The Guy Who Studied Buffett for 25 Years

I have a thought experiment for you. Imagine if you could just snap your fingers and suddenly there was a second version of you, a second body, brain, your eyes, your ears, the way you think, the way you operate, but with one caveat, one change. It would do whatever you said to do. You know what I would tell it to do? I would tell it to go study the art of investing. Investing, like Scott Galloway says, is like having an army of capital go wage war for you. Right? Instead of you working for money, your money works for you. I love that. So how do you get great at something? Well, you would study the greats, and that's exactly what the person who's coming on this podcast today has done. He's gone back and for 25 years has studied everything that Warren Buffett, Charlie Munger, all the great investors, what they have done, read every single annual letter, go and read all the reports, study their, how they grew from bit by bit, block by block, step by step, and not just learned them in the book, but then went and practiced it. And so, I wanted to ask this guy, what did you learn about investing and what can I learn? How can I spend an hour or two with you and download 10 years of your brain? His name is Guy Spier. He's a very cool guy. A lot of people really respect Guy because he is an incredibly humble, interesting guy. I think you're going to love this conversation. So enjoy this episode with Guy Spier. I feel like I can rule the world.

I know I could be what I want to.

I put my all in it like no days off.

On the road, let's go.

I have all these notes about where to start, 'cause I'm like, oh, he's value investing. There's gonna be good investing knowledge. But the thing I was actually curious about when I was doing my research was about this group that you had called the Posse. Oh yeah. And I don't know if the Posse still exists or this was just a moment in time, but can you explain what was the Posse? Who was in it and what was it?

Well, what's happened to me is I've discovered that I love Warren Buffett value investing, Berkshire Hathaway. So I want to be all over anything that's got to do with that. And in New York City, there's this Ruane Conniff firm that has a friend of Warren Buffett's, two friends of Warren Buffett's that run it. And they have a mutual fund and they have an annual general meeting. And I get invited to some event before or after, and there's a guy, Whitney Tilson, there who's like master network to the power of master networker. And we're introduced to each other and we're one year away from each other at Harvard Business School. And the next thing I know, he invites me to meet other people. And he doesn't invite me to the group on its own. He invites me to meet this person over there, or that you're sort of like, hey, go have a coffee with that guy. And so before I know, I've met 3 or 4 members of this group. And then it, it was Whitney who put together a group of 5 or 6 of us who were all fascinated by Warren Buffett, who all wanted to become better investors. And we'd meet, I think it was sometimes we'd meet even once a week in one of our members' offices. There was a member that had an office in Midtown. And we'd present ideas. And Whitney's friend Bill Ackman was part of that group for a while. That's how I met Bill Ackman for the few times that I'd met him. And I wasn't really aware of what that was or why. Well, I kind of, we'd had study group at business school and obviously you want to get together with friends who have common interest, but I didn't realize what a powerful tool for success it was until at that dinner and lunch, first meal with Mohnish Pabrai, where he talked about forums, YPO forums, and he said, you should get into one, you'd benefit. And then I got switched on. But that posse met for about, I think it met for 2 or 3 or 4 years, and we're still part of an email chain. I mean, Whitney will send out an email, send out a happy birthday message to the group. Some have become very, very good friends of mine, and some are, I'm not even sure where they are now.

So you, what was happening? So you're meeting, let's say once a week or every couple of weeks, and you go to someone's office and you said you had, you would all the commonality was you were all investors who were fans of the Buffett style of investing, the value investing. What would happen at these groups? You show up, what actually, is there a substructure? Did you just, somebody's got a stock that they're interested in and you start debating it? What would happen?

Everybody or one person?

Just one person. And then you'd discuss it in depth at that meeting. And then the following meeting, another person would come with a written stock idea that you would distribute, hand out. Give the handout, and then you'd talk it through. And obviously at the end of that, like a half an hour, 45-minute sort of talk through that, there'd be various other ideas that were discussed. But as a result of that, what would happen, I remember once sitting in a car with Whitney driving somewhere in New Jersey to visit a company called— it was called ISWI, Interactive Services Worldwide Inc., I-S-W-I, that had gaming software for TVs, for example. So there were sort of follow-on meetings that happened, both social and business related. Or somebody would, and you'd realize this is at a time when transcripts of conference calls were not available. So somebody would listen to a conference call and they'd make notes and they would pass them out by email, for example. So there's the kind of the structured part of those meetings. But what is really, really fascinating is that unstructured sort of like somebody mentions something or says something. And I think that many of these best ideas come because somebody says something that is really fascinating. So as a result of this, I, we're at a dinner somewhere. Bill was at this dinner and he started talking about MBIA and he started talking about how the asymmetry of the bet on the credit default swaps on MBIA. And it was not, I could have read that in a document. I could have had that, but it was the way Bill talked about it that really stuck in my mind. I thought, wow, that is really fascinating. And so that kind of meta information, if you like, is what you really get out of it.

Can you tell the Farmer Mac story? 'Cause I think that was a great example of what came out of the policy.

Yeah. So there I am investing, started off investing. I'm investing for friends, fools, and family, as I think how Mohnish would put it. So, but I'm shit scared. I'm very, very scared because I really, I don't know what I'm doing. What's a Harvard MBA? A guy who pretends to himself and the world that he knows what he's doing when he actually doesn't, you know? But I knew that I didn't know what I was doing. So, you know, so you're looking, one of the ways in which I approached that challenge was to look for people who did know what they were doing, who were, I thought they knew what they were doing and to kind of try and unwind what they did to backfill, to reverse engineer what they'd done and do the same thing. So I got all sorts of investment ideas through that. And I've obviously, I was studying Warren Buffett and I was also studying a guy called Tom Russo and I can give, Examples of, for example, Tom Russo was invested in Nestlé and I started, I kind of like, wow, brands. That's a really powerful way to place to look. Where else can I find consumer brands? So Freddie Mac and Fannie Mae at the time were these government-sponsored enterprises, kind of a duopoly slash monopoly, highly profitable, enormous balance sheets, but were super successful at making money for their investors, but also for organizing the mortgage market in a way that made sense for everybody. So there they are. And so I'm doing what I normally do, which it, or normally do, which it had made sense for me, is look for similar kinds of situation.

Because Buffett was invested in Freddie and Fannie.

Freddie Mac.

Yeah. So he was invested there. You're looking at Buffett for ideas.

Yes.

So you're saying what's similar to those?

So much more risk.

Yeah. And he just said, look, this is business lending. This isn't a mortgage-backed security. There's no way you can call this a mortgage-backed security. You know, I debated him. I said, look, it's got a government guarantee behind it. And he said, yeah, it's got a government guarantee, but what they're doing is they're engaging in business-related lending. From his perspective, this was lending against a business, not lending against real estate, and it just didn't deserve to be there. So was he right? I think he was right. Absolutely. And look, what was clear to me in that moment was that I had not done the depth of analysis that he'd done. And first of all, I hadn't downloaded those documents. I could have downloaded them. I hadn't downloaded them, or maybe they weren't— I could have located them and found them. It wasn't as easy to find as it would've been today, but I could have found them. And I'm kind of torn between wanting to stay and learn more and rush back to the office and put in a sell order. And literally, I mean, I got back to the office and I put in a sell order. I knew I didn't know it well enough. I knew that the points he made were good. And I sold it by the end of the day. Lucky enough, the fund was small. I felt super relieved that I'd sold it. And then either I or Bill or Whitney got a meeting with the management. So what happened there was absolutely astounding to me, actually. The management came with its pre-prepared presentation and they were ready to go through the presentation. And of course, it's very dangerous when a management does that because they lead you in the direction— they may not even do it consciously, they're leading you in the direction they want you to go. And Bill says, look, I know I prefer if we dispense with the presentation, we just go to the questions that I have for you. They were a little nonplussed by that, but they agreed to it. They didn't really have much choice. And then Bill came with the same kinds of questions that he posed to me that I didn't have good answers for. Like, why is this different to business lending? How can you call this a class when there's only a small number of loans inside and they're all inside and when they're all of different sizes, whereas A mortgage-backed security will have, you know, many, many, many single-family homes. And they didn't have any good answers. At some point the CEO said, well, maybe this might not be the right investment for you, which is a pretty, pretty weak— I don't know if that makes it into my book, but that was a pretty weak thing to say. And I was kind of absolutely shocked. Shocked. And it's one of the, one of 3 stocks that I've shorted in my life actually.

When presented with a counterargument, instead of simply, you know, explain— they should know their business better, they should be able to answer those questions— they just took their ball and said, okay, maybe don't play with us.

Yeah, exactly. And look, Bill was a way better— at that point, a way better analyst than I was. I had all sorts of other things I needed to be doing just to keep my little business afloat. So there are all sorts of good reasons as well for why I was unable to dive that deep. But it showed how From time to time, if you don't do the analysis all the way, especially when you're going to a place where other people haven't been, you're going to get it wrong.

What strikes me about that is that what extraordinary act of generosity. So he was giving you sort of like something that he was giving you the best part of his brain and he was giving it to you just out of the desire to give. And it feels to me, obviously I wasn't there, he's giving it without any agenda and just maybe he loves to do it or because he really cares about you or because he knows a lot about the topic. And that seems really special friend because there are people who know a lot, but they just don't have the time. They either don't want to have the time or generally don't have the time to talk to you about your stuff. And so that, that's pretty, pretty special, especially if he wasn't an investor yet or he wasn't an employee yet. Yeah.

Yeah. I think we're, we're both Tony Robbins, uh, you know, uh, I don't know, fans or, or I noticed that, uh, and he has a phrase, you know, the secret to living is giving. And he talks about, you know, almost like in the hierarchy of needs, eventually you get past yourself. Can you tell a couple of the lessons that you got from Tony or maybe that what, what shaped you out of that? Because you, like me, are a self-improvement kind of infinite learner mindset person. I think a lot of the audience, because that's what I like to talk about, is also wired that way. I would love to hear maybe some stories or some big takeaways for you.

So I think that in total, I've done sort of like 8 or 9 Tony Robbins seminars in my life, including a big one in Hawaii. And I'm just curious, what number are you on? I want to know if you're more of an expert than me or vice versa.

No, less than that. I've been to 2, and I, so I've been to 2 or 3, 2 or 3, but they're all, they were all the, uh, UPW, at least The Power Within. I didn't do his like kind of deeper stuff, but then I just kind of devoured a lot of his old material. Specifically, like if you go on YouTube, there's really great stuff of him when he was very young, uh, talking. And you know, not all of it is the stuff he talks about today, but he has some really good stuff that actually for business people is useful about public speaking. About sales, about marketing, about persuasion. And he doesn't do a lot of that material now, but that was some of my favorite stuff that he did back then.

So that's where I'm at. And I think that what comes up for me as you say it is, so, you know, there's this moment where in a way my destiny is on a knife edge with this meeting with Mohnish Pabrai. And because I took the decision to to approach him without an agenda, I got a very different Mohnish to the person I would've gotten if I'd have approached him with an agenda. And first meeting is always very important. And so the decision to go to my first Anthony Robbins seminar was a bit like that. I had this really good friend in New York City who, she says to me, oh, you're in San Francisco. There's an Anthony Robbins seminar there. You should go. It might change your life. And I remember at the time, because I had this weekend planned with friends, I was like, you know what, I'm going to go. It's somewhere perhaps my deep wise, the deepest wisest part of me knew that just to go hang out with friends would be something like same old, same old, whereas going to the seminar might give me something new. So, you know, I show up at this seminar, Anthony Robbins, like 6-foot-something tall and, you know, and he's getting us to, jump up and down. There's a huge amount, as you've heard 1,000 times, anybody's done Anthony Robbins, emotion has got motion in it. If you want to feel good about yourself, you need to look at your physiology and look at how you're moving and change the way you're moving in order to change your emotions. And I'm like this kind of snarky Brit at the back. I'm just like, so what is this? And looking at my watch and thinking, why did I waste the money? Maybe I can still go out, hang out with my friends. But I did the firewalk and once I'd done the firewalk, I was in a different place. And so for those who don't know, he whips those who want to be whipped up into a state in which you feel very confident to walk across a bed of hot coals and you walk across them and you don't get burned. And there's all sorts of spiritual or non-physical reasons. I think that the main thing is the state of mind that you're in and the firmness with which you walk. If you walk that way. Anyway, it was like, I, it really did that metaphor of how if you have the right psychology and you have the right physiology, there are extraordinary things that you can do as a human. That metaphor went in for me such that I now stayed the rest of the weekend. And in my case, I was a guy who had my head up my rear end. I was, uh, I had achieved some early academic success in life and I was getting to be quite bitter because I wanted success, but the things that I'd learned, the routines that I'd learned to get success, and at this point I'm age 27, 28, 29, they weren't working for me. And I'm sad that I see other people who are in kind of similar circumstances. And I think the younger you are when failure hits you or when difficulty hits you, the better it is because the more likely you are to to develop strategies and to adjust and to try different things. But I was at a point where I was kind of starting to get stuck in my ways and I really needed a very powerful kick in order to— it wasn't enough that I knew things weren't working. And Anthony Robbins did that for me. And so after that Firewalk, I was really quite enthusiastic about everything that came out after that. And I couldn't stop talking about Anthony Robbins when I got back to New York and started reading NLP and started Neurolinguistic Programming and started really diving into the self-help bookshelf to find more material that would help me in that way. And I think that in my case, I was so badly programmed for the kind of earlier part of my life that I needed— you probably did fine with one or two Anthony Robbins UPWs. I needed every single one, and I'm super grateful to him for giving me that. I mean, There was a point on that first night where he kind of said, and I bought it. So there was the firewalk and he said, look, you think I'm here to make money out of you. And he kind of said, look, I'm definitely here because it's a business and you guys have paid money to be here. And there's a lot, yes, I definitely make money out of this, but it's not the true motivation. I really want to help you. I really, really want to help you guys in this stadium. Get a different result from your life. And that actually, I mean, one of the books that Mohnish gave me to read when I first met him was this Power vs. Force book by David Hawkins. And I went strong at that. He didn't strike me as just selling me a yarn. I was like, okay, I'm willing to open myself to this. He actually wants to, I don't know if he can help me, but he's at least, that's the intention he's expressed and I believe him. Then what I knew was that I had an enormous amount of rewiring of myself that I had to do. And so I started doing that rewiring and it was that rewiring, the process of rewiring myself and taking actions that I'd learned to do because I'd started doing Anthony Robbins that got me in front of Mohnish Pabrai.

What would be an example of a rewiring? So like a before my brain thought this way or worked this way and after?

So I had this awful attitude that I was smarter than most people that I met. And first of all, I was way less smart than I thought I was. You know, and this, that it is, it's not important how smart you are, it's how smart you are relative to how smart you think you are. And I had this arrogant attitude that once I'd categorized somebody as not worth my time, I didn't really need to pay attention to them. And there's a moment, it's either in the seminar or one of the cassettes, and at the time I was listening to cassettes of Anthony Robbins, by the way. I had a collection of the cassettes. And there's the story that Anthony Robbins tells about walking up to, maybe it's Norman Vincent Peale or another of these self-help people. And Anthony Robbins says, look, I've read your book and nothing's changed. And the guy says, how many times have you read my book? And he, Robin, says, well, once. He's like, go read it 5 more times and then come back to me. And so one of the books I'd picked up was Dale Carnegie's book, How to Win Friends and Influence People. That came well before I discovered that Warren Buffett really learned a lot from Dale Carnegie. And Dale Carnegie sort of sits there and says, the most important sound in anybody's mind is their own name. What a freaking concept. You know, I was too busy trying to, you know, having studied law and economics and what have you, and I was not connected to that. But so that's just the awareness. Oh my God, you don't bother to remember people's names. You don't remember bother to address people by their name. Is it a surprise that you're not getting the results that you want? And so I then made an effort, and it, especially to somebody who grew up in the UK, in the US, people will do it a lot. They'll meet you and they'll say, oh, and they'll say, how do I pronounce your name? To make sure it's pronounced correctly. And then they'll use your name a lot. And it struck me as being a little disingenuous, but actually I started doing it. I made myself do it. I said, wire this into yourself. And around that time, and this is not from Anthony Robbins, I'd read The Psychology of Influence. And so I was like, reciprocation, reciprocation. I need to do reciprocation. I would buy bags of sweets and hand out sweets to the doorman, to the taxi driver, to whoever the hell it was. So I had all these big theories of how the world worked from these great professors and writers of textbooks and what have you. And I could spend hours writing essays about how the world worked, but I had never really spent time understanding how one-on-one interactions work and how do you get people to feel positively oriented towards you on a micro level in real life. And it's shocking. Look, I think in my case, there's a few things going on. I think that I'm just, that module is not very good. It's not very well developed in me. I take my wife, for example, we'll go to some social event. She said, do you realize the guy was, you were standing too close to him? Or do you realize they wanted to go 5 minutes before you actually allowed them to go? And I'm like, no, please help me. And I think that I've made some progress, just not something I'm very good at. Yes, we should specialize in the things that we're really good at, but we need to bring a few things up to the bare minimum basics. And there were a few things with me that I was missing that were just not the bare minimum basics.

Yeah, it's funny, in your book you talk about how when you were young, you were like this Gordon Gekko wannabe. I wrote that phrase down. You're like, I was a young Gordon Gekko wannabe. I wanted to be rich, I wanted to be powerful, I wanted to run Wall Street. You join DH Blair, which basically was like, modeled after, I think, Stratton, like the thing, the firm that's featured in Wolf of Wall Street, like the penny stock firm. And then DH Blair goes down a few years after you leave and you're at this point where, you know, you've gone to Harvard Business School, you got the job on Wall Street, you wanted to have the slicked back hair and all the money and the cars and the power. And then you have this kind of turning point, which is, you know, the Tony Robbins event, which starts to get you to think about other things. You go study NLP, you study the Cialdini book about persuasion and how to win friends and influence people. You start working on other things. There's a great Tony Robbins line where he says, school is great, but learning is more important. And his point is that it doesn't matter what happens when you're in school. The point is to learn. Sometimes it happens in school and sometimes it happens out of school, but the learning is the thing, not the schooling. And so it's funny to me that it seems like you actually got your master's after you left Harvard Business School and started to pick up all these other traits that were important to you. Can you tell the story of the handwritten notes? Because I found this, you know, initially when I read this, and I've heard this before, I kind of wrote it off as this sort of simpleton cheesy idea, and it's now come into my life 3 or 4 times. So what did you read in that book? And then how did that lead to ultimately, I think you meeting Mohnish was from a handwritten note also. So can you tell that little story? I think there's There's something I need to learn there 'cause I've heard this 3 or 4 times, never implemented it. Maybe this is the time.

And you know what's interesting for me is there was a certain point at which I would get interns to do just that. I'd just say, your job as an intern is just to get a list together of people that you care about. Because they're— and write notes to them. And I don't think that there's even one case, or none comes to my mind right now where somebody really implemented it. And it kind of like really frustrating for me because it's not a zero-sum game. It's not like if you do it and somebody else we know does it, it may diminishes us. It actually enhances all of our lives. And it's not clear to me exactly why some people end up doing it and some people don't. I would tell you that What just blows me away is that Warren Buffett gets this. Warren Buffett is giving gifts to me. He's writing the equivalent of thank you notes to me. I'm a nothing in his life, and he is not doing it every day. He's not necessarily doing it every year, but every 2 or 3 years, he sends me something or does something via his assistant. Like Warren Buffett is doing that.

Wait, really? So Warren Buffett sends you something like a thank you note or something like this?

I mean, it's like a holiday card. But here's the— I mean, I don't know if we're doing video. I have one that I have to pull out. So let me step away for a second and pull one out and demonstrate it. Bear with me because of course I have it up on my wall. Hang on a sec. So Warren, this is, I don't know how many years after I've met him, not right away, that's for sure. I get a holiday card from Warren in the post and I'm just going to put it up for a second and then we can talk about it because it is so clever. So let's see, you can see that and there we go.

I see Warren, Santa, and I can't read the text, but I see Warren Buffett with Santa.

So of course I framed it, but the key there is that it's a card, which is, I mean, I'm going to look at it now because I need to remember. So it's 2011 and he's crossed out GEICO, Burlington Northern, Santa Fe, and McLean. And then it's sort of like companies that he maybe would want to buy. It's got ExxonMobil, Wells Fargo, Google, and there's Warren next to Father Christmas there. And, but here's the key. So he says, either I finish this list by Christmas or I occupy the North Pole. Probably it was around the time of Occupy Wall Street. But then what he's done is he's written, he's scrawled on it, and I don't know how many of these he does every year. Guy, happy holidays. I enjoyed your 2010 report, Warren. And so, you know what it, you know, so the key there is, is like the other side's got nothing on it because who cares? Because you know, maybe Guy's going to frame it. You don't want to put anything on that side. And what makes it special is he's personalized it to me and he's understood that that is an enormous gift to the people who receive it. And Literally, this is a Monash expression. When I received that, you needed to peel me off the floor. I mean, I was sort of— And what am I to him? Really, of all the people that he knows, what am I to him? He's had dinner parties with Katharine Graham in Washington where he's met heads of state and head of the Commerce Department and the head of the Federal Reserve. Now he's sending that to me and he's doing reciprocation. He's giving out the equivalent of sweets. He's given out the equivalent of a thank you note. He's showing this individual that he in some way just cares about me as an individual, and he's doing it in a pretty efficient way for him and in a way that allows me to get all excited and tell Sean Puri all about it, right? In a podcast. I mean, he, so he understands this stuff. He freaking understands this stuff.

Well, I think that's amazing. I did not know that he does that, so that's very cool. We had a guy, Jesse Itzler, come on the podcast and he does this as well. I think he handwrites thousands of cards every year and he talks about how the value in this. But you know, I need to hear ideas 4 or 5 times before I actually go implement them. I'll tell you another similar story that's like this. We met a guy who knew Kobe Bryant. He trained Kobe's daughter before she passed away in that, in that you know, the tragic accident. And I was like, tell me some Kobe stories. And if you read on the internet, all Kobe stories are like Nike Kobe, they're Black Mamba Kobe, which is basically about this ruthless competitor, hard work, kind of an asshole on the court, but like, you know, for the right reasons. And that was the brand there. But this guy who actually knew Kobe told me like a different side. He's like, and he's like, Kobe would call my mom on her birthday. He's like, and who am I?

Same thing.

Who am I to him? Unbelievable that he would FaceTime my mom on her birthday. I don't know how he even knew her birthday. I don't know how he did it, but from that day forth, my mom was the biggest Kobe Bryant fan in the world. Another guy mentioned the same thing. He said, he told this story, and I'll give you the short version, which is he goes to this pickup game, he plays with Kobe, and the guy plays terrible. And Kobe's like, come on, man. Are you going to make a shot? What's going on? He's joking with him. And the guy says, hey man, hey man, I'm a volume shooter. I need to take lots of shots. Okay. It's not about making a high percentage. I'm a volume shooter. And so Kobe laughed and a month later, the guy comes in the gym, Kobe's playing, and Kobe turns, sorry, Kobe's playing in his game. This guy's helping out on the side. Eventually this guy's leaving and Kobe says, hey man, volume. You're just going to leave without saying bye? And the guy's like, oh, I didn't even want to bother Kobe. That's why I didn't say bye. He's like, I couldn't believe that this guy, A, stopped me to say bye and B, remembered that thing about me. And the trainer asked Kobe, he's like, Kobe, like you have, you're amazing with people's names or remembering like one thing about them. You know, why is that? And he said, well, you know, feels good in the moment.

Right.

And I think that what's fun about these things is that you want to make it yours. So you don't want to necessarily follow the Guy Spier formula.

Well, I also want to ask you about investing because, you know, that's what you're known for. I want to start with a quote from you that I found interesting. I don't fully get it, so I want you to explain it to me. You said investing is like being a drunk stumbling around in a bar. Trying to find a drink. Yeah. And I think you were contrasting it to the idea of investing being, you're like a fighter pilot. You just scan and you lock your target and you just, you know, laser beam it. What do you mean by that? I don't fully understand.

You said something in your book that I liked. You go, I don't know what it is about me, but when an idea captures me, I throw my all into it for better or for worse. If somebody, it's the handwritten note thing, right? Okay, that's the thing, then I'm going to do it all. I'm all in on doing that. And it seemed, sounded like when you got interested in Buffett, you didn't just read about Buffett or study kind of like his high-level philosophies. It sounded like you went and you ordered the annual reports of the companies that he bought in the years before he bought them to try to sit down as if you were Buffett and try to read them through his eyes. Can you describe this? Because I thought that was pretty fascinating. I'd never, heard somebody talk about something like that, but there was something in there that to me felt like a valuable practice or an impressive version of really throwing your all into something versus just tiptoeing around or surface-level investigation of it.

Yeah. Unlike what I did with Farmer Mac, for example, just to get back to another part of the conversation where I did not do that. That's what I should have done, but didn't. And there's been, I think it's been 3 times, maybe 4 times in my life where I've lost sleep over something where I've sort of like, I've stayed up saying, I kind of want to do it now. I want to get my hands on anything related to it. And that happened to me with Warren Buffett and Berkshire Hathaway sitting at this Stratton Oakmont type place, DH Blair, and saying, I want a life that looks more like that guy's and I hate what my life is. And then doing whatever the hell I can do to get closer to it in a way, Sean, in a sense of desperation. So the idea of this masterful person who orders up the annual reports and goes through them carefully, no, it's a sense of desperation. I'm so desperate, I'll do anything, even order his annual reports because that's the only thing I got. And so my father says to me, because I'm talking to him about this, he says, "Well, why don't you go and apply to him for a job? Why don't you go visit him in Omaha?" And I'm like, father.

He's—

yeah, I was a guy who was smiling and dialing, pounding the pavement, looking for deals for DH Blair. He wasn't going to be interested in Mr. Guy Spier showing up. So I felt like that was a dead end. But I was doing what I thought were not dead ends, and to understand everything I could about him was not a dead end. And it was absolutely instructive. And I remember the feeling of, you know, getting the— you know, and you had to call up the company and say, I'd like to receive some copies of your annual report. Then they'd take your mailing address and then they'd mail it to you by snail mail. And now the annual reports arrive and I'd never seen a company like this. 2 years of business school, I hadn't seen the accounts of companies like these. And those— it's funny because it's a well-worn saying, you want to buy companies that just drown in cash. I hadn't seen Coca-Cola Company drowning in cash. I mean, just enormous amounts of money. Cash being generated, way more than on the income statement. And it's kind of like an embarrassment of riches. And to somebody who looks at the average of all American corporations, if you spend your time with most American corporations, you're not going to see the outliers like a company like Coca-Cola that really is just this extraordinary outlier. And so it really was an eye-opener to me. And I kind of like my— obviously my jaw didn't actually drop. I was like, Wow, that's what this guy looks for. That's like insane. That's— I didn't realize. I wonder what other companies like this exist. So this is 1995 and Warren already understood so much 'cause he was just sitting on Coca-Cola. But you know, and the story of Coca-Cola is that, as I understand it, is that he'd bought See's Candy and See's Candy opened his mind up to these businesses with pricing power, with powerful brand that people don't want to switch away from. But yeah, and so obviously I was going down a steeper learning curve than Warren Buffett had been down, if you like.

So, and so you order these reports, you're reading them, you're trying to understand what he looks for. And then was there anything else that was formative at that time for you to develop the mindset of a value investor to sort of immerse yourself and speedrun this education to try to really level up? So one formative thing sounds like ordering the reports, sitting down, I think you even described it like sitting down like Buffett, like walking like him, talking like him, drinking the drink that he sit down with the Diet Pepsi or whatever he drinks and really trying to sit in their shoes for a minute. Was there anything else that was very formative in your development there?

Can you give the— I think there's a Mohnish thing, I don't know, or maybe he'd got it from somebody else, the two gas stations across the street. I thought this was a great metaphor.

What was something Mohnish was doing that you should have been simply copying? Oh, that guy, you know, he comes out and washes the windshields of people giving, getting gas and they love it. And that's why that, you know, that little action is leading to success. What was something that was a little action you could have copied.

You know? Right. You bumped into Buffett, right?

At the, uh, at the— You're a close reader of my book. It's a true story. It's just hilarious. So this was the meeting where they were voting in the B shares. There hadn't been B-Shares up to this date, and I don't remember the name of the location. It certainly wasn't where it is now, the big stadium or the big convention center downtown. And I'm in the stalls, I'm going to the toilet, and out comes Warren Buffett. And he turns to me, he says, he's just, he's clearly done a number two because otherwise he wouldn't have been in the stalls. He says, I always get a little nervous before those, these things before he goes off. And again, this was one of these moments where I just like dropped to the floor as I couldn't believe it. My hero was just standing there. And look, why did he talk to me? This was not, he was not in the streets, although I've heard stories of him showing up at people's parties in Omaha. I mean, well known around town, at least when he was younger. He was talking to me because he felt like he was amongst family. He was with a Berkshire shareholder and therefore he was family. I was family to him. And but that was a, you know, I'm there dressed in a suit. I'm Mr. New York investment banker. I've got an MBA. I mean, I've still got all of that wiring going on inside of me. But that was kind of like a, what would Anthony Robbins call it? He broke my pattern.

Right. Well, I have a question. So you have your fund and I think you own a bunch of Berkshire in your fund, right? Yes. It's like 20% of your fund. And Buffett doesn't take any— Berkshire doesn't have any management fee or any carry, right? You're just buying a piece of Berkshire Hathaway if you do that. Why? This is kind of a silly question, a stupid question, but like, If all the fund managers sort of idolize Buffett, and I think most would say, I might not be better than him or as good as him, but I will try to learn from him as much as you can. Why would anybody buy anything besides Berkshire if you wanted to do value investing?

You know, people say, well, should I invest in Berkshire Hathaway or should I invest in the index? Because they say, look, I think that Warren Buffett's getting older. Berkshire Hathaway just hit a trillion in valuation. And I think the index might be better. And one of the things that I want to say to them is, look, realize that the index is impersonal and you might get spooked out of the index. And I think that many people, if they buy Berkshire shares and they attend the Berkshire meeting and they really kind of become closely connected to the company, they're more likely to be in for the long haul and be in for the ride. And so it's not just The choices whether to buy Berkshire or to buy the index, for example, it's how do I impact my own behavior through my investment actions? And the realization that when we invest, if we buy Berkshire or we buy the index, we buy something else, we're also making our own bed and we're also creating the environment in which we'll be in. And we are in a kind of a relationship with these things. What I discovered when I shorted PharmaMac, just to go back to that, one of those original stories was that I became all twisted inside. I kind of didn't like my internal wiring when I was doing that. Berkshire Hathaway strengthens my internal wiring in the right way. And, and it's, I think it's a really important question to ask. If I become a shareholder of this thing, or if I buy this asset, what does that do to me as a person? How does it improve or deteriorate my thinking? And, That's the reason to own Berkshire. And I actually tell people that's a reason not to own the index 'cause the index is unbelievably impersonal. You'll get manipulated into all sorts of things.

Well, the other thing I want to ask you about is just performance. So you, so I asked my guy, helps him with research. I said, okay, what's the performance, let's say, of your fund over the long haul? And it looks like you basically have beat the S&P 500 by some amount. I don't know the exact numbers, but Sliver. 9.5% versus 8.5% or something along those lines. Is that right? Like since you started?

It's about, it's about 80 basis points at this point.

Great. Uh, and is that, by the way, is that net?

Uh, like kind of certainly net, net of everything.

Yeah, net of everything. Cool. So good job. That's, uh, that's something that's obviously very hard to do is to beat the index over a, uh, you know, 25 years plus. Yeah, more than 25-year timeline. So that's super impressive. At the same time, in the last 10 years, I don't think you've beat the S&P 500 in most of those years, but that's a long time. I'm thinking, putting myself in your shoes, man, the psychology. I don't know what I would do. You know, basically I would just be running around with my head cut off. Like basically if I, over a 10-year period, wasn't doing the main thing I wanted to be doing, or, you know, and I felt this by the way, in my 20s, I wanted to be a successful entrepreneur and for 8 straight years I failed. And I remember what that felt like at the time. It was crushing, soul-crushing for me. To be doing that. I wonder, how do you manage your psychology in a period of time where your performance is not as good as you want? Because you seem like a really well-balanced, well-regulated, emotionally regulated guy, but at the same time, this is the game you're playing. And how do you manage your psychology during a window of time like that?

So yeah, it's an absolutely spectacular question. It's funny because I did a sort of dry run through. I'm going to be talking about the fund to our investors in a day or two's time. And I think it's like, it's 7 or 8 years that I've underperformed the S&P index in this case. And so I don't know why it always comes up for me when I think of this is the question that was asked to me just after I'd published my book and I was invited to give a talk at Google. And the outperformance was looking better at that point than it was, it is right now. And a very smart engineer asked the question, how do you know that the outperformance you've gotten to date is not luck? And my answer then, as it would have to be now, is we don't know. Well, I'm just one data point and amongst thousands of data points. And so, you know, you, you would argue that 25 years is a long period of time, but 8 years of underperformance in that 25 years is also a long time. And so, You know, this was already a year or two ago where I said, in the face of underperformance, what am I going to do? Am I going to say, this sucks, this isn't working, I need to change my strategy and risk everything that's dear to me potentially? Or am I going to say, look, I understand what I'm doing. Somehow the market's not rewarding it the way I would like it to be rewarded, but I know that what I'm doing will in the, even in the worst possible cases, lead to a really, really good life. Even if I am underperforming. And if I take for starters, you know, the, my first investors, friends and family had never invested in equities before. So in their case, even if they're underperforming the S&P, they've vastly outperformed what they would've gotten in fixed income and all the cash instruments that they have there. They've won many, many, many times over. And I actually got to have, I like to call it courage, where I kind of realized that the key is to compound and to take, make moves that I know will enable me to compound. And if I can end up beating an index, then that would be great. But I cannot jeopardize compounding for the sake of beating the index. I have to focus on compounding and And if you step back, I mean, I think that this idea of playing the infinite game, so many people think they're playing a finite game, but they're playing an infinite game.

Explain the difference, finite and infinite games.

Well, I mean, I enjoy listening to you 'cause I think what's cool about your mindset and is very different than the environment that I live in, which is I've lived in Silicon Valley here for the last 12, 13 years, is everybody here wants to be Zuck. Everybody here wants to be Elon. Everybody here wants to be, in your case, it would be Buffett, right? And the venture capital game is a, you win and you get all the glory, or most likely you fizzle out and lose. And my life really improved when I asked myself, what game do I even want to be playing? And I moved basically an hour outside of Silicon Valley, which helped just to not be right in the center of it. And it seems like what you're trying to do is not be the next Warren Buffett. Although if it hap— if, if your performance actually happened to be that way, it's not like you would be, be annoyed by it, but your goal is compound well and live well.

Yeah.

And I think that that is a much more achievable goal that you've been able to achieve versus putting your happiness or self-worth tied to some moonshot type of outcome. And I think I really respect that about you because I think it's not going to get movies made. It's not going to get articles written about you. You're not going to be on the COVID of Forbes with that attitude. But those are the people who, you know, the guy swimming in the lake happily, you know, with his kids who's living well and gets to do what they enjoy every day, reading and writing and talking. And to me, that is a life well lived. And I had to almost deprogram myself from the media I was consuming, which was kind of shaping me to want something that I didn't really want, especially once I knew the odds of success in that game. And so, you know, it really helped me to shift my thinking that way. So, you know, you're a good example of that for me.

Yeah, that's an interesting point. 'Cause also the other side is true too, which is if nobody was Zuck, If nobody was Elon, then we would also have a problem. And so I think the answer isn't be one way or the other, but like you just said, what is the satisfying version of life for you? And if you could figure out that answer for yourself and then just act in accordance with that, that's really powerful. I think for somebody like Elon, this is the satisfying version of life for him. I don't think he would be satisfied doing what I'm doing or what you're doing. And so I think we need that sort of The ecosystem has to have that diversity in order for it to work. I think it's a great point you just said, like this, it's almost like this action in the limit, you know, if every time I was in this circumstance, I did this thing, if every time I was craving chips, I ate chips, where does that lead me? If everybody did this action, if everybody just took from the cookie jar, what happens? There's nothing left, right? And so I think that there is a, that's a very powerful question that simplifies I'm a big fan of single decisions or frameworks that simplify thousands of future decisions. Yeah. And that seems like one of them. We should wrap up with this. Can you just leave me with, I am a newbie on my, what I'll call the Buffett-Munger school of thought, which is around partially around investing, partially around how to conduct oneself, how to avoid, you know, the trappings. You know, what is the, the Munger talk, like the 24 common Found the Causes of Human Misjudgment. Yeah.

Yeah.

Causes of Human Misjudgment. So things like that. What are the best essays that I should go read? If I was going to go read 3 things, what would you point me to? The kind of the pinnacle, you know, either essays, letters, blog posts, could be books, but I'm looking for the shorter version if you have them.

Yeah, I like that. That is the answer I needed, not the answer I wanted, which is good. You have a good quote, by the way, that stuck with me. You said, I treat my library like a cocktail party. You know, you're gonna mix and mingle and hop from one conversation to the other, and if it gets boring, you go grab a drink. I love that metaphor because I also am a promiscuous reader and I just didn't have the right mental model or metaphor for how to treat, you know, this stack of books that's here in my room. But I think a cocktail party is a good one. Guy, thanks for doing this, man. This is a really fun conversation that I was looking forward to. And I got to say one thing about you that's really cool. Probably I'll leave you just with a compliment, which is I texted a few people before this that you were coming on. I said, give me, uh, what's a good story or nugget? And I was disappointed at first because they didn't give me like a specific, oh, you got to ask him about this, which is what I'm looking for. It's a shortcut for me and my research. But the way people talk about you is incredible. You're like a mensch, right? Like people just have such a high regard for your character and who you are as a person to them. Like what's a brand? It's what people say about you when you're not in the room. What's a reputation? It's what people say about you when you're not in the room. Your brand, your reputation is very, very strong amongst people I respect. The way they think about you is that you are sort of, you know, just such a value giver. So, you know, congrats to you on that. That is, it showed me something that I can strive for. Like, oh, how would people talk about me if somebody asked them in this way? Would they do this today? I don't think, honestly, no. That's the answer is no. They would not talk about it the same way, but that became a bit of an aspiration.

Well, I'm delighted and that's extraordinary kind of them. Whoever the hell said that, thank you so much.

I feel like I could rule the world.

I know I could be what I want to.

I put my all in it like no days off.

On the road, let's travel, never looking back.