“My only measure of success is how many people love me.”
On May 29, 1969, Doris and Roberta, two sisters from an average-sized midwestern town, born to an average midwestern family and enjoying an average if happy midwestern life, received a letter letting them know their brother was about to quit his job. Naturally, their first reaction was to ask, “what’s next?” No one would guess that what came next was the largest wealth creation opportunity in history promulgated by a single individual.
When the family’s coffers would be tallied, the family might be the richest on earth, richer than the Queen or the Walton’s for god’s sake? They had never contemplated the idea, nor did they think much of people who worshipped at the altar of material riches. The sisters were the kind of people who dressed up on holidays to dine at Gorat’s, the local steak house, and stopped by the diner each morning for a mug of steaming black coffee where they shared funny stories about children and friends. “Did you hear what kind of trouble Howard’s boy got into? He better keep a steady eye on the lad.” That’s how the news got around, and the only business they were interested in was everybody else’s business. They were not the kind to waste time on get rich quick schemes, and if you mentioned puts and calls they would say, “I’m not sure that’s legal?”
It was why the idea they were about to become billionaires was not easy to comprehend. But it was true. It would make them richer than a winning lottery ticket or discovering oil in their backyard. The source of this windfall was not a spam email from a Nigerian prince but a letter from their brother Warren informing them they would have to find someone else to manage their money.
Across town in his humble office, Warren Buffett, their 39-year-old brother was at his desk checking the ticker machine. The market was quiet, and he felt satisfied he could take the time to write a formal goodbye that would reveal the plan and the inspiration for his decision. The letter began: “Dear business partners,” although he could have just as easily written, “To my sisters and friends,” since that’s who the investors were.
On several previous occasions, Buffett warned he was ready to close down the fund he ran for their benefit. He had gotten himself into aq box where their money grew so nicely he felt like he was on a treadmill running faster and faster only to stay in place. No one would feel sorry for him. He was a millionaire before turning 40. Still, his decision was not driven by success or money or wanting more. He wanted less.
The problem for Buffett was that he was just too damned busy “chasing rabbits,” the way he referred to keeping up the gains in his portfolio every quarter so that he beat the S&P 500. It was a colossal undertaking and for him a waste when he could do other things that he found more stimulating. It became something of an obsession to find a way that would allow him more freedom, as he wrote, “for considerable non-economic activity,” by which he meant non-Wall Street activity. By which he meant not managing money for people who had placed their life savings in his hands.
“The Only Way To Slow Down Is To Stop”
A plan had formed in his mind and once Buffett had an idea it became an obsession. Those who were surprised by this transformation simply didn’t understand how he operated, very logically but guided by gut feeling. The plan had many elements that would need to take place, and he only had the barest outline of what he wanted to do, but it would give him a life that would make him happy. It all came down to working with people he enjoyed and having time to think. The vision that had stood just beyond his reach had finally come into focus. Its name was Berkshire Hathaway.
Most of the people around town knew Buffett from the time he grew up and were vaguely aware he was in the financial business. But he was better known for ukelele playing and telling corny jokes. He was no money-driven Wall Street tycoon, that was for sure. He even once asked his neighbor, Don Keough, to invest $10,000 in his partnership. Keough checked with his own children who knew Mr. Buffet what kind of a man he was like? The kids said Mr. Buffett was fun and liked to play with them after school let out. Keough thought to himself, “He has time to play with kids during the day? I think I’ll pass on investing.” Later, when Don Keough became president of Coca-Cola, he would tell this story, adding that the ten grand would be worth about six hundred million today.
The Buffett sisters greeted the news that he was about to close down the partnership with some dismay. These people took time to trust someone but when they did it was meant to last forever. They had put their faith in him (and life savings) when he practically flunked out of the University of Pennsylvania before Harvard Business School rejected him. He had done well for them and now they didn’t want to figure out what to do with their money.
“Easy, Safe, Profitable, and Pleasant”
Curiously, he did not reveal a clue about what he planned to do with his life once he was free of his partner responsibilities, as the letter concluded with an ambiguous comment: “I am likely to limit myself to things which are reasonably easy, safe, profitable, and pleasant.” While they supported his decision and did not question the motive, as they read and reread the letter, all were wondering what was going to be easy, safe, profitable, and pleasant?
It sounded like stamp collecting.
Collecting stamps was exactly what Warren Buffett had in mind. Only the stamps he had begun collecting looked suspiciously like stock certificates of a company called Berkshire Hathaway. In fact, he would accumulate so many shares he would end up owning the company hook, line, and sinker. That turned out to be a fitting metaphor for Berkshire Hathway when Warren Buffett first took control — because it nearly sank him.
At no time in Warren Buffett’s life was success assured. Except perhaps in his dreams, a point we shall come back to. However, purely financial considerations never claimed primacy over Buffett’s burning desire to be somebody — to do something he believed in. It shows that success, like love, emanates from our deepest reservoir of feeling.
Although Buffett’s letter only alluded to his dream of acquiring a company to run, he turned dozens of people into freshly minted billionaires. What is salient about this story is that Buffett never set out to be one himself, nor did he ever live like one. The ambition to be filthy rich never comes up in any of his writings, nor has he ever expressed it other than as a joke, “marrying for money is questionable, but when you’re already rich, it’s downright stupid.”
Most people think that to be rich you have to want it more than anything else. Not Buffett. He still lives in the same house he bought over fifty years ago and drives himself to work, stopping to pick up an Egg McMuffin for breakfast. No kale smoothies for Warren Buffett. While he was a millionaire when he ended his partnership, making more money was the last thing on his mind.
At 37, Buffett was wise beyond his years. For reasons which will be evident shortly, his brain was able to grow faster than his bulging bank account, which he attributes to a process he calls the “compounding of wisdom.” It means that as we continue to learn new things in our lives, our thinking ability compounds the way interest accrues on top of interest. Soon, the wisdom of our decision-making doubles in size, and the dividend is an ability to make savvy, often contrarian decisions about life, money, careers, and even love. In practical terms, like a fine wine, the right mental model can turn our feeble brains into wise ones when aged properly.