Inside the Mind of Warren Buffett

Alice Schroeder, a Wall Street analyst turned biographer, scored one of the most sought after assignments in the book world when Warren Buffett agreed to cooperate with her for a book about his life. She spent over 5 years researching Buffett and conducted hundreds of hours of interviews with him and his family and friends. The result is a provocative, insightful portrait of an intensely private and complex individual. The story Schroeder tells of the legendary investor, chairman of Berkshire Hathaway, and the world’s second richest man, gives the fullest measure yet of the man whose public persona is that of the jocular “Oracle of Omaha.”

Schroeder first met Buffett when she began publishing equity research on Berkshire Hathaway. Her insight and grasp of the subject matter so impressed him that when she later raised the idea of writing a book, he offered her unprecedented access to his files and to himself. Her book is an attempt to pull back the veil on Buffett’s life and work and find out who he really is and what drives him. As Buffett was making headlines with a $5 billion investment in Goldman Sachs and many were calling on him for counsel in the financial bailout, we sat down with Schroeder to talk about the book and the man.

How did you decide on the name for the book? Can you explain what it means?

It comes from a saying from Buffett that I think sums up his life nicely: “Life is like a snowball. The important thing is finding wet snow and a really long hill.” It’s the concept of compounding. The snowball rolls along at the same rate, but over time it grows exponentially. Now this is fitting not just from the perspective of money, but it also relates to factors in your life, such as the relationships that you have, how you use your time, and the compounded effect of learning. The snowball is a reference to Warren’s life and the way that it has grown in many different directions, based on a very mindful and conscious approach to living.

Is this a business book?

Not really. I call it a biography of ideas because the genesis of it was the idea that Warren Buffett is not just a great investor or businessman, but he is very unusual person who has spoken out on a lot of issues, and often in ways contrarian to his economic class, such as the fact that rich people should pay more taxes. He is egalitarian and his philanthropy reflects that. Yet he came from a background that was not headed in that direction at all. His family was very conservative and did not believe in government assistance, while he is a big proponent of government assistance for the less fortunate. What I thought the book should do is explain the forces and influences in his life that gave him these ideas, because he is so influential—politicians and leaders from all over the world consult with him. Behind the scenes he has an incredible amount of influence on what happens in this country and around the world. You may not hear about in the headlines, but it is very real.

Buffett’s “20 punches” approach to investing: “If you thought of yourself as having a card with only twenty punches in a lifetime, and every financial decision used up one punch, you’d resist the temptation to dabble. You’d make more good decisions and you’d make more big decisions…You’d get very rich.”

How did you come to be chosen to write the biography?

First, this is not an authorized biography. He did not have any editorial control of the book. He was enormously cooperative with me, but he did not do any meddling on the subject matter of the book. I first met him when I was working as an analyst on Wall Street. I was following Berkshire Hathaway. He had never talked to the Street and in fact, he was disdainful of it. But he decided that he needed to communicate and chose me as the analyst he would talk to. Over the next five years covering Berkshire I got to know him and at one point we had a conversation about a book idea. He did not want to write a book himself, but he immediately offered to cooperate with me and that changed everything.

What did you find that we didn’t already know about Buffett?

His public persona is who he really is, but it tells only part of the story. He is a very complex individual. He is far more interesting, he’s sharper, and he’s even wittier in person than the guy you see on television. I used a lot of dialogue from the hundreds of hours of recorded interviews. He’s very three-dimensional and more sophisticated than he lets on. It is true that he has simple tastes, but that is only one aspect of his personality.