Every year Warren Buffett auctions off a private lunch to benefit the San Francisco based GLIDE Foundation. Since 2000 the legendary Oracle of Omaha has raised more than $18 million on these lunches. This year the winning bid was $2.2 million, well shy of the $3.5 million record of 2012, but nothing to sneeze at either.
In exchange for the donation winners get the pleasure of Buffett’s company at the restaurant of their choice (though Manhattan steakhouse Smith & Wollensky usually hosts the event unless the winner wants to remain anonymous). The famously opinionated Buffett sets only one precondition when it comes to topics: he won’t discuss his next investment. Other than that he’s an open book.
In June of 2008 Guy Spier and his friend Mohnish Pabrai won the auction with a bid of $650,100. An Oxford and Harvard Business School educated New York money manager with a new fund and a tainted resume, Spier went into the meeting looking for an insight that would help him become the next Gordon Gekko, or at least Bill Ackman.
Spier describes the person he was going into his lunch with Buffett in his book, “The Education of a Value Investor.” Basically, take every negative stereotype of an Oxford and Harvard educated hedge fund manger with $300,000 to spend on lunch with Warren Buffett and turn up the volume until it’s almost unbearable. He dressed to impress others. He lived where he felt a man of his caliber should. He roamed the earth “feeling that the world owed me a living in return for my general awesomeness,” he writes.
In the attached clip Spier is only slightly less harsh on himself. "I was in a New York vortex,” he explains. “I had put on the face of this hedge fund, aggressive, corporate activist kind of guy. Somewhere I knew something wasn’t right. In some ways Warren Buffett was my lifeline."
A year later he’d moved to Switzerland, stopped charging fees to new investors and dedicated his life to creating a personal harmony between his true self and monetary reward.
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If you’re looking for a single stock tip or “system” stop reading now. The dirty little secret of finance is that the mechanics of it are relatively straight forward at least for intrepid souls willing to overcome math phobia. Asking Warren Buffett to help you calculate the net present value of Coca-Cola’s revenue stream would be like tracking down Stephen Hawking to solve a Sudoku puzzle. You’d get the right answer but only the opportunity cost would be massive.
The Oracle of Love
Spier and Pabrai were joined for lunch by Buffett by their spouses and Pabrai’s two daughters. Ordering a steak, hash browns and Cherry Coke, Buffett got down to the business of philosophy. The key to building a sustainable business, in fact the key to life as Buffett seems to see it, is maintaining a consistency between your work and core values. The goal is not to build the best company as measured by others but to do the work that best fits you.
It’s an idea that would seem more apt to the last five minutes of an episode of “Kung-Fu” than a $650k lunch. That only makes the metaphor Buffett chose to make his point to Spier all the more unusual.
Flanked by two children and speaking to Spier, who at that point in his life was still aspiring to be nothing less than a bling-flashing Master of the Universe Buffett posed this question:
“Would you rather be considered the best lover in the world and know privately that you’re the worst or know privately that you’re the best lover in the world even and be thought to be the worst?”
It takes a minute to figure out what Buffett is driving at with this question. It also helps to remember that Warren Buffett is estimated to have roughly two IQ points for each of the $90-odd billion he’d be worth if he hadn’t given so much away to charity. Buffett is a genius. He’s different. It would be silly to expect him to have a life philosophy that would fit in a fortune cookie. He can literally afford anything in the world and he choses to live in Omaha, Nebraska. Buffett openly lives his life exactly as he sees fit. If other people think it’s hypocritical for him to both criticize the tax treatment of the wealthy and profit from the Burger King (BKW) Inversion deal** that’s their problem.
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What he was asking Spier was whether his real goal was becoming one of dozens of billionaire investors trying to outspend one another on vanity projects, or one of a much smaller group of those who live a life without compromise, no matter what the rest of the world thinks.
Once he wrapped his mind around what Buffett was really asking, and that it was less a question than a personal challenge, a switch flipped for Spier. Buffett had torn down his whole world with a single oddball question.
“I realized how many things I had done because of the way people would think about me. I didn’t think about the way I felt on the inside and whether it was right for me. I was coming home from this incredibly beautiful office in a gleaming office tower, hedge fund center, but deep down I wasn’t happy. Deep down I knew I wasn’t being authentic to myself...Once I realized I wasn’t being true to myself I knew I had to change.”
Even with Buffett’s help it took a while. Spier gradually shifted his goals from mastering the universe to mastery of himself. In six months he had left the mecca of hedge funds in New York entirely. He now lives a relatively sedate life in Switzerland. Still a long way from Omaha but light years from New York.
Buffett doesn’t care what anyone thinks. Paradoxically his not caring has earned the slavish respect of millions and become one of the richest, apparently most content men on earth. His investment success and life mastery stem from an almost complete lack of contradiction between his personal values and his life choices. It’s a bit like Bill Murray only instead of crashing kickball games Buffett is building the largest company on earth. He is constrained by nothing. Buffett’s trust in his own judgement is so complete that he is able be completely relaxed in the midst of chaos.
For his portion of a $650,100 lunch tab Guy Spier was given the secret to life and investing. Those in a relaxed state will never panic out of positions or chase bubbles. They don’t cave to peer pressure because they don’t have peers. They are better at what they do because they waste no energy on the petty tensions that consume everyone else.
No one in his adopted home is particularly impressed with New York hotshots. As it turns out, being a Master of the Universe in New York generally makes a person insufferable outside of Manhattan. Not that it seems to matter to Spier now. He’s on his own journey. He’s delighted to share the experience, but to truly ride along requires eliminating the showoff affectations that seep into your life and figuring out what really matters to you.
Once you master that approach to life the details on buying or selling stocks pretty much take care of themselves.
**For official purposes Berkshire Hathaway will pay US tax rates on its portion of the deal but negotiated extra fees from the T3 group leading the merger. Ethically it’s akin to an athlete who gets fined for violating league policies but paid extra by team owners to cover the expense. Not that that’s a bad thing. It would have been hypocritical for Buffett to do anything other than maximize his profits.
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