Bill Gates, Warren Buffett on surviving the fin crisis

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Quick: Another question right here.

 

Q: Buffett and Gates, my name is Antionette Genevieve. I am a first-year executive MBA student. And I actually work at Goldman Sachs, so thank you for your investment.

 

Buffett: Why aren't you at work?

 

Q: My question to you is I would like both of your thoughts on the investment of alternative energy as for developing our economy and getting it back on track.

 

Quick: Gates, you touched on this earlier.

 

Gates: Well, there are many, many ideas. And there is enough that we can say most of them will turn out to be dead ends. You know, the solar-thermal, solar-electric, nuclear is going to go through some of the revival and see if it can solve some of its cost challenges. As a country, we want to make sure all of those get lots of R&D and regulatory enablement because one of them is going to give us much cheaper power without causing any problem. We don't know which one it is. And we don't have quite as much R&D going into those things as I would like to see. We have quite a bit, but I think the government policies could drive for more. But it is one of these areas that is somewhat faddish in nature. When you have a lot of energy focusing on a field, the amount of money that goes in is very large. And the overall return on capital is often quite large. The car industry in its heyday was a disaster. The airline industry, even the software industry because people don't remember all the non-Microsoft's that don't exist until today. When something is hot, you get kind of a bubble. So in energy, you are going to have to be a bit careful to make sure it's one that's really got its cost structure in line and it's not just being pushed along by subsidies and there will be scientific surprises. So a very hot area, but not necessarily a good area for investment.

 

Quick: All right. Why don't we leave it there for now? When we come back, we will have more with Bill Gates and Warren Buffett. We will be talking about leadership and President Obama right after this break.

 

Quick: All right. Welcome back, everybody. We are at Columbia University. And right now we are going straight to the top of Columbia Business School. We are joined by Dean Hubbard. Glenn Hubbard, by the way, is not only the head of the Business School here, he also happened to serve at the White House where he was Chairman of the Council of Economic Advisors. So this is a man who knows not only about what's happening in the economy, but also what's happening with these students. You talk to them all the time. What's the question that you'd like to pose to Gates and Buffett?

 

Hubbard: Thanks, Quick, and thanks to both of you for being here today. And, Buffett, welcome home.

 

Buffett: Thank you.

 

Hubbard: Buffett, one thing you said years ago that's always stuck with me is you never know who is swimming naked until the tide goes out. And that, of course, says maybe there is some value in knowing when it's going to be low tide. It also says there's value in knowing context. How do we develop -- how do we encourage business leaders who understand context and connect the dots?

 

Buffett: Well, I think they have learned a lot about that in the last year. Some never learn, you know. At Berkshire, we have actually 70-some managers. I think most of them are a fair amount smarter than they were 15 months ago but they were plenty smart to go in. But, you know, I think that what I learned from a Ben Graham, who came up here every Thursday afternoon. He didn't need to do it, you know. He donated whatever he got paid back to the school and all of that. But having sound principles takes you through everything. And the bedrock principles that really I learned from Graham and Dodd, I haven't had to do anything with them. They take me through good periods. They take me through bad periods. In the end, I don't worry about them because I know they work.

 

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