When Warren Buffett Gives You His Blessing

You sort of have to take his advice, right?

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Lawrence Cunningham told us an awesome story this week about how he met Warren Buffett and became a part of the Berkshire Hathaway story thirty years ago.

Larry had discovered the shareholder letters Buffett had been writing since the mid-1960’s. The year is 1995 and Buffett is famous but not famous famous. Investment people know who he is but he’s not a part of pop culture. He’s a brilliant investor running an insurance conglomerate thousands of miles away from Wall Street. People aren’t flooding basketball arenas to hear him speak. CNBC is barely even a thing. There aren’t bookshelves filled with Buffett biographies or dozens of magazine covers about the Oracle of Omaha. Not yet.

But Larry Cunningham is blown away by the lessons and the stories embedded within Buffett’s annual communiques to Berkshire Hathaway’s investors. He has the sense that there’s a bigger opportunity to share them with others who might become similarly spellbound. Larry’s idea is to get a big event together featuring the leading experts on corporate governance, investing strategies, mergers and acquisitions and other investing topics in New York City. Conferences of this sort are common now (I throw one every year, lol) but back then this was a novel proposition.

So he gets some of his acquaintances in the New York business law community to get word to Warren Buffett about it. And then one day there’s a voice mail message waiting for him that changes the course of his life. Remember, it’s ‘95 - people have answering machines and sometimes don’t get their messages until the day is over and they get home for the night. The Motorola StarTac is still a year or so away. Anyway, Larry presses play and it’s Warren Buffett’s unmistakeable midwestern accent. “Larry, I think this is a good idea, we ought to find a way to make this happen…”

The Event

Larry set it up and Warren Buffett showed up with his wife Susan. Charlie Munger came too and so did Ajit Jain of Berkshire’s insurance subsidiary. On stage and in the audience was a who’s who of both well known and up and coming financiers. A young Bill Ackman was in the crowd watching the man he’d grown up idolizing. Larry notes that you could never do an event like this today in the auditorium of a law school in Manhattan. You’d need to rent out Madison Square Garden.

The event goes off and it becomes a touchstone in the longer term story about how Warren Buffett and Charlie Munger became the heroes of a generation or three of professional investors and businesspeople.

Larry eventually got the nod to begin working on a book collecting and commenting on the Berkshire Hathaway shareholder letters. He tells a great story about why Buffett sort of insisted he put the book out independently rather that with a large publishing house - no easy feat in 1997, in a pre-Amazon, pre-social media world.

The book has been an explosive success over the years and decades. Every year a new crop of students of the game eventually discover Buffett’s writings the way music fans eventually discover the songs and albums of the Beatles. Quality is timeless. When you encounter the Berkshire letters, you know you’ve come across something special. You get that same feeling the first time you play Sgt. Pepper’s all the way through for the first time. By the time that epic final chord* of ‘A Day In The Life’ rocks your world, you want to go back and start it again for everything you’ve missed. Buffett’s letters are read and re-read and recited from in that way, uniquely among the writings of investing legends. Only Jesse Livermore is referenced as often.

On this week’s episode of The Compound and Friends, Larry Cunningham tells us these stories and others about his thirty year history with Buffett, Munger, the Berkshire Hathaway shareholders community and more. Larry is on the board of directors of two publicly traded companies, has written 21 books and is one the foremost authorities on corporate governance and boardroom strategy in America. It was an honor to speak with him and to bring this conversation to you.

I hope you love listening to this episode as much as we enjoyed producing it. It’s all below. Talk soon, have a great weekend! - Josh

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*The final chord of ‘A Day In The Life’ is an E Major played by five people on three pianos and a harmonium all at once. The volumes on the instruments were tuned all the way up to produce that sustain effect. It’s been remarked that the reason it’s so satisfying is that it’s a major chord coming after a wall of dissonant notes and a crescendo of noise leading up to it. Listen on headphones and you can hear random background noise from the people in the studio as the sound of that chord slowly fades out. It’s one of the most memorable album-ending sounds of all time. Even now, almost sixty years later, you can’t help but remark to yourself “Oh my god, what was that?” when the record comes to an end. If you feel the same way when you come to the conclusion of a famous Buffett letter, you might be cut out for the investing business as a way of life. It’s how you know.