For years, the financial writer Alice Schroeder had urged Warren Buffet to write his autobiography. Buffet continually demurred, and then countered with a question: why don’t you write a biography. He offered her full access to himself and to his papers, and encouraged his family and associates to cooperate, without, importantly, exerting any sort of control over what Schroeder would write. The result, The Snowball: Warren Buffet and the Business of Life, turns out to be the best sort of authorized biography–honest, insightful, reasonably critical, admiring but not beguiled. Buffet turns out to be an astonishing individual, particularly in the first half of his career, when his restless urge to make money and to learn about making money taught him habits that created the foundation for his astonishing fortune. We’re grateful that Alice Schroeder agreed to take some questions
Is Warren Buffett a genius? Could another similar focused individual achieve the same spectacular results? Does he have a unique gift?
There’s intellect and focus. But Warren also has a charm and skill at promoting himself that brought opportunities his way. Because he is almost phobically risk-averse he protected himself financially throughout his career. And he is almost scarily detached emotionally when it comes to business decisions. Maybe it’s not impossible to replicate his complicated personality, but nobody’s done it. Luck also played a role. He began his career at perhaps the most opportune time for investing in the past century.
What separates Buffet from other great investors? Why has he lasted longer and outperformed so many others?
Many great investors eventually get suckered by their own success into believing that they are infallible — or they start snoozing and take their eye off the ball. Warren has done neither. He sticks to his core principles. He never kids himself that he’s so smart he can stop thinking and learning. His habit is to question himself about every decision because he’s so cautious about ever making a mistake. And he’s energetic — still excited like a little kid when he finds a new investment idea.
Is Buffett a tough guy? Contrast with his periods of passivity. Is it fair to say that he gives greater leeway to people who have achieved a higher profile and more success?
Warren can be tough as tree bark. It’s not easy to win his trust; he’s quite skeptical of people’s motives. Yet he hands over the reins and relaxes into passivity with people whom he has learned to trust. And on occasion he has shown an almost astonishingly one-dimensional way of looking at people who can enhance his bank account or reputation. Their role defines them – whether linked to fame, financial success, or as members of the media – so that other qualities (or drawbacks) are simply swept away. I see this Warren Buffett — tough, passive, and starstruck in turn — as the pugnacious little kid who is always looking for an even more powerful protective figure, the one he never had while growing up.
You describe a man who was emotionally distant from his wife and children for many years but who seems to have changed. What happened?
When Susie Buffett moved to San Francisco in 1977 she got Warren’s attention. He had always depended on her – despite taking her for granted – and afterwards they remained married, which seems to have suited both of them. He spent the next 27 years trying to make amends and woo her back emotionally. Meanwhile, as she did throughout their marriage, Susie continued to mediate emotionally between Warren and most everyone else in the family. Essentially, he outsourced the emotions to his wife. When she died in 2004, he started to connect more with his children – out of necessity. They are all happier for it
Did Buffett’s gift for making money enable him to escape the consequences of a lot of dysfunctional behavior?
You could argue that if Warren Buffett had been a pipefitter or welder, his family would never have put up with his remoteness. Now, there are plenty of dysfunctional people who have no gift for making money, in fact no real gifts whatsoever, and who still escape the consequences of their behavior. After all, the one talent that dysfunctional people share is finding codependents. Still, it’s much nicer to live with a rich dysfunctional person who can take you to dinner at the White House and who enables you to drop the names of movie stars to your friends.
Buffet predicted with uncanny and painful accuracy the financial catastrophe we have suffered. He wasn’t exactly quiet about it, but could he have done more to alert people? Most importantly, what does he think we need to do now?
He did more than just write about it in his shareholder letters. He talked behind the scenes to everybody who mattered. So, ehh, what more could he have done? Maybe ridden a horse through Washington, D.C. in the dead of night shouting, “The subprime losses are coming! The subprime losses are coming!” It’s not as if anybody wanted to listen.
He thinks the government is doing the right thing now, which is to intervene on a massive scale to restore confidence in the banking system. If the house is on fire, don’t argue about whether it’s better to use a garden hose, a bucket brigade, or call the fire department. Just call the fire department. If he were running things, obviously some of the specific steps would have been handled differently, but the main point was to act. The risk is of not going far enough, rather than of going too far. And there are going to be unpleasant consequences no matter what you do.