September 26, 2008 / 7:33 PM / in 9 years

New bio shows Warren Buffett tough, vulnerable

<p>U.S. Investor Warren Buffett listens to a question during a news conference in Madrid May 21, 2008.Andrea Comas</p>

NEW YORK (Reuters) - People don't normally associate self-doubt and vulnerability with Warren Buffett. The author of the first authorized biography of the man many consider the world's greatest investor says they ought to.

Alice Schroeder, a former Morgan Stanley insurance analyst, said she spent 2,000 hours with Buffett, amassing 300 hours of recorded interviews, over five years to create "The Snowball: Warren Buffett and the Business of Life."

The title is from a metaphor Buffett uses to describe the accumulation in life of knowledge and understanding, not just money. Bantam Dell Publishing Group, part of Bertelsmann AG unit Random House Inc, on Monday will release the 960-page book, which is on a short list for the Financial Times/Goldman Sachs Business Book of the Year award. Reuters obtained an advance copy. Buffett was unavailable for comment.

Schroeder began working on the book in 2003, a year before Buffett's first wife, Susie, died of oral cancer.

"The surprise was his vulnerability," Schroeder said in an interview. "Seeing him weep and suffer and be in real emotional pain -- when I would see him always answer the phone, 'never better,' until this happened -- was the biggest surprise."

His self-doubt, she said, "never relates to his business judgment, but it relates to whether people like him or not, how he's being perceived. He is sensitive to criticism from other people, which he seems to have internalized."

Buffett has built Berkshire Hathaway Inc over 43 years into a $207 billion conglomerate with at least 76 companies selling such things as bricks, car insurance, ice cream, knives, paint and underwear, and owning blue-chip stocks such as Coca-Cola Co and Wells Fargo & Co.

Forbes magazine this month put Buffett's net worth at $50 billion, which would be higher had the 78-year-old not begun to donate most of his wealth to the Bill & Melinda Gates Foundation and family charities.

Schroeder said Buffett gave her access to his files and a free hand to write, even admonishing her to "use the less flattering version" when his recollections differed from others'. She said she also interviewed 250 other people.

But she spent the most time with Buffett, dining often with him as he would chow down T-bone steaks, New York strip steaks, or "mock filets" -- ground beef wrapped in bacon.

"He took me to steak restaurant after steak restaurant after steak restaurant," she said. "I finally pleaded, 'Please, I can't take another steak,' and he said, 'I was testing you to see how long you could take it.'

"Occasionally you feel like a lab rat," she went on. "But he's very curious about people, and very discriminating about who he lets into his circle. He screens for honesty above all, and selfishness. If people do things only if there's a payback, he's not really interested in spending time with you."

WHOOSH

Despite his reputation for ethics and rectitude -- and yes, frugality -- Buffett is a businessman first. When Bear Stearns Cos and Lehman Brothers Holdings Inc scrounged for cash this year, for example, he said no. But this week, Goldman Sachs Group Inc won a $5 billion investment from him.

"When it comes to business, he's not altruistic at all," Schroeder said. "He's in business to make money, and Berkshire shareholders are number one."

Schroeder portrays Buffett as a creature of habit, driving himself to the office, working nine hours, and returning home to a simple dinner -- often hamburger or a pork chop -- and a couple of hours of online bridge. There is also the nightly phone call with Ajit Jain, a top insurance executive widely considered a leading candidate to eventually run Berkshire.

She also wrote of how Buffett disarms out-of-town visitors by picking them up at Omaha's airport, Eppley Airfield, only to rattle their nerves by weaving as he drives back, almost oblivious to stop signs, traffic lights and other cars.

Schroeder also focused on Buffett's fear of mortality. After Susie Buffett died, his daughter, also named Susie, told her father he didn't have to go to the funeral. Buffett was overcome with relief, Schroeder wrote. "I can't go," he said.

But Schroeder believes Buffett also takes advantage of his "bathtub" memory. "The tub filled with ideas and experiences and matters that interested him," she wrote. "When he had no more use for information, whoosh -- the plug popped up, and the memory drained away." She said that freed space "to ruminate in depth on business to the exclusion of almost everything else."

In recent years, Buffett has shed much of his longtime reticence toward the media, puzzling friends with his sudden frequent appearances on CNBC television, Schroeder wrote.

"He's always been something of a showman," Schroeder said in the interview. "He thinks of himself as a teacher. His sense of his audience is mathematical. My sense is that he is doing the math, and concluding the need to get out what he wants to say more frequently than 10 years ago."

And yet, she said there are some things he doesn't get.

"He has no aesthetic sense at all," Schroeder said. "He doesn't know the color of his bedroom walls. One time, just as a joke, I asked him what color my hair was. I'm a blond, and he said, after a long pause, 'Not black.'"

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