1998: How does rapidly changing technology affect how you filter businesses?
AUDIENCE MEMBER: Hello. My name is Martin Weigand from Bethesda, Maryland. Again, I want to thank you for your letters and principles. They’re a great help for small business people running their business.
My question is, last year you said you had filters in your mind to help you quickly analyze businesses.
How do your filters take into account the very fast changes of technology and the way that businesses communicate with their customers, take orders, things like that?
WARREN BUFFETT: Well, we do have filters, and sometimes those filters are very irritating to people who check in with us about businesses, because we really can say in ten seconds or so “no” to 90 percent-plus of all the things that come in, simply because we have these filters. We have some filters in regard to people, too.
But the question of technology is very simple. That doesn’t make it through our filter. I mean, so if something comes in where there’s a technological component that’s of significance, or where we think the future technology could hurt the business as it presently exists, we look at, you know, we look at that as something to worry about. We will — it won’t make it through the filter.
We want things that we can understand, which filters out a lot of things. (Laughter)
And we want them to be good businesses, and we want the people to be people we’re very comfortable with. That means ability and integrity.
And we can do that very fast. We’ve heard a lot of stories in our lives, and it’s amazing how they — you can become quite efficient in, probably, getting 95 percent of the ideas through in a very short period of time that should get through.
Charlie?
CHARLIE MUNGER: Yeah, we have to have an idea that is A, a good idea, and B, a good idea that we can understand. It’s just that simple. And so those filters are filters against consequences from our own lack of talent. (Laughter)
WARREN BUFFETT: Filters haven’t changed much over the years, either. (Laughter)