The Snowball

by Alice Schroeder

  When she felt threatened, the woman that her editor Howard Simons called the “Bad Katharine” flew down the chimney.

  “It wasn’t really the Bad Kay. It was the Insecure Kay. If she got feeling insecure, she could get pretty shrill. Occasionally some incident would set her off, and then she would react like an animal. It was as if she felt nobody was on her side. She felt cornered. And nobody would quite know what to do. That’s when they would call for me. Phil hadn’t been on her side, and her mother hadn’t been on her side. The executives at the company hadn’t always been on her side. And so she always had this sense in the back of her mind that she was in an unfriendly environment and it could be triggered by some incident.

  “But she always knew that I was on her side. That didn’t mean I agreed with her on everything or ate everything she wanted me to eat. But I was on her side. And I always would be.”

  The Bad Katharine bore some similarities to Leila Buffett. And Warren took an obvious pride in being the one person who could win Kay’s trust and keep the Bad Katharine at bay.

  Buffett had developed so much discernment about people’s motivations by now that he understood what was driving everyone around Graham and helped her gain perspective. It was a measure of what Susie had done for him that he could transmit some of her discernment to others. His antennae for people’s reactions were sharp. He could help a person who felt threatened tell the difference between somebody who was actually dangerous and someone who was simply acting from fear.

  “She thought Warren walked on water—and he did,” says board member Arjay Miller. “Warren was open, and she had confidence in him.” For the right person, Buffett could instill an ability to see all sides nonjudgmentally, an ability that Susie had instilled in him, and this marvelous gift of self-confidence and security could be internalized, so that it was not dependent on his presence. But Kay was so insecure, “I don’t think he ever really got her to do that,” says Miller, “although if anybody could have, it would have been him.” She needed his actual presence.

  For the next six months, the Post would continue to publish while navigating fruitless negotiations, threats, violence, a logistical war of nerves, and a constant struggle to keep the torn Newspaper Guild from striking in sympathy. People were tackling all sorts of incongruous jobs to get the paper out; Don Graham worked as a paper handler, pushing huge, heavy rolls of newsprint to the presses.

  “She had people telling her, including some of the people she respected most, ‘You’ve got to give in or you’re going to lose.’ They were afraid, they hated not publishing and seeing the Star gain on the Post.

  “So I was the countervailing force. I said to her, ‘I will tell you before the tipping point is reached.’ The tipping point is the point at which the other guy becomes dominant, and after you go back, he is still dominant. There are fifty variables involved: the attitude of your employees when you come back, the impression that you’ve left on the community, the degree to which advertising has gotten better results from having shifted over. You’re gauging the likelihood of people changing their habits. They couldn’t get our columnists, or our comics, so the question is, at what point does it become more of a habit for them to buy the other paper?

  “That’s probably what did the most for her. She believed me, and she was right to believe me. All I had were her interests at heart, and she believed that I knew enough about the business.”

  But while “Warren encouraged her, it was her backbone, not his,” stresses George Gillespie.15

  Her backbone had to be strong enough to support the whole company. Although nearly all of the Post’s employees other than the pressmen stayed on the job, the constant threat of violence hung over those who crossed the picket lines. Their tires were being slashed, and their families were getting threatening phone calls at home. A striker carried a placard that said “Phil Shot the Wrong Graham.” To keep morale up, Graham and Buffett and Meg Greenfield rolled papers in the mailroom. Buffett loved it, working circulation once again.

  Two months into the strike, the Post had made a final offer to the pressmen, who rejected it.16 The strike dragged on, unresolved. Graham began to hire replacement workers, breaking the strike. The pressmen carried on picketing as if there was a chance of negotiation. But over the next few months, the paper gradually won back the remaining unions, readers, and advertisers, even though the picketing and bad publicity continued through the spring.

  Just as Graham was slowly rescuing her company,17 Buffett and Munger had finally reached their settlement with the SEC. Now Buffett invited Munger for a steak dinner down at Johnny’s Café near the stockyards to finalize their “simplification” plan. He had decided to stop managing money for FMC on the side. Next, Blue Chip would sell its interest in Source Capital,18 and Berkshire and Diversified would refile their merger plan, formerly quashed at the beginning of 1975 by the SEC investigation. At Betty Peters’s request, Wesco, owned only eighty percent by Blue Chip, would remain a public company, and Munger would be chairman of that. Munger and Buffett deferred merging Blue Chip into Berkshire Hathaway until they could more easily agree on the relative values of the companies.

  With both Berkshire and the Post emerging from the tumultuous times that had consumed his attention for so long, Buffett’s business routine began to normalize. The Post board meetings lost their edge of emergency, and Graham began thinking of expanding her empire.

  Newspapers at the time were being snapped up left and right. “Kay really wanted to buy newspapers. But above all, she didn’t want other people to buy them instead of her,” Buffett says. “Tell me what to do,” she would beg. Buffett had gotten her to stop pleading for help from the rest of the board, but she still pleaded for help from him. “I would just make her make the damn decision,” he says. He helped her understand that it was always a mistake to pay too much for something you wanted. Impatience was the enemy. For a long time, the Post did very little and grew slowly. Buffett taught the Grahams the immense value of buying their company’s own stock when it was cheap to reduce the shares outstanding. That increased the size of each slice of the pie. Meanwhile, the Post avoided making expensive mistakes and became much more profitable as a result.19

  Buffett, used to doing the taking, for the first time found himself in the giving role and discovered that, with Graham, he liked it. “She would talk to me about some business policy and then she’d talk to some other guy back home, and they’d know how to scare the hell out of her. She knew they were doing it, and she didn’t like it, but she couldn’t get over it.

  “Eventually I told her my job was to get her to see herself in a regular mirror rather than a fun-house mirror. I really wanted her to feel better about what she was doing. Basically, I enjoyed trying to build her up. And I had some success, although I started late in life with her.”

  Yet, wrote Munger to Graham about Buffett, “I can see damn well whose ways, predominantly, are actually being mended.”20 Buffett began to be seen out with Graham more and more. She made it her job to try to give him some polish.

  “Kay tried to upgrade me a little. It was just very gradual and not so I would notice. It was very funny. She worked so hard to sort of remold me, but it didn’t work. She was a hell of a lot more sophisticated than I was, that’s for sure.” Buffett learned that Graham thought it was uncouth and disgusting to eat out in restaurants. “Around Washington your cook was a big point of pride. The highest compliment you could pay somebody at a party was, ‘I’m going to try and hire away your cook,’ or ‘You must have brought your cook over from France.’ Kay cared about that, like everybody in Washington. So her dinners tended to be quite fancy, except that she would make exceptions for me.”

  Graham’s chef found the restrictions imposed by cooking for Warren a challenge. “Broccoli, asparagus, and Brussels sprouts look to me like Chinese food crawling around on a plate. Cauliflower almost makes me sick. I eat carrots reluctantly. I don’t like sweet potatoes. I don’t even want to b
e close to a rhubarb, it makes me retch. My idea of a vegetable is green beans, corn, and peas. I like spaghetti and grilled cheese sandwiches. I’ll eat meat loaf but wouldn’t order it in a restaurant.”

  His idea of a feast was a half gallon of chocolate chip ice cream. He ate his foods in sequence, one at a time, and did not like the individual foods to touch. If a stalk of broccoli brushed his steak, he recoiled in horror. “I like eating the same thing over and over and over again. I could eat a ham sandwich every day for fifty days in a row for breakfast. At dinner at her farm retreat, Glen Welby, Kay served lobster. I was attacking the shellfish through the wrong side, attacking the shell, and not having much luck. She told me to turn it over.” Confronted with a nine-course dinner—each course accompanied by the appropriate wines and destined for a dinner table filled with dignitaries and celebrities and journalism’s star reporters—“it threw him,” says Gladys Kaiser. He never grew accustomed to life on this grand scale.

  Yet Buffett became a regular guest at Graham’s famous dinners, which he called her “Kay Parties.” He enjoyed his status as the hayseed who was flummoxed by a lobster. His childlike tastes conveyed an air of authenticity and innocence. But his social naiveté was also genuine—mostly because he went around with blinders on. When “sightseeing” with Graham, he was focused like a laser on who was there, not on which fork to use. He had no desire to broaden this aspect of his horizons. Graham upgraded his elephant-bumping skills gradually but was amazed that Buffett continued to eat nothing but hamburgers and ice cream.21

  “She always talked to the cook in French, always, totally in French. So I would hear ‘hamburger’ among the French words and tease her and say, ‘No, no, it’s hambur-zhay.’ Then I would just say, ‘Order me a hambur-zhay,’ and it would come out of the kitchen very fancy. The chef at Kay’s wanted so much to be able to make hamburgers and french fries—and I ate them, but they were not even close to as good as you could get at McDonald’s or Wendy’s. The french fries were always mushy. And he wanted so hard to please.

  “But at her big parties, she didn’t make exceptions for me as much.”

  At the Kay Parties, Buffett’s role was not to eat but, of course, to talk. As a star investor, he was like a bald eagle in a town where birds of any kind were scarce. Even the most hidebound of Georgetown “cave dwellers”—blue bloods who rarely emerged to socialize with anyone except others of their kind, many of whom were Graham’s friends, such as the columnists Joe and Stewart Alsop, cousins of Eleanor Roosevelt—enjoyed having the charming Buffett around. Dinner guests pelted him with questions about investments, and he fell into his most comfortable role: the teacher.

  By now he was spending so much time in Washington that he began keeping a spare set of clothes in Graham’s guest room, just as he once had with the more maternal Anne Gottschaldt in Long Island. Usually he wore a fraying blue suede jacket and gray flannel slacks that looked like a rumpled bedspread.22 Graham tried to improve his sartorial sense. “She was appalled by Warren’s clothes,” according to her son Don, “although my mother just hated the way that I dressed. And at one point she said, referring to her employees, ‘Why am I of all people surrounded by the worst-dressed executive staff of anyone in America?’ Her scorn for people’s clothes was widespread, and not confined to Warren.”23 She took him to meet Halston, the tony designer whom she preferred and who had made over her own sense of style. Buffett’s take on Halston: “He was from Des Moines, you know.”

  By June 1976, Buffett had occasion to invite Graham to an event of his own: Susie Jr.’s wedding. In every way this event would be the antithesis of a Kay Party—held in Newport Beach, California, a mix of the formal and the casual, with a Buffettish zoo of a guest list, to celebrate a marriage that everybody knew was a mistake from the start.

  The spring semester of her senior year of college, Susie Jr. had dropped out of UC Irvine when her roommate learned that Century 21, a real estate company, was offering high-paying secretarial jobs that didn’t require typing skills.24 Though they were wise enough not to interfere, both her parents knew that Susie Jr.’s marriage to Dennis Westergard, the good-looking blond surfer, wasn’t going to work out. On some level, Susie Jr. herself knew this, but she was caught up in the fantasy.25 Parental reservation notwithstanding, her wedding was an important affair. Warren had asked that Kay be invited; Big Susie had reserved a special place for her at St. John’s Lutheran Church, right behind the family. For a few minutes she sat with Dick and Mary Holland, who had escorted her to the service. Then, not surprisingly, Kay said to them, “I feel uncomfortable. I don’t know why, but it’d be better if I sat in back.” She removed herself to the rear of the church, where she sat for the rest of the wedding.26

  Buffett had traveled far from the day of his own wedding, when he had to take off his glasses because he was so nervous that he didn’t want to see. Waiting in the rear of the church to go down the aisle, he said to his anxious daughter, “Don’t look now, but my fly is open.” The photographer was standing in front of the altar, waiting to snap a picture. Susie Jr. was so busy trying to stifle her laughter and to keep from looking at her father’s fly so that the photographer would not capture her staring at his crotch that she forgot to be scared.27

  The rest of the traditional ceremony proceeded without incident. Then the reception at the Newport Beach Marriott turned wild. The Buffetts had let their music-groupie daughter hire any band she liked. Susie Jr. chose her favorite, Quicksilver Messenger Service, a psychedelic rock band that had been among the groups launched at San Francisco’s Fillmore Auditorium in the 1960s. Its members looked like any normal rock band. As the group of twenty-something men with white-boy afros and nipple-length uncombed hair mounted the stage and tuned up their instruments, Buffett looked on with inner horror. When Quicksilver Messenger Service hit it with the drums and electric guitars, Susie Jr. danced in ecstasy at her rock-and-roll wedding while her father managed to keep his composure, even though he was squirming inside. “I was not wild about their music,” he says in an understatement. “They played awfully loud.” He longed for something like his wife’s sweet Doris Day style of singing, or Florence Henderson or Sammy Davis Jr. After ninety minutes, the musicians flabbergasted him again when they stopped playing and put away their instruments. Then their manager compounded his astonishment by asking Buffett to fork over the staggering sum of $4,000—in cash.28 Big Susie had told her daughter, “You know, Susan, you can’t go home with the band on your wedding night.” “Darn!” said Susie Jr. But “some of my friends did,” she says.

  Now Susie Jr. had settled permanently in Los Angeles, working for Century21. Howie had already dropped out of Augustana College after having trouble adjusting and connecting with his roommate. He tried a couple of other schools, but had lost his support system and never graduated. “I was so close to my mom,” he says, “and everything in my life revolved around our family and our home. In college I just could not get any traction.”29 Neither had their father’s ambition, but both had money for the first time. The trust left by Howard to his grandchildren had distributed a little over six hundred shares of Berkshire Hathaway stock to them. Warren gave them no advice on what to do with it. He had never sold a share himself; why would they sell theirs? Susie Jr. sold most of hers to buy a Porsche and a condo. Howie sold some of his to start Buffett Excavating. In a grown-up version of his childhood love of Tonka Toys, he was now digging basements for a living.

  Peter, just finishing his senior year in high school, had been accepted at Stanford and would be headed to California in the fall. More and more during the summer of 1976, the house in Omaha was simply empty. Most days after school Peter went to Arby’s by himself to get something for dinner, then headed to the darkroom to work on his photography. Even the dog was decamping. Peter’s friends had started calling to report “Hamilton’s over here.”30

  Big Susie, who was rarely home these days, admitted to feeling depressed about the state of her marriage. She se
emed to feel that Kay was an interloper who was pursuing her husband;31 Kay had such a territorial way with men that it would have been surprising if Susie had felt otherwise. Yet despite—or perhaps because of—her sadness, Susie herself was “running around like a teenager,” as one person put it, in the hot rush of a midlife romance. She was angry at Warren and got careless, letting herself be seen around Omaha with John McCabe, her tennis coach. She still called Milt from time to time as well, and when he agreed to see her they, too, were spotted out in public. She seemed to be living in different worlds, with no plan to proceed in any direction. She could not conceive of abandoning Warren. She described him as an “extraordinary man.”32 She clearly looked up to him; however much she joked and nagged about his rigidity and his preoccupation with money, he gave her things she very much wanted: security, stability, strength. “It mattered to her that he was honest and had a good value system,” says Doris. “If I ever let down someone who needed me,” Susie said, that would be the biggest failure she could imagine.33 Susie was not a thinker. She had a natural confidence in her ability to manage complex relationships with multiple people, using her emotions as her guide. But somebody would have to be let down eventually.

  While Susie was off on her various unknown pursuits, and his three children were headed in their respective directions—Peter taking off for Palo Alto in his little yellow Triumph convertible; Howie driving a backhoe, gorilla costume in tow; and Susie Jr. embarking on married life with her good-looking surfer—Warren was on a journey of his own. The man of simple tastes who thought of his life as something out of Leave It to Beaver was now spending his time at parties on Embassy Row. Katharine Graham was dragging him into elephant territory as fast as she could.

  “She didn’t change my behavior as much as changing what I knew and saw. Everywhere she went, she was treated just like royalty. I saw a whole lot of interesting things that I wouldn’t have seen in the world. I had a lot of things explained to me. I picked up a lot around her. Kay knew so damned much about everybody that she would give me insights on people in the political arena.