22

“We Should Pay to Have This Job”

Asked what he would do if he did retire, Mr. Rupert Murdoch, chairman of News Corp., responded: “Die pretty quickly.”1

—TIME

 

“I’ll keep [investing] as long as I live.”

—WARREN BUFFETT2

 

BOTH WARREN BUFFETT AND GEORGE SOROS have so much money they don’t need to get out of bed in the morning if they don’t want to. What motivates them to keep making more money when, given their frugal natures, they couldn’t possibly ever spend what they have? What drives them?

There are two kinds of motivation: “away from” and “toward.”

Someone may be motivated to become wealthy from a fear of being poor. This is an “away from” type of motivation.

So what happens when he has achieved some level of wealth? Having moved away from poverty, the motivation no longer has the power to direct his actions, so he stops.

“Away from” motivations can be very, very powerful. If you’re walking through the jungle and you’re suddenly confronted by a tiger, then fear will cause you to run like hell. But once you have achieved safety, there’s no reason to run anymore.

This kind of motivation is like a battery stamped with a “use by” date. After then, it’s dead; its power has run out. This kind of motivation won’t stir you to pursue a goal over an extended period, like a lifetime.

The exception is when such a motivation is associated with a character-shaping event in one’s formative years. This seems to be the case for both Buffett and Soros.

Like most people born in the 1930s, the Great Depression had a lasting impact on the young Warren Buffett, who saw his father lose everything.

The Nazi occupation of Hungary had a far deeper impact on the young George Soros, who even today, with billions of dollars at his disposal, talks about survival as “an ennobled value.” In his introduction to The Alchemy of Finance he wrote: “If I had to sum up my practical skills, I would use one word: survival.”3

Soros’s driving “away from” motivation can explain what he does when he goes to the office, but it isn’t enough of a force to keep sending him there every morning when survival is no longer a real issue.

For that, you need a motivation that pulls you toward some goal. And if that is a fixed goal, such as becoming a millionaire, or running a four-minute mile, then once achieved it will lose its pulling power.

But if you are inspired by what you do, then any money you make while pursuing your goals is merely a side effect.

Warren Buffett’s motivation is easy to understand: He just wants to have fun. “There is no job in the world more fun than running Berkshire and I count myself lucky to be where I am.”4

Fun to him is “tap dancing” to his office every day, reading piles of annual reports, working with “sensational people,” and “making money and watching it grow.”5 As he says:

“I think if you found an athlete that was doing well—and I’m not comparing myself—but a Ted Williams or an Arnold Palmer or something—after they have enough to eat, they’re not doing it for the money. My guess is that if Ted Williams was getting the highest salary in baseball and he was hitting .220, he would be unhappy. And if he was getting the lowest salary in baseball and batting .400, he’d be very happy. That’s the way I feel about this job. Money is a byproduct of doing something I like doing extremely well.”6

Money is just the way Buffett can measure how well he’s doing what he loves to do.

“We [Charlie and I] should pay to have this job,”7 he once told shareholders. Given that his salary is a mere $100,000 per year, in a very real sense he does. If Berkshire were a regular mutual fund that charged a one percent management fee, on $77.6 billion8 in assets Buffett would be getting $776 million a year. That’s quite a haircut.

“There Is More to My Existence Than Money”

Like Buffett, Soros is interested in money “in the same way that a sculptor must be interested in clay or bronze. It was the material in which I worked.”9 Like the sculptor, his focus isn’t on the material but on the outcome.

He is indifferent to money itself. Talking about his father’s influence he noted that “part of what I learned was the futility of making money for money’s sake. Wealth can be a dead weight.”10

But Soros’s primary motivation for investing is very different from Buffett’s. He doesn’t agree with Buffett that investing is fun. “If you’re having fun, you’re probably not making any money,” he says. “Good investing is boring.”11

Investing isn’t his calling, as it is Buffett’s. As a student, Soros imagined himself becoming a famous intellectual figure like Keynes, Popper, or even Einstein. It’s this ambition that still drives him today.

He describes the first years of his career as a hedge fund manager as “a very stimulating and dynamic period” as he began using his philosophical ideas in the real world. “This is when I started elaborating my concept of boom and bust reflexivity. This is when the philosophy took on a practical application.”12

As he wrote in The Alchemy of Finance:

In the first ten years of my business career … selling and trading in securities was a game I played without putting my true self on the line.

All this changed when I became a fund manager. I was putting all my money where my mouth was and I could not afford to dissociate myself from my investment decisions. I had to use all my intellectual resources and I discovered, to my great surprise and gratification, that my abstract ideas came in very handy. It would be an exaggeration to say that they accounted for my success; but there can be no doubt that they gave me an edge.13

He discovered that the investment marketplace was the perfect arena to test his ideas. He imagined that by proving his ideas in the real world he would be recognized as a philosopher of note.

This was (and remains) a vain hope—if only for the reason that the majority of academic philosophers deny that the real world even exists! And as for testing philosophical ideas in the real world, that’s just not the way to impress academics.

Of course, some of Soros’s writings (such as The Alchemy of Finance) are so opaque that few people can really grasp them. So it’s no surprise that academics ignore him completely. Not that many investment professionals can understand what he’s trying to get at either.

But Buffett has hardly suffered a better fate in academia, even though his writings are crystal clear, his method of investing is far easier to grasp, and his philosophy is derived from the most famous investment academic of all time: Benjamin Graham.

To be fair, we should add that Graham’s ideas don’t get much more attention in academia these days than Buffett’s, despite Graham’s superior academic credentials. One possible reason: Like Soros, Graham drew his investment philosophy from—and tested it in—the real world. Successfully.*

At heart Soros is a thinker, not an investor. His primary satisfaction comes from proving his ideas in the marketplace. “It’s the adventure of ideas that attracts me,”14 he says. “I was also inspired by the fact that I was able to combine the two great abiding interests in my life: philosophical speculation and speculation in financial markets. Both seemed to benefit from the combination: Together, they engaged me more than either one on its own.”15

Like most people who have accumulated wealth, Soros began giving some of it away. But his method is unique. He didn’t write a check to a charity or simply endow a foundation. He established his Open Society Foundations as tools for applying his philosophical ideas in the political and social arenas. “Being rich,” he once said, “enabled me to do something I really cared about.”16

Whether he is making money or giving it away, what drives Soros is ideas. As he says himself:

The main difference between me and other people who have amassed this kind of money is that I am primarily interested in ideas, and I don’t have much personal use for money. But I hate to think what would have happened if I hadn’t made money: My ideas would not have gotten much play.17

He also acknowledges that if he hadn’t become famous as the Man Who Broke the Bank of England, it’s unlikely there’d be much interest in any of the books, such as The Crisis of Global Capitalism, he has published.

He’s still motivated by his childhood dream to be remembered as an influential thinker like Keynes or Popper. “I wish I could write a book that will be read for as long as our civilization lasts,” he writes.18

I would value it much more highly than any business success if I could contribute to an understanding of the world in which we live or, better yet, if I could help to preserve the economic and political system that has allowed me to flourish as a participant.19

A major reason both Soros and Buffett have accumulated so much money is that it was never their primary aim. If money was the motivating factor they would have stopped long before they were billionaires. Indeed, Buffett himself says he had quite enough money to retire on in 1956 before he even started his investment career.

When Soros burned out in 1981, he was already worth $25 million. Even so, he had not achieved what he wanted to do in life.

Both Master Investors were inspired to keep moving by a combination of powerful “away from” and “toward” motivations that still drive and inspire them in their seventies. As a side effect, they accumulated great wealth. For them, making money is a means to an end, not an end in itself.