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The Snowball

Page 13

by Alice Schroeder


  Warren knew he needed to win friends, and he wanted to influence people. He opened the book. It hooked him from the first page. “If you want to gather honey,” it began, “don’t kick over the beehive.”9

  Criticism is futile, said Carnegie.

  Rule number one: Don’t criticize, condemn, or complain.

  This idea riveted Warren. Criticism was something he knew everything about.

  Criticism puts people on the defensive, Carnegie said, and makes them strive to justify themselves. It is dangerous, because it wounds people’s precious pride, hurts their sense of importance, and arouses resentment. Carnegie advocated avoiding confrontation. “People don’t want criticism. They want honest and sincere appreciation.” I am not talking about flattery, Carnegie said. Flattery is insincere and selfish. Appreciation is sincere and comes from the heart. The deepest urge in human nature is “the desire to be important.”10

  Although “don’t criticize” was the most important, there were thirty rules in all.

  Everybody wants attention and admiration. Nobody wants to be criticized.

  The sweetest sound in the English language is the sound of a person’s own name.

  The only way to get the best of an argument is to avoid it.

  If you are wrong, admit it quickly and emphatically.

  Ask questions instead of giving direct orders.

  Give the other person a fine reputation to live up to.

  Call attention to people’s mistakes indirectly. Let the other person save face.

  I am talking about a new way of life, Carnegie said. I am talking about a new way of life.

  Warren’s heart lifted. He thought he had found the truth. This was a system. He felt so disadvantaged socially that he needed a system to sell himself to people, a system he could learn once and use without having to respond in a new way to each changing situation.

  But it took numbers to prove that it actually worked. He decided to do a statistical analysis of what happened if he did follow Dale Carnegie’s rules, and what happened if he didn’t. He tried giving attention and appreciation, and he tried doing nothing or being disagreeable. People around him did not know he was performing experiments on them in the silence of his own head, but he watched how they responded. He kept track of his results. Filled with a rising joy, he saw what the numbers proved: The rules worked.

  Now he had a system. He had a set of rules.

  But it did you no good to read about the rules. You had to live them. I am talking about a new way of life, said Carnegie.

  Warren began to practice. He started at a very elementary level. Some of it came naturally to him, but he found that this system could not be applied in an automatic and easy manner. “Don’t criticize” sounded simple, but there were ways to criticize without even realizing it. It was hard not to show off, not to display annoyance and impatience. And admitting you were wrong was easy sometimes and very difficult at other times. Giving people attention and sincere appreciation and admiration was one of the hardest. Someone sunk in misery much of the time, as Warren was, found it hard to focus on others, not himself.

  Nevertheless, he gradually worked out for himself that the dark years of junior high were living proof that ignoring Dale Carnegie’s rules didn’t work. As he started to gain his footing in high school, he continued to practice the rules in encounters with others.

  Unlike most people who read Carnegie’s book and thought, gee, that makes sense, then set the book aside and forgot about it, Warren worked at this project with unusual concentration; he kept coming back to these ideas and using them. Even when he failed and forgot and went for long stretches without applying himself to the system, he returned and resumed practicing in the end. By high school, he had accumulated a few more friends, joined the Woodrow Wilson golf team, and managed to make himself inoffensive if not popular. Dale Carnegie had honed his natural wit; above all, it enhanced his persuasiveness, his flair for salesmanship.

  He seemed intense, yet with an impish side; even-tempered and congenial, yet somehow solitary. Certainly his passion for making money—which occupied most of his spare time—made him unique at Woodrow Wilson.

  No one else in high school was a businessman. Just from pitching newspapers a couple of hours a day, he was earning $175 a month, more money than his teachers. In 1946, a grown man felt well paid if he made $3,000 a year for full-time work.11 Warren kept his money in a chifforobe at home, which no one but he was allowed to touch. “I was in his house one day,” says Lou Battistone, “and he opened up a drawer and said, ‘This is what I’ve been saving.’ And he had seven hundred dollars in small bills. That’s a big stack, let me tell you.”12

  He had started several new businesses. Buffett’s Golf Balls peddled refurbished golf balls for six bucks a dozen.13 These he ordered from a fellow in Chicago named Witek, whom Warren couldn’t resist nicknaming “Half-Witek.” “They were classy balls, really good golf balls too, Titleist and Spalding Dots and Maxflis, which I bought for three and a half bucks a dozen. They looked brand-new. He probably got them the way we first tried to get them, out of water traps, only he was better.” Nobody at school knew about Half-Witek. Even his family didn’t seem to realize that he bought the used golf balls that he and his friend Don Danly were selling. Fellow members of the Wilson golf team thought he fished them out of water traps.14

  Buffett’s Approval Service sold sets of collectible stamps to collectors out of state. Buffett’s Showroom Shine was a car-buffing business that he and Battistone ran out of Lou’s father’s used-car lot, until they abandoned this because it involved manual labor and turned out to be too damn much work.15

  Then one day when Warren was seventeen and a senior, he raced to tell Don Danly about a new idea. It had the same exponential quality to it as the weighing machines from One Thousand Ways to Make $1,000—where one machine could pay for another and another. “I bought this old pinball machine for twenty-five bucks,” he said, “and we can have a partnership. Your part of the deal is to fix it up.16 And, lookit, we’ll tell Frank Erico, the barber, ‘We represent Wilson’s Coin-Operated Machine Company, and we have a proposition from Mr. Wilson. It’s at no risk to you. Let’s put this nickel machine in the back, Mr. Erico, and your customers can play while they wait. And we’ll split the money.’”17

  Danly was game. Although no one had ever put pinball machines in barbershops before, they presented their proposition to Mr. Erico, who bit. The boys took the legs off the pinball machine, put it in Don’s father’s car, and hauled it over to Mr. Erico’s barbershop, where they installed it. Sure enough, the very first evening, when Warren and Don came back to check, “Gee zip!” Warren said—four bucks’ worth of nickels had found their way into the machine. Mr. Erico was delighted, and the pinball machine stayed.18

  After a week, Warren emptied the machine and scooped the nickels into two piles. “Mr. Erico,” he said, “let’s not bother going one for you, one for me. Just pick the pile you want.”19 It was like the old-fashioned way of dividing cake: one child cuts, the other child chooses. After Mr. Erico swept one pile over toward his side of the table, Warren counted out the other and found $25 in his pile. That was enough to buy another pinball machine. Pretty soon, seven or eight of “Mr. Wilson’s” pinball machines were sitting in barbershops around town. Warren had discovered the miracle of capital: money that works for its owner, as if it had a job of its own.

  “You had to get along with the barbers. That was crucial. I mean, these guys could all go buy these machines for twenty-five bucks themselves. So we would always convince them that it took someone with a four-hundred IQ to repair pinball machines.

  “Now, there were some pretty unsavory characters in the pinball business, and they all hung out at a place called Silent Sales. That was our hunting ground. Silent Sales was in the 900 block of D Street, right near the Gayety burlesque house on the seedy side of downtown. These characters at Silent Sales were amused by us, sort of. Danly and I would go down there,
and we’d look at these machines and buy whatever we could for twenty-five bucks. New machines cost about three hundred dollars. I used to subscribe to Billboard magazine in those days to keep track of what was going on in pinball machines.

  “The guys at Silent Sales taught us some things. There were some illegal slot machines around. And they showed us how to pour beer into them to make a fifty-cent piece get stuck in the mechanism, and you could just keep pulling the handle until it paid. They showed us how to disable the electric cutoff for the coin-operated soda machines at the movie theaters so if you stuck a nickel in, then immediately pulled the plug, you could empty the whole machine.

  “These guys would explain all this stuff to us and we’d just eat it up.

  “My dad probably suspected the kind of characters we were hanging out with. But he always felt I’d turn out okay.”

  Warren and Don were already making good money with single pinball machines in barbershops, but then they found a gold mine. “Our home run of all time was down near Griffith Stadium, which is the old baseball park.” In the middle of Washington’s worst slums, they found “a seven-chair black barbershop. There were a lot of dudes down there. After we put a pinball machine in, we would come back to collect, and these guys had drilled holes in the bottom of the machine and rigged the tilt mechanism. It was a real contest of wills. But that was our mother lode, our best location by far. The guys who played at these barbershops were constantly imploring us to adjust the tilt mechanism so you could shove the machine harder without making it tilt.

  “Listen, we were not judgmental about our customers.” If anything, they were probably trying to pick up more ideas like the scams the guys at Silent Sales had taught them, and those they were inventing on their own. “One time we were down in Danly’s basement playing with my coin collection. To make collecting on the paper route more interesting, I used to collect different kinds of coins. So I had these Whitman coin boards with slots for the coins. I said to Don, ‘It looks to me like we could take these coin boards and use them as molds for casting slugs.’

  “Danly was the brains of the operation. And so, sure enough, he learned how to pour these molds for casting slugs, and I supplied the coin boards. We would try to use the slugs for vending machines for soda pop and things like that. Our basic formula was to have our income in currency and our outgo in slugs.

  “One time, Danly’s father came down in the basement and said, ‘What are you boys doing?’

  “We were pouring metal into these things. And it was, ‘We’re doing this experiment for school, Dad.’ We were always doing experiments for school.”

  At school, however, Warren mostly liked to talk about his businesses—not his scams—and by the spring semester, near the end of high school, his raconteuring had turned him and Don into a minor legend around Woodrow Wilson.

  “Everybody knew we had the pinball-machine business, and everybody kind of knew we were raking it in. We probably exaggerated too when we told them. And so people wanted in on it. It was like stocks.”

  One of them was a boy named Bob Kerlin—an intense kid who played on the golf team with Warren.20 He and Don weren’t open to letting anyone in on their pinball business, but they did have a plan for using Kerlin for their newest venture. “We had given up stealing the golf balls from Sears, but we got this idea that we were going to retrieve lost golf balls from the lakes on golf courses around Washington. And now we saw a position for Kerlin, because neither one of us wanted to retrieve the golf balls.”

  They created an elaborate scenario for how Kerlin would do this. It bordered on an evil prank, but school was out in a couple of months, so what the hell.

  “We went down again to Ninth and D, where the army surplus store was located, right by Silent Sales, and bought a gas mask. And then we got this garden hose and we hooked them up and tested this thing in a bathtub by putting our faces in three inches of water.”

  Doing what he called his Tom Sawyer routine, Warren said to Kerlin: “‘This is your chance. We’re going to deal you in.’ We told him that we would go out at four in the morning to some golf course in Virginia, and that he would wear the gas mask in the lake and retrieve the balls, and we’d split the money three ways.

  “Kerlin said, ‘How do I stay down on the bottom?’ I said, ‘Oh, I’ve got that all worked out. What we will do is, you’ll strip, and you’ll be nude, but you’ll wear my Washington Post newspaper bag, and we’ll put barbell plates in the newspaper bag so that you’ll stay on the bottom.’

  “So we went out to this golf course, and all the way Kerlin was expressing some doubt. And Danly and I said, ‘Have we ever failed? I mean, you’re looking at a couple of guys…if you want to quit now, okay, but, you know, you’re not in any future deals.’

  “So we got out there at the crack of dawn. Kerlin was stripped, and we were dressed warmly. He was totally nude with a Washington Post newspaper bag on and all these barbell plates, and he started wading into the lake. Of course, he didn’t know if he was stepping on snakes or golf balls or whatever. And then he got down and when he tugged on the rope, we pulled him back up. He said, ‘I can’t see anything.’ We said, ‘Don’t worry about seeing anything, just grope around.’ And he started to go back down.

  “But before his head went under, this truck came over the rise, carrying the guy that’s going to fill up sand traps in the morning. He saw us and drove up, saying, ‘What are you kids doing?’ Danly and I were thinking fast. ‘We’re conducting an experiment for our high school physics class, sir.’ Kerlin was nodding the whole time. So we had to get him out of the pond. The whole thing blew up on us.”21

  Whatever happened to poor Kerlin, and however nude he actually was, a watered-down version of this story got around. It would be the last great Tom Sawyering of Warren’s high school career.

  By now, however, he had made a small fortune: a glistening $5,000 heap, sticky with the newsprint from throwing more than five hundred thousand newspapers. Newsprint snowflakes made up more than half his snowball. Rich as he was, however, Warren meant to keep that snowball rolling.*8

  13

  The Rules of the Racetrack

  Omaha and Washington, D.C. • 1940s

  Warren’s Dale Carnegie tests of behavior were handicapping: a mathematical experiment on human nature. The data he collected gave him the odds that Carnegie was right.

  This way of thinking was an extension of his childhood hobby of calculating the odds on the life expectancies of hymn composers. But his interest in longevity was no mere abstraction. Ernest Buffett, to whom Warren was extremely attached, had died in September 1946 at age sixty-nine, while the family was in Omaha campaigning for Howard’s third term. Warren was sixteen. Of his four grandparents, only Stella, age seventy-three, remained alive, confined in the Norfolk State Hospital. Long before Ernest’s death, Warren had been preoccupied with his own lifespan; these latest family events did nothing to ease his mind about either longevity or insanity. Warren’s passion for handicapping, however, extended to many other subjects, and in an embryonic form had started much earlier—well before he even knew the meaning of the term—back when he was a little kid with marbles and license plates and bottle caps and a fingerprint kit for nuns.

  The art of handicapping is based on information. The key was having more information than the other guy—then analyzing it right and using it rationally. Warren had first put this into practical use as a child down at the Ak-Sar-Ben racetrack, when his friend Bob Russell’s mother introduced the boys to the world of pari-mutuel betting.

  Warren and Russ were too young to wager, but they quickly figured out how to make a buck. Amid the cigarette butts, beer slops, old programs, and hot-dog remnants in the grime and sawdust of the Ak-Sar-Ben floorboards were thousands of discarded tickets, peeping out like mushrooms on the forest floor. The boys turned themselves into truffle hounds.

  “They call that ‘stooping.’ At the start of the racing season you get all these people who’d
never seen a race except in the movies. And they’d think that if your horse came in second or third, you didn’t get paid, because all the emphasis is on the winner, so they’d throw away place and show tickets. The other time you would hit it big was when there was a disputed race. That little light would go on that said ‘contested’ or ‘protest.’ By that time, some people had thrown away their tickets. Meanwhile, we were just gobbling them up. We wouldn’t even look at them when we were working. At night we’d go through them. It was awful; people would spit on the floor. But we had great fun. If I found any winning tickets, my aunt Alice, who didn’t care anything at all about races, would cash them in for us, because they wouldn’t cash them for kids.”

  Warren wanted to go to the races all the time. When Mrs. Russell wasn’t taking him, “my dad would never go to the races,” says Buffett. “He did not believe in the races.” Instead, his parents let his great-uncle Frank, the oddball of the family, take him. Frank had long ago reconciled with Ernest and had eventually married a woman whom the family referred to as “the gold-digger.”1 He had no particular interest in the horses, but he took Warren to Ak-Sar-Ben because his great-nephew wanted to go.

  At Ak-Sar-Ben, Warren had learned something about how to read the tip sheet, and it opened up a whole new world. Handicapping horses combined two things he was very, very good at: collecting information and math. It was not unlike counting cards at blackjack, except that the winning hand had four legs and ran around a track. Soon, he and Russ knew enough to put out their own tip sheet, the cannily named Stable-Boy Selections.

  “We got away with it for a while. They weren’t the hottest sellers in the world. I mean, a couple of little kids selling this thing we typed up in my basement on an old Royal typewriter. The limiting factor was carbons in those days. You could probably only get in five or so carbons. But I got on the Royal and Bob Russell and I doped out the horses and then we typed up this thing.

 

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