Customer Reviews

The Snowball: Warren Buffett and the Business of Life

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I recently re-read Roger Lowenstein's biography, Buffett: The Making of an American Capitalist (first published in 1995 and now re-issued with a new Afterword), and then read this more recent one by Alice Schroeder. Both are first-rate. Which to select if reading only one? That depends on how much you wish to know about Buffett's personal life, including his relations with various family members, and how curious you are about his personal hang-ups, peculiarities, eccentricities, fetishes, etc. If you can do without any of that, Roger Lowenstein's biography is the one to read. I also highly recommend the recently published Second Edition of The Essays of Warren Buffet: Lessons for Corporate America, with content selected, arranged, and introduced by Lawrence Cunningham.

The heft of Schroeder's biography may discourage some people from obtaining a copy. To them I presume to suggest that they not be deterred by that factor. Schroeder has a lively, often entertaining writing style that drives the narrative through just about every period and (yes) interlude of Warren Buffett's life and career thus far. There is much more information provided than most readers either need or desire. However, she had unprecedented access not only to Buffett but to just about everyone else with whom he is (or once was) associated as well as to previously inaccessible research resources. It is possible but highly unlikely that anyone else will write a more comprehensive biography than Schroeder has, at least for the next several years, if not decades. Also, her opinion of Buffett seems to me to be balanced and circumspect. No doubt he wishes that certain details about his life and career were not included. However, there has been no indication from him or those authorized to represent him that any of the material in this biography (however unflattering) is either inaccurate or unfair. Both halos and warts are included.

Others have shared their reasons for holding this book in high regard. Here are two of mine. First, although I had already read various Buffett's chairman's letters that first appeared in a series of Berkshire Hathaway's annual reports, I did not understand (nor could I have understood) the context for observations he shared, especially his comments about especially important 12-month periods throughout BRK's history. Schroeder provides the context or frame-of-reference I needed but previously lacked. For example, whereas in previous letters, Buffett merely offered brief updates on how each BRK company was doing, in 1978 he began to share his thoughts about major business topics such as performance measurement for management and why short-term earnings were a poor criterion for investment decisions. With the help of Carol Loomis, especially since 1977, his chairman's letters "had grown more personal and entertaining by the year; they amounted to crash courses in business, written in clear language that ranged from biblical quotations to references to Alice in Wonderland, and princesses kissing toads." As Schroeder explains, these gradual but significant changes of subject and tone reflect changes in Buffett's personal life as he became more reflective about business principles and more appreciative of personal relationships. His children were growing up and departing the "nest" in Omaha. His wife Susie decided to relocate to San Francisco. Meanwhile, his personal net worth continued to increase substantially. His national and then international recognition also increased. The "Oracle of Omaha" had finally become sufficiently confident of himself to reveal to others "a sense of him as a man."

I also appreciate how carefully Schroeder develops several separate but related themes that help her reader to manage the wealth of information she provides. The biography's title suggests one of these themes: the "snowball" effect that compounded interest can have. From childhood when he began to sell packs of gum (but not single sticks) and bottles of soda, and a money changer was his favorite toy, Buffett was fascinated by the way that numbers "exploded as they grew at a constant rate over time was how a small sum could be turned into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn. Warren began to think about it a different way. Compounding married the present to the future. If a dollar today was going to be worth ten some years from now, then in his mind the two were the same." Early in life, Buffett avoided making any purchases unless they were almost certain to generate compound interest. This theme is central to understanding Buffett's investment principles and to his own leadership of BRK. It also helps to explain why he could become physically ill when an investment cost others the funds they had entrusted to his care. Other themes include his determination to simplify his life to the extent he could (e.g. eating hamburgers and wearing threadbare sweaters, minimizing participation in family activities) so that he could concentrate almost entirely on business matters; his dependence on a series of women, beginning with his mother and two sisters (especially Doris) that continued with his first wife Susie (and their daughter "Susie Jr.") and then companion Astrid Menks whom he married in 2006; and his passion for helping others to understand the business principles to which he has been committed since childhood.

There is one other theme of special interest and importance to me: over the years, how Buffett has interacted with various associates, notably with Jerome Newman and Benjamin Graham, Sandy Gottesman, Charlie Munger, Bill Ruane, Katherine Graham, and Bill Gates. By all accounts, Buffett is a superb business associate once he agrees to become involved. He cares deeply about each relationship, does whatever may be necessary to protect and defend the best interests of his associates, and is extraordinarily generous with material rewards as well as recognition. Here is an especially revealing excerpt from Cunningham's Introduction to The Essays of Warren Buffett: "The CEOs at Berkshire's operating companies enjoy a unique position in corporate America. They are given a simple set of commands: to run the business as if (1) they are its sole owner, (2) it is the only asset they hold, and (3) they can never sell or merge it for one hundred years." These three "commands" are wholly consistent with what Lawrence explains earlier in the same Introduction: "The central theme uniting Buffett's lucid essays is that the principles of fundamental business analysis, first formulated by his teachers Ben Graham and David Dodd, should guide investment practice. Linked to that theme are management principles that define the proper role of corporate managers as the stewards of investment capital and the proper role of shareholders as the suppliers and owners of capital. Radiating from these main themes are practical and sensible lessons on the entire range of important business issues, from accounting to mergers to valuation." Those who shared Buffett's same core values of honesty and integrity, and who are also committed to the same basic principles, cherish their relationship with him.

To me, Alice Schroeder's rigorous and eloquent analysis of this theme of mutually productive and beneficial collaboration is her single greatest achievement among many in this definitive biography of one of the most important and yet least understood business leaders in recent years. Bravo!

This the second biography on Warren Buffett that I have read, and I must say the other one was much better. This version of Buffett's life is more accurate, but it will make your eyes bleed with the details. Easily 500 pages too long, the authour takes forever to get to the point of each chapter. She rattles on about useless things like, what he ate on a certain day, what the weather was like, what he wore, and what everyone else was wearing. This is what happens when you interview a man with a photographic memory and think you have to write down every little piece of information he recalls. My advice is to read the first chapter and the last two, in the book store for free, and then buy the slightly older yet superior Buffett: The Making of an American Capitalist.

The book is certainly well written and will reveal more than everything that you ever wanted to know about Mr Buffett. Astute observations about conservative managers in the 1950s hoarding cash on corporate balance sheets after being scarred by the Great Depression are probably very relevant today (2013). Regarding his family and relationships, the intrusive nature of the scrutiny is too much! He cooperated with the author, but why would he subject himself to such an invasion of privacy?

I spent the last two weeks of 2008 engrossed in the story of this great life. Alice Schroeder presents Warren Buffet as the complex man he no doubt is, highlighting his weak points as well as his qualities. Not only is this a great biography, it is also a fascinating review of the economic events of the last 80 years. Alice Schroeder extracts from this economic history and from the comments from Warren Buffet key lessons that will serve all of us well, especially in these troubled times.

In my opinion, it is certainly clear that with a minimum of wisdom, prudence and patience we can all prosper through these challenging times by following Buffet's business practices and integrity. Business is not all that complicated when you choose colleagues and associates based on the right combination of character and skills.

Enjoy the book. It is long as this is a long and rich life. It is well written so take the time to enjoy all the stories and anecdotes. It is a perfect read to start your day. Much better than the current news...

Alice Shroeder, an up-and-coming American biographer, has done an incredibly fine job in outlining the life of Warren Buffett, one of the world's consumate financial investors. This book is loaded with all kinds of fascinating and spicy detail about how Buffett dedicated himself to the many challenges of making money with the minimum amount of risk. Shroeder, in telling Buffett's complex story, covers a number of important facets about his internal and external makeup: his nose for business opportunities; his philosophy on what makes for a secure investment; his strengths and weaknesses as a family man; his ability to handle adversity; and the monumental changes in his life that have resulted from a maturing of his attitude towards the importance of money. Having read this very significant book on an very important person in history, I make the following obervations:
a. Buffett, as one of the world's wealthiest men, rarely takes questionable risks with his money, except during this latest economic downturn, which is not covered in the book;
b. Buffett is renowned for buying companies that are near dead, reviving them, and then selling them. Shroeder includes a couple of incidents in Buffett's life where he paid the price for deviating from this practice;
c. Buffett started out as a notorious cheapskate and bottom-feeder in investment circles, and only over time and under the influence of certain women and men in his life has he developed a measure of grace, generosity, and respect;
d. Buffett, for all his billions made, is not without his regrets as to how he could have invested more wisely;
e. Buffett, for all his success in the modern world of finance, still has managed to retain a lot of that Omaha charm that comes with enjoying the simple conventions of life, whether it be home-cooking, music or playing contract bridge;
f. Buffett rarely ventured into a business deal that he couldn't undersand himself;
g. Buffett has been at times an emotionally insecure person who needed the support certain special people, like his late wife Susy and Katherine Graham, to manage and direct his personal life. For a man who has been totally devoted to the art of making money, it should come as no surprise that he was hopeless in looking after himself. Shroeder does not treat this quirk as a failing so much as an endearing quality in the man's personality;
h. Shroeder offers us a wall-to-wall vista of a prominent life lived out to the fullest with the 20th century history as its backdrop. There are no punches pulled here in supplying the reader with a thorough and honest account of Buffett's very instructive life, The reader certainly gets to see how the snowflake eventually becomes the snowball, the motto of Buffett's extraordinary life. Great read.

I found the book very entertaining. I didn't put it down until I reached the end. One thing I found a little odd was how much space was dedicated to Warren's childhood and early years (about half the book) and how quickly the author went through the 60s/70s/80s - I would have assumed these were the most important years, but if 50 pages were dedicated to them, that's plenty. At least it felt like it.

This book shows how Warren Buffett start and proceed his journey towards the most successful investor in the world.As book title indicate he selected a tall hill to roll his small snowball(stock investments) at the age as early as 11 years.