What I’ve Learned From Warren Buffett & Charlie Munger w/ Chris Davis (RWH035)

(00:00) Warren and Charlie and many of the people you mentioned have done well is they've structured their lives so whatever their weaknesses are, it hasn't taken them down. And so, you mentioned Charlie's bluntness. I don't think that would have served Charlie as the CEO of a Fortune 500 company. So Charlie structured his life in a way where those personality traits of his didn't set him back. Warren is an incredible communicator and exudes this sort of warmth and people can feel, but he has a very hard time making those (00:31) really hard decisions to fire somebody or to replace them. So he's structured his life to minimize those. A very powerful lesson for people to carry out is not to necessarily obsess on your weaknesses, but to do your best to structure your life so that you can avoid a lot of them. Hi folks, I'm absolutely delighted to welcome today's guest, who's Chris Davis. And Chris is Chairman of an old and renowned investment firm named Davis Advisors, which I think was founded back in 1969. And he's also a member of the board (01:07) of directors of a small, obscure company that some of you may have heard of, uh, namely Berkshire Hathaway. It's, um, lovely to see you, Chris. Thanks so much for joining us. I'm so glad to be here. I, I've been looking forward to this, which I don't say about a lot of interviews, but, but, uh, I feel like the way you approach life and the universe and everything has, uh, has made me look forward to this conversation. Uh, thank you so much. And, and before I forget, since we were talking about it right before we, we got on, talk to me about (01:36) this idea of our 30,000 days because it's such a beautiful idea. And two hours from now, I'm likely to have forgotten that we talked about it. So, so discuss the significance of this before we get started on anything else. Well, I, I'm gonna start, I'm gonna go back to my days as an accountant because this is actually when it, when I first sort of started thinking about it. And I'm not much of a, of a, of a birthday celebrator. And, but one of the things I'm particularly struck by is the ones that (02:04) are hallmarks tend to be tied to, you know, 10, 20, 30, 40, 50, 60, so on. Uh, not a lot of life changes around those sort of random decades. And when I was working back at State Street as an accountant, I had the worst job, which is, I had to, one part of my job was to calculate, uh, the NAV of, uh, money market and bond funds. And that meant accrue the interest by the day. And so, you know, and Lotus 1-2-3 had just come out. And, uh, and so I was using that to write a little program to make it easier to calculate bond interest and count all the days. And so (02:46) on. And when I was testing it, I put in my own birthday and ended up, I was at the time something like 9,500 days old. And that was sort of the Genesis of this idea where I started thinking, you know, we live about 30,000 days, or generally have 30,000, uh, uh, uh, really productive days. And our life divides much more naturally on the 10,000 day increments. So after 10,000 days, you're about 27 or so, 28, somewhere in there. And you often think, that first 10,000 days is about going wide, experimenting, trying new things, new places, new professions, new (03:27) people, uh, uh, new towns. It's a time of exploration. And 21 years old doesn't capture it, or 20. And by the time 30 comes around, usually you're already into what I would call that second phase of life. So right around 10,000 days, by then, usually on average, people have decided what they want to do, where they want to do it, who they want to do it with. Uh, and instead of going wide as they have for the first 10,000 days, it's about going deep. Uh, you know, the, just the, the depth of relationships that comes through (04:04) marriage, through family, through your vocation, your profession, your colleagues. Uh, you sort of have 10,000 days to execute, 10,000 days to, um, accomplish and build, uh, what in many ways will be the sort of monuments of your life, your family, your kids, uh, your profession. And then right around 55, 56, 5, you know, somewhere in this range, uh, what, what happens? You know, your kids are grown and beginning to, to leave. Uh, what you've achieved professionally is fairly settled. And in a funny way, it lifts an enormous weight off many people. (04:44) I think it's one of the reasons people actually end up growing happier as they get to their 50s, 60s, 70s, uh, because you're in a time when you can, in a sense, go wide again. Uh, you can, you have more perspective, you have less of that urgent depth of the day-to-day. So anyway, I, I know when we started talking, we were talking about this idea of both sort of completing the, maybe our second 10,000 days and now looking at, uh, what we, how we think about the, the, this, this next 10,000, this chapter that sort of gets us (05:17) from here till, you know, around in our 80s. And how does this affect the way that you're actually living? Like, what is, what is this awareness of these three phases do to your view of how to behave and what to, what to focus on and what you're actually optimizing for at this point? Well, this sort of ties in with how I think about investing. There's so much about of it is about anticipation and preparation. So I think a lot of people go through unhappiness in their 30s in part because they're sort of thinking (05:51) "Where did my youth go? I used to be able to do all these different things and now I'm tied down." And if instead you have this mindset, you really look forward to that the privilege of being able to go so deep, to concentrate. Uh, uh, and I think how it's affected me thinking about this next 10,000 days is a little bit about this idea of inverting it and thinking about what would stand in the way of this 10,000 days being a very enriching time of life. And of course, health is one of them. So it becomes, as you think about (06:26) going into this next third, it becomes a, a time where you think a lot about taking care of yourself. You think about investing in relationships. Uh, you know, when you're raising a family, when you're in the office every day, when, you know, a lot of your life and your social life are structured for you. As you get to the next 10,000 days, uh, people can lose touch. And, uh, so I think it's also been a time when I have really invested in, uh, maintaining, invigorating, revisiting, uh, relationships. Um, you know, deeply getting (07:03) to know my children's partners and spouses, uh, uh, making sure that, uh, uh, that their aspects of friendships as people. You know, I, we may get to this, but I, the idea of retiring has no appeal to me. I mean, I love what I do. It always seems startling to me that we get paid so well for studying something so interesting. And it should be a profession where we get better over time, provided we're not creating behavioral and psychological roadblocks. And, and, uh, you know, if that is the case, I would like to continue, uh, as long as I could. (07:40) But of course, I also recognize that that's not the same for many of my closest and oldest friends. And so as they contemplate retirement and moving and going to different places, uh, you know, old patterns, uh, can dissipate. So I think it's a time to really invest in being prepared for this sort of exciting chapter that's in front of us. And it, it may not end very well, but 10,000 days is, you know, it's a long time. And so I think it certainly has, in it, you know, impacted how I think about, uh, preparing for that (08:15) transition. I thought it was very interesting the Berkshire annual general meeting, which I, I, I, I guess that's where you and I, uh, chatted. Actually, we had, we spoke for a couple hours on the Sunday, I guess, after it all ended and everyone had had had left. And, uh, you and I had the pleasure of sitting down with another friend of mine, Ina, and, uh, and chatting. I, I was very struck at the AGM that Buffett said a couple of times, he talked about the idea of rating your obituary and then trying to figure out how to live up to it. And he said, look, if you (08:49) want to know how to live your life, write the obituary, then reverse engineer it. Go backwards. Which is really not dissimilar to what Nick Sleep does with this whole idea of destination analysis, of figuring out a happy ending and then, um, well, he didn't use that phrase, and then working backwards, thinking of the, in, starting to feel unsafe. So sorry about that trigger warning. Here. And then starting to work backwards to figure out what the inputs are to get there. And, and obviously, you've been close to Charlie Munger and (09:19) Warren Buffett. Um, and we'll talk about this more. I'm wondering how seeing Warren at 92 and Charlie at 99, seeing how they've lived the, the, sort of the final chapters, you know, the, the closing chapters in this kind of remarkable way, how that's had an impact on your sense of how you want to live that, that, that third stage out of the three, however long it may be. Well, and I could expand that list. I mean, Warren and Charlie are great examples, but I had an incredibly influential grandmother. In fact, her, her picture is on the wall here (09:55) next to me, uh, who died at 106. And I had her in a kayak at 104, and, uh, had her on a motorbike at a 100. Uh, uh, and she had a PhD in international relations. I mean, she was an incredible intellect and model. Um, you know, my grandfather, Catherine, so that was C, Katherine Davis. So what did you learn from her? What, what did you observe? Well, she, she, she was magnificent in every way, but it, this is going to be a tie-in to Warren, to Charlie, to all of the people that I would put on that list, is one was this idea of they kept interested. They kept (10:38) so engaged with life. Um, my mother has a, a very close friend who we always admired as kids because she was, you know, that, that, that powerful, sort of irreverent woman. But one of the things I've watched as she's gotten older is she resents, uh, the impact of technology. She, she doesn't want to learn to use a cell phone. She doesn't want to do email. She doesn't certainly not going to do Instagram or something. And the result is she is increasingly getting cut off. So this idea of keeping interested, (11:13) how you, you stay interested in the world, uh, around you. I think the second thing is they all kept optimistic. Um, there's a very common, sort of, old man disease, which is "The world is going to hell." And, and of course, we feel like that because we're no longer at the center of it. You know, the, America in particular, but a lot of the world is, is oriented. Every marketing message is oriented, uh, uh, towards people in their peak spending years, in their peak, you know, uh, family years. You're at the center of everybody depending on you. Um, (11:49) and I think what happens is gradually, uh, of course, the world moves on, and you become less relevant. And rather than have your ego absorb that reality, people rail that the world is wrong, that if only people listen to them. So I think you get a pessimism that begins to take over, a ranker. Uh, and so I think resisting that is next. So keeping interested, resisting that pessimistic tendency, uh, which is really simply the extrapolation of the approach of your own demise, uh, and projecting it onto the world. A related one to keeping (12:26) interested, and I've seen this so much with Warren, with Charlie, with my grandmother, other people who are octogenarians, and whatever the next two decades that come after that means, certainly with my father, who's 86 and still skiing, uh, is this, they keep making new friends. They just, you know, it is a very sobering part of life is how dramatically differently people age. You know, I had the enormous misfortune when I was a kid and a teenager of not hitting puberty. In fact, I didn't break 5' tall until I was a senior in high (13:00) school. Uh, uh, I will just say the loss of other key, uh, uh, defining milestones happened somewhat later. And, uh, uh, and, you know, that that made that time of life very trying. And, uh, but of course, the other side of that, as Charlie Munger likes to point out, is one of the, other than genetics, one of the strongest predictors of age is how late you hit puberty. And, and so, you know, of course, you see it with friends aging at different rates. And so that idea of my grandmother, very late in her life, said to me that it was very (13:38) difficult for her that she not only outlived all of her friends, she outlived many of her friends' children. And, uh, and so for her, it was keeping, uh, uh, keeping making new friends became a very, very important part of it. So, you know, what I would say when I look at all of these older people that I admire is they are interested, they're optimistic, and they're constantly meeting new people and pursuing relationships. And, and, uh, there's not a lot of time for self-pity. So one friend said, "Only one organ recital a day." You know, they don't need (14:12) to spend a lot of time talking about what's what's failing. So isn't it ultimately that idea of living life backwards from your obituary or from your funeral? Uh, it is a very useful way to think. And it, it is, you know, keeping that perspective in the back of your mind, uh, I think is a very useful exercise. And, and, uh, so I, I'm with you on that one. Yeah. Ray, Ray Dalio came on the podcast and was, we, we had a long discussion about his most recent book, the, um, the Principles Journal, I think it's (14:46) called, which is all about how to develop your own principles. And there's a very bracing section of that, and also of our discussion, where he talks about just being brutally aware of where you are in, in that, in that arc. And also being brutally aware of where the people you love are in that arc, whether it's your parents or your kids or whatever. And so you can adapt your behavior accordingly to people, depending on what their needs are. And one thing he said to me that had, um, a real impact on me was he said that (15:19) your job in the later stage really is to prepare the next generation, to make sure that they'll be okay without you. Yeah. It's, it's funny you say that. I, I, I was, uh, out actually out at Fire Island, where we have a shack on stilts in a swamp. Uh, yeah, right. I've been there. It is that, that whole area is not such a shack. Well, you didn't see my house. Visited friends who have, you know, views of an ocean and so on. But, um, but, you know, I was coming back at night and, and, uh, you know, it's a place where there are (15:56) no cars. And so I was riding a bike and had a little flashlight. And I was coming up to the house. And the lights were all on inside, so I could see in the windows. And, you know, what I saw was my three kids and their significant others, and, uh, uh, and some friends of theirs. And they were all sitting at our dining room table, laughing and carrying on. And that moment of feeling like, you know, I almost don't need to go in. It was such a, uh, it was, you know, I would mark it at that particular moment, one of the happiest (16:28) moments of my life, just looking in that window and seeing, seeing all that. So I, I do think there's, there's a lot of, a lot of truth in that idea of, you know, doing what you can to make yourself obsolete. Um, and yet, of course, wanting to occupy mental space in people's minds and, and wanting to have been a productive force, uh, in the world and, and within the community, within your family, but, but, you know, within the world in general. You don't, you know, you don't want the, the world to be worse off for your (16:59) existence. So much of, um, what seems to become most important, increasingly the, the more I interview great investors, the more I realize the extent to which they're talking about relationships is the thing that determines everything. I, I mean, I remember, I remember asking Charlie, um, you know, what can we learn from you and Warren about how to have a happy life? And he immediately started talking about relationships. Same with Ed Thorpe. When I asked him about the secret of a happy life, you know, how, how to win the game of (17:29) life, given that he is one of the great, uh, game players of all time, and he again, he starts talking about how, you know, who you spend your time with is clearly the most important thing of all. And I, I wanted to talk to you about this whole idea of relationships in some depth because I think one of the things that's distinguishing about you and your friend Tom Gainer, who, who's been on the podcast and who's a friend of mine as well, is your ability to have these extraordinary relationships. You know, you're, you have (17:57) this incredible network of Markel friends, includes people like Buffett and Munger and Bill Miller and Mason Hawkins and Tom Gainer, as we mentioned, and Brian Lawrence, a lot of, a lot of remarkable investors and remarkable human beings with very high integrity, extraordinarily talented people. And I, I wonder if you could talk about how you've done it, and also how you observed these masters of building what Tom would call trust-based relationships, how you've observed them doing it, because it seems to me an (18:29) extraordinary competitive advantage in life and at the same time, obviously enormously life enriching. Well, I think, you know, going back to this peculiar subset of people that you focus on, investors, you know, obviously that, that's a term that covers way more people than would fit the description that you just mentioned of, of, uh, valuing relationships, right? I, in fact, I would argue that there's an enormous subset of people that have built very substantial fortunes, uh, uh, in one way or another, investing or speculating or trading, uh, uh, you know, to (19:09) quote Charlie Munger once said to me, you know, "Who don't have one true friend in the world?" And rightly so. And, um, so I actually think it is a relatively narrow subset of investors that end up at some point in their life, highly recognizing and acknowledging the profound value of relationship. Um, they're playing a different game. Uh, you know, my, my brother, when we were in our teens, had a t-shirt that said, "Whoever dies with the most wins." And they are people that live that way. And, and I think they would pass a lie detector (19:43) test saying that they're happy. I don't think it's much of a life, but it's the way that it's the goals that they set out, and it's what their sense of validation, that's what it comes from. Um, and so I actually think that's more common in investing rather than less common. Um, I think the reason is, I think that, uh, to succeed as an investor, you have to think you're right when, and most other people are wrong about each investment that you make. So that takes a certain amount of either arrogance or (20:18) hubris, uh, uh, it, or an enormous amount of discipline to be able to push through all of the social signals that make us herd animals, uh, that have helped us succeed as a species by being very sensitive to what other people think. Uh, and, uh, and recognizing that, uh, most of the time, most people are right, uh, in aggregate. You know, in other words, setting price and so on. The market's mostly efficient. Um, so I think you have, uh, a series of personality traits, including just the amount of work that you need to do. You know, you need to (20:57) be engaged deeply in the process. So it's very hard to simultaneously, I think, build a very successful investment career and necessarily check every other box that we might associate with a, a, a good and honorable citizen in a community, making sure you're at the PTA meetings and at the child conferences and at the the weddings and the baptisms and so on. So you add that recipe together of, you know, generally a very, very driven work ethic, um, often an ability to disregard what others think about you or what you're doing, um, uh, (21:41) often desire for money, right? Of course, the, you know, there's an aspect of some people are attracted to investing, uh, or certainly most people appreciate the fact that it can be a lucrative profession. Well, you add that all together, you're not going to get a recipe of, you know, well-adjusted, philanthropically minded, civic-oriented people on average, right? Now, if you swung that, you know, that cast, that same net into nursing, uh, you'd probably find a lot more people that you would feel are going to be deeply human and have (22:19) deep connections and so on. So I think you described a tiny, narrow subset. And that subset, who I think of as value investors, and not in the sense of any particular investment discipline, but in the sense of thinking that over a long period of time, you know, things that create value get recognized for doing so, and that it can take a long period of time, and it can be lonely and so on. All of these things, I think you do begin to get into that subset of people. And, and, and then I would say, when you get right down to the relationship part, I think (22:56) ultimately for long-term investors, so I'll now distinguish between the value investors that might be doing trade convergence or something, but over a long period of time, you come to recognize what an incredible difference individuals can make. And they can, what they can, the difference they can make in the world, the difference they can make to their companies, the difference that they can make in any given situation, it is incredible. Uh, and so you gain almost sort of a reverence and an admiration for what people can achieve. And, uh, so I (23:28) think you end up with a higher view of humanity, uh, because you've taken a time horizon that you've extended over a long period of time, and you've sort of seen that impact. And yet you've combined it with a value system that is willing to think independently and be held accountable. And so I like that subset you described. I just don't think if you swung that same net around Wall Street, that that would be the, the, that would be the way it would shake out the most. And of course, in some ways, we've (23:57) all selected each other. You know, as, as Bill Miller said to me once, you know, "It's, it's nice to see people who approach the world the way you do do well." And so you want to help each other. And, and, uh, and so of course, we seek each other out. I have a picture in our conference room from the depths of the financial crisis, uh, and it was with Warren. Who else was in there? Will Danoff was in that picture, and Mason, Bill, as I said, Warren. I think there were a couple of others. But, but the caption, somebody had scrolled on the bottom, was (24:31) "Value investor support group." And it was just all trying to get through that, that dark period. So, um, you know, the, it, it, it, it, I, I think it is unusual in, uh, in Wall Street on average, but I think that the key determinants are what I'll call the value system, with a capital V, and then the time horizon. And those two things, I think, is part of what creates that that convergence. I certainly think there's some kind of competitive advantage here that I, I was slow to realize that we're (25:07) often taught that you have to have sharp elbows to get by in any profession. I think that was the case in journalism, that it's, it's, it's pretty brutal, and also it was a sort of slowly sinking ship, which doesn't bring out the best in people. And in investing, as well, very cutthroat, very intense, very competitive. And so it took me a while to realize that there's a different way of playing the game that was more well, less of a, less of a zero-sum approach, where one person has to suffer in order for (25:38) someone else to do well. And so I sort of had this sense when I was thinking about people like Charlie, for example, that it was a different way of operating. And, and so I remember Charlie sort of saying, "Look, we have this simple system. To have a good partner, be a good partner. Or to have a good spouse, deserve one." Or, uh, Tom Gainer saying, "You need to extend trust first, and then see if people reciprocate it." And so I do, I think there's something going on here that's deeper, that these very wise people have figured out a (26:11) different operating system. Am I deluding myself, or is there something going on where they're they're behaving in a kind of relatively exemplary way, despite being flawed human beings like all of us, and they're attracting extraordinary people into their ecosystem as a result? Yeah, the only trouble is, you're, you're discussing a correlated group. In other words, they aren't, it's not a random distribution of people that have succeeded. They're people that have been enormously influenced primarily by (26:43) Warren and Charlie. And that, and that relationship, the waves of that have sort of persisted out. And you, you could say Thorp is sort of a non-correlated in some ways, although there were obviously those historic overlaps. And, and he's not somebody I know personally. But, but, you know, I would say that for Tom and for me, the influence of Warren and Charlie is so dramatic, it's not a coincidence that we have shaped decisions that we've made in our own lives and our own careers, based on, um, our admiration, uh, of not just what they've (27:21) achieved, but the way they've achieved it. And I would put Bill Ruane in that category too. You know, Bill used to say that, you know, "I know Warren's got 70 IQ points on me, but, uh, um, knowing that, that's helps me make good decisions because I don't kid myself." And I was able, as Bill did, to delegate an enormous amount of his return, in essence, to Warren. So I, I do think that they're, they're sort of correlated in, in, in that sense. But, um, well, I, I may have lost my thread on where you started there. But I (27:57) Well, a different system of play. It reminds me of, um, Nick Sleep saying to me, I, I, he said at one point, "Look, I don't know whether or not I believe in God. I think he probably does. But he said, um, I believe in good, and I believe that good things grow." And I think there's something, there's something kind of life-affirming when you see these people behaving decently and honorably, and it kind of works out. But, uh, who knows? Maybe it is just because they're so damn smart anyway, that they they could succeed (28:27) anyway. Well, that's probably true in some. But, but I, I do agree that we, there's such an enormous investment in the negative narrative about humanity. You know, it's what I call the Lord of the Flies assumption, that if we were marooned on a desert island, sooner or later, everybody would be killing one another. And there's, there's really no evidence for that. The evidence is the opposite. And the more you study, uh, evolutionary biology at the species level, rather than at the individual, you know, "survival of the fittest" is one of (29:01) the most grossly misrepresentative articulations of a profound truth that there is. Um, of course, you know, humans are in no way the fittest in almost any dimension. Um, the superpower, uh, is not at the individual level, it's at the cooperation level. It's at language. It's really at trust. Uh, if we were not able to cooperate, uh, uh, we would still be floating around the middle of the food chain, as we were for most of all of human existence. Uh, cooperation and trust, and the feedback loop that comes from that. Now, if you want a wonderful way to (29:38) quantify that, I love the idea of, of not just cryptocurrency and blockchain generally, because to me, one of the most interesting tenets of, uh, blockchain in general, and I, I'll, I'll use Bitcoin in particular, is, uh, what do they call them? Trustless networks. So you have a, you're creating using technology, a means of exchange that does not require trust. Now, an interesting thought experiment is to say, "Wow, how much energy needs to be consumed to duplicate trust?" And therefore, you know, sort of conclude, "Well, that must be, in a sense, (30:27) the efficiency of trust is, uh, requires this much energy to sub, as a substitute." So, you know, you've got to burn a lot of carbon and burn a lot of electricity, uh, uh, uh, generate a lot of electricity, uh, to generate, uh, a substitute for trust. Now, think of the other side. You think about this idea of operating in a web of earned trust. And we talk about it on a moral plane, that this is good, you know, good, uh, uh, the right way to behave, that you have to have some metaphysical belief in the power of good. But you could be entirely mercenary and simply (31:11) say, "Trust is an incredible source of efficiency, in particularly in business." Uh, I would also say in life. And that ironically, you know, Bitcoin is a, a demonstration of how much energy has to be consumed to replace trust. So, you know, we have traders that have been in the business a long period of time, and they're on the phone, you know, sort of generalized here, but they're putting in trades that may involve, you know, billions of dollars. And, uh, there are cases every year where there has been a mistake made somewhere. And I don't mean an (31:48) investment mistake. I mean, somebody, you know, inadvertently, you know, uh, uh, put a zero in the wrong place, or, you know, misspoke or misheard. And it is amazing how much is undone because the person on the other side says, "Oh, yeah, we'll, we'll figure that out. We, you know, it's not a survival of the fittest." It's this view that we are in a system where I trust you, and you trust me. And, uh, and so, it, watching, uh, the way that operates, um, and watching it at scale, at a company like, you know, it's staggering the efficiency (32:30) and how much you would need to do. Just think of a due diligence on a transaction. Think of what the investment bankers charge and the consultants just to do due diligence on a transaction. You could view that as like with the crypto, that is what people are paying because they don't have trust. So they pay all that, and then do they get a better outcome? I don't think so. I mean, I think Berkshire is an example that all of the foregone due diligence trips and investment banking and auditors and so on would not have produced an outcome (33:05) that would have raised returns or avoided fraud, uh, in a way trust ended up to be a superpower on it. So I think it's a, I think it's the right way to live. But I think even if I didn't think about that, it would be a strange thing for somebody to fail to recognize what enormous power there is, uh, in having a, certainly in a business context, operating in a web of, of trust. Uh, it is, and as I say, it's certainly a more fun way to go through life. I wouldn't, I wouldn't want to substitute it. So, uh, (33:41) also interesting if you, if you invert it, right? You go back to what Charlie was saying at the annual general meeting, where he was talking about avoiding toxic people. And he said, "Look, get toxic people out of your life." And cost. And there was a, a wonderful moment where Warren said, "We'll do it too, if possible." Charlie was like, "Yeah, I don't mind a little tea, but just get them out of your life." Yeah. And, and so it's, in a way, it gets back to Tom's comment that you want to extend trust first. Yeah. But if people (34:11) don't reciprocate, boy, do you get away from them quickly? Well, for me, for example, one of the things I love about stocks is it's not a negotiated transaction. And if I look over my whole career at the private deals I've done personally, uh, as a firm, we've done some with great success, but when I look at the ones that I've done personally, it's a pretty poor record. And it's particularly poor because I can't imagine looking somebody in the eye and lying. And, uh, and so, you know, when you're (34:47) in a negotiated transaction with a seller, uh, I, I am terrible at that. I would not. What I love about stocks is the price is the price. I'm not negotiating with it. The other person that is. I, I view that as a weakness in me, uh, uh, not a strength, but I've been able to structure my life so my inability to be a hard-nosed negotiator has not hurt me. You know, in other words, to be a little naive and, you know, accept, uh, uh, you know, it doesn't help me when I, you know, buy an apartment or something, and I learn subsequently (35:25) that people were lying through their teeth about whether a fireplace worked or something. You know, then I feel like a sucker. Oh, I shouldn't, I should have had an inspection on that element or so on. But, you know, for me, stocks are wonderful because I don't have to have that negotiated transaction. Um, I think the idea of when somebody has lied to you, it's one of the reasons I think short selling would be such a terrible way to live. You have to, you know, that toxic person, you can't get them out of (35:56) your life. You've got to, you've got to spend every waking hour studying that toxic person, you know, trying to elucidate all the ways that they're toxic and deceitful and lying and stealing. Well, that's a, that's a tough way to go through life, immersed in toxic people. So I, I like Charlie's and Warren's philosophy a lot more. Um, and, and as I say, you know, there are people where, uh, uh, I think where stocks sort of create the perfect venue where you, you don't need that individual on the other (36:31) side. You don't need to come to terms with the seller. Um, and whatever for me, the behavioral biases I have that would make that very difficult. Instead, I have a set price, and I can figure out what to do at that price. So, um, it's, I, you know, what I would say is that all of the people have in common a Tiger Woods trick, which I really love. Which is, I, I whenever I talk about sports, you have to footnote that I don't know anything about almost any sports, but I like sports because I find it metaphorically rich. And, uh, so (37:06) Tiger Woods, I think it was his first British Open, as I understand it, the weakest part of Tiger Woods' game at that point was his, coming out of the sand traps. He was not very good at that, relative to the people that were the best at it. And they were playing the British Open at a course that was renowned for these bunkers that look like, uh, you know, they were created by a piece of artillery. And, you know, the deep, nasty bunkers. And so the press was really pushing Tiger on, you know, "Have you been working on your sand game?" And (37:42) they were watching him in the practice rounds, and he said, "No, I'm working on my drives and my, uh, low irons." And they said, "Why?" And he said, "Because I don't want to go in the sand." And he played the entire British Open and didn't go into a bunker once. Hey guys, I just wanted to jump in here quickly and tell you about today's sponsor. Few investments make a better long-term hedge against inflation, depression, and economic downturns than precious metals like gold and silver. And that is why I'm excited to tell you (38:15) today about Noble Gold Investments. 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Which is an incredible sort of mental model to have, which is, and, you know, if you can identify your weaknesses, yes, trying to reduce how severe they are, you don't want weaknesses that are going to take you down, but then trying to architect your life so you avoid them is the best of all. And I would say something that Warren and Charlie and many of the people you mentioned have done well is they've structured their lives so whatever their weaknesses are, uh, it hasn't taken them down. And so you (39:46) mentioned Charlie's bluntness. Uh, I don't think that would have served Charlie as the CEO of a Fortune 500 company. Uh, it would wouldn't have served him as a manager of a lot of people. It wouldn't serve him to have to, you know, when you go from a platoon to a company to a brigade, you know, all those Roman, there's a, there's a turning point where all of a sudden you can no longer communicate directly. You have to begin to communicate with stories, and you have to allow yourself to become a, some sort (40:18) of cutout of who you are. Uh, and that, I think, would have been, I mean, I'm speculating, but I think it would have been very difficult for Charlie. And, uh, so Charlie structured his life in a way where that those personality traits of his didn't set him back. Warren is an incredible communicator and exudes this sort of warmth and people can feel, but he has a very hard time, as he says, describes, you know, making those really hard decisions to fire somebody or to replace them. So he's structured, here he is as a CEO of a Fortune 500 company where (40:54) over time he's had to make very, very, very, very few of those decisions. So he's structured his life to minimize those weaknesses and so on. So I think there's, I, a very powerful lesson for people to carry out is not to necessarily obsess on your weaknesses, but to do your best to structure your life so that you can avoid a lot of them. You made a fascinating observation about the difference between, um, Charlie and Warren's approach to human interactions back when we were talking in, in May in Omaha. We, I, I was pointing out someone I, (41:29) I'll try not to be too specific, but someone asked a really stupid question. And I was mentioning that Charlie just dismissed it instantly, like he didn't pretend that it was anything but a stupid question. And Warren replied in such an incredibly deft way where he didn't insult the person who had answered, who had asked this stupid question. He turned it into a useful teaching lesson about something else, so that people in the audience got something out of it. And it was so emolient, it was so charming, and so deft. And I mentioned (42:03) this to you, like his, his brilliant diplomacy. And you were saying, the funny thing is actually, in some ways, Charlie is the soft-hearted guy, even though it doesn't seem it. Um, Warren is this sort of brilliant machine who studied Dale Carnegie, "How to Win Friends and Influence People," and he has, as you put it, super high processing speed. So he's able to take all of these boxes and know how to behave in a way that's going to be kind and thoughtful. And I just thought it was such a fascinating observation. Can you (42:35) talk a little bit more about that? I don't know if I'm, if I'm, um, doing justice to your observation. You know, Warren shows any visitor that comes to see him, you know, his Dale Carnegie certificate hanging in his office. And, and he talks about how important that was. And, and people don't read much Dale Carnegie anymore. It's really worth reading. It's enormously useful, and it is a very practical guide. You know, it's the subtitle is "How to Make Friends and Influence People." And we hear that in the, our modern ear now, and that sounds (43:11) very disingenuous or manipulative or somehow lacking integrity. I actually totally disagree. I, I think it is a way, you know, as, as John Wooden famously said, "You, you haven't taught unless they've learned." Uh, you know, I think it is a way to, to do your best to make sure that somehow you aren't communicating something you don't wish to communicate or don't intend to communicate. And so I think Warren was an incredible student of that mindset. And so you're absolutely right. And by the way, Ben (43:47) Franklin was too. I, I have written down, I should have brought it in. I have a book of things that I've jotted down, mostly quotes from books or poems, you know, since I was in college. And one of them is about Ben Franklin talking about how he knew people that were very effective at winning arguments, but they never won influence or goodwill. And that would have served them better. And the reason they didn't is they, uh, on the course of their winning the argument, they tended to humiliate the other person. And (44:23) in so doing, uh, they impressed people with their intelligence, but they also gained an enemy. And, uh, ultimately, that set them back. Um, so, and, and Charlie would hold up Ben Franklin as his Dale Carnegie. So, I mean, both of them have enormous, uh, uh, uh, you know, have learned ways. Uh, Charlie once told me, he, he wears suits, uh, in part because he said, "I'm so unconventional in other ways that if I, at least wear a suit, people immediately assume I'm conventional in some ways." And, uh, that that's probably helpful. Uh, uh, but, you know, (45:03) it was purely a practical matter. But I do think that I think Warren is, is so, you know, his father, of course, was a congressman. So I think he grew up with this sort of understanding, this sort of political sensibility in the best sense of the word. You know, in other words, how to create goodwill, how to have people rooting for your success. Imagine the record that he's achieved with almost no enemies. Can you name another fortune that was built where there wasn't a significant, uh, consensus or a significant view in the, uh, in the world (45:40) that somehow, uh, uh, that person gets vilified? I mean, you know, I think about watching the changing narratives around Jeff Bezos or Bill Gates or Sam Walton and Walmart. And, you know, uh, there are very few you can point to to, you know, certainly John D. Rockefeller and Carnegie and all of them. But, but there tends to be Howard Schultz. You know, there's a cottage industry vilifying Howard Schultz. I don't get it. It seems, you know, crazy. Uh, but it just seems it sort of goes with the territory. So it's an amazing thing for Warren to have (46:14) built this fortune and still have so much of the world, uh, uh, viewing him as this sort of kind, gentle, uh, presence and patient. And, but I think you're right. I think in, in many ways, it is a, well, we don't have to speculate whether it's, it's good. It's like honesty, you know, whether it's, it's a, you know, good policy, uh, or whether it's ethically right. You could do it for either reason. The effect is the same. Uh, Tom Gainer loves to talk about the Quakers. You know, "came to do good and did well." It's the (46:50) same idea that, uh, it

It ends up that that that that approach both serves him enormously well, uh, and is a very, uh, uh, uh, ethical way to treat people, even when they ask asinine questions. But, you know, Charlie dismissing somebody and saying that's an asinine question, uh, uh, yeah, Warren, Warren, as you say, he invests dignity into the question, even if it wasn't there or if it wasn't intended by the asker. Yeah, I, I would definitely reiterate that people should go back and read that book, *How to Win Friends and Influence People*. Because of the title, (47:26) it sounds very cynical, but I started rereading it again last year because I was talking to my daughter about it. And, like, yeah, I, I was saying to her, look, there are really important skills here. And I was struck when I reread it, not, not only by how skillfully written it is, but how actually, I think unconsciously, it's influenced an entire generation of our most successful writers. And so I actually suspect that, in, in the same way that you can show that there's this lineage that comes out of Ben Graham through, you know, Warren and Charlie and (47:59) and many others, including yourself, you can actually, you could plot a kind of lineage coming out of Dale Carnegie where you could actually show that the techniques that people like Malcolm Gladwell use, and that I use, and Richard Wiser, uh, consciously or unconsciously, actually stem from Carnegie. That he would, he would interview these people and then he would tell these really elegant stories and come up with, with great quotes and sayings. It was very practical. I, I, I don't know. I suspect if you looked at all these guys like Daniel Pink now, or (48:33) or David Epstein, all these really good non-fiction writers, you'd find that a hell of a lot of us actually, consciously or unconsciously, owe this huge debt to Dale Carnegie.

I think you're right. And I, and I think that the cynicism about it is a really something that's very deeply troubling. And the reason is, it sort of gets at this idea of the mutability of human nature, right? If, if right now, there's this sort of obsession with, you know, identity, you know, what is, who are you? How malleable is it? How fixed is it? And so on. And that (49:16) manifests in all different ways. But, you know, almost 3,000 years ago, you know, Aristotle said virtue is a habit. It is what we do. So there was implicit in that this idea that you could become virtuous, you could make yourself more virtuous. There is something in the zeitgeist at the moment that really views that cynically, as if somehow it's inauthentic, that who you are is, you're screwed. Like, whoever you are, that's it. And I think that there was part of the 1950s America, which is, it's a period, the postwar US is a, a time in history that I (49:59) admire so profoundly. You know, you think of the Marshall Plan, you think about rebuilding, uh, uh, Japan, rebuilding Germany, creating almost a hundred years of peace and not just peace, enormous goodwill, right? These are our strongest allies. Um, that mindset, which of course came with this sort of optimism that, that, uh, in this sort of we can do attitude. But I think that went to the individual. This idea that I will. And by the way, it didn't just start then. It was a real characteristic of the late 19th century and the emerging middle class and the (50:41) creation of, uh, and this idea that as we achieve, means we should work on self-improvement. And, uh, and, you know, this idea of self-improvement, it's a very American mindset. You know, there was a wonderful scene in *Chariots of Fire*. I don't know if any people even remember that movie now. Yeah, but with the old, uh, English, uh, schoolmasters, uh, sort of chastising, uh, uh, young Abrams, the runner, uh, because they viewed his, uh, training methods as a bit commercial, a little bit, uh, not quite in the spirit of things. Remember the man (51:24) that they fed would know practice hurdling by putting glasses of champagne on each hurdle? Uh, and here was Abrams, you know, uh, employing scientific methods and a professional coach. And so they were sort of chastising him. And, and he said, you know, you, you relish my achievements, but you would have me achieve with the effortlessness of gods. And that was very much the British mindset. I, I lived in the UK for five years. I love the UK, UK, um, but, you know, I always was struck by the fact that it's a little bit rude to ask somebody what (52:03) they do, right? That's an American question. It's actually one of the first questions I always ask people when I meet them. What do you do? Why do you do it? This idea of vocation and being good at something. And, you know, or how you spend your waking hours. But in, in Europe in general, and say, in the UK, there's an idea of, well, you're presuming I need to work. And that alone, it could be a little insulting. I'm not a tradesman. Um, so anyway, that's a little bit of a political tangent. But what I would say is, uh, this idea of (52:39) self-improvement as something that you, you get started on, just the way a value investor, where Warren used to say, you start the A's in the stock index. Uh, you know, you start with, how do you improve yourself? You know, you make, make a list, you put, put up pictures around you of people that you admire, you have role models. Ben Franklin wrote about it. Aristotle wrote about it. Warren writes about it. Uh, Dale Carnegie wrote about it. But somehow, there is a cynicism about that that I find really, uh, discouraging and and unhelpful, actually.

I mean, when I (53:17) read, um, when I read Marcus Aurelius's *Meditations*, which was written not for publication, I think it was his own, his own notes, written a couple of thousand years ago. I read the first chapter and I was like, wait a second. He's naming at the very start, something like 17 people whose qualities he essentially wants to clone. And I'm like, here's one of the great thinkers, and he's consciously cloning. And it was such a fascinating example for me of how these, you know, even, even someone like he was figuring (53:51) out, how do I improve myself by following this, this trait of my father-in-law, or this trait of this, uh, um, the guy who adopted me. Um, so, yeah, in some ways, I think having grown up in England, we think it's a little bit torturous to admit that we want to improve ourselves. And so, I mean, I remember buying, when I first moved to New York in my early 20s, when I was 21, I, I was very anxious for some reason. I think it's quite a stressful time in your life where you don't really know what you're going to do and if (54:21) you're going to find your way in the world. I was having terrible trouble sleeping. And I, I remember getting Dale Carnegie's book about anxiety, that was something like *How to Stop Worrying and Start Living*. And I was like, this book is really, really good. It's really well written. And I, I had just got an English literature degree from Oxford. I was like, the ultimate intellectual snob, right? And I literally, I, I'm ashamed to say, I, I not only marked it out very heavily, but I hid it behind other books on the bookshelf because it looked tacky. (54:54) It had a tacky title. It was, it was a mass-market paperback. It was on terrible paper, but it was so helpful to me. And I remember it had these amazing quotes from people like Lincoln, you know, where Lincoln had this sign on his desk that just said, "Today." That was him, him just reminding himself that he could just focus on that one day. And there was an extraordinary poem by Kalidasa, this written in Sanskrit like 2, 3,000 years ago, that I memorized because it was, it was so helpful. And so I feel like he, he'd synthesized this incredible worldly (55:28) wisdom. And yet, somehow, it was sort of embarrassing. So I'm mentioning it because I think someone in our audience is going to now buy that book on *How to Stop Worrying* and it's actually going to really help them. And so I, I, I hope you'll benefit from my, um, my admission of my own shame in, in, in hiding, hiding that book.

I absolutely share your shame. It's so true. Um, and it is a peculiar, it's a peculiar regression as a, as a civilization. And I think that it speaks to this idea that I do think (56:06) is very, very much the currency of the moment, which is that your destiny is determined by circumstances that are outside of your control. And, you know, it could be, you know, identity and gender politics, race, um, it could be that, no, the system is rigged so that people achieve. And by the way, I think that, and so it feeds this idea, uh, that there is no true agency. That, in a way, uh, the people that succeeded succeeded because the system was rigged. The people that failed failed because the system undermined, uh, uh, their (56:53) opportunities. And, you know, this is outside of the, my, my world. And but I do think that there is something about removing that agency, uh, and that sense of agency that I think is very destructive. I don't think it's permanent. I think these things sort of wash through in, in waves. But, but the idea that, you know, you could read a book and make a, make a series of decisions that improved your life relative to where you had been if you hadn't read that, that idea of of of agency and and a certain amount of mobility. And, you know, I was born on (57:34) third base. So it's a, I'm a very dangerous person to even begin to, to talk in that way because, you know, I, I really started with every possible advantage. So, um, but I will say that I look at, you know, the, you know, I look at my own research team. I'd say 80% of our research team are our first-generation immigrants, uh, you know, children of, of immigrants, or themselves immigrants. Um, you know, I really do believe that there is still an enormous amount of mobility that is possible. And that it starts with this idea of of (58:15) self-improvement. And that the more we create a cynical environment where that is considered inauthentic or manipulative, uh, the more it is dismissed, uh, the more we give up on the sort of feedback loops that you describe from reading that book, how it helped you, and, or how Dale Carnegie helped Warren, and, uh, what that means for the greater civilization.

Yeah, and I, I actually, I remember writing out on a couple of cards, various quotes from from that book, much more the one on *How to Stop Worrying* than *How to Influence People*. (58:51) Um, and there was one from Thoreau, if I remember. I mean, it's 35 years since I did this, but there's one from Thoreau where I think he talked about exactly that, where he said something along the lines of, "I know no more encouraging fact, um, than our ability to to transform ourselves through an act of conscious endeavor." I'm slightly misquoting it, but, um, that was incredibly heartening for me. And when I look back, I had this fear that there were certain things that were just kind of, kind of like your, your set (59:21) points, where, you know, maybe you had a slightly melancholy nature, or maybe you're just always going to be anxious. And one of the most encouraging things I found now, at 55, looking back, is how, not completely, but very significantly, I've actually managed to change my wiring. And that's a really, that's an incredible gift. And just to know that, to know there was, there's a great sage, Rasheed, who said that, um, "It's a spiritual law that there's no negative characteristic that you have that can't (59:52) be changed." And when you see something like that, you're like, God, wait. So there are these sort of forms of negativity that you have, or these, these, these bad characteristics, you're like, no, actually, you can change that too. Um, I, I find that incredibly heartening.

Of course, it is. And you would almost say that even if it wasn't true, it would be good for people to believe it. But it is true. And, and, uh, and it's not surprising in that, in that, you know, one of my, uh, uh, when I was in seminary, there was a bishop that I loved (1:00:23) who was a, uh, uh, Bishop of Newark, New Jersey. Um, and his name was Jack Spong. And he was an incredible character and very controversial, but he was a great teacher and mentor to me in many ways. And, and, uh, way more than he would even have realized. Um, um, but he once asked me, "What is the opposite of faith?" And I said, you know, doubt. And he said, "Oh, no, no, no. He said, faith requires doubt. You can't have faith without doubt. The opposite of faith is certainty. If you have certainty, you don't need faith." Uh, he said, "It's very much like, like (1:01:07) courage. You know, courage is not the absence of fear. It's the very real presence of fear and then being able to master that fear." But the fear needs, is part of what it is to be courageous. Uh, doubt is part of what it is to be faithful. And this idea, and the, the sort of pathologizing of behavior as something that is immutably thrust on you as a condition, literally as a condition, um, and, uh, you know, I, I tease my children often when they say things like, you know, "Well, I, you know, I have real, I have anxiety about such and (1:01:52) such." I was like, "How about if you say, 'I'm nervous about that'?" Just the change in, in the language. If you say, uh, or if you say, "I, I'm really worried about this." What if you try saying, "I'm excited about this?" Uh, uh, because both can be true. And excitement and nervousness and worry, you know, you imagine, I mean, I'm sure you know, if you've ever get on a, have to give a speech, you know, that that nervousness can be part of, of, of, of what it is. It can all be. But once it becomes a condition, then it becomes sort of (1:02:25) immutable, uh, or, or it needs to be treated. But the treatment comes from outside. The condition comes from outside. And there we surrender agency. And, and, um, I just, you know, I'm, I'm so lucky not just from where I started in life, but I'm, I'm lucky to have a profession where I'm constantly studying excellence. And I'm studying a group of people, uh, now, you could say some of them were were born to it, they, you know, inherited a business or something, but most of them, uh, did not come from, uh, a circumstance where you would say their (1:03:04) achievement was obvious. And, and it's funny, we look at athletes, uh, with deep admiration because nobody thinks, uh, well, I'm gonna segue a little bit to inequality in a, in a strange way, but, uh, you know, nobody looks at the NBA and thinks it's a problem that LeBron is paid a greater multiple of the lowest paid player in the NBA, uh, than would have been the case 20 years ago. In other words, inequality in the NBA has gotten much, much greater. But we don't think it's a problem. And we don't think (1:03:42) it's a problem for two reasons. And reason one is that the poorest player in the NBA, the lowest compensated player, is still well compensated. So there's a sense that you don't have poverty in the face of this immense wealth. You don't have players that are afraid that if I get injured, I'm going to be kicked out of my house and I'm going to lose my coverage. And, you know, there's a sense that even the lowest paid player in the NBA is treated well. And then second, there's a view that LeBron James has a (1:04:15) demonstrable talent that is unarguable. It's measured in the statistics. And therefore, it was fairly achieved, right? So nobody is saying that it's unfair. You know, I, I would argue that Jeff Bezos is the LeBron James of capitalism. He, he achieved what he did through immense talent, incredible commitment. And you could say, well, you know, he, he went to Princeton. And you could say, well, LeBron was born, I don't know how tall he is, very tall, significantly more athletically inclined than I am. He had enormous advantages, physical advantages (1:04:56) relative to me. And then he had enormous character advantages. And, and those conspired together to produce somebody that is an absolute virtuoso, uh, and one of the great talents at what they do. And I think one of the hard things for me about watching the state of capitalism at the moment is two things. One, we seem to vilify or imagine that that success is achieved because the playing field isn't fair. And I don't think that's the case. It is a viciously competitive playing field, the world of capitalism. Um, but I think where there is (1:05:36) plenty of blame to go around is the blame that we've somehow achieved a society that has enormous wealth in the face of enormous poverty. So it's not the inequality itself, it's that there are people living in fear, uh, and people living in poverty in the face of that wealth. And so that would be the area that I would wish for capitalism to do a little better job taking care of, um, because I think that if we only focus on inequality rather than focus on poverty, uh, which is the real issue, because as I said, there's lots of inequality in the (1:06:11) NBA, it's not a problem. Poverty is the problem. And that, by focusing on inequality, we end up vilifying the talent. And, you know, I stand in awe of what the CEOs of so many companies have achieved, not just the founders, but even the leaders. You, I was speaking today with the, the leader of Coca-Cola, James Quincy. I mean, he is an incredible leader with incredible commitment, great values, and, uh, and, you know, to say that, oh, well, you know, the playing field was tilted for somebody like that to to rise, anyway, that's a, a little bit of a wild (1:06:49) divergence. But I, I think this, going all the way back to Dale Carnegie, this, this sort of undermining of the degree to which, you know, the combination of luck with enormous talent, with incredible hard work, with incredible ability, uh, can manifest in our system. I wish we could celebrate them the way we celebrate our athletes. They deserve it. And you could argue that what the athletes do for the creating sort of the goodwill and the diversion and the entertainment and the admiration, uh, you, you could argue that there (1:07:27) are people that have succeeded in business in a way that that has done so much good for for our country and for the world, uh, and, uh, I would wish that that this tendency towards vilification, uh, would end because it's tied, it takes away those people as potential role models, uh, which they should be in, in many ways.

Berkshire is is a kind of iconic, emblematic teaching institution, right? It's there to to show us, uh, capitalism done right in many ways. I mean, not that it's flawless, necessarily. And, you know, sometimes there (1:08:04) are controversies, but it's an extraordinary, it's an extraordinary culture. And you're in this unique position, um, of having been named by Warren as a director of Berkshire back in, I think, 2021. And just to give our listeners some context, the other directors are Warren himself and Charlie, and, uh, Greg Abel, the likely successor to Warren, Ajit Jain, who runs the insurance operations, Buffett's son and daughter, uh, Howard and Susan, Ron Olson, I think, who co-founded Charlie's old law firm, Ken Chenault, who was CEO of (1:08:40) American Express. So in some ways, it's kind of the ultimate club. And it's given you this, this insider's view of, um, capitalism done well, and what makes Warren and Charlie extraordinary, what makes the culture extraordinary. And I, I wondered if we could get a sense from you of, of what the experience has been like so far, what you've learned about the, the culture. And one thing I would mention, I remember talking to our mutual friend Brian Lawrence about this. And, um, he was pointing out that there are some (1:09:10) really great money managers who, um, would never dream of going on the board of Berkshire because the requirements are really difficult. Like, whether formally or informally, I think one of them is that you, you have to own a significant amount of the stock. And I, I was looking at the, um, ownership statements, and I, I think you own like $20 million worth of the stock personally. And you don't get any stock options. And I looked at the compensation structure and was stunned to see that you received the princely sum of $7,000 a year to serve on the (1:09:44) board. And I think Brian told me that there's no insurance protection either for the director. So, so you're sort of personally exposed, not enriched, and you have to put up your own money. So, can, can you talk about that unique culture and what you've seen about it, and why, why you would even, uh, want to do it? Uh, and what you've learned from it? And apologize for that long-winded question.

Oh, no, it's a great question. Also, for some reason, $7,000 sounds high. I think it's $700 a meeting, but I, I could be (1:10:13) wrong on that. Um, you're the highest paid. I think I think there most people get $3,000 unless I misread it, which is, I think I have to review that to figure out. But, um, yeah, it, I, I believe Berkshire is incredibly important as well, as an exemplar, but as an icon of how capitalism should work, right? In other words, uh, you know, a company that hasn't taken shortcuts, that in almost every dimension, tries in every industry, in every subsidiary, has this goal of, you know, as Charlie would say, getting what you deserve, trying to earn success, no (1:11:05) shortcuts. They want to have the reputation with the regulators, with customers for fair dealing. And, you know, you, you mentioned Tom Gayner, of course, Markel aspires and has delivered in the same way. And, and by the way, there are other companies that do, but Berkshire is absolutely, in a sense, the LeBron James of that, right? They, there is, uh, the sheer scale of the success, the, the time horizon over which it's been done, um, in every manner. And so I think Berkshire, for the good of the entire system, Berkshire is worth cherishing and (1:11:52) protecting. It is the, this virtually sort of unassailable example. And of course, the maintenance of that, uh, is something that is very easy so long as Warren and Charlie are there. But the laws of inertia, uh, uh, in business, and are, you know, are such that there are few records of that persisting. And one of the extraordinary characteristics of Warren and Charlie is how much every year, uh, every decision they do with the goal of having it persist, making their successor's jobs easier, trying to lay out a framework. So I think the responsibility of the (1:12:39) directors will never be to be in any way involved in the business. It will be, in a sense, protecting this, this culture that really is, uh, stands out for its independence, dependence, it's rejection of all of the conventional ways that people begin to take shortcuts or begin to fall prey to all of the institutional biases, uh, uh, uh, that can cause something that's so excellent in its, in its virtue, in its virtue, uh, so little things like not paying the directors, or paying them very little, that, that is a symbol (1:13:24) that is trying to reinforce a culture. And, uh, so if you have a criteria that says directors have to own a lot of stock personally, and they have to be willing to serve for no compensation, well, why are they doing it? They're doing it because they care about the place. That's an incredible alignment. I don't, there is no other company that has that sort of criteria. So I think Berkshire is important for the, the reminder that it is of how things ought to be. And it's a great sort of benchmark against which, uh, (1:14:02) uh, other companies, uh, uh, you know, can, something that they can look towards. So anyway, I, I think the reason to do it is because it is so precious as an example. And I think it's good for the system as a reminder that when there's an ethos that says, you know, corporate greed, CEO is bad, capitalism bad, companies get rich, shareholders get rich at the expense of other constituencies, it's a zero-sum game. So if shareholders grow, they must have somehow profited at the expense of another constituency, (1:14:42) employees, uh, communities, the environment, uh, uh, customers, uh, uh, and Berkshire, and, and other companies, they aren't alone in this, but they, as I say, are the most extreme. You know, they, they, they, they achieved not at the expense of any other constituency. They, they, they, they built themselves by by creating value in the world, and then doing so in a transparent way. So it wasn't just the business, it was also the governance, it was also the communication, the education. So I think it is really worth fighting for. And I (1:15:16) think it'll be much, much, much harder when Warren and Charlie aren't here. And so that's my one thing that I don't like about it.

Um, I think you and I've talked about this, but, you know, I'm from a family of, you know, work before play. That was my expression of my father's. That's in our family. It's just, we say it all the time. And, you know, it's Granny's rule, eat your broccoli, then you get dessert. And Berkshire is is serving Berkshire right now is the opposite. You get your (1:15:46) dessert first, you get to play first, you get to listen to Warren and Charlie, you get to go to each board meeting absolutely secure in the conviction that anything that is being done that they know about is being done in an absolutely, uh, the highest, to the highest ethical standards, and with deep transparency and advocacy for shareholders. And, um, what's it like actually being at a board meeting? I mean, for those of us who, um, will never have this experience of being on the inside and actually watching up close, like what's actually, I mean, not in (1:16:24) terms of state secrets, but in terms of actually the dynamic and the energy of it, what's actually that experience like?

It, it, it is, you know, if you're a longtime shareholder and you've attended annual meetings, as you have, in one way, I would say not that different, uh, because the tone is completely candid. Uh, the only difference is at the annual meeting, I think the mindset that I experienced as a shareholder going to 30 years worth of annual meetings was Warren saying, "What's on your mind? You're the (1:16:57) shareholders. I'll answer your questions." And I think in the boardroom, the orientation is, "I want you to know what I think is important." If our seats were reversed, now, I think Warren does that through the annual report for shareholders. And I think the only difference is within the boardroom, I think he has a, a view that he needs to make sure if there's, you know, an issue in, you know, subsidiary ABC, that he is surfacing it and communicating what he's thinking is going on in the world. Um, you know, so, but, but the direction is exactly (1:17:40) the same. I would say the depth, and the fact that, to me, the great gift is twofold. One, Warren tells you what he is focused on. And he thinks in this moment, at this meeting, these are the issues that he thinks are very important for Berkshire. He obviously takes questions as, as long as anybody has them. Uh, but I think the second thing that I would say is different, not different, but is just was an incredible surprise, is too strong a word, but you would know from the outside that there is no CEO in America that thinks (1:18:18) about risk in a more profoundly broad way than Warren and Charlie. I mean, they, Warren thinks about, you know, the capital market shutting down. He, you know, he thinks about nuclear weapons and bioterrorism and, and in annual meetings, there are glimpses of that. I think the one thing I would say I've seen, uh, uh, sitting there listening, is how profoundly he structures and wants the enterprise structured to make sure it's resilient to, to in scenarios that are so, uh, far outside of the thinking of a normal CEO or a normal investor. Um, he (1:19:00) is really building something that he wants to last, uh, through almost any conceivable scenario. And it is an incredible privilege to just see that mind at work in that way. So everything is directionally laid out, just sitting in a, reading the annual report, and sitting in a, a shareholders meeting, everything is is the same. It's just more of it. Um, and, and as I say, the risk part in particular is, is something that I've been, was just been incredibly struck by, uh, that sense of profound stewardship for this enterprise.

It was very striking (1:19:39) in the annual meeting. I, I, I always take a lot of notes on my phone. I'm sort of sitting there madly taking notes. And one of the things I wrote down was when he said, "We'll never make a decision that kills us." And he said, "We, we, we keep ourselves in better shape, shape than anybody else." So I think that sense of the obsession with resilience is is hugely valuable for for all of us. I mean, we, we can't, we can't clone his brilliance, but that focus on resilience, on surviving anything, seems to me hugely important for any regular investor. And (1:20:10) then the other thing that that came across massively for me when he was talking about the culture of the company at the AG, he said, "We feel no pressure from Wall Street. We don't do investor calls. We're for the people in this room, not people who care about quarterly estimates." And then he was talking about how if, if the company does good for America, you know, I don't see any reason why it can't survive and do fine. And there was a moment, I think, where, um, where he said, "We will look at our shareholders as partners, not seeking an (1:20:43) edge on them." And Charlie said something along the lines of, he, he started treating everyone else the way he treated his relatives. Yeah. And that, to me, was such a profound idea. Just, just that culture of not wanting to get an edge over your shareholders. Can you talk about that? Because that seems to me to be the absolute essence of the thing, like running it with not even trying to optimize because you know that a lot of your shareholders have so much of their net worth in the stock, for example.

Well, I think you're, you're (1:21:17) absolutely right that they run it assuming that Berkshire is the only asset of the shareholders, uh, because in many ways, it really was. And so that partnership ethos of the family and the doctors and the people that, that, uh, had faith, um, you know, the, obviously a significant amount of the stock is owned by indexes now, uh, you know, when it was added to the S&P 500 and so on. I think the, there have been times when Warren and Charlie have said, "We would not buy the stock at these levels." And by the way, you could argue in hindsight, they were (1:21:58) wrong. You should always have bought the stock. And, uh, um, and, uh, there are times when they say, you know, uh, at, you know, "We are buying stock at this level." So I think that they want shareholders to have the information to make their own decisions. Uh, uh, so I think that that culture, I think of viewing it as the only asset of the end owners, I think that will persist for a long time. You know, I, I think you've, you've heard me sort of say that, you know, I, I doubt either one of us could name the third CEO of Standard (1:22:37) Oil. Uh, uh, I, I used to say nobody could name the second CEO, except it was also a Rockefeller, uh, but, uh, but the third or the fourth, um, and yet Standard Oil was, you know, the most valuable company in America for something like 11 decades, or certainly one of the top three. Um, and I think that's the right mindset for thinking about Berkshire, how it's built, what Warren is trying to do. You couldn't name the third CEO, but what John D. Rockefeller left was a collection of assets that had very long lives and (1:23:17) would produce cash for a long period of time. That was, that was the first thing that he left built and then left. The second thing was a culture that said, uh, you know, "Wall Street plays their games. Famously at Exxon, governments come and go, but we're Exxon." That may be too strong for for Berkshire, certainly, but, but this idea that that we make our own decisions, and we make them based on the combination of engineering and economics. So there is no, it's not politics, it's not perception, it's not trends. It's these are how we, it (1:24:03) was a rigorous engineering culture. So I think the combination of this, I won't call it insular culture because that makes it sound like, uh, they have their head in the sand, but it was a culture that was resistant to the vagaries of outside influences, many of whom are sort of have ulterior motives and different agendas. And that combination meant that if you, to had Standard Oil in, you know, 1900, if you had it in 1950, if you had it in 1990, or if you had it today in 2023, you were well served by those two characteristics that were laid in place (1:24:46) by John D. Rockefeller. And, and John D. Rockefeller was a bigger, larger-than-life influence, and Chernow's biography is one everybody should read, uh, um, but you didn't need another one after that. What you needed was people that were protective of the assets and the culture. And I think that is how I think of Berkshire, and how I think of the board's job, and, and, and the management's job.

One thing that's very distinctive, obviously, about the culture of, of Berkshire, that I guess comes a lot from Charlie, is this (1:25:20) habit of rubbing their nose in their mistakes, of admitting when they've gone wrong, where, where they've gone wrong. And the first time I met you, I think, was when I interviewed you for *Richer Wiser Happier* for the book, uh, in your office at the Rockefeller Center back in, I think, 2017. And I was very struck when you were giving me a guided tour of your office, you had set up, I think what you called a Wall of Mistakes.

Wall of Shame.

Wall of Shame. Yeah. That was that was inspired, I guess, by Charlie and (1:25:53) his effort to reduce standard stupidities by rubbing his nose in his mistakes. And I think it's really fascinating as an idea. Relate, well, this whole idea of how you can structure your physical environment actually to tilt the odds in favor of making wiser decisions. And I wondered if you could talk about that Wall of Shame, the Wall of Errors, the Wall of Mistakes, how you, how you think about it, how it came about, why it's, why it's really helpful for you.

Well, it goes, I mean, it goes so much back to what we were talking about about (1:26:28) immutability and this relationship between how we can improve, uh, ourselves. And as you said, you changed your wiring, uh, and of course, our wiring is got this plastic nature and is capable of it. It is not at the extremes. I mean, right, we, we all know, I mean, what clinical depression is, is something very, very serious. But, but this idea of, you know, the connection of our physical environment, our physical bodies to our mental state, of course, those things are related. C.S. Lewis wrote an interesting essay I read a long time ago about (1:27:05) praying, and he said, you know, people have this view, "I can pray anytime. I don't need to be on my knees." And he made a very strong case that you should be on your knees because the connection between our brains and our bodies is strong enough that that position, which is of course a position of incredible submissiveness, affects our wiring, uh, in a much more modern interpretation. There was a, uh, uh, in the early days of the idea of internet video, it was streaming. There was at that time, laptops wasn't really the thing. It was just (1:27:42) desktops. And this skeptic said to me, "Well, nobody's ever going to watch a movie on their computer screen because when you're on your computer, you're leaning forward 3 degrees, and when you're watching a movie, you're leaning backwards 3 degrees. And you're different people when you're leaning forward, when you're leaning back. You have different expectations. Your sensory apparatus is working differently." Well, of course, that's true. Right now, he was wrong because it ends up you can put your laptop in bed and lean back. And you (1:28:12) know, all sorts of things. Um, but so I do think, uh, you know, Charlie very early told me to put pictures in my office of people that I wouldn't want to disappoint. So that if I was on the cusp of making a decision that was in that gray zone, I might look around, uh, and I might feel a little less comfortable making it. I don't think he expected that I would have a bronze bust of him in my office, which I, in fact, do. Uh, uh, but, but, you know, I had my grandfather, I had Warren, Charlie, you know, I, people that, uh, that I (1:28:47) admired, and I wouldn't want to disappoint. And then Charlie said to me, you know, "When you create directors, you run a mutual fund. The relationship between you and your end investors is very tenuous. It's not like Berkshire where Warren sat at a table and knew his original investors." You know, we work with financial advisors. And, you know, and he said, "So have a board of directors that you're, you're, you're proud, uh, and you that you're proud of them, and you don't want to disappoint them. And (1:29:15) you certainly don't want to mislead them because they're the face of your shareholders." And that's how we ended up with people like Tom Gayner and, uh, uh, serving in that capacity. Who do you want to report to? Uh, but you're absolutely right. The, the symbolism. When we visit companies, we're always looking for symbols. You know, is there an executive cafeteria, or do the executives eat? You know, are there reserved parking spaces? Are there, you know, P.A. systems? And, uh, uh, we're always looking for those sort of (1:29:46) subtle cues. And, and so of course, we've tried to internalize that ourselves. So you mentioned the Wall of Shame, and that's probably a very good and tangible example. So we frame the stock certificates of our biggest mistakes and we put the transferable lessons. Because, uh, uh, and we lead these mistake reviews as a team. Danton, my partner, and I lead those. Because I worked at other firms and I saw, you know, the success having a thousand fathers and failure being an orphan. And I, I worked for one individual (1:30:19) that he just, it was always somebody else's fault. And it was so clear that this man, who was an incredible analyst, was going to fail as a portfolio manager and as a businessman because, you know, as a, as a portfolio manager, uh, he had a hard time, uh, revisiting, uh, his work. And then as a business, he created a culture where people were afraid to admit their mistakes and had to pin the blame. And it was always, "The company lied to us," or, you know, "Somebody else's fault." So that, I think it's a really useful use.

When you went back and you looked at something like AIG, for example, which I remember you telling me once was definitely your most painful and expensive mistake, where, you know, this had gone from being one of the world's biggest financial companies and great insurance companies to almost collapsing and having an $85 billion bailout from the government during the financial crisis. And you obviously were a big shareholder and an expert in financial companies, so particularly painful. Like, what, when you came out of that and you went (1:31:25) back and you did your postmortem, was there something where you, you actually changed the way you invested, or the way that you looked for disconfirming evidence? Like, was that process of, of really rubbing your nose in your mistakes, practically helpful to you and making you a better investor?

Yeah, I mean, the goal each plaque that's written on the, the, the bottom is not what happened, right? It's, it's what was the transferable lesson learned from what happened, right? In other words, our goal is to earn a return on those mistakes, on (1:32:01) the money that was lost. By the way, there wasn't money lost on all of them. There's, there's one on that wall where we made, I don't know, six or sevenfold on our investment. Uh, it was just trying to recognize that we had gotten lucky. So, you know, obviously, the mistake wall, the Wall of Shame, is focused on process, not on outcome. So, Warren and I, don't, I'm sure he wouldn't mind my saying this, once I was asking him about this idea of having a significant loss on an investment. He said, "Oh, you, you shouldn't (1:32:33) be afraid of having a loss. It's, you know, going back to you were talking about Thoreau, and you think of the Kelly criterion of how much to bet. You know, he, he said to me, 'I'll bet you a billion dollars on a coin toss if you give me two to one odds.' And so I'm willing to take a 50% chance of losing a billion dollars because the odds are so much in my favor. But I wouldn't bet you 10." So I have to decide the bet, right? I have to make sure I know the odds. So if, if he took that bet and the coin came my way, it wouldn't go on a mistake wall for him. (1:33:10) I, I mean, I'm speculating, so I'll say it from my point of view. If, if we took that bet with two to one odds and it didn't, uh, come out, uh, and we had a loss, we wouldn't, we wouldn't say there was a transferable lesson to learn from that, unless the coin was rigged or something like that. So, uh, we're thinking very much about what is the transferable lesson learned. So, um, you're right, AIG was the biggest one. Probably the one that we've earned the highest return on was Lucent, interestingly, because Lucent was (1:33:44) one where our own processes worked, but we kept overriding them. And the reason we did is because Lucent was, it's hard to bear this in mind, Lucent was the most admired company in America, number one, Fortune ranked most admired, had a blue-chip board, I mean, the most unbelievable board, absolute dominance in telecom equipment, and, and always a very expensive stock. So we followed it from a distance. People admired Bell Labs. We all, our visits to Silicon Valley, people talk about Bell Labs and everything that came out of there. And, and (1:34:22) uh, and so they missed a product cycle, and the stock went down a lot. And we said, you know, this could be a real opportunity for us because when it, at that time, it was a real momentum market, a little bit like it's been in recent years. And so missing a quarter, you know, stock could really overreact. We, we bought 17 million shares of Costco in a single day when the stock closed at $42 and opened at $26, uh, because they missed a quarter. But we, we were ready. So that was sort of in our mind. And we thought, hey, here's our chance. Let's really look (1:34:54) and there was this anomaly that was so strange in Lucent's cash flow statement, is they were reporting a lot of income, uh, uh, but if you looked at cash from operations, it was negative. And now, when you think of a manufacturing company, so the first line on the cash flow statement is net income, then you have a big add-back for depreciation. They're a manufacturing company, so that's a big add-back. To go from net income plus depreciation being a huge number to a number less than zero for cash from operations is very, very (1:35:29) strange, uh, uh, uh, and it had to do with this vendor financing. And so we thought, well, this doesn't make sense. But we were so disposed to want to own it that we sort of met with the CFO, and we, you know, and we asked the question, and they did this Kabuki of giving us an answer that made no sense, but it sort of played on our behavioral biases. And, you know, it ended up being a terrible

Investment. We overrode our own red flags, and so learning that mistake to have confidence in your discipline, uh, to recognize how behavior can unwind it. You know, that saved us from Edron. It saved us, oh, Global C. It saved us from so many things that have been incredibly admired. Business, business is GE, uh, but that have, uh, uh, but where we couldn't make the math work. Uh, so that was a higher return. AIG was, you know, so painful because we just passed 9/11, and I still look at the downtown skyline, and I can still see the silhouette, even, you know, what, more than 20 years later. Uh, it was just, they were so much a part of my existence for most of my life. And to me, AIG vaporizing was like that. Every lesson that I learned didn't apply. Insurance companies go broke before they go illiquid. Insurance companies never go illiquid because they've got the money, right? They, they get paid upfront, so they've got, you know, AIG had a trillion dollars worth of liquid assets, a trillion. You know, had a hundred billion dollars of equity, 80 billion of tangible equity. So it was so hard to see. So our lesson, uh, written on the wall is, is in some ways very technical, um, uh, but I think the most important one was simply about the view.

That we knew when Hank was gone, there was nobody that could understand that complex enterprise, uh, the way he could. So we knew whatever risk was there went up dramatically. And the fact that there was so much growth in things like financial products in his absence, uh, should have been a very. Now, we have other things on that plaque, but, but I would say that shaped us as we think about banks. But some of those mistakes are mistakes of omission, things we should have done that we failed to do. Um, a number of them are things that we sold, uh, on. You know, they were a little ahead of themselves, but ended up, uh, being fantastic. So it is a big, big part of the culture, um, and, and just continually trying to learn from all of those different types of mistakes, not just buying something that goes down, but, you know, things you should have been looking at, things. And it makes it more fun to work here. I think the young people feel like we love hearing about how our bosses did stupid things, and it makes us feel more comfortable saying, well, I'm afraid we, I've really changed my mind.

Everything I told you three months ago, I, I, I think I'm wrong. And it's interesting to me also that that you had all these images that you bought on eBay, I think, and framed with quotes. And I, I was looking at a video I'd taken in your office, um, of those videos and quotes. I sort of wrote them out by hand, and it was striking to me how many of them were related to behavioral biases that you were trying to remind yourself of. And so I, I, one of them, very, you know, obviously, a, a kind of famous, uh, thinker on this subject, Richard Feynman, who said, if you're doing an experiment, you should report everything that you think might make it invalid, not only what you think is right about it. That was interesting to me. You had a couple of quotes from him, but there was also, there was also a really interesting quote, um, one, yeah, feel free to comment on either of these. One was from Max Perutz, who I hadn't heard of until you mentioned him to me, who ran the Cavendish Laboratory in Cambridge, which was, I think, one of the most innovative research institutions in the world. And he was asked if there were simple guidelines on how to organize, um, research so that it's still highly creative. And you had this great quote from him where it said, no politics, no committees, no reports, no referees, no interviews, just gifted, highly motivated people picked by a few men of good judgment. And I wondered if you could talk about that idea of how to run an organization that isn't saddled with terrible bureaucracy and the like.

Yeah, I, I love that Max Perutz quote. And you're right, it's, I studied a lot of organizations, uh, that breed excellence when the participants could work anywhere else, right? In other words, why, you know, mention Munger, Tols, and Ron Olen, uh, you know, how does Munger, Tols rank? Literally, as I believe in one ranking, I just read recently, the best law firm in the country, right? It's, it's like, what is it? And by the way, you could say the same about Wachtell Lipton. And what's interesting is they have totally different compensation practices, totally different. So it's not just compensation, but, but certainly in both cases, it is about culture. And so I'll use that and, and the Cavendish Lab to sort of draw them all together, which is that, you know, my experience is if that, of course, you have to pay people fairly, right? You know, people, people, it, it, it would be a crazy thing to tell people that, you know, over the arc of your lifetime, I'm asking you to earn well below what you could earn elsewhere. So you have to pay people fairly. That, but within a very broad range of what's fair and what the appropriate time horizon is.

I find if people are great at their craft, then what they really care about is being in an environment where they can be absolutely the best that they can be at that craft. And so what is it that takes somebody who's really gifted in analyzing businesses or selecting securities? Um, what sort of environment is it where they can be the best at what they do? Or alternatively, what are the sorts of things that would interfere with that? So, for example, uh, if you have to spend a lot of time meeting with clients, that's very destructive because, of course, clients want to face on, uh, focus on what, Bob Kirby, who is a great mentor at Capital Group, uh, used to call, tell me where the three W's, what went wrong? You know, you'll spend 95% of the meeting on 5% of the portfolio. It's always what's gone wrong. Uh, if you go back to that same client a year later, and it's down more, uh, you're going to have a hard time defending it. In the third year, you're going to sell it before the meeting so you don't have to, uh, uh, and those are all terrible decision, um, waste, wasteful meetings.

You know, sitting in meetings. You know, there's, uh, one of the quotes on that wall, I thought you were going to quote, was a baseball player because see how much I know about sports. A guy named Bill Lee. He was a pitcher for the Red Sox. I don't know anything about him. I don't even know what decade he pitched in, but, but the quote of his that I had read that I like so much is he was asked what happens at team meetings, and he said, oh, at team meetings, you sit on your ass, chew tobacco, and nod at dumb things. And, uh, so of course, I, I worked at other places. I, I saw that culture of like, why am I wasting my time? I've got work to do. So that's another criteria. You don't waste their time. You don't put them in, uh, uh, surround them with people that are going to make them worse at what they do. In terms of what are the external pressures? How do you minimize the external pressures that allows them to be the, the craftsperson they are? How do you make sure that they admire the people they work with? You know, people don't, they say they don't quit their job, they quit their boss, but they also quit their colleagues.

Um, so if you really admire the people you work with, you like coming to work, you like their value system, you like their expertise, you admire what they do, uh, they help you get better at what you do. So, uh, you know, there are a few others. We want a compensation system that's reasonable, and we want to remind people that what they're doing makes a difference in real people's lives. And I, I have nothing against hedge funds, except I'm jealous of the fees, of course. Uh, but, you know, the, what we do is very direct, right? Our average client might have $25,000 invested with us, and it may well be their life savings. And so it really determines whether a kid goes to college or whether, uh, they get to retire in the circumstances that they want. And they're having conviction in what we do and what we do mattering is a very central part of what we do. So, you know, we've tended to skew towards people where they prefer, that they like the idea that what we do sort of matters versus if we're charging two and 20 and managing the endowment, that that's terrific, and, you know, they wouldn't hire us anyway. Uh, but we like, you know, we like that we're offering a good value to the end client in terms of we have low fees, you know, and we try to keep it that way.

So all of those come from that Max Perutz quote, like how do you create an environment where talented people enjoy coming to work and they aren't trying to optimize just their income, they're trying to practice their craft in the best way possible? And by the way, a small team is also part of that. It would be very hard to run the Cavendish Lab with 600 scientists. And so a small, talented team. Tom Murphy, I liked, used to say at at Cap Cities that he got to be a low-cost provider by paying people that were twice as good 50% more. And there is something about that too. We love having fewer better people. And yet we have people that are in their 20s, in their 30s, in their 40s, in their 50s, and in their 60s, and this on a team of 10, you know, so it's not that. And yet on average, we've been together 20 years, which is sort of incredible. Maybe it's 17 years. I, I, I get you the actual numbers, but it's something like that. I think on average, the team has been together an average of 17 years, and yet we have been people that have been here for less than five, less than 10, less than 15, 20, you know, and people in every decade.

So I love that. Going all the way back to where we started about my grandmother and keeping interested and keeping making new friends. I do think investment organizations can also get a winning team and they age out, and you end up with sort of a huge gap. And I think it can create a very brittle investment culture because often it's harder for them to be challenged. You know, and, you know, I think about how much we had invested in newspapers in the 90s. And when Danton, my partner now, joined me in the 90s, I gave him newspapers as his first industry. I said, "Look, you know, he had banking experience. He's an amazing just a human being I admire in every dimension." Uh, uh, uh, and in the beginning, I said, "Well, I'm gonna give you newspapers because we own three or four of them. We own Gannett, we own Tribune, we own Dow Jones." There was one more, but anyway, uh, uh, and I said, "You know, these are old business models. They're very, in a way, predictable. They're regional monopolies, you know, capital allocation matters, blah, blah." And a year and a half later, he came back and he said, "Have you heard of this internet thing?" Because I don't think you understand how powerful it is, not as a source of news, but as a source of where to buy an apartment or how to find a job. And when you recognize that help wanted, real estate listings, and, uh, uh, uh, you know, miscellaneous classified, you know, car, uh, uh, are essentially responsible for 100% of the profits of the newspapers on average that we owned, and that it sucks looking for a job in the classifieds. You, you used to read through them and you'd circle the ones that applied. You couldn't search. And so anyway, uh, that, I, I don't know where I would have been without Danton joining. And, and we sort of carried that through with the younger ones. So that, that, that's been all.

You're so amazing that you remember that Max Perutz quote. I, I keep that one a little in a different place. It's right by my office. For that, a beautiful quote. I also, there was an amazing quote also from J.P. Morgan that I wrote down that I loved, um, where he talked about how our mistakes have been errors of judgment and not of principle. And that also seems to me, um, yeah, he said, "Since we have no more power of knowing the future than any other men, we have made many mistakes, but all mistakes have been errors of judgment and not of principle." And that seemed to me a really interesting thing from back in. And it, it was a comped with a photo of J.P. Morgan. So this was from 1933, when he talked about the importance of doing first-class business in a first-class way. And so, in a way, it's, it is a, it's consistent with the Buffett-Munger approach to capitalism as well, right?

Yeah, it absolutely is. And, and, and I think, you know, my, my, my grandfather had one of those quotes where I think in today's era, I would have said, "Shit." You know, I, I think you need to stop saying that. Uh, and his quote was, you know, uh, "Making the first million is the hardest." You know, the second million is just a double, uh, the third is just 50%, you know, the fourth is 33, uh, the fifth is 25. Like, each one, the, the threshold for making a million bucks, it gets, it gets to where you could make it on on interest. Uh, but the first one is hard. Uh, and so what I would say is, you know, it's Ben Franklin. Going back to, I think the most, for me, the most important book that I read wasn't, uh, uh, Dale Carnegie, it was Ben Franklin's autobiography, which is only 80 pages or 85 pages. And it had checklists, it had ways to improve your character, it had ways to deal with, uh, uh, negotiations, it had great techniques for winning influence. I mean, it, a lot, uh, uh, there, there's an enormous amount, uh, in that book that is useful. But one, of course, his famous sayings was, "It's hard for an empty sack to stand upright." And so I used to say that when I was starting, uh, uh, you know, I, I used to, uh, buy shoes in New York City for work, and then I would have them shipped to my brother who lived in Hoboken, and, and that way I would avoid New York City sales tax. And, you know, do I think that is an ethical way to live? No. I, I, I think the world can understand and a kid making $188,000 a year sending shoes to his brother's apartment to save sales tax. Now, when Dennis Kozlowski is sending Monet paintings, uh, to New Hampshire, it's a different standard.

So one of the quotes in that wall, uh, of Charlie Munger's is, is he says, you know, I think as you rise in life, more is expected of you. He then somewhat colorfully says, if you're a beer-swilling sand shoveler, you can go to a strip club, but if you're the bishop of Boston, you probably shouldn't. Uh, so wrong on all levels. So, just, but I think this idea that, uh, I'm not, uh, I don't want to ever have a sort of a holier-than-thou mindset, but I do think there is a point that people sometimes push out too late in their career. And the earlier you move it in, the better the longer-term consequences of saying just what you say. You know, we want to do first-class business in a first-class way. I'll give you a good, this, this may be helpful for your listeners, but it's a piece of advice I recently gave my kids, whereas I said, I, I'm not sure I've quite got the ages right, but, uh, one thing I said is, is before you're 40, and maybe the number is 30, uh, but before, let's split it and say 35, before you're 35, never do business with friends. After you're 35, only do business with friends.

Uh, you know, there is a turning point there where, as you, so you accrue, so much insight, wisdom, data in that, in some period of your early career, that as you get to your later career, you start realizing that that's the coalescence that you started in talking about these networks of people. You know, they, they weren't relationships I was going to have at 22 because we were all trying to figure it out. But over time, you start realizing, and the sooner you can shift that, the better.

I wanted to ask you before I let you go about, um, Cardinal John Henry Newman. Because when we were in, uh, you told me about this great quote of his that I looked up. It's from an 1852 lecture that he gave in in Ireland where he said, "It is almost a definition of a gentleman to say that he is one who never inflicts pain." And I think, I think you told me that you had it in, that you keep it in your phone, and it's a, it's a central teaching for you. And our listeners probably won't know that Cardinal Newman was this great English theologian and scholar and priest, and he was actually made a saint by Pope Francis, I think, in 2019. And most important of all, he was, um, a fellow of Oriel College, Oxford, which is my college at Oxford. Um, and so he may be the only great person to have been a fellow of Oriel College, Oxford, or to have come through Oriel. Um, can you talk about this idea of, um, a gentleman being someone who never inflicts pain? Because it's a, it's a beautiful insight, but it's also one that obviously has deep resonance for you.

Well, I mean, one of the interesting things about that is it was given to me by my tutor and my favorite, uh, professor in university. And there, a professor named James White, and he subsequently became the moderator of the Church of Scotland. And I have to say, you have to admire a church where the head of it is called the moderator. Isn't that a great title? Uh, so he was the moderator, and he gave it to me in a way, uh, uh, the way maybe Charlie would have given me if I had known Charlie then, he might have given me the Ben Franklin quote about these argumentative, uh, people may, you know, they win the arguments, but they don't win friends and influence, which would serve them better. Um, he gave it to me because I think he, he appreciated my very deep engagement in the work that we were doing and in my degree. And, but I think he also felt that, well, I recently, uh, had a, a very sore throat after, uh, uh, uh, spending a couple of days at a conference. And, uh, a man I admire greatly, when I said, "I think I'm losing my voice," he said, "Yeah, you usually don't get that from listening too much." So I would not have been accused of listening too much in those tutorials and in the seminars at university. And so he handwrote out Cardinal Newman's talk, uh, because, you know, there, I don't think he had a computer printer, uh, and so he handwrote it out, and he, he gave it to me, uh, uh, uh, at the, uh, beginning of my last semester with him. And, and, uh, and he said he thought it would serve me. And, and so the not in inflicting pain is, is an important part of it.

So was the idea of, uh, the gentleman will will seem to be receiving when he's in fact conferring. Um, it's, there's a, a line in there I love where it talks about he's, he's, you know, uh, uh, compassionate with the pain, he's, uh, patient with the absurd, you know, it's this, um, he has his eyes on the whole table, trying to put people at their ease. Beautiful. It says, he, he has his eyes on all his company, he is tender towards the bashful, gentle towards the distant, and merciful towards the absurd. Exactly.

So, you know, my, my grandmother, uh, uh, used to quote, uh, Harold and Maude, that wonderful movie. And there's a line in it where, uh, Maude says, "Yeah, Harold says to Maude, you know, you really, you really love people, don't you?" And she says, "Of course, I do. They're my species." And I really love people. I, I love the complexity of life. You could sit on a subway and look at all of those faces, and every one of them has a story. And, and being curious about that, to me, is a source of so much richness. And I think, you know, back then, at age 19 or 20, or whatever it was, when he handed me that, uh, I think I was much more impatient and aggressive and, uh, insecure. And, and, and there was something about wanting to aspire to that. And my gratitude to him for seeing that as potential. And going all the way back to mutability, of course, you can become a better investor by learning. Of course, you can become a better parent by reading and working at it. Of course, you can become a better lover and a better spouse or husband, wife. You can become a better cook. Uh, of course, you can become a better person. Of course. And this, this idea that people are defined by their worst moment, uh, uh, and reviled and identified by their worst moment. I mean, if you know, if you're Hitler, you deserve it. Uh, but if you were somebody that worked hard to live a good life and you really screwed up, I was reading a about a figure in the Hudson Valley who, you know, had led the, well, it was a complicated, uh, uh, uh, redefinition of his legacy, where there was unarguably wonderful things that he had done. And so I just think that idea of the mutability, and of course, it's one of the things I love about investing is it's always changing. It is, you know, wonderful companies become absolute bureaucratic nightmares, terrible companies reform.

Uh, I mean, you think about going back to J.P. Morgan, think about Jamie Dimon going into J.P. Morgan. If you want to know what kind of leader he is, and I met him very early when he was still at Primerica, or actually Commercial Credit, which is where he started with Sandy. And his first annual report at Bank One when he became CEO of Bank One is just required reading. Everybody should read it because he had never led anything, so we had no idea. Would he be a good CEO? Would he be too abrasive? Would he be? And he wrote a shareholder letter of accountability, of how to be measured, of fairness, of aspiration. And, you know, J.P. Morgan had certainly, and Bank One, both had become very mediocre institutions. And the drive and the commitment and the value system and the legacy, it is an incredible transformation. So that, you know, that constant changing, uh, that can come. I, I, I love that in all aspects of life.

There's also something in in that Cardinal Newman letter that I thought was very beautiful and weirdly, uh, uh, weirdly resonant and apposite for investors as well, where he just was so undogmatic. I, I, I wrote down this this paragraph where he was talking about non-believers. And obviously, he was a, he was a man of deep faith, but he said, "If he be an unbeliever, he will be too profound and large-minded to ridicule religion or to act against it. He is too wise to be a dogmatist or fanatic in his infidelity. He respects piety and devotion. He even supports institutions as venerable, beautiful, or useful to which he does not assent. He honors the ministers of religion, and it contents him to decline its mysteries without assailing or denouncing them. He is a friend of religious toleration." And I thought that was really lovely, that he's able to say, well, yeah, you can disagree, but disagree agreeably, and be large-minded enough not to ridicule what you disagree with, and not to be a dogmatist, and not to be a fanatic.

And, you know, again, it's something that's beautiful about Warren and Charlie's relationship, right? That you can have a Democrat and a Republican, you can have, and they're willing to change their views and be open to others' views.

What do you think? Well, I think, yeah, I think the sort of the litmus test of what allows you to dismiss somebody completely from your guard, uh, has become so, so narrow and so tightly defined. And it's, you know, there's so much of the internet that is a gift to the world, and, and I think people that rail against it are making a mistake. But, you know, I, I actually spent the weekend, Saturday, in the small town that I'm in. There was a, a big public hearing where there was a controversial issue in the town. And people, if you were to read what had been written on the internet, the vitriol was despicable. And so the supervisor called this meeting, and everybody came together. It was interestingly held in a church because the town hall was under construction. And maybe that made people behave a little better, but there was so much decency in that room. At the end, people really listened. They sat together. You drive differently in a small village if you live there than you drive being anonymous. You're a much more courteous human being, not you specifically, one is, uh, uh, when there's a chance that you know the person in the car in front of you, you're less likely to honk very aggressively when the light turns green.

Um, and it, it, it is, I think, that that underlying, you know, sort of tolerance for different views, uh, it is, I think, and, you know, I don't know where the blame starts in the political sphere, but I'm, I'm, you know, it is amazing how many people think life is going pretty well in their neighborhood and in their community, but somehow thinks the world is going to hell in a handbasket. And, and I'm, I'm fundamentally more optimistic. And I, I think like Warren and Charlie, I think there are many people that maintain very close relationships and friendships with people that have different political views on a personal level, and then as they get out into the broader context, you know, then then they're back to the anonymity of just sending in the hate mail.

Yeah, and the, one of my favorite moments, I think, from the annual general meeting, back in May, was when, you know, Buffett drifts off into non-investing topics, which I always find much richer in some ways than than the pure investing topics that they discuss. And he said, "I've never known anybody that was basically kind that died without friends." And then he said, "I've known plenty of people with money who died without friends." And then he talked about Tom Murphy, who you mentioned before, and he said, "I never saw him do an unkind act in 50 years. He didn't see any need." And so I think in some ways, that message, that maybe this is one reason why, in sort of David Hawkins' kind of terminology, uh, Berkshire makes us go strong, is it embodies not just being fair to shareholders and the like and being transparent about mistakes, but trying to be honorable and decent and generous, like the way Warren tries to avoid criticizing people by name. Um, and there's also, there's a kind of, you see the kindness, I think, between him and Charlie, and you see the kindness that they show towards AET and Greg Abel. There's a, there's a sort of sense of decency. And so I don't know, I think that's in a way, one of the most valuable things that we can clone, and it's relatively easy to clone.

Yeah, and if you, you know, a good framework for thinking about Berkshire as an example, is is just to think of a phrase of Charlie's that I've always liked, is that, you know, investing is a subset of worldly wisdom. So everything that they say about investing is, if you think about it in a sense, metaphorically, you know, or as a subset of a broader worldview. Um, the fact that it works in this subset is generalizable. And, uh, uh, it, and I, and I think that that is true. I think, I, you know, I just think by and large, it's one of my sort of queries about the basic premise of some aspects of this formalized ESG movement is that it rests on this premise that somehow capitalism succeeds by exploiting another constituency. And, you know, that was something that Keynes, uh, uh, wrote about, uh, uh, and Adam Smith wrote about, you know, going all the way back, that that's not the way it works at all. It's not a zero-sum game. Uh, uh, that, you know, the person who's good at fishing and the good person that's good at making hooks can both do those things and both end up better off. It's not that one's getting the better deal than the other. And, and, uh, I think that you're absolutely right on on that on that mindset that's there. And thinking of it as a subset of worldly wisdom helps sort of move from one scale to another scale.

Yeah, yeah, and well, as Charlie would say, it's all one damn relatedness or another, right? Everything, everything is related. And, and once you start to have this sort of simple framework for how you think about the way they're behaving, you're like, oh, they're doing it that way, that's what I should do. So I, I was right struck, for example, when Warren was talking about Ben Graham, and he said, "Ben did all kinds of things for me where he just never expected anything in return." You hear that and you're like, okay, so here are these people operating in a way where they're kind of generous in sharing their wisdom, they're not expecting anything in return. You're like, oh, it's a different system where there's there's enough wisdom, enough knowledge, enough money to go around. You don't need to kind of hoard it all.

Well, and the elimination of that friction, the elimination of that friction is a source of huge efficiency. And in both in this metaphor, you know, in this subset of investing, in worldly wisdom, also in life. And that goes back to what we were saying about the amount of energy that needs to be consumed if there isn't trust. You know, all of this friction is created, and you need an enormous amount of energy to push through that. And so that sort of effortlessness of the way it falls back and forth, it'll, it'll probably work out at the end.

I have a partner at work, not Danton, who runs our client side, who is, you know, probably my oldest friend. We are baptized together as infants, and, been godparents of each other's children. And, uh, you know, we've worked together for 30 or more years. And, uh, uh, and we go out for coffee, or we walk to work together, or we walk home from work together, you know, at least two or three times a week. And, you know, it is amazing how, you know, whoever gets their phone out quicker to tap to pay for the coffee, uh, but it, it's, you know, we've had such a, it's on my mind because we were talking last night, and this sort of view that over time, we both are convinced that we got way more from the other than we contributed. And, you know, it is going back to that Harvard study on happiness, you know, of course, gratitude is is a huge shaper of life. And this idea of not keeping score. And, you know, the analogy I sometimes use with my kids is if you're running downstairs and you try to place your feet on each stair, you're going to fall, and you're going to go very slowly. Um, somehow you lift your head, and you just float down the stairs. And this, this scorekeeping, uh, in who did what for whom, it, it, it, it destroys relationships. And, and this contractually legislating not just kindness, but also, you know, helping out one another professionally, it is amazing the, the gift that I feel, you know, how much I've received from all of the mentors that you mentioned, and, and as a result, how much I feel I owe the rest of the world. It's, it's a hell of a great way to live. And, and it works. I'm not one to speak totally on this front, but I think it works as well. I'll say in friendships, because I'm good at that, it works as, you know, as well in friendships as it does in business.

You know, I, one last point, but I just, because, you know, we, we were interviewing some younger kids about internships here, and they were, were all interested in remote work. That was a big, uh, uh, that was a source of interest to them. And I talked to them about why, and they said, well, because they have all, they want to have work-life balance and so on. And I said, so I'm curious, because you just graduated from college, you were in college during COVID, what was remote class like? And every one of them says they hated it. And you say, why? They said, well, I didn't learn a lot because I was, you know, obviously multitasking. I didn't create great relationships, and everybody cheated. Everybody cheated. And I think, why would work be any different? Like, if you view work as something you do in order to then have a life outside of work, that is a totally different mindset than the idea that work is where you go to become excellent at something, to learn, to have deep relationships and friendships, to admire people that you get to work with every day, to serve a customer, to serve a client, um, to create value, to get better at what it is you do. And by the way, I know there's a, there are a lot of jobs out there. I, I, I know that. But I also know that there are far more people that are in those same jobs as people that describe them as who somehow find it rewarding. And those people are the people that, you know, smile when they help you at checkout, and, you know, that you deal with whether you're calling Comcast to deal with your cable, or whether they're helping you fix a a pipe, or whether they're building, installing cabinets, every, or moving. Everybody knows what it is to deal with somebody that is taking pride and pleasure in what they do, and somebody that is just trying to get paid and get the hell out the door. And sometimes the vocations overlap. The only difference is what they, the orientation that they bring to them. And I feel like with remote work, to me, it's a cancer because it's creating this future alienation from what you really should are spending 40 hours a week doing, which is a lot of time to feel like my goal is to do the minimum I can to get paid the most versus it's a way, just like school, to build relationships, learn, and not to cheat.

I don't know, I kind of like working at home, but I've done it for so many years. And I love, I love remote working because it meant that my wife started to work at home as well. So, so well. And also your work is entirely cerebral, almost entirely. Although I would say that I would feel differently doing this with you if we hadn't drunk wine together, you know, out on Fire Island, if we hadn't, uh, uh, if you hadn't been through the office, and we hadn't sat here talking about walls and culture and sipping coffee. And so this is an extension of our relationship. But if this is all I knew of you, it would be a totally different experience for me. That's true. By the way, my father was a remote worker too, so I, I could see how it works for people that aren't, uh, that are in a sense, self-learning. Yeah. But if you're part of a team or part of an environment, I think it's a, it's a totally different experience.

Well, next time, next time, Chris, I definitely hope we'll do it in your office. I'll be more efficient about arranging a cameraman and the like. And, and, uh, I like that. And we'll come to it in person, especially one that can airbrush in the illusion of an upper body. Ah, but this has really been such a pleasure. I've really enjoyed it. And it's always a delight chatting with you. And, and also, as a, as a longtime shareholder in Berkshire, I'm, I'm happy that you'll be helping to safeguard the culture down the road. So, uh, I, I'm, I'm, I'm fully in support of that mission.

All right, well, thank you so much. I'm, I'm so glad for what you've done to, to, I think, really to me, celebrate what's special about a number of people that I admire in in a profession I think that gets misunderstood. And just grateful that you've put that out in the world.

Ah, thank you so much. All right, bye-bye.

Well, I'd be very careful of some of your software companies and, and a lot of what's in the arc portfolios where you don't have profits, and you may not have profits where almost everything has to go right, yet you're paying ridiculous multiples to sales. I'd be always be careful of paying big multiples to sales for profitless businesses.