[00:02:26] Intro: You are listening to the Richer, Wiser, Happier podcast where your host, William Green, interviews the world’s greatest investors and explores how to win in markets and life.

[00:02:37] William Green: We’re going to start by playing a clip from my interview with Mohnish Pabrai, who’s one of the leading investors and philanthropists of his generation. When I started the research for my book, Richer, Wiser, Happier, the very first thing I did was arrange to travel in India with Mohnish for five days. We even shared a bunk bed on an all-night train ride from Mumbai to Kota.

[00:03:06] William Green: In any case, he ended up as the star of the first chapter of the book. Over the years, Mohnish has become extremely close to Charlie Munger. As I’m sure you know, Charlie is the multi-billionaire Vice Chairman of Berkshire Hathaway, and has been Warren Buffett’s partner for nearly half a century. Charlie is 99 years old, so he is 40 years older than Mohnish, but they hang out together at Charlie’s various homes.

[00:03:29] William Green: They play Bridge together, and Charlie has become a great friend and mentor to Mohnish. In this clip, we start by talking about a conversation that I had with Charlie over Zoom, in which he told me that he and Mohnish have both figured out the simple truths, but being honest and ethical is just good business.

[00:03:47] William Green: Let’s listen and then I’ll talk about this clip.

[00:03:50] William Green: I’ll tell you a story about this actually that involves you, which is, as I think you know, I had this wonderful two-hour Zoom breakfast with Charlie and a few other great investors back in, I think July 2021. Crazily, they’d said the homework was to read my book and they all wanted to discuss the book. I can’t tell you how inadequate I felt as it’s like, “Yeah, I’m going to teach Charlie something about how to invest.” It was Lou Simpson and people like that. I knew that Charlie was going to arrive early because I read that introduction that Li Lu had written too. I think the Chinese edition of Poor Charlie’s Almanack, where I think he talked about Charlie always being early.

[00:04:40] William Green: I signed on five minutes early. As a result, I’m on this call alone at the start before Lou Simpson, all these other guys, Mark Nelson, get on just with Charlie. The very first thing I did actually is I said to him, “Mohnish and I are friends, and he speaks incredibly highly of you. Obviously, I interviewed you for my book if you remember.” He said to me, he starts waxing lyrical about you. Very specifically, he said, “Mohnish is a very highly ethical person.” He said, “He’s so mathematical and he’s so smart.” He said, “He knows he can make more money by being ethical.”

[00:05:23] William Green: He said to me, “People like Mohnish and me, we actually don’t deserve nearly as much credit for our morality as we deserve, if we were doing it against our own interests.” He’s like, “We’re both actually doing better in business and life because we’re ethical.” I thought it was a really interesting insight into life, and business, and Charlie, and you. I wondered if you could talk about that idea of being ethical as a competitive advantage.

[00:05:54] William Green: Because I think many of us are taught as we are growing up and starting in the business world, or watching succession or billions or whatever, we’re taught that we need to be hard-edged and self-serving and selfish to succeed. Here’s this kind of grand old man of business and investing saying, “No, you should actually be decent and it’s not a zero-sum game.” It strikes me as a hugely important insight.

[00:06:24] Mohnish Pabrai: Actually, Charlie’s absolutely right. Probably a huge portion of why I’m so ethical is because of self-interest, and light and self-interest. I think what people don’t realize is most things in life function on trust. They don’t function based on contracts. They function based on trust. If you become very trustworthy, it gives you a massive competitive advantage, a huge leg up in life. The thing is that this trustworthiness doesn’t come overnight, but it’s on a long scale, it’s like truthfulness. You sometimes use small lies, but if you eliminate all lies and the powers of force we’ve talked about, what happens is that the tractor fields come into play. Humans feel they can trust you. Once humans feel they can trust you, the whole universe is at your disposal.

[00:07:16] Mohnish Pabrai: We see that in spades in Berkshire Hathaway. Berkshire Hathaway does all kinds of things where they just say something to someone, and people will accept that. They don’t need to have it in writing or anything like that. It’s just, Warren’s word is enough. How do you get there? Well, you get there by having a consistent life where you have demonstrated repeatedly that you are playing the game very ethically. Playing the long game and looking at things to make sure that business partners and vendors and whoever you deal with is treated extremely well.

[00:07:49] Mohnish Pabrai: Ray Kroc used to say that there were three stools on which McDonald’s stands. He says, “My franchisees, my vendors and my employees.” The franchisees are all entrepreneurs, the owner. He felt he had to make sure that they did really well. The people supplying the French fries and the cups and the plates and all of that at McDonald’s, Ray Kroc wanted to make sure they did really well. He’s not trying to squeeze them for the last penny. He wants them to do well. Because he says that it’s part of my ecosystem. I have taken those lessons to heart.

[00:08:30] Mohnish Pabrai: If I have a relationship with a printer for my business, I want those relationships to go on for decades. I want the printer to do well. I don’t want to be squeezing him every time and get three quotes and take the lowest and all of that. I don’t want to do it that way. I want to make sure that it’s fair and we don’t need to go to multiple quotes. Just run our business on trust. What happens is that when you show trust in a company or a human being, they react really positively.

[00:09:09] Mohnish Pabrai: My baseline when I’m dealing with anyone, my baseline is that the other person is a very high-quality person, or a very high-quality company and I can completely trust them. Then I wait to see if they do stuff which violates that trust. If it does violate the trust, we’ll move on. We’ll do something else. I think when you upfront demonstrate the trust, a lot of good things happen. I think this notion of being ethical, running things properly, gives you such a tailwind in life that it’s like Peter Kaufman says, “If crooks knew how much money you could make by not being crooked, they would stop being crooks.” Because basically, you make a whole lot more money by being honest. You make a very little bit of money by being crooked. It’s a bit no brainer to be ethical and honest.

[00:10:07] William Green: The big lesson to remember right off the bat from this clip is I think Charlie Munger’s really simple assertion to me that Mohnish is so rational and logical and smart, that he just understands that he can make more money by being ethical and honest.

[00:10:24] William Green: As Charlie told me, he and Mohnish are actually doing better in business and life because they’re ethical. It’s not naive to be ethical, in other words, which I think is a really important and fundamental lesson as Mohnish puts it. This is a matter of enlightened self-interest. Now, the truth is I think he would probably act pretty ethically regardless whether it was enlightened self-interest.

[00:10:45] William Green: But I think it’s helpful to know that it actually gives you a huge competitor advantage to do the right thing and to be trustworthy. And this clearly guides both Mohnish and Charlie in the way that they treat people in their ecosystem in this fair and generous and trusting way. I remember going once to The Daily Journal meeting, this company that Charlie was the chairman of, and he was saying, “Look, I don’t want to brutalize my vendors.”

[00:11:11] William Green: He said, “My view of life is win-win. That’s my philosophy of business.” And if you remember the biography of Munger that Janet Lowe wrote, it has this extraordinary foreword by Warren Buffett where he says, “Look, in 41 years, I’ve never seen Charlie take advantage of anyone.” And he said, “I’ve seen him knowingly take the worst side of a deal multiple times with me and other people.”

[00:11:37] William Green: And at that same Daily Journal meeting, actually I remember I suddenly realized sitting to my left was Molly Munger, Charlie’s daughter. So, I started asking her questions ’cause I was trying to get extra material for my book. And she said to me, “Look, money was always very important to my father,” but she said, “To win it by cheating or to win it and lose the battle for life,” as she put it, “that was just never what he was about.”

[00:12:02] William Green: And I’ve seen this also in my interactions with Mohnish over the years. I’ll tell you a short story that I think illustrates this kind of nicely. I remember once after my book came out; Mohnish decided that he was going to buy a lot of copies to give as gifts. So, I had a publicist at the time who was handling bulk purchases of the book, which you can do through various retailers.

[00:12:24] William Green: And so, they were giving Mohnish a quote for how much it would cost to buy a lot of copies to send in the US and I think India and elsewhere. So, Mohnish writes me this email and he says, “Is this a good price?” And I look at the number and I’m like, “Well, actually, no, not really.” He could definitely get it cheaper.

[00:12:43] William Green: And so, I started investigating this and I realized what’s happened, and I realized that the publicist has basically been directing him to buy the book through this particular bulk retailer whose sales are going to be counted towards the bestseller list. So, it’s actually going to help me, but it’s not going to help Mohnish that much ’cause he could get it cheaper elsewhere.

[00:13:05] William Green: And so, I just wanted to be straight and truthful with Mohnish. So, I email him back and I say, “Yeah, Mohnish, you can do it at a much better price. Go through this other retailer and it’ll be better.” And I said, I explained what had happened and sort of said sorry, and just assumed that was the end of it. And Mohnish then writes back to me immediately and says, “No, I’ll do it through the retailer that they wanted me to go through.”

[00:13:29] William Green: So, here’s a really nice little but emblematic example of Mohnish knowingly taking the worst end of the deal in a way that helped me. And here I am a couple of years later and I’ve kind of tucked that away in the back of my mind as evidence of Mohnish’s sense of honor and fairness. And it’s a really small thing, but it shapes the way that you think about people.

[00:13:52] William Green: And so, I think that’s one really helpful thing to remember is these little things, these little actions that seem minor can actually really have a profound impact on the way that people view you. I don’t know, I just, I was impressed, and it’s had a lasting impact on the way I think of Mohnish and the way he does business.

[00:14:10] William Green: So, what are the practical implications of this teaching from Mohnish and Charlie about the rationality of being honest and ethical? I think the first one is simply this very clarifying idea that it’s not naive, that it’s actually enlightened self-interest. I think that’s important to remember. That doesn’t mean you should be naive.

[00:14:30] William Green: It doesn’t mean that you should let your guard down and just let people take advantage of you. But I think it’s very important to know the business and life are not a zero-sum game. There are a lot of people who play it that way. And are very sharp-elbowed and self-serving. But I don’t think it has to be that way.

[00:14:50] William Green: And I think it’s a very conscious choice, and it’s very liberating once you decide that you are going to go this other direction and you just feel better and you draw better people into your environment.

[00:14:59] William Green: The second point I think that’s worth making is that when you look at someone like Mohnish, Mohnish is pretty extreme about it. He talks in this clip about the importance of consistency, and we all know that being truthful and not lying is a virtue. But I feel like whenever I look at Mohnish, part of what’s distinctive about him is how extreme he is in applying these lessons. He’ll say, for example, in that clip, you want to try to eliminate all lies.

[00:15:28] William Green: And similarly, when I interviewed him for my book, I remember him saying, “You go as far out as you can on the truth variable and the payback is huge.” So, Mohnish’s view is that when you find a good idea, like telling the truth or compounding or cloning the ideas and practices of people who are smarter and further along on their journey than us, he says, “When you find a simple truth like this that works, that gives you a competitive advantage.”

[00:15:57] William Green: He said, “You’ve got to go 10,000%.” And I think this is a really good example of really Charlie’s instruction that you should take a good idea and take it seriously. And I think it served both of them very well. Mohnish’s behavior. I mean there’s no question in my mind that Munger wouldn’t have become his mentor, if he didn’t behave this way, I think it’s his ethics, his intelligence. It’s the fact that he has this extraordinary foundation, the Dakshana Foundation that’s lifting thousands of people out of poverty, which I really encourage you to look up if you haven’t looked it up. The Dakshana Foundation, I think, was originally what led Warren to introduce Mohnish to Charlie.

[00:16:37] William Green: So, the fact that he’s trying to use his ability to make rational bets on stocks to fund this charity that lifts thousands of people out of poverty is actually what drew him into the orbit of Warren and Charlie in the first place. The other thing I would say that I think is really important to bear in mind is that this emphasis on truthfulness and integrity and ethics should actually also shape who you hang out with, who you work with, who you partner with, and equally important who you decline to work with and associate with.

[00:17:16] William Green: I was very struck during the Berkshire Hathaway annual general meeting back in May when Munger and Buffett were on stage, and they really talked very specifically about this question of who you hang out with, who you have in your ecosystem. And Munger very specifically warned us, that “The toxic people,” as he put it, “who were trying to fool you or lie to you or weren’t reliable in meeting their commitments, the great lesson of life is get them the hell out of your life.”

[00:17:45] William Green: And then he said, “And do it fast. Do it fast.” He repeated it and Buffett very characteristically, immediately added, “Do it tactfully, if possible, too, but do get them out of your life.” And Munger didn’t let it go. He quickly replied, “Yes, I don’t mind a little tact, or even a little financial cost, but the key point is simply getting them the hell out of your life.”

[00:18:10] William Green: And so that night I actually had dinner with Mohnish in this lovely steak restaurant that where he books a room on the Saturday night after the annual general meeting every year. And I was sitting to his right and he’s got this enormous footballer to my left. And Chuck Akre to his left.

[00:18:29] William Green: And so, it’s a really interesting group of people. And I start asking Mohnish about this whole idea of getting toxic people out of your life. And we were talking actually about someone who that day had done something that I didn’t think was a really big deal, but it was clearly a little bit self-serving and self-promoting in a way that wasn’t terrible.

[00:18:50] William Green: But it probably wasn’t wise. And I think this guy is a decent person but flawed like most of us. And Mohnish, his view was, “No, don’t associate with him at all.” And he just thought, there’s not really anything to gain by hanging out with someone like that, by hanging out with a person who’s demonstrated that he’s sort of self-serving and is playing a different game.

[00:19:14] William Green: And I’m more forgiving, I think, because I have this feeling that we’re all deeply flawed. I don’t want to be too judgmental of other people because I think I would invite a lot of judgment of myself if I did that. But I think this is a really important issue and you’ve got to figure out the right balance for you, how extreme you want to be.

[00:19:35] William Green: And really, it all gets back to this comment that Warren Buffett made back in probably 2008, 2009, when he had this charity lunch with Mohnish and Guy Spier, where he said to them, “Look, hang out with people who are better than you and you can’t help but improve.” So I think this emphasis on being ethical, being truthful, playing life as a win-win game should guide our own behavior with this awareness that it’s both morally upstanding but also actually smart business. But it should also guide us in who we invite into our ecosystem. Because as Buffett and Munger emphasize a great deal, the people we hang out with are going to tilt our behavior either way, either to make us better people or less good people.

[00:20:25] William Green: And this is something Mohnish has always said to me. Mohnish once told me that whenever he meets a person, he says to himself afterwards, “Do I want to have a relationship with this person? Are they going to make me better or are they going to make me worse?” And I’ve often thought about that ’cause I’m like, “Oh God, I don’t want to be one of those people that Mohnish meets and thinks this guy’s going to make me worse.”

[00:20:45] William Green: And so that fear in a sense of being judged to be lacking is a pretty good reminder that I want to try to be a little more ethical.

[00:20:52] William Green: The next clip that I want to play you also comes from my interview with Mohnish. And in this clip, we talk in more depth about where he got these ideas of being very truthful and trustworthy.

[00:21:05] William Green: And basically, he derived a lot of these ideas from David Hawkins’s book, Power vs. Force, which he mentioned very briefly in that first clip. And so, I’m going to play you the clip from where we talk in some depth about Hawkins, and then I’m going to discuss a little more why I think Hawkins is so important and why he’s had such a profound impact on me and many other people.

[00:21:29] William Green: So anyway, here’s the clip.

[00:21:31] William Green: When you look back and you think about what you learned from getting really serious about David Hawkins and Power vs. Force, and this idea of building your life on truthfulness and integrity and the like. Do you feel like that set a lot of this stuff up, both the friendship with Warren and Charlie, the kind of partners you’ve got, the kind of children you’ve got? Because it seems like everything is built on trust and truthful and integrity. In some ways, the idea that Hawkins had that these very high levels of virtue and consciousness, the idea that this actually radiates out in every level of your life. I think it’s been born out in some ways. Is it a sort of experiment in Power vs. Force, this whole journey of Mohnish Pabrai?

[00:22:25] Mohnish Pabrai: I would say that what might have started as an experiment, I think the experiment has proved itself a long time ago. It became very obvious to me. It became obvious to me when I was reading the book that, that was going to work because he was giving examples of like Jesus and Mahatma Gandhi, et cetera, that it worked for. We are not at that level. Warren Buffett’s not at that level, but 40,000 people show up every year. I think with Warren and Charlie, what really surprised me, and it’s really a credit to them that they can see through people.

[00:23:06] Mohnish Pabrai: I think they were genuinely able to see through or they must have seen through, that I’m a good person to hang out with. Charlie is very, he has a, both of them have very high standards, of especially the people that they spend time with. I still am in disbelief about that. Because the range of high-quality people that they deal with is really high. They get the best of the best coming to them from all over the place. It’s been really good. I think part of it is not just the ethics. I think the ethics is important. It’s also extreme candor. There will be a lot of ethical people, but they may be reserved. Then I think if you’re reserved, you can’t build a deep friendship. You’ve got to be able to bear your soul.

[00:24:00] Mohnish Pabrai: I think that’s been part of it where I have found that with a few people, close people around me, I have learned the power of bearing my soul and I’ve learned the power of candor. I find sometimes that when I am very candid with, it happened the other day with a guy I don’t know so well, but he’s having a lot of struggles with his teenage son. I wasn’t sure if what I would say to him would get received properly or not. I tried it, so I gave him some very direct pointers on what might be a good way to deal with his issues with his son. He immediately became defense. I said, “Okay, this isn’t going to work. The receiver is not ready. The receiver cannot deal with the truth.” I just knew that, that person on so many levels was not going to be able to get to where I wanted to get to.

[00:25:05] William Green: It was interesting to me ’cause I went deep down the David Hawkins rabbit hole, and I ended up reading multiple books of his multiple times. And so, Power vs. Force had a big impact on me. And I think Letting Go is also a very important and very practical and grounded book. But then I got really into the sort of more esoteric stuff like The Eye of the I and things like that.

[00:25:25] William Green: I love that stuff ’cause I’m a bit more of a mystic than you are, and I think you struggled with this stuff that was less logical and rational. I was interested in that because I feel you took one idea from Hawkins that was immensely powerful about the importance of truthfulness. I think it’s a superpower to be truthful and candid. But I think you missed some of the other stuff that was really profound. And I also thought it was really interesting, I’m not saying this in any way as a criticism, I thought it was interesting.

[00:26:01] William Green: And with it also, it always struck me that you took truthfulness as the virtue you wanted to develop. Because when I read Hawkins, one of the things that struck me above all was actually kindness strikes me as one of the most powerful things he talks about where there’s something where he said, I think the line is, “Simple kindness to oneself and all that lives is the most transformational force of all.” And I started to think, well, so he’s talking about all of these different virtues, that if you go big on truthfulness, kindness, compassion, stuff like that, it just changes your life because it changes your consciousness. So, you’re going to draw different people into your life.

[00:26:50] William Green: So, for me, truthfulness is really important although I do still lie and prevaricate and distort stuff, and particularly lie to myself. But kindness kind of became a very clarifying, I’m not saying that I’m kind the whole time. If you talk to my wife, you’d get a good sense of how irritating I can be, an irksome. But that to me was almost the most powerful idea from Hawkins, was if I just used that as my guiding light of trying to become kinder, and not just to other people, but to myself which was hard, that would change my life. So, I was just curious how you thought about the other stuff that you’d learned from Hawkins.

[00:27:38] Mohnish Pabrai: Yeah, so in, 1999, I had these two industrial psychologists who basically gave me a bunch of tests, did 3:16 interviews with all kinds of people around me, and they finally gave me what I think of as my owner’s manager.

[00:27:54] William Green: It sounds like somebody’s getting whipped in the background in the room next to you. Is someone doing construction or something there, Mohnish?

[00:28:03] Mohnish Pabrai: Yeah, so actually we’ve got some blinds and shades that are going through. So, I’m sorry about that.

[00:28:08] William Green: No, that’s fine. I was just curious. Now I know.

[00:28:10] Mohnish Pabrai: I thought that this mic would not pick up the distant sound.

[00:28:13] William Green: Yeah, it’s a good mic. But yeah, so sorry, keep going.

[00:28:18] Mohnish Pabrai: Sorry about that.

[00:28:19] William Green: So, you mentioned these industrial psychologists.

[00:28:21] Mohnish Pabrai: Yeah, so the thing is that I had heard about Warren Buffett about five years before that. And I saw that many of the things that made up of Buffett’s what I thought were Buffett’s temperament and aptitudes, and all of that, seemed to fit well for me. I was trying to mirror a lot of stuff. These two guys said to me that, “Look, here’s the problem.” He said that “You don’t know who you are, okay? You have no idea.” They said, “We don’t exactly what went on in your childhood. But what we know is the outcome of that you really don’t know is really who you are.” And he said that, “You have a desperate need to know who you are. And so, what you’re doing is,” he says, “You are trying on different gloves, and you try on this Buffett glove and it fits, it looks like it fits really well.” And you say, “This is it.” So, then I can just look at Buffett and just clone everything about him, and then that’s me.

[00:29:33] Mohnish Pabrai: And now I’m in nirvana state, and they said that doesn’t work. They said, it’s almost for sure that the template that makes up Buffett and the template that makes up Mohnish are not the same. It may be similar on the number of trades, but it’s not the same. So, like for example, what I found in, when I heard about Buffett in, 1994 is, I had been playing bridge for six or seven years before I heard about. I love bridge. Even now I play many hours of bridge at work. And I said, “Look, there’s a similarity with bridge. There’s a similarity with analyzing businesses. There’s a similarity with investing. I seem to like all of that. Everything seems to fit.” And they said, “It’s not there.” And they said, “What really needs to happen is that you need to understand who you are and to be true to yourself.”

[00:30:35] Mohnish Pabrai: Part of that owner’s manual helped me look inside to see who I was. I’ve read that, we read that many times. What I’ve realized over the years is that, yes, they were absolutely right. It took me a long time to see this, that Warren Buffett is a very different person, that there may be some areas of similarity, but there are vast areas of differences. And those vast area differences are not easy for me to bridge if I were to try to do that. First of all, it would be a distortion to try to do that because I wouldn’t be true to myself so it wouldn’t even work. I think this notion you bring up about the kindness and so on, is even when I read Hawkins, I took the stuff that was easy for me, right? I’m always looking for low hanging food. I’m always looking with the shortcuts. And I said, “Okay, this being ethical and truthful, I can do this in my sleep. It’s easy.”

[00:31:44] Mohnish Pabrai: The kindness is the much harder to do. I have learned over the years to become kind and to be kinder. But I think I have a long way to go. I think I have a lot of work to chop over there. Since there’s 22 years and three weeks left, maybe I’ll pick up Hawkins again and give that another whirl,

[00:32:09] William Green: I love this long clip that I just played you for so many reasons. One of which is that you see this extraordinary mind working its way through this issue, trying to figure out “How can I become more true to myself?”

[00:32:24] William Green: “What can I learn from Warren Buffett? What can I learn about my own unique nature and whether I’m actually being true to it or not?” And at the same time, you see him being incredibly candid. I think that’s an extraordinary moment at the end of this clip where he actually has the honesty and self-awareness to say, yeah, it was easier for me to be honest and ethical than it was for me to be kind.

[00:32:54] William Green: And actually, later in the conversation, in a part of the conversation that I don’t play you, he says, “This may be the biggest take home for me of this month, or maybe even this year.” And he says, “I need to go back and look at Hawkins again,” he says, “I agree with you. I think the kindness variable is very powerful.”

[00:33:15] William Green: So here you have an extraordinary person working on himself in this live mode, you’re actually watching him, working on himself, trying to become a better person. That’s very inspiring to me, and it’s something I see in all of the great investors actually. This self-awareness, this willingness to learn, this willingness to keep improving. It’s a remarkable thing to behold.

[00:33:40] William Green: I’d also say this part of the conversation was one of my favorite parts of any podcast interview that I’ve done over the last year or so, because there’s something profoundly beautiful to me about an authentic conversation between two friends in this case who are trying to be truthful and are trying to explore difficult questions, thorny questions about how to live and how to operate in the world in a truthful way.

[00:34:07] William Green: And I think there’s just a real beauty in that and there’s something kind of inspiring about seeing a person like Mohnish actually not in any way trying to spin, not trying to make himself look better, just trying to tell you the truth about himself, what he’s working on, what he’s trying to figure out about how to improve.

[00:34:25] William Green: And I’ve always been struck actually in all of my interviews with Mohnish about how direct and straightforward and candid he was. And I once as an experiment, when I was working on, Richer, Wiser, Happier, I sent to him an email asking him all of these pretty tactless questions. And one of them was, I asked him what your net worth is.

[00:34:47] William Green: And it was kind of an experiment to see how would he respond to this sort of impertinent very direct personal question. And he emailed me back, and it’s an exact quote I quoted in my book. He said, net worth as of 11/30/17 is 154 million dollars. And then he proceeds to explain in the same email what that doesn’t include and how he’s doing the accounting.

[00:35:09] William Green: And as I wrote in my book, it was just this marvelous display of trust in the power of truthfulness. And so, one of the questions I think is worth exploring is, is where this idea of being radically truthful as I guess Ray Dalio would call it, radically transparent, radically truthful, where this idea came from in Mohnish’s case.

[00:35:29] William Green: And so, for Mohnish, he read this book in the late ’90s written by David Hawkins called Power vs. Force. And Hawkins, I think at one point had had the largest psychiatric practice in New York City and then became, in my view, kind of an enlightened mystic and he’s an extraordinarily clever guy, dead now, but extraordinarily clever guy writing about this incredible range of things.

[00:35:55] William Green: And so, I’ve read a lot of his books because of Mohnish, I ended up falling very deep down this rabbit hole. Power vs. Force is a really helpful place to start. And the thing that Mohnish got from Power vs. Force is this fundamental idea that true power, as Hawkins would put it, stems from certain virtues, certain powerful attractors, as Hawkins would describe it, that really have an unconscious effect on people.

[00:36:21] William Green: They either make you go strong, or they make you go weak. And so, he would measure this stuff through kinesiology, seeing whether your muscles went strong or weak in the presence of sudden behavior or things. And I have no idea whether this is valid or not. I’m no expert on kinesiology, but I find his conclusions incredibly compelling.

[00:36:42] William Green: And so, one of the things that Hawkins said is, “Well, there are these traits like dishonesty or fear or shame that basically make people go weak. And then there are these traits like kindness, compassion, love, mercy, honesty, integrity, service to others that make you go strong.” And so Mohnish reads this, and he comes away with this very powerful idea that is clearly in the text.

[00:37:05] William Green: I mean, Hawkins says at one point, this is a direct quote, he says, “Falsehood makes us all go weak.” And so Mohnish comes out of this and he says to me, “You can’t get away with lying to other humans. And that’s a very profound idea.” And he said, “Most people don’t understand just how important this idea is. And people will sense when you are lying, when you’re not being fully candid, you can kind of smell it.”

[00:37:27] William Green: And I remember once, many years ago saying to Mohnish, I’d interviewed some multi-billionaire who I really didn’t like and I was chatting with Mohnish. I think, in his office then in Irvine, California, I’d gone to interview him for The Great Minds of Investing, which is the book that I’d been working on at the time.

[00:37:42] William Green: And I said to him, “God, I really didn’t like this guy”. And I was talking to him about how this guy was kind of avoiding certain questions. I remember he had an amazing, I don’t want to give too much information ‘cause I don’t want to identify him, but he had an amazing collection worth obviously tens of millions of dollars of some particular beautiful object.

[00:38:03] William Green: Sorry to be vague about this. And he just didn’t really want to talk about it. And Mohnish said, “That’s a guy who’s misaligned and you smell it, and you just want to get away from him.” And what was intriguing was that a few years later, this guy’s career totally came unraveled. Like his reputation was just sort of devastated.

[00:38:20] William Green: And so there was something that you kind of smelled in this person that didn’t feel right. And so, Mohnish kind of went the opposite direction and decides, well, I’m just going to be truthful all of the time. And so, this had kind of a big impact on me, right? I start going down this David Hawkins rabbit hole, and I read Power vs. Force, and I read these other books like The Eye of the I and Truth vs. Falsehood.

[00:38:43] William Green: And these books have some strange names like this’s one called I, just the letter I and then a colon, Reality and Subjectivity. And for a long time, I just kept reading these things over and over again. I’ve found it incredibly helpful. It would sort of give you this sense of, well, this is just true, and this is how I should operate in the world.

[00:39:03] William Green: So, I sort of got to know these books pretty well, right? And Power versus Force in particular had this idea that I thought Mohnish was kind of missing, that I thought was hugely important. This is what I was referring to in this part of the conversation is there’s a paragraph from Power vs. Force where he says, “Simple kindness to oneself and all that lives is the most powerful, transformational force of all.”

[00:39:32] William Green: And then he continues “It produces no backlash, has no downside, and never leads to loss or despair. It increases one’s own true power without exacting any toll, but to reach maximum power, such kindness can permit no exceptions, nor can it be practiced with the expectation of some selfish gain or reward. And its effect is as far reaching as it is subtle.”

[00:39:55] William Green: And this had a big enough effect on me that I actually, I wrote it out on a card that I stuck on my wall in my study at home because for one thing, if you notice that first sentence, he’s not just saying simple kindness to all that lives. He’s saying simple kindness to oneself and all that lives is the most powerful transformational force of all.

[00:40:15] William Green: And that hit me very hard because it’s difficult for me often to be kind to myself, and I tend to be pretty brutally judgmental of myself, of all the ways that I’m falling short, and they’re voluminous and that’s been a real guiding light for me. And so, I was interested really in some ways the subtext of this conversation was, am I missing something?

[00:40:40] William Green: Why is Mohnish going so big on truthfulness when actually it’s really clear that what Hawkins is saying is you want to go big on kindness? And I was thinking about this in the last couple of weeks and I was thinking, well, maybe actually I’ve, in the same way that Mohnish said to me that it’s easier for him to be truthful than it is for him to be kind.

[00:41:01] William Green: Although I think he is actually a very kind person, but I started to wonder, well, maybe I’m embracing kindness because it’s harder for me to be truthful. And so, it’s not that one is more important than the other. They’re both really important. But I think this general sense that you get from Hawkins, that there are certain virtues, certain types of behavior, to represent a particularly kind of high consciousness is just a really important and simple revelation.

[00:41:29] William Green: And so basically what he says is there are these very powerful attractors, like, love, compassion, forgiveness, humility, tolerance, honesty, service, generosity of spirit, all of these things you’d expect. And so, what do you want to do if you’re trying to lead a wise and successful life and to have true power rather than force?

[00:41:50] William Green: These are the terms that, that he uses. So, somebody like Gandhi or Jesus would have true power like Gandhi, he would say, operate at such a high level that he could actually bring down the whole British empire. So, what you want to do is shift your consciousness as much as you can through conscious choice towards these very powerful attractors.

[00:42:09] William Green: And as Hawkins puts it, the more that you can reject these kinds of weak attractors, the better. So you’re trying to move away from things like resentment or jealousy or self-pity or fear or anxiety or greed. And I think one of the things that was striking to me when I read Hawkins that feels true to me is that things like shame and guilt calibrate at an incredibly low level.

[00:42:36] William Green: And so, the practical lesson that I drew from this, that I think is really valuable is that you kind of want to flood the zone with these positive emotions like love and compassion and forgiveness and the like. And the less you can indulge in these weaker emotions, the better. And I remember talking to Munger about some of this stuff, not about Hawkins, but Munger said to me when we were talking about negative emotions, he famously has said that “Envy is the dumbest of the seven deadly sins ’cause it’s not even fun.”

[00:43:09] William Green: And he said, “With these things like envy, anger, really intense anger, jealousy,” he’s like, “I just don’t indulge them. I do not let them run.” And I said, “How come? How do you do it?” And he said, “Well, I just know that they’re stupid, so I don’t let them run.” So this is a really powerful and important issue, I think, because it gives you a sense of, these are sort of guiding principles.

[00:43:34] William Green: They’re simple, but they’re very powerful guiding principles. So, this is what I got, I think from Power vs. Force. But then I started to fall down this deeper rabbit hole. So, I started to read some of these other books by Hawkins and they’re all worthwhile. But I’m going to pull out a page from one of them.

[00:43:50] William Green: It’s not my favorite of his books, but there’s a particular page that’s absolutely extraordinary in a book of his called “Transcending the Levels of Consciousness”. And then there’s a, the subtitle I think is “The Stairway Enlightenment”. And I don’t get the idea that I’m anywhere close to enlightenment, but I’m reading this list of virtues that he’s talking about, and I’m like, “God, this is the most unbelievably helpful list.”

[00:44:15] William Green: And so, he talks about how simple tools consistently applied are incredibly powerful, which is something I write about in my book, right? The importance of simplicity, that you don’t need to get that complicated. And he says, “Some tried and true basic tools that are brought about tremendous results over the centuries are as follows.”

[00:44:33] William Green: So, the first one in this list, and I’m not going to read you the whole list, but the first one, he says, “Be kind to everything and everyone, including oneself all the time, with no exception,” right? Which is what we read from Power vs. Force, something very similar. Then he says, “Revere all of life in all its expressions, no matter what, even if one does not understand it.”

[00:44:53] William Green: And then he says, “Presume no actual reliable knowledge of anything at all.” And this has been really helpful to me because I keep thinking whenever I’m trying to judge someone, or I’m thinking about like, “I can’t believe this happened to me,” or “This is terrible,” or “I don’t understand somebody else’s behavior,” and I think it’s reprehensible in some way, I start thinking, well, presume no actual reliable knowledge of anything at all.

[00:45:18] William Green: What on earth do I know? And I don’t understand these people. I don’t understand the way they’re behaving. And then he says something that I think about a great deal. He says, “Forgive everything that is witnessed and experienced no matter what.” And I just find that an incredibly helpful idea that whatever happens and it’s hard to forgive everything, but at least I know that that’s an incredibly powerful guiding light.

[00:45:43] William Green: And so, I was in a bit of a conflict with someone recently, not a big deal. I’m not even sure that they know it’s a conflict. Maybe they do, but, I would find myself sort of slipping into this tailspin of resentment where, you know, you start to sort of replay conversations in your head and you think, I can’t believe they did that.

[00:46:04] William Green: And I can kind of cut it by saying, “Well, no, forgive everything that’s witnessed and experienced no matter what. And revere all of life in all these expressions, no matter what. Even if one doesn’t understand it. ‘Cause what do I know about why that person is behaving that way?”

[00:46:18] William Green: And then he says, “Approach all of life with humility.” Be willing to surrender what he calls all positionalities. I don’t know, I’ve just found this incredibly helpful, really incredibly helpful. And so, I just wanted to share some of these ideas from Hawkins that I think are worth exploring. And there’s one other really powerful idea that’s had a profound impact on me from Hawkins, which actually comes from this book, Letting Go, which is in some ways the most practical of his books that I’ve read. It’s much more based on his psychiatric practice. And there’s an extraordinary passage that I’ve read over and over again, which is in chapter two, I believe. Let’s see, sorry, I have the book here. And it’s the mechanism for letting go.

[00:47:01] William Green: And this is something where he’s talking about how to deal with negative emotions, with difficult feelings and emotions that come up. Maybe it’s in a conflict, maybe it’s fear, maybe it’s anxiety, maybe it’s some resentment or jealousy or hatred or whatever it might be. And I’m just going to read you this paragraph because I think it’s incredibly helpful. It’s been incredibly helpful to me anyway.

[00:47:23] William Green: And he says, “Letting go involves being aware of a feeling, letting it come up, staying with it, and letting it run its course without wanting to make it different or do anything about it. It means simply to let the feeling be there and to focus on letting out the energy behind it. The first step is to allow yourself to have the feeling without resisting it, venting it, fearing it, condemning it, or moralizing about it. It means to drop judgment and to see that it’s just a feeling. The technique is to be with the feeling and surrender all efforts to modify it in any way. Let go of wanting to resist the feeling. It is resistance that keeps the feeling going. When you give up resisting or trying to modify the feeling, it will shift to the next feeling and be accompanied by a lighter sensation. A feeling that is not resisted will disappear as the energy behind it dissipates.” And this to me is just profoundly important because it gives us a different way of dealing with difficult emotions, difficult stuff that comes up, difficult thought patterns.

[00:48:26] William Green: And if you want to learn more about this, go read Letting Go. But also, I discussed this in an interview that I did with Daniel Goleman and Tsoknyi Rinpoche on the podcast, which you can see from a few months back, if you go look, and I discussed this technique with them because it’s so similar to what Tsoknyi Rinpoche, this great Tibetan Buddhist meditation master is teaching, and it’s really about radical non-resistance.

[00:48:53] William Green: It’s when difficult stuff comes up, you’re not suppressing it, you’re not judging it, you’re not trying to change it, you’re just sitting with it, you’re abiding with it and being aware of where it’s showing up in your body. And then for some reason, the intensity of it dissipates. And so as Hawkins puts it, it’s the resistance that’s keeping it alive.

[00:49:14] William Green: And so, I just wanted to share these lessons from Hawkins because I’ve spent so much time reading Hawkins because of Mohnish over the last seven, eight years, and I just wanted to make sure that I had this opportunity to share with you some of the most important and practical lessons that I hope can help you in your own life.

[00:49:32] William Green: Our next clip is from a conversation that I had on the podcast with Tom Gayner. As you may already know, Tom is a very renowned investor who also recently became the CEO of the Markel Corporation. He’s been there since 1990, running the company’s investment portfolio for more than three decades, and he is built a remarkable record.

[00:49:53] William Green: Over the years, he’s also played a central role in transforming Markel from a small, pretty obscure insurance company into a behemoth that’s now a Fortune 300 company and has a market value of about $18 billion. But another reason why Tom really stands out and as someone I love to talk to, is that he’s really admired in human terms.

[00:50:16] William Green: He’s incredibly well liked, and we’ve become friends over the years, and I just have consistently found him to be an unusually wise and thoughtful and decent person. So anyway, let’s listen to this clip and then we’ll chat about it.

[00:50:32] William Green: You’ve had this creed at the heart of Markel, right, since before 1986, which I think Alan Kirshner, who recently retired as Executive Chairman had been the lead writer of the Markel style, which is very much built on what you refer to as these timeless values, right?

[00:50:51] William Green: Things like honesty and fairness and hard work and the zealous pursuit of excellence and trust and a mindset of service and a win-win-win culture. And I think people tend to be kind of skeptical of this, right? When corporations talk about, you know, their virtues and the like but it seems to me truly central to Markel, it doesn’t seem like a propaganda.

[00:51:17] William Green: Can you talk about this as a kind of competitive advantage, this idea of setting the culture, setting it in stone, and having it there for, what is it now, 37 years?

[00:51:30] Tom Gayner: Correct and Alan was indeed the primary author of the Markel style, which was done long before I got here. It was part of the process when Alan and Tony and Steve Markel were about to go public.

[00:51:45] Tom Gayner: It was a time to take a pause and to do some reflection over what the values of this company were, and again, the context of setting these things down in stone, so to speak, so that when they were no longer here and they knew they were mortal, those values would continue to be carried on even when they weren’t here day-to-day to supervise that process.

[00:52:12] Tom Gayner: And, you know, Alan and Tony and Steve have not been here in a day-to-day basis for over a decade and all of them, Alan retired from the board a couple of years ago. Steve and Tony are obviously still involved at the board level, but they’ve stepped back from day to day, yet the essence of what was communicated in the style still pervades to the company.

[00:52:39] Tom Gayner: I do think that is a competitive advantage and the way in which it shows up is this. And the other athlete that I talked about in the annual report this year was Bill Russell. And Bill Russell primarily was a factor on the defensive side of the game. And the defense is much harder to quantify and capture in statistical metrics than what offensive contributions are.

[00:53:06] Tom Gayner: But his team won when he was on the floor. So this unquantifiable type of factor. Just like the Celtics one. When Bill Walden, I mean, when Bill Russell was on the floor, and by the way, Freud even slip there. Bill Walden ended up playing for the Celtics too, and they won when he was around too.

[00:53:29] Tom Gayner: But a very different style of player than Bill Russell. But we get to see deals and get exposure to people and get opportunities that come about because people who share the same basic values as what we do they like doing business with people they know and they trust, and they prefer not to do business with somebody that they don’t know and they don’t trust.

[00:53:54] Tom Gayner: So frankly, I think we see things from the opportunity to build Markel from, you know, what businesses we did. Plus, I think our customers have a sensation that they’re dealing with somebody. He’s going to do their best to try to serve them in such a way that they’ll want to do business with us again.

[00:54:17] Tom Gayner: One of my great friends, this guy named Shad Rowe. Who was a money manager down in Dallas, Texas, and also someone I’ve learned a lot from over the years and one of his phrases, and again this goes back 20 years or so, he said he wanted to invest in companies that did things for their customers rather than to their customers.

[00:54:35] Tom Gayner: So, you get these snippets of wisdom from all kinds of different sources, but they all line up in the same general direction and I think they support the foundation of how it is you should do business. And by the way, I think life works out better when you follow those rules, certainly in the long run.

[00:54:57] William Green: There was something you said to me when I first interviewed you, I think probably back in 2014 or ’15, that I was very struck by that I’ll read back to you where you said, “Sometimes, people can build great careers and enjoy great successes for a period of time through bluster and bullying and intimidation and slipperiness. But that always comes unraveled, always. Sometimes it takes a while, but it does. The people you find that are successful and just keep being successful year after year after year, I think you find those are people who have the integrity.” I thought there was a really interesting insight and I’ve struggled with it for a while.

[00:55:32] William Green: I think partly because I had kind of lost a political battle at a company where I had worked and I was like, well, actually, I think kind of in some ways the snakes won. Maybe that was self-diluting and I was a snake myself. And then I would look at kind of the political situation. I would see the corruption of politics by business and big money and the like, and there’s a part of me.

[00:55:55] William Green: And then also, Charlie Munger has talked about how Sumner Redstone was always his example of what I don’t want to be in life. And he was like, look, this guy made much more money than me. But even his kids and his wives hated him. And I never met Sumner Redstone. I’m not trying to badmouth him, but you know what I mean.

[00:56:12] William Green: This question of whether it’s actually better to live your life this way or to do business this way, or to look at the counter example of these people who are tremendously successful while having very sharp elbows and leaving a trail of lawsuits in their wake. Can you talk about that? ‘Cause I feel like some people just assume that capitalism is kind of vicious and nasty and self-seeking and that that’s the way it goes.

[00:56:39] William Green: And I think you are pointing us towards actually a different system that may actually work better in the long run.

[00:56:45] Tom Gayner: Right and I do think that capitalism is a much better system than what it’s given credit for. And I think businessmen oftentimes do a horrible job of communicating the positives of a capitalist system. So Adam Smith is given credit for being sort of the father and the intellectual creator of the system of capitalism. I believe his title was Professor of Moral Philosophy at University of Edinburgh or Glasgow or wherever he was at the time.

[00:57:16] Tom Gayner: So, he approached the idea of capitalism from a moral lens and thought it was a superior system and wrote books about it in that way.

[00:57:26] Tom Gayner: Secondly, success, I think is something that you shouldn’t define along only one variable at the complicated equation. There are a lot of things that go into the idea of success.

[00:57:38] Tom Gayner: So, if you were, again, in the realm of athletics, Cause things just pop into my head from athletics stuff. And so if you look at Muhammad Ali and his career as a boxer and his probably reputation well deserved for being the greatest fighter ever. Well, that’s probably true, but if Muhammad Ali needed to be a tennis player or a chess player, he might not have been so successful.

[00:58:07] Tom Gayner: So, if you’re going to define success, make sure you define what arena you are talking about. So just to say the word success in and of itself is too limited. It’s not enough. So, I do not know the family structures of Sumner Redstone or Charlie Munger for that matter. I’m guessing that Charlie Munger’s success probably has more dimensions to it then Sumner Redstone.

[00:58:33] Tom Gayner: But that is just a pure guess on my part and two points about Charlie Munger was the notion of you know, if you want to be a success, the best way to do that is to deserve it. So, he operated with the idea of trying to be someone who deserved the success that he has earned and I think that’s a fundamentally important way of doing these.

[00:59:01] Tom Gayner: And there’s a business practice, there’s a life practice that flows from that. So, if I just met you, and we were talking about a deal or a project or some commercial transaction, and I said, “William, trust me.” You can’t help it if, again, if we don’t know one another, that is going to cause 99 times out of a hundred, just a hint of doubt in you., ‘Cause if I say, “Trust me,” your natural human reaction is, “I can’t trust this guy.” And the notion of trust is not going to flow immediately if I started that way.

[00:59:33] Tom Gayner: But if instead I say, “William, I’m going to trust you,” and I’ve done some workers, and some basis for saying “I trust you,” and offer the gesture of trust first without demanding reciprocation or quality. I just do that in an unconditional way.

[00:59:57] Tom Gayner: What I have observed is that either you’ll do one of two things. You’ll either honor that trust or you’ll violate it. And if you’re going to violate the trust, you’ll probably do it sooner rather than later. And in so doing, you’ll have sorted yourself that we’re just not going to do business again. But if you honor that trust and start to trust back, what happens is that starts to cascade.

[01:00:19] Tom Gayner: And it’s another element of compounding that takes place in your relationships with people. If you trust first, if you offer that service, that value first, and you initiate that, the world will sift and sort itself and orient and give you enough people and enough opportunities where you have these compounding trust relationships, that it just becomes marvelous over time.

[01:00:43] Tom Gayner: Same thing would be said in the world of love. If I say, “Love me,” and you’re trying to meet somebody, you’re trying to develop a relationship, you say, “Love me,” I don’t think that’s going to work. But if you offer love and then you offer it unconditionally, is everybody going to love you back? No. But a lot of people will, and they’ll do it in enduring, consistent systemic ways. So just orient yourself to be the initiator of trust and be the initiator of love. And then don’t be stupid, reciprocate and compound and grow the trust relationships and the love relationships, and filter out the ones where you’re not getting reciprocity.

[01:01:22] Tom Gayner: If you stay at the game long enough, and I’ve been at it 40 some years, you’ll find you have a wonderful group of people that are enjoyable, fun relationships that keep you coming in the office and doing what you’re doing as opposed to wanting to go play golf instead. That’s working out for me.

[01:01:39] William Green: One of the great lessons that I’ve learned from Tom Gayner over the years is that it’s not just money that compounds, and he mentions in this clip that there’s also this compounding of trust-based relationships. I think this is such an important and interesting idea when I was interviewing Tom for my book, I remember him saying that he regarded himself as a node in a neural network. And he would talk about how one of his great competitive advantages in life was actually that he is a really nice bloke and that everyone wants to help him as a result, because he’s always trying to do the right thing.

[01:02:17] William Green: He’s trying to help people. And he said to me, “Look, as a consequence of that,” he said, “What I found is that I have this wonderful network of friends and colleagues and associates who were just rooting for me rather than against me.” And he said, “they help you.” And then he kind of paused and he repeated it and he said, “they just help you.”

[01:02:34] William Green: And I’ve always remembered that because it struck me as something very similar to a lesson that I’ve learned from Guy Spier, which is this idea of the compounding of goodwill. We don’t just want to compound money, we want to compound goodwill. You want to treat people in a way that it’s not cynical, but again, there’s this understanding that there’s this enlightened self-interest that if you treat people decently, if you treat people honorably, if you’re generous to people, if you’re kind to people, over the years, it has this extraordinary impact because you meet all of these people who wish you well.

[01:03:12] William Green: And I’ve seen it in my own interactions with Tom. I’ve told this story before that was kind of remarkable for me, where I needed his help on an occasion where I needed to interview basically a famous investor at a private event. And Tom was the first person I contacted, and I said to him, is there any way you would do this interview with me?

[01:03:34] William Green: And this is during Covid, and it would’ve been very easy to do it over Zoom. And he was like, no, but it’ll have much better energy if I’m actually physically there. So, he gets a train for six hours from Virginia where he lives and works, to New York City where this event was to do this event with me, to have a one hour far side chat at a private event.

[01:03:55] William Green: There’s nothing really in it for him. It was just an act of real kindness at a time when I really needed help and, it just is very powerful. I’ve never forgotten that. And I’ve seen this again and again with Tom, that I see the amount of goodwill that is surrounding him because of the way that he behaves.

[01:04:13] William Green: So, you see his relationships with, say someone like Josh Tarasoff, my friend who is a very smart hedge fund manager who talked to Tom about Amazon years ago and said, “Don’t you think you should own it given this business model.” And that led to Tom investing in Amazon. And likewise, you see the relationship that Tom has with people like Chris Davis, who’s going to be a guest on the podcast soon, who’s a very upstanding and impressive guy.

[01:04:44] William Green: Or you see the relationship that Tom has with people like Munger or Saurabh Madaan, who I don’t know if you remember the talks on Google, the investment talks on Google, Saurabh used to host all of them. And he was a senior data scientist at Google. Really smart guy, really lovely bloke. And Tom meets him and ends up inviting him to come basically be his right-hand man running the investment portfolio at Markel, which he did for several years.

[01:05:12] William Green: And so, you don’t get someone like Saurabh to come work for you unless you’re an incredibly high-quality individual. And so, it’s turned out to be this strange competitive advantage. It’s not just that Tom’s smart and diligent, hardworking and has a good investment philosophy. He’s really surrounded himself with these extraordinary relationships.

[01:05:34] William Green: And, he’s been on the board of The Washington Post Company, for example, where he was on the board with Buffett for years. And so, he got to build these relationships. And I think it’s telling that last year, Berkshire Hathaway invested more than 600 million in Markel’s stock. And so, I think that’s an indication that Buffett is looking at the company and the culture and saying, “Yeah, I’m happy to have Tom Gayner in my ecosystem. I trust him to do the right thing.” So, I think this idea of very consciously compounding good relationships with high quality people that are built on trust turns out to be a kind of superpower. But the other thing I would say is that it’s not about being cynical. You can’t really do it with a cynical agenda.

[01:06:25] William Green: It helps if it’s sincere and it’s also not about naivety. I remember once having dinner with Tom and his wife Susan, at their home in Virginia. And Susan at the time was CEO of ParkLand Ventures, which was a subsidiary of Markel, part of Markel Ventures. And I think they own and operate something like 45 manufactured housing communities around the country.

[01:06:48] William Green: And I remember asking Tom and Susan, “How do you deal with things like people not paying their rent? What do you do when a person’s in trouble and they can’t pay their rent in these manufactured housing communities?” And I remember them saying, “Well, look, we give them every opportunity to reorganize, to restructure their debt. We give them time to figure out a plan. But you know, we can’t be so generous and so lax that the business doesn’t work. We’ve actually got to make a return on the business or else we’re letting down our employees. We’re letting down our shareholders.” And, I remember Tom saying to me, “Look,” I think at the time, maybe they had 18,000 employees or something, and he said, “We’ve got about 10,000 families at this company who rely on us to make good judgements.”

[01:07:39] William Green: And I thought that was a really helpful reminder that it’s not just about being generous, loving, kind, compassionate, forgiving, all of these virtues that we would aspire to. There’s also this sense with Tom of good sense, good judgment, and think of in this clip how he talked about extending kindness and love and trust first, but then seeing if the person actually reciprocates, seeing if they earn that trust.

[01:08:06] William Green: And it reminds me of this idea from Munger where he talks about existing within this seamless web of deserved trust. And so, it’s not about being naive, it’s about behaving in a way that’s built on trust, but also surrounding yourself with people who actually deserve that trust.

[01:08:23] William Green: Our next clip is also going to be from my conversation with Tom, and it’s a really important subject. We’re going to talk about how to actually figure out whether to trust someone, whether they merit your trust.

[01:08:34] William Green: You’ve often talked about money managers as custodians and shepherds of other people’s savings, right? I remember Chris Davis once saying to me that you’d actually freed him from the moral straight jacket of becoming a money manager because you explained this notion of stewardship and being trustworthy and he thought, “Okay, so maybe as Charlie would say, it’s a low vocation, but it is a vocation.”

[01:08:57] William Green: And I wondered if I could ask you, like, when you are trying to appraise the talent and integrity of managers or you are trying to appraise the talent and integrity of people to partner with, what are you looking for? I mean, cause obviously we need to partner with people who are going to put our interests first.

[01:09:21] William Green: And in the investment business, there are a hell of a lot of them who are not out to do that, right? They’re in survival mode where they’re looking out for themselves first. What are the tells? What are the clues when you are trying to assess whether someone is going to look out for you or not?

[01:09:44] Tom Gayner: Most people have a trail behind them. There are people that they’ve done business with that know them, that if you spend a little bit of time and do a little bit of due diligence, you can kind of get this rough, rough sense of if this is a person who makes the people around them better off or worse off. I don’t think that is as impossible a task as what you think, and you got to keep your eyes open and be sensitive to if your thesis is confirmed day by day or disconfirmed day by day.

[01:10:17] Tom Gayner: Again, getting back to in earlier point in the conversation where you offer trust, you trust first, and that trust is either reciprocated or violated. And just through a lifetime of doing that sort of thing, both of you build that network of relationships, you become one of the nodes on that web of trust.

[01:10:36] Tom Gayner: And the people that you have it with, it compounds and becomes bigger and bigger over time. And by the way, the best way for a new person to come onto that node is for them to be vouched for by someone who was already on the node. So, I’m sure, again, in the due diligence you would’ve done for the people you’ve written about over the years, you didn’t just talk to the person that you were writing about.

[01:11:01] Tom Gayner: You, you talked to other people who had dealings with that person to kind of see if you were on the right track or not. And I suspect, I think your hit ratio is probably pretty good. And if you were setting out to write the book today as compared to 10 years ago, I dare to say, I think you might even be better at it today because you’ve been at the process for the last 10 years, and you’ve developed your own filters and spidey sense and ways and methods to think about, am I on the right track or not?

[01:11:35] William Green: I really like this insight from Tom Gayer that one of the ways you can assess whether a person is going to be honest and honorable in your dealings with them, whether it’s a CEO of a company that you’re investing in or a money manager or whatever, is that most people leave a trail and you can see whether this is the kind of person who makes other people richer or poorer.

[01:12:00] William Green: And I think it’s such an interesting and obvious insight, right? When you read stories about crimes, for example, you often see that someone who’s done a particular crime, whether it’s robberies or sexual assaults or murder or whatever, they have a modus operandi. It’s remarkable to see how often the way that they do things is repeated.

[01:12:22] William Green: And likewise, I remember Tony Robbins would often say, look, success leaves clues. And so, I think just this awareness that there are these repeated patterns of behavior, it’s obvious and at the same time really, really important. And also, this idea that there’s a kind of triangulation that goes on where, we do this a lot as reporters, where you talk to other people to get a sense of whether a person is honest and honorable.

[01:12:47] William Green: And I do this a great deal. Actually, one of the reasons why I decided to go big on writing about Tom Gayner in my book was I literally, I remember interviewing Chris Davis at his office in New York City, and as we were walking to the lift the elevator in his building in Rockefeller Center, he was talking to me about Tom Gayner, who he is close to.

[01:13:08] William Green: And I’d interviewed Tom before and had been impressed with him. But as Chris was talking to me about Tom, I started to realize, actually, this is a really interesting guy, really upstanding, really interesting guy. I should spend more time with him. And so I actually arranged to go spend two days in Tom’s office in Virginia.

[01:13:27] William Green: Because of something Chris Davis had said about him. And I do this a lot. Just, this week there’s another well-known investor who I’m always a little mystified by, like whether he’s an honorable person, whether he’s not. And I was talking to another person who’s going to be a guest on the podcast soon, who knows this guy well.

[01:13:45] William Green: And I was saying, “I’ve heard this about him. Is it true? Is it not true?” And he kind of convinced me that this guy was very honorable and impressive. And so, there’s always this sense that you’re doing triangulation on people to see whether others will vouch for them. And I think it’s just a really important part of your due diligence.

[01:14:08] William Green: It’s analyzing the trail that a person has left and talking to the people who know them well to see whether you are missing something. But the other thing I would say that’s very distinctive about the investment business is that there’s also a really important tell, which is you can see how they’ve structured things financially.

[01:14:25] William Green: You can see the fee structure to see whether they’ve structured the operation in a way that shows that they’re looking out for themselves or that they’re looking out for you. And I was very struck when I went to the Berkshire Hathaway annual meeting back in May. There was this point where you’re sitting there and you’re looking at Buffett and Munger, right? 99 years old, in Munger’s case and 92, the Spring Chicken Buffett sitting there. And they have their two most important successes, I guess sitting there next to them for part of the meeting. This Ajit Jain who runs the insurance business, who’s been absolutely extraordinary, and Greg Abel, who’s going to be the successor to Buffett and is also incredibly capable.

[01:15:08] William Green: And in some ways you’re sitting there and you’re thinking, “Okay, well here are the Alpha Dogs, right? Buffett and Munger.” And here are their junior lieutenants. And then I’m thinking, “Well, actually, Greg Abel and Ajit Jain are paid 19 million dollars each when I checked last. And Buffett and Munger are paid a hundred thousand dollars each.”

[01:15:29] William Green: And I think that’s a fascinating insight that Buffett and Munger have built this company in, into this just enormous Goliath of a business that’s worth over 700 billion dollars. And yet they pay themselves a hundred thousand dollars each. And it gives you a sense that they’ve structured the business in a way where they’re looking to make money with you, not off you.

[01:15:51] William Green: So, I think this is the other great tell is to ask yourself, “Has this person I’m looking to do business with, structured things in a way where our incentives and our interests are aligned? Are they looking out for me or are they looking out for themselves?” And someone said to me recently, “The real question is, who are you serving? You’re serving someone, but are you serving yourself or are you serving the other person?”

[01:16:17] William Green: The next clip that we have, this is the fifth and final clip actually, this is part of an interview that I did with John Spears. I feel like not enough people really took notice of this interview. I think it came out at a weird time and it didn’t get quite the attention that I think it really deserves ’cause John Spears is a remarkable person, a remarkable thinker, and a remarkable investor.

[01:16:39] William Green: And he spent 48 years at this legendary firm, Tweedy, Browne, and actually Buffett’s original stake that he bought in Berkshire Hathaway back when it was a textile mill, was bought through Tweedy, Browne back when it was a broker. And so, John Spears has this great long-term record over almost half a century at Tweedy, Browne.

[01:16:57] William Green: And what’s also always struck me about John in my past interviews with him is that he seems incredibly comfortable in his skin. He seems happy, well-adjusted a lovely human being. And I’m always particularly interested in investors who are not only successful at making money, but also seem to be successful in other areas of their life.

[01:17:18] William Green: So, in this clip we talk a bit about some of the spiritual beliefs underlying his approach to business and life that I think gives some clue to why he’s cheerful and upbeat and has had a good life. Let’s listen and then we’ll discuss.

[01:17:36] William Green: Quaker has obviously been a really important part of your life, and I, last time we met, we chatted about this and you had talked about how I think your wife had introduced you when you were probably in your late twenties or early thirties to correct the Quaker Church.

[01:17:56] William Green: And I was reading last night a little bit of faith and practice. The book that you said had really kind of had a huge impact on you early on, and I was struck. It said, “Recognition that God’s light is in every person helps us to overcome our apparent separation and differences from others. It leads to a sympathetic awareness of their needs and a sense of responsibility towards them.”

[01:18:18] William Green: And I wonder if you could talk about how some of these ideas that you drew from Quakerism have enriched your life and kind of been a really important guide to you on how to behave towards others, how to behave as a money manager, how to behave as a husband or father, ’cause it’s obviously been a really essential part of your life and thinking about how to live.

[01:18:40] John Spears: I’m really impressed with that. You read that? That’s so interesting. It has had a big influence. The idea that, of God in every person, we’re all children of God. That idea is very, very appealing to me. And it sets up a way of trying to live your life, of trying to behave with other people, of trying to think of people as equal under God and not necessarily as people who have equal outcomes in life or any of that, but just to kind of a, a common humanity.

[01:19:17] John Spears: So, I think that it has helped me in trying to deal with other people, with hopefully deal being an okay partner with my partners to sometimes disagree. But with respect and with humility that my opinion could be way wrong. I don’t have any perfect track record, any of that kind of thing.

[01:19:43] John Spears: Trying to live with in one’s family with those ideas. Yeah. And also, the Quakers, the Religious Society of Friends is both communitarian and at the same time, individualistic, the founder of Quaker, as of George Fox, would say to his followers, “What can’t thou say?” Meaning, what can you say as a human being, as an individual, as a unique creature, one of one of God’s children, what can you say?

[01:20:14] John Spears: Meaning, sort of speak your truths. Be honest. Try to be honest and truthful and try not to fake it. If you’re faking it, he called it your, it’s a mask. You want to be, try to be honest. Well, that’s something that has had an impact on me. I’m no perfect person, but these Quaker sayings and mottoes, I think have been very useful to me.

[01:20:41] William Green: When we were having lunch a few years ago, I was looking at my notes again over the last couple of days from our lunch and farm meeting at your house, and we were talking about this subject. And one thing that you said that really struck me at the time is you were talking about forgiveness as well, and you said, “Yeah, trying to forgive yourself to realize you are not perfect.”

[01:20:59] William Green: And that was really striking to me because for me, I tend to be fairly self-flagellating, and I’m always struck by all of the many ways in which I’m failing to live up to the values that I espouse. Can you talk a bit about that idea of forgiveness and self-forgiveness?

[01:21:16] John Spears: Well, I’ve always liked the idea of imperfection.

[01:21:20] William Green: Oh, good.

[01:21:21] John Spears: And I just think that humility under God, that none of us are perfect creatures. I often, when my wife or somebody does some dumb little thing, I’ll say, “Well, you’ll be perfect in that next 12 months.” You know, 12 months from now, you’ll finally be perfect. And I think that that attitude applies to oneself.

[01:21:46] John Spears: You try to do the best you can, but a kind of a recognition almost of God’s grace of kind of your count your blessings. Try to look at the glass half full, but don’t whip yourself too hard when you can make a mistake or you’re not perfect, or you say something that was stupid or dumb and you regret saying it. Try to get over it. Move on.

[01:22:10] William Green: There’s a beautiful story I think of some old Zen monk that I’m no doubt garbling who said something like, “Last year, a foolish old man, this year, no change.” And I always love that, right?

[01:22:25] John Spears: Right, there’s another one I thought somebody said, “God laughed.” And you can laugh a lot at all the things that have to do with human behavior, human nature. If you approach looking at the newspaper with a sense of humor.

[01:22:42] William Green: I remember Tom Gayner, who grew up Quaker actually.

[01:22:45] John Spears: Oh, did he? Did he?

[01:22:46] William Green: Yeah.

[01:22:46] John Spears: Was he the guy at Markle?

[01:22:48] William Green: Yeah, exactly. Wonderful guy. And actually he, like your wife, I think ended up becoming Episcopalian, if I remember correctly, but is deep, deeply influenced by Quakerism. He once was talking to me about how deeply flawed humans are, and he said something about human foibles and flaws and then just chuckled uproariously.

[01:23:08] William Green: And there was something kind of lovely about it that he wasn’t appalled and disgusted by how flawed we were. He was kind of amused. There was a sort of gentle, a gentle awareness.

[01:23:19] John Spears: Right. A sort of an ironic chuckling. The humor in life.

[01:23:25] William Green: I feel like I take things too seriously. I think I was struck when you said that about trying to forgive yourself and to realize you’re not perfect. So that helped me. So, thank you.

[01:23:34] John Spears: I think it’s rational too. It’s rational. It’s just plain true.

[01:23:40] William Green: One thing I really appreciate and enjoy about this clip is John Spear’s tone. There’s a gentleness and a rye, amusement and warmth about his comments. And I think an understanding that, yeah, we should try to act with humility and respect and kindness and should treat other people as our equals and be humble and the like.

[01:24:02] William Green: But there’s also a recognition that we are going to mess up. We’re going to say the wrong thing and we’re going to do the wrong thing from time to time. So, we shouldn’t be too tough on ourselves. And I often come back to a beautiful insight from a great mindfulness meditation teacher named Sharon Salzberg who says that “When you fall off track, you should let go with self-compassion and begin again.”

[01:24:24] William Green: And I find that really helpful just because we’re always messing up. Literally, right before I recorded this, I scarfed down some lunch and spilled jam all over my shirt, my brand-new pristine shirt that no doubt will stain it permanently. And it’s just a practical and pretty standard reminder of my own imperfection on the fact that I’m, as Oscar Wild one said, “We’re all in the gutter, but some of us are looking at the stars.”

[01:24:56] William Green: And so yeah, we’re stumbling along here. We’re trying to figure out our way through the mud. But it’s really helpful, I think, to keep our minds on these principles that people like John Spears and Tom Gayner and Mohnish talking about, because they give us a sense that there are certain types of behavior that are going to help us both in business and life and yeah, we’re not going to live up to them always these standards, but if, as Tom Gayner would say, we’re directionally correct, that’s pretty darn good.

[01:25:25] William Green: So that’s my goal for the day. And also, I’d like to spill less jam on my shirt if possible.

[01:25:30] William Green: In any case, thanks so much for joining me today and I’ll be back very soon. Until then, do feel free to follow me on Twitter @WilliamGreen72. And as always, please let me know how you’re enjoying the podcast. It’s always a real pleasure to hear from you. For now, take care and stay well.

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