The Snowball

One line: Alice Schroeder's authorized biography of Warren Buffett — David's primary source across the entire Berkshire trilogy, quoted directly episode after episode.

Overview

Schroeder had been a sell-side Wall Street analyst covering insurance companies, the first analyst to initiate research coverage on Berkshire Hathaway. Buffett, who never took calls from Wall Street analysts, took hers in 1998; in 2003 he went further, telling her "why don't you just write it and I'll give you full access" — thousands of hours of close access followed, producing what the show calls the "more popular" of the two Buffett biographies. Across the trilogy David keeps returning to it: the "compounding curse," the exact terms of the Buffett Partnership, the deeper mechanics of the Buffett-Munger relationship, the psychology of the Salomon crisis night, and the "ham sandwich" case for why Buffett avoided tech stocks.

Why it's worth reading

David is the trilogy's primary reader of this book (Ben's counterpart read was Roger Lowenstein's Buffett: The Making of an American Capitalist — "the second time on the show they each read a different book"). Its most-quoted passage, brought into the episode verbatim, is Buffett's own confession about Berkshire itself as his biggest investing mistake:

"You walk down the street and you see a cigar butt. It's kind of soggy, disgusting, and repels you, but it's free and there may be one puff left in it... That was Berkshire Hathaway in 1965. I had a lot of money tied up in that cigar butt. I would have been better off if I'd never heard of it in the first place."

That unvarnished, first-person reckoning — not outside analysis, but Buffett auditing his own decision — is why David keeps coming back to this book.

Where it comes from

[acquired-berkshire-1-en] (the "sources" note): David's primary source was Schroeder's The Snowball; the cigar-butt confession is Buffett speaking to Schroeder herself, and the book's account of the Buffett Partnership terms (4% annual hurdle, 50% of the excess) also underpins the episode. [acquired-berkshire-2-en]: the book names the deeper layer of the Buffett-Munger relationship — "nobody's willing to tell him he's wrong anymore" — and the "sickening jolt" psychology of the Salomon crisis night. [acquired-berkshire-3-en]: the "ham sandwich" philosophy, explaining why Buffett avoided tech stocks for life.