1999 would have been enough to pay the income taxes of all US residents. For this money, one could give a brand new Bentley to every family in more than nine states. For this amount, you could buy all the properties in Chicago, New York and Los Angeles combined. This money was badly needed by some of the companies making their presentations.
Tom Brokaw's study, The Internet and Our Life, was the first in a series of presentations on how the Internet can change the nature of today's communications business. Jay Walker of Priceline showed the audience the dizzying promise of the Internet by comparing the information superhighway to a building transcontinental railroad in 1869. The speakers talked about the bright prospects of their companies, filling the room with intoxicating visions of a future that is not limited by geographical distances. It sounded so promising, so beautiful, that it reminded many of the tales of miracle drug sellers (although it's fair to say that many participants were truly impressed by the picture of the new world opening before their eyes). The guys from technology companies seemed to themselves Prometheus, carrying fire to mere mortals. All the other industries involved in the boring job of providing consumers with everything they needed—the same auto parts or garden furniture—interested the newcomers in only one way: how much technology they were willing to buy. Shares of some internet companies traded at many times their unearned earnings, while "real-sector" companies that made specific things lost capitalization. As tech stocks outpaced stocks in the “traditional economy,” the Dow Jones Industrial Average (Dow Jones Industrial Average, a widely used measure of the health of the U.S. stock market) easily passed the landmark 10,000 mark (which had been reached just four months earlier).), and then doubled in less than three and a half years.
Many of the newly enriched businessmen gathered on a fenced-in dining terrace near a pond in which a couple of swans swam in between performances. It was here that any guest - but not a reporter - could squeeze through a mass of people dressed in khakis and cashmere sweaters and ask Bill Gates or Andy Grove a question. Journalists, meanwhile, stalked the Internet moguls between the conference room and the cabins they lived in, further exacerbating the air of self-importance that permeated Sun Valley this year.
Some of the new Internet Kings spent the afternoon of Friday begging Herbert Allen to let them in on Saturday's photo shoot for celebrity photographer Annie Leibovitz, who was planning to shoot a series of media industry shots for Vanity magazine. fair. They felt they were invited to Sun Valley because they were the kings of the moment. And they could not believe that Leibovitz herself decides whom she photographs. Why, for example, she intends to past made large and small investments in this industry. But he was in any case a representative of the "old media". It was hard for these guys to believe that Buffett's face on the cover helped sell magazines.
Would-be business stars felt disadvantaged because they knew full well how much the balance in the mass communications industry had shifted towards the Internet. This could not be denied, but Herbert Allen believed that the "new paradigm" of stock valuation in the technology and media industry (based on the number of clicks and eye movements on the surface of the screen, and not the company's ability to simply make money) was complete nonsense. "New Paradigm," he snorted. - It's like "new sex". That doesn't happen."7
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The next morning, Buffett, the symbol of the "old paradigm", got up quite early - he was supposed to give a closing speech at the conference. He did not hesitate to refuse to speak at conferences organized by other companies. But when Herbert Allen asked him to perform in Sun Valley, he always agreed. The Saturday morning meeting was a key event of the conference, so instead of playing golf or fishing in the morning, almost all of its participants limited themselves to a light breakfast and sat down in the conference room. Buffett was supposed to be talking about the stock market today.
In private conversations, he expressed a lot of criticism of the abnormal situation in the stock market, which throughout the year raised the share prices of technology companies to heady heights. Stocks in his own Berkshire Hathaway had slumped, and Buffett's rigid rule of not buying technology stocks was beginning to look old-fashioned. However, this critical attitude did not affect the way Buffett invested. And until now, Warren Buffett's only public statement about the situation in the stock market has been the words that he never makes forecasts of its development. Therefore, the decision to take the stage in Sun Valley was completely unprecedented. Although, maybe it's just time for it. Buffett had a strong conviction in his own right and an unlimited desire to preach9.
Warren spent several weeks preparing his speech. He understood that the market is not just some group of people trading stocks like chips in a casino. Behind each such chip was a specific company. Buffett has always thought about the total value of chips. What is each one worth? Then he studied the history of the company, processing huge amounts of information and data in the brain. It was not the first time that new progressive technologies appeared on the scene and shook the stock market. The history of business has been filled with such "explosions" - there were railroads, and the telegraph, and the telephone, and cars, and airplanes, and television. All of these things were designed to speed up the interaction in one way or another - but how many of them were able to enrich investors? This is the question that Buffett wanted to bring to the attention of the audience in Sun Valley.
After a short breakfast, Clark Q took the podium. Buffett has known the Q family for many years, they were neighbors in Omaha. It was thanks to Clark's father, Don, that Buffett was able to make the connections that brought him to Sun Valley. Don Q, chairman of the board of Allen & Co and former president of Coca-Cola, met Herbert Allen when he bought Columbia Pictures from Allen & Co on behalf of Coca-Cola in 1992. Kew and his boss, Coca-Cola chief executive Roberto Goizueta, were so impressed with Herbert Allen's approach to the deal (not like the usual businessmen) that they persuaded him to join the board of Coca-Cola.
Don Q, the son of a cattleman from Sioux City and a former church clerk, had already retired from the management of Coca-Cola, but continued to live and breathe in accordance with the Real Thing5 slogan and retained such a large influence in the company that he was often called the “shadow CEO"8.
While living side by side with the Q family in Omaha in the 1950s, Warren once asked Don how he was going to pay for his children's college education and offered to invest $10,000 in a partnership created by Buffett. However, Don at that moment was forced to take his six children to the parochial school for $ 200 a week, like a small and unfortunate merchant. “We didn’t have that kind of money,” he said. assembled in Sun Valley by his son Clark. “And it’s part of our family history that we will never forget.”
Buffett, wearing his favorite red sweater over a plaid shirt, walked onto the stage and stood next to Clark. And he finished the story he started 5'10 11.
“The Qs were great neighbors,” he said. - Of course, sometimes Don did not forget to hint in between that, unlike me, he had a real job, but in general, our relationship was excellent. One day my wife Susie came to visit her neighbors and, as is often the case between neighbors, she asked for a cup of sugar on credit. Mickey, Don's wife, gave her the whole package. When I heard about this, I decided that same evening to go to Q's myself. I said to Don, "Why don't you give me twenty-five thousand dollars as an investment in the partnership?" The whole Q family was a little taken aback, my offer was rejected. Then one day I went back to them and asked for ten thousand dollars, which I told
Clark. Got the same result. I came back again and asked for five thousand dollars. Again my offer was rejected. So one fine summer evening in 1962, I headed back to Kew's house. I don't remember if I wanted to ask for two and a half thousand yards, but in any case, when I approached the neighbors' house, it was dark and quiet. Nothing was visible outside the windows, but I knew for sure that Don and Mickey were hiding upstairs, so I waited. I rang the bell. I knocked. Nothing. However, Don and Mickey were upstairs and there were no lights in the house, although it was too dark to read and too early to go to bed. And I remember that day like it was yesterday. It was June 21, 1962. Clark, when were you born?"
March 23, 1963.
“Well, it is from such small details that a story is born. I think you should be glad your parents didn't give me ten thousand dollars."
Having captivated the audience with this story, and especially with its unexpected ending, Buffett got down to business.
“Well, today I will try to solve several problems at once. Herbert asked me to add some slides to the presentation. His request was: "Show them you can handle this thing."