VV Show #28 - John Bogle of The Vanguard Group
If you’re making lots of money in a fat industry for doing relatively little, then the last thing you want is a competitor like John C. Bogle. He founded The Vanguard Group in 1975 and revolutionized the mutual fund industry by slashing management fees. By creating the world’s first index fund, John showed investors they could invest in the market without giving a large portion of their earnings to fund managers. While it sounds easy in hindsight, it was a difficult path. John was fired along the way and made many enemies in the industry. But John, like any good entrepreneur, is a fighter. And at age 75, he’s still ready for a challenge.
3:30 College years at Princeton
- “I’ve always been a terrible idealist – or a wonderful idealist.”
- The mutual fund industry was described as “Tiny but contentious.”
- “I’m even more idealistic now than I was then.”
13:15 Executing on a senior thesis by starting a career in mutual funds
- Became head of Wellington Management Company by age 36.
- “I fell for it hook line and sinker.”
- “My merger partners… banded together and fired me.”
- “It was awful, I cried. And why wouldn’t you? But I know I’d made a terrible mistake and ended up paying a terrible price.”
18:00 Started the world’s first index fund
- A thousand times growth since start.
- “Fired with enthusiasm.”
- “I can assure you I am no saint. If you don’t believe that ask my wife.”
- “The more the managers take, the less the shareholders make.”
23:40 Idealism and execution
- “The Lord has created few people with a greater feeling of determination than I have.”
28:00 Keeping costs low
- “I’d be embarrassed to walk into an executive dining room.”
32:15 Values in a company
- “For God’s sake let’s always keep Vanguard a place where judgment has at least a fighting chance to triumph over process.”
38:45 Managers have usurped power from owners
- Describes this problem in The Battle for the Soul of Capitalism
49:15 Fighting corruption through the market
- “Mutual fund directors are pretty useless appendages.”
- “If I were persuaded it would never happen, would I start doing things differently? Not at all. I’d do them even stronger.”
55:20 Going against the grain
- “Nobody in this business had more fun than I had. Nobody.”
- “Entrepreneurship is about the joy of creating.”
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A few podcasts I recently listened to and highly recommend: 1) Gregory Galant of Venture Voice in an excellent interview with John Bogle, founder of The Vangaurd Group. I couldn't help but thinking of him as the 37signals of mutual [Read More]
Tracked on April 22, 2006 5:36 PM
Interesting show, and it comes right as I'm deciding between opening a Fidelity account or a Vanguard account.
Posted by: Steven at February 24, 2006 3:49 PM
Check out www.diehards.org
Posted by: modal at February 25, 2006 7:45 PM
Awesome show Greg! I was skeptical when I read the description because I thought I wouldn't get another juicey tech start-up story, which is what my mouth waters for each week, but I was pleasantly surprised, and I plan to look up Mr. Bogle's books to hear more of what he has to say.
What a cool sounded guy.
Keep up the good work... and if you can... produce shows more often ;)
Posted by: Stuart Doherty at February 28, 2006 12:18 PM
Hurray for John Bogle! I share John's view of the mutual fund industry and have for many years. Let's hope Bogle has a few protoge's out there waiting in the wings.
Posted by: Charlie Thompson at March 10, 2006 8:12 PM
Make that 'protege'...thanks! :-)
Posted by: Charlie Thompson at March 10, 2006 8:14 PM
Brilliant. John Bogle's talk has provided some reaffirming support for the ideal of the startup that I am a part of.
Charitable fund raising has traditionally been done at cost as high as 60 cents on the dollar. A lot of it has to do with the small scale of operation. We believe that there is nothing more important than the cause of these organizations. So our goal is to help them lower operating expense by aggregating fund raising resources.
Process automation engineering has come a long way in for the corporate world to lower cost. Our goal is to use these technologies to help charitable fund raising. Traditionally this has been too small of a market for big company to explore. We are here to do it.
We end up working with angel investors instead of VCs because of the same reasons discussed in the previous shows. Hopefully we’d be able to change a thing or two about they way philanthropy is being conducted.
Posted by: Kavin Du at March 12, 2006 2:53 PM
Fantastic interview. How refreshing to listen to a financial entrepreneur who doesn't sound as if they work inside an imaginary bubble where the height of your money pile is all that matters.
Posted by: Andrew McFarlane at April 30, 2006 8:07 AM