1994: What does Buffett like about the shoe industry?

AUDIENCE MEMBER: Thank you for teaching me — teaching so much to all of us about business. My name is Mike Assail (PH) from New York City.

You mentioned earlier that Berkshire’s shoe business was great, but that other shoe businesses were not so good.

What are the uncertainties of the global brand leaders that Berkshire seems to like? They like Coke and Gillette. The global brand leaders in the shoe business being Nike and Reebok.

What are their uncertainties, in terms of long-term competitive advantage, business economics, consumer behavior, and the other risk factors that you mentioned in the annual report this year? Thank you.

WARREN BUFFETT: So, you’re really asking about the future prospects of Nike and Reebok?

Yeah. I don’t know that much about those businesses. We do have one person in this audience, at least, who owns a lot of Reebok.

But I am not expressing a negative view in any way on that. I just — I don’t understand that — I don’t understand their competitive position and the likelihood of permanence of their competitive position over a 10 or 20 year period as well as I think I understand the position of Brown and Dexter.

That doesn’t mean I think that it’s inferior. Doesn’t mean I think that we’ve got better businesses or anything.

I think we’ve got very good businesses. But I — I’m not — I haven’t done the work and I’m not sure if I did the work I would understand them.

I think they are harder to understand, frankly, and to develop a fix on, than our kinds. But, they may be easier for other people who just have a better insight into that kind of business.