Warren Buffett is not just any billionaire. To hear his wise quips, people trek from around the world each year in the first weekend of May to descend upon Omaha for Berkshire Hathaway's BRK-A
annual meeting. Hotels are booked up a year in advance, and the Omaha civic center is filled to capacity for the meeting. This year, 24,000 people made the trip to hear the "Sage of Omaha" speak. Imagine then the demand for getting a private audience with the man (see BusinessWeek.com, 5/8/06, "Under Warren Buffett's Big Top").
The eBay (EBAY) auction for a private lunch with the sage will begin on June 22, and concludes a week later. The proceeds of the auction will benefit the San Francisco-based Glide Foundation, which runs over 80 charitable programs ranging from feeding the poor and running a free clinic to rehabilitating drug addicts and gang members. This is the sixth year eBay has auctioned the Buffett power lunch. eBay Giving Works, eBay's dedicated program for charity listings, started listing the lunch auctions in 2003 after holding live auctions the first two years. The winning bids were $250,100 the first year, $202,100 the second year, and a whopping $351,100 last year. So why does Buffett, who is worth over $40 billion, do these lunches? Why not just write a check? And why Glide? BusinessWeek.com reporter Pallavi Gogoi spoke with Warren Buffett to get some answers. Here are edited excerpts:
These "power lunches" raise money for Glide. Why did you choose Glide?
My wife [the late Susan Buffett] first introduced me to the organization 15 years ago. Originally, I was suspicious, as I am about most things. But when I went to Glide and met Cecil [Williams, the founder] a few years ago it was clear to me that it was a special organization run by a special man doing some very good things for thousands, that the world was ignoring.
I forget who came up with idea of a lunch and it sounded like a good idea to me. I'm delighted that people participate. The last few of them went on eBay for large sums.
Why do you think it attracts such large sums?
Most of these people have already checked out Glide themselves before bidding for the luncheons. They've been extremely impressed and felt good about where the money has gone and even give more separately.
Indeed, I spoke with David Einhorn, one of the past winning bidders, who said he was happy to donate to a great charity and also get the added benefit of having lunch with me.…This fellow from Singapore [Jason Choo, who won the bidding in 2004] said the same thing. He won two years ago, wrote the organization an extra check and then he bid again last year.
And that's because Glide is a remarkable organization and I've been there. The people there have hit bottom and Cecil and his staff give them job training, food, and get them off drug dependency. They've really changed thousands of lives and it's inspiring.
Is there anything specific that you saw at Glide that affected you?
What strikes me is not any specific program but the very genuine and effective intent that they have to help out anybody that's hit bottom, of which there are a lot more people than you know. Cecil has brought in top executives -- Charles Schwab, the Clintons, Sharon Stone, last time I saw Barrack Obama -- they all want to pitch in when they see how real this guy is. (see BusinessWeek.com, 6/9/06, "Unconditional Love"). And you know, I'm very suspicious by nature, but it's so clear to me that Cecil's for real, as is apparent to all these other people who come to help. My wife, who lived in San Francisco, got to know Cecil well.
Cecil is quite something. He mentioned that you visited his church…
Yes, and I'm not at all a church-going person. It was a dying church 40 years ago and all the older white members quit when this young black guy came there and rebuilt it from scratch. And now I can have an enjoyable lunch at Smith & Wollensky helping that organization.
I believe that you recruited Smith & Wollensky to donate too?
Three years ago, I believe I did. And this year, Alan Stillman (CEO of Smith & Wollensky, the steakhouse chain) called me and said that if you do the auction again we would like to participate by providing a free lunch and donating $10,000. And I said, why not?
Well you can just write Glide a check, so why go through a lunch with strangers to raise money?
We do give them a check, separately. But I benefit enormously from the auction. I don't pay any penalty at all. I get to meet new and interesting people and am delighted to do it. And people like it too. In fact, we've had a couple of cases where three other people matched the final offer on the day of the bidding.
And what do you do at these lunches?
Last year the winners came to Omaha Country Club and we started lunch at noon and continued on until 3:30 in the afternoon. The fellow, who is from the eastern part of the U.S., chose not to give his name. He brought along a sister and a few other associates of his and I told them "You've got me for long as you want." And we had a great time there for three and a half hours. Since then, we've become friends, and the last time I saw him and his sister out on the West Coast, I bought him breakfast. I told him I'm bringing down the price of his meal with me. I've made new friends this way.
Who do the winners bring with them?
It's entirely up to them and they're allowed to bring up to seven people. One guy brought his son along, some bring along other family members, like a sister or a spouse.
You get to choose the restaurant in some cases? I hear you didn't have your signature steak or coke, but went for salad and iced tea at one of your lunches at Michaels?
Yes, at Michaels in New York, where I met Einhorn [David Einhorn, investor and co-founder of hedge fund Greenlight Capital, who won in 2003]. You know, the waiter there turned out to be fellow from a tiny town in Nebraska. At Michaels! Where all the media types go and there's this guy from a Nebraska town of 500 people. Yeah, I didn't have steak there. But yes, at Smith & Wollensky, they have more of my kind of food there.
Better than Gorat's? [Buffett's favorite Omaha steakhouse]
The steak there is plenty good, believe me. I'm willing to endorse Smith & Wollensky's steak and though this luncheon is paid for, I'd pay from my own wallet there.
You've done other auctions before.
Well, once I autographed a Berkshire Hathaway monopoly game for this school and this fellow asked me to autograph a couple more and he increased his contribution to $62,500.
And you recently auctioned off your ukulele?
Yeah, that was for Dairy Queen. Though I don't want to do too much of it, they've always served a good purpose. Once I auctioned off a wallet, which fetched $215,000 for Girls Inc. (a nonprofit organization that works with girls in high-risk and underserved areas) A fellow from Minnesota bid and got Girls Inc. more money than what was ever in it.
And what was in it?
At that time there was nothing in the wallet. It was an old wallet, which I had had for 20 years. But I said that I would stick a name of a stock in it. And the winner, John Morgan, said that he would auction off that stock tip for Girls Inc. for a starting bid of $1,000. That way, he raised another $15,000 for the charity. In fact, the charity got quite a bit more from John, who went on to serve on its board.
And the people who win the power lunch auction, what do you talk about with them?
Whatever they want to talk about. It's always a good conversation.
You're the world's most famous investor -- do some of them want stock tips?
Interestingly enough, nobody has asked for stock tips. We've always talked about varied things. Most talk about their personal lives. The younger people like David Einhorn (who is 37) talk about raising kids and other such worldly things. They think because I'm 75 I know something -- which is not necessarily the truth.