“It’s the entrepreneurial spirit of success, not for the sake of the fruits of success, but for the sake of having a good fight and competing and winning.”
To an entrepreneur, a corrupt industry with a lot of inefficiencies means one thing: There’s a huge opportunity to innovate. When he founded The Vanguard Group in 1975, John Clifton “Jack” Bogle created the first index mutual fund, an idea that was innovative in its simplicity. By keeping management costs low, he was able to pass the savings on to investors. It sounds like common sense, but it goes against the grain of how most mutual fund managers think and operate. In fact, at the time, his idea was ridiculed as “un-American” and “a sure path to mediocrity.” But Jack was undeterred. If anything, he was even more motivated by the naysayers.
This interview was recorded in 2006 when Jack was 75, and what stands out is that his idealism and interest in “having the good fight” hadn’t wavered in the slightest. He’d just released his fifth book, “The Battle for the Soul of Capitalism,” and was still relentlessly focused on taking on corruption and abuse in the industry. He wasn’t in it for the fancy perks or the money. He was in it to fight the good fight and to build a better world. Jack passed away in 2019, but his legacy is stronger and more relevant than ever. I feel fortunate to have been able to spend this time with him, both on the mic and off. I think you’ll see why.
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.”
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.”
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.”
Idealism and execution
- “The Lord has created few people with a greater feeling of determination than I have.”
Keeping costs low
- “I’d be embarrassed to walk into an executive dining room.”
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.”
Managers have usurped power from owners
- Describes this problem in The Battle for the Soul of Capitalism
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.”
Going against the grain
- “Nobody in this business had more fun than I had. Nobody.”
- “Entrepreneurship is about the joy of creating.”