B000U5KFIC EBOK (16 page)

The Munger Science Center at Harvard Westlake School had substantial design input from Charlie. He met with the architects, went through
several iterations until they worked out the proper design for the site.
Munger seems to be able to get his wishes fulfilled without alienating the
architects and builders.

"No, he doesn't offend people," said Otis Booth, who also serves on
the Harvard Westlake School Board. "He has a great ability to turn a
phrase and make things amusing."

Munger employed this technique in planning the Munger Science
Center, when he saw boys and girls bathrooms of the same size. "You're
going to do this in a building where you teach biology?" he asked.

There was another building on campus, said Booth, a combined
gymnasium and arts complex. It was difficult and time-consuming to
continuously convert back and forth from a gym into a theater, and there
was discussion about whether to spend the money to make it one or the
other. Charlie told the board, "Look, man has only one instrument that
serves two functions and it always gets him into trouble."

Munger agrees that humor helps-as does being plainly right-when
reversing expert's ideas in their own territory, but he thinks that he sometimes causes resentment. It requires constant vigilance to keep from
going too far.

Not long ago he did another commercial development, this one in
Santa Barbara on property owned by Wesco Financial. Wesco's former
thrift association, Mutual Savings, got the 22-acres of pristine oceanfront
property in a 1966 foreclosure.

The development's official name is Sea Meadow, but Buffett calls it
"Mungerville" after "Pottersville" in the movie, It's a Wonde,ful Life.
"He's constantly trying to sell me things in Mungerville," groused Buffett.

Mungerville is in a pricey waterfront neighborhood on the south
edge of Santa Barbara-tucked between the Pacific ocean and the coastal
range of mountains. The area is studded with citrus groves, eucalyptus
and olive trees, oleanders, acacia, fuchsia, all gracing the gated walls of
early California-style estates.

It took years of haggling with local building authorities and the California Coastal Commission to reach an agreement on the plans for the Sea
Meadow project. Only about half of the houses have a significant ocean
view. Munger said that due to the high cost of private streets, sewage,
utilities, and various other charges, including heavy archaeological obligations, the houses would be costly and the profit from the development
would be limited. "We have 'given' a very large fraction of the value of
our land to the County of Santa Barbara in exchange for permission to use
it at all," he said.'

"I developed it because I didn't want to let the zoning authorities rob
me the way they wanted to. And now I know that if I had let them rob me,
we would have had better financial results."

In 1989 Munger reported to shareholders. "Reasonable, communitysensitive development of this property has been delayed over 14 years in
the course of administration of land-use laws. But, miraculous to report,
eight houses, plus recreation facilities, are in various stages of completion on the property as part of an authorized development into 32 houses
interspersed with large open areas. Mutual Savings plans to make the development first-rate in every respect, and unique in the quality of its
landscaping."'

By today's standards, the land, which was carried on the books for $2
million, was bargain priced. In fact, Charlie and Nancy paid $2.1 million
for just two lots on which they built a house where they now spend many
of their weekends.

Otis Booth believes that Munger responded to governmental requirements creatively. "Sea Meadow in Santa Barbara is beautifully done. The
piece of land was so constrained by rules, he really had to be imaginative.
He made a beautiful enclave."

Despite the attractiveness of Mungerville, the units sold poorly, and
many of the buyers are Munger's own friends and colleagues. The residence list looks like the directory of Munger's former law firm. Roy
Tulles, Chuck Rickershauser, and Ron Olson each own homes there.

Booth also bought a home in Mungerville, but under some duress. "I
bought it because Charlie gave me a hard time. I didn't need another
house."

W1111,1; MUUNGER WAS BEGINNING TO EARN his first million in the risky business
of real estate development, back in Omaha Warren Buffett, whom he had
yet to meet, was laboring in his own trenches, building assets in the Buffett Partnership. During this time, Dr. Carol Angle took Buffett's evening
class on investing, and she and her husband Dr. William Angle invested in
the Buffett partnership. Both Bill Angle and his brother John, by now an
executive at Guardian Life Insurance in Lincoln, had been Charlie's
chums and fraternity brothers at the University of Michigan. The number
of mutual friends they shared was growing, but still Munger and Buffett
had not crossed paths.

I can see, he can hear. We make a great combination.

Warren Buffett, speaking of his partner
and friend, Charles Munger.

,MAxA, NEBRASKA, Bu TSINESSMAN LEE SEEMANN often went duck hunting
with Charlie Munger's father Al along the marshes, lakes, and rivers
surrounding Omaha. Lee also hunted with another member of the family,
Bob Munger. Bob was a big wine-colored mixed-breed, along the lines of
a Chesapeake or a setter. Al Munger had many friends, but Bob was his
very best. Al called Bob a college-educated dog, said Seemann, and along
with his other talents, Bob held an advanced degree in retrieving ducks.
If the dog missed a bird, Al would say, "Bob, there's another duck out
there." Bob would look around, then scurry back out, and when he returned with the duck, Munger would scold him gently. "To think a
college-educated dog like you would miss a duck."

Bob had lots of tricks. When guests were visiting the Mungers, Al
would say, "Bob, what would you do if I told you to go to the basement?"
Bob would zip off to the basement. After a while, Bob would amble back
and lie down beside his master's chair. Then Al would repeat the statement, making it shorter. "Bob, what would you do if I told you ..." and
Bob would jump up and head for the basement. Finally, Al would simply
say "Bob, what ..." and off the dog would trot.

One day Lee, Al, and several friends went to a lake near Omaha to
hunt. "It was bitterly cold in the valley," said Lee. "Bob picked up a lot of
ducks, although he was extremely old for a dog. The water was deep, and
we had to hold the decoys with ropes. It was too windy for weights. Bob
got the final duck, then he became stuck in the ropes. Al went crazy. He
climbed in the boat to go get him-by then Al was no longer young. He'd already had one heart attack. He started rowing out to get Bob, but he was
not very strong or agile, so when he leaned over to pull Bob into the boat,
it tipped over. There were ice sheets on him in a matter of seconds. I went
out, worried more about Al than Bob. They were hanging on to the boat. I
flipped the boat up and Bob climbed in. He was working with us, just
looking around like it was fun. We pulled Al in. He said, 'Don't you ever
tell this to Toody.' "

Other members of the hunting party rushed up the embankment to
the railroad tracks where the car was parked and got the motor running
and the heater going, and none of them told Munger's wife what happened. Al Munger survived the accident with no ill effects.

"Grampa Al died in 1959-he was like a Norman Rockwell grandfather," recalled Wendy Munger. "Rimless glasses. He had it little treasure
chest where each child could pick out a candy."

His FATHER'S DEATH LEFT AN ACHING VOID, yet the end of Al's life launched it
new phase of Charlie's. When Munger went home to take care of his father's estate, he was introduced to young Warren Buffett, a meeting
that would change the lives of many people. It also is a perfect example of
the sort of success matrix Munger often talks about, the converging
of several great ideas to produce outstanding results. In this case, it was
the coming together of two people with superior intellects and shared
objectives.

"Warren and I got along from the start and have been friends and
business associates ever since, although with various investments on both
sides which do not overlap," said Munger. "With my background, how
could I fail to take to a man who preferred reading and thinking to delivering groceries and who had learned something from everything he ever
read, including the manuscript his grandfather left behind entitled, "How
to Run a Grocery Store and a Few Things I Have Learned About Fishing."'

Following their initial conversations in Omaha, Buffett and Munger
continued their discussions by telephone, often talking for hours at it
time. Though Munger and several friends were poised to launch a new
firm, Buffett urged him to give up law and become a professional investor. In Buffett's famous speech "The Superinvestors of Graham and
Doddsville," he said that when he met Munger, he told him, "law was fine
as a hobby, but he could do better."' Munger's experiences with the industrial companies and in real estate development had whetted his appetite for business and the notion attracted him, though he wasn't quite
ready to let go of his legal practice.

Because Buffett's friend and former colleague Ben Graham had retired and moved to Beverly Hills, Warren and Susie had become acquainted with California and were captivated by the climate and people
they met. They visited whenever possible.

"Not long after [meeting Munger], I went out to California to see Ben
and Estey Graham, and we went to see the Mungers. They still lived on
Roscomare Road. Nancy was appalled by my eating habits."

She was indeed.

"I remember that Charlie came home and said he'd met this brilliant
man," said Nancy Munger. "He was excited about meeting Warren. About
a month later, he came to dinner. I planned a steak dinner. We had three
vegetables. I noted that Warren didn't eat a single vegetable. We had ice
cream for dessert, and he was happy about that."

Emilie Munger was an infant when Buffett first visited the Munger
home, and she was still quite young when she noticed that Warren Buffett
was an important visitor. "I remember his coming and thinking how
similar Dad and Warren were," said Emilie. "Their voices, their laughter.
He was a picky eater. He loved Pepsi-for us kids, it was funny to have an
adult who loved soft drinks so much."

Molly, the oldest of Munger's daughters, says she can't recall exactly
when Buffett entered their lives. "I do remember the symptoms. Daddy
was on the phone now all the time to Warren."

During the time the relationship between her father and Warren was
blossoming, Molly was becoming increasingly involved in her own affairs. First, over her father's objection, she decided to enroll in a high
school where none of her friends went, a school attended mostly by lowincome and minority students. As Charlie gave in to his willful daughter,
he said, "Molly, you are insisting on raising yourself. Make sure you do a
good job."