“The Snowball —  Warren Buffett and the Business of Life” by Alice Schroeder. (Bloomsbury 2008)

By Nick Clack 

We live in times where the business hero is in decidedly short supply. The individual businessmen best known to the public are, at best, likely to be seen as greedy incompetents who have led the world to financial disaster. At worst they are fraudsters facing a prison term. Public resentment, even hatred of financiers, is now commonplace.
 
But then there is Warren Buffett.

Buffett holds a unique position in the business and investment world. He is synonymous with the accumulation of astonishing quantities of wealth and with the most material of gains. And yet, he is equally synonymous with honesty, integrity and fair-dealing. For many this is the big underlying paradox about Buffett. How can a man have made himself so rich and been so successful and yet not be a crook?

Alice Schroeder’s book gives answers; but fitting the style of Buffett himself, they aren’t facile or glib. They require time and patience.

The book is meticulously researched.  She has done the legwork and has also had the benefit of extraordinary access to Buffett and members of his circle. Schroeder used to be an analyst who followed Berkshire Hathaway and she says that it was Buffett himself who encouraged her to write the book. She claims she had around 300 hours of formal interview with Mr Buffett.

But, such access and approval from the subject of a biography raises the question as to whether she is too close to her subject; whether this is a sycophantic account. Well, my judgement is it is not.

Alice Schroeder says that Buffett himself said she should use “the less flattering version” when she came across conflicting accounts of his life. It is hard to be certain as to how much she did do this. But she has certainly avoided a hagiography.

The book is very readable and I was pleasantly surprised by how I wanted to pick it up and keep reading. It is written in a conventional chronological format and that helps. It is rarely technical and could appeal to anyone who has a regular interest in the business pages. It also benefits from humour. There are plenty of moments where I found myself smiling or even laughing out loud.  

The book highlights many contradictions in the Buffett story. He is a complex man and the brief sketches of him in the papers rarely do him justice.

One image of him is as this rather grandfatherly figure, a model of mid-western convention and stability. Someone who likes to keep it all “down home” and folksy and dislikes excess and vulgar display.

Well there clearly is some truth in that. But let’s also remember that the man who hates corporate excess is also the man who owns NetJets; a private executive jet business. The man who doesn’t like corporate show-offs, also clearly enjoys the most glamorous of company. And his private life certainly doesn’t fit a conventional image (Ms Schroeder has, perhaps understandably, been a little coy here). None of these things are necessarily bad, but they just highlight he is a complicated man.
 
The book is very strong on his early life. And I’m sure I won’t be the only reader to have been surprised to discover that his father was a Congressman. So again the reality is a little different to the common image. But one lesson that comes through is the sheer hard work that Warren Buffett put in during his early years. From an early age he worked hard. He also seems to have been obsessive in finding out information and understanding it. He was if you like the anorak’s anorak… reading prodigious amounts of technical financial reports. And the effort and, yes, intellectual analysis he put into his newspaper delivery rounds as a youngster are extraordinary. So this is a man that did the work and covered the miles; no short cuts.

For those hoping to find some magical insight into how to make billions, don’t get excited. I’ll save you the trouble. On page 825 (you have to work to get to this bit), Ms Schroeder quotes some handy advice for mere mortals… “…stocks are the things to own over time… There are only a few things you can do wrong. One is to buy and sell at the wrong time. Paying high fees is the other way to get killed. The best way to avoid both of these is to buy a low-cost index fund, and buy it over time.”   This quote highlights one of the great lessons I took from this book. An amateur investor cannot even remotely compete in financial markets with guys like Buffett and his many imitators. So personally, I will never again even try!

Certain key lessons are hammered home again and again. The long-term view, the “margin of safety”, the importance of good management, the importance of good faith and the avoidance of fads or crazes. It all sounds so simple, easy and unexciting. But it clearly isn’t easy or Buffett wouldn’t be so special.

Buffett himself is a fascinating character and I enjoyed being in his company for so long. Schroeder uses many lengthy quotes from her interviews with Buffett and they are well chosen, interesting and often entertaining. This gives the reader the illusion that they have spent some time in his company.  

The cast of characters who surround Buffett are often fascinating. For me one stands out, and that is his partner Charlie Munger. He comes over as a sort of financial Walter Matthau; I would love to meet him. The truly extraordinary furniture entrepreneur Rose Blumkin is another character deserving of the attention she receives. Hers is a story of the American dream, but the account of the non-compete clause Buffett felt he had to have with this elderly lady is a delicious detail.

In terms of problems with the book, the biggest is its sheer size. It is over 800 pages long and my hardback edition was certainly not the sort of thing you could read on the tube. Frankly, some of the details about his family, for instance concerning his first wife’s singing career, I could have done without. But, the book does zip along at a good pace and I didn’t skip at all.

So, what is the judgement on the book and the man?

The book is easy: an entertaining and fascinating read, exhaustively researched and authoritative. But it is a little too long. I am sure more detail about Buffett and his life will emerge in the coming years, but it is hard to believe this account will be bettered for a very long time.

The man is harder. In Alice Schroeder’s account he comes across as something of an oddball, an obsessive character. In terms of his wealth it is almost as though he has a collector’s impulse – he just happens to collect investments and money. But that doesn’t do justice to his intellect, judgement and method. His reputation for uncompromising integrity has been hard won over many years. Now that clearly doesn’t stop him from being a very tough businessman indeed. But it does mean he represents a kind of plain-speaking, fair-dealing approach to capitalism that displays a care for the long-term that is surely more relevant now than ever.

Nick Clack is a Media Consultant who advises companies and their most Senior Executives on their relations with the broadcast media. See www.clackmedia.com