The Nineteen-Million-Dollar Lunch That Did Not Quite Work

For nineteen years, Warren Buffett auctioned off lunch with himself for charity, with the proceeds going to the Glide Foundation, a soup kitchen and outreach center in San Francisco. The first auction, in 2000, sold for twenty-five thousand dollars. The 2003 auction sold for two hundred and fifty thousand. The 2008 auction sold for two and a half million. The final auction, held in June 2022, sold for nineteen million sixty thousand one hundred dollars. The winning bidder was a young cryptocurrency entrepreneur named Justin Sun, founder of the Tron blockchain.

What the buyer received, formally, was lunch — typically held at Smith & Wollensky steakhouse in Manhattan, where Buffett would arrive with up to seven guests of the winner's choosing — and a few hours of conversation. Buffett would discuss anything except his own current portfolio positions; the conversation could otherwise range across any subject the buyer wanted to raise. The lunch had no formal duration; it ended when the participants felt it had ended. The winner could bring their phones, take photographs, ask questions about anything from monetary policy to marriage advice. They could not, by the rules of the auction, expect investment advice on specific securities.

The interesting question is what the nineteen million dollars was actually buying.

The Status Mechanism. Lunch with Buffett, as an asset, generated approximately three categories of value to its winner. There was the personal value — the experience itself, the conversation, the photographs, the dinner-party stories for the rest of the winner's life. There was the network value — the opportunity to meet a small set of additional people in Buffett's orbit, to be introduced into a particular professional community by the most credentialing introduction in business. And there was the public-relations value — the global press coverage that accompanied each winning bid, the New York Times article naming the buyer, the brand association by proximity that the buyer's existing enterprises could leverage.

Of the three categories, the public-relations value was, for most of the auctions in the post-2010 period, the largest. Each year's auction generated, by media-equivalent valuation, between four and ten million dollars in earned media coverage for the winner. For an entrepreneur seeking to legitimize a new business or a new identity, a single positive story in the New York Times associated with Warren Buffett's name was a particular kind of credentialing event that could not otherwise be purchased at any price. The auction structure converted philanthropy into reputation; the winner paid the soup kitchen, the soup kitchen got fed, and the winner got a globally distributed story arc that placed them at the same lunch table as the most respected investor in American history.

The Final Twist. Justin Sun's nineteen million dollar bid for the 2022 lunch was, in this framing, an attempt to purchase a particular kind of legitimacy for the cryptocurrency industry at a moment when its public reputation was unusually exposed. The lunch took place. Sun and Buffett met for approximately three hours. Sun gifted Buffett a Tron-branded watch. Buffett kept it. The press coverage was, predictably, enormous. The cryptocurrency industry's public reputation was, predictably, not transformed. Within months, the broader crypto market entered the most severe downturn of its history; several major exchanges collapsed; the legitimacy that Sun had paid nineteen million dollars to associate with did not, in retrospect, transfer cleanly.

This is approximately always the limitation of reputational arbitrage. The mechanism works at the level of individual photographs and individual news stories, but does not, in any robust way, transfer the underlying credibility of one party to another. Buffett's reputation accrued over seven decades of patient capital allocation, mostly visible to a small number of attentive readers of his annual letters. It could be photographed but not transmitted. The lunch was a remarkable charity event. It raised tens of millions of dollars for an underfunded soup kitchen. It also demonstrated, repeatedly and without quite intending to, the curious lesson that respect for an investor's actual record is not, in the end, fungible into respect for the investor's lunch guests. The kitchen was fed. The press was satisfied. The reputation, which had been Buffett's and not Buffett's to give, remained where it had been.