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Book Review

Charting the course of a billionaire in the making

By Claude R. Marx
October 21, 2008
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The Snowball: Warren Buffett and the Business of Life
By Alice Schroeder, Bantam Books, 960 pp., $35

The tumultuous and damaging economic climate has, justifiably, given some business leaders a lousy reputation. One of the few remaining icons is Warren Buffett.

His financial success - which he achieved through hard work and generally ethical practices - coupled with his amiable and folksy demeanor have made him a cult hero. Given all that, he is the perfect subject for a nuanced biography that discusses his life and work, warts and all.

"The Snowball" delivers some of those goods. First-time author and former Wall Street analyst Alice Schroeder, with Buffett's cooperation, has produced a detailed examination of the business tycoon's life and work. Unfortunately, she is at times too prone to cliché, too detailed, and too wedded to armchair psychology.

Schroeder used her access to Buffett and his family to great advantage. We learn much about his childhood (when he already showed his entrepreneurial talents), his strained relations with his parents, and his boredom with anything that doesn't involve business or number crunching.

"Warren thought about numbers all the time and everywhere, even in church. He liked the sermons, he was bored by the rest of the service; he passed the time by calculating the life span of hymn composers from their birth and death dates in the hymnals. In his mind, the religious should reap some reward for their faith," she writes.

Unfortunately, the author doesn't always see the forest for the trees and allows her narrative to get bogged down by arcane details. Do we really need a more-than-two-page discussion of Buffett's high school paper route? When we get to Buffett's adulthood, the book is equally detailed. Though the highs and lows of Buffett's business life are worth reading, Schroeder's way of presenting them is more appropriate for a business school case study than for a general interest biography. She breaks down many deals, explains the formulas used to calculate the probability for success, and recreates many of the negotiations. While some of her stories are interesting, there are too many of them.

So here's the Cliff Notes version: The secrets of Buffett's success are fairly simple: prodigious research, a thorough analysis of all the numbers, and onsite visits to prospective business purchases. "He had an unusual way of turning problems around in his head, which gave him insights nobody else had," she writes. "Warren Buffett was a man who loved money, a man for whom the game of collecting it ran in his veins as his lifeblood."

He is a big fan of thinking long term. The book's title comes from a well known Buffetism: "Life is like a snowball. The important thing is finding wet snow and a really long hill." His early intuition about the insurance firm Geico paid off, as did his purchase of an array of businesses from furniture stores to a mobile home manufacturer. And while he loves newspapers (he is a longtime shareholder and board member of The Washington Post), he declined to make an offer for The Wall Street Journal because of the newspaper industry's woes.

Just as significantly, unlike some other titans of industry in earlier eras, he has thought about many of the important issues of the day and taken positions that don't always benefit the wealthy. He favors higher taxes for the affluent, including a heavy inheritance tax, and greater spending for social services. Also, he's opposed to some of the investment tools that many businessmen have used to make a quick buck, including the derivatives that just helped to undercut the market.

In 2003, Buffett called derivatives "financial weapons of mass destruction" that would cause an economic crisis and urged Federal Reserve chairman Alan Greenspan to push for more regulation of them. Had politicians, regulators, and business leaders listened to the Oracle of Omaha, the nation might have avoided many of its current financial market woes.

While Schmidt clearly admires her subject, she is not blind to his faults. His relations with his children have been strained, and he has not been afraid to use money as a weapon with them. Also, he is happy to let others do the dirty work so he can be perceived as Mr. Nice Guy.

You will learn a lot about one of the nation's most compelling and important men from reading "The Snowball." Unfortunately, you will have to wade through unnecessary information to do so.

Claude R. Marx is the author of a chapter on media and politics in "The Sixth Year Itch," edited by Larry J. Sabato.

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