Part 3: SimoleonSense Interviews Warren Buffett's Biographer, Alice Schroeder.
Copyright 2010 Alice Schroeder & Miguel Barbosa
Please do not repost without asking for permission.
Miguel: At what point (and I don't know if this happened or not) do you say there is more to this guy (Warren) than meets the eye? Did you just write the (BRK Initiating Coverage) report and never expecting things to progress (into a book deal)?
Alice: You can tell he's not ordinary by reading anything he's ever written. I knew right away he was a legend. It was also apparent at our first meeting how different he was. I took a list of 60-some-odd questions that should have filled several hours of conversation. We sat on his Gulfstream flying to Omaha and he sliced through those questions in about 45 minutes in between mouthfuls of potato chips. I had to improvise, which was terrifying at the time. It was my first encounter with what conversing with him was like.
But, to go back to exactly how I met him: Shortly after I started working on the report, clients who wanted to meet Buffett asked me to get a meeting with him. The ostensible reason was that they were going to be voting on the General Re merger and their fiduciary obligations as fund managers required them to meet with the management of any company whose stock they owned. Truthfully, I'm not sure how eager they would have been to fly to Omaha to meet anyone but Warren Buffett.
So I wrote him a letter saying that shareholders representing 13% of General Re's stock wanted to meet with him and we were all willing to fly to Omaha if he would give us an hour of his time.
I thought it was a long-shot. But Warren called me within a couple of days on the phone. That was my first encounter, and, as are many people who don't know him at first, I was shocked that he answered his own phone and dialed his own outbound calls. I thought it was a prank until after the first sentence or two when I was sure from the voice that it was him. Then my knees were shaking.
He said, "Come on out." So we went. In the end, he gave us about two hours. The conversation would seem surreal to a lot of people because we literally spent almost two hours talking about insurance. It really is the insurance gene thing. And, I was with exceptional investors like Jody Jonsson from Capital Group and Chris Davis. Warren enjoyed it because he loves to talk about insurance.
Three weeks later, I was in my office, never expecting to hear from Warren or talk to him again. My phone rang. It was him. Hearing his voice, with no secretary placing the call, was again shocking. He got straight to the point.
He said (and I'm paraphrasing), "I never have had any contact with the Street, but Berkshire is now very complicated. Someone needs to teach investors how it works. This means I have to choose between the lesser of 2 evils. Either I give one person an advantage over their peers. Or, I have to be bothered all the time by analysts. I don't want a gaggle of analysts calling me all the time, so I am choosing to give one person an advantage. Would you do me a favor and be that person?"
With hindsight, this elegant way of reasoning and drawing me in was so classically Warren. It made a strong impression on me at the time. When you ask how I knew he was different, it was from episodes like this. And, perhaps as he wanted, I felt that he chose me. I had shown the initiative to cover the stock and had brought people to Omaha, and he really likes it when people come to Omaha. It matters to him more than people realize. So I said, "Of course, I would be thrilled to," and that was the beginning.
By the way, there has sometimes been a misunderstanding that he asked me to cover the stock. There is no way he has ever asked anyone to cover the stock. It's unthinkable. He rarely asks anyone outright for anything. He wanted to talk to me because I was already going to do it.
So, after that, I would fly to Omaha and interview him once or twice a year, and talk with him by phone periodically. My first interview was that conversation on a NetJets plane in 1998, flying to Omaha with him and Susie.
Susie sat in the back of the plane and read magazines the whole time. She was obviously irritated at him. This side of Susie came out very, very rarely, but if she saw Warren showing off in front of a woman, that could trigger it. And Susie dealt with it fabulously, very gracefully, letting him know in multiple nonverbal ways that he was irritating her. Susie was an unusual person whose emotional intelligence was off the charts.
Miguel: What was it like being the world expert on Berkshire Hathaway?
Alice: I thought that it would be interesting to our retail brokers and to a limited number of institutional investors. I knew that a lot of people on Wall Street were indifferent to Warren Buffett and some even disliked him for one reason or another.
What I didn't expect was that the new role would become huge, but it did, because, until that time, Warren had been so inaccessible. The New York Times ran a front page business section story "The Oracle of Omaha Taps a Medium on Wall Street." For a while I had 3 people answering the phones. I can't tell you how many phone calls just never got returned; it was like a wildfire. Thankfully, it calmed down after a few weeks.
Berkshire was a very interesting stock to follow, especially as you began to really understand it and its most important elements. Shortly after I began my new role, Warren made a series of acquisitions in the late 1990's and early 2000's. There was, as there still is, a fascination with the minutiae of these companies. But it seemed to me that the most important part of what he did resembled a factory-like process. What interested me was the factory.
Miguel: When does the Snowball come into the picture?
Alice: In 2003 I had been following Berkshire for 5 years. I had been an analyst for 10 years, and the job was getting a lot less fun during the Spitzer era. I was thinking about starting a boutique research firm. I was talking within Morgan Stanley about moving into management. I was also contemplating doing something completely different.
There were two threads that merged. One was that an author contacted me with an idea for a book about Buffett. I didn't love this author's particular idea, but it got me thinking more about the subject of what books should be written about him. There were so many books trying to describe how Buffett invests, but there was nothing, really, that combined his management and business philosophy with a fairly comprehensive account of his own biographical information. There was no "biography of ideas." I wasn't really thinking about writing a book; I called him and told him about this book suggestion and said I thought he should write it.
Warren replied that he liked the idea but that he would never write a book, and asked me who else I thought could do it. I said Carol Loomis, and he said Carol is not going to do it. He asked me again, "Who else do you think could do it?"
Then comes the second thread, but only retrospect did it make sense. Warren, ever since 9/11, had periodically mentioned that he liked the way I wrote and thought I should quit my job and write a book. I realize now that this started right after the death of Katherine Graham. Warren viewed Personal History as a seminal episode because it defined her in the public's mind. When Kay died it brought him to the conclusion that the subject has to get on with it if such a book is to be written. But I found this out from conversations with him later. He never mentioned Personal History to me at the time. So I would say, "But Warren, what should I write about?" at which point he would say, "oh, you'll think of something." I assumed he meant something about insurance or Wall Street. Unsurprisingly, nothing compelling came to mind, so I wasn't going to quit my job to write a book.
Now, when he put me on the spot in this conversation, it was clear that, absent him or Carol, nobody would write this book that I had conceived of but me, and that's what he was saying. Once I understood the offer, I knew The Snowball was worth doing. The magnitude of writing a book like that was overwhelming, though. It still didn't occur to me to shelve my other plans right then and there to write a book like this. I said something to Warren about how maybe I could do it in 10 years or so when I retired.
I wasn't worried about the timing because, just as with my report on Berkshire, it never occurred to me that I would have any direct help from him. That may sound odd, because a lot of people would have seen the advantage of getting his cooperation and would've asked for it.
But one of the criteria of getting along with Warren, of him seeking out a relationship with you, is that you don't have expectations. People who ask him for things, even small things, do not get to stick around long. Over and over, I've seen that only a person who genuinely has no expectations gets offered things by him. At the time I had no inkling of this, so I wasn't expecting it when Warren instantly said, "Well, I'll cooperate with you if you write the book. I'll do interviews with you; I'll give you my files, etc."
That changed everything. It meant I would have to start right away. (At the time he was 73.)
It was an incredible offer, but even so I had to think about it. It was a big risk. I had never done anything like this before, and I could fail. I was giving up my career. Financially, though this still surprises some people to hear, I would be giving up a job on Wall Street that was far more lucrative and financially stable than even the best of book contracts. But, most frighteningly, it was a huge responsibility, and it was an irrevocable one. I was being entrusted to produce the book that would define Buffett and would always bear the responsibility for interpreting the knowledge I was given.
Yet I was really excited about to spend all this time learning from him. (I later realized that the kind of attention I received was something even some of his close business partners, family, and friends were rarely given.) I felt that the world needed this book, and it could be a great gift to do this for people. I like challenges. I would learn new skills: writing narrative, interviewing, and structuring the story. No one else ever had or ever would have this opportunity. How could you turn it down? So I called him back two days later and said, let's go. In June, 2003, I flew out there and we started.
Miguel: So you decide to write the book, what's next? Did you quit your job? How did you juggle multiple responsibilities?
Alice: Originally I thought I could do this on a part-time basis and at least stay with Morgan Stanley and write occasionally as a strategist if I gave up my stock responsibilities. That was naive. I ended up becoming what's called an Advisory Director, which is somewhat like going limited at Goldman.
I had some minor responsibilities at Morgan Stanley while writing the book, but spent close to full time writing.
Miguel: At that point, what was the message of the book? How were you going to tell Warren's story?
Alice: Initially, it was still this notion of the biography of ideas. Warren kept referencing Iacocca's biography and Kay Graham's. He loved Iacocca's book and, in fact, started shoveling biographical material at me immediately. There were a lot of stories he had been saving for "the" book. Some of the material was very personal and revealing, including the mental illness in his family and his shoplifting as a child. Sources who had never spoken to anyone came forward because this was "the" book. Warren said he wanted to reconcile his public and private selves. It was the right thing to do, revealing the source (and wellspring) that forged Buffett.
He was very clear from the very beginning that he did not want any editorial involvement. That it was my book. He did not want to have any control and he wanted me to write whatever was best in my judgment. He explicitly said, as I wrote in the first few pages of The Snowball, "Use the less flattering version'' if his version differed from anyone else's.
Warren wanted a successful book that would be credible enough to sell well. In a sense, he also didn't trust himself to write it. I have an interesting interview recorded of him insisting that I will do a better job of the book than he would.
He also knew if he got involved, a publisher might market the book as if he were the co-author or as if it were ghost-written, and he wanted the boundary very clear that it was not his book.
Miguel: As you are writing the book, does anyone stop you along the way? Was there any fear involved in the process?
Alice: There was constant fear from the first moment to the last. All different kinds of fear.
Writing is all about fear.
Miguel: What do you mean by that?
Alice: Every word that you put on paper is an expression of your window on the world, of your abilities. It's going to be judged and often judged harshly. In this case, it was a book that would be potentially historic. I was worried from the first day to the last as to whether I could live up to the responsibility I had been given. I was afraid of all kinds of other things. I was afraid of failure. I had to learn to write narrative and I was afraid of failing at that. I had to learn to interview like a journalist, which is a very difficult skill.
There is another set of fears that go along with writing. You as an author have to confront yourself on the page. This doesn't happen when you're writing technical material, but when you venture away from that to draw judgments about people, all kinds of existential and psychological considerations emerge.
The dynamic between the author and the subject is fraught with complication in every writing relationship. When the person on the other side of the table is Warren Buffett, there's another kind of fear. I learned and observed very early in the project things that had happened to journalists who reported on him in a manner that bothered him. It's an understatement to say that Warren is sensitive to criticism.
When we started, I had no idea what he was really like, whereas he knows himself and his life story. A couple of people called me as soon as the book was announced and said things along the lines of "I know him really well and I didn't think it could be done," and "I couldn't do it, but maybe you can pull it off."
Once I was far enough into the project to understood what they meant, it was too late to back out. I wasn't particularly happy about being in this position. The path of least resistance would have been to write a Valentine book, but I just couldn't do it. Instead I convinced myself that he would be supportive of a truthful book. I told him, and my agent told him, any number of times, that there were parts of the book he wasn't going to like, and he seemed fine with that and kept cooperating. It's pretty clear that, to get the book done, we were both engaged in some magical thinking.
Miguel: I had no idea how many things you went through both career-wise and then in writing this book. I don't think most people appreciate how different you are from a traditional Wall Streeter (or even author).
Alice: I've had some unusual experiences in my life that helped my judgment here. One example is from my career, during the E&Y merger. I was one of the two people responsible for "independence" — that is, rules that prevent auditors from having conflicts of interest with clients, such as investing in client stocks and having relatives employed by clients.
The Ernst rules went beyond the minimum AICPA requirements, and we chose to continue that. I was involved in making decisions and giving people the news that they had to make awful choices. Their options were to quit their job or to sell a major investment in an illiquid limited partnership at a big loss, for example. Or to quit their job as a partner in Atlanta unless their sister, the CFO of some publicly-held client in Seattle, was willing to resign.
These experiences taught me vivid lessons. Conflicts-of-interest-in-appearance and and conflicts-of-interest-in-fact are two very different things. Inherently, conflicts-of-interest policies can only address appearances. And virtually 100% of the time, well-intended, ethical people are blind to conflicts when they're faced with giving up some personal thing that they highly value.
This happens to be one of Charlie Munger's oldest points, though the implications I draw are slightly different than his.
Rules are necessary because people are inherently human, not inherently evil. We can easily be way too black-and-white in our judgments of people who commit things that are labeled improprieties in hindsight. Nobody is all good or all bad. Well, almost nobody is all bad. My experiences made me firmer about applying principles, while at the same time, softer toward the people involved. For example, a relationship with Warren Buffett is extremely valuable. I don't judge people for protecting it, I just feel freer for having been disentangled.
Backtracking a bit, another advantage of starting as an auditor before Wall Street was that I had to spend a lot of time thinking, "Is this a good business or not? Is this company going to succeed or not? Is this a good industry or not?"
I audited some truly awful companies. I couldn't understand why anyone would want to be in these businesses. So, it came very naturally when I encountered Warren's focus on the qualities of a good business.
Miguel: It's funny and I hope one day you can meet my boss. But you can tell him anything in the world (about an investment) but he always circles back to two questions
- Is it a good company, and
- Is it cheap?
Alice: Sure.
Miguel: I think that I am a little bit like you in that I love thinking about things. But I also find it very easy to get lost in details while forgetting to ask, "Is this something I even want to own in the first place?"
Alice: One trap is not probing deep enough to really answer whether a particular investment opportunity is a good business. It's easy to make a facile judgment about that based on a summary description of a business. The sheer breadth of different business and investment opportunities in a modern capital market creates an overflow of information that leads many investors to have short attention spans in thinking about companies comparatively. Curiosity is an inherent kind of arbitrage that no amount of computer technology can overcome. Warren makes it sound so simple to know what is and is not a truly good business – and great business do resonate very clearly when you understand why they are great and especially when they've been identified as successful investments by an investor like Warren Buffett and proven so with hindsight – but like many things in investing, Buffett makes it sound easier than it is. When it comes to appreciating something that is special about a business that others do not, I've learned that the devil really is in the details.
Tune-in Tomorrow for Part 4: Will The Real Warren Buffett Please Stand up
没有评论:
发表评论