Personal History (95 page)

I
F
I
’D EVER
had an inclination to let Watergate and the concomitant fame for the
Post
go to my head, management problems throughout the company generally and labor problems, particularly at the
Post
, at which I was failing dismally, kept me rooted in reality. The problems were entrenched, burdensome, and all-absorbing. I had hoped to get some real help from Paul Ignatius, but that had not happened. Paul was a thoroughly nice, well-intentioned man, but he came from a very different culture and never really learned the communications business.

When I decided that we needed a new president of the
Post
, and when we announced Paul’s resignation in October 1971, I viewed it as a failure of all of us in management who had erroneously placed someone in an inappropriate position. Though I never made any major move by myself—particularly changing a top executive—and though much of the criticism I received over the years was deserved, the decisions were always publicly viewed as being
only
my mistakes. Because of the new conspicuousness of the company and the fact that I was a woman, I got overly lionized for our editorial victories and overly criticized for
correcting
my mistakes rather than for making them in the first place, both of which I resented. At that time, if a woman fired a man, everyone assumed the woman was at fault. Indeed, I was viewed—and publicly pilloried—as a difficult, whimsical, tyrannical, tempestuous woman. The man was perceived as a victim. Newspaper executives suffer from press criticism, too—at least I did.

In any case, having grown to know the industry and to have slightly more knowledge of what I was looking for, I went outside the company again and hired John Prescott as the new president of the
Post
—in effect, as the general manager. (We had upgraded the title to “president” for Paul because he had been secretary of the navy.) On paper, John looked perfectly qualified. He had had a distinguished newspaper career, starting at the
Baltimore Sun
twenty years before, and he had spent four years on the
Detroit Free Press
as labor-relations manager—which was especially important for what he could bring to bear on our desperate labor situation—as well as two years at the
Miami Herald
, a well-run nonunion paper. He had also been general manager of the Knight-Ridder papers in Charlotte, North Carolina, and in Philadelphia.

Before starting work at the beginning of 1972, John visited the paper and met with the executives, after which he wrote me a fairly accurate appraisal of what he’d seen and what he felt should be done immediately. Since I was more than ready to move us off the mark, I was delighted with his action-oriented approach. I had become more and more aware of the difficulties we were in and was worried about problems on several fronts: the poor labor contracts that seemed to keep us in a straitjacket, the further disintegration of production, the constant crisis management. Getting the paper out each night, as I described it to John, was “one last minute, hair-raising rescue after another take[ing] place averting either minor or major disasters in breathtaking succession.”

Despite minor problems, John started to take hold. Although I was puzzled and concerned about certain things he did, I was pleased by a great deal of what he accomplished, some of which had a lot to do with our success in the long run. Within six months, he had moved decisively on organizational changes, putting people into more appropriate slots and identifying areas of trouble—all a departure from the past. John brought in Jim Cooper, a young production expert who knew the technicalities of how the machinery worked. He had worked at the Southern Printing and Production Institute (SPPI), an organization that helped train executives to publish in case of a strike. John also brought us Larry Wallace, an able, tough labor negotiator who took the lead in beginning to turn our contracts around. And John replaced our production director with his assistant—a less astute move, but it was hard to find outsiders willing to step into our well-known hornets’ nest.

With Fritz’s death, one learning curve had come to an end—the first ten years of wading in, of feeling my way, responding to circumstances and problems as they arose. I didn’t realize how protected I had been by Fritz. I was now alone again, but in a different way. I became chairman—it never occurred to me to change the gender of what I considered a neutral title—of the board of this growing public company, while remaining publisher of the
Post
. I was now the person with ultimate responsibility at The Washington Post Company, with all that that entailed. A whole new learning curve faced me: how to be chief executive officer of a public company with obligations to shareholders, how to apply what little I’d learned about management to the business of the company, how to maintain editorial quality while exercising financial responsibility. I felt as though I were lying on a nice bed of nails, inadequate to all of the problems I faced.
An affidavit about the hours I was putting into the job would have attested to my good intentions, but results were what I cared about. I didn’t know how and when to think about growth, how the job description of a chief executive officer would read, how much profit we should be making or should be aiming to make. Perhaps my standards were unrealistically high: I was judging myself by the ease with which Phil at his best had seemed to deal with his problems, or by some other imagined ideal of what was expected of me.

Because I still had vast problems with self-confidence in public situations, I feared dealing with the industry and with Wall Street, especially the excruciating ordeal of speaking to financial analysts. Because we were a public company, if I hashed things up now the mistakes were all going to be visible. In truth, I didn’t even know how much I didn’t know, or the complexity of what lay before me. What I did know was that I wasn’t at all sure that I could do what was going to be required of me.

Good luck was again on my side, coming just when I needed it. It was my great good fortune that about a month after Fritz’s death, Warren Buffett bought into the company, beginning a whole new phase of my life. Warren’s arrival not only launched me on my new learning curve but also marked the beginning of a friendship that has gone well beyond the relationship of an owner to a large stockholder.

Warren had actually made a cameo appearance in my life in 1971, when he and his business partner, Charlie Munger, came to see me about a possible partnership with them to acquire
The New Yorker
from Peter Fleischmann. The project died, and I didn’t see Warren again, or even particularly remember him, until he wrote me a letter two years later. This letter is still jokingly referred to by us as the “Dear Mrs. Graham” letter.

Under SEC regulations, anyone buying as much as 5 percent of the stock in a company is required by law to notify the officers of the company about such a purchase. Warren informed me that through Berkshire Hathaway he had bought more than 230,000 shares of the Class B shares of The Washington Post Company and intended to buy more. The letter helped explain why he’d bought the stock:

I knew nothing about this man who had just bought a significant chunk of the company. Warren was the same person then that he is now, but he was a relatively small investor at the time, and mostly unknown. I knew that he had bought into the company because it fit his “rules” for investment and because our stock was so cheap: at that moment all stocks were selling below their value, thanks to a recession, and ours was selling below other stocks, since we were relatively unknown in the business world and because of the challenges to our Florida television-station licenses—and possibly, too, because of Fritz’s death and my succession. But I knew nothing about Warren personally.

I also knew so little about the operations of the stock market that it took others to alarm me about an unknown investor buying such a big piece of the company. I had no idea about takeovers; I felt safe with the system we had in place of the family-controlled A shares as opposed to the B shares that Warren was buying. Warren assumed I felt safe and so didn’t see the need to assuage any fears, but so great were the alarms that came from men around me and from the few business people I knew, including André Meyer, head of Lazard, that I grew concerned. Their message clearly was: “He means you no good.”

I tried to find out whatever I could about this man. Research turned up only one highly flattering chapter in a book titled
Supermoney
by “Adam Smith,” which was read voraciously by several of us at the
Post
shortly after Warren’s letter arrived. And when I called everyone I knew who might know Warren directly or indirectly, no one I spoke to had anything but positive reactions: he had never done anything hostile, he was straight, brilliant, fine. One of Phil’s major influences on me was the idea of reaching out to different kinds of people. He had encouraged me and the children to be curious about people, not to assume things about them and their motives without getting to know them. He emphasized the importance of not believing in stereotypes, not only because they don’t hold true to form but because you miss so much if you allow them to dominate your responses. I followed this impulse with Warren and answered his letter telling him how totally committed I was to effective business management in our enterprises, thanking him for his confidence in us, and saying I hoped we could live up to the flattering comparison to the Disney company—a hope not exactly fulfilled.

By this time, I was curious and even nervously eager to meet him.
When I realized I would be in California that summer, I wrote him to suggest our getting together out there, since I knew he would be at his vacation house in Laguna Beach. I was going to be meeting with the
Post
’s news-service partners at the
Los Angeles Times
, and the
Times
offered us a room in which the two of us could talk. When we met in Los Angeles, Warren’s very appearance surprised me. He resembled no Wall Street figure or business tycoon I’d ever met; rather, he came across as corn-fed and Midwestern, but with that extraordinary combination of qualities that has appealed to me throughout my life—brains and humor. I liked him from the start. As I later wrote a friend, “If I would ever bet on someone being Mr. Clean, it’s Buffett.”

At our meeting, Warren persisted in analogizing between Disney and the Post Company, because at the time it looked as if no one cared about our company. He told me he had a feeling not only that Wall Street didn’t see the value of the Post Company but that even I and the group from the
Post
didn’t appreciate how valuable it really was. He said that someday the market would recognize its value, although one couldn’t predict when.

At that first meeting, Warren saw that I knew nothing about business and finance, and, further, that I thought people like Otis Chandler and others knew much more. He later told me he had the impression that my perception was, “There are all these 24-foot-high people around who are going to eat me alive.” I didn’t feel as though I knew him well, but I instinctively trusted him, and invited him with his wife to lunch both at
Newsweek
in New York and at the
Post
in Washington, as well as to my house for dinner, when he came east. He accepted, and we set a date.