The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [94]
At Buffett-Falk, Warren was installed in one of its four private unair-conditioned offices, next to the “cage,” a glassed-in area where a clerk handled the money and securities. He started out selling his favorite stock to the safest people he knew, his aunt and his college friends, including his first roommate at Wharton, Chuck Peterson, who was now in the real estate business in Omaha and with whom he’d reconnected.
“My aunt Alice was the first call I made, and I sold her a hundred shares of GEICO. She made me feel good about myself. She was interested in me. And after that Fred Stanback, Chuck Peterson, and anybody I could get to buy it. But mostly I got myself to buy it, because when other people didn’t buy it, I’d just figure out a way to buy five more shares myself. I had this big ambition. I was going to own one-tenth of one percent of the company. It had 175,000 shares outstanding, and I figured if the company would become worth one billion dollars someday and I owned that much, I would be worth a million dollars. So I needed 175 shares.”2
Yet in the meantime, his job was to sell on commission, and beyond this narrow circle, Warren found that almost insurmountably difficult. He got a taste of the obstacles his father had faced to build his brokerage business back when the grand old families of Omaha—the owners of the banks, stockyards, breweries, the big department stores—peered down their noses at the grandson of a grocer. Alone in Omaha now, with his parents back in Washington, Warren felt that he got no respect.
These were the days when all stocks were sold by full-service stockbrokers, and most people bought individual stocks rather than mutual funds. Everybody paid fixed commissions of six cents a share. Transactions took place in person or over the telephone, as part of a relationship. Every trade was preceded by a few minutes of chat with “your broker,” part salesman, part adviser, part friend. Your broker might live in your neighborhood, and you saw him at parties, you golfed with him at your country club, and he came to your daughter’s wedding. General Motors brought out new models of its cars every year, and a businessman might trade his car more often than his stocks. That is, if he owned any stocks.
Important accounts didn’t take Warren seriously. Nebraska Consolidated Mills, a client of his father’s, once scheduled him to come out at five-thirty a.m.3 “I was twenty-one. And I’d go around to all these people to sell them stocks, and when I’d get all through they’d say, ‘What does your dad think?’ I got that all the time.” Warren, who looked like a “dork,” struggled to make sales.4 He didn’t know how to read people, couldn’t make small talk, and certainly wasn’t a good listener. His mode of conversation was to broadcast rather than receive. When nervous, he sprayed forth information about his favorite stocks like a fire hose. Some potential clients listened to his pitch, checked with other sources, and used his ideas, but bought the stocks through other brokers, so he didn’t get the commission. He was shocked at this perfidy from people he’d spoken to face-to-face and would be seeing again around town. He felt cheated. Other times he was simply baffled. Once he walked in on a guy who was in his seventies sitting with a pile of dollar bills on his desk and a secretary in his lap. Every time she kissed him, the man gave her a dollar bill.
“My dad hadn’t taught me what to do in that sort of circumstance. Generally speaking, I was not getting reinforcement. When I first started selling GEICO to people, Buffett-Falk had this little office downtown, and the stock certificates would come in and Jerome Newman’s name would be on those certificates. He was the seller I was buying from. And the guys at Buffett-Falk said,