Our Journey to Visit the Oracle of Omaha
Friday, March 30, 2012, marked the sixth time UC Davis MBA students have been invited to rub shoulders with Mr. Warren Buffett in his hometown of Omaha, Nebraska. For the 20 students this year, like the others before, it was the opportunity of a lifetime.
Giving Back to Omaha – Volunteering at Girls, Inc.
Anticipation for the next day’s events peaked on Thursday, as several UC Davis MBA students spent the afternoon volunteering at Girls, Inc. of Omaha, an organization that helps girls succeed in school and life. Girls, Inc., which is supported by the Buffett family and Berkshire Hathaway, provides after-school and summer activities for more than150 girls ranging from age five to 18. It has been visited by notables such as Presidents Barack Obama and Bill Clinton, and First Ladies Michele Obama and Secretary of State Hillary Clinton.
UC Davis MBA students spent the afternoon planting spring seedlings with the girls. On Saturday, the rest of the group made another trip to Girls, Inc. to help the program administrators with facility maintenance. We hope to do more to support organizations like this one in the future, and are excited to learn that there are a few local Girls, Inc. chapters in Northern California in Alameda, Richmond, Salinas and San Leandro.
Day Begins at Berkshire Hathaway’s Nebraska Furniture Mart
Friday began with an early morning tour of Nebraska Furniture Mart (NFM), a Berkshire subsidiary acquired in 1983. The Mart is the brainchild of the late Rose “Mrs. B” Blumkin, a Russian immigrant who opened the store’s doors for the first time in 1937 and worked there until she was 103 years old. Today, the Mart is home to “4 food groups”: furniture, flooring, appliances, and electronics.
At the Nebraska Furniture Mart, we met up with other business students from Wake Forest University, University of Arizona, Duke University, University of Western Ontario, St. Louis University, Kansas State University and The Ohio State University.
Our tour, led by Executive Vice President Bob Batt, the grandson of Mrs. Blumkin, gave us insight into the Berkshire Hathaway corporate culture.
As 160 of us sat in a sea of recliners, we learned that the Mart places a high emphasis on the customer experience. Batt said they “make rules to benefit the customer, which in turn provides collateral benefit to the shareholders.” It’s a philosophy that may not always ring true in many organizations today. The culture is supported by weekly continuing education for sales teams to provide the best service possible in a rapidly changing marketplace. Batt said there is a constant focus on innovation and “staying ahead of the curve,” and a continual embodiment of the Berkshire’s “cash is king”/no-leverage policy.
Regarding the competitive landscape of the furniture industry, Batt had a surprising response. NFM’s biggest competitors are not the IKEAs or the Sears of the world –- it’s the Visa card balance. In fact, NFM’s competing for discretionary dollars from consumer spending in other industries, such as vacation, automotive and entertainment. “IKEA is a ‘niche marketer’,” Batt said. “It’s not your parents’ furniture.”
Indeed, the NFM is well aware that it need not be too concerned with other furniture giants. Making quality furniture a priority in the American budget is its most pressing concern.
The tour ended with a visit to NFM’s “version of Disneyland,” also known as its electronics and appliance warehouse. It’s a mecca at least four times the size of the average Best Buy, complete with an in-house Apple store.
As our tour ended, we sped off toward the Field Club of Omaha, our discretionary incomes prepared for our return at a later date.
Questions for the Oracle
Leaving the Nebraska Furniture Store was a race of rental cars and buses through the streets of Omaha to get the best seats in the house for the Q&A session with the Oracle himself at the Field Club of Omaha.
With a list of pre-selected questions, each school took turns asking Mr. Buffett to speak his mind on issues ranging from the European Union, taxes and career advice to value investing and other timely topics. Mr. Buffett’s was jovial as host, asking us to help ourselves to a table full of Coca-Cola products.
“Berkshire makes a profit on one of every 11 Cokes,” he said. “So at least open one and pour it on your neighbor.”
On how value investing is taught today: “I learned from Ben Graham at 19,” Buffett said, “and the value investing principles are still the same today.” He went on to explain that the original proponent for valuing businesses was declared in 600 B.C. with the adage, “A bird in the hand is worth two in the bush.” A value investor, he said, knows how to learn when and where those two birds are. Mr. Buffett said it is as easy as “shooting fish in a barrel after the water is drained out and the fish have stopped flopping around.”
Regarding corporate social responsibility, Mr. Buffett professed that he instills in his managers that “doing something just because the other guy is doing it” is never acceptable.
He commented that Berkshire hires people to match its principles, which helps the company maintain such a strong corporate culture. In a holding company with 270,000 employees, there’s undoubtedly something illegal going on at any moment, he said. It’s the managers’ job to watch out for those infractions and be guardians for the company’s reputation, he said. As managers (or future managers), we took his advice to heart, knowing the importance of company reputation in today’s world.
When asked what he thought was the most important thing to take away from the day, he left us with this inspirational advice:
“Find your passion, and follow it. Figure out a way to play it for all its worth.”
As our questions wrapped up, our stomachs growled in anticipation for our lunch soon to follow. Mr. Buffett graciously offered to drive four students to the restaurant, including Bay Area MBA Vianna Quock.
Breaking Bread with Mr. Buffett
Our next stop was lunch hosted by Mr. Buffett at Piccolo’s, his favorite restaurant. A true gem of Omaha, Piccolo’s served a great meal topped off with its signature root beer float.
A few fellow UC Davis MBA students were able to sit with Mr. Buffett at his table, and enjoyed their conversations with him.
Toward the end of the meal, Mr. Buffett enjoyed his favorite dessert, a root beer float, this time out of a UC Davis mug, arranged by yours truly.
Following lunch was a photo opportunity with each student. It was a chance for each of us to personally thank Mr. Buffett for hosting us, as well as a time to prove to our friends and families that we met the Oracle. Everyone, including Mr. Buffett, enjoyed taking both professional and “goofy” photos.
We presented Mr. Buffett with a basket of UC Davis goods and a plaque thanking him for his dedication to entrepreneurship. Upon seeing the pinball machine affixed to his plaque, Mr. Buffett remarked that it was a replica of the exact machines he leased to drug-stores as a sophomore in high school in the 1940s. “Thank you, that was very thoughtful,” he said.
Making the Most of Omaha
Following the photo opp, we made our way to Borsheim’s Fine Jewelry and Gifts, another Berkshire Hathaway-owned company.
The tour gave us insight into the struggles of the luxury goods market during the recession of 2008 and 2009. While sales growth fell during the recession, we learned, the Berkshire policy on debt kept the company afloat during hard times—a lesson that could have saved many other companies through recent years.
Many of us took the opportunity to drive by Mr. Buffett’s house, a surprisingly modest home in the neighborhood of Dundee, Omaha. The home was purchased in 1958 for $31,500 and today is valued at $700,000, a relatively humble figure when compared to the celebrity megamansion monstrosities seen on MTV’s Cribs.
Our day ended with a fantastic dinner at Mark’s Bistro, hosted by Assistant Dean Jim Stevens. As we dined, we recounted the day’s events, and enjoyed getting to know our peers from other campuses.
As the evening wound down, we all expressed how grateful we were for the opportunity, and how much we enjoyed meeting such a business icon. We left Omaha feeling inspired and lucky, armed with sage advice for how to conduct business and pursue careers after commencement in June.