Buffett to Smith Students: Master Salesmanship, Temperament

SMITH BRAIN TRUST — Some 66 years ago, MBA student Warren Buffett trekked from New York to Washington, D.C., seeking career wisdom. He arrived unannounced at Geico, drawn there because it was chaired by his former professor, investing guru Benjamin Graham. It was a Saturday, but Buffett encountered a Geico executive onsite and seized the opportunity to glean several hours' worth of insight about the insurance industry and firm. The knowledge eventually led Buffett to make Geico a cornerstone of Berkshire Hathaway. 

In a gesture to spark similar MBA-student resourcefulness, Buffett shared a range of insights with 20 graduate students from the University Maryland’s Robert H. Smith School of Business during a Nov. 18, 2016, meeting in Omaha, where Berkshire is headquartered. Asked to identify the “most important skill in finance,” Buffett answered: Salesmanship.

“Salesmanship is how you convince someone to marry you, and that’s how you get a job,” Buffett said. 

And what’s the most important quality? Temperament, he said. It permits “the control of fear and greed, which have ruined many,” Buffett told the students. “Anyone who has become rich twice is dumb.  Why would you risk what you need and have for what you don’t need?  If you are already rich, there is no upside to taking on a lot more risk, but there is disgrace on the downside.”

Buffett discussed with the students how S&P 500 companies are performing on Wall Street, active versus passive management, Dodd-Frank’s status, the Wells Fargo scandal, national debt implications, the impact of central banks on stock markets, and the insurance industry. 

Smith finance professor David Kass, who accompanied the students, took meeting notes for what Poets & Quants described as a “fascinating blog post” (read it here). A close follower of Buffett’s investment strategy since 1980, Kass also drew invitations and brought 20 MBA students to meet with Buffett in 2011 and 2013.

At this year's meeting, Buffett shared more career-based wisdom, which Kass included in his blog. Here are some excerpts, edited for length: 

What qualities does WB look for in hiring people?

Berkshire has only 25 people at headquarters, but 360,000 employees.  The managers of Berkshire’s 70 businesses choose their own people.  The qualities he looks for are intelligence, energy, and integrity.  But the most important quality in a manager is having a passion for the business.  It is not IQ but passion for their businesses that make Berkshire’s 70 managers stand out.  When WB was 23 years old, he was rejected by Ben Graham for a job. Years later he received a letter saying the “next time you come to NY stop by my office.”  WB went the next day.  He never asked about pay.  You should take a job that you would take if you didn’t need a job.

What qualities does WB admire in others?

Choose someone (among your friends and classmates) as though you were getting 10 percent of their future earnings, he says.  Choose someone who is generous and has a good sense of humor. Someone you would trust to lead you.

For further insight to what has shaped Buffett’s career and philosophy: Buffett describes, here, his mentor Benjamin Graham’s impact, and Kass comments, here, on the role of luck in Buffett’s success.