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Bogle’s Vanguard & Wallace’s Braveheart: Hero’s Journey Entrepreneurship

Posted: Nov 27, 2006 1:16 PM CDT
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Author: Elliot McGucken

"I say, follow your bliss and don't be afraid, and doors will open where you didn't know they were going to be." -- Joseph Campbell

The true source of every academic discipline, from law, to religion, to economics, to entrepreneurship, is Story, and thus tying entrepreneurship to classical myth is a lot of fun, as Story is a most efficient schoolmaster. So often it is that great ventures originate in inconspicuous events on an ordinary day--Luke Skywalker bought a couple robots, Bilbo Baggins came across a small ring and took it back to the Shire, and Neo followed the white rabbit. Entrepreneurs ranging from John Bogle, who founded the Vanguard Group based on his college senior thesis which went against Wall Street's conventional wisdom, to Randall Wallace, who left a job in TV to pen something closer to his heart--the classic Braveheart--all leave the "Ordinary World" to "follow their bliss." So often it is that the beginnings of the journey is marked by a seemingly whimsical happening: John Bogle, while seeking a topic for his Princeton Senior Thesis, came across an article in Fortune Magazine saying that money managers rarely outperformed the market, and so the idea for his "common sense" index fund was hatched. While visting Scotland after having left his job in TV, Randall Wallace came across the statue of Robert the Bruce, and standing next to him was a statue of William Wallace. Since he shared the same last name, Randall asked the museum guard, "Who is this William Wallace?"

If the students don't quite know who Richard Branson or John Bogle are; if Joseph Campbell seems a bit esoteric, they are yet familiar with Frodo, Luke Skywalker, and Neo—farm boys and a cubicle worker who felt there was something more out there—who heard some call to adventure and reluctantly went on to save the universe. If they've not yet heard of Randall Wallace, the author of Braveheart, they yet know William Wallace, who lived a parallel journey on the silver screen. The class seeks to remind them that life is a great adventure to be lived with a free spirit and brave heart, and without the assistance of classical myth and real-life entrepreneurs who followed their bliss, we would be unable to teach such things.

During the most recent freshman seminar, the students discussed how they're watching movies and reading books differently—how they're extracting the eternal principles—the classic call to adventure, the meeting with the mentor, the road of trials, tests, allies, and enemies, the showdown/ordeal, and the return on home with the elixir. And too, they're seeing the deeper secret of the "Hero's Journey"--the common moral precepts that are at the center and circumference of all everlasting stories. And thus it makes sense that similar plot points appear in Job's, Branson's, Bogle's, and Wallace's careers.

In reading both The Odyssey and The Battle for The Soul of Capitalism, students see that it was similar moral precepts that guided Odysseus on home and inspired John Bogle to found Vanguard. Both Odysseus and Bogle saw the folly of short-term temptations--the Sirens, Lotus Eaters, Hedge Funds, and speculation based on daily market fluctuations--and the virtue of long-term investing--of investing in and living by the fundamentals--family, faith, and the home back on the Shire. 'Tis why Buffett never left Omaha.

So it is that eventually Bogle founded Vanguard based on higher ideals that countered Wall Street's wisdom—the higher ideals he set down in his 1951 senior thesis at Princeton—that paying Wall Street intermediaries to manage money was by and large a waste for the common investor. And like his 1951 thesis, Bogle's 2005 book shows how mutual funds and hedge funds, despite all the hype, typically harbor greater risk and less rewards than the Vanguard index fund--and time has proven his thesis true via abundant empirical data.

Regarding Vanguard, Bogle writes,

The first invention took place only months after we began, when a simple thought, indeed one that had first occurred to me when I wrote my senior thesis at Princeton University in 1949-51, began nagging at my mind. If mutual funds as a group fail to deliver stock market returns by the amount of their heavy costs, why not own the entire market at the minimal cost we were prepared to deliver? Then, investors could capture almost 100% of that annual return, rather than the 70%-80% fraction that would likely be achieved by our peers. This banally obvious insight quickly led to the simple invention that has been the most powerful manifestation of Vanguard's philosophy—the first index mutual fund in history. Today, "Bogle's Folly"—now Vanguard 500 Index Fund—is the largest mutual fund in the world.

Bogle worked a normal job on Wall Street for over twenty years, just like Neo in The Matrix, but throughout it all, he never lost sight of the moral premise he had set down in his senior thesis--the ideal that nobody could ever quite convince him wasn't real—that fundamental premise of all entrepreneurship--that the risk takers ought to reap the rewards of their investments, and thus that the overarching Wall Street setup was fundamentally immoral in that it reaped the majority of the rewards while relegating all of the risk to the common investors—the teachers, preachers, and firemen.

Bogle lost his job on Wall Street during the seventies recession; forcing him to finally follow the youthful idealism of his 1951 senior thesis and found the Vanguard Group, just as Randall Wallace lost his job writing for and producing TV, before being "forced" to write his very first feature film—the multiple academy-award-winning Braveheart. So it is that failure and setbacks are contextualized in artistic entrepreneurship—they become steps along a greater journey, where one sometimes trades one's job for one's higher ideals; which although paying little or nothing today, are infinitely better long-term investments.

I recently had the privilege of hearing Randall Wallace speak at the Director's Guild, and he told us a great story about the writing of Braveheart, which very much parralleled the narrative of the movie (without the battle axes).

Wallace had lost his job in TV after telling his boss that Hollywood could do better—that Hollywood could aim higher and voyage deeper. His boss had replied, "If we tried for anything deeper, the backwoods folks in Nebraska wouldn't get it." To which Wallace said, "I am from the backwoods folks from Tennessee, and not only would they get it, but they would love it. And it is our duty to give it to them."

And that very same exchange--in which Wallace, like Bogle, Buffett, and Odysseus hears that call on home--became the moral premise of Braveheart:

There's a difference between us. You think the people of this land exist to provide you with position. I think your position exists to provide those people with freedom. And I go to make sure that they have it. –William Wallace speaking to the Scottish Nobles in Braveheart

And too, such sentiments are the moral premise of Vanguard:

"Just as my book points out, mutual funds are the paradigm of the triumph of managers' capitalism over owners' capitalism. Yet the winning strategy ultimately is held by the firm that provides a community advantage that serves shareholders and owners, simply by taking the lion's share of those oppressive costs out of the investment equation. It is hard to imagine that Dr. Franklin, reborn in our age, wouldn't have sought to serve, not himself, but the community in exactly the same way. " –John Bogle, Capitalism, Entrepreneurship, and Investing—The 18th Century vs. the 21st Century, Founder and Former Chairman, The Vanguard Group At the Greater Philadelphia Venture Group
January 25, 2006

It is the moral premise of Joseph Campbell's life and works—of the Hero's Journey:

Man should not be in the service of society, society should be in the service of man. When man is in the service of society, you have a monster state, and that's what is threatening the world at this minute. –Joseph Campbell, author of Hero With a Thousand Faces

'Tis the very same moral premise of America--"a government of the people, by the people, and for the people."

And that's where entrepreneurship comes in--the living embodiment of this classic American ideal--the constant creation, renewal, and revival of ventures that exist not to tax nor exploit nor limit freedom, but to serve--that exist not to make money by following the bottom line, but to create wealth by serving higher ideals.

So there it is—in the personal journeys of Bogle and Wallace—they lived epic myths centered about a moral premise and created enduring ventures in their wake. One might call them risk-takers, but look closer, and each knew that the bigger risk was in forgoing one's moral premise to merely "go with the flow."

So it is that entrepreneurial risk has little to do with the roulette wheel that Wall Street has become—it has little to do with MBAs extracting fees for risking other peoples' pensions and savings in hedge funds—but risk has everything to do with the lone individual following higher ideals—providing true leadership in going against the establishment whenever and wherever the establishment goes against the hgher ideals; heeding that call to adventure, siezing the sword from the stone, and returning on home with the elixir--creating lasting wealth for all on the Hero's Journey.

And when students hear these epic stories, courage is gained—the courage to perhaps forgo a "safe" job at a mutual fund, or even get fired from their cubicle in the Matrix--to "lose one's life so as to find it"—but only because they are adhering to higher principles and dreaming of an exalted goal. The courage to believe in and follow Jefferson's eloquent words--"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness ." The courage to build those better ventures based on those higher ideals, for while the average value of all paper currency over time is zero, paper printed with the prophet's poetry pays in dividends.

Such courage will be needed to lead a renaissance--"to begin the world anew," as Bogle quotes Hamilton.

        One of William Wallace's most endearing qualities was the hope he saw in everyone--in Robert the Bruce and the future Queen of England--he saw the better angels of their nature and spoke to them, regardless of their positions, for "men follow courage, not titles." And in hearing Randall Wallace speak at the DGA, one could see from where William had inherited such traits.

            And finally, speaking of inheriting traits, Randall Wallace told us the story of how royal historians had contacted him from England after Braveheart's resounding success.

            As you all know, at the end of movie the Queen of England carries William Wallace's child, and the royal historians were worried and perhaps a bit upset about what the fictional account might lead some to believe about the lineage and constitution of the actual Royal Family.

           So Randall Wallace apologized, "I never meant to imply any such thing, and I apologize to Scottish people everywhere."

           Well thanks to Bogle and Wallace for providing living examples of the "humble hero's journey." For as students to see that such epic myths are not solely the province of the silver screen, Joseph Campbell's advice to "follow yor bliss" is brought to life.

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Comments:

Thanks for the read. Very much appreciated. I am currently aspiring to Warren Buffett, using Conscious Investor software. He is a great example to society.
Posted by Roger on 02/07 at 04:14 AM