Forbes India 15th Anniversary Special

Warren Buffet: I Don't Have to be Smart About Everything

On his first trip to the country, he faced throngs of Indians at press conferences and business meetings, while he searched for companies to acquire, and attempted to convince wealthy Indians to contribute to philanthropy

Published: Apr 20, 2011 06:36:40 AM IST
Updated: Apr 20, 2011 01:04:52 PM IST
Warren Buffet: I Don't Have to be Smart About Everything
Image: Namas Bhojani/ Bloomberg

Can you give us some sense of how soon we could see Berkshire Hathaway making a significant investment in India?
Just within the last 10 days or so, we began an insurance operation here in India. I do not know where the next opportunity is going to come from. It was almost five -and-a-half years ago that I received a letter from Eitan Wertheimer of Iscar Metalworking. I didn’t know I was going to get that letter, it just came in and we are ready to go.

The same thing will happen in India; I will hear from somebody — I will be meeting a lot of people in the next few days and maybe from the next week or a year from now, one of those people may contact me and that is the way.

Are you certain that you will make an investment in India in this financial year?
Our cheques were clear, I can promise you that.

Recently, you made an investment in BYD, which is new and clean technologies and electric vehicles. How do you see this change of pace toward more of technology and clean energy?
Fortunately, I have a partner who is lot smarter than I am. My partner Charlie Munger, who is 87 and going very strong, understands a lot of the aspects of technology. So, BYD was his idea and I have never made a mistake following Charlie.

I am not good at tech matters but I have got a lot of people who are. I don’t have to be smart about everything; I didn’t deliver my wife’s baby! So, I believe in using people who are smarter than I am and it is not very hard to find the number that are and certainly in the tech field. I just don’t have that ability but I am reasonably good at spotting the people who do have that ability. We do not want to do anything that curbs the enthusiasm, the innovativeness of the people who work with us and we get the best people, and when you get the best people and you let them go, you get the best result.

What convinced you to enter India now?
I have some pretty convincing associates, including Eitan Wertheimer of Iscar Metalworking and Ajit Jain. Bill Gates too joined in and said he would like to meet me over here. But the reason I am here is because of TaeguTec [part of Iscar Metalworking].

There are other fields that are more challenging, more interesting. Why metal?
I received a letter in the fall of 2005 from Eitan, I did not know him or about this company but I recognised it in this page-and-a-half that I was hearing from an extraordinary individual about an extraordinary company. It didn’t mean that I knew anything about Metalworking myself. I invited Eitan and his associates to come over and they attempted to educate me. They made a lot of progress; they made even more progress with my partner Munger who picks up on things better than I do.

It is a very important business. Everything we do in life would not be done as efficiently or as effectively, if companies like TaeguTec were not turning out extraordinary products and thinking about products of tomorrow working with the end user. Hence, I regard it as a very exciting industry and I couldn’t be happier to be in it.

Do you see new challenges for the cross border businesses?
There will always be people in all countries that resist change. There will be an element in the United States or in other countries that resist the idea of more trade between countries. I am in exactly the opposite camp and believe that it will prosper as we do more and more business with each other. Various countries have various advantages and no country can do all things themselves.

As world trade expands it will mean a better life for people around the world. I have seen more of it in my own lifetime; world trade has expanded during my lifetime significantly, including the United States, where there is some resistance to trading with the rest of the world. Our exports since 1970 have gone from 5 percent of GDP to 12 percent and our imports have gone from about 5 percent to more like 16 percent.

We are benefiting more and more from what the rest of the world does; the rest of the world is benefiting from what we are doing. There will be people who will fight that. However, over time, good ideas prevail and the world 20 years from now and 50 years from now will see far more trade between countries and will be more prosperous because of it.

India is marred by corruption and scams. How will this affect your investment plans in India?

Corruption is present in every country, including the United States. It is important to us who we associate with and that is one of the decisions I make when we look at buying a business. When Eitan wrote to me, I checked out the reputation of the people that I was about to enter into partnership with. So, we are going to look at every activity we do to make sure that none of that creeps into any of the Berkshire Hathaway companies. As I point out to a lot of the managers, which is in the back of the annual report this year, if you have a city and we have 260,000 people working for Berkshire Hathaway companies, there are going to be some things that are wrong.

Given the fact that we are dealing with fairly high levels of inflation in India, what would your advice be to people who are investing?
Inflation, someone said many years ago, is an invisible tax that only one man in a million really understands. It is a tax on people that have had faith in their currency, the governments issued it. The best investment against inflation is to improve your own earning power, your own talent. Very few people maximise their talent. If you increase your talent, they can’t tax it or they can’t take it away from you.

How did you get your family to buy into your decision, to give away 99 percent of your wealth?

They haven’t talked to me for quite a while. My family is going to be in the upper quarter of 1 percent or something like that of humanity in terms of the funds that they have at their disposal. My goal originally was to leave my children enough so that they could do anything, but not enough so that they could do nothing.

If you were to be reborn, what would you like to be reborn as?
I would like to be reborn as Sophia Loren’s boyfriend.

(Shereen Bhan is Executive Editor, CNBC-TV18)

(This story appears in the 22 April, 2011 issue of Forbes India. To visit our Archives, click here.)

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