WORKING TOGETHER
TOGETHER
WORKING
Why Great Partnerships Succeed
MICHAEL D. EISNER
with Aaron Cohen
WORKING TOGETHER. Copyright © 2010 by Michael D. Eisner. All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner what-soever without written permission except in the case of brief quotations embodied in critical articles and reviews. For infor-mation, address Harper Collins Publishers, 10 East 53rd Street, New York, NY 10022.
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FIRST EDITION
Library of Congress Cataloging-in-Publication Data has been ap-plied for.
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Introduction xi
1 Frank Wells and I 1 Where I learned 1 + 1 = 3 (if not much more)
2 Warren Buffett and Charlie Munger 31 “Warren and I are kind of an historical accident.
It’s not a standard model.”
3 Bill and Melinda Gates 55 “Be smarter faster.”
4 Brian Grazer and Ron Howard 87 “We view the world differently, but we arrive at
the same conclusions.”
5 Valentino and Giancarlo Giammetti 113 “This isn’t a story about money or fashion or power.
It’s a story about love.”
CONTENTS
6 Steve Rubell and Ian Schrager 139 Two guys from Brooklyn
7 Arthur Blank and Bernie Marcus 163 “It was always about the business. Whenever we did
anything, the question was, Is it good for the business?”
8 Susan Feniger and Mary Sue Milliken 199 “A good partnership has to allow for a certain
amount of separation.”
9 Joe Torre and Don Zimmer 221 “Hit and run.”
10 John Angelo and Michael Gordon 251 “Smart as hell . . . and scrupulously honest.”
Epilogue 273 Happiness
2.
WARREN BUFFETT AND CHARLIE MUNGER
“Warren and I are kind of an historical accident. It’s not a standard model.”
Through all the deals, all the companies, all the money,
all the stock, all the interviews, all the plainspoken
advice, all the good spells, and even the few bad ones,
there’s one thing everyone should know about Warren Buf-
fett.
The man is having fun.
At eighty years of age, Warren is the rare senior citizen
who eats as much candy (chocolate is his fancy) and drinks
as much Coke (cherry, not diet) as he wants. We met up for
our conversation about this book in an airport, and as he
greeted me—excited as ever—he went straight for a nearby
ice cream sandwich. The economy was in shambles, his com-
pany, Berkshire Hathaway, was a few weeks away from an-
32 WORKING TOGETHER
nouncing that it had had the worst year in its history, and
flights were delayed hours because of snow, but to be with
Warren, you wouldn’t have known it. He talked excitedly
about ways the economy could be fixed, and spoke with real
concern about the millions of people who were hurting, and
how they could be helped.
He also talked, as he often does, about his businesses.
Something you can never forget about Warren is that he is
a businessman in the most classic sense, and through Berk-
shire, he owns literally dozens of companies, from insur-
ance companies (Geico) to underwear companies (Fruit of
the Loom) to paint companies (Benjamin Moore) to restau-
rant chains (Dairy Queen) to airlines (NetJets) and furniture
stores and jewelry shops and more. Berkshire also has major
stakes in corporations like Coca-Cola, Wells Fargo, and the
Washington Post Company. It was the middle of February
that day in the airport, the day before Valentine’s Day, and a
day after I broke my foot walking in Washington, D.C., talk-
ing on the phone and to my wife at the same time while
checking e-mails on my BlackBerry and not seeing the end of
the sidewalk. Talk about a twenty-first-century injury! After
the obligatory sympathy for my foot, Warren talked about
See’s Candy, his chocolate business, and how See’s was hav-
ing its biggest day of the year, with thousands, if not mil-
lions, of men all across the country scrambling to get their
wives and girlfriends gifts at the last minute. Warren talked,
and as always, I learned.
“The man just looks at the positive side of everything,” I
thought to myself, making a mental note to consider his ex-
ample the next time I got frustrated at the office. It’s a kind
of fun that doesn’t just come from having a lot (okay, a tre-
WARREN BUFFETT AND CHARLIE MUNGER 33
mendous amount) of money; believe me, I’ve met plenty of
people with more money than they could ever spend who are
miserable. It’s a different kind of fun, a fun that comes from
being able to share success—and, just as important, failure—
with someone else.
“You’ve got to enjoy it,” Warren told me that day. “It’s crazy.
I would have had a lot of fun over the years, but not nearly as
much fun without Charlie.”
Charlie is Charles T. Munger, Warren Buffett’s sidekick,
confidant, intellectual kindred spirit, and best friend. Offi-
cially, Charlie is the vice chairman of Berkshire Hathaway.
Unofficially, and more notably, Charlie has been Warren’s
partner in one way or another for pretty much everything
he’s done over the past fifty years. If you follow the business
world, and Berkshire, closely, you know who Charlie is, but
if you’re just a casual observer, you may never have heard
of the man, which is fine with him. Still, make no mistake:
every business move Buffett makes comes after close consul-
tation with Munger.
The partnership has added up to one of the most success-
ful runs in business in American history. But just as sig-
nificantly, as Warren says, “With Charlie, it’s basically been
nothing but a good time.”
� � �
Officially, when you consider all of the businesses it controls,
Berkshire Hathaway has thousands of employees scattered
throughout the country and the world. But in Omaha, Ne-
braska, the company’s headquarters is modest and nonde-
34 WORKING TOGETHER
script, with just a few dozen employees, including, of course,
Chairman Buffett.
“Take a look at this,” Warren said to me recently, reaching
into his back pocket and pulling out an old-fashioned pocket
date book, the kind people used to carry when a blackberry
was something you ate, not something you charged at night.
“It’s completely empty. I just sit in my office and read all day.”
I tried to call his bluff. “C’mon, Warren, it’s not completely
empty,” I said as I took the small book from his hand to thumb
through. I found an appointment filled in after a few pages.
“That’s one of my college days,” he explained. “I have six
business schools come in, limited to about thirty students
each, and I do a daylong seminar thing. I do about half a
dozen of them a year. Panel in the morning, question-and-
answer, they take pictures with me, and so forth. I love it.”
“Do you ever identify a kid who’s clearly really talented,
and hire him to come to Omaha to work for you after gradu-
ation?” I asked.
“I have, once or twice, but it really doesn’t work out too
well. There’s just not that much to do. If I want to talk to
somebody about something, I’ll just talk to Charlie.”
Charlie Munger and Warren Buffett grew up just a few
miles from each other in Omaha, and as a teenager, Charlie
actually worked for a short time at Warren’s grandfather’s
grocery store, Buffett and Son. But because they were six
years apart in age (Charlie is the older one), their paths
never crossed as kids. Instead, the first time Warren heard
the name Charlie Munger was in the mid-1950s, at a meet-
ing with a physician named Eddie Davis, whom Warren was
recruiting for his fledgling investment business. Warren
was in Davis’s house, giving a surely passionate sales pitch
WARREN BUFFETT AND CHARLIE MUNGER 35
to convince the doctor to let the twenty-six-year-old future
whiz kid invest his money. But as he gave Dr. Davis his best
shot that day, the older man stood in the corner of his living
room, seemingly barely paying attention, and leaving young
Warren to address Mrs. Davis, his wife, who appeared much
more engaged by the conversation. Finally, when Warren
had just about exhausted himself, Mrs. Davis turned to her
husband to get his thoughts.
“We’ll give him a hundred thousand dollars,” he said, sud-
denly looking up. “He reminds me of Charlie Munger.”
Warren had no idea who Charlie Munger was, but it was an
auspicious prologue to the relationship nonetheless.
The money did well (of course the investment would be
worth billions today), and Dr. Davis would invest more with
the young Nebraskan over the next few years, once even mis-
takenly writing a check to “Charles Munger” instead of “War-
ren Buffett.” And in 1959, the Davises succeeded in bringing
the two men together.
Munger had been living in Los Angeles, rising to promi-
nence there as a young Harvard-trained lawyer, all the while
spending time on side deals and outside work to augment
his income and reach his candidly declared goal of becom-
ing a very rich man. When his father passed away, he re-
turned to Omaha to tend to the estate, and Neal Davis, the
son of Dr. Davis and Charlie’s childhood best friend, insisted
on bringing together the two men who reminded so many
people of each other. So a lunch was scheduled at the Omaha
Club. Sure enough, the two men took to each other instantly;
Warren once told me that as soon as he saw Charlie “roll-
ing around on the floor laughing at his own jokes,” he knew
they’d get along great. A few nights later, before Charlie left
36 WORKING TOGETHER
town, the men got together again with their wives in tow, and
for the second straight meal, stayed at the table talking long
after the waiter had cleared the table.
It was 1959; the men stayed closely in touch through old-
fashioned snail-mail letters. Charlie was the older man, but
Warren was the one succeeding in a more substantial way, at
least if substantial meant accumulating some wealth.
“ ‘Charlie,’ I’d write,” Buffett told me, “ ‘law is okay as a
hobby, but a guy with your brains, you’re wasting your time.
You’ve got to manage money.’ ”
And gradually, Warren pulled his new best friend into the
investment business.
“It made no difference if we weren’t investing together in
the same pot,” says Warren. “If he was interested in some-
thing, and wanted to talk it over, I was as interested in it as if
I had my whole net worth in it.”
And over the next few decades, they’d talk over virtually
all of their decisions and deals, and sometimes invest in
the same companies, most substantially Blue Chip Stamps.
They’d use that position to buy a series of other companies,
including See’s Candy, and in 1982 they finally officially
joined together financially. Since then, Munger has been
the vice chairman of Berkshire Hathaway, operating from
his office in Los Angeles at the law firm he helped found,
Munger, Tolles, & Olson. The pair’s most well known public
get-togethers have long been at Berkshire’s annual meetings,
gatherings in Omaha that shareholders and Buffett devotees
attend with the zeal of a religious revival. Together, each
year, Warren and Charlie hold court in front of thousands,
offering a well-rehearsed and familiar brand of salt-of-the-
earth midwestern ethos. Warren does most of the talking,
WARREN BUFFETT AND CHARLIE MUNGER 37
and when he’s done making a point, he turns to Charlie for
an addendum. The response is always the same.
“I have nothing to add.”
Nothing could be further from the truth.
� � �
The offices of Munger, Tolles, & Olson are located in down-
town Los Angeles on Grand Street. Charlie Munger has not
actively practiced law there in several decades, but, in his
mid-eighties, he still dresses like a lawyer with his crisp suit
and tie. He has long had trouble with his eyes, and a few
decades ago, lost one of them. I bring this up only because
of the joy Warren took in telling me the story of Charlie pop-
ping out his glass right eye at the DMV in California for rea-
sons that were lost amid my “You’ve got to be kidding me”
response. There are also Charlie’s frequent appearances for
the Harvard Westlake School in Los Angeles, where he and
my wife share board seats. Some of the meetings are way up
at the top of the Los Angeles hills, along tiny windy roads.
And at the end of each one, close to midnight, Charlie exits
to his car and heads off into the night alone, eighty-six years
old, no driver, one eye, no request to be dropped off, and no
fear. The man in the thick glasses and pristine Brooks Broth-
ers suit has a mind as sharp as it’s ever been, and like his
partner, he favors simple and homespun over complicated
and pedantic.
“If you want to get a good partner, the way to do it is be a
good partner. Though Warren and I are kind of an historical
accident. It’s not a standard model. It’s a mental partnership,
38 WORKING TOGETHER
an intellectual partnership. We don’t even live in the same
city, so we’re not interfacing that much and so forth. This is
like two academics who sort of stumble into the same ideas
and like one another. It’s quite peculiar.”
So to hear him tell it, the conversation that began at the
Omaha Club on that Friday afternoon in 1959 has just contin-
ued for half a century, with Charlie still in Los Angeles, and
Warren back in Omaha. I’ve never been able to figure out ex-
actly how often they talk—I imagine it varies somewhat—but
apparently those conversations are the crux of the decision-
making process of Berkshire Hathaway when it comes time
to do a deal. Then again, the talks are also the culmination of
what Warren and Charlie do when they’re not on the phone
with each other, which to hear them tell it, is very simple:
they read.
“If Charlie and I were stranded together on a desert island,”
Warren says, “and we somehow had the Library of Congress
available to us, we’d both be very happy for a long, long time.”
“That’s part of the secret,” Munger says, a thousand miles
away from his partner, but talking as if he’s nodding along to
what Buffett would say. “You could hardly find a partnership
in which two people settle on reading more hours of the day
than in ours.”
“Look,” Warren continues, “my job is essentially just cor-
ralling more and more and more facts and information, and
occasionally seeing whether that leads to some action. And
Charlie—his children call him a book with legs.”
Maybe that’s why both men agree it’s better that they
never lived in the same city, or worked in the same office.
They would have wanted to talk all the time, leaving no time
WARREN BUFFETT AND CHARLIE MUNGER 39
for the reading, which Munger describes as part of an essen-
tial continuing education program for the men who run one
of the largest conglomerates in the world.
“I don’t think any other twosome in business was better
at continuous learning than we were,” he says, talking in the
past tense but not really meaning it. “And if we hadn’t been
continuous learners, the record wouldn’t have been as good.
And we were so extreme about it that we both spent the bet-
ter part of our days reading, so we could learn more, which is
not a common pattern in business.”
It’s not how you’d think it would work. You’d think Buffett
and Munger would have the smartest young business school
graduates locked to their desks, obsessing over figures and
going blind in front of computer monitors, and then coming
to them with proposals about which new companies and in-
vestments to look into.
“No,” says Warren again. “We don’t read other people’s
opinions. We want to think. We want to get the facts, and
then think.”
And when it gets to the thinking part, for Buffett and
Munger, there’s no one better to think with than their part-
ners.
“Charlie can’t encounter a problem without thinking of an
answer,” posits Warren. “He has the best thirty-second mind
I’ve ever seen. I’ll call him up, and within thirty seconds,
he’ll grasp it. He just sees things immediately.”
But Charlie himself sees it as an acquired, rather than nat-
ural, genius, thanks to all the studying he does.
“Neither Warren nor I is smart enough to make the deci-
sions with no time to think,” Munger once told a reporter.
40 WORKING TOGETHER
“We make actual decisions very rapidly, but that’s because
we’ve spent so much time preparing ourselves by quietly sit-
ting and reading and thinking.”
He added to that thought when I met with him in his of-
fice.
“Warren knows an amazing amount, and he thinks very
rapidly, and he talks very persuasively. I’m very similar in
many ways. You get two people like that who really like and
trust one another, and have been together for a long time,
you’re going to learn a lot from each other, and you’re going
to advance faster. So the learning machine is working faster.”
Any two businessmen, though, could talk over decisions
on the phone, no matter how big, and not have the track
record Buffett and Munger have. Yes, these two are damn
smart, but there’s more to this match than that. This pair
may both be fans of campy jokes, and may say they think
the same way, but their differences—or more specifically,
their different roles in this partnership—are integral to their
success.
� � �
We’ll start here: Charlie isn’t just a partner, he is a teacher.
Early in his career, Buffett was a strict and passionate dis-
ciple of a Columbia economics professor named Ben Gra-
ham, whose theory of investing advocated buying stock in
companies selling for less than their assets were worth, and
then, when the market price of these companies improved,
selling them. Professor Graham will always be one of the
most important people in the Warren Buffett biography, but
WARREN BUFFETT AND CHARLIE MUNGER 41
Charlie Munger added another component to the Buffett, and
Berkshire, strategy: buy and hold. Buy strong, well-run com-
panies, and hold on to them for the long run.
For Charlie, that may have been common sense, and it also
may have been because of the simple way he learned about
money and investing: he taught himself. During World War
II, which came in the middle of his time at the University of
Michigan, he enlisted in the ser vice, but attended the Univer-
sity of New Mexico and Cal Tech on the side, earning credits
in meteorology. After the war, he found a way to get himself
into Harvard Law School without technically ever getting his
undergraduate degree. Then, once he was a lawyer, to hear
Warren tell it, he got frustrated “because he thought he was
smarter than everyone else he was working for. So he decided
he was going to do something smart for his most important
client—himself. He was going to sell himself what he deemed
the best hour of the day to work—six to seven in the morn-
ing—and think about nothing else besides matters for this
client—himself—during that time. And through those surely
intense early-morning sessions with himself, he got himself
into real estate, built some apartments, and expanded his
moneymaking beyond the law.” Soon after, in Omaha, he met
Warren, one of the few people on earth who shared his rabid
hunger for knowledge and unending desire to learn. And the
self-taught Harvard graduate, if there is such a thing, con-
vinced the hotshot young investor of the virtues of a new, if
totally logical, investment strategy: buy companies that are
well run and well conceived. Their value will hold up and, in
times of prosperity, grow.
“Charlie didn’t go to business school,” continues his part-
ner, “but he was a natural. As a young lawyer, he always
42 WORKING TOGETHER
wanted to know as much about the business of his clients as
possible—and eventually, would feel he knew more than the
client.”
In the years since his salad days as an attorney, and since
that early lesson in investing, Charlie has continued to learn,
which fits perfectly into the structure of his partnership with
Warren.
“He works harder,” says Munger about Buffett, very mat-
ter-of-factly. “I have always wanted to improve what I do,
even if it reduces my income in any given year. And I always
set aside time so I can play my own self-amusement and im-
provement game.”
That self-amusement and improvement game is chiefly
about learning. Charlie’s idol is Ben Franklin, perhaps the
most celebrated Renaissance man in American history.
Charlie’s friends and family even cajoled him into publish-
ing a book called Poor Charlie’s Almanack: The Wit and Wis-
dom of Charles T. Munger, in the model of Franklin’s classic
Poor Richard’s Almanack. It’s been sold at Berkshire’s annual
meetings, a five-hundred-page coffee-table-size volume filled
with various Mungerisms like “Take a simple idea and take
it seriously,” and “The way to win is to work, work, work, and
hope to have a few insights.” In following the example of Ben
Franklin, Charlie has never stopped learning, even into his
eighties. And all that knowledge means that when you ask
Charlie about something, he’s much more likely than not to
know what he’s talking about. And he uses that vast array
of knowledge in his decision-making. Charlie has something
he calls “The Lollapalooza Effect.” No, it has nothing to do
with rock music. In the Almanack, it’s defined as “the critical
mass obtained via a combination of concentration, curiosity,
WARREN BUFFETT AND CHARLIE MUNGER 43
perseverance, and self-criticism, applied through a prism of
multidisciplinary models.” In other words, it’s the process of
coming to a decision after examining any number of factors
in any number of areas. I have personal experience here, as
my wife has for those fifteen years been with Charlie on the
board of the Harvard Westlake school. Once, after Charlie
made a very generous donation to build a science building,
Jane asked me to loan Disney’s head architectural planner to
the school to offer some design choices. I did. Charlie was not
very interested. He just went ahead and helped design the
building himself. So yes: this is a guy who donates buildings
to schools—and then helps in all aspects of the process. The
school, incidentally, loves the building.
Some teachers nurture their pupils, encouraging them
along the way. Charlie may not exactly be the nurturing
type, but he is a teacher and a collaborator who is far from a
superficial cheerleader. Quite frankly, the last thing Warren
needs is someone encouraging him. Buffett has been quoted
himself as saying, “CEOs get into trouble by surrounding
themselves with sycophants. You’re not going to get a lot of
contrary thinking.” Charlie is anything but that. You will get
contrary thinking with Charlie.
“It’s beneficial,” he says, “to have a partner who will say,
‘You’re not thinking straight.’ When I call Charlie with an
idea, he has three reactions. One is, ‘Warren, that’s a dumb
idea.’ Then, we put one hundred percent of our net worth
into the idea. If it’s, ‘Warren, that’s one of the dumbest ideas
I’ve ever heard,’ we put half of our net worth into the idea.
And if it’s, ‘You’ve gone out of your mind, and I’m going to
have you committed,’ then we pass.”
He’s laughing as he says it, but you get the sense there’s a
44 WORKING TOGETHER
lot of truth behind what he’s saying. This is the partner serv-
ing as skeptic, hugely important in the business of invest-
ing. I got an up-close look at this aspect of their partnership
when Disney bought Capital Cities/ABC in 1996. I, of course,
was ecstatic about this great new property for Disney. Mean-
while, Berkshire Hathaway was the controlling shareholder
in Cap Cities, and in that we made half of the deal with Dis-
ney stock, I realized quickly Berkshire would become one of
our largest shareholders. That was great news for our com-
pany, but I knew Charlie hated the entertainment business.
I had heard many times in conversations with him over the
years in Los Angeles how he hated “the waste,” “the lack of
stable management,” “the insane fees paid to talent,” and a
business run by “one’s gut rather than one’s mind.” I was hop-
ing—even praying—that Charlie knew that at Disney, and be-
fore that at Paramount, we tried to run things differently,
with intelligence in place of ego, but still I asked Warren the
day we closed the deal for his thoughts on the future of their
investment.
“Are you planning, Warren, to hold your Disney stock after
the deal closes?” I asked.
“Well,” he quickly responded, “I never make a decision to
sell and buy the same asset on the same day.” That was it. But
I knew it was only a matter of time until Charlie’s influence
would prevail here. Berkshire reduced its holdings in Disney
stock several years later, quietly and with no negative public-
ity. I wasn’t angry at Warren, or Charlie. Warren had slyly
hinted what would probably happen in a way that actually
made me like him more. What a great attribute—to like a
man when he gives you bad news as much as when he gives
you good news. It reminds me of Frank Wells.
WARREN BUFFETT AND CHARLIE MUNGER 45
In my conversation with Warren, he told me about one
time when he called up Charlie with an idea, saying they
should buy stock in the Pittsburgh and West Virginia Rail-
way. The response was less than enthusiastic.
“Well, I don’t like railroads,” Charlie started. “I don’t like
businesses with a lot of labor content. I particularly don’t
like when they’re unionized. I don’t like capital-intense busi-
nesses. I particularly don’t like eastern railroads. But if you
are telling me that you’ve researched this thing from A to Z,
that you’ll follow it twenty times a week and you’ll keep track
of it and take full responsibility for it . . . then I’ll just shut
my eyes and say no.”
In this instance, the chairman listened to his partner—
though several months later, he did make a big railroad pur-
chase, paying $26 billion for the Texas-based Burlington
Northern Santa Fe.
But you get a sense of how these conversations go, always
with a verbal twist at the end, almost as if a playwright had
written the dialogue.
“You have to have someone who tells the truth,” says Buf-
fett. “There’s just no way that Charlie would not tell me the
truth.”
Munger’s role as the ombudsman fits him well; though
both men admit they will exaggerate their differences for
amusement from time to time, generally, Charlie is more
pessimistic, and Warren more optimistic.
“Charlie thinks exactly like I do,” says Warren, “but he puts
things through a tougher filter than I do. There are only two
things he’s ever liked better than I liked that we’ve done. One
was the tool company Iscar. I loved it—but when Charlie falls
in love with something, forget about it. Also, there’s a deal
46 WORKING TOGETHER
with a Chinese car company, BYD, we did recently. I wasn’t
so sure about it. Charlie tells me the Chinese guy running
the company, Wang Chuanfu, is the Henry Ford of China.
I’m still not jumping. Then he says he’s the Thomas Edison
of China. Still no. Then, the Bill Gates of China. Nope. Then,
his trump card. He’s the Warren Buffett of China!”
But usually it’s Warren doing the selling and Charlie the
listening—and the questioning, playing the role of gentle
skeptic. In fact, Warren once told me with a laugh that a fa-
miliar refrain at the end of a Buffett-Munger conversation is
Charlie saying to Warren, “Look, you’ll end up agreeing with
me because you’re smart . . . and I’m right.”
Still, often, Warren gets his way, and Berkshire Hathaway
takes a risk that Buffett wants and Munger fears.
� � �
Warren told me another story when we chatted. Several years
ago, Charlie Munger was testifying at an arbitration hearing,
and getting grilled about a recent board meeting. He claimed
he didn’t recall what the lawyer was asking him about. “Mr.
Munger,” the lawyer said, “you are reputed to have a very
good memory. Are you really telling me you don’t remem -
ber it?”
“Well,” Charlie is said to have responded, “I only listen
when I’m the one talking.”
Indeed, Munger is not the standard model for the kind of
partner who prefers to lie low and fade into the background.
Everywhere else in his life, Charlie Munger plays the alpha
role—with his family, in board meetings for the variety of