The Snowball

by Alice Schroeder

  Six months after Howie joined the board, Andreas hired him for a job in public affairs. Howie had no public-relations or financial experience, although he did have a basic compass when it came to money and business that made him the most Buffettesque of his siblings. At a school bake sale for the local junior high kids, he worked the checkout line; when people handed him five bucks for a fifty-cent brownie, he looked them in the eye and said, “We don’t have change.” He told the principal, “This is how you raise money.” All afternoon, people donated whatever was in their pocket because Howie refused to give them change.24 Likewise, he was shrewd when it came to calling his father to talk about the job at ADM. He knew better than to take anything for granted. What happens to the donations I can make through the Sherwood Foundation if I accept this job? he asked. Buffett said he would not take that away. Okay, said Howie, perhaps understandably worried about the impact of a desk job on his waistline, what about the rent deal on the farm? Buffett swapped him fixed for floating by letting Howie start paying a straight seven percent rent on what the farm had cost.25 After nailing down another point or two, Howie agreed to move to Decatur, Illinois, where ADM was headquartered. The company put him in charge of working with analysts.26

  On the surface, Howie’s role at ADM had nothing to do with his surname or his father’s recently burnished reputation as a paragon of corporate ethics. He would not have taken the job if he thought it did; and his expertise in ethanol made it plausible. His father had instilled in him disdain toward special privilege. However, while Howie had many years of experience with people trying to use him for his father’s wealth, he was naive about large corporations, and he saw nothing remarkable in a major company hiring a member of its board of directors to work as a public-affairs spokesperson.

  Buffett, who would never invest in a company like ADM or hire a person who mixed business and politics the way Andreas did, said nothing to dissuade his son from serving on a board and working for a company so dependent on largesse from the government. This uncharacteristic reticence speaks volumes about his longing for his son to gain some business experience and follow, at least to a degree, in his footsteps.

  Andreas was tough and demanding, according to Howie, and gave him assignments like buying flour mills in Mexico and working on the North American Free Trade Agreement. But Howie remained the same person as before—driven by adrenaline, energetic, almost painfully honest, and vulnerable. At family trips and gatherings, he still surprised his relatives by jumping out of closets in his gorilla costume.27 He wrote his mother letters brimming with tearstained emotion. His office looked like a teenager’s bedroom, crammed with company tchotchkes: toy trucks with ADM and Coca-Cola logos and Coca-Cola bottles that played the company theme song.28 Nevertheless, Howie felt that he was getting years of business education compressed into a short time.

  In 1992, Buffett had invited Howie to join the board of Berkshire Hathaway, saying that his son would become nonexecutive chairman after he died. Howie’s business experience was still light, he had never finished college, and he was more interested in agriculture than investing. He now had the beginnings of a credible résumé, however. Since Buffett was the largest shareholder of what amounted to a family corporation, he was within his rights to do this. His reasoning was that Howie would steward the culture after he was gone. He knew that his son was beginning to mature and was a principled individual.

  Buffett now had to do some mental backflips, however, to reconcile all the statements he had made over the years—denunciations of the evils of the “divine right of the womb,” dynastic wealth, and advantages based on parentage rather than merit—with his decision to make his relatively untested son the chairman of Berkshire Hathaway after he was gone. And it was not clear how Howie’s role would complement that of the next CEO of Berkshire. That may have been the point. Every sign now indicated that Buffett would see to it that power would not be concentrated in any one individual after his death. This might inhibit Berkshire’s potential or it might not, but it would fend off the grisly menace of the Institutional Imperative, which he viewed as the greatest danger that Berkshire faced. Buffett wanted a degree of control from beyond the grave, and this was his first step in getting it.

  In a second step, he had put Susie Jr., then Peter, on the board of the Buffett Foundation, with the understanding that Susie Jr. would run the foundation after her mother died. This, by the assumption of all concerned, would not occur until after Warren himself was gone. Buffett’s view of the foundation, as of so many other things, was that “Big Susie will take care of it.” Susie Jr.’s shouldering of foundation responsibilities was presumably many years in the future; in the meantime he was coming to rely on her in other areas. A philanthropist in training, she played an active role in her father’s civic and social life in Omaha. She had searched far and wide that year to find a hail-damaged car cheap enough to suit her father. She was helping him organize volunteers for the first Omaha Classic, a charity golf tournament he had started that would be attended mostly by his fellow CEOs but also by some celebrities.29 As her father’s fame increased, Susie Jr. was becoming his most frequent elephant-bumping escort, now that Kay Graham, in her seventies, was not getting out as much. Astrid, who only occasionally attended events with him, did volunteer work at the zoo and had no interest in serving on committees or chairing events. Her life was less changed than almost anyone’s by Buffett’s newfound fame, interrupted only by the occasional gawker in the driveway.

  Peter, too, kept his feet on the ground as his father’s celebrity soared over him like a speeding hawk. He had moved to Milwaukee, headquarters of his record label, where he and Mary had bought a showy house, partly to use as a recording studio. The mansion that belonged to Warren Buffett’s son made the papers, so now Peter was the family member who had transgressed and embarrassed his father by appearing ostentatious. After a stressful marriage, he had separated from Mary in May 1991, just before the Salomon affair started, and ever since had been going through a messy divorce. His father, long experienced as an observer of difficult divorces among his friends and family, was understanding of this. After the divorce, Peter formally adopted his twin stepdaughters, Erica and Nicole. While Big Susie had always embraced them as her granddaughters, Warren was more reserved. Later—with hindsight—it would become clear that he viewed the adoption as a new postmarital link forged between Peter and his ex-wife—a link that Warren did not feel bound by himself.

  Introspective by nature, Peter found the end of his marriage catalytic and revelatory; he was doing inner work to create a solid identity after so many years of being overshadowed and submerged by others. Even during this traumatic period in his personal life, his career had progressed. He had already released several solo New Age albums. After reading Son of the Morning Star, a bestselling book about the Battle of Little Bighorn, his music had begun to reflect Native American elements, which resonated strongly with him. That had led to a job scoring the Fire Dance scene in Dances with Wolves and a live performance at the movie’s premiere. He was now working on a movie score for The Scarlet Letter and a CBS miniseries, as well as beginning to create a multimedia show on the Native American theme of identity lost and reclaimed.

  Peter was respected but not famous, a working musician but not a star. In the music world, the Buffett name meant nothing. His father was proud of his son’s movie scoring and other work. But artistry divorced from fame or commercial success flew past Warren just the way his investing and business passion flew past Peter; their worlds did not connect. Yet, oddly, Warren and Peter were the most alike; both shared a passionate devotion to a vocation for which they had been destined from early childhood; both got wrapped up so obsessively in their work that they expected their wives to become their conduit to the outside world.

  Buffett also now had, in effect, a third son—Bill Gates.

  At first it was what Gates calls “a tiny bit of ‘Warren’s the adult and I’m the child.’” Gradually th
is evolved into “Hey, we’re both in this learning at the same time.”30 Munger often attributed much of Buffett’s success to the fact that he was a “learning machine.” Although he was not going to learn to code software, and Gates wasn’t going to learn to cite the statistics of every business for the last seventy years, their shared intellect, interests, and way of thinking gave them considerable common ground. They shared the same intensity. Buffett taught Gates about investing and acted as the sounding board for Gates’s ruminations about his business. It was the way Buffett had learned to think in models that impressed Gates most. Buffett was as eager to share his thoughts about what makes a great business with Gates as Gates was eager to hear them.

  If Buffett could have found more great businesses, he would have bought them all. He never stopped looking for them. The town where the Superinvestors of Graham-and-Doddsville lived was getting crowded, however. Wall Street as a whole had been overrun; there were fewer and fewer odd pockets of overlooked opportunity. Buffett had carved out more time and created more balance in his life; he no longer wandered off to read American Banker during dinner parties, and he genuinely enjoyed socializing. While his focus on business never lessened, as the nineties progressed, the deals became larger—but more sporadic. Meanwhile, a new interest took hold. It would not reduce his zeal for Berkshire, but it would alter his social priorities, his travel itineraries, and even his friendships.

  What Buffett now wanted to do in his spare time was to play bridge. He had been playing a casual social game for nearly fifty years, and while in New York to handle Salomon, he had started playing a more serious and competitive game. One day in 1993, he was playing in a simultaneous international bridge tournament with George Gillespie and met Sharon Osberg, who was partnered with Carol Loomis.

  Osberg had grown up with a deck of cards in her hand. She was a former computer programmer who had started playing bridge in college. By the time she was running Wells Fargo’s start-up Internet business, she had won two world team championships. It didn’t hurt that she was a petite, sweet-faced brunette in her mid-forties.

  “The next time she’s going cross-country,” Buffett told Loomis, “have her stop in Omaha. Have her call me.”

  “Where’s Omaha?” Osberg said. It took her three days to build up the courage to pick up the phone, “scared to death. I’d never talked to a living legend before.”31

  Osberg, who lived in San Francisco, was on her way to Omaha a week or so later. “I’ve never been so scared, breathing in and out,” she says. At Buffett’s office, his new secretary, Debbie Bosanek, showed her into the inner sanctum. He greeted her by reaching into a box and handing her three dice. These were covered with an odd set of numbers, like seventeen and twenty-one and six and zero. “Now you can look at these as long as you want,” Buffett said. “Then you pick any of them and then I’ll pick, and we’ll roll and see who wins.” Osberg stared at the dice. She was so petrified that the numbers faded into a blur. After a few minutes with no response, Buffett said, “Well, let’s just throw ’em.” Three minutes later, he had Osberg crawling on her hands and knees rolling dice on his office floor. That broke the ice.

  The secret of Buffett’s “nontransitive dice” was that each die could be beaten by another; it was like the game “rock, paper, scissors,” except that the players went one at a time.32 Whoever chose first automatically lost—because the other player could simply choose whichever die would beat the one chosen first. Bill Gates figured it out, as had the philosopher Saul Kripke, but nobody else ever had.33

  Afterward, Buffett took Osberg to dinner at his now-favorite steak house, Gorat’s. He drove her through a residential neighborhood and pulled up next to a pharmacy and AutoZone store in the parking lot of what looked like a 1950s ranch house with metal steer heads next to the front door. A big blue globe traced with black continents highlighted the sign, “Gorat’s finest steaks in the world.” Seated in a room full of families eating at Formica tables, Osberg decided to play it safe and declared, “I’m going to have whatever you’re having.” A few minutes later she found herself looking at “a piece of raw meat the size of a baseball mitt.” Afraid of offending a living legend, she ate it. Then they went to the local bridge club to play, after which, at ten o’clock, Buffett took her on a driving tour of Omaha so he could show off his collection. She saw the Nebraska Furniture Mart parking lot, she saw his house, she saw the house he grew up in, she saw Borsheim’s, all from a moving car in the dark. Then he dropped her off at her hotel. Both were leaving early the following day.

  The next morning, when Osberg was checking out, the front desk clerk told her, “Someone came in and left a package for you.” Buffett had come to the hotel at four-thirty in the morning and left her a compilation of his annual reports to shareholders, which he had had privately printed and bound into a book.34 She had just become one of Buffett’s people.

  Not long after, Buffett sent Osberg to meet Kay Graham when she was in Washington on a business trip. She filled in as a fourth at bridge with Graham and her friends Tish Alsop, widow of her friend Stewart Alsop; Cynthia Helms, wife of former CIA director Richard Helms; and Teeny Zimmerman, wife of Warren Zimmerman, who had recently been recalled as ambassador from the suddenly former Yugoslavia. Soon, Osberg was staying at Graham’s house and playing bridge in Washington on a regular basis with people like Sandra Day O’Connor. She called Buffett from the guest bedroom. “Oh, my God!” she said. “There’s a real Picasso in the bathroom!”

  “I never noticed it and I’ve stayed there for thirty years,” Buffett later said of the Picasso sketch. “All I know is she leaves shampoo out.”35

  Buffett began to time his trips to coincide with Osberg’s business trips to New York. They played bridge at Graham’s apartment with Carol Loomis and George Gillespie. “We liked each other,” says Buffett, “although—she wouldn’t say this, but—she was appalled at how badly we all played.” Osberg was so gentle that she could correct him without hitting the hair-trigger button in him that reacted to criticism—Buffett always avoided or limited his time with anyone he feared might criticize him. After a few hands, she would ask Buffett why he had played a particular card. “Now, we have a learning opportunity,” she would say, and explain what he should have done.

  Before long, the two had become fast friends. Osberg thought it was a shame that the only time Buffett got to play was when he was in a room with other bridge players. He needed a computer. They went round and round about this for several months. “You know, I think you might.” “Nah! I really don’t.” “You know, you could play bridge.” “Eh, not really.” Finally Osberg said, “Warren, you really should just try it.” “Okay, okay,” he said. “You come to Omaha and set up the computer, you stay at the house.”

  Bridge and Osberg accomplished what even Bill Gates had not. Buffett had the Blumkins send someone over from the Furniture Mart to hook up a computer. He stopped the Indefensible in some Midwestern city where Osberg was playing in a tournament and ferried her to Omaha. They arrived at the house, she got acquainted with Astrid, then taught Buffett how to navigate the Internet and use a mouse. “And he was fearless, just fearless,” Osberg says. “He wanted to play bridge.” And only bridge. “Just write down the things I need to know to get in to play bridge,” he told her. “I don’t want to know anything about anything else. Don’t try to explain to me what this thing is doing.”36 Buffett adopted the moniker “tbone” and began playing on the Internet four or five nights a week with Osberg (“sharono”) and other partners. Astrid would fix him an early dinner before he logged on to his bridge game.

  Before long, Buffett was so engrossed in Internet bridge that nothing could disturb him. When a bat got into the house and flapped around the TV room, banging into the walls and entangling itself in the curtains, Astrid shrieked, “Warren, there’s a bat in here!” Sitting across the room in his frayed terry-cloth bathrobe, staring at his bridge hand, he never moved his eyes from the screen as he said, “It’s
not bothering me any.”37 Astrid called the pest-control people and they removed the bat, all without disturbing his bridge game.

  Buffett felt his skills had improved so much under Osberg’s tutelage that he wanted to play in a serious tournament. “Why not start at the top?” she said. They signed up for the mixed pairs at the World Bridge Championships. The Albuquerque convention center was filled with hundreds of people sitting around bridge tables and kibitzers wandering around watching the players. Murmurs and stares flew through the room when the richest man in the United States and two-time world champion Sharon Osberg strolled into the World Bridge Championships together. By now, enough people recognized Buffett’s lanky frame and thatch of gray hair that he caused a stir. For an unranked amateur to show up at the world championships as his first tournament was an unusual thing. For Warren Buffett to do it was shocking.

  Osberg expected that they would lose in short order, so the point was to have fun and get some experience. Instead, Buffett sat down at the table and seemed to shut out everything. It was as if there was nobody else in the room. His bridge skills were not close to the level of most other players, but he was able to focus as calmly as if he were playing in his living room. “My defense is better with Sharon,” he says. “It’s almost like I can feel what she’s doing. And you can trust that everything she’s doing has meaning.” Somehow his intensity overcame the weakness of his game. Osberg was amazed when they qualified for the finals. “We were just good enough,” she says.

  But after a day and a half of playing to get to this point, Buffett was exhausted and wrung out. The only breaks had been an hour here and there to slip out for a hamburger. He looked like he had run a marathon. In the break before the finals he told Osberg, “I can’t do it.”