Warren Buffett: The Biggest Sin in Journalism
January 26, 2015
It turned out to be a rare 40 degrees in January in Omaha, Nebraska. The locals told me the tourism bureau must be playing games again. But since I was here to interview Warren Buffett, it was a good day no matter the weather, and after we landed we headed on over to meet him at Berkshire Hathaway headquarters. The ride from the airport gave me time to ponder the Buffett myth, one part wealth and prestige another old fashioned virtues. I was hoping to find out as we got off at the 8th floor of his inner sanctum.
The average chief executive holds court in an office that is about the size of a large house. Buffett’s was more like a rustic cabin, at the end of a narrow corridor filled with memorabilia like Shaq’s sneakers and old campaign buttons of Congressman Howard Buffett (his father). Berkshire wasn’t cramped for space because of an overflowing staff; Buffett runs the place with only 25 people, which sounds perfectly fine until you realize he oversees the equivalent of a small city, with more than 350,000 employees under his supervision. How about taking over the Department of Defense, I asked myself?
Buffett invited us into his office where he sits in the corner behind a big desk that happened to belong to his father, Howard Buffett. Above it, his father’s framed photo hangs on the wall. So we have a “father-thing” going on. Then, I saw an outbox in the corner labeled “too hard.” He’s a joker, too, and a master of understatement. I began to warm up to my subject.
We sat on a couch which happened to be adjacent a painting of Sophia Loren. She is his favorite star of all times, and I struggled to fit this all into a kind of psychological Rorschach test. Then I recalled this is the same office where Buffett created the world’s third or fourth-largest business fortune, yet still drives himself to McDonald’s for breakfast every day before work. Depending on which year you measure, Buffett’s net worth is nearly a $100 billion. That ended any further attempts at psychoanalysis.
The Interview
We wandered off to a conference room where the video crew was busy laying cables and tweaking camera angles for our interview. Before we began, Buffett’s first words were, “take all the time you need. I have all day.” The most successful business tycoon in the world has all day for me. I had to digest that.
My first question was meant to disarm him. “You’re richer than Midas, yet everyone thinks you’re the champ?” He volleyed it back faster and with a Buffett spin, no brag, no ego, no navel gazing: “wait until I’m 100 like comedian George Burns, then everyone will love me.”
He’s a gifted thinker and speaker. I didn’t have to edit one line at the end of the interview, so I asked him about his communication ability. What he told me was astounding. There was a time when Buffett was paralyzed by public speaking of any sort. He knew he would have to get over his insecurity: “I was terrified of speaking in public and avoided taking any classes in college that required it. So I finally took a Dale Carnegie course when I got out of school. I spent one hundred bucks, got this little diploma, and even proposed to my wife during the term of the course. So I got my money’s worth.”
Buffett And The Media
Nobody in business gets better press than Warren Buffett. The problem is he makes it look easy, and I wanted to find out how. What is behind his secret to gaining the confidence of reporters who carry an axe to grind the way Londoners carry an umbrella?
Every company chief worries about an employee doing something wrong and the media flare up that follows. I asked him how he handles bad news when it concerns employees: He didn’t mince words. “I employ 330,000 people, and I guarantee you someone is doing something wrong and you’ve got to do something about it fast. When you find out bad news, correct it and report it immediately if it is reportable to the authorities. When trouble hits, my rule is: get it right, get it fast, get it out, and get it over.”
What does he do when the problem is an explosion of bad news? In that case, he recommends brutal honesty, like the time he had to “fess up” at a Senate Hearing about the way Salomon Brothers (he was the major shareholder), tried to evade security laws:
“Mr. Chairman, I would like to start by apologizing. The nation has a right to expect its rules and laws to be obeyed. And at Salomon, these were broken. I told our employees: lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”
Buffett’s candor relaxed the Senate Committee and instead of chastising, they gave him the reins and let him run the company. He was later able to rebuild the organization and management team before selling it to Citibank. Virtue rewarded, one might say.
When Journalists Lie
For an inveterate truth-teller, Buffett doesn’t tolerate journalistic faux pas, like mistating his intentions. He related a story about the time he abstained from a vote on the Coca-Cola executive compensation plan. He disagreed with the board’s over-generous terms for the CEO, and as the largest shareholder he abstained. Buffett knew that this would carry a message that would be felt more strongly than causing a riot in the boardroom.
But when New York Times reporter Joe Nocera was looking for a hook, he took the route that is so often true of journalists today, opinion was substituted for fact-checking. He called Buffett’s decision ‘cowardly and hypocritical.’ As Nocera never stepped foot inside the boardroom, the charge that Buffett was avoiding a confrontation with management was pure fantasy to anyone who follows corporate governance. When your largest shareholder abstains, and one of Buffett’s caliber, the message is loud and clear and the very fact it was an abstention suggests you need to rethink the plan and do it now.
Buffett got in touch with Nocera to correct the record by carefully explaining the rationale behind his action, and why a “no” vote would not produce any better result, but might be worse for shareholders as it would invite lawsuits whose sole purpose was to enrich the trial bar. The NY Times columnist acted like it was much ado about nothing. The entire matter made its way to the ombudsman at the NY Times, aka Public Editor, who published a column in the New York Times supporting Buffett’s interpretation of the facts:
“…Some mistakes are bigger than others, and this was the case in two related columns by Joe Nocera…who made some serious factual errors.” The Times Ombudsman then asked Nocera if he planned to write anything about the errors,” and Nocera offered: “I don’t see how I would have much to add.”
So the Public Editor turned around and asked Buffett for his comment, who responded: “The (Nocera) column is based on an incorrect fact — one that could easily have been checked, and wasn’t.”
Nocera left the New York Times to flog his material at Bloomberg’s audience. His brutish behavior with Buffett may not be well known to his new employer, but the fact that he never again was able to conduct an interview with Buffett should tell them something.
The Biggest Sin in Journalism
I asked Buffett what this experience taught him. He said, “the biggest sin in journalism is that a reporter has to have a working hypothesis, but when the facts don’t agree, the hypothesis has to be changed. Journalists don’t always do that, and that’s the greatest sin. It can be compounded when a reporter searches for confirmatory facts that support the inaccurate story. Buffett has a name for this, ‘quote shopping.’ He told me that it drives him crazy when reporters reach out to get one comment that they can take out of context to support their story while ignoring the other 59 minutes.
Buffett said the corollary for some journalists is looking for sources that support their point of view and not realize they are being played: “People who have a vested interest are feeding the journalist confirmatory material all along the line.”
I asked Buffett if journalists should learn more about business in order to be less naive about how the world really works. He responded by saying they do need to understand accounting, but the real damage is not misunderstanding business as much as it is underestimating the challenges. When it comes to how the media sees the business world, he offered his anecdote: “Mickey Mantle once told me, ‘it’s amazing how easy this game is once you get up in the press box’.”
The good news for the best reporters, Buffett is always available to them as a source. But it’s a privilege the journalist has to earn: “If a reporter does the right kind of a job, I’m a source, and the reason I am is that I admire their work. The others get no place with me.”
So a bungle in the jungle like Nocera’s above is costly to journalist’s reputation as Buffett grants access very carefully: “It’s very important to — if you want to become a great journalist, to behave like one as you go along, and then all the other pieces will fall into place. There are so many good stories that haven’t been written yet, a few of them which I know.”
After the interview, I reflected on how to capture Warren Buffett into a single sentence. Keep in mind that he’s arrived at his state in life by not being the best but at picking those who are. He would never win a software writing contest against Tim Cook of Apple, for instance. And he certainly won’t win a game of operations ability against Amazon’s Jeff Bezos. Yet Bezos is his business partner and Buffett is Apple’s largest shareholder. His secret is to maintain a simplicity about who he is while never oversimplifying the complex realities of running a major business. As Albert Einstein once said, “make things simpler not simple,” and Buffett would agree.
