#58 John Bogle Enough True Measures of Money, Business, and Life

In this podcast episode, the hosts discuss John Bogle's influential book "Enough: True Measures of Money, Business, and Life," which delves into Bogle's philosophy on life and business. Bogle, the founder of Vanguard, is celebrated for his commitment to providing value to investors by minimizing costs, a principle stemming from his Scottish heritage and a family ethos of thriftiness and hard work. The hosts reflect on Bogle's upbringing, his battles against the finance industry's value-extraction practices, and his advocacy for simplicity, trust, and stewardship over complexity and short-term profit. They also explore Bogle's personal motto of "press on regardless," his critique of the misalignment of incentives in the financial sector, and his belief in the importance of persistence, autonomy, connectedness, and competence for happiness. The episode concludes with a nod to Bogle's legacy and his unyielding fight for a fairer financial system.

• Joseph Heller, an acclaimed author, valued the notion of having enough over accumulating excessive wealth.
• Kurt Vonnegut shared an anecdote involving Heller at a billionaire's party, highlighting Heller's contentment with his earnings from "Catch-22" compared to the billionaire's wealth.
• Heller's sense of enough was contrasted with the host's immense wealth, emphasizing a different measure of success and fulfillment.

"And Joe said, I've got something he can never have. And I said, what on earth could that be, Joe? And Joe said, the knowledge that I've got enough."

This quote demonstrates Joseph Heller's satisfaction with his life achievements and his lack of desire for more wealth, which he considered something the billionaire could not purchase.

• John Bogle used Kurt Vonnegut's poem about Joseph Heller as the basis for his commencement address at Georgetown and later for his book "Enough: True Measures of Money, Business, and Life."
• Bogle's book is praised by notable figures like Warren Buffett and Bill Clinton, indicating its widespread acclaim and impact.
• The book is not only about the history of Vanguard but also encapsulates Bogle's life philosophy.

"That, used as the basis for the book that I am holding in my hand and the one that I want to talk to you about today, which is enough. True measures of money, business, and life."

This quote introduces John Bogle's book, which explores the concept of "enough" in the context of personal wealth, business ethics, and life satisfaction.

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• Listeners can gain access to exclusive content, including a podcast about the founder of Seagrams, by emailing a screenshot of their review.
• The host encourages listener engagement and offers additional value as a thank you for their support.

"If you want access to my private podcast feed, all you have to do is leave a review anywhere you listen to this podcast, take a screenshot of your review and email it to me at foundersreviews@gmail.com then I'll reply back to your email with a private podcast link."

The quote explains the process by which listeners can gain access to exclusive content, highlighting the host's appreciation for audience support and engagement.

• John Bogle's Scottish heritage and his great grandfather's reformist spirit in the insurance industry influenced his approach to the finance industry.
• Bogle's family faced financial difficulties, which required him and his brothers to work from a young age, instilling a strong work ethic and a sense of responsibility.
• The notion of "idle hands are tools of the devil" is mentioned, indicating a belief in the value of productivity and hard work.

"I've always thought of my great grandfather Philander Bannister Armstrong, as my spiritual progenitor. He was an industry leader, but did his best to reform, first the fire insurance industry and then the life insurance industry."

This quote highlights the influence of Bogle's great grandfather on his own career, suggesting a legacy of industry reform and a critical stance towards established practices.

• Bogle's philosophy emphasizes the importance of working hard and finding value in one's own "backyard" rather than seeking wealth elsewhere.
• He shares a fable about a farmer seeking diamonds, which serves as a metaphor for recognizing and cultivating one's own resources and opportunities.
• Bogle's experience of having to work for everything he achieved is presented as a "priceless advantage."

"The moral of the story. Your diamonds are not in far distant mountains, are in yonder seas; they're in your own backyard if you but dig for them."

This quote encapsulates Bogle's belief that individuals should focus on their own capabilities and opportunities rather than chasing external wealth, which is often illusory.

• Bogle is described as having made significant changes in the finance industry, perhaps more than any other single person in history.
• His approach to mutual fund management at Vanguard aimed to save investors from excessive fees, resulting in substantial savings over time.
• Bogle's traits as an idealist and a street fighter were instrumental in the founding and success of Vanguard.

"The idea was simple. Why should our mutual funds retain an outside company to manage their affairs... when they could manage themselves and save a small fortune in fees?"

This quote explains the foundational concept behind Vanguard's business model, which revolutionized the mutual fund industry by prioritizing investor interests over management fees.

• Bogle criticizes the finance industry for prioritizing short-term speculation over long-term investment and for valuing complexity over simplicity.
• He advocates for a return to professional values and stewardship in business, suggesting that many companies have lost sight of these principles.
• Bogle believes that leadership should be about doing the right thing, not just doing things right, emphasizing ethical conduct over mere efficiency.

"We have more than enough of the fool's gold of marketing and salesmanship and not enough of the real gold of trusteeship and stewardship."

The quote criticizes the finance industry's focus on superficial gains and sales tactics at the expense of genuine value and responsible management, calling for a reorientation towards ethical and sustainable practices.

• The modern world often prioritizes material success over character and intangibles that give life meaning.
• There's a disconnection from the enlightened values of the 18th century, with a focus on immediate gratification and information.
• Personal satisfaction is often pursued at the expense of a true sense of calling and contribution to society.

"In life, we too often allow the illusionary to triumph over the real. We focus too much on things and not enough on the intangibles that make things worthwhile."

This quote emphasizes the misplaced focus on materialism and success rather than the intangible aspects of life that truly matter, such as character and a sense of purpose.

• Socrates' message from 2500 years ago aligns with the modern criticism of prioritizing wealth over wisdom and soul improvement.
• The ancient perspective suggests that virtue and character are more valuable than material wealth.

"I honor and love you. But why do you, who are citizens of this great and mighty nation, care so much about laying up the greatest amount of money and honor and reputation, and so little about wisdom and truth and the greatest improvement of the soul?"

Socrates highlights the ancient concern with society's focus on wealth and reputation rather than on the more important aspects of wisdom and moral development.

• John Bogle shares his opinions on the true values in life, drawing from his extensive experience.
• He aims to instill a sense of humanity in his readers, challenging them to reflect on their own values and priorities.

"I hardly have the standing to compete with Socrates, but over the course of these remarkably blessed 79 years of life that I've enjoyed to the fullest, I have, like Socrates, arrived at some strong opinions on money, on what we should be proud of and ashamed of in our business and professional callings, and on what are the false and true treasures in our lives."

John Bogle relates his personal journey and the wisdom he has gained, which echoes the teachings of Socrates on the importance of character over material wealth.

• Charlie Munger and Warren Buffett are cited for their wisdom on value creation and the negative impacts of the finance industry.
• The book highlights the need to create work that adds value to society rather than subtracting from it.

"Most money making activity contains profoundly antisocial effects. As high cost modalities become even more popular, the activity exacerbates the current harmful trend in which ever more of the nation's young brain power is attracted into lucrative money management and its attendant modern frictions."

Charlie Munger criticizes the finance industry for attracting talent away from more socially beneficial work, emphasizing the negative societal impacts of such trends.

• John Bogle discusses the impact of costs on investment returns, illustrating the significant difference between gross and net returns.
• He emphasizes the importance of understanding and managing costs in both investments and business operations.

"Clearly the wonderful magic of compounding returns has been overwhelmed by the powerful tyranny of compounding costs."

John Bogle points out that the potential benefits of investment returns can be greatly diminished by the long-term effects of costs, which can compound just as returns do.

• John Bogle argues that financial markets are unpredictable, and what is often considered investing is actually speculation.
• He uses historical events to demonstrate the unpredictability of markets and cautions against assuming that past trends will predict future outcomes.

"The laws of probability don't apply to our financial markets. For in the speculation driven financial markets, there is no reason whatsoever to expect that just because an event has never happened before, it can't happen in the future."

This quote challenges the common belief in the predictability of financial markets, suggesting that unprecedented events can and do occur, defying historical probabilities.

• John Bogle advocates for simplicity in business and life, citing Occam's razor and its preference for simpler solutions.
• He argues that simplicity and common sense are often more effective than complexity and sophistication.

"My career has been a monument not to brilliance or complexity, but to common sense and simplicity, the uncanny ability, as one observer has said of me, to recognize the obvious."

John Bogle attributes his success to his focus on simplicity and common sense, rather than complex or sophisticated strategies.

• Bogle discusses the limitations of relying solely on quantifiable data in business and the importance of balancing this with trust.
• He warns against the dangers of managing corporations solely by the numbers, which can lead to flawed decisions.

"Not everything that counts can be counted, and not everything that can be counted counts."

This quote, attributed to Einstein, encapsulates the idea that not all valuable aspects of business and life can be quantified, and not all quantifiable data is necessarily important.

• The discussion touches on the misalignment of incentives in the financial industry and the resulting ethical issues.
• Bogle points out the inherent conflict between the way businesses operate and the way they measure success.

"The way we act and the way we measure things are in conflict."

This quote summarizes the idea that there is often a disconnect between business practices and the metrics used to evaluate them, leading to a misrepresentation of true success.

• Governments may not provide accurate economic indicators, such as GDP and inflation.
• Misleading numbers can lead to poor decision-making in commerce.
• Examples include errors made by Arthur Andersen and banks during the financial crisis.

"e a lot of the numbers that we're getting from world government, like GDP and inflation. He gives examples of why they're actually cooking the books." "Lead you to make drastically disastrous decisions, such as the decisions that Arthur Anderson made or some of the banks did in the financial crisis."

These quotes highlight the concern that governmental economic indicators may be manipulated, leading to catastrophic decisions in the business world, akin to those seen in historical financial crises.

• The distinction between companies that prioritize trust over mere numerical targets.
• Vanguard's focus on client service over market share as a measure, not an objective.
• Corporate growth should be organic, not forced by quantitative goals.
• The importance of trust, human values, and ethical standards in a company's relationship with its clients.

"Between companies that trust and companies that count." "Vanguard's market share, as I've said countless times, must be a measure, not an objective." "For God's sake, let's always keep Vanguard a place where judgment has at least a fighting."

These quotes delineate the difference between companies that build their operations on trust and those fixated on numerical achievements. Vanguard is exemplified as a company that values client service over competitive metrics and seeks to maintain a culture where sound judgment is valued over rigid processes.

• Real-world experience provides knowledge that can surpass what is taught in educational institutions.
• John Bogle emphasizes experience over theoretical education, especially in business.
• Market share should be a result of good practices, not a primary goal.
• Repetition is necessary to internalize simple but crucial business principles.

"Knowledge comes from experience." "Your market share, if that's even important to you, should be a measure, not an objective."

These quotes suggest that genuine knowledge stems from experience, not just formal education. Bogle values the practical understanding gained through years of building a business over the metrics-focused approach taught in business schools.

• Critique of overemphasis on quantification in business.
• The quote from Daniel Yankelovich warns against the pitfalls of focusing solely on measurable factors.
• The tendency to undervalue or ignore what cannot be easily quantified can lead to organizational myopia and failure.

"The first step is to measure what can be easily measured. That is okay as far as it goes. The second step is to disregard that which cannot be measured or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what cannot be measured really is not very important. This is blindness. The fourth step is to say that what cannot be measured does not really exist. This is suicide."

The quote from Yankelovich, shared by Bogle with his employees decades ago, cautions against the overreliance on quantifiable data, highlighting the potential for disastrous consequences when qualitative aspects are neglected.

• Alignment of incentives with customer interests is crucial for a company's success.
• Misalignment of incentives can lead to conflicts of interest and unethical practices.
• Professional conduct involves creating value for society, not just extracting it.
• The finance industry is criticized for extracting value rather than creating it.
• The failure of Arthur Andersen and Enron is attributed to misaligned incentives.

"Show me the incentive and I will show you the outcome." "I will create value for society rather than extract it."

Munger's quotes and Bogle's commentary stress the importance of properly aligned incentives in business. They argue that companies should aim to create value for society and their customers rather than merely extracting profits, a principle that is often overlooked in the finance industry.

• Founders are more likely to align company incentives with customer interests.
• Professional CEOs may prioritize short-term gains over long-term stability.
• Founder-led companies often place a higher value on customer satisfaction.

"The difference between founders and ceos." "A simple heuristic I have in my life is if I can spend money with a company that's still led by the founder, I try to."

The distinction is made between the motivations of founders, who typically have a long-term vested interest in their company, and professional CEOs, who may be incentivized to focus on short-term financial metrics. The preference for founder-led companies is recommended as they are perceived to be more customer-centric.

• A superior company is defined not by conventional metrics but by its unique vision and priorities.
• Unconventional thinking about a company's dream and how it serves its customers is key to its distinction.
• A company's dream should guide its organization and priority-setting.

"What distinguishes a superior company from its competitors are not the dimensions that usually separate companies, such as superior technology, more astute market analysis, better financial base, et cetera. It is unconventional thinking about its dream, what this business wants to be, how its priorities are set, and how it organizes to serve."

Robert Greenleaf's quote, as referenced by Bogle, emphasizes the importance of a company's intrinsic vision and mission over traditional competitive advantages. It suggests that a company's unique approach to its goals is fundamental to its success.

• The value of persistence and determination in achieving success.
• Talent and education are not as influential as the relentless pursuit of goals.
• The family motto "Press on regardless" is highlighted as a guiding principle.

"Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan, press on has solved and always will solve the problems of the human race."

Calvin Coolidge's quote, cherished by Bogle, underscores the supremacy of persistence over talent and education in overcoming life's challenges and achieving success. It serves as a motivational principle for both personal and professional endeavors.

• Bogle discusses the factors contributing to happiness beyond financial wealth.
• Autonomy, the ability to make choices, is a key component of happiness.
• Complexity, engaging in challenging tasks, and connectedness, forming meaningful relationships, are also crucial.

"What determined, in his opinion, determines our happiness. It's the presence of some combinations of these three attributes. One, autonomy. The extent to which we have."

Bogle's perspective on happiness encompasses autonomy, complexity, and connectedness as essential elements that contribute to a fulfilling life. It suggests that true happiness stems from the freedom to make choices, the engagement in complex tasks, and the formation of significant relationships, rather than from material wealth alone.

• The ability to control one's own life is crucial.
• Connectiveness with others through love, friendship, and openness is important.
• Exercising competence by using talents and striving to learn is a key aspect of life.

Ability to control our own lives, also.

This quote emphasizes the importance of personal autonomy and agency in one's life.

Known as to do our own thing. Number two, maintaining connectiveness with other human beings in the form of love of our families, pleasure in our friends and colleagues, and an openness with those we meet in all walks of life.

This quote highlights the significance of relationships and connections with others as a source of fulfillment.

And number three, exercising competence, which means using our talents, being inspired, and striving to learn.

This quote underscores the value of personal growth and the utilization of one's abilities.

• Battling is an inherent part of life for many people.
• The speaker reflects on his life-long battles for personal advancement, innovation, and societal service.
• The idea of battling is tied to the desire for remembrance and impact.

Damned if I know why I bother to battle. I just do it. And I don't know how to stop.

This quote conveys an intrinsic motivation to engage in life's challenges without fully understanding why.

Because in all the nearly nine decades of my life, I've never done anything but battle.

This quote provides insight into the speaker's perspective on his life as a series of challenges and his relentless pursuit of overcoming them.

• The speaker reflects on what motivates him to continue battling in life.
• He expresses admiration for historical figures who battled for their causes.
• The speaker battles to bring traditional values and service back to the mutual fund field.

I battle to be the exception.

This quote reveals the speaker's aspiration to succeed where others have failed.

Because the great battlers of history have always been my heroes.

This quote shows the speaker's inspiration comes from historical figures known for their tenacity.

• The speaker acknowledges the attention and ego satisfaction that comes from standing alone in a battle.
• He mentions the support of a community, the "bogleheads," who share his ideals.
• The speaker finds solace in battling as he can no longer engage in physical sports.

Because when the battler stands pretty much alone, he draws a lot more attention to the mission.

This quote suggests that there is a personal benefit to being a solitary figure in a cause, as it garners more attention.

Number four, because sad to say, I no longer play squash and playing golf on grown up courses is now something of a stretch.

This quote illustrates the speaker's need to channel his competitive spirit from physical activities into societal battles.

• The speaker battles for a fair financial system, which he believes is mathematically, philosophically, and ethically right.
• He enjoys the intellectual challenge and competition in his field.
• The speaker's battle is likened to a "lover's quarrel" with the financial world.

Because what I'm battling for, building our nation's financial system anew in order to give our citizens and investors a fair shake is right, mathematically right, philosophically right, ethically right.

This quote expresses the speaker's conviction that his fight for a fair financial system is justified on multiple levels.

Using Robert Frost's formulation, my battle is a lover's quarrel with our financial world.

This quote uses a metaphor to describe the speaker's passionate but critical relationship with the financial industry.

• The speaker identifies as a natural battler, with passion and determination being intrinsic to his character.
• He acknowledges the inevitability of time not being on his side.
• The speaker is determined to continue his battles for as long as possible, appreciating their value in retrospect.

Simply because I'm a battler by nature, born, bred and raised to make my own way in life.

This quote captures the speaker's self-perception as someone who is inherently driven to face challenges head-on.

So I'll continue to fight the battle until my mind and strength at last begin to dull.

This quote conveys the speaker's commitment to continue his pursuits until he is no longer able to do so effectively.

• The speaker encourages support for Founders Notes as a way to access valuable insights on building companies.
• He emphasizes the value of the service for entrepreneurs and those interested in creating something new.
• The speaker offers alternative ways to support if one cannot afford the fee.

If you get value from the work I do, if you're learning from these podcasts, I would consider it a great favor.

This quote is a direct appeal for support from the audience who benefit from the speaker's work.

You'll unlock the archive, which I said before has 139. I think basically the best ideas about building companies from the people that are doing it right now.

This quote highlights the extensive resources available through Founders Notes, positioning it as a valuable tool for learning about entrepreneurship.

• The speaker discusses the impact of the internet on the optimal size of companies.
• He explores the idea that smaller companies may now have an advantage due to technological leverage.
• The speaker considers the societal and entrepreneurial pressures that influence company size and success metrics.

What is the Internet doing to the optimal size of companies?

This quote introduces the topic of how technology is changing traditional business models and company structures.

Jeff Bezos has said stuff like this, like, hey, in the age of the Internet, you can either be really small or really large, but everything in the middle is going to get wiped out.

This quote references a viewpoint from a prominent entrepreneur that supports the speaker's observations about company size in the digital age.