Elizabeth’s note: In the midst of this crisis I find myself missing Jack Bogle, the founder of Vanguard. He died last January.
The company he founded in 1974 has more than $5.6 trillion in assets under management today. In the last five years of his life, I interviewed him about a half-dozen times, often when the market was sliding. He offered a rare perspective after a 65-year career as a purpose-driven entrepreneur and professional investor. His wisdom boiled down to one idea, also the title of his last book: Stay the Course. For investors, that means: Don’t overreact and flee the market as it’s dropping. For entrepreneurs, that means: If you believe in what you’re doing, keep moving forward, even against uncertainty.
In 2015, I interviewed him for a story for CNBC about leadership. Preparing for a podcast (sign up for our newsletter here to be notified when it’s released: www.timesofe.com), I’ve been listening to the original tapes, where he offered these simple principles for leadership.
Stick To Your Purpose
Bogle was devoted to the idea of the long-term success of individual investors. Vanguard ended up being incorporated as a mutually owned company so that the company’s management would never be tempted to charge high fees. Bogle would have been a billionaire many times over if he hadn’t made that decision (he ended up comfortably a millionaire).
In the early years, the devotion to purpose meant facing down the board of directors as the company hemorrhaged cash. But Bogle believed that allowing individual investors – people he called “the little guy” – the chance to invest inexpensively in ways that mirrored professional investors’ moves offered them the best chance to build up assets over the long term.
He stuck to that mission even in ways that others found crazy. In 1991, he told me (and later wrote in The Financial Times), he turned down a chance for Vanguard to sell the first ETF. Its inventor, Nathan Most, came to Vanguard before taking the concept to State Street, but Bogle rejected him immediately.
“Guess how many people I consulted on that decision?” he asked. “One. Me.”
Bogle thought ETFs’ trade-ability encouraged individual investors to trade. Trading racks up costs and tends to hurt returns. (After Bogle retired, Vanguard started selling ETFs).
Bogle said he put his mission ahead of the short-term success of the company, because it helped ensure the long-term success of the company. “An institution that is built to serve one’s fellow human beings should have the best chance to survive for the maximum possible time,” he said.
Make Time For Introspection
Bogle read and memorized poetry to give himself the space to make wiser decisions.
Bogle struggled to stay humble – he was the Elon Musk of his day, with a crowd of followers called “Bogleheads” and was the subject of thousands of profiles. There was a whole body of legend around him. Sometimes, he got sucked in.
But he also kept Ozymandias, the poem by Percy Bysshe Shelley hanging in his office.
It reminded him to “play down the arrogance, pal, What you’ve built will not last forever. Nothing lasts forever. Our universities and our churches come the closest, and they have been built, respectively, on learning and the search for truth, and on faith that there is something out there–unseen–that is bigger than we mere mortals.”
He struggled with humility. He didn’t always win.
During one of our interviews, he suggested Shelley should have used the word “gaze” instead of “look:”
My name is Ozymandias, King of Kings;
Look on my Works, ye Mighty, and despair!
Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.”
“You just corrected Shelley?” I said. “‘Look’ leads to ‘works. It’s the ‘k’ sound.’”
“Gaze is a better word,” he answered, not yielding an inch. In retrospect, I think he was laughing at myself, and me.
Take Care Of Your People
He devoted his life to building the institution, Vanguard. But he accepted the idea it could all come tumbling down. “But there are no guarantees. Company leadership can do what it will,” he wrote in an email to me. “Company crewmembers need to be treated fairly, and with respect. People matter, and caring about the human being with whom we serve–and whom we serve–must be the soul of any institution worth its salt. I’m guessing that Ozymandias wasn’t much into caring–except about himself and his works.”
“If you have to tell people you’re the leader, you’re not the leader,” he said.
Bogle was extraordinarily confident – a quality that often rubbed people the wrong way. The confidence came from his deep sense of himself. Before founding Vanguard, he’d made what was nearly a career-ending mistake when he hired portfolio managers who steered his previous company, Wellington, toward market trends. After the market crashed, Bogle was fired.
Bogle decided he’d never follow the crowd again.
He was a contrarian, and an individualist.
“I shouldn’t jump on bandwagons,” he said. “It’s not me.”
Not only was Bogle a contrarian, he was decidedly not a team player. “I’m an individual who doesn’t want to waste a lot of time hearing what people who don’t know very much have to say,” he said.
Roll Up Your Sleeves
In fact, it’s not just the ability to work, it’s willingness to do all kinds of work. Bogle worked as a waiter, as the head of the football ticket office at Princeton and in a post office, to put himself through college. In one of the worst market crises in history, Black Monday, Bogle could have been a command-and-control CEO. Instead, he stepped into the fray.
“You should have been here on Oct. 19, 1987, when the market went down 23 percent in one day.”
Bogle remembered moving around the office “like a general running behind the trenches.”
He said he answered 104 calls from panicked investors himself that day.
In what I think was our last interview, about a year before he died, he told me his philosophy was to always move forward, even in the face of uncertainty, even when the odds seem impossible.
“We’re one individual, in the face of a giant universe, how many millions and billions of stars,” he said. “What we do doesn’t make much difference. Do it, anyway.”
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