Interview With Guy Spier PDF

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Graham, Buffett, Klarman
Year IV, Volume III
March 31, 2011
SMALL- AND MICRO-CAP VALUE
When asked how he became so
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We read hundreds and hundreds
11 small- and micro-cap investment screens
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20 companies profiled and analyzed
Top Ideas In This Report
Proprietary selection of top investment candidates
GenOn Energy
(NYSE: GEN) . 52 Plus: Superinvestor holdings update
RadioShack
(NYSE: RSH) .. 80 Plus: Interview with Guy Spier
Rosetta Stone
(NYSE: RST) .. 88
Plus: Interview with Rahul Saraogi
Stewart Information Services
(NYSE: STC) .. 92
Syms Corp. Companies mentioned in this issue include
(Nasdaq: SYMS) .. 100 A. H. Belo, Aegean Marine Petrol, Alliance One, Barnes & Noble,
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Also Inside
Canadian Solar, Charming Shoppes, Charming Shoppes, Chiquita,
Editorial Commentary . 4 CIBER, Citizens Republic, Coldwater Creek, CONNS, Corinthian Colleges,
Cross Country Health, CSS Industries, Donegal Group, Doral Financial,
Superinvestor Update . 8
E.W. Scripps, Eagle Bulk Shipping, Eastman Kodak, EMC Insurance,
Interview with Guy Spier 9 Exceed Company, Exterran Holdings, FBR Capital Markets,
Interview with Rahul Saraogi .. 18 Fresh Del Monte, Gaiam, Genco Shipping, GenOn Energy,
Screening for Small-Cap Ideas 22 Gibraltar Industries, GigaMedia, Green Plains Renewable Energy,
Analysis of 20 Companies 36 Hallmark Financial, Hawaiian Holdings, Horace Mann Educator,
Hutchinson Technology, Imation, Imperial Sugar, Jones Apparel,
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holdings of top fund managers. We Chief Executive Officer of
Rosetta Stone, RTI Biologics, SeaBright Insurance, SkyWest,
also use a proprietary methodology Aquamarine CapitalServices,
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Interview with Guy Spier

Our friend and fellow value investor Jacob Wolinsky recently had an
opportunity to interview superinvestor Guy Spier. Jacob has graciously agreed
to let us bring this interview to you first. We remain indebted to Jacob.
Guy Spier is 45 years old and for the last 14 years has been the manager of
Aquamarine Fund, an investment partnership inspired by the original 1950s
Buffett Partnerships, with market beating returns. Since inception in September
1997, Aquamarine has returned a total of 221.6% versus 36.7% for the S&P 500
Index and 12.8% for the FTSE 100 Index (data as of December 31, 2010).
Guy Spier is married with three children. In June 2009, he moved to Zrich,
Switzerland from New York City. He completed his MBA at the Harvard
Business School (class of 1993) and holds a First Class degree in Politics,
Philosophy and Economics from Oxford University, where he studied at
Brasenose College. Upon graduating, he was co-awarded the George Webb
Medley prize that year for best performance in Economics. He spent two years
Value investing allowed you working at Braxton Associates (now part of Deloitte Consulting) and six months
to be a mild, quiet, as a stagaire at the Forward Studies Unit of the European Commission in
conservative person, which Bruxelles. He has appeared in various articles and magazines, with commentary
was much more in tune with on various issues, and also in connection with his charity lunch with Warren
who I was. Buffett and Mohnish Pabrai. In New York, Guy served for four years as the
President of the Oxford Alumni Association of New York. He is an inner-circle
sponsor of TED India.
Jacob Wolinsky: What attracted you to value investing?
Guy Spier: I was about 28 years old when I came across The Intelligent
Investor and then pretty quickly after that, having read the introduction to the
book by Warren Buffett, I read the Roger Lowenstein biography, Warren
Buffett: The Making of an American Capitalist. Afterwards, I ordered all the
Berkshire Hathaway annual reports. There was no, or little, email at the time, so
I remember calling up the company and ordering the report, which came in the
mail two or three days later. From there, I started ordering the annual reports of
the companies that Berkshire Hathaway had investments in: Geico, Coca-Cola,
Cap-Cities, and ABC. What attracted me was that I was an investment banker at
the time, raising money for start-up companies and, in order to be successful, I
had to be extremely aggressive about projections and in explaining what I
believed those companies delivered. In this role, I was being put into situations
where in order to do my job, I was being forced to mis-represent the truth and
overstate what actually happened.
What came as so obvious about value investing is it allowed you to be a
mild, quiet, conservative person, which was much more in tune with who I was.
It was a real revelation for me. I remember sitting in my office at 44 Wall Street
and feeling like I wanted to be doing what Warren Buffett and Charlie Munger
were doing, not what I was doing at the time. This was within three months of
reading The Intelligent Investor, and I was already planning on leaving my job.
So I started interviewing with value investment firms like Tweedy Browne
and finding ways to meet people like Carley Cunniff of Ruanne Cunniff and
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Tom Russo, and I was just figuring out a way to get into that world. Today,
value investing and the Buffett phenomenon are better understood and widely
accepted, but at the time, I was extremely impressed by how successful Warren
Buffett was, and how different an animal he was to most corporate and financial
titans, such as corporate raiders, for example, who were normally the ones I read
about having success in the investment world.
Wolinsky: Why did you decide to start your own fund?
Spier: I was actually looking for a job as an analyst, and I thought that was the
role for me, but strange things happen in the world. In my case, my dad came up
to me and said, look, I have been running this business, Aquamarine Chemicals,
and now is about the time you should start thinking about starting your own
business. Dont make the mistake I did by working for someone else for the next
forty years. I will start you off with some funds, and youll start learning the
investment business.
So I started learning about investments. Once I started investing his money,
he brought a couple of his partners to me as well. While reading about the fund
world, I figured out this was a great way to manage one account rather than
When you pay up for a multiple accounts. In turn, I left my job at the investment bank in 1995 and, a
better business, you can year and a half later, I had launched Aquamarine Fund. I launched it with no real
suffer greatly when the price investing experience, and by that I mean I had bought three or four stocks before
people are willing to pay for I started the investment business and had not worked for anyone else in the
that business goes down investment business.
dramatically, as it did in Wolinsky: How would you describe your investment philosophy? Is it cigar
2008. butts, GARP stocks or something else?
Spier: Pretty soon after I started I fell in love with this whole GARP idea. I
spent a lot of time around Ruane Cunniff by researching their ideas and
attending their annual meetings, where I had the chance to listen to and meet
some of their brilliant investors and analysts, including Bob Goldfarb, Greg
Alexander, Jonathan Brandt, and Girish Bhakoo. I learned about why Warren
had moved into the business of buying, and paying up for better businesses.
Something I learned during the financial crisis was that when you pay up
for a better business, you can suffer greatly when the price people are willing to
pay for that business goes down dramatically, as it did in 2008. Many better
businesses fell in price more rapidly than other businesses because, as the crisis
came about, many investors were not willing to pay up for growth or quality.
However, while I lost more money owning those businesses than I would have if
I had owned the right cigar butts, I have gained an important insight, which
explains why I was in some of those GARP stocks, and it is this:
If you talk about your stocks, it will affect how you think about them as
well as the portfolio decisions you make. At the time, I did not believe it would
skew my decision making. But if I go back over the life of Aquamarine Fund
and examine my letters to investors, I can see clearly how this created a bias for
better businesses, simply because it was more fun to talk about them. (Or
perhaps a better way to put this is that I developed a bias for businesses that are
fun to talk about.)
Owning things that Mike Burry says have an ick factor or cigar butt
investment ideas that have a lot of hair on them is not something your investors
want to hear about unless you have a very sophisticated group of investors. In
my case, many of my investors had never owned stocks before so they were not
going to feel too comfortable about me owning companies with a high ick
factor. So I was immediately biased toward buying better businesses at a
reasonable price. With most audiences, it is much easier, for example, to talk
about Heineken and their phenomenal sales growth in Russia and other BRIC
countries, or about Nestle and their Nespresso brand, than to talk about
businesses that are either hated, or unloved, as Whitney Tilson would put it.
One of the things I have learned as a result of the recent financial crisis is
not so much that you want to own cigar butts, but that you want to own
something that makes the situation unusual and gives you an unusual
risk/reward. That is not necessarily a cigar butt, but you have to identify what it
is that will result in a return of 3x in two years. I am trying very hard to own
things that will give me a return of 3x in two years rather than settle for
something that will appreciate at a few percentage points better than the market.
Thus, you could say that my approach to investing, in contrast to Buffett,
has gone in the reverse direction. My approach today has become more similar
to the way Warren Buffett invested when he got started. The important thing to
You could say that my realize is that if Buffett today was running a fund the size of Aquamarine, he
approach to investing, in would be investing differently than the way he does today. Buffett would be
contrast to Buffett, has gone investing in what he has called at investor meetings wrinkles.
in the reverse direction. My Wolinsky: Do you favor any specific metrics, like price to book, return on
approach today has become equity or return on capital when evaluating equities?
more similar to the way
Warren Buffett invested when Spier: When I started investing I used screening software to find companies
with the metrics you mention high ROE, low price to book, and high return
he got started. The important
on invested capital. I was looking for all of those types of things.
thing to realize is that if
Buffett today was running a I think all of those metrics have a potential downfall, and I will give you an
fund the size of Aquamarine, example: In general, you want to invest in high ROE businesses, and you can
he would be investing run various types of a screen to find high ROE businesses, but to the extent that
differently than the way he in the vast majority of businesses, ROE is going to revert to the mean, you may
does today. Buffett would be have paid up for something that might not be there in five years. The ROE five
investing in what he has years forward might be a lot lower than the ROE you are paying up for today.
called at investor meetings Tom Russo has said, flying an airplane requires you to focus on five or
wrinkles. more instruments, and you cant favor the altimeter over the speed indicator, or
the vertical speed indicator over the pitch indicator, for example. You have to
look at all the instruments together and fly the plane integrated. Tom has used
this plane analogy to discuss investments. There is no single metric you should
look at but rather keep an eye on all of them. I do not favor any specific metric,
but a better way to talk about what were looking for is not so much the metrics
but something unusual and where we can understand why it is unusual.
Wolinsky: What types of questions are on your investing check list? In short,
how do you analyze equity?
Spier: There are many books written on analyzing equities. Ken Shubin Stein,
for example, teaches a class on investing at Colombia Business School that lasts
a whole semester. And believe me, if I were to take that class today, I would
learn plenty, so I am not sure what useful knowledge I can impart in a short
interview, but I will do my best by sharing a few things on checklists:
First off, credit for coming up with the idea of creating an investment
checklist really goes to Mohnish Pabrai. He involved me in the process of
thinking about it and, although I have spoken about it to groups of investors, he
really had the insights and has subsequently done some phenomenal work on the
subject. I believe and hope one day he will go public with it. To the extent that I
contributed to it, I will be happy to share. I cannot share the entire checklist with
you though: You can ask Mohnish if he will and, at some point, he may.
I can, however, talk a little bit about creating the checklist and provide some
examples. The process of creating a checklist is very simple and works the same
way the Federal Aviation Administration does it. You look for mistakes
yours, mine, Warren Buffetts, Charlie Mungers or anyone elses, and look at
the salient features of those mistakes what was present that could have been
seen at the time the investment was made. Add that to the checklist. For
example, take leverage: There are times leverage can be very damaging to ones
net worth. It is a simple checklist item, but in my checklist there are five or six
items related to leverage. So one question might be, what is the debt to EBITDA
ratio? Another question might be, what are the debt covenants, and is there a
I try to look at the world as possibility of default anytime soon? Another question would be, when is the
borderless. If I am looking at debt coming due? The point of these questions is to force the mind to focus.
an industry, I want to look at Imagine coming across an idea that could be a 5x. It is easy to get excited about
all the companies in that a 5x, but going through the checklist forces me to cover these items.
industry, whether they are Another item on my checklist is the one talked about in Atul Gawandes
based in North America, The Checklist Manifesto, which relates to whether the CEO is going through a
Europe, South America, or divorce. I once had an investment in a company where this was the case. I
the Far East. I think there realized that much of the CEOs behavior in the corporation was driven by his
are huge advantages to divorce proceedings, and while it may have made sense from that perspective it
looking at the world as one was completely dysfunctional from an investor standpoint. Therefore, if I know
integrated whole, and I think that the person controlling the company is going through something like a
increasingly most divorce, it would be something to double-check and focus on. With investing,
marketplaces are integrated unlike flying, the results of the checklist do not have to be perfect, but they do
as a whole. have to be identified and then one has to have something to compensate for it,
like a low price.
Wolinsky: Do you only invest in certain countries, or do you invest wherever
you see value?
Spier: I try to look at the world as borderless. If I am looking at an industry, I
want to look at all the companies in that industry, whether they are based in
North America, Europe, South America, or the Far East. I think there are huge
advantages to looking at the world as one integrated whole, and I think
increasingly most marketplaces are integrated as a whole. Further, even if the
markets are local, the forms that exist in the different markets are becoming
more and more alike. In traded markets, if you are looking at coal mines in
Australia, it makes a lot of sense to look at coal miners in North America and in
Canada. If you are looking at steel producers, look at them as one and review the
similarities and differences. Even in the retail sector, if you are looking at Nike,
you would be crazy not to look at Puma, Adidas, and even at a Japanese firm
called Asics. If you are looking in the food industry and are looking at Nestle,
you would be crazy not to look at Kraft. And even parking companies, which
were initially local businesses, are becoming increasingly corporate, and
organizing themselves in a similar fashion around the globe.
But while there are lots of good reasons to see the world as borderless,
borders do, of course, exist. The institutional makeup of where a company is
incorporated makes a big and often the determining difference. If there were a
mining company based in Russia that had all the right characteristics for me, I
still would likely not invest in it because the regime in Russia has made it
abundantly clear that it views mining and the key commodities as its domain,
where the rules that apply in other capitalist countries do not necessarily apply.
The Russian regime appears to have no problem expropriating large and
powerful corporations like Exxon, Chevron and others, so I would not stand a
chance. However, I would be much less likely to rule out something in Russia
that is not considered by the ruling oligarchs to be a part of the commanding
heights. For example, I would be willing to look at a retailing chain in Russia,
or a food company, if only because I would likely learn something.
What the Russia example brings up is that, while I want to see the world as
a whole, I want to invest in places where people are playing the same game as I
am playing and where they want to and are willing to allow their investors to
make money alongside them. The truth is that if an organization, whether that be
the government or the controlling group, want to make sure that the passive
If there were a mining minority investor does not make money, either management or existing rules
company based in Russia that and regulations can make it very simple for this to happen, so you have to be
had all the right around people who are interested and willing to let you win as well.
characteristics for me, I still Even more important than the system being protective of outside passive
would likely not invest in it minority investors is that the people who control a corporation think in the
because the regime in Russia following way: For instance, in the U.S., Buffett exemplifies the individual who
has made it abundantly clear wants to play the same game as his investors. He wants his investors to make
that it views mining and the lots of money, so he takes a small salary, keeps his expenses low and may end
key commodities as its up paying a dividend quite soon. That is the type of person you want to be
domain, where the rules that around, and there are many other great examples in the U.S. But the opposite
apply in other capitalist also exists in abundance in the U.S., and it is hard to make money around such
countries do not necessarily people. It is increasingly true that one can find people of Buffetts ethos all over
apply. the world. On a recent trip to Brazil, I was extremely impressed by the fair-
minded business ethic of the people I found there, and I am invested alongside
two private equity funds Patria Investments and GP Investments. In another
interesting example, the Philippines, which is by reputation highly corrupt, is
home to the Fred Uytengsu, one of the most ethical and straightforward
managers of a publicly traded business you will find anywhere.
It is most certainly the case that you can find good, decent people all around
the world, even in places with a reputation for corruption. And even though it
may be harder to find them in difficult markets such as the Philippines, the
reward, in terms of a lower valuation, is much greater.
Wolinsky: Should value investors be looking at emerging markets?
Spier: I think they most certainly should be looking at emerging markets.
Unfortunately, the time to have been looking would have been five or ten years
ago. Thats when things were very cheap and no one was really looking at them.
Now Hong Kong, Singapore, and Brazil are relatively well picked over and
there is plenty of talent looking at them. But again, I think it is one world and
you should look at the whole world.
Wolinsky: Besides Think and Grow Rich, How To Win Friends and Influence
People, and Awaken The Giant Within, what other books do you recommend?
Spier: Think and Grow Rich is a fantastic book. So is How To Win Friends and
Influence People, which should be read regularly until the lessons have been
absorbed. I still learn new things each time I re-read them. Regarding Awaken
the Giant Within, I think Tony Robbins is a unique American phenomenon. He
has a lot to teach and he has even coached presidents; many of the people he has
coached do not want to make it public. I have learned a lot from having read his
books and attended his seminars.
The Rational Optimist by Matt Ridley is a wonderful book. One of the issues
investors have to deal with is that pessimism has a big payoff for journalists in
terms of eyeballs and attention. And optimism pays a lot less. If you write an
article with a catchy title that is pessimistic, it garners much more attention. At
the end of the day, newspapers, journalists, and bloggers are interested in
catching peoples attention. A negative article much more readily catches our
attention. In his book, Matt says that despite all the pessimism, there is plenty to
be optimistic about. The basic idea of the book is that we have been improving
our standard of living as a species for thousands of years, and that the rate has
One of the issues investors accelerated dramatically in the past 500 years. Considering this, it is extremely
likely that, despite all that is happening, we will all be living better 50 or 100
have to deal with is that
years from now. New businesses and new opportunities will be created, and for
pessimism has a big payoff
that timeframe, there is not so much we should really fear.
for journalists in terms of
eyeballs and attention. And Wolinsky: Why did you move to Zurich? What are your thoughts on the crisis?
optimism pays a lot less. If Spier: The mentality of the Swiss is in many ways similar to that of value
you write an article with a investors. The buildings, trains, airports tend to be extremely well thought out
catchy title that is and very well engineered. You see can the margin of safety concept applied in
pessimistic, it garners much all sorts of areas in Switzerland. I also like Switzerland as a quiet place to live
more attention. At the end of with my family. For me Zurich met the need for a good place in which to do
the day, newspapers, business, with a good infrastructure. At the same time it is a small city where my
journalists, and bloggers are children can walk to school and where we can enjoy the greenery. So it met the
interested in catching quality of life test for me.
peoples attention. A negative In terms of the crisis, Switzerland has not been too affected. Switzerland
article much more readily has a 4% unemployment rate right now, which means it has a pretty tight labor
catches our attention. market; neither has it had a housing crisis. The Swiss really embody what should
have happened in the U.S. twenty years ago. The Swiss tend to live within their
means. The savings ratio is high, the Swiss tend not to borrow a lot of money,
they tend to keep high cash balances in the bank. So this place is extremely well
set up to deal with bumps along the economic road.
Wolinsky: Do you see distressed opportunities in European equities due to the
European sovereign debt crisis?
Spier: Although I did some work on Greece during the sovereign debt crisis,
one of the issues is that corporate tax rates could increase a lot, or some of the
governments in these peripheral countries might find a way to tax profitable
companies because they need tax revenue. And so you have to discount that into
the corporations you look at. In Greece, there was a high potential government
interference factor that made an investment a lot less attractive to me.
There are some things I am probably missing out on, but I brought a very
substantial network of resources, friends and ideas over with me from the U.S.
And I am not as familiar with the European sector as I will be in five years
time, so some of that may be ignorance on my part.
Wolinsky: What has been one of your biggest investing mistakes?
Spier: One of the things we know about financial institutions is that you do not
want to be around them if they are projecting out what their earnings will be, as
Fannie and Freddie did in the years leading up to the financial crisis. This is
because in a financial institution, the minute the leadership starts projecting
numbers, there will be powerful incentives within the firm to start cutting
corners in order to make sure the company achieves the target.
From 2005-08, I was very interested in growing and marketing myself and
the fund. As a result, I felt forced to talk myself up and make predictions to
investors, setting expectations as to what I thought I could do. In many ways I
was making the same mistake for myself as the one I just described for financial
institutions: Having expectations higher than I should have had, I found myself
having to resist the pressure to try to meet them by pushing the envelope. This
notwithstanding, in 2008, investor expectations were not met. This lead to
The unfortunate truth is withdrawals from Aquamarine Fund, which meant I had less money to invest in
that, if you have a fund where the juicy values I was seeing in the latter part of 2008 and early 2009.
people can redeem at will, I think it was a huge mistake, not so much for the specific buys that I had
then you can have a potential made, but in terms of not being diligent about constructing an environment that
run on capital, and so was conducive to making good investment decisions. I think if we can create an
diversification is a good environment that is conducive to good decision-making, then that is more than
thing. The combination of not half the battle. In my case, I was inadvertently doing the opposite; I was creating
being diversified and trying an environment that was inimical to making good investment decisions.
to set investor expectations One of the hard things about creating an environment that is wrong is that
put me into a situation where you cannot deconstruct it at the flip of a switch. It takes time to de- and
I was not able to respond reconstruct. In fact, part of my decision to move to Zurich was that I wanted to
with the best performance I reconstruct my environment in a solid fashion, and one of the easiest ways to do
should have achieved. that is to start certain parts from scratch. You can get locked into all sorts of
relationships leases, business suppliers, customers etc. and they all expect
you to behave in a certain way, so if you say you want to behave differently, you
need a lot of willpower to shift yourself over. So the best thing to do, of course,
is to never put yourself in a situation where you have to shift. That has been one
of my biggest investing and business mistakes.
Another reason why I had such a bad down year in 2008 was because I was
concentrated in some GARP ideas that I thought were very good, and they all
went down together. So as for concentration, I think there should be a limit. I
have since instituted a concentration limit in my portfolio. I know of one
investor who allocated all his money to one investment idea: Contango Oil and
Gas. There is nothing wrong with Contago Oil and Gas as an investment idea if
you run permanent capital the way Berkshire Hathaway does. However, in the
case of someone who does not run permanent capital, there is always the
possibility that there could be a run on the bank, which will tend to happen
when you have a very big drawdown. The unfortunate truth is that, if you have a
fund where people can redeem at will, then you can have a potential run on
capital, and so diversification is a good thing. The combination of not being
diversified and trying to set investor expectations put me into a situation where I
was not able to respond with the best performance I should have achieved.
Wolinsky: What do you remember most from your lunch with Warren Buffett?
Spier: It was Warrens intellectual intensity and his enthusiasm for the lunch
and for the people there. This is a guy who is older, wealthier, more experienced
and smarter than I am, but in his eyes, this all counted for nothing. From the
moment he was there, he brought his full self to the lunch and every time I or
someone else spoke, he focused all of his attention on what they were saying.
This was disconcerting at first but exhilarating once I got used to it: I felt like
my words were being sucked out of me because he was so curious to hear what I
had to say, and in many cases, I felt like he had understood my point or question
before I had finished. As you can imagine, he responded quickly, warmly,
intelligently, and with ideas that were original, thoughtful and fascinating, such
that I could savor each of his responses. Of course, we knew the time was
limited so we moved rapidly on to different topics. Needless to say, I came from
the lunch completely exhausted, while Warren seemed quite refreshed.
One of the many things I took away from the lunch was that I felt like Snow
White who had drifted: I was not living up to the expectations I had for myself
when I started down this path. Part of that was coming to an understanding of
One of the many things I why I was in New York, and realizing that it was time to move to Zurich.
took away from the [Buffett] Wolinsky: Honestly, was it worth the money?
lunch was that I felt like
Snow White who had drifted: Spier: Perhaps the best way to answer this question would be to have you call
I was not living up to the up Reverend Williams at the Glide Foundation, or you could ask to speak to
some of the many thousands of people who benefit from Glide in San Francisco.
expectations I had for myself
Believe me, once your readers become aware of the Glide Foundations work,
when I started down this
especially those who live in San Francisco, they will know that it was worth the
path. Part of that was coming
money. I find it interesting that some of the very same people who would ask,
to an understanding of why I
is it worth the money, would not think twice to ask the question if I had made
was in New York, and a charitable donation to a deserving organization that did not come with the
realizing that it was time to added benefit of a lunch with Warren Buffett.
move to Zurich.
There is another way to answer this, which might make the was it worth
the money crowd a little happier: If you are in a marketing organization,
management will require you to justify your marketing expenditure, whether it is
on a quarterly basis or annual basis. You may be lucky and only have to justify
it on a five-year basis, but even then few organizations will allow you to invest
money on a five-year basis without knowing what sort of return to expect after
those five years. That means most marketing expenditures are focused on things
that will get a short-term result. Long-term investments tend to get neglected.
The chance to have lunch with Warren Buffett was an opportunity to make a
long-term investment in myself, and I still have a lifetime to reap the rewards of
that investment. It is one of those investments that are hard to measure. For
example, how do I measure the fact that I came out of the lunch saying to
myself, here I am in New York and I am not who I want to be. The lunch with
Buffett got me thinking that now was the time to be living in a different place, a
place that is more like Omaha and Buffett. That was a decision that was greatly
influenced by the lunch with Buffett and likely tipped the scales from staying in
New York to moving to Zurich. On that front, if you look at the cost of living in
Zurich vs. New York, the cost of the lunch repays itself within a few years.
It is hard to measure, but having the lunch with Warren made many people
who did not want to meet me, want to meet me because they were curious to
meet the guy who had lunch with Warren Buffett. There are some absolutely
phenomenal people in that group some of the wealthiest as well as the most
interesting people in Switzerland as well as some great journalists, and some just
great people in all regards. So my network expanded and improved. But more
than that, Warren Buffett has said that you should seek to spend time around
people who are better than you, and you yourself will naturally improve. I would
argue that the lunch with Buffett has enabled me to attract a better quality of
person into my network of friends, associates and acquaintances, and that this
has improved my business sense and reflexes in a myriad of ways. So I think I
am in a better place in terms of my behavior now than I would have been had I
not met with Buffett. And although I think it is hard to put a price on it, the
value of all of this to me easily exceeds the cost of the lunch.
Because of the ways in which my social network improved after the lunch
with Buffett, I am now more willing to invest in expanding and deepening my
social network. For example, in a week, I will be giving a week-long course at
the Harvard Business School with a group of phenomenal people, all owners of
substantial businesses. I do not think I would have been as willing to invest in
myself in that way, had I not seen the personal benefits of the lunch. So I would
argue that the lunch with Buffett helped to accelerate and steepen my learning
The chance to have lunch curve in a way that would have taken much longer had we not had lunch.
with Warren Buffett was an
Wolinsky: Do you still keep in touch with Warren Buffett?
opportunity to make a long-
term investment in myself, Spier: Warren has very high priorities on how he wants to spend his limited
and I still have a lifetime to time. For example, he decided he would be willing to spend three hours in an
reap the rewards of that auction for people willing to give money to Glide. He valued that time highly
investment. because he wanted to help Glide. So he spent an intense three hours with us. He
was under no obligation to spend any time with us after that.
Mohnish and I got to know Warrens assistant through the lunch, so the
next time we were in Omaha we let her know we were in town and we had the
chance to say hi to Warren as well. So we have a relationship, but it is not
something where I can call him up and expect him to have a long conversation
with me about whatever happens to be on my mind. Warren is very focused and
his focus is not on having lots of new friends. The only person he really likes to
talk about investments with is his partner Charlie Munger.
If I happen to meet a guy at dinner who is the owner of a substantial
business who is looking to sell, and I ask him if he has considered Berkshire and
he asks for an introduction, would I feel comfortable picking up the phone to
Warren? Absolutely. Also, I think that it is quite likely that he would pick up the
phone, or that he would be on the phone within milliseconds. But that is because
I would be calling with something that is bang in the middle of what he is
looking for. By the way, this is a key insight into how Warren Buffett works
which is to have a well-developed web of deserved trust, to use Charlie
Mungers term. If I only get in touch when the circumstances warrant it, I
increase that trust. If I were to get in touch in ways that were a distraction to his
priorities, you can be sure that the relationship would diminish rapidly.
Wolinsky: Guy, thanks very much for your time.

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Interview with Guy Spier

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