06 June 2018, 14:46 / Finance

Why Russians Don't Want to Have Dinner with Warren Buffett

Do our entrepreneurs and financiers have anything to talk about with the investment guru?

Isaac Becker , international financial consultant FCP (Financial Management)

For 19 years now, since 2000, an annual auction has been held to give away the right to have lunch with one of the most famous investors of our time, Warren Buffett. On June 1, another lucky winner became known. However, never once has a Russian found himself at the dinner table with a legend of our time. Why?

The first person to have lunch with Buffett cost $25,000. Unfortunately, he wished to remain anonymous and may have started a tradition: of the 19 lucky ones, nine refused to reveal their names. However, over the years of the auction, the value of the prize has increased significantly. Since 2008, the price tag has not fallen below $1 million, and the record was set in 2012 and 2016. and amounted to exactly $3,456,789 (in both cases the winner remained unknown). This year, an anonymous bidder needed $3,300,100 to beat other contenders. All money raised goes to the Glide Memorial Church, a California charity that helps those in need.

Why is this necessary?

The first thing that comes to mind is the desire to donate considerable funds to a good cause in such an original way. It is possible that many people do this, especially those who avoid publicity. I think that you shouldn’t look for rich Russians in this category of people. We have enough homeless people of our own.

Of course, a meeting with Buffett is primarily of interest to professionals for whom the investment business is the main activity in life. They, apparently, solve two main tasks - to discuss their issues and, possibly, to appear next to a recognized genius in their field. This hypothesis is supported by the list of people who have been able to communicate one-on-one with Buffett over the years. We are talking about at least four such cases. And Ted Weschler, the manager of a large hedge fund, even bought lunch with Buffett twice, two years in a row: in 2010 and 2011. This cost him a tidy sum - more than $5.2 million. However, the costs were fully justified, since he received an offer to start working at Buffett's Berkshire Hathaway company and now occupies one of the key positions there.

Unfortunately, the 2008 crisis crippled the mutual fund industry in Russia so much that I can hardly imagine anyone in this area who would be willing and able to shell out several million dollars for a steak at the Smith restaurant in New York. & Wollensky talk to the guru. And the fashion for the funds themselves has passed. More and more people are investing through various exchange-traded funds (ETFs), which are much cheaper and in many cases more effective. And it turns out that for that kind of money there’s not much to talk about between our pros and “old man” Buffett; and only a few can afford such advertising costs, and it’s not a fact that they will justify themselves.

Celebrity Factory

What remains? Powerful PR. For at least a few days, the world's business press will savor the cost of this year's lunch and the name of the man who spared no expense. It costs a lot! You will be catapulted to a previously unattainable level of global fame.

In Russia alone, officially more than a million people are dollar millionaires. There is money! But for almost 20 years, no one has dared to do such a trick. Why? There may be several reasons. It is possible that the vast majority simply do not know about this possibility. If at first lunch with a guru was a purely American idea, then since 2004 the auction has been held on eBay and has become international in nature. In theory, anyone can place a bet in this game. Thus, citizens of Singapore have already been among the winners twice.

However, there is one “but”. Buffett is willing to spend a few hours of his time helping the American homeless, but he doesn’t want to meet just anyone. This is exactly the case when reputation is more valuable than money. Therefore, the auction mechanism includes a certain filter for those who want to participate in it. Before you place a bid, you must get the go-ahead. The selection criteria are not public, but I think that their strictness should not be doubted. So here, especially “dark” or suspicious (in the opinion of the organizers) individuals will not be allowed to run wild. “Rags to riches” will not work.

Don't forget that money loves silence. This rule is especially valued in modern Russia, and there are a few who want to “break” it in this way.

Make way for the young

Well, just talk to the legendary man “for life”, as they say, “synchronize watches”? Do our billionaires, for example, need Buffett's wisdom? I guess not either. What can he teach, say, Alisher Usmanov or Alexey Mordashov? Different eras, different rules. But for Pavel Durov or Arkady Volozh this is, most likely, a “fading nature.” Buffett is already well over 80. True, I could be wrong. Some of the anonymous people could theoretically still be Russian, although it is unlikely.

In this regard, I have an idea. According to the terms of the auction, the winner can take up to seven people with him for lunch. So, maybe it’s worth selecting a team of the best young investors in Russia and just buying this meeting for them? And the money could be contributed by, for example, the 100 richest people in the country. This would be very symbolic: let the sprouts of Buffett’s ideas actively sprout on our soil.

List of auction winners

Year Winner Amount

2000 Anonymous $25,000

2001 Anonymous $18,000

2002 Anonymous $25,000

2003 David Einhorn, Greenlight Capital $250,100

2004 Jason Chu, Singapore $202,100

2005 Anonymous $351,100

2006 Yongping Duan, California $620,100

2007 Mohnish Pabrai, Guy Spear, Harina Kapoor $650,100

2008 Zhao Danyang, Pure Heart Asset Management $2,110,100

2009 Salida Capital, Canada $1,680,300

2010 Ted Weschler $2,626,311

2011 Ted Weschler $2,626,411

2012 Anonymous $3,456,789

2013 Anonymous $1,000,100

2014 Andy Chua, Singapore $2,166,766

2015 Zhu Ye, Dalian Zeus Entertainment Co. $2,345,678

2016 Anonymous $3,456,789

2017 Anonymous $2,679,001

2018 Anonymous $3,300,100

Source: Bloomberg

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