Warren Buffett declared an 89-year-old carpet seller would 'run rings around' America's best CEOs. Here's the incredible story of Mrs B.
REUTERS/Rebecca Cook
- Warren Buffett said an 89-year-old carpet saleswoman would "run rings around" Fortune 500 CEOs.
- Buffett praised Rose "Mrs. B" Blumkin after buying her business, Nebraska Furniture Mart, in 1983.
- Mrs B founded NFM with $500 in 1937. It now generates an estimated $1.6 billion in annual sales.
Warren Buffett said an 89-year-old carpet saleswoman would "run rings around" the best corporate executives and business-school graduates in America.
Berkshire Hathaway's billionaire boss praised Rose "Mrs B" Blumkin after he bought 90% of her company, Nebraska Furniture Mart, for about $55 million in 1983.
''Put her up against the top graduates of the top business schools or chief executives of the Fortune 500 and, assuming an even start with the same resources, she'd run rings around them,'' Buffett said in 1984, according to the New York Times.
"There aren't any other Mrs Bs," he said in a NBC interview after the takeover.
Mrs B founded Nebraska Furniture Mart in 1937, and enlisted her children and grandchildren to grow it into the biggest home-furnishings store in the nation.
Today, the business generates about $1.6 billion in sales and more than $80 million in after-tax profits, Glen Arnold estimates in "The Deals of Warren Buffett Volume 2: The Making of a Billionaire."
Humble beginnings
Mrs B was born in 1893 in a village near Minsk, Belarus. She began working in her mother's grocery store at age six, and was managing six people, all men, by the age of 16.
At 23, virtually penniless with no formal schooling and unable to speak English, Mrs B journeyed to the US to reunite with her husband, who had fled there to avoid being drafted into the Russian army.
She traveled across Siberia on the Trans-Siberian Railroad without a ticket or passport, convincing a guard on the Russia-China border to let her pass by promising him a big bottle of brandy upon her return, Arnold writes.
Soon after Mrs B made it to Iowa, she and her husband moved to Omaha, where she sold second-hand clothing and sent money home to help her parents and five siblings make the trip to America as well.
In 1937, aged 43, with four children, Mrs B started Nebraska Furniture Mart with $500 and stocked it with $2,000 of merchandise. Fearing she wouldn't be able to repay her creditors, she sold all the furniture and appliances in her home, including her refrigerator.
Mrs B's strategy was to undercut her rivals, prompting them to organize boycotts and haul her into court for violating fair-trade laws. During one trial, she explained that she turned a profit by selling everything at 10% above cost. The judge not only acquitted her, he bought $1,400 worth of carpet from her the next day.
Buffett buys the company
Buffett was a longtime admirer of Nebraska Furniture Mart. At least 12 years before he bought it, he described it as a "really good business" to a writer he was showing around town, Arnold writes.
Mrs B resisted selling for years, but eventually warmed to the idea at the age of 89 in 1983. She felt bossed around by her children, and didn't want them to squabble over the company and pay steep estate taxes when she passed away. She decided to cash out and distribute the windfall among her family members.
Buffett approached Mrs B's son, Louie, about a buyout. The famed investor reassured him that the Blumkin family would continue to run the company, and Berkshire would take a long-term view as its owner.
When Buffett brought the deal to Mrs B, he didn't check the store's inventory or real-estate titles, audit the accounts, or conduct any due diligence. The agreement was done with a smile, a handshake, and a 1 1/4 page contract that Buffett drafted.
Part of Buffett's appraisal was imagining being a rival retailer. "I'd rather wrestle grizzlies than compete with Mrs B and her progeny," he said.
Mrs B retires, then decides to open a rival store
After Buffett's takeover, Mrs B remained chairman and continued selling carpets.
"She runs rings around the competition," Buffett wrote in his 1987 letter to shareholders.
"It's clear to me that she's gathering speed and may well reach her full potential in another five or 10 years," he continued. "Therefore, I've persuaded the board to scrap our mandatory retirement-at-100 policy. (And it's about time: with every passing year, this policy has seemed sillier to me.)"
Mrs B eventually retired in 1989, aged 95, after a disagreement with her grandsons. However, she grew restless after three months and opened a rival store called Mrs B's Clearance and Factory Outlet across the street from Nebraska Furniture Mart, the Times said.
She grew it into Omaha's third-largest carpet store in three years, and Buffett bought it in 1992 and merged it with her family business. He joked that he wouldn't let Mrs B retire again without signing a non-compete agreement.
The tireless Mrs B worked at the store until she was 103. She died a year later, in 1998. Her grandchildren and great-grandchildren now run the business.
from Business Insider https://ift.tt/e54qQ6w
via IFTTT
Comments
Post a Comment