John C. Bogle, one of the greatest business leaders of the past 100 years, does not know what makes a leader. But he has some ideas.
"I can give you some simple principles," he said in a 2015 interview, stretching out his long legs in his office, which is cluttered with stacks of books and papers on the floor and on shelves.
And he will, in a minute.
There are two copies of Frederic Remington cowboy statues framing the sofa where he sits, one with a congratulatory ribbon hanging off the horse's head. The ribbon ended up there after a celebration, when Vanguard, the company Bogle founded in 1974, passed $100 billion in assets.
Vanguard is now the largest mutual fund company in the world, with more than $3.4 trillion in global assets. Its assets grew at an incredible 21 percent compound annual growth rate over the 40 years it has been in business. The growth is due to the company's culture of putting the shareholder first, which has led to continual declines in its expense ratios, said Burt Malkiel, the Princeton economist and current chief investment officer at Wealthfront who joined Vanguard as a director when it had less than $2 billion in assets.
"His values, his strategy, the culture he established are the reason Vanguard has prospered," said Malkiel. "They are clearly his and uniquely his."
Retired as an executive since 1999 — when he hit the mandatory retirement age of 70 — Bogle occupies an out-of-the-way office on the Vanguard campus in Malvern, Pennsylvania, though he speaks often, advocating for individual investors and criticizing companies that don't live up to his standards (including, sometimes, Vanguard itself).
There's a painting leaning against the wall in his office, showing a younger Bogle dressed as Admiral Horatio Nelson (Vanguard is named after the British admiral's flagship in the Battle of the Nile). A magazine put Bogle on the cover in that outfit, and he had a print blown up and turned into a portrait. "Look at that good-looking guy," he said.
Bogle is having fun. "Are you kidding me?" he said. "I've had fun all my life."
He's well aware of how he's viewed by a lot of people. There are hundreds if not thousands of Bogleheads who follow his teachings. He finds the adulation embarrassing. But his stentorian voice gets a little softer when he talks about going to the Vanguard cafeteria.
"The people are doing the hard work here," he said. "But they revere me and maybe love me. I don't know how it happens. But I go over there to the galley for lunch, and they're just happy to see me."
He pauses and then laughs. "It may be a little bit like what Dr. (Samuel) Johnson said about the dog that walks on his hind legs. It's not that he does it well; it may be that he does it at all at this stage of life."
Bogle is 86.
He says that what made him a leader was a combination of luck, skill and a hefty or huge dose of determination. Then there's a collection of principles that have become clearer to him over time. Bogle is a self-described introvert, using his own experience to understand and illustrate the world. In an interview, he laid out principles that have led him, a few he could have embraced a little more conscientiously, and describe qualities he believes define the leadership on which Vanguard's success was built.
"If you have to tell people you're the leader, you're not the leader," Bogle said.
In Bogle's case, he stood out in part because of the contrarian nature of his ideas. He's never comfortable when he is thinking along the same lines as the crowd.
In fact, Bogle traces his major career mistake — a merger at Wellington Management in 1966 that led to his being fired in 1974 — to one of the few times he wasn't a contrarian. He bet the company's future on trendy, go-go, high-risk mutual funds that the other investment managers brought to the table, and that was a mistake.
"I shouldn't jump on bandwagons," he said. "It's not me."
Bogle also admits he is decidedly not a team player. "I'm an individual who doesn't want to waste a lot of time hearing what people who don't know very much have to say," he said.
Bogle adopted his sense of purpose after that career failure at Wellington. Ever since then, he's been devoted to the idea of the long-term success of individual investors, sometimes in moves others would find crazy.
In 1991 he turned down a chance for Vanguard to own the first ETF. Its inventor, Nathan Most, came to Vanguard before taking the concept to State Street, but Bogle rejected him immediately.
"Guess how many people I consulted on that decision?" he asked. "One. Me."
Bogle's view was that because ETFs can be traded throughout the day, they would encourage individual investors to trade. Trading too frequently is one of the biggest pitfalls of individual investing, because trading increases costs and the risk that investors will trade overconfidently or in a panic.
Vanguard has embraced ETFs since Bogle's departure as CEO in 1999. Subsequent CEOs brought internal management skills to the job. "What they haven't done is change the company's culture," Malkiel said.
This principle is near and dear to Bogle, who worked his way through school. About a decade ago, in fact, Bogle's granddaughter Rebecca spent the summer with Bogle and his wife, Eve, at Lake Placid. She had a job in a curio shop, but she told her grandfather she hadn't learned anything while there.
He disagreed, telling Rebecca to "just look" at all the things she had learned:
- How to get up in the morning, go to work and be on time.
- How to give an honest day's work for an honest day's pay.
- How to do what the boss says, even when he is wrong.
- How to handle unfair customer gripes.
"I feel sorry for kids who grow up never taking a job because they have to," Bogle said. "There are kids too moneyed in their families, and what do they learn? Money talks. Isn't that grand?"
In fact, it's not just the ability to work, it's willingness to do all kinds of work. Bogle himself worked as a waiter, as the head of the football ticket office at Princeton and in a post office. In one of the worst market crises in history, Black Monday, Bogle could have been a command-and-control CEO. Instead, he stepped into the fray.
"You should have been here on Oct. 19, 1987, when the market went down 23 percent in one day."
As markets lost $500 billion in value, Bogle remembers moving around the office "like a general running behind the trenches."
By his recollection, he answered 104 calls from panicked investors himself that day.
"If you want people to trust you, you have to trust them. If you want people to be loyal to you, you have to be loyal to them," Bogle said. "You give people responsible jobs and help them do them the best way you can."
One example from Vanguard: The company has a partnership plan that calculates bonuses for employees based on how much less Vanguard's expense ratio is than its competitors' and how much its funds outperform. During Bogle's tenure as CEO, annual bonuses could amount to as much as 30 percent of an employees' pay.
"Leaders do need patience, of which I have none," Bogle said. But he was forced to practice it at a few points over the years.
The long process of cutting the ties with Wellington and founding Vanguard was, he said, "nine months of pain and struggle."
When he started Vanguard with $1.4 billion in assets, much of the financial services community called indexing Bogle's Folly. Malkiel remembers an early board meeting where one of the other directors said, "We're hemorrhaging cash."
The company struggled until 1981 to find its footing, even fighting with regulators for the approval of its fund model.
The early fights didn't deter Bogle. Malkiel remembered, "What Jack did was to say, 'We're on the right course, and stay the course.' I knew Jack believed this in his heart of hearts."
Twenty years later, in 1995, Bogle's heart failed, but only literally. "I drew deeply on all the patience, persistence and courage I could muster, as anyone would when, in 1995-96, I endured a 128-day hospital wait, on life-saving intravenous fluid, before receiving a heart transplant," he wrote in his classic book, "Common Sense on Mutual Funds."
"A leader is someone people look to for help and encouragement and maybe a little sympathy and empathy," said Bogle.
He's not afraid to show emotion himself.
The grandson of a wealthy family and the son of a poor one, Bogle worked his way through school after the Bogles lost their money during the Depression. His father was, he said, a playboy, and his mother held the family together.
"She could charm the skin off a snake and often did," Bogle said, tearing up. "You just can't imagine the burden she had, day after day. But I don't recall her complaining. Life has a lot of burdens. She never showed them. "
As for his father, Bogle said, he loved him and still does. "He just didn't have the strength. He did his best."
When he was in college, his mother and two brothers were living in a rented apartment above the garage of a mansion in Bryn Mawr, Pennsylvania. The apartment was a pool room, where his brothers slept, a bedroom for his mom, a hot plate in the hallway, and a bathroom, where they also washed dishes.
When Bogle came home from Princeton for the holiday, there wasn't room, so he made another bedroom out of the dirt-floor garage on the estate.
He got a job working at the post office in the center of town. It started at 4 a.m.
"I remember walking down from this mansion, this garage," he said. "I walked down the street in the dead of night. Streetlights on. Not a car in sight. Once in a while, it would be snowing. And I thought, 'Oh, my God, I'm in heaven.' The snow is falling, and everything is quiet, and I'm going to work, looking forward to the day. I never thought I was anything but the luckiest person on the face of the Earth," he whispered.