Hedge Fund Manager Guy Spier Talks Letter Writing and Warren Buffett

This is the second of a three part series on Guy Spier, who runs Aquamarine Capital, a fund that follows a philosophy similar to Warren Buffett’s early years.

Spier has received much acclaim for his recently published book, “The Education of a Value Investor,” which details lessons he learned on Wall Street. To gain deeper insight to Spier’s education once on Wall Street, Marketfy Mavin and value investor Tim Melvin spoke with him exclusively.

In your book, you talk about a series of meetings in New York where you would meet with a group of like minded value investors on a regular basis. How did that influence you?

It was like an MBA all over again, or a better MBA. I mean, we had study group at business school, but some of the best things from business school for example, I didn’t realize I had to continue in my daily life.

Investing is a lonely task and it was kind of a support group, I guess. I didn’t realize at that time that I needed a support group and I actually think everybody needs support groups. Everybody, whatever it is that we’re going through. I think that even the most individualistic, capable and introverted group of people should still find support groups. Napoleon Hill talks about having a mastermind group, Ben Franklin talks about having a group, it was a big change to my life and it was a huge learning experience for me.

We would sit there and bring up stocks that we were looking at and we’d pitch them to each other and then we’d sort of like go through them with a fine toothcomb and I’d never really done that, and business school wasn’t a good forum to do that in. It was extraordinarily educational for me.

After that I learned how to structure those group meetings a little bit better and I would tell you that my life would be incomplete if I didn’t have at least one or two groups like that in my life, which I do. I wish I could have more, actually, but it becomes a little time consuming.

In Switzerland you host VALUEx, which sounds like a forum for value investors to come together and share ideas.

There are also another two that have started: VALUEx Berkshire and VALUEx Vail.

I have deep respect for Whitney Tilson and John Schultz and the value investing conference is an absolutely phenomenal a conference, but it is expensive. John and I just wanted to create something where people could get together and network and be down to work with other like-minded souls without forcing people to meet at an expensive conference where you have a small number of key note speakers talking to a very large audience. We made it a slightly smaller and more egalitarian opportunity where everybody has a chance to speak.

A student who comes to Valuex, we will make sure that the student gets the opportunities talk to the whole room of 80 people. What’s incredible is you have some student, or someone very early in their career, and you let them give a three or four minute talk on a favorite stock idea… and one of the other 80 people in the room, it triggers something for them and it triggers the conversation. It’s all about generating connectivity between people and connection between people. In order to do that, you have to give everybody airtime.

One of my biggest takeaways from the book is the letter writing experiment. Can you talk about that? I think it is an incredible idea.

I got the idea from Cialdini’s book. He talks in the sales part about selling 13,000 cars in one year. I’m thinking, ‘You attribute it all to letter writing?’ So I just went nuts on the letter writing and I think that it’s just interesting, really. You have to be willing to do it for two or three hours before you start getting any rewards and it’s just and in a way, it’s just wonderful that the world is this way. Any employee of any business who shows up to management and says, ‘hey, I’ve got this great marketing plan. It’s a sure fire way to give us a phenomenal reputation and create growing business opportunities for us. By the way, it’s only going to start showing results after three years.’ Most management teams would just say well, forget about it, you need to show results within 12 months, max 18 months.

This becomes something that any corporate environment is incapable of choosing to do, but we as individuals can do. There’s so many advantages that corporations have over individuals when we start off in our lives. Well, this is an advantage we as individuals have over larger organizations and corporations, but we have to stick with it. I would tell you that, you know, there’s a limit to what you can write in one book and you got to make the book interesting and readable but, you know, so I give just one or two examples of the impact of that on my life.

The impact being enormous and the other thing that’s worth saying is that you can’t really trace all of the different things. I mean I ended up being a co-founder of TEDx Zurich, which has got me connected up to a vast number of people in Switzerland and all sorts of influential people. I was invited to do that because I have written a thank you note to somebody and that thank you note… I found that note writing at the margin leads to a random opportunities when you least expect them. That sort of slight uptick in random opportunities, which can’t always be traced the letters can make all the difference over time.

In your book you discuss a letter you wrote to the well known investor, Mohnish Pabrai, which led to a great friendship and the famous charity lunch with Warren Buffett.

All because of the note that I wrote.

I asked him. ‘so why did you respond?’ He could have just said yes and thrown the note away. He said, ‘I don’t know. But I had a feeling that I should respond, so I did.’ It’s just fascinating for me.

The problem that I have now, you’ll laugh at this, is that in the book I write about the value of thank you notes. The book has now sold somewhere between sixteen and seventeen thousand, and a healthy proportion of the people who read the book have decided that what they need to do is start off by writing me a thank you note.

I got back from my US book tour and I had like, 150 or 160 handwritten notes, and some of them are letters like written on three pages. So, there I am with these hand written notes and I can’t ignore them and I have to respond, because otherwise I’m not walking the walk. In the book I talk the talk. When I got back from my UK and US book tour, I spent two and a half weeks return mail letter writing. Everybody said that I had to delegate this, but I absolutely insisted that I could not delegate. These people wrote to me personally, I had to write back to them personally, just like Ronald Reagan.

After you address letter writing, you go right into the famous charity lunch with Warren Buffett. I get the impression that that was a life changing event for you.

He didn’t ask me to come and work at Berkshire, that would have been really life changing… I didn’t know what to expect going into it. I was certainly very, very nervous.

Phil DeMuth writes about this, Warren Buffett has got three brains in his head all operating simultaneously. There was some part of me that didn’t want to believe that. There was some part of me that wanted to believe that I was as smart as him and, you know, again, one of the perils of an elite education is that they constantly tell you how smart you are. In a very unfair way, they constantly tell you how dumb the rest of the population is, which is also untrue.

So, on some level I just didn’t want to believe it. But then, having spent three hours in his presence, I couldn’t ignore it and that had consequences for me. There is some level on which I would love to have his intelligence although that said, there are many aspects of who Warren Buffett is that I wouldn’t want to have. I would not have as enjoyable life if I didn’t have those things. Like, I like drinking coffee, I like drinking wine, I like a view out my window. I mean, enormous number of things, but it freed me in some way. Because, once you’ve met him, I realized there was no point in even trying [to be him].

I diagnose that as Buffett-itis. I warn people against it constantly, that they are not Warren and they have to do what fits them.

I don’t know what you would diagnose this as, and I’ll tell you it wasn’t me who started it. There’s an attitude that comes out in the book, which is, ‘I can’t do that, I’m not as smart as Warren Buffett.’... So, Buffettitis is thinking that we can’t be Warren Buffett and then there’s something else which is a much humbler and much better place to be in… just because I’m a value investor does not mean I’m Warren Buffett.

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