At least 50 authors have written about Warren Buffett, but now comes a biography penned with unprecedented access to the billionaire investor. Buffett spent 2,000 hours talking with author Alice Schroeder and shared piles of personal papers. That makes The Snowball: Warren Buffett and the Business of Life (Bantam) an indispensable title for students of the prolific investor. (A snowball, Buffett learned early on, swells if you push it through the right kind of snow, just as well-invested money compounds.) Yet the book also depicts a financial genius who's often needy, stingy, contradictory, and aloof, as Schroeder explained to U.S. News. Excerpts:
Buffett is on TV all the time, and so much has been written about him. What did you learn that we don't already know?
There are a number of paradoxes about Warren. He's a liberal Democrat who came from a staunch Republican family. He works hard but says his success comes mostly from luck. He's known for being thrifty, but he has a jetsetter lifestyle. He's also America's business teacher, through his annual shareholder letter and other things he says. People look to him for investing advice and even advice about life.
I got to know him when I was an analyst at Morgan Stanley, covering Berkshire Hathaway, his company. Everybody who's seen him on TV knows he's always very quick with a witty answer to any question. He's amazingly powerful. He has tremendous self-confidence and this grandfatherly demeanor.
But here's what else I saw. When his wife underwent surgery for cancer, I saw depths of pain and suffering. He's very uncomfortable with illness and death. He has a reputation for being not just thrifty but stingy. At one point he said he didn't want any of his money given away until after his death. I got to see that change because, during the time I was working on this book, he became somebody more comfortable with being generous.
What made him more generous?
For one thing, he lost people. To illness or death. His wife Susie died in 2004. He came to understand that what matters is people. He was not an attentive father in his early years. He's making amends now. He says that the measure of success in life is the number of people you want to love you who do love you. And the way to be loved is to be lovable.
He had a strange situation for years, with his wife living in San Francisco and another woman, Astrid Menks, living with him in Omaha. Sorry for the pop psychology, but did that produce seething resentment between the two women?
His wife Susie was one of the most instrumental people in his life. She kept part of the role of wife. She offered emotional support and was an authority figure. She had a public role, too, appearing with him at events. Astrid, who is now his second wife, helped take care of him day to day. It was a situation that was acceptable to all three of them. Astrid and Susie liked each other. There was no seething resentment.
And Katharine Graham, who ran the Washington Post and had a long friendship with Buffett—was that an affair?
Kay Graham boasted to friends that they had an affair. She was sexually insecure, but there was zero chemistry between them. There was no steam coming off of this relationship. Any romantic aspect of their relationship lasted about five minutes.
What was it like spending so much time with Buffett?
For five years it was a combination of cooperation and negotiation. He didn't try to supervise. He has the energy of an 18-year-old, so I was exhausted much of the time. One highlight was when he would spend time with me. I got to watch him work, talk on the phone to people like U.S. senators and Bill Gates. I sat in on meetings with him. I got to understand how his mind works.
He has had a lot to say about the current financial crisis, and of course he's in the middle of it, through his $5 billion investment in Goldman Sachs. What else do you suppose he thinks about it?
I got to understand how he thinks about risk. Don't bet the ranch unless you can afford to lose it. He always thinks through what's the worst possible thing that could happen. I think what we're seeing now is a lot of people who said, "This kind of calamity has never happened before, so it probably won't happen to me." But that doesn't mean the calamity will never happen.
There are a lot of Buffetisms, those aphorisms of his. Any favorites that maybe we haven't heard?
Here's one: "Intensity is the price of excellence." And I've also heard him say that "cash combined with courage in a time of crisis is priceless." Isn't that great?