Warren Buffett's Historic $31 Billion Gift to Gates Foundation - Full Interview with Charlie Rose

Warren Buffett announces his historic $31 billion gift to the Bill and Melinda Gates Foundation. He explains how he originally planned for his wife Susie to distribute the wealth, but after her death he found the perfect solution in the Gates Foundation, whose goals aligned with his own values of helping those who got the 'short straws in life.'

Bill Gates initially didn't want to meet Warren Buffett, taking a helicopter to his mother's house thinking he'd stay just a couple hours. However, they connected immediately over discussions about companies, trends, and business, talking for hours about topics like which companies were most valuable across decades and why market leaders fail to maintain dominance.

Warren and Bill discuss their unique friendship despite different ages, backgrounds, and locations. They emphasize finding each other interesting and funny, with no competitive tension. Charlie Rose notes this is one of those rare friendships that's almost beyond definition, with Warren stating if you have a dozen terrific friends in life, you're going to have a great life.

Bill Gates shares the story of an elaborate prank where he hired comedians to pose as an obnoxious couple at a dinner in Carmel. The actors were prepped to insult things Warren cares about, including the University of Nebraska Cornhuskers, driving Warren to nearly confronting them before the reveal.

The friends discuss playing bridge and golf together, with only friendly competition through dollar bets in golf. Bill credits Warren for re-igniting his passion for bridge, though it requires about 30 hours of practice before becoming truly enjoyable. Warren emphasizes the continuous learning that happens in all friendships.

Bill discusses what he's learned from Warren, particularly about valuing free time and calendar management. He loves when Warren shows his calendar with empty days, contrasting with Bill's fuller schedule. Charlie Rose notes that Bill once said he 'studies' Warren, showing the depth of learning in their relationship.

Warren and Bill discuss the philosophy that giving excessive money to children could be detrimental to them. Warren handed out Carnegie's Gospel of Wealth at a gathering, which helped Bill think about philanthropy. They established foundations for their children with modest amounts rather than leaving dynastic wealth.

Warren praises the Gates Foundation as the best-run philanthropy in the world, highlighting Bill and Melinda's rational approach to determining what can produce the best results for society. They set a framework first, then become extremely smart about execution within that framework, with decades ahead to make an impact.

Warren explains why he doesn't invest in technology companies like Microsoft despite understanding Bill's business. He can't see 10 years out in fast-changing industries, preferring businesses where he's 95% sure rather than 60-65% sure. Bill confirms he's never asked Warren to buy Microsoft, as it doesn't fit Warren's investment model.

Charlie Rose notes that Warren's friends say what he understands better than anyone is price - getting cheap price for value, a principle from Ben Graham. Bill shares how he read 'The Intelligent Investor' after meeting Warren, finding it surprisingly basic, showing Warren keeps barriers to entry low so others don't compete with him.

Bill recounts how Warren handled the Salomon Brothers crisis over a weekend, explaining to regulators why they shouldn't shut down the firm, picking a new CEO, and managing press questions. Warren shares the dramatic story of convincing Treasury Secretary Nick Brady to modify an order that would have destroyed the firm, calling it the most important day of his life.

Charlie shares how Warren gave Tom Murphy voting rights to his Cap Cities investment without even telling him, exemplifying Warren's character of doing the right thing without seeking recognition. Warren deflects, saying Tom Murphy is the one with true quality of character.

Warren discusses how people with high IQs often underperform because they have obstacles throwing sand in their gears - like having a 500 horsepower motor but only getting 100 horsepower output. He notes this is particularly common on Wall Street where smart people can solve complex problems but get tied up in self-destructive behaviors.

Bill shares that what stunned him most about Warren after meeting him was that he was really having fun - not just being brilliant and interesting, but having fun at a level Bill didn't know how to achieve. This taught Bill that picking the right things, the right time, the right friends, and what you can contribute to can be incredibly fun.

Warren and Bill discuss how they tell each other when they're wrong and support each other through challenges. Bill shares how talking with Warren during Microsoft's court challenges was an incredible gift - not that Warren told him what to do, but just talking through how to think about difficult situations.

Bill bought Melinda's engagement ring at Warren's jewelry store Borsheims in Omaha. He distracted Melinda during the flight so she wouldn't notice they landed in Omaha instead of Seattle. Warren joked that when he got married he spent 6% of his net worth on the ring, asking how much Bill loves Melinda - 'let's quantify it right there.'

Both Warren and Bill express strong optimism about America and the entire world. Warren notes that while the US won't be as uniquely dominant, wealth will continue to grow. Bill emphasizes this is a great time to be alive due to medical and computer breakthroughs, though improvements may not all be for the better.

Warren describes Bill as fundamentally a citizen of the world who thinks a child in India is as valuable as the child next door, and lives this through his foundation's operations. Bill explains that when thinking about giving away money, they identified the greatest inequity as lack of health interventions allowing children to live, aiming to benefit 6 billion people instead of just 1 billion.

Warren formally announces the structure of his gift: 10 million Berkshire shares to Gates Foundation (giving 1 million per year), 1 million shares to Susan Thompson Buffett Foundation, and 350,000 shares each to foundations headed by his children Susan, Howard, and Peter. The gift will continue throughout his lifetime subject to at least one of Bill or Melinda being active in their foundation.

Bill and Melinda discuss the tremendous responsibility of managing Warren's life's work versus their own wealth. They view it as doubling the impact on diseases, education, and global health issues. Bill recalls presenting on global health opportunities to Warren and friends in 2001, showing the ongoing dialogue that led to this decision.

When asked why he didn't want buildings named after him, Warren simply says he likes the Omaha public library and has no desire for the Buffett name on things. His role as trustee will be minimal - just a sounding board when they need him. He confirms their priorities overwhelmingly mesh with his, which is essential for the arrangement.

Bill explains how Warren's gift enables them to tackle the 'challenge of success' - when you develop a new drug, the bigger problem becomes distribution and ensuring impact. Of the top 20 diseases, they're making very good progress on at least 10, expecting solutions in 5-10 years. Scaling up successful models, whether in health or education, becomes possible with increased resources.

Melinda explains how increased funding allows them to deepen health work by addressing related issues. You can't give medicine to someone without food or clean water. They'll support small farmers in Africa with drought-resistant seeds, help prevent crop viruses, improve market access, and ensure clean water - all while developing vaccines and treatments for major diseases.

The foundation grapples with difficult decisions about allocating finite resources between immediate solutions and future research. Using AIDS as an example, prevention has incredible impact since every case prevented stops future transmission, but treatment is needed for those already ill. They work with governments worldwide to address these big problems that can absorb huge amounts of money.

Warren admits he'd be terrible at philanthropy because he likes immediate feedback - he's the kind of guy who wants a triple dipper ice cream right away. Philanthropy requires taking delayed results in many cases. He also notes it requires answering to a bigger constituency than he likes, preferring to look in the mirror and decide if he's doing okay rather than being diplomatic with many stakeholders.

Warren uses analogies to explain his philosophy: if he had to play the golf match of his life, he'd get Tiger Woods to substitute; if he had to sing on TV, he'd mouth the words while Sinatra sang in the background. The idea that you have to personally do everything is wrong - if you can get somebody better at doing something that needs to be done in your place, that's smart.

Warren explains that he and Susie decided in their 20s that money would go back to society - this was never in question. His original logic was that high compounders should handle philanthropy 20-40 years out while low compounders handle current needs. But now is the right time because he's seen what the Gates Foundation has done, Berkshire is positioned better than ever, and this structure avoids forcing them to sell concentrated stock.

Warren doesn't think the gift will affect Berkshire shareholders one iota. In fact, now 31% of every dollar Berkshire makes through his shares goes to philanthropy, giving him even greater motivation. He loves the feeling that as the company becomes worth more, it translates into something good for people around the world while benefiting shareholders.

Warren describes this as the 'second act of the money' - first amassing claim checks on society, then figuring out the best use for them. Bill recalls how Warren handed out Carnegie's Gospel of Wealth in Ireland before the Gates Foundation was created, which helped Bill think about high-goal philanthropy and convinced him that not leaving wealth to children made sense for society and for the children themselves.

Bill shares that they had Warren at a microfinance discussion where he asked bankers great questions about costs and loan repayment rates. Bill acknowledges the tough decision of having two things he loves - Microsoft and the foundation - both important and challenging. He's excited about making the change and Warren's gift reinforces the importance of spending that time well.

Warren discusses his famous philosophy: leave children enough money so they can do anything but not enough to do nothing. He opposes dynastic wealth where many generations can go without working simply because they came from the 'right womb,' seeing it as flying in the face of America's meritocracy and equality of opportunity. He'd rather have a foundation doing tremendous things worldwide than supporting the 'lucky sperm club.'

Warren and Bill share a mindset about market systems - they work awfully well and have worked well in America, even making Warren successful. But market systems fail for poor people around the world who need access to diseases treatment that should be available for peanuts. Warren believes in the market system 95% of the time, but where it won't solve the problem, you have to interject yourself and make sure there's a system to deliver solutions.

Warren explains his approach to philanthropy: if money and talent are already pouring into something, there's no reason to duplicate effort. Look for something important where you'll be reasonably good at implementing ideas and that really needs more funding. They note Susie would have loved this decision - she wanted to start philanthropy sooner, seeing people with needs immediately, and would have gone to town if Warren had died at 60.

Warren advocates applying the same logic to dispersing wealth that people use for accumulating it. Just like people gave him money 50 years ago because they thought he'd be better at accumulating wealth, why not get people better than you at dispersing wealth? He hopes people of even modest means who don't have something specific they want to do will look around for somebody who will do the job better than they could.

Bill shares that when they described Warren's plan to a friend, the friend acted like it was obvious this would happen, though to Bill it wasn't obvious at all. Warren first mentioned it in passing over the last year and a half, but only got very serious in the last few months. Once Warren decides something, it's very crisp - he doesn't look back or lose sleep over decisions.

When asked how this will change his life day to day, Warren says 'zero.' He'll go back to Omaha and tap dance to work as always. Bill once observed Warren does only three things: talks on the phone, reads, and plays bridge - plus watching Nebraska basketball (Nebrasketball). The satisfaction comes from knowing while he's alive he can see the impact, not among executors after death.

Warren expresses surprise at the overwhelming reaction because in his view, what else could he do that made as much sense? It wasn't brilliance, just the logical thing to do. While other foundations aren't giving to Gates Foundation yet, the principle of getting someone better, younger, and more dedicated with common ends should be obvious - people do it all the time on the accumulation side, why not distribution?

Warren reveals he would give up being a participant for a few years at the end of life to be an observer for 40 years. He finds the world so interesting with so many things he wants to see how they come out. The convergence of forces, technological advances, and changes happening may not all be for the better, but he'd still like to see the rest of the movie or a good portion of it.