In his office in downtown Omaha, Nebraska, Warren Buffett displays only one certificate of his education. It isn’t for his bachelors degree from the University of Nebraska, or his master of science in economics from Columbia Business School. It is for completing the “Dale Carnegie Course in Effective Speaking, Leadership Training, and the Art of Winning Friends and Influencing people”, dated January 23 1952.
The instructors on the course “made you do all these crazy things to get out of ourselves”, Mr Buffett says in the new HBO documentary Becoming Warren Buffett. But “if I hadn’t had done that, my whole life would have been different”.
American business adores its legends and Mr Buffett holds Arthurian status. Becoming Warren Buffett will only amplify it. With lingering shots of rolling Nebraskan farmland intercut with Mr Buffett squinting at dusty old company records, it is a fascinating look at an extraordinary fortune-builder and his methods.
Carnegie’s influence, as Mr Buffett admits, was profound. No business school, to my knowledge, includes Carnegie’s most famous book, How to Win Friends and Influence People, on its curriculum. But they should.
The book is divided into four sections: “Fundamental Techniques in Handling People”; “Six Ways to Make People Like You”; “How to Win People to Your Way of Thinking”; and “Be a Leader: How to Change People Without Giving Offence or Arousing Resentment.” Reading it, you can spare yourself hours of flaccid Ted talks and reams of self-evident claims from professors in organisational behaviour.
Carnegie developed his course on effective speaking in 1912, after coming to New York from Missouri in the hope of a career on Broadway. Instead, he found himself trying to sell Packard trucks and living in a filthy tenement in Hell’s Kitchen. As he later wrote, he had a “bunch of neckties hanging on the walls; and when I reached out of a morning to get a fresh necktie, the cockroaches scattered in all directions”.
To earn some money, he devised a course based on his training as an actor and his experience as a rather poor salesman, and focused it on how to conquer worry. Having been turned down by several more august institutions, he began teaching it in a room at the YMCA on 125th Street in Harlem. The key to Carnegie’s classes was, and remains, getting people comfortable on their feet and talking, conquering their fears by discussing things that are most familiar to them.
It is not intended to turn them all into identical tub-thumpers and rambling toastmasters, but to make them more realised versions of themselves. And that is precisely what it achieved with Mr Buffett.
One of the most instructive moments in the documentary describes Mr Buffett’s investment in Salomon Brothers. During the market crisis of 1987, he bought a stake in the investment bank. The documentary shows footage from that era of Wall Street, with lots of identical young men in dark suits looking extremely pleased with themselves. Mr Buffett mistrusted investment bankers but saw an opportunity in Salomon. He snagged a good deal, an option that paid 9 per cent a year and could be converted into common stock at a higher price after three years or redeemed over five.
But four years later, Salomon was swept up in a bond trading scandal and verging on bankruptcy. Mr Buffett went from investor to chairman and had to negotiate with the US Treasury to keep the firm in business. His reputation as an ethical and responsible businessman earned him the trust and time to fix things. What is striking is his facility in the shark tank of Wall Street. He was uncorrupted by the yahoos and remained the wild-haired genius from out of town able to impose order and reason on chaos.
At the press conference announcing the Treasury’s support for Salomon, Mr Buffett coolly took more than two hours of questions. When someone asked him how he would handle his business in both Omaha and New York, he shot back: “My mother has sewn my name in my underwear, so it’ll be OK.” Carnegie would have been proud of his pupil.
The documentary tracks the change in Mr Buffett wrought largely by his extrovert first wife, Susan. They married in 1952, but she left him in 1977 to live in San Francisco, though they remained close. It was an unconventional relationship, but Mr Buffett credits Susan with awakening him to the importance of human relationships.
He admits he was a “lopsided person” and that Susan “put me together”. He realised over time that while he revelled in finding solutions to the most complex financial problems, “it’s the human problems that are the tough ones”. It is this process of self betterment that makes the parallel stories of Mr Buffett’s compounding fortune and his equally compounding character so compelling.
“I’m pretty well depreciated. I’m getting down to salvage value,” he says towards the end of the film. On this, he is charming, but wrong. He has not depreciated, but evolved.
The writer is author of ‘What They Teach You at Harvard Business School’