importance of free trade, globalization, how is it possible for the U.S., the president of the U.S. to be thinking of building a wall separating the United States from all Latin America? I believe that the important thing will be for us to have not only freedom for capital, goods, and services to go everywhere, but mainly, the most important thing, that is the human being, freedom for the human beings to go everywhere. This must be our objective. I would appreciate your opinion on about this.
Yes, we got it, sir. Objective about this wall. I certainly live here, sir, as a living example of someone who's benefited personally from the freedoms this country has always had to allow immigrants to come in. Warren, you read, you wrote something about this very eloquently recently, so maybe you should say a word. So you will certainly get no issue from us on this matter.
Well, when I was born in 1930, the odds were roughly 40-1 against me being born in the United States. So I, I won what I call the ovarian lottery, uh, the day I was born. And it was, you know, just, it was dumb luck. But, you know, I have had, I have had a chance, uh, to really ride the crest of something. Just imagine, in 1930, John D. Rockefeller Sr. was the richest man in the world. Everybody in my neighborhood, and it's not a fancy neighborhood, and the median income is probably a hundred thousand a year. The means a little higher for those of you who are mathematically inclined. But the, uh, but everybody in my neighborhood lives better than John D. Rockefeller in terms of medicine, in terms of transportation, in terms of entertainment. You could, up and down the line. And that's happened in one person's lifetime. Now, when you've got a Tailwind like that in your life, you know, you should feel very, very lucky. Yeah. And we should create that opportunity for all.
So, last question here. Okay. Hi. Uh, it was mentioned in one of the panels yesterday that like five or ten years ago, the most valuable five most valuable companies in the world, you should be like Exxon, Shell, and Walmart. And nowadays, these are numbers of 2016. The five most valuable companies are Facebook, Google, Apple, Amazon, and Microsoft, which are all tech companies. So how do you choose to see that in terms of investment in the future? Thank you.
Oh, I'll have what he's having. Um, I'm honestly aware, aware of the value that Facebook and Google and these new companies have achieved. Them, I'm actually envious of them. I mean, you know, it's, uh, and, uh, but the businesses that were available for where I was and where I started in Brazil were basically a beer and more simple businesses and like that, trying to grow them as much as possible. And I'm not, Warren has avoided doing what he doesn't know or technology or like that. And I'm, I'm tempted to give it a try at times of, uh, I have some ideas, some way that I could give it a try without risking too much or like that. So I'm conscious of what's going on. I think it will continue. I mean, you know, I think the, the better investments will be in technology. The problem is technology is very difficult to pick and things change very fast there. But I still think that these companies, which are now the most highly capitalized, well, we'll continue around for some time, and there will be other opportunities. And I would like to know a little bit more about it.
If you take Apple and Facebook, Microsoft, Google, Alphabet, in aggregate, just those four will have, well, over 2 trillion of market value. They require no net tangible assets. So they, the business, you know, and those, they're wonderful. But here's, here's Apple, you know, earning 40 or so billion plus after tax, and, you know, with three billion of inventory, no, no fixed assets really required. They've just finished a big building, uh, uh, no receivables to speak of. It takes no capital. That's a different world than when Andrew Carnegie got rich and John D. Rockefeller. I mean, they had to build one steel mill, take the profits from that over time, build another steel mill, maybe borrow some money. But, the world where you can translate an economic model into something that's worth hundreds and hundreds of billions, approaching a trillion of value, with no tangible assets, you know, is that's a different economic model. That, even, you know, if we go back to 1960, when the number one company would have been General Motors and down the list. And you can now get, there are, there are businesses which don't require much inventory, they don't require fixed assets, they don't require receivables, and, and they get extraordinary margins. And that is a different investment world. That doesn't mean both kinds of businesses can't exist. But always, you know, our candy business takes no capital, and our gift certificates take care of the capital needs of the business. And when you get businesses that now, it's a peanut business, but, but it, those are extraordinary economic opportunities. I don't think they existed to this, well, they didn't exist remotely to the same degree 50 or 60 years ago, when more was tied to physical assets. And that makes a very different investment world.
So I want to be respectful of everybody else's time. I, we could go on forever. This is such a remarkable treat. I want to thank Larissa. I want to thank all of the organizers of this conference to have given us this, uh, amazing opportunity to get to do this. But I know that you wanted to have the last word. And since this is your conference, this is your last word.
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Oh, all right, all right. Uh, I just want to take the opportunity to congratulate the students who put this together. It's been a wonderful event. And for me, it has filled my, my heart with joy to see the, the, the high potential agglomeration of of people here. You know, like I said, most of my businesses have been people-oriented or based on people. And that's what Brazil needs at the moment, these good people. And so to see so many of you working together and ready for dialogue to make Brazil more meritocratic, more pragmatic, a more equal society, and like that, you know, fills me with a lot of optimism for the future. And maybe we will even be able to reach the four percent growth per annum in the next decade, the rahminu promised us yesterday. I mean, it was the accidental banker. So congratulations to you all. And what a team this is. And you can transform Brazil. And, you know, and I'm, I'm looking forward to that very much. Thank you, ladies.
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