A day in a room with $73 billion
Last week at the Detroit Homecoming Conference, I saw an unprecedented enthusiasm and interest in Detroit that have not been felt in more than a decade or even the years before that. That Warren Buffett, the man who has emerged as the noble and compassionate bridge both at the national and global level with his co-creation of the “Giving Pledge” urging the world’s billionaires to dedicate majority of their wealth to philanthropy, would now consider Detroit as a place ripe for good investment is indeed a global yes vote on the city.
It is a global vote of confidence on Detroit’s ability to steer aright not only the bankruptcy ship but also to redefine this moment of historic significance, and lay claim to its own identity, telling the stories that the world must now hear. The city’s obituary has been written too many times in national reviews. But if last week’s conference was any indication or lesson for us, it is a reminder of a new narrative that says America’s most misunderstood and misjudged city is now on the road to social and economic transformation. And it is doing so because the city has ambassadors who are championing Detroit in ways that would once be considered unconventional and out of the box. These plenipotentiaries are re-writing the script on the Motor City.
One of those key ambassadors is Dan Gilbert, the founder and chairman of Quicken Loans, whose infectious sense of optimism and love for the city where he was born and where his family started their own small business, is bringing global attention to Detroit. To his credit, Gilbert is making a quintessential economic giant like Buffett with massive global calendar to pay attention to Detroit. Buffett devoted almost an hour sitting down with Gilbert in front of an audience of leading investors and former Detroiters looking to reconnect and rebuild the city’s economy. They discerningly discussed the future, with Detroit illuminated at every turn of their conversation. Buffett signaled he would buy in Detroit.
But I wasn’t surprised hearing what Buffett was telling Gilbert before an audience glued to every word dripping from the lips of the man widely celebrated as the greatest compassionate billionaire who has creatively changed the narrative of the super rich as insensitive and insouciant to the stark realities and needs of the masses.
Because I saw first hand, the camaraderie between Buffett and Gilbert in a private room at the conference that showed the respect and trust they have for each other. When I arrived at the conference, I was quickly ushered into the room to wait for Gilbert, having been invited to moderate a session with him on Detroit. Few minutes later, Gilbert arrived and we sat down to discuss anchor points of the conversation the two of us will be having on stage, and where I’d like to take the half hour dialogue. We both were looking forward to the conversation as this would mark the second time we shared the stage.
Within 15 to 20 minutes of our chat, we got word that Buffett was on his way. Then, the “Oracle of Omaha” entered the room and it clearly dawned on me that I was in the room with living, breathing $73 billion. Forbes estimates Buffett to be worth $68.9 billion and Gilbert $4.2 billion. As soon as Buffett entered the room, Gilbert and I wrapped up our dialogue and I watched with interest how the two were interacting.
Gilbert was getting ready to interview Buffett in front of would-be investors. As he started to tell the man who made headlines when he revealed he was paying less taxes than his own secretary, the rudiments of their upcoming conversation, Buffett responded quickly, “I’m here for you. Whatever you need. I’m fine.” The super giant of global stock investment further went on to reassure Gilbert he was there because of his friendship with him. It was like watching a reunion of high school buddies.
Then, Gilbert briefly left. Buffett and I spoke about an array of subjects, including media, Detroit and other issues. Gilbert returned just in time for the conversation between the two to start. I was then asked to introduce the two economic titans on stage to begin a conversation focused on the nation and how Detroit matters.
To me, the conversation was essential for the city’s morale — to have Buffett speak directly to the kind of economic structures that would make Detroit an innovation-driven destination city. It was refreshing to listen to the depth of experience, knowledge and perspective from the “Oracle of Omaha” who still lives in his house of more than five decades. It was important to see the city receive global financial validation from a man whose financial wisdom is sought by presidents, kings and queens around the world.
Detroit had long been painfully and wrongly branded as a no-go city for major investments until Gilbert arrived with his “Opportunity Detroit” investments, and greatly bolstering the efforts of other existing business leaders and groups who had refused to give up on the city.
With the infusion of direct investment into a place like Detroit that shares border with Canada, comes the delicate balancing act of reaping the investment and rejecting the pull to the confines of the balance sheet.
The latest October issue of the Harvard Business Review warned in an article titled, “The Rise and (Likely Fall) of the Talent Economy,” that the super rich cannot ignore the majority in an economic dispensation.
“In a democratic capitalistic country, it is not sustainable to leave the members of the largest voting bloc out of the economic equation,” the article noted, citing 1935 when the U.S. “was still in the throes of the Great Depression” and incomes were falling.
Good investment is not only about balance sheets, and Gilbert alluded to this in my conversation with him at the conference, indicating why he is involved in the fight to address blight, crime and other social issues affecting the city. In other words, he is out to give corporate social responsibility a different and dynamic meaning.
“If you make every decision on running a business on ROI (Return On Investment), it’s not the best way to look at your business. At the end of the day, your ROI would be lower. It’s kind of a crazy way of thinking, but if you strictly focused on your kind of structured mentality of what my return on investment would be at this very moment in time when there are all these other factors that I don’t know about in the future, you may miss a lot,” Gilbert said. “Blight is an example. We became involved in blight because I believe and some of us believe very strongly that…jobs, education, blight and crime…if we don’t take care of blight, I think the discussion around the three has some very low ceilings as to what we can do. We must get rid of the soul-sucking similar to cancerous growth of blight.”
Unless you are living under a rock, Detroit has gone refreshingly global.
This is how Buffett, the chairman of Berkshire Hathaway, described the city whose current financial state is similar to that of New York in the 1970s when the Big Apple was on the verge of collapse.
“The financials got out of hand, and that’s happened with plenty cities before. Cities have an inherent strength of survival. You’ve got great headquarters, companies in Detroit and that is enormously important,” Buffett told Gilbert. “We would buy a company in Detroit today, and we would be happy to have the headquarters here.”
Detroit is getting attention around the world and from players on the global economic stage.
In my conversation this past weekend with Dr. Hippolyte Fofack, senior economist at the World Bank Institute in Washington D.C., he opined that Buffett’s visit has put Detroit on the investment radar.
He, like others, is watching how Detroit comes out of the ashes of bankruptcy and how the city will reposition itself in the wake of the mark of confidence it is receiving from global marquee players like Buffett.
Fofack further told me that Buffett’s show of confidence in Detroit is important because of the man himself. That sometimes a city’s mischaracterized image can be restored by the right messengers.
“Warren Buffett’s remarkable journey with business and investing has been predicated on his exceptional ability to always focus on what is essential,” Fofack said. “In the international development community where actors constantly face competing demands under resource constraints, the ability to single out the project that is important and focus on its implementation will be a critical path to better results and greater impact in the development community.”
The global economic reconstruction expert commended Buffett.
“In a rising world of income inequality that is increasingly viewed from the dichotomy of 1% of ‘have’ against the 99% of ‘have not,’ Warren Buffett has become the most important figure on the global economic landscape who is using his compassionate stance to help confront the crisis the world.”
In their talk Gilbert raised with Buffett the possibility of inviting members of the “Giving Pledge” to meet in Detroit. Though no commitment was made to this new bold idea from Gilbert, such a gathering, if it were to take place in Detroit, would have almost the same effects of the annual World Economic Forum in Davos, drawing the global media.
No matter where you stand on what is rapidly taking place in Detroit, you’d have to agree that Dan Gilbert, a son of this soil whose father and grandfather ran businesses here, is on a global mission to establish what the New York Times called a “post apocalyptic Detroit.” I witnessed the high energy, enthusiasm and expectation on Sept. 18 being in the room with him and his dear friend Buffett.
Bankole Thompson is the editor of the Michigan Chronicle and author of a forthcoming book on Detroit. His most recent book, “Obama and Christian Loyalty,” deals with the politics of the religious right, Black theology and the president’s faith posture across a myriad of issues with an epilogue written by former White House spokesman Robert S. Weiner. He is a senior political analyst at WDET-101.9FM (Detroit Public Radio) and a member of the weekly “Obama Watch” Sunday roundtable on WLIB-1190AM New York. Email bthompson@michronicle.com or visit https://www.bankolethompson.com.
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