The lesson emphasizes the importance of determination, hard work, and focusing on delighting customers. The stories of Rose Blumkin and Jack Taylor illustrate that starting with very little capital, they built successful businesses through perseverance, dedication, and exceptional customer service. Their success was not due to unique products but to their relentless effort and commitment to making customers happy. The lesson also underscores the value of learning from others and surrounding oneself with exemplary people, both in business and personal life, to achieve greater success.
Full speech below:
These people had one thing in common, you know. They knew they had it in themselves. They knew they could be something beyond where they were. They were willing to put their time and their energies to better themselves. What you really could do with more skills is just remarkable. So I would like to just tell you a couple of short stories, and we'll draw maybe a couple of lessons from them.
I would like to tell you of two women who each sold their businesses to Berkshire Hathaway, to me actually, for many, many millions of dollars. Both of them started with twenty-five hundred dollars, by coincidence, the exact same amount. It was everything they had in the world.
One of them was a woman who landed in Seattle in 1917. She couldn't speak a word of English and had a tag around her neck that said Fort Dodge, Iowa. The Red Cross got her to Fort Dodge, where she was reunited with her husband who had come to the country a couple of years earlier. She lived in Fort Dodge for two years, and as she put it, she felt like a dummy. She couldn't pick up the language; she couldn't learn a word. So she and her husband decided to move to Omaha.
In 1919, they came to Omaha, where she found a small colony of Russian Jews and started feeling more at home. Her oldest daughter, Frances, would come home from school and teach her mother the words she learned that day. This woman, Rose Blumkin, spent 20 years saving money, bringing over her siblings and parents, fifty dollars at a time. She sold used clothing to do it and had four children during this period. By 1937, after 20 years, she'd saved twenty-five hundred dollars. She went to Chicago and bought what she could of furniture. Her dream had always been to open a furniture store.
This woman, who had never gone to school a day in her life, with twenty-five hundred dollars but with the same spirit that the people in this room have about having a dream and working to accomplish it, built a business which she sold to me in 1983 for approximately 60 million dollars. Last year, that business did a billion and a half dollars worth of business. The fourth generation is working in that business now. Rose Blumkin worked for me until she was 103. She retired and died the next year, which is a lesson to all of Berkshire's managers about premature retirement.
Mrs. B, with her twenty-five hundred dollars, could not read or write and went into the furniture business. She didn’t bring anything unique in furniture, but she brought a determination to succeed. She knew she could outwork anyone else and cared about her customers. She worked at very low gross margins but built this incredible business.
I saw another woman who did a similar thing with twenty-five hundred dollars. I paid her hundreds of millions of dollars for her business, so I decided to go to the source and get these people before you do. I don't want you guys coming around asking me for hundreds of millions of dollars; I'd like to join in with you much earlier.
Today, I'd like to tell you about one other small business person. I went to buy his business from him, and he turned me down, which was very wise. This fellow was born about eight years before I was, in 1922. We'll call him Jack. He lived in the Midwest, was a pretty good athlete, and didn’t like school much.
I'll tell you one thing early in the story, and maybe you can figure out who he was. The company he built hires more college graduates each year than any other company in the United States. This fellow, destined for this but not knowing it, went to college for a year and then dropped out. He wasn't interested in school, and the year he dropped out was 1941. When the United States came under attack, he went to the Army Air Force recruiting station and volunteered. They turned him down because he had hay fever. So he went to the Navy, volunteered, and they took him. They put him on an aircraft carrier, and he flew small flight airplanes during World War II. He got two distinguished flying crosses from the Navy and then came back to the Midwest.
Now, we've got a young guy, probably 23 or 24 years old. He went from one job to another for a short period. He finally became a used car salesman at a Cadillac dealership in St. Louis, Missouri. At age 35, having moved up in the sales organization, he asked his boss if he could go into the car leasing business with him. The boss said yes, but only if he cut his salary in half and came up with $25,000, which he borrowed. They became partners in a car leasing company.
Jack started at age 35 in the car leasing business with seven cars. It was slow. One of the things he did was let the phone ring three or four times before answering, so people would think he was busy. His first venture was okay but wasn’t going anywhere.
At age 40, he decided to go into competition in the rental car business with 17 cars. He was taking on Hertz, Avis, and National, who had hundreds of thousands of cars, while he had 17. His cars weren't different; he bought them from General Motors, Ford, or Chrysler. He couldn't get the airport locations; those companies had them all sewn up. But he was determined to offer the customer friendlier service than they'd ever seen. He named his company after the battleship he'd flown from in the Pacific, the USS Enterprise.
When he died, his rent-a-car company, starting with those 17 cars, was worth more than Hertz and Avis and all the rest of the rental car companies put together. The man's name was Jack Taylor, and his son Andy Taylor, who is a good friend of mine, runs the business now. A grandchild is in the business; they'll probably be a fourth-generation alumni. So this man, in the United States, didn't invent artificial intelligence, you know. He didn't do anything just like Mrs. B selling furniture, I mean, that any one of us could have entered those businesses. But he lived by the creed of delighting his customers, working with people, and establishing relationships with them so that they, in turn, would want to delight the customers. He couldn't go out and take care of every rental car possibility, but he learned how to project himself and his attitude toward his fellow man and his desire to make a friend out of every customer. He managed to take very ordinary cars and turn them into this extraordinary business from virtually nothing, and it illustrates several points. One is you don't necessarily get it right exactly the first time. In the car leasing business, you were basically competing on the cost of money to finance cars, and it's very hard to delight a customer when you just give them the car and tell them to send you a monthly check for five years and you'll be back at that time. His talents were being wasted in that business. But at the age of 40, with all of that experience behind him, he found the golden key. He took a very ordinary business and turned it into an absolutely extraordinary operation, just like Mrs. B. Rose Blumkin did with furniture. He didn't worry about whether the Federal Reserve was going to tighten or ease, or whether the stock market was up or down yesterday. He didn't worry about the things he couldn't change, but he did focus on the one thing he could change: the customer's experience.
I have seen the one that got away: Enterprise. I went down to Florida and tried to talk him into selling to Berkshire, and he was smart enough not to do it. Probably the value of the company has quadrupled since I made that visit, but he was smart enough to see that he would find that business. Henry Ford, as you may know, failed twice before he started the Ford Motor Company in 1903. The test isn't whether you get the greatest business idea in the world the first time out; the test is whether you keep learning as you go along what your strengths are and what you can do for your customers, what you can bring especially to the party. To do that, you need the education that I know you've received through Ten Thousand Small Businesses, but you also need a genuine desire, day in and day out, to delight the customer. I've never seen a business, and I've seen a lot of businesses, but I've never seen one that delights the customer and doesn't succeed. What you want is for that customer, the next day, when they think, "Do I want to rent a car or buy some furniture?" to remember the place where they've had a great experience.
I don't know what I paid for this tie; actually, somebody probably gave it to me, but for the purposes of the speech, I will say I have no idea. But I do know I will remember how I was treated when I bought it. You long forget about the price, but you never forget whether you had a good experience or a poor experience with the purchase. You'll have a hard time finding a person who has had a wonderful experience, a delighted experience, in purchasing anything who isn't going to come back. Similarly, if the memory is of rudeness or indifference, they are never going to move in the direction of the people you associate with. If you constantly...
I've been enormously lucky in that respect. I've had teachers, friends, and a spouse who really was a better person than I was, and I had enough sense to learn from these people that life went better if you behaved better yourself. It took a while, so I advise you to seek out, as your partner in business or in life, people who actually are examples to you, rather than somebody you think you need to straighten out yourself. Simple rules like delighting customers, working through other people, and associating with people who will cause you to move in a better path than you might otherwise have will take you so far in life that it's hard to believe. They took Rose Blumkin, who couldn't speak a word of English, couldn't read or write, and built what is now a billion-and-a-half-dollar business. Incidentally, there's been no money put into it since the $2,500; that's been the total capital paid into the Nebraska Furniture Mart. I think if you looked at Enterprise, I don't know their books the same way, but my guess is that very little equity capital has been added to Enterprise over the years. The business built on itself.
I want to tell you I admire this group enormously. When I met Dr. Mello's class on September 22nd, eight years ago, I was thrilled, and I admire people who are doing what you have done: working hard at your job while taking on a lot of added hard work to further your skills. A 99% graduate rate is a mind-blowing statistic, and I'm looking at 2,200 people here who I admire. I'm cheering for you, and I can tell you the best is yet to come. Thank you.
