Warren Buffett and Bill Gates spoke with Charlie Rose and answered student questions at Columbia Business School in 2017.

Watch a similar Q&A with Buffett and Gates nearly two decades earlier.

We are pleased to provide the following transcript as a courtesy. The transcript has been edited for space and clarity. It may contain errors.

Lee Bollinger, President of Columbia University: This town hall with Warren Buffett and Bill Gates, moderated by Charlie Rose, is a wonderful event for Columbia, and we’re proud to host it. It’s a special, and I expect, memorable occasion for our students, the primary audience that drew all of our guests here today. Warren, Bill and Charlie are friends of this university and of mine personally, and in the case of Warren Buffett, an alumnus. They are people of enormous talent, accomplishment and success, and as much as anyone alive at this moment, they embrace and act on the deep sense of responsibility that good fortune creates. If you had to choose people to represent the best of a generation or even a century, you could not do better than these individuals.

Charlie Rose demonstrates how the art of conversation can educate and illuminate; Bill Gates succeeded in creating from scratch a business giant that now takes that success and searches the world, looking for ways to make humanity meaningfully better off; and Warren Buffett is a one-of-a-kind investment genius, but even more importantly, he grasps a complex world better than almost anyone else and then combines that singular talent with an uncanny capacity for condensing insight and wisdom into memorable utterances at the level of a Will Rogers or a Mark Twain. We are admiring and grateful for their presence today.

Charlie Rose: Thank you for coming. Thank you, President Bollinger, and also to Columbia for hosting this. We appreciate the people who are here in Alfred Lerner Hall, and we want to welcome everyone viewing on Facebook Live.

I’ve known these two guys sitting next to me for a long time. I’ve probably done more interviews with these two than anyone else. I certainly know that I always come away, firstly, having fun, and secondly, learning something. My guess is so will you this afternoon. They represent two different generations, but they represent a kind of essential friendship. As Bill has said, when they first met, they instantaneously knew they would be great friends. I should also say that they have been here before. That was in 2009, I think?

Warren Buffett: Sounds right.

Rose: Do you remember, Bill?

Bill Gates: Yup.

Rose: 2009. And what was that event called?

Buffett: “Making America Great,” was it?

Rose: “Keeping America Great.”

Buffett: Keeping America. We’re entitled to a royalty!

Rose: Keeping America Great, in 2009. I’ll be here talking for a few minutes with them, but this is an opportunity for all of you to participate. There’ll be people going around with microphones. I ask you, in the interest of everybody here, not to make speeches. We need curiosity. We need you to think carefully about what you’re saying, and ask your question in the most precise way you can, so that as many people as possible will have a chance to be involved. We’ll have a considerable amount of time to talk about anything, and certainly everything from your curiosity about what they know, which is considerable, but also the world around you, because they know a lot about that too.

I want to go back to the idea of this friendship, Warren. What is it that you two share? What makes this friendship so satisfying for both of you?

Buffett: We both certainly share a curiosity about the world, and we come from two different but related worlds. We probably spent about 10 hours together during a visit that was scheduled to last only about an hour on July 5th, 1991. His mother had to talk him into it. We had gotten nowhere in terms of our eventual agenda in that time. In fact, the governor of Washington came by, and Bill’s dad had to come into the bedroom and pull us out. It was a little embarrassing.

To start with, we have fun. Every relationship should have a lot of fun. We find the world such an interesting place. We like to compare notes on it, and we have a lot of fun doing it.

Rose: By the way, there’s a remarkable documentary about Warren which is on HBO. I think it premieres on —

Buffett: Monday, 30th.

Rose: On Monday. You should take time to take a look at it. Bill’s involved in that. It’s called, I think, “Becoming Warren Buffett.”

Buffett: Yeah, that’s what it’s called. It took me 86 years.

Rose: You’re doing well on it though.

Buffett: So far, yeah. The best is yet to come.

Rose: One of the things that happened that night, Bill, was I guess your dad at the dinner said, “What’s been the most important quality for you,” and you found out that you and Warren had the same word.

Gates: Curiosity, which Warren mentioned, is an amazing thing where you try and predict what’s going to happen, and then when it doesn’t, you think, well, that drug didn’t get invented, that stock didn’t go up, that approach wasn’t popular. What is it about my model of the world that’s wrong? Who could I talk to? What could I read? The things that have happened since 1991, mostly good things, have been amazing and so much fun to talk about. I read the news and I wonder what Warren thought about that.

Rose: You both are readers. You read all the time, all day, Warren. Bill, you’re a reader. You also do a lot of courses online. What has that done for your life, the sense of constantly learning?

Buffett: Go ahead, Bill.

Gates: It’s an incredible time to be a learner. I remember when I was young and I had the World Book, which is one of Warren’s products. It was very good, but I always felt like I want to get into this in more depth. I want to understand it better. Today, the videos that are online and the courses that you can buy with the very best professors ― it’s phenomenal. Take a subject like weather or climate change, or what’s going on in economics, what’s known and what’s not known. These days, with the Foundation, a lot of what I need to learn is about biology, making vaccines and what’s going on with these various diseases. This is a phenomenal time to be a curious person, with all the information that’s out there. My biggest problem is that I stay up too late because I’m reading, and then I’m a bit tired the next day.

Rose: The other thing that you share other than reading is optimism. You believe in America.

Buffett: Absolutely.

Rose: You have said to me more than once, “I would give up a year of my life just to know what the next 50 are going to be like.”

Buffett: Even the next four now!

Rose: Why did you pick four?

Buffett: I don’t know. It’s just a number that came to me.

It is fascinating what’s happened, just in my lifetime, in the 86 years. I should mention one thing about reading. It was at the library here at Columbia where I think I spent more time than any other student. I lived there, practically. I pulled a book out, which happened to be Who’s Who in America, and it told me something about my professor, Benjamin Graham. I went to the librarian and I said I want to learn more about this because I learned this over here. That changed my life. We own Geico now because of that librarian directing me to some other book and then me following through on that.

I read at about one-fifth the pace that Bill does, but I still spend five or six hours a day reading. You can learn so much. I particularly love biographies ― to be able to live the lives of these people that have been so extraordinary, the lessons and the discouragements they faced ― everything about it. You can’t get enough of reading.

Rose: What surprises you most about Bill?

Buffett: That’s an interesting question. I guess what surprised me initially is we found so many things to connect on. He didn’t try to sell me a computer. That’s probably the only sale he didn’t make, although a computer changed my life for the better in a big way subsequently. He just had the same curiosity.

Rose: The other word you have used is focus.

Buffett: There’s no question about the focus. Both of us got to where we are in a big way because of focus.

Rose: Bill, what surprised you about Warren?

Gates: I was amazed that he comes to investing with this broad model of the world. One of the first questions he asked me was: Microsoft is a small company, and IBM is this huge company, so why can you do better? Why can’t they beat you at the software game that you’re playing? Every day, I was thinking about what advantage we have, but nobody ever asked me that question. We talked about the economics of software, which is a different and special thing, and he could relate it to things that he’d seen. I didn’t understand banking ― why some get ahead and some don’t ― so he was able to put that in very clear terms. I found somebody whose model was rich enough that it helped me understand things that I really wanted to know, and we could laugh about things that were a surprise to us.

His humility and his sense of humor stood out in this incredible way. He enjoys what he does, and he shares that with other people. Even when I ask questions that are pretty naive that he’s probably been asked 50 times, he’s very nice about it. “It took me a long time to figure this out, Bill, but here’s how it works.”

Buffett: I tried Bill out with some non-transitive dice. I’d read about them in Scientific American or some place. There are only two people in the world in the history of these dice that actually figured it out while I was trying to take their money from them. One was the leading symbolic logician in the world, and the other was a drunk who didn’t know any better and asked the wrong question. But Bill said, “Wait a second. You choose first,” and the game was over.

Rose: You brought him into a great appreciation of bridge.

Buffett: Yeah, he can play bridge. His family is big on games. We played bridge together. We played in China, going down the great rivers, when we were supposed to be looking at the scenery. We had a good time playing bridge.

Rose: We’ve got a lot of questions we want to take from the audience. We’ll start up in the balcony so you know we haven’t forgotten you.

Participant: My question is in regard to public health and vaccinations. Given our current president’s publicly-stated stance against the use of vaccinations both in this country and abroad, how would you recommend that we, as students and future leaders in health sciences, best allocate our resources to most effectively resist his alternative-fact political philosophy in regards to domestic and global public health?

Rose: Bill.

Gates: That’s a good place to start. The facts about vaccines are clear, which is both that they’re safe and that the vaccine schedule has been designed to reduce disease. The more parents that adhere to it, the more not only their children will be protected, but you have some kids who are immune deficient, so if the kids around them are not protected, it puts those kids at risk. There are diseases like measles or pertussis that all it takes is a small cluster, and then ― mostly those diseases would be coming in from overseas, but you can get infection. In some European countries, there have been deaths because the kids weren’t vaccinated.

I don’t think the U.S. government is going to come out with any negative statements. There may be a commission. Fortunately, if you look at the facts, the facts are quite unequivocal. We certainly are speaking out in favor of vaccines. I’m a little surprised that we have to stick up for them, but it’s true in every country that you get these rumors, and particularly in today’s media, those rumors can get ahead of the facts because the rumors are more salacious or contrary to what you’ve been told. Here, I’m sure we’ll have a chance, if necessary, to go through the facts again and get a clear positive message from the government.

Rose: If people are scared of having vaccines, what is the risk?

Gates: We’re engaged right now in polio eradication, and the only way that succeeds is to get 95% of the kids to have these vaccines. We ran into a form of anti-vaccine sentiment that’s even worse than U.S. rumors, and that is that two terrorists groups ― one in Nigeria, Boko Haram, and another in Pakistan and Afghanistan, the Taliban ― said that vaccination was a U.S. plot, and would sterilize women. They killed a number of the women who were going out to the children’s houses and giving these oral polio vaccines. The only reason we still have polio today ― that we’re not done ― is because of that part of Nigeria where Boko Haram has caused unrest, and the border areas, including Balochistan in Pakistan, where there have been these anti-vaccine sentiments. Our risk is simply those negative things. It’s not just in rich countries that we run into this. It absolutely causes deaths if parents don’t know that they should bring their kids in and get them fully vaccinated.

Rose: Your drive to eradicate polio is to show that you can do it.

Gates: It started in 1988, when it already had been eradicated in the Americas ― the U.S. in the ’60s, the rest of the Americas in the ’70s. It showed that it could be done. In 1988, well before our foundation was involved, Rotary and a number of other organizations said, “Let’s get rid of this.” It’s been harder than was expected because of these sentiments. Here we are in 2017, and last year there were less than 50 cases, so we are very close. In fact, there are so few cases now, the way that we track the virus is by looking at sewage samples, because a lot of kids get infected and pass it along without getting paralyzed, so it’s only through these sewage samples that we know there are still about four places in Pakistan and Afghanistan and one place in Nigeria where we haven’t gotten yet.

Participant: My question, sorry, is also a bit on the political spectrum. I was wondering what you’re both most hopeful about in this new political environment we have, and also what you’re both most worried about.

Rose: You want to take hope or worried, Warren?

Buffett: I’m confident that America will move ahead. From the time I was born until now, the real GDP per capita of this country has gone up six for one. Nobody ever dreamt that would be possible. When you look at what’s happened in this country over 240 years, it’s an absolute miracle. When I went to Columbia Business School in September 1950, there was one woman in the class. This country moves forward, and you can’t stop it. I’m enormously optimistic. I’d say the luckiest person born in the history of the world is the baby being born today in this country. Half the country is always going to be somewhat unhappy ― close to half, looking at the last election.

I grew up in a household in the late 1930s. My dad was very Republican. My sisters and I didn’t get dessert unless we said something bad about Roosevelt ― it was required! I heard all these apocalyptic views about how after his third term, there’d be no more elections. I’ve been hearing that all my life, year after year after year. With occasional hiccups and an occasional seizure like we had in 2008 and 2009, this country is all profit, folks. Just think of what it would have been like in the ’70s, ’76. There was nothing here.

Rose: And the velocity of change goes everywhere.

Buffett: It just keeps moving. Guys like Bill, they don’t quit. He moves on to something like polio. He mentions 50 cases in the world. There were more than 50 in the ward where I went when I was a teenager to see a friend of my sister’s. There were all these rocking machines and everything. They were destined for a terrible life, and that was just one ward in Omaha. Now, that’s the yearly total thanks initially as well as currently to Rotary, but people kept working on it. This world moves forward. I bought my first stock when I was 11 in April of 1942. The Dow was 100. If you haven’t looked, it’s 20,000. Something good must have happened in between, and it’s going to keep happening.

Rose: Bill, I know you share the optimism. What about concerns?

Gates: The optimism is partly that I think American innovation is strong. Support for research is by and large bipartisan. Whether it’s health breakthroughs or even energy breakthroughs, I think every year that goes by, we’re going to have more of those things. This administration is new enough that we don’t yet know how their budget priorities will come out. There are things like foreign aid ― which is a small part of the budget, about $30 billion a year, but that means the U.S. is the biggest ― that every time there’s new leadership, we have to go in and articulate the benefits: that it’s well spent, that it’s not the image people have had in the past. Right now, there’s a lot of intensity to make sure we get that message out, both to the Executive Branch and Congress, to maintain amazing things like the President’s malaria initiative, or PEPFAR, which is an HIV thing.

These things started under President Bush, so our foundation has had a great working relationship with both Democratic and Republican administrations. Most people wouldn’t realize that U.S. foreign aid as a percentage of the economy, which is generally how it’s measured, reached its low point in 1999 under the Clinton administration. I’m not saying it was the administration ― it was a mix of the administration and the Congress. Then, during the Bush years, it went up fairly substantially. The economy helped with that, but these initiatives were amazing. I’m hopeful that maintaining or even growing these initiatives will be a priority when there’s a lot of talk about tax cuts and different spending activities. It is a bit up in the air during these months ahead.

Rose: You’ve often made the point that no matter how big private contributions are, sometimes in terms of sheer scale, you need government involvement.

Gates: Somebody asked me today if PEPFAR, which is this AIDS program, were cancelled, would private philanthropy make up for it. PEPFAR is over $5 billion a year. That is for one aid program, which is phenomenal and has saved over 10 million lives. That’s larger than our foundation, which is the largest in the world. The government sector ― U.S., UK, other European donors ― that’s $130 billion a year in total that’s uplifting these poor countries in health and education. If we lose the consensus around that, if people draw inward too much, we will hurt progress and there will be millions of lives lost because of it.

Buffett: One thing that might be mentioned, Charlie, is the difference between now and 60 or 70 years ago in the ability of bright, innovative, energetic people to get financed to do things. It’s dramatically better these days. Today, if you’ve got good ideas ― and there are good ideas right in this crowd ― and you’ve got energy, it’s far easier to get financed to move those ideas forward than it was 50 or 60 years ago.

Rose: Is that because of the internet or crowdsourcing? What is it?

Buffett: There’s just a lot more capital now, and people are more optimistic about business.

Rose: And better ways to connect the two ― the capital and those with an idea.

Buffett: Absolutely. It’s dramatic.

Gates: And the willingness to take risk. The first venture capital stuff is in the 1960s, and it’s tiny. When we at Microsoft were taking outside investment, at a valuation of $20 million, we took $1 million for 5% of the company.

Buffett: I’ll do it retroactively, folks!

Rose: You had your chance.

Gates: We never spent the money. Our business was profitable enough that we didn’t really need to do that, but we wanted people on our board to give us advice. There’s an episode of Silicon Valley where all these venture capitalists are courting this guy, and that reminded me of what it was like. By that time, which was 1984, there were dozens of venture capitalists, and that’s something that other countries have tried to do. They have succeeded, in small part, but not nearly as well. We have this willingness to take risk ― the idea that if you have a failure, it’s not a mark of shame. You move on to your next startup.

Buffett: You heard his secret, folks. He gets his ideas from Silicon Valley. Be sure to watch that.

Participant: You started this talk about how you were able to make a model, and it won’t accurately predict what happens. On the other side of the coin, I was wondering what happens when you create such a well-developed predictive technology. What are the ramifications and implications of that outcome?

Gates: I don’t think our predictive technology is going to be like an oracle. Warren’s nickname is the oracle of Omaha, but we’re a long way away from predicting things like macroeconomics, because they involve emotional sentiment. The biggest modeling project I’m involved in is a group that models diseases. We look at HIV or tuberculosis and understand what we have to do in terms of diagnosis and drugs to reduce these diseases. Once we finish polio, we’ll go on, and our next big challenge, which will take decades, but I expect will be done in my lifetime, is malaria eradication. These models aren’t nearly at the point where they can take human sentiment into consideration.

In the field of economics, there’s a basic question about what we should have done differently before the financial crisis, and there is no consensus either among the general public or inside the economics profession. They agree that some of the emergency treatment we did was necessary and important, and I wish that was better understood, but in terms of the root causes, it’s disconcerting how little our models explain how that imbalance got so extreme.

Participant: I’m with the engineering school here at Columbia. You were talking about your love of reading. Do you have a particular book that changed your life, and the way you think about things, and also, what is the thing that you admire most about each other ― you, Bill, about Warren and the other way around?

Rose: They already touched on the second question, but go ahead ― you may want to add to it. Books though first, that changed your life.

Buffett: A book that changed my life was by a fellow that taught here at Columbia, Benjamin Graham, called The Intelligent Investor. I read it when I was 19. I had been interested in investment since I was maybe seven or eight, and I’d read every book in the Omaha public library by the time I was 11.

Rose: Why do you think you were interested in investing when you were seven or eight?

Buffett: Because I was too dumb to get interested at four! My dad had a small investment firm. I read all the books that he had there, waiting to go to lunch or whatever it might be, and then I went to the public library and read them all. It was a fascinating subject to me. I knew what everybody thought and all of that at an early age, but what Graham wrote made sense. I just happened to pick that book up in a bookstore in Lincoln, Nebraska.

Rose: In terms of investing per se, is there something about your core competence that made investing the perfect place for you to be?

Buffett: I certainly wasn’t going to be a pro football player! It was a question of zeroing out all the other incompetencies, and I was left with one thing.

Rose: Just an allocation of capital.

Buffett: I was wired in a way that this would be something I would be good at.

Rose: Wired in what way?

Buffett: I can’t tell you precisely, but I’ve got the right temperament for it, which is much more important than IQ. If you’ve got more than 120 points of IQ, sell the rest of it to somebody else ― you don’t need it in investments ― but you do need the right temperament. You do have to be able to think for yourself. Getting back to the earlier question, the first question I ask myself when I look at a business is: is it important and easy, what I can determine about this business. A lot of them don’t make it. Bill is looking for the hard questions that plague society and where intellect and money may make a difference. They may not for a while, but he’s taking on the tough things. My job is to find easy things. I’m looking for one-foot bars to step over rather than eight-foot bars to jump over. That’s not irrational if you’re looking at the investment universe. But reading is key.

On the book thing, I will tell you a wonderful book to read. I can tell you a number of them. Intelligent Investor, obviously, if you’re in the investment field, but Katharine Graham’s autobiography is a marvelous book. It’s by an incredible woman who had an incredible life and then wrote honestly about it.

Rose: She was someone who you knew very well and invested with. She was a bit reluctant and had to be assured —

Buffett: She was afraid of me, actually.

Rose: What makes that book so much —

Buffett: It is such a broad range of human experience honestly told. Nobody in Hollywood could write the scenario that she lived through. To see how that world developed, how she reacted to it ― you can learn so much. My partner, Charlie Munger, loves Ben Franklin. Biography is my favorite. You can learn from other people and their mistakes.

Rose: Part of the reason you love biographies.

Buffett: Yeah.

Participant: I’m a senior here at the college. I’m also a Gates Millennium scholar with my family over here. What both of you do involves a lot of risk, and sometimes you have to face the fear of failure with that risk. How did you overcome that fear, and what steps did you take to do that?

Gates: I was lucky that when I was in high school, the computer was brought in there, and I developed a fascination for it. I became fanatical about it. I didn’t view it as risky. I viewed it as a fun hobby. Even when I went to college ― which I didn’t finish but I spent time up in Cambridge, Massachusetts ― I wasn’t sure that would be my life’s work. As the chip came along and made it mainstream, it became obvious that something dramatic was going to happen. So my passion ― my hobby ― coincided in a nice way with the beginning of the revolution in the area where I could start this company. I never felt it was risky. I didn’t have kids or anything, so if Microsoft had failed, I could go back to school, finish my degree and go get a job somewhere.

I was very risk averse when running the company. I always made sure we had enough money in the bank to pay everybody for at least a year if nobody paid us at all because I was hiring people who had kids and families and they were moving to work there. Here I was at 19, 20 years old telling these people I’d be paying their salary, so I was conservative from a financial point of view. One of the few arguments I had with Steve Ballmer, who came in and played a phenomenal role in the success of the company, was over how many people he could hire, because I was trying to be so conservative. I let him go full speed, and it turns out our financial success meant that we never had a conflict about that. It’s great to be risk taking, particularly when you’re young and trying out different things, in fields that aren’t very popular that you might enjoy, but I never got into a position where I was, in any meaningful sense, taking a big risk.

Rose: The risk for you would have been not to have acted because you felt the train was leaving the station.

Gates: Yeah, and it was so clear that this was going to happen, and this was so much fun. I was a fanatic. I didn’t believe in weekends. I didn’t believe in vacation. My mom had to negotiate whether I’d come once a week for dinner.

Rose: No matter who the guest was.

Gates: That’s right!

Rose: Warren, you have often said you still tap dance to work —

Buffett: Absolutely.

Rose: Because you can paint with your own colors.

Buffett: I’m as excited about tomorrow in terms of what’s going to happen as I was when I started. I was having a lot of fun when I started, but I’m having just as much fun now. When I was here at Columbia, I had this terrible fear ― it was impossible for me to speak in public. I wasn’t able to do it. I read an ad in The New York Times and I went down to Midtown, signed up for a course, gave the guy a check, and then stopped payment on the check. It petrified me ― and after you get through hearing me today, maybe you’ll wish I ‘d stayed afraid of public speaking! When I got out to Omaha, I finally decided I just had to do it, so I gave a guy $100 in cash and once I parted with $100 in cash, I’d jump off the Grand Canyon to get my money’s worth. But it changed my life. I would say this: don’t fear failure. I got turned down by Harvard. It’s one of the best things that ever happened, along with other good things that have happened that didn’t seem good at the time. Don’t worry about it, and don’t let it eat at you or look back. Just keep going because you’re going to have some things and forget them. Go forward.

Participant: I’m a first year at Columbia Business School. Both of you had a moment where you went out on your own. If you were to do it all over again, you’re in our shoes, what industry would that be in? Where would you start your own business today?

Buffett: I’d do the same thing. I’d be a failure at anything else, probably. I had fun when I was in my 20s, my 30s. Now, I’m 86, and I’m having fun. I advise students: as much as possible, look for the job that you would take if you didn’t need a job. Don’t sleepwalk through life. Don’t say it’s all going to be great. I’ll do this and I’ll do that, I’m just marking time until I get to be older. That’s like saving up sex for your old age. It is not a good idea.

Rose: What are you urging them to do?

Buffett: You want to be doing what you love doing, and you can’t necessarily find it on your first job, but don’t give up before you find it.

Rose: Bill, you’ve had the unique experience, both because of your curiosity and because of your involvement in global health, to see the impact of a lot of other areas, whether it’s biomedicine, or whether it’s a range of other things other than computer science. If you were going to drop out of Harvard today, which field would you be most likely attracted to?

Gates: I love the hard sciences, and there are some phenomenal things that people will get a chance to be a part of. I’d still probably pick computer science because the work in artificial intelligence today is at a profound level, and not just in our ability to play games, though that is a profound milestone ― the AlphaGo work that the DeepMind people at Google were able to achieve ― and that kind of technology is in all the leading companies and a lot of the universities. With AI ― creation of agents, the ability to read and understand material ― it is going to be phenomenal. Anything connected with that would be an exciting lifetime career.

In the field of energy, we have the imperative to have energy that’s reliable, cheap and clean, and no system available today can provide that, whether it’s for rich countries or for poor countries, so the innovations there will be profound, and there are many paths that could provide that solution.

Finally, it’s the most thrilling time in biology. We are going to figure out obesity, cancer, even things that are very hard like depression, because the mind is even more complicated than other parts of the body. I see this through the lens of the diseases of the poor, the infectious diseases where we are moving faster than ever in developing new vaccines and new drugs. Some of these are platform technologies like DNA vaccines ― just that one thing will give us lots of solutions, and so working in that space is phenomenal. I say this to my children. They may not want to do hard sciences. The one who has picked wants to counsel patients and be a doctor. It’s that relationship with patients that grabs her more than the science. Everybody has their own taste, but in terms of big impact, those three hard science problems would be at the top for me.

Participant: Thank you for being here, and also, thank you to Mr. Gates ― I’m also a Gates scholar, and without your foundation, I wouldn’t be here. Many industrial-based communities have been severely affected with higher levels of unemployment due to the increasing utilization of automation which ends up displacing workers. What do you believe is a possible solution to unemployment arising from automation?

Rose: That’s a good question because there’s a lot of talk about globalization, and a lot of people step forward and talk about technology and the impact technology is having on jobs, and the demand for new kinds of skills.

Buffett: If we were here in 1800 and conducting this, somebody would point out that eventually, tractors and better fertilizer would come along, and that 80% of people are now employed on the farm, and in a couple of hundred years, it’s going to be 2% or 3%, and what are we going to do with all these people? The answer is we release them. Keynes wrote something about it in Essays on Persuasion that he wrote in 1930, about what a more prosperous society would look like. He postulated that in 100 years ― and we’re now 87 years from when he wrote that ― there would be four to eight times as much output per capita. It’s remarkable. He didn’t quite get how it might get distributed, but the idea that more output per capita, which is what the progress has been on productivity, should be harmful to society, is crazy. The distribution may be a problem, but if one person could push a button and turn out everything that we turned out now, is that good for the world or bad for the world? You’d have to figure out how to distribute it, but you’d free up all kinds of possibilities for everything else. Everything should be devoted initially to getting greater productivity, but for the people who fall by the wayside through no fault of their own, as the goose lays more golden eggs, those people should get a chance to participate in that prosperity, and that’s where government comes in.

Rose: Bill, anything to add to that?

Gates: A problem of excess is a different problem than a problem of shortage. If all the tractors and computers stopped working, then we would have problems of shortage, and we wouldn’t have enough people to make the output. A problem of excess forces us to look at the individuals affected and take those extra resources and make sure they’re directed to them in terms of reeducation and incomes policies. The need for labor in terms of smaller class size, helping handicapped kids, reaching out to the elderly ― the demand for labor is not at zero. If you ever get to that point, you can shorten the work week and you’ll be just fine with that. There’s a lot to be learned about and a lot of thinking we have to do around those individuals who are affected, but the macro picture that it enables is an opportunity.

Participant: I go to Columbia College. What steps do you think need to be taken in order to improve public education, particularly in economically depressed areas of the United States?

Rose: Bill is the one who’s closer to education.

Buffett: Bill’s the educator.

Gates: This is an important issue because the dropout rates, although they’ve gone down a bit, are still high and largely based on income. Even kids who graduate, a lot of them don’t enter college, or if they do enter college, they end up in these remedial courses for their reading or math capabilities. Those people have an extremely high dropout rate from higher education. They can incur debt. They have a negative experience. We have a long way to go in education. There are some strong points of light. Here in New York City, some of the charter schools, with even less resources than schools at large, are doing a phenomenal job of educating kids. There are a lot of countries, particularly in Asia, who spend way less of their GDP on education and are doing a great job educating their kids ― and it’s not just the top 20%. Their bottom 20% is quite phenomenal in the case of China, South Korea and Singapore.

Looking at what we’ve learned in charter schools in terms of building the culture and giving teachers feedback, what does good teaching look like? Do we give teachers a chance to learn from each other about that interactive element that makes the subject seem relevant and important? There are great teachers, but spreading those practices has been tough. Education is a top priority for our foundation for our work in the United States, whereas outside the U.S., we take on health. It’s a top problem because the institutions of education are fairly resistant to change, and people are not easily convinced by various approaches, but we need to keep at it. We’re going to stay and put even more money into trying to help create models.

Participant: First, I want to thank Bill. I’ve witnessed the role of your foundation in eliminating polio in India, and I’m really thankful for that. My question is more on how to set the basic level of debate in any public sense. There are many tradeoffs. How do you explain climate change policy for people who are losing jobs in the coal sector? How do you balance the current short-term economic goals with the long-term peaceful transition to the renewable sources of energy?

Gates: It’s a good question. Certain topics are so complicated, like climate change, that to get a broad understanding is difficult, particularly when people take any of that complexity and try and create uncertainty about it. For example, India is paradigmatic in that they want to electrify for all sorts of good reasons having to do with health and reading at night and quality of life, and the question of whether they should delay electrification for climate issues is going to be difficult. The ideal is to innovate in such a way that they can go full speed ahead on electrification without emitting the CO2 that comes with the natural way to go for them today, which is coal. We have a lot of cost reduction to do because rich countries may be able to buy premium electricity, but when you get to middle-income or lower-income countries, that’s not going to happen. Democracy has us allocate these resources in terms of investing in the future and things like research and investing in the present. When you have a problem like the financial crisis, then you do get a bit more short-term thinking. I’m hopeful ― I think it’s better for the world and for the country ― that we can get back into focussing more on the long term.

Rose: We have some questions from Facebook. Warren, a central tenet of your investing is to invest for the long term. This comes from Brian, who says, “How might Bill and Warren convince investors to think beyond short-term returns to encourage world-changing innovation?”

Buffett: I’ve spent my life trying to convince people of investing for the long term. If I knew how to double my money tomorrow, I’d probably invest for the short term too! It’s much easier to invest for the long term if you’re talking pure investment, because you know with high probability what’s going to happen 10 and 20 years from now in a major way, and I don’t have the faintest idea what’s going to happen tomorrow or next week. If you’re talking about societal, it’s tough because politicians face elections either every two years or six years. The way that congressional districts have been organized, primaries have become more important, so it’s hard to have politicians think of something that’s wonderful for the country in 20 years but will cost them the election two years from now. That’s a basic problem in a democracy. It gets to be more of a problem as we’ve arranged congressional districts so the primary dominates because a limited number of people turn out and they tend to be on the extremes of both parties. It’s not easy.

Rose: When deciding whether you’re going to make an investment in a company or you’re going the buy the company, what are the factors that you’re looking for? What test?

Buffett: I’m looking for durable competitive advantage; I’m looking for something that has a moat around it for a considerable period of time; I’m looking for honest and able management to run it because I don’t know how to run it myself; and I’m looking for a purchase price that’s not excessive, but it’s better to pay too much for something that’s a very good business than it is to buy some bargain company that doesn’t have much of a future. I don’t have an ability to predict with a high probability of success the future of most companies, so I’m looking for the exception. The nice thing is if there are thousands of companies out there, I only have to be right on a couple. It’s exactly the opposite of baseball where you have called strikes, and the pitcher is trying to throw to the worst part of the strike zone for you. If he succeeds in getting into that corner three times and you don’t swing, you’re out. In investing, it’s a no-call strike thing, so I can sit there all day and somebody can throw me one company after another, and finally, I get one in my sweet spot.

Rose: Both of you have chosen both wives and partners well. Charlie Munger added what to you?

Buffett: Charlie Munger changed my views. He refined them in a huge way in terms of looking for the quality companies and looking for the ability to make an investment that would work out well for 5, or 10, or 20 years as opposed to something that might be — I call them cigar-butt investing where there was one puff left in the cigar, but the cigar was free, so you picked up these disgusting-looking things and got one puff out of them and went on to another one. That worked okay, but it was small scale, and it really doesn’t build something satisfying. He kept forcing me in the direction of saying: is this really a business we want to own forever? It’s like a marriage: do you want to get associated with this person forever? It’s a great way to look at things.

Rose: Bill, your wife, Melinda, has added what? Other than four children.

Buffett: Three.

Rose: Three children.

Gates: How much time do I have?

Rose: Because she is your partner, and she was there in the philanthropy from day one.

Gates: Absolutely. At Microsoft, I had two partners who were amazing. I had Paul Allen in the early days, and then Steve Ballmer as the company got bigger. We would not have achieved any of what we did without those partnerships, because when things are tough, when you’re making big decisions, having somebody who’s really in there with you, committed ― for me, I couldn’t have done it without that. For the foundation, Melinda’s an amazing partner. She thinks about the people issues better than I do. She knows when I get overexcited about the science, she can make sure we’re being realistic about it. It makes it fun. Last week, I went to Europe for the World Economic Forum and she went to Nigeria, and then this weekend, we sat and talked about it. What did we see? What does that say about the work we should do? I don’t think I’d enjoy it without a partner, and particularly someone amazing like her.

Buffett: It’s more fun with a partner. Charlie and I have had more fun working together than either one of us would have had individually. We have never had an argument after working together for 58 years.

Rose: You talk every day?

Buffett: Not anymore. We know what the other guy’s going to say. We just grunt. We talked it all out 50 years ago.

Rose: If you see Charlie and he says, “Why haven’t you called me,” you’d say, “I knew what you’d say anyway.”

Buffett: Absolutely, no question about it, but we still have a lot of fun together.

Participant: I’m a student at Barnard College. I’m wondering what your main considerations are when you’re choosing where to donate and what causes to donate to, and what the main challenges are that are associated with that.

Buffett: I wholesale it. Originally, my first wife and I planned that I would pile it up and she would unpile it. That was plan number one, but she died in 2004, and then I had the problem of figuring out the best way to distribute what would turn out to be a lot of money. I wanted people who had similar values and similar objectives to what I have, but I also wanted people who would pour in intelligence and energy, and in the case of Bill and Melinda, a lot of their own funds, who would work at it full time, but who saw society as I saw it, which is that every life is of equal value. If you start with that and then you figure what you might be good at changing, whether it’s in medicine or in education or early learning or whatever it may be, that was my answer ― the wholesale. Retail philanthropy would drive me crazy, but wholesale philanthropy, I really like.

Rose: Bill?

Gates: For our work at the foundation, our question was how do we bring the kind of innovation which both Melinda and I saw at Microsoft, to help the world’s poorest. We learned that when it comes to coming up with new vaccines, although you can pay a lot to have them created, the marginal cost comes down to less than a dollar. Getting a new vaccine for the main cause of diarrhea or pneumonia, that can be a phenomenal thing. You’re looking for these non-linear dramatic things, because per poor person, compared to government funding, philanthropy is quite small, and yet, with funding vaccine projects, the government isn’t as good as a philanthropist who assembles a team and over time they learn how to do that well. We had models. Rockefeller Foundation was a phenomenal foundation. The green revolution is one of many things they did which raised agricultural productivity and prevented hundreds of millions from starving. Studying the other foundations that have made these big breakthroughs and creating a model out of those, was informative to what we’ve gone after.

Rose: What’s the most important lesson you’ve learned along the way from the foundation about making investments?

Gates: When we started out, I thought that coming up with a new vaccine or drug alone would be enough and that the world would then take that and get it out to all the children of the world. Partly through field visits Melinda and I did, and looking at the statistics, we learnt that that delivery system doesn’t get out to a lot of the kids. Having to figure out how people are hired, or how that was funded and measured ― what’s called primary healthcare ― we were drawn into that out of necessity. It didn’t fit the normal process of coming up with this big concoction in the lab. In order to achieve our goals, we needed to think about those delivery pieces.

Sometimes the state of the product had to be simpler in some ways in order to get through that limited delivery capacity. Now, we’re getting to 86% of the world’s children with vaccines. It was about 70% when we got started, so that’s a good increase. We still have 14% to go.

Buffett: Bill and Melinda have amazing convening and persuasive powers as well. They bring something far more to it than just money. They work incredibly hard ― as do my three children and their foundations ― at getting governments involved in vaccines or whatever it may take. It’s an extra dimension that very few people have in the field.

Rose: It’s a hands-on, travel-to experience.

Buffett: When Melinda is in Africa and she’s holding a little baby, she is thinking that this kid needs to be vaccinated, has a decent chance at an education and all that. I feel the same way about the kid, but what I’m thinking is: is he going to pee on me! There’s a difference in that human touch that makes a big difference.

Gates: I’m halfway in between.

Buffett: I think he’s closer to me, actually.

Participant: I’m at the Columbia Business School. If the current government were to ask for your advice on immigration or healthcare reform, what would you recommend to them?

Rose: Warren?

Buffett: Well, on immigration?

Rose: Yes.

Buffett: First of all, immigration ― this country is built on it. I always say to people that are anti-immigration, let’s put it in retroactively. Everybody leaves. You’ll have heard this before from me, but we are sitting here in part because of two Jewish immigrants who in 1939, in August, signed the most important letter perhaps in the history of the United States. You can go to the internet search ― using Bing ― and type in Einstein, Roosevelt, 1939. Leó Szilárd and Albert Einstein, two immigrants, came here directly from Germany (Szilárd came from Hungary before that), and they told President Roosevelt that the Germans were likely to develop an atom bomb which was likely to work, and we better get to work on something fast. The Manhattan Project came out of that. If it hadn’t been for those two immigrants, who knows whether we’d be sitting in this room.

Rose: Immigration?

Buffett: Immigration, I mean ― you knew Andy Grove ― you can look all the way down the line. This country has been blessed by immigrants. You can take them from any country you want, and they come here and they’ve found something that unleashed the potential that the place where they left did not, and we’re the product of it.

Rose: The question also was about healthcare. What can you tell us about healthcare that you think is important in terms of the consideration of what might happen? If you were building a healthcare plan for America, what would be the elements that you would want to include?

Gates: There’s no doubt that in order to provide decent healthcare, the percentage of GDP devoted to it is going to go up over time. It’s already high. Yes, there are some efficiencies to be gained in that 18% or so number, but as society ages, as we come up with new things like joint replacement and organ transplant, which are going to create lots of human benefits, we’re going to have to have more resources overall, including more government resources for healthcare. It’s a tough problem because you have both access problems and cost problems today. Whenever I look at a problem, I have this one simple lens, which is that innovation should help here, but in this case, innovation, while it will provide breakthrough drugs that will save cost — like if you can cure Alzheimer’s, which we certainly haven’t done yet, that will save on huge long-term care cost. We have some chronic diseases that we’ve made less progress on, and the market mechanism to get pharma to go after those things, and the basic research, to get those funds, I am quite optimistic that we’ll have some advances but they’ll also give us some very expensive things that will mean we’re spending more money against it. I do hope that at some point, we’ll be calling on the best minds to look at the incentives for making breakthroughs, and to come up with the most efficient system. There’s a lot of unhappiness in the country now that stems from the fact that the healthcare system isn’t delivering. People are saying we should have less government, others say more government. They’re not being given the depth of education about why it’s so tough that over time will help them vote for the right solution.

Participant: I’m a dental resident at Columbia. What advice do you have for future doctors and dentists of America about having a proper balance of providing that healthcare but also mastering the concepts of business and economics?

Gates: Atul Gawande is an incredible author. He writes wonderful articles about the healthcare system. In the current issue of The New Yorker, he’s talking about how people like himself who do “heroic” surgery are paid twice as much as the people who are, on an ongoing basis, in an incremental way, learning about their patients and seeing what works for them. It’s a calling cry to say: that part of the system needs to be run better, needs more resources. It’s brilliant that he’s saying that, and it corresponds to what is working in some other countries.

Participant: I’m from Columbia College. You both have invested a great deal of money abroad, but there is a prevailing belief held by some that there are pressing issues in America. There are poor people here, there are sick people here, and we should deal with that first before even tackling anything abroad. What are your thoughts on that?

Buffett: I believe that every life is of equal value. In many ways, if you have a limited number of dollars, you can do more for more people outside the United States. We do have greater resources here for our 320 million people than exist around the world for 7-plus billion people. You can improve the lives of more people by intelligently spending $1 billion or any other number in other areas of the world than here. Coming from Omaha and having the money I have, people can say, “Why not spend it all in Omaha? You grew up here, and Omaha’s done all kinds of things for you.” I acknowledge that, but in the end, if I’ve got x dollars to spend, I can make life better for more people if I can have it intelligently allocated in other parts of the world than in the United States. That draws a fair amount of criticism, but I live with it because it’s what I believe.

Rose: All lives have equal value is really the driving force behind this kids’ foundation.

Buffett: Absolutely. I’m an accident. I won the ovarian lottery when I was born in the United States in 1930. It was 40 to 1 against me. I was male. Now it’s 80 to 1 against being a male in the United States in 1930. I was just plain lucky. Bill always said if I had been born a long time ago, I’d have been some animal’s lunch since I can’t run fast and I can’t climb trees. I’d be saying, “I allocate capital! I allocate capital!” It wouldn’t work. I was lucky, but 79 out of the 80 weren’t as lucky as I was at that time.

Rose: Bill.

Gates: In terms of helping people in other countries, the foreign aid budget of the US is 0.8% of the budget. In the years ahead, there will be a discussion about whether that’s worth doing. It saves lives for typically about $1,000 per life saved. In terms of stability and countries eventually being self sufficient and being part of the world economy, there are some huge benefits to that. If we were talking about whether we should spend 20% or 30% overseas, that would be an interesting discussion, but what we’re trying to preserve is something that’s gotten smarter and smarter all the time and has proven benefits, all of which are things that our foundation invests in, such as the polio thing which is 0.8%. I’m hopeful that in a big world, that can remain a priority.

Rose: Let me go to another Facebook question. This is from Nadia who says, “How might Bill and Warren encourage innovation, particularly among teens and young adults?”

Buffett: You should have a market system that provides rewards for it, and we have it. We have an incubator for innovation in the United States. Bill can drop out of school. Andy Grove can come from Hungary. This just welcomes it, and thank God. That’s why we have the kind of prosperity that we have. The question of how it gets divided is a secondary question, and that does not get solved as well by the market system, but our system is designed for it, and look at what is happening.

Participant: I’m a senior in the engineering school. As men of such great influence ― and we touched a little bit about this in the last question ― I’m curious about how you deal with reconciling your convictions with maybe what is believed by the public, maybe even a majority, considering you have the wealth and power and fame to make such great things happen.

Gates: The convictions I have, I love sharing them and talking to people and understanding where people disagree. I can be overly science centric about things. There are all sorts of causes that are super important that at our foundation, because we have limited resources, we don’t get to go and do. There are lots of diseases. There are aspects of education. Part of the strength of philanthropy is its diversity. Just by sharing the fact that it’s fun, that it can have measurable impact, I hope that sets an example for all of philanthropy. I don’t believe that my voice should be that much louder than other people. When it comes to political donations, at least I ― and I think Warren as well ― have chosen not to have that be a huge way that we’re spending our money. That’s a personal choice. The money is being saved not for the megaphone but for the work of the foundation.

Buffett: We get a podium of a certain sort, but with a partner like Charlie Munger, you don’t have to worry about my views being accepted automatically. He’ll point out the shortcomings. The influence of money in politics is bad news for this country. Citizens United was a terrible decision. The idea that somebody can pour millions and millions of dollars into a campaign, and in certain cases it not even be identified, goes counter to the kind of America I believe in.

Rose: The two of you along with Melinda and others created The Giving Pledge. How is that going?

Buffett: It’s going terrific. Bill?

Gates: Yes, philanthropy can be a lonely thing.

Rose: Bill, tell them what it is exactly.

Gates: We love philanthropy of all types, and part of the strength of American philanthropy is that people with very little are incredibly generous. Here though, we said for the people who are super lucky, who have over $1 billion, we want a group who are working together, who are committed to giving the majority of their wealth away, to learn from each other: what’s worked, what hasn’t worked, how you involve your kids, how you hire staff, and they’ll find areas they’re working on together and cooperate. We’re not pulling any money, We thought we’d get 25 people together, and in fact, now, we’re at 156. It is a wonderful yearly event. I’ve met some great people, and the quantity and quality has improved because we’re getting together. We’ll never be able to measure that in a direct way. We’re making special efforts in China and India because there’s a lot of wealth there that wasn’t there before. By having a strong philanthropic sector there, that will help those countries, and therefore help the world.

Buffett: (Bill and I are actually having dinner with the group tonight.) Let’s go back 100, 150 years. People got wealthy by making some money from the first oil refinery or steel mill and building another one. Henry Ford would build a plant and build cars. It would be from retained earnings, which are eventually turned into cash. Now you can get rich very young just by having an idea, and you can get that idea monetized and capitalized in a way you cannot believe. We are particularly interested in getting younger people interested in philanthropy because there are people in their 20s and 30s who have huge fortunes, and think about the potential for that group. This thing has worked out way, way better, including getting younger people to join us.

Participant: I’m also a dental student at Columbia. I’m curious about your insight into relationships. Given a desire to honor myself and respect other individuals, I have found it difficult throughout life to discern which relationships to foster and invest in and accept challenges from, and which to forego and abandon because they’re more harmful than helpful. Are there any major life lessons that you two have learned through your personal experiences?

Buffett: It’s an important question. You will move in the direction of the people that you associate with, so it’s important to associate with people that are better than yourself. The most important decision many of you will make ― not all of you ― will be the spouse you choose. You want to associate with people who are the kind of person you’d like to be. You’ll move in that direction, and the most important person by far in that respect is your spouse. I can’t overemphasize how important that is. You’re right: the friends you have, they will form you as you go through life. Make some good friends, keep them for the rest of your life, but have them be people that you admire as well as like.

Rose: Bill, you’d add to that?

Gates: Some friends do bring out the best in you, so it’s good to invest in those friendships. Some friends challenge you about things you’re doing, and that level of intimacy is great. I was so obsessed with work in my 20s and 30s, I didn’t invest as much as I should have. Through Melinda and seeing other people, I’ve realized it’s really worth the investment to have those people. You’re always there to help them and vice versa.

Rose: We started with friendship and we end with a question of friendship. I want to thank all of you in this audience at Columbia University for coming here, the Facebook audience, the faculty and students from all of the disciplines at Columbia that have participated. Most of all, thank you to Warren Buffett and Bill Gates.