Note on This Episode
Sam is not present. Shaan hosts solo. Guest is Guy Spier, value investor and author of The Education of a Value Investor.
Introduction: Cloning Your Way to Wisdom [00:00:00]
Shaan: Imagine if you could snap your fingers and suddenly there was a second version of you — same brain, same eyes, same way of thinking — but it would do whatever you told it. I’d tell it to go study the art of investing. Scott Galloway says investing is like having an army of capital go wage war for you. Instead of you working for money, your money works for you.
Shaan: My guest today has done exactly that. For 25 years he’s studied everything Buffett and Munger have done, read every annual letter, gone through the reports, and then actually practiced it. His name is Guy Spier. A lot of people respect Guy because he’s just genuinely humble and interesting. Enjoy.
The Posy: Buffett’s New York Study Group [00:03:00]
Shaan: You had a group called “the Posy.” What was it?
Guy: When I discovered Warren Buffett and Berkshire Hathaway, I wanted to be around anything connected to them. In New York there was this Ruane, Cunniff firm — two friends of Buffett’s running a mutual fund — and Whitney Tilson was at one of their events. He’s a master networker to the power of ten. He invites me to meet other people, not to the group directly but one person here, one there — you’re sort of knitted into the community before you realize you’re in it.
Guy: Whitney and I were one year apart at Harvard Business School. We keep meeting, keep talking, and eventually there’s this kind of informal group. Bill Ackman was in it. The whole thing had a gravitational pull because everyone was oriented around the same thing: Buffett, Berkshire, value investing.
The Farmer Mac Story: Bill Ackman Calls [00:10:00]
Shaan: You had a story about Farmer Mac and Bill Ackman that I want to hear.
Guy: I got excited about Farmer Mac as an investment idea — a government-sponsored entity doing mortgage-backed securities for agricultural real estate. I hadn’t done deep enough research, but I thought it was interesting and brought it to the group.
Guy: A few days later, Bill Ackman called me. He said: “Guy, I just shorted Farmer Mac.” I said: “Really? Why?” He explained that what they called mortgage-backed securities weren’t really diversified pools of loans at all. It was essentially three large concentrated business loans dressed up in securitization language. There was no real diversification. The risk profile was completely different from what the marketing implied.
Guy: I sold immediately. But the story continues: Bill then went and met with Farmer Mac’s management. He asked them basic questions about their own product and they couldn’t answer them. They didn’t understand what they had built. That told him everything he needed to know.
Shaan: So you almost made a bad investment, got saved by a phone call, and the reason he could call was because you were in the right room with the right people.
Guy: Exactly. And I hadn’t done the work. If I had done the work — ordering the actual filings, sitting down with them the way I eventually learned to do with Buffett’s companies — I would have seen it myself. That’s the version of me I was trying to become.
From Gordon Gekko to Value Investor [00:20:00]
Shaan: Walk me through who you were before this. Because when I read your book, there’s a version of Guy who was a young Gordon Gekko wannabe.
Guy: That’s accurate. I joined DH Blair, which was basically a Stratton Oakmont-style shop — the kind of firm that would show up in Wolf of Wall Street. I was smiling and dialing, looking for deals, wanting the slick hair and the cars and the money. I had an MBA from Harvard Business School. I thought this was how you got rich and powerful.
Guy: DH Blair goes down a few years after I leave. At that point I’ve burned my bridges in a lot of directions. I’m kind of desperate. And desperation turns out to be the useful ingredient, because I became willing to try things I would have thought were beneath me before.
Guy: The turning point was a Tony Robbins event. Not the content specifically — though the content was useful — but the experience cracked something open. I realized I hated what my life was. And the contrast was Warren Buffett. I was sitting at this Stratton Oakmont-type place reading annual reports trying to understand what he looked for, and I said: I want a life that looks more like that.
Handwritten Notes and the Reticular Activating System [00:30:00]
Shaan: Tell me the story of the handwritten notes. I keep hearing this idea from different people and never implementing it. What did you read and what happened?
Guy: In Cialdini’s book there’s a story about the most successful car salesperson of all time. His method, as I remember it: he wrote a thousand cards a year that said essentially “I like you.” That’s it. And he was the best in the world for years.
Guy: I was feeling raw. I said to myself: a thousand notes a year is three notes a day. I’m not going to leave the office until I’ve written three. And if I can’t even do that, then I actually don’t want success that badly. So I did it. I wrote thank-you notes. Not “I like you” — that felt weird — but “thank you.” Specific thank-yous for specific things.
Guy: Whitney Tilson saw me doing this and said: “Guy, your friends are all telling me you’re writing notes. Do you really think that’s going to get you somewhere?” And for some reason I just didn’t care if I looked like a fool. That’s something I notice stops people — the fear of looking ridiculous. I didn’t have that fear at the time.
Guy: Here’s what happened: the act of writing the note changed me. To write a thank-you note, I had to find something I was genuinely thankful for. Which meant I had to pay attention. I was becoming more caring through the act of doing the thing I was trying to feel.
Shaan: That’s huge. You don’t have to feel it to do it. Do it, and you’ll feel it later.
Shaan: There’s a Tony Robbins bit about this — the reticular activating system. He does an exercise: look around the room and find everything red. Find as much red as you can. Red is everywhere — fire alarms, chair cushions, the screen, everything. Then he says: close your eyes and tell me everything blue. Nobody saw anything blue. We were looking for red.
Shaan: The reticular activating system is like your brain’s heat-seeking missile. It filters out 99% of stimulus and only sends you what you’ve told it to find. And you get to program it. When you’re considering buying a BMW, suddenly you see BMWs on the road that were always there. Writing the notes programmed your brain to find things to appreciate.
Guy: Exactly. And what blows me away is that Warren Buffett gets this. He sends me things. He’s given me a holiday card. Let me get it — I literally have it up on my wall.
[Guy retrieves a framed card]
Guy: So this is 2011. It’s a card with Warren dressed as Santa Claus, with a list of companies he might want to buy: ExxonMobil, Wells Fargo, Google. And he’s crossed out Geico, Burlington Northern, and a few others he’s already acquired. The Occupy Wall Street period — so the joke is “either I finish this list by Christmas or I occupy the North Pole.” And then, written in his hand: “Guy — Happy holidays. I enjoyed your 2010 annual report. Warren.”
Guy: That’s it. The back is blank, because who cares what’s on the back — you needed to peel me off the floor when I got it. What am I to him? He’s had dinner parties with Katherine Graham. He’s met heads of the Federal Reserve. And he’s writing that to me. He understands reciprocation. He’s giving out sweets. And he does it efficiently — personalized, memorable, costs him almost nothing.
Kobe Bryant’s Version of the Same Thing [00:42:00]
Shaan: We had a guy come on who knew Kobe Bryant — trained his daughter before the accident — and he said something that stuck with me. All the Kobe stories on the internet are Black Mamba Kobe, ruthless competitor, hard work. But the people who actually knew him described a completely different side.
Shaan: Kobe would call his trainer’s mom on her birthday. FaceTime her. Nobody knows how he even knew the birthday. And a separate story: this guy plays pickup with Kobe, plays terribly, tells Kobe “I’m a volume shooter — I need to take a lot of shots.” Kobe laughs. A month later, the guy is leaving the gym and Kobe stops him: “Hey, Volume — you’re just going to leave without saying bye?”
Shaan: The trainer asked him about it: how do you remember one thing about everyone? Kobe said: “This might be the only five seconds I ever interact with this person. But for the rest of their lives they’ll tell everybody they know about this interaction. It costs me almost nothing, and it might last twenty years.”
Guy: He got it. He understood the compounding effect of a single gesture. Same thing Buffett understands. Same thing the handwritten notes taught me.
Cloning Buffett: Ordering the Annual Reports [00:52:00]
Shaan: You didn’t just read about Buffett at a high level. You actually ordered the annual reports of the companies he bought — in the years before he bought them — and tried to read them through his eyes. Describe that practice.
Guy: There were three or four times in my life where I lost sleep over something in a good way — where I just couldn’t stop, where I’d stay up because I wanted my hands on anything related to it. That happened with Warren Buffett and Berkshire Hathaway.
Guy: I was so desperate that I did things I never would have done if I had other options. And one of them was: call up companies and ask them to mail me their annual reports. This is 1995. You called, gave your mailing address, they mailed you a physical copy. I’d never seen companies like this. Two years of business school and I hadn’t seen the accounts of a Coca-Cola — a company that just drowns in cash, generating amounts of money that dwarf the income statement. It was an embarrassment of riches. My jaw was on the floor. I thought: so that’s what he’s looking for. That’s insane. I wonder how many other companies like this exist.
Guy: And I want to push back slightly on the framing. It wasn’t this masterful investor calmly ordering reports. It was desperation. I was so frustrated I would do anything. If sitting down like Buffett with a Diet Coke was what it took, I’d do it — even if drinking his drink doesn’t actually help.
Shaan: That’s a key distinction. You threw everything at it and figured out what was meaningful afterward.
Guy: Yes. And the deeper thing is that what I was doing is something very human. We learn generation to generation by modeling. Daughters learn from mothers. Hunters learn from elders. We’ve been doing this forever. What’s actually unnatural is sending people to universities where the professors have never built a business and asking them to learn how to build businesses. Cloning someone you admire is the ancient, correct way.
The “What Would Buffett Do?” Question [01:02:00]
Guy: The key insight I had — and I subsequently realized was a good one — is that you don’t always need the real person. You need to know enough about them to know what they would say if they were present. So the question I’d ask myself is: if Warren Buffett were in my shoes right now, what would he do?
Guy: I’ve never asked: what would Jeff Bezos do? Because I don’t want to live Bezos’s life. But Buffett — yes. And I think this is an unbelievably powerful question regardless of who you admire. Pick someone, imagine them in your situation, and see what they’d do. It’s not a genius move. It’s not about being smarter. It’s available to anyone.
Two Gas Stations: The Engine Metaphor [01:08:00]
Shaan: You mentioned the two gas stations story — where does that come from and why does it matter?
Guy: It’s from Good to Great, I believe. Two gas stations on opposite sides of the road. One owner paints the walls, plants flowers, keeps the price slightly lower, makes the station nicer in every way. The other owner can see all of this happening across the street. He has every opportunity to copy every single action — and he doesn’t.
Guy: Years later the two stations are wildly different. And the puzzle is: why? The losing station owner wasn’t blind. He was watching a live demonstration every day.
Guy: I was sitting with Monish Pabrai hearing this story, nodding along — what a dumb guy on the other side of the road — and then it hit me: I’m the guy on the other side of the road. Monish was right there doing things I should have been doing and I wasn’t copying any of them.
Shaan: What specifically were you not copying?
Guy: Building engines. Monish talks about sales engines, marketing engines — the idea that you break down the actions that need to happen, build a repeatable system, enable people around you to do it, and scale it. I was writing thank-you notes by hand, but it was just me. The question Monish was asking is: what’s the engine version of this? How do you generate Goodwill at scale?
Guy: Another one: Monish basically didn’t spend time with prospects. If you weren’t already invested with him, he didn’t want to meet. He had an engine for how people would discover him. The first time I declined a meeting for that reason — said “I’m not going to meet with you if you’re not invested with me” — was huge. That’s a rule that sounds terrible and works perfectly.
Why Own Berkshire? The Community Effect [01:18:00]
Shaan: Your fund owns about 20% Berkshire. Here’s the silly question: if all fund managers idolize Buffett and most would admit they might not be as good as him — why buy anything besides Berkshire?
Guy: The honest answer is that buying Berkshire is not just a performance decision — it’s a behavior modification tool. When I shorted Farmer Mac, I became twisted inside. My internal wiring went bad. Berkshire Hathaway strengthens my wiring in the right direction.
Guy: The index is impersonal. You’ll get manipulated out of it when things get scary. But if you own Berkshire and you go to the annual meeting and you’re connected to the company — you’re more likely to stay in for the Long Haul. The ride matters. So when someone asks Berkshire or the index, I’d reframe it as: how does this investment change your behavior as an investor? That’s the actual question.
Guy: And on performance: my fund has beaten the S&P net of fees over 25-plus years by about 80 basis points annually. But in the last seven or eight years I’ve underperformed. That’s a long time.
The Psychology of Long Underperformance [01:28:00]
Shaan: How do you manage your psychology through that? Seven or eight years of underperforming the thing you’re measured against. I felt something similar in my twenties — eight straight years of failing as an entrepreneur. It was soul-crushing. How do you hold up?
Guy: There’s a question I got at Google after my book came out, when the outperformance looked better than it does now. A smart engineer asked: how do you know your outperformance to date isn’t just luck? And I said: I don’t. I’m one data point among thousands.
Guy: Twenty-five years is a long time. But eight years of underperformance within that is also a long time. I had to make a choice: do I change strategy and risk everything that I know is working at a deeper level? Or do I say the market isn’t rewarding what I’m doing right now, but I understand what I’m doing, and I know that in the worst possible case it leads to a really good life?
Guy: My first investors — friends and family — had never invested in equities at all. Even if they’re underperforming the S&P, they’ve massively outperformed what they would have gotten in cash or fixed income. They’ve won many times over.
Guy: The realization I came to: I cannot jeopardize compounding for the sake of beating the index. Compounding is the goal. If I also beat the index, great. But the compounding is what I have to protect.
Finite vs. Infinite Games [01:38:00]
Guy: This leads to the finite versus infinite game distinction, which I find really clarifying.
Guy: A finite game has clear rules, clear space, a defined start and end, a winner and a loser. Chess. American football. A tennis match.
Guy: An infinite game has none of those. No defined rules, no fixed game space, no clear beginning or end. One of my favorite examples is the Cold War — fought across multiple fronts, Southeast Asia, nuclear arsenals, culture, didn’t clearly start or end. What happened at the end? Russia imploded and dropped out. You don’t win an infinite game. You just keep playing, or you stop playing.
Guy: Investing is an infinite game. Life is an infinite game. The mistake people make is treating an infinite game like a finite one. I did a study of all the funds that existed when I started. Less than 2% are still operating. Some dropped out by choice — they made their money, moved on. But most dropped out through implosion. And the key error is usually treating a long-run game as a sprint — taking on too much risk, too much leverage, trying to win this year instead of still being in the game in year twenty.
Shaan: I moved an hour outside Silicon Valley specifically because I couldn’t unsee the Zuck mentality when I was inside it. What I had to ask myself was: what game do I even want to be playing? And the answer for me wasn’t Zuck’s game. It was: I want to compound well and live well. Which is a much more achievable goal.
Guy: And it’s not about dismissing ambition. If every person was just quietly compounding, nobody would have built the internet. The ecosystem needs Elon types. But it also needs the guy who’s reading and writing and having good conversations and living well. The question is just: which life do you actually want?
The “Just This Once” Trap [01:50:00]
Guy: Another framework I use constantly: if I always did this action when I was in this situation, how does my life look? Not just today — always.
Guy: “Just this once get blind drunk.” “Just this once drop out of the plane without a parachute.” If every time I crave chips I eat chips, where does that lead? The question forces a long-run view on a short-run decision. It makes the no much easier. You can explain it to the other person: “I’m sure you understand — if I always said yes to this type of meeting, here’s what my life would look like.”
Guy: The related question: if everybody did this contemplated action, what does the world look like? A world where everybody is trying to be Zuck is actually pretty miserable. A world where everybody is trying to write their own story, discover something new, make something beautiful — that’s a world worth living in.
Reading Strategy: Library as Cocktail Party [01:58:00]
Shaan: What should I read if I’m getting serious about the Buffett/Munger school of thought? Three things.
Guy: The Buffett letters. The transcripts and recordings of Berkshire annual meetings. And Poor Charlie’s Almanack — it’s just an incredible collection.
Guy: But here’s the non-answer, which I think is more important: I can’t tell you what to read. Your brain is different. Your moment is different. Pick twenty books you think might lead somewhere. Go through them quickly. Ask after a few pages: is this getting me somewhere? If yes, keep reading. If not, put it down. Maybe tomorrow it’ll be the right book. Life is too short and your reading time is too short to force yourself through something that isn’t giving you win after win.
Shaan: You have that phrase — treating your library like a cocktail party. You mix, you mingle, you move to a new conversation when this one gets boring. Go grab a drink if it’s not working. I love that.
Guy: Exactly. You’re not obligated to finish. The obligation framing kills reading. Go find what your brain is hungry for right now.
Closing: Brand vs. Reputation [02:05:00]
Shaan: I want to end with something. Before you came on, I texted a few people who know you and asked for a story or nugget I should know. And I was initially disappointed because nobody gave me the “ask him about X” shortcut I was looking for. But the way they talked about you — that was its own thing. A brand is what people say about you when you’re not in the room. A reputation is what people say about you when you’re not in the room, over years. Your reputation among people I respect is that you are a genuine value-giver. That’s it. You show up and you give.
Shaan: And when I heard that, I asked myself honestly: would people say that about me? And the honest answer was no, not yet. So that became a bit of an aspiration.
Guy: I’m delighted. And extraordinary kind of them, whoever said that. Thank you.