John Bogle has been an inspiration in my journey of personal and professional growth. Whenever I read or listen to John Bogle, I always walk away with an uplifting feeling. Mr. Bogle’s personality flows through in his speech and writing. His messages have always struck me as authentic, idealistic, and bold. I see John Bogle as a determined and courageous visionary who has lived his life in harmony with the principles and values that he believes in. Suffice to say, I have the highest respect and admiration for Mr. Bogle.
I came across John Bogle thanks to Joel Spolsky. In one of his posts, Joel mentioned his interview with Greg Gallant at Venture Voice. I started listening to Greg’s podcast and eventually he interviewed John Bogle.
The interview resonated with me and I gained a lot of respect and insights after listening to John Bogle. I would like to share some of my insights with you:
John Bogle’s voice made a big impression on me. I found it to be distinct, powerful, and unique. Mr. Bogle’s voice carries the force of his personality. If you listen to the interview, I would recommend you pay close attention to the voice modulations.
When John talks about principles that are dear to his heart, his voice depicts confidence and determination.
During the interview, John narrates the instance when he was fired. His voice shows his anguish at a grave mistake he made. John then immediately talks about taking responsibility for his actions and his voice now exudes courage and the strength of his convictions.
While discussing entrepreneurship and what it means to him, I could sense a deep joy in his heart.
Starting at the 28:00 minute mark in the interview, Greg discusses Vanguard’s business model which is “predicated on keeping the cost low” and asks John for his advice to entrepreneurs on “keeping cost low“. When I mentally formulated a response to this question, I was thinking about cutting wasteful spending, paying attention to expenses etc. The response from John Bogle blew my mind. Here is John’s response:
Well, the first thing that happens, is you have to realize, that about half of the cost, little bit less than half maybe, that a mutual fund incurs are profits to its managers. Profit margin in this business is pretty close to 50%. So, if you eliminate that, which the Vanguard structure does and it basically rebates that profit to the shareholders. You all of a sudden have cost 50% below the competitors. So to give you kind of a homely example, if the average cost is 1%. You are all the way down to 0.50 or 0.60 simply by getting the entrepreneurial profit out of the equation. A good start! The rest of it is aggressive cost control.
Frankly, I was stunned. John looked at the entrepreneurial profits as the first place to start cutting costs! Wow! I believe it takes a person who sincerely and deeply cares about his role as the steward of his Client’s financial interests to pursue this course of action.
John goes onto expound his philosophy of cost control. I was reminded of Roy Posner’s article on The Power of Personal Values while listening to this portion of the talk. Roy mentions that
A value is a belief, a mission, or a philosophy that is meaningful. Whether we are consciously aware of them or not, every individual has a core set of personal values. Values can range from the commonplace, such as the belief in hard work and punctuality, to the more psychological, such as self-reliance, concern for others, and harmony of purpose.
The “business value” of cost control permeated throughout Vanguard. Vanguard lived, executed and based their decisions using this value as a guide. I am not surprised by the tremendous growth of Vanguard given such a relentless focus on values such as Customer Service and Cost Control. Keeping costs low was not just a slogan. It felt like a way of life that Vanguard had chosen to serve a higher purpose!
John Bogle has the powerful mix of idealistic vision that he matches up with his indomitable determination and will to achieve his goals and live according to his beliefs. I would recommend that you listen starting from the 23:40 minute mark of the interview where Greg talks about how he was able to mix idealism and execution. John has a wonderful quote at this point:
First, The Lord has created few people with greater feeling of determination than I have. I asked my kids once. What word would they use to describe me. I asked them separately. All of them said the same thing. Determined.
John mentions 3 qualities that characterizes him – Determined, an intellectual turn of mind that is driven by Curiosity and not brilliance, and a Contrarian who is not afraid to fight the good fight and do what it takes to do the right thing.
John talks about building a company and the values at Vanguard starting from the 32:30 minute mark. Vanguard uses a lot of nautical metaphors in everyday communication. The name, Vanguard, was inspired by the battleship HMS Vanguard commanded by Lord Nelson in the Battle of the Nile. Vanguard refers to its employees as crew members, the cafeteria is called the galley. They heavily use nautical phrases such as – Stay the course, Press on regardless.
I found a person who enjoyed his work and was very thoughtful about the culture in Vanguard.
There are a lot of great quotes, honest messages towards the end of the interview (starting 49:15 minute mark). Here are some of my favorite ones:
If I were persuaded it would never happen, would I start doing things differently? Not at all. I would do them even stronger. You know, Somebody has to stand up and be counted in this life.
Entrepreneurship is about the joy of creating. That’s what Tom Peters tells us and he is right. The joy of success for its own sake. The joy of changing the world a little bit for the better.
Nobody in this business had more fun than I had. Nobody. And it’s fun to take on the establishment. It’s fun to have some determined ideas and see them implemented.
There is nothing like the satisfaction of a good fight well won.
The mutual fund industry didn’t need Vanguard. No industry needs Vanguard. But, all industries need A Vanguard. That is, a company that says, I see what you are doing, understand what you are doing, I am going to do it differently. And may the best ideas win.
I think I have left no doubt how much I enjoyed this interview. I do have to mention the excellent job Greg did as the interviewer. He asked thoughtful questions and gave John the center stage. He led the conversation beautifully and the conversation had a great feel to it. Thank you, Greg!