The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [310]
“I thought he was going to die over how much it was,” she says of her father. Susie Jr. went for reinforcement. Her mother was powerful, but she knew who had even more leverage with Warren when it came to money. While Kay Graham barely knew Peter and was an “unreachable” figure to Howie—he was always afraid he would sit in the wrong place or break something in her house—Susie Jr. had developed a warm, close relationship with her.21 She called Graham, who agreed to parachute in as backup if needed.
But since a deal was a deal, Buffett paid the bill without strong-arming. Then he immediately started polling his friends in shock, asking, “If your wife spent that much, what would you think?” The men all agreed it was outrageous, while their wives agreed that he should count his blessings because it could have been so much worse.22
The deal that Buffett made with Howie concerning the rent for Howie’s farm was similarly linked with weight; the amount rose and fell with Howie’s poundage. Warren thought his son should weigh 182.5 pounds. When Howie was over the limit, he had to pay twenty-six percent of the farm’s gross receipts to his father. When he was under, he paid twenty-two percent. “It’s the family version of Weight Watchers,” Howie said. “I don’t mind it, really. He’s showing he’s concerned about my health. But what I do mind is that, even at twenty-two percent, he’s getting a bigger paycheck than almost anybody around.”23 So Warren couldn’t lose on this deal either. He got either more money or a thinner son.24 All of this was classic Buffett. As one of his friends put it, “He’s the master of win/win…but he never does anything that isn’t a win for him.”
Peter and his family had moved from their apartment on Washington Street, in the building where his mother now lived, to a house on Scott Street. Peter got a gig writing music for some fifteen-second animated spots for a new cable channel, MTV. Success led to a business scoring commercials. Even though he was the least financially savvy of the Buffett kids, he had managed to tether his Berkshire stock to his musical talent and thus establish a career and a life that freed him from the money games. But by the mid-eighties, Peter pondered his father’s homily: “Nobody goes to the supermarket to buy Howie Buffett’s corn.” Nobody ever hired an ad agency because of Peter Buffett’s music either, he realized. If he wanted to pursue his own art, he needed to free himself from corporate lackeyship, whatever the cost. While he continued doing commercial work, he cut a demo record and signed with the New Age label Narada to do an album.25
His mother, who still dabbled in music, was often at Peter’s studio; she liked to sing with Billy Rogers when he was in town from Los Angeles. Billy was trying to get his life in order; he wrote his uncle saying that he had “blown many chances” in life but was now ready for the next time that opportunity knocked.26 He asked Warren to help him with a down payment on a house that he wanted to buy as a new start for his family. The letter was carefully prepared and showed unusual financial sophistication, considering that it was written by a jazz guitarist who was a heroin addict. Big Susie would not dare give out such a large sum herself without Warren’s permission, but her hand was clearly behind it.
In a lengthy but kindly worded reply, Buffett said no. He quoted Munger’s saying that liquor, drugs, and debt are the main things that cause “smart fellows to go astray.” Borrowing the down payment for a house, he said, provided no margin of safety.
“If you are going to drive 10,000-pound trucks across a bridge repeatedly, it is well to build one that can withstand 15,000-pound loads rather than one that can withstand 10,001 pounds…. It is a big mistake to have lots of financial obligations and no cash reserve…. Personally, I have never used more than twenty-five percent borrowed money in my life, including when I had only $10,000 and had ideas that made me wish I had $1,000,000.” 27
Rogers soon sent another letter, chaotically