Buffett, the Washington Post, and the true culture of ownership

Washington Post‘s (NYSE: WPO) sale to Amazon (NASDAQ: AMZN) chief Jeff Bezos this week is surprising in more ways than one.

Yes, few would ever associate tech pioneer Bezos with a declining, old-media newspaper.

But Washington Post’s controlling family, the Grahams, were also some of the most committed owners in American business. The family has controlled the paper since 1933. As current chairman Donald Graham said yesterday, “I never until this year even imagined the possibility that we might think about selling.”

Why sell now?

Partly because the newspaper industry is a mess. Graham said the Post has been trying to innovate around the industry’s slump for a decade. “But the innovations, though very high quality, weren’t offsetting the decline in revenue.”

But another reason is that the Grahams found the right buyer in Jeff Bezos.

Bezos has proven, perhaps more than any current executive, to be willing to create something meaningful over the long run without much worry over profits foregone in the short run. Amazon invests so much in its future that it’s practically run as a non-profit. “Benjamin Graham said, ‘In the short term, the stock market is a voting machine. In the long term, it’s a weighing machine.'” Bezos said recently. “And we try to build a company that wants to be weighed and not voted upon.”

This is exactly the kind of owner you want at a company with a valuable brand but poor short-term economics.

The Post has a history with another owner, albeit a minority one, with the same attitude: Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) .

Here’s what Buffett once said about the companies he invests in versus Wall Street’s short-term culture:

You can sell it to Berkshire, and we’ll put it in the Metropolitan Museum; it’ll have a wing all by itself; it’ll be there forever. Or you can sell it to some porn shop operator, and he’ll take the painting and he’ll make the boobs a little bigger and he’ll stick it up in the window, and some other guy will come along in a raincoat, and he’ll buy it.

Buffett proved he was serious about this philosophy two years ago when commenting on the Post’s decline. “We’re going to keep every share of stock we have. I would never sell a share of the Post,” he said.

To understand this attitude, you have to go back 40 years to when Buffett first started buying shares of Washington Post.

Post stock plunged in 1972 amid a sour economy and after the Watergate scandal pulled the paper into a web of headaches. Sensing a bargain, Buffett started buying its stock.

Late chairwoman Katharine Graham feared Buffett was attempting to gain control over the company. “He’s going to take over the Washington Post!” she worried to friends, according to Buffett’s biography The Snowball. By all accounts, she wanted him out.

Buffett wasn’t oblivious. “When I first met with Kay, she was wary and scared. She was terrified by me … I could see that even though she had all the A [voting] stock, she was afraid of me. I mean, they had spent their whole life dreaming up and putting defenses around the stock,” he’s quoted as saying in Snowball.

Graham didn’t know it at the time, but Buffett had no intentions of flipping his investment, taking over the company, or influencing the Grahams’ management decisions in any way. He just wanted to be a longtime owner in what he saw as a great business run by great people. And he respected them. As Buffett wrote to Graham in a 1973 letter:

I also know that it is so important to you in this world that you’re going to worry about it no matter what you’ve got. It’s your whole life. I’m telling you that even though these teeth look like Little Red Riding Hood’s wolf fangs, they really are baby teeth … I’ll never buy another share of stock unless you’re OK with it.

Snowball author Alice Schroeder wrote: “That afternoon, Buffett — who had spent US$10,627,605 to buy twelve percent of the company — signed an agreement with Graham not to buy any more of the Post stock without her permission.”

Graham and Buffett soon became friends, and Berkshire remained one of Washington Post’s most loyal shareholders and supporters for four decades.

Who your shareholders are — what kind of vision they have and how long they plan on sticking around — matters. It affects how a company is run and how it will succeed in the future. Katharine Graham knew this 40 years ago when she met Buffett, and her son Donald Graham knew it this week when he sold the company to Jeff Bezos.

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A version of this article, written by Morgan Housel, originally appeared on

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