#57 John Bogle: Stay the Course: The Story of Vanguard and the Index Revolution

**David Senra** (0:00)
I want to tell you about a one time only limited event that I don't think you're going to want to miss. I am doing a live show with Patrick O'Shaughnessy from the Invest Like the Best podcast in New York City on October 19th. Patrick has interviewed over 300 of the world's best investors and founders for his podcast. I've read over 300 biographies of history's greatest entrepreneurs for my podcast. We'll be talking about what we learned from seven years of podcasting, sharing our favorite ideas and stories, and doing a live Q&A. There will also be special event-only swag. If you live in New York City, I think it's a no-brainer. But if not, I think it's a great excuse to fly in. I've already heard from a bunch of people that bought tickets, they're flying in from other cities. Some people are flying in from other countries. That's setting the bar really high, so I will have at least four shots of espresso, or four energy drinks, before or during the show, so we can make it a night that you'll never forget. If you're interested in attending this unique live event, I will leave a link down below. I highly recommend you get your tickets today, and I hope I get to see you in New York on October 19th. This book tells the story of how my career began, how it was abruptly cut short, and what followed once I resumed that career. It is a story of creativity and innovation, of victory and defeat, of laughter and tears, of pure coincidence and sheer luck, of commitment to high values, of determination, of determination, of stubbornness, and of cussedness, all in the name of serving investors, small as well as large, simply by giving thrifty human beings their fair share of whatever returns the financial markets bestow to our investments.
It is also the story of a revolution. No, there are no Molotov cocktail throwing radicals involved. Just one man with a truly financial world changing idea called the Index Mutual Fund. That idea has spread like a meme, maybe even a religious sect. It is the index revolution, and Vanguard has been its clear leader. For as long as I can remember, I've used the phrase, stay the course, to urge investors to invest for the long term and not be diverted by the daily sound and fury of the stock market. In this book, as you'll see, stay the course also has been my motto in building Vanguard. Holding fast to a long-term business strategy and overcoming both adversaries and adversities, none of which were able to halt our rise.
Okay, so that is from the introduction of the book that I want to talk to you about. The book is titled Stay the Course, The Story of Vanguard and the Index Revolution by John Bogle.
So I knew I was gonna eventually get around to covering John Bogle, because I think he is the inventor and the founder of arguably one of the most important products and most important companies in history. And I'll put into financial terms later on in the podcast that'll make, I think, that statement fairly obvious. But a few weeks ago, or about a week or two ago, if I had the time of recording this, he passed away, so I decided to push him to the front of the queue. And for us to study his ideas, because he was a truly remarkable person with some very simple ideas that, in retrospect, are extremely obvious. And as we've studied in the podcast, a simple idea coupled with determination usually can lead over a long period of time to great results. And before I jump into the book, just a reminder that this podcast is ad-free and independent, so I rely on the people that actually get value from my work. The best way to do that is sign up for Founders Notes. If you commit to supporting this podcast on a monthly or an annual basis, you'll get every single podcast note. So just like I take notes on books about entrepreneurs, I take notes on podcasts with entrepreneurs. And I just counted yesterday, the full archive of all my notes, I've taken notes on 132 different founders. So the same way I'm pulling out the main ideas of these books, I pull out their main ideas from the podcasts and email them to you every Sunday. And you can just do that by clicking the link below or going to founderspodcast.com. All right, so let's go ahead and get into the book. Now, this book does not follow, the time scale is not linear. So he'll be talking about something that happened in, say, 1974, and then he'll flash forward to the result of that, let's say, 30 years later. But I'm just going to pull out these ideas. Don't worry about keeping the timeframes because it would be too confusing unless you literally read the book in order. So we're going to get to how he get, what he was referencing in the introduction about how his career was cut short, and then he had to basically start all over again. So he's going to explain a little bit about that in a minute. For now, though, all you have to know is that he got fired, and he decides, hey, this is an opportunity to kind of turn the industry, the active management industry on its head. And it's based on a thesis that he wrote in 1951, which we'll also get to. But anyways, he's publicizing his plans to basically have an unmanaged index fund, which didn't exist at the time. And this guy named John finds out, and the note I left myself is, do you want to put customers' needs first? How dare you? And so as we can imagine, and we've seen in other podcasts, whenever you have a new idea, you're gonna get a lot of pushback, especially from the people that make money, that are making money doing it the current way. So he talks about the, hey, I want to meet with you. John's like, okay, well, you can just meet with me tomorrow at the airport. And we're gonna pick right up to the point. He says, after a few pleasantries, he got right to his point. I understand that you're planning to create a new mutual fund complex that will actually be mutual, owned by the fund shareholders. Yes, I responded. I hope to build such a firm. To put it mildly, John was not amused. I still remember his exact words. If you create a mutual structure in other terms, if you put the customer's needs before our own, he said sternly, you will destroy this industry. More than four decades later, it is clear that John was on to something. If he had amended his dire prediction to say, you will destroy this industry as we know it today, we could credit him with almost perfect foresight. Then again, nobody in 1974 really could have predicted that an upstart firm founded at the bottom of a vicious bear market would overcome all odds and not merely survive, but ultimately dominate the mutual fund industry. So what I particularly loved about reading this book is to spend a lot of time in his thoughts, going back from when he was a Princeton in the 1950s all the way up to when he started Vanguard. He was in his mid to late 30s at the time. So that places it somewhere in the 1970s, mid 1970s. And so now today, I think it's widely known by a lot of people, you know, index funds are massive. They're right at the time I'm recording this. I think Vanguard has something like six trillion dollars of assets under management. But this industry literally did not exist in the 1970s. So it's really interesting to see the creation of a fundamentally brand new product. And then of course, the predictable responses from, you know, the entrenched interests. Okay, so let me just give you, in case you don't know, this is just a brief description of what Vanguard does and why it does it.