Sponsored by Greenhaven Road Capital, finding value off the beaten path.
In November 2012, Carol Loomis and Warren Buffett sat down with Charlie Rose to talk about Loomis’s book Tap Dancing to Work.
The first time Carol Loomis wrote about Warren Buffett (1970) she misspelled his last name as ‘Buffet’. By 1977 Buffett was writing his own (7,000 word) commentary in Fortune.
The first part of the conversation with Charlie Rose centered around Buffett’s suggestion for a minimum tax rate. “I’m suggesting that because the 400 of the highest taxpayers (in 2009) had average incomes of 202M, half paid below 20%, a quarter paid below 15%, and six paid nothing.”
Buffett is/was one of the richest people in America/the world. Part of what made him that was was that he “can hardly wait to get to work in the morning…there’s never been a day I haven’t looked forward to.” Even on the weekends, Buffett works because he loves it.
Neil Gaiman said something similar, “Amanda (Palmer) sometimes describes me as a workaholic and I don’t think I am, but I’m certainly somebody who loves what I do and it’s never felt like work.”Mike Lombardi said you don’t work in the NFL, you live in the NFL. Tyler Cowen answered on Reddit that he maintains his impressive productivity thanks to being born the right way and then persisting.
Buffett said he sees accounting as a language, and reading accounting documents, “It’s almost like playing music.”
Since 1977 Loomis has given feedback to Buffett on his letter to shareholders. Buffett said that when he writes “I’m addressing (the) partners. There’re 600,000 of them, but in my mind, I usually have my two sisters.” The first year Loomis gave limited feedback but over the years she’s become bolder. Buffett said, “She’s one of the smartest people I’ve ever seen, she’s objective, and in a very very nice way she tells when I’m full of baloney.”
Loomis added, “I do think I’m one of the few people who argue with him.” And, “I’d include Charlie (Munger) in the few people that argue with him.” Buffett’s smart but he’s not perfect and having good arguments has been a regular theme this year.
Howard Marks said about his partnership with Bruce Karsh: “It’s been a great partnership. Never an argument. Intellectual disagreements but never an emotional argument. The key is respect. Even when we disagree, we respect each other. The great thing about that is, you sit down, you disagree, and then you go back to your corners., and he may say, ‘You know what, Howard’s right’ and I say, ‘Maybe Bruce is right’ and then you can go back and have a productive discussion.”
Buffett said something almost identical, “Charlie and I never have an argument but we have disagreements and whenever we have a disagreement his clincher is, ‘Warren, when we get through talking about this you’ll agree with me because you’re smart and I’m right.'”
Those good arguments center around being approximately right rather than precisely wrong. “I only get into situations where I do know the value,” Buffett said, “There are thousands of companies whose value I don’t know but I know the ones I know.” It’s not pinpoint, “If someone walks in this door right now and they weigh between 300 and 350 pounds, I don’t need to say they weight 327 to say that they’re fat.”
Charlie Rose asked about an investment in John Deere and Buffet said that wasn’t me, it was someone else at Berkshire. And he doesn’t need to know. “I don’t want to know what they’re doing. They have the responsibility for managing that money, they’ve got to have full authority. They can’t look at me and see whether I’m smiling or frowning over it, and they get paid based on how those securities do.”
Berkshire has a Decentralized Command and few HIPPOs. Daryl Morey uses a DC for Houston basketball. Ed Catmull uses a DC for Pixar movies. Alex Blumberg uses a DC for Gimlet podcasts.
A decentralized command is even part of machine learning — which we’ll focus on next week. Thanks for reading.