#303 Rose Blumkin (Warren Buffett's Favorite Founder)

What I learned from reading The Women of Berkshire Hathaway: Lessons from Warren Buffett's Female CEOs and Directors by Karen Linder. ---- Follow one of my favorite podcasts: Invest Like the Best and listen to episode 326 Alexis Rivas—A New Blueprint for Homebuilding ---- Episode outline: Mr. Buffett, we're going to put our competitors through a meat grinder. — Buffett: The Making of an American Capitalist by Roger Lowenstein. (Founders #182) There are several "Going Out of Business" advertisements from competitors' stores framed and hanging on the wall. As a general rule, bet on the quality of the business, not on the quality of the management-unless, of course, you've got a Mrs. B. in your hand. If that is the case, go all in. She was a business genius. — The Tao of Charlie Munger (Founders #295) Retirement is fatal. — David Ogilvy (Founders #189) Business like raising a child, you want a good one. A child needs a mother and a business needs a boss. What is your favorite thing to do on a nice evening? Drive around to check the competition and plan my next attack. He was 52 and famous. I was 33 and a junior account executive. Early on, he wrote a letter to one of my clients. After listing eight reasons why some ads prepared by the company’s design department would not be effective, he delivered his ultimate argument: The only thing that can be said in favor of the layouts is that they are “different.” You could make a cow look different by removing the udder. But that cow would not produce results. So began my “David” file. Almost everyone who worked at the agency kept one. — The King of Madison Avenue: David Ogilvy and the Making of Modern Advertising by Kenneth Roman. (Founders #169) Buffet said: If she ran a popcorn stand I’d wanna be in business with her. She's just plain smart. She's a fierce competitor and she's a tireless worker. Buffett “on how Mrs. B ran her business: One question I always ask myself in appraising a business is how I would like, assuming I had ample capital and skilled personnel, to compete with it. I'd rather wrestle grizzlies than compete with Mrs. B. They buy brilliantly, they operate at expense ratios on to t competitors don't even dream about, and they then pass on to their customers much of the savings. It's the ideal business—one built upon exceptional value to the customer that in turn translates into exceptional economics for its owners." She hired a chauffeur who drove her around Omaha each day. The driver took her to other stores. She looked in the windows and checked to see how many cars were in their parking lots. It didn't take long for her to plan her revenge. There was no looking back. She just swung. Aspiring business managers should look hard at the plain, but rare, attributes that produced Mrs. B’s incredible success. Students from 40 universities visit me every year, and I have them start the day with a visit to NFM. If they absorb Mrs. B’s lessons, they need none from me. ---- Join my email newsletter to get my top 10 highlights from every book ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  The tale of Rose Blumkin is a quintessential immigrant success story. She was born in a village near Minsk, Russia. She and her seven siblings lived in a two-room log cabin and had to sleep on straw mats. Her father was a rabbi and spent his days in religious study. Her mother ran a small general store. "My father was so religious," he said, "that my mother had to support us. He only prayed." Rose never attended school. She started helping her mother in the store at the age of six. She once woke up in the middle of the night and saw her mother washing clothes and baking bread for the next day. Rose said, "When I grow up, you're not going to work so hard. I can't stand it, the way you have to work day and night."

• 0:44David Senra?

  When Rose was 13, she left home, walking barefoot for 18 miles to get to a train. She stowed away on the train and got off 300 miles away at a small town near the Ukrainian border. She went from shop to shop looking for a job and a place to stay. "You're just a kid," one store owner said. "I'm not a beggar," Rose shot back. With only four cents in her pocket, she asked to sleep in the house that night. "Tomorrow I go to work," she said. The owner relented, and Rose got up before dawn the next morning and cleaned the store. She stayed, becoming the manager of that store by the age of 16. Then she went to a larger town, got another job in a men's clothing store as a salesman, and met Isadora Blumkin.

• 1:29David Senra?

  They were married in 1914, and Mrs. B. later remembered her wedding day, saying, "My mother brought me two pounds of rice and two pounds of cookies." That was the wedding feast. World War I erupted that same year, and many inhabitants of Russia had to flee. Isadora was able to emigrate to the United States. "We didn't have the money for two passages," Rose said, "and so my husband had to go alone." For the next three years, Rose worked in a dry goods store, squeezed every penny, and finally in 1917, took a train to the Chinese Siberian border. I had no passport. At the China-Russia frontier, a soldier was standing guard with a rifle. I said to him, "I'm on my way to buy leather for the army. When I come back, I'll bring you a big bottle of vodka." "I suppose he's still there waiting for his vodka," she said laughing.

• 2:14David Senra?

  She made her way from China to Japan and then booked passage on a Japanese peanut boat. After six miserable weeks, the ship finally docked in Seattle. When she got to America, she had $66 in her purse. The Red Cross helped Rose find her husband, who was living in Iowa. They lived in Iowa for two years, during which their first daughter was born. But Rose was unable to communicate with any of the locals, so they moved to Omaha, where there was a large community of people who spoke both Russian and Yiddish. "I couldn't learn to talk English," Rose said. "I didn't know nothing, so I made up my mind that I was going to a bigger city." That was an excerpt from the short biography of Rose Blumkin that I found in the book that I'm going to talk to you about today, which is The Women of Berkshire Hathaway:

• 2:57David Senra?

  Lessons from Warren Buffett's Female CEOs and Directors, and is written by Karen Linder. So I've made a lot of podcasts on Warren Buffett and Charlie Munger. And in almost every book, including the Berkshire shareholder letters, they'll mention their admiration for Rose Blumkin, who's known as Mrs. B., who's the founder of Nebraska Furniture Mart. And I've mentioned on past podcasts that I can't find a biography on her. I wish I could do an episode on her. And a few listeners actually told me about the book that I'm holding in my hand. And this book does an excellent job of giving an overview of Rose Blumkin's life and career. And so let's jump right into it. It says, "Rose Blumkin became the first ever female Berkshire Hathaway manager when Nebraska Furniture Mart was acquired by Warren Buffett in 1983. Rose was just shy of 90 years old at the time."

• 3:40David Senra?

  You would assume that this change in ownership would signal retirement for Rose, but she still worked for more than a decade longer, 12 to 14 hours a day, seven days a week, until she reached the age of 103. So after I read the book, I went and searched all the highlights that I have about Rose Blumkin. And back on episode 182, I read a biography of Warren Buffett that came out in 1995. It's called Buffett: The Making of American Capitalists. And there's this great excerpt in that book that describes this purchase that this book is describing. And it's the, it's the negotiation, if you can call it that, between Buffett and Mrs. B. And this is, I think, the second or third time he had tried to buy... I think, I know he tried to buy it at least one other time, maybe like 20 years earlier.

• 4:25David Senra?

  And so it says, "How much?" Buffett asked. 60 million, Mrs. B spat out. They shook hands and Buffett drew up a one-page agreement, Buffett's biggest acquisition by far. Mrs. B, who could not write in English and barely could read it, made a mark at the bottom. A few days later Buffett presented her with a check for 90%. She, this is my favorite part. She folded it without a glance and by way of concluding matters declared, "Mr. Buffett, we're gonna put our competitors through a meat grinder." She was 89 when she said that. About 46 years after she started the company. It says, "Rose founded the furniture store in Omaha in 1937, at the age of 43, and grew it into a business with annual profits of over $15 million." By this time she had trouble walking, but that wouldn't stop her.

• 5:08David Senra?

  She'd actually drive around the furniture store on a motorized scooter and she would stop to speak with customers in her thick Russian-Yiddish accent, encouraging them to make a decision and assuring them that they wouldn't get a better deal anywhere. She had a harsh management style and she was very tough. The way she speaks about some of her former employees in this book. It's just, it's funny because it's coming from like a 100-year-old lady. This is the end result. "Most furniture stores have found it futile to attempt to compete in Omaha with Nebraska Furniture Mart." In fact, I can't remember if it's in the book Buffett, The Making an American Capitalist. No, you know what? It's in Buffett's shareholder letters where he says that he would rather wrestle grizzlies than compete with Mrs. B.

• 5:49David Senra?

  And so I want to expand on that idea that most furniture stores have found it futile to even try to compete with her. This is one of my favorite parts of this entire mini-biography of Rose. Look what they hang on the walls in the office of Nebraska Furniture Mart. There are several going-out-of-business advertisements from competitor stores framed and hanging on the wall.

• 6:11David Senra?

  Displayed so that the company will never forget about those other stores who put themselves out of business, how it can happen to anyone, and that it must be avoided. And so, yeah, that's a good idea as a reminder, hey, how bad things can get. You know, Buffett has like a newspaper comes from the depression to remind him of the same thing. But after getting to know Mrs. B, I just can't help but thinking that she also put it up there to be like, look what happens when you try to go against me. I unapologetically adore and love her approach and how serious she took her work. And just if you think about the opening where you just think about how difficult her early life was, she was never able to go to school ever, not elementary school, not college, not high school, nothing. You know, having to start working at six years old, live on a straw mat, and then have the

• 6:53David Senra?

  opportunity to come to America and build a business that made her and her unborn grandchildren rich. I could see why she would take it so seriously. So let's go back to the very humble beginnings of this business that's unbelievably valuable. I think in later shareholder letters, they were doing more, they were doing, what, 120 million a year just out of the one Nebraska store? I think it was more than all the other furniture stores in Omaha combined. And it started out because she needed to help her husband. Her husband opens a secondhand clothing store. Now, sometimes it's referred to as a clothing store, sometimes it's referred to as a pawn shop, but her husband's the one working originally, and she's at home with the kids. Remember, at the very beginning, she calls herself dumb, or she says, "I was dumb because I couldn't learn to talk English." The way she speaks, learns to speak English, though, is actually from her, I'm pretty

• 7:37David Senra?

  sure this is her oldest daughter, who was going to school in Omaha. Her oldest daughter's named Frances. Frances taught her mother how to speak English after she came home from school each day. Rose tells the story of how she began to be involved in Isadora, her husband's store. "The depression came, and my husband came home and said, 'We'll starve to death. Nobody walks in. What will we do? I already had my four children by 1930.'" So she's gonna go to work and help her husband. She says, "He would sell clothing at the same price that he had paid for it. He didn't understand how to make a profit." Remember, she's, at this point, she's what, almost 43? She'd been working in stores since she was six, working full-time when she was 13. You know, managing stores when she was 16, she knew how to sell. And so she told, she told her husband, "This is what we're gonna do."

• 8:19David Senra?

  And this is really the basis for her entire, Warren's gonna talk about the advantage that he has and why he's, that she had over her other competitors. And in many cases, I think it's in this book, and if it's not, I'll find the quote for us, about the fact that she hit on the idea for what makes places like Costco and Walmart so special, before there was a Costco and Walmart. And so she says, "Let's sell 10% over cost and I'll come to your store and show you and show you and help you because I did build a big business in Russia for my boss and I knew business." These are direct quotes from her. So this is how she speaks. She obviously speaks. You know, she's missing some words there. Rose began retailing right out of the Blumkin home. This is hilarious. With home furnishings and accessories.

• 9:02David Senra?

  This practice continued even after she was successful. Check out her dedication to sale. This practice continued throughout her lifetime. Visitors to the Blumkin's house would admire the furniture that had attached price tags. I'm sorry. All right, hold on. I gotta read that to you again. Just this idea where you're like, one of the most successful, financially successful entrepreneurs in Omaha, and you come to her house and her furniture has price tags on it. And like, "Oh, I like your couch." And she tries to sell it to you. I love this lady. This practice continued throughout her lifetime. Visitors to the Blumkin house would admire the furniture with attached price tags and lampshades still covered in plastic wrap.

• 9:43David Senra?

  If a guest expressed interest in a piece, it was available for sale. Long before that, though, she had to find a way to make money. At one point, she printed 10,000 flyers, offering to dress a man from head to toe for $5. So this is back in, I think, like the 1930s, somewhere around 1937. This one promotion made the Blumkin family $800. And so she's selling stuff out of her house. There's like this basement. She's selling stuff out of this store. And she realizes like, people keep coming to her because they get such great prices. Can you get me this? Can you get me that? People used to ask me, "Can you get me this? Can you get me that?" I used to take them to the wholesale house and sell it and sell them at 10% above cost. I never lied. So her main... Let me go to another quote real quick.

• 10:25David Senra?

  I think I brought this up in the latest episode I did on Charlie Munger, which is episode 295. And he says, uh, well, there's actually two ideas here. Let me, let me bring this up to you first before we go back into Rose's story, because I think this is fascinating. How they make an exception to their rules. How Rose is so special that Munger and Buffett make exceptions for her. "As a general rule," this is Charlie Munger saying, "as a general rule, you should bet on the quality of the business, not the quality of the management, unless, of course, you've got a Mrs. B. in your hand. If that's the case, you need to go all in." I remember Nebraska Furniture Mart's founder, Mrs. B., who, in response to a question about having a business plan, replied, "Yeah, sell cheap and tell the truth." She was a business genius. So that's the end of the quote from Munger. How many? And again, this is what I always pay attention to with people like Muffet,

• 11:10David Senra?

  uh, Muffet with Buffett and Munger. How many different managers, founders, businesses have these guys analyzed over their entire life? Like it's incredible. And they're saying, hey, no, pay attention to this person. This is why I went really deep on Henry Singleton and why I've been collecting a bunch of like hard to find Singleton information because I'm going to do another episode on him. But his idea is like, she was a business genius. The reason that that came to mind just now is because where we're in this book, they're like, listen, I'm just going to tell the truth. And at this point in the story, she's telling the customer, hey, I'm going to get you a good deal and I'm just going to sell it to you above 10% cost. And because the markup's so low, this is the lowest price you're going to get. And therefore it builds trust and a relationship with these customers and they're going to come back forever. They're going to tell their friends, their kids are going to go there, their grandkids are going to go there, assuming you're in a like, uh, if you're in a game that you're going to play for a long time.

• 11:54David Senra?

  This is like the, the version of a, this idea of infinite return on investment. I never lied. I showed them the bill and then, and they all respect me. You should see what kind of customers I have, the best in the world. They build me one of the finest businesses in the country. I always believed in honesty. Anything is wrong, I try to make it right. Meaning obviously if the problem has, if the customer has a problem, I'll make it right. Mrs. B opened a furniture store in 1937 with a $500 loan from one of her brothers. It was a 30 by 100 foot basement room. She called it the Nebraska Furniture Mart. This is hilarious. The day, the same day I opened, another furniture service opening, they had an orchestra, orchestra music and Hollywood stars, and I only had a three, and I only had three line one ads because I was poor. I did that day a big business.

• 12:37David Senra?

  I couldn't get over it. Rose was 43 years old at the time and her four children were between the ages of 10 and 19. And then this story is also mentioned in Buffett's shareholder letters, which was fantastic. The fact that she gets sued by her competitors over charging customers too little. Mrs. B would encounter a fair number of obstacles in growing her business throughout the years. She would choose to make a small profit of 10%, bend over backwards for customers and grow the company by selling in large volumes. It also made her competitors very angry. At one point, Mrs. B was able to convince Marshall's Fields to sell her carpet wholesale at $3 per yard. She then resold it for $3.95 per yard. The competition was selling the very same carpet for $7.95 per yard. Her competition called her a bootlegger.

• 13:22David Senra?

  Her reply was, you betcha, I'm the best bootlegger in town. So then she tells the story of what happened. These three lawyers from this one company take me into court suing me for unfair trade practices. Three lawyers and me with my English. I can't afford a lawyer, so I just go to the judge and I say, Judge, I sell everything 10% above cost. What's wrong? Can't I give my customers a good deal? I don't rob my customers. The judge agreed, threw out the case and bought $1,400 worth of carpeting from Mrs. B. the next day. The publicity from this trial was worth far more than Mrs. B. could have afforded afforded to purchase in advertising. It's hard to think of better advertising than that. It's something you read, imagine reading the newspaper.

• 14:04David Senra?

  It's like this, this lady gets sued because her prices are too little. You know where you're going the next day. Oh, this is fantastic. So this investor named Josh Wolf has this great, has this great maxim that I see in these books all the time. He says, Chips on shoulders puts chips in pockets. I think Rose Blumkin is a perfect example of that. Rose attempted to buy furniture wholesale in Chicago. Their merchants were very rotten to me. When I walked in to the merchandise mart to buy furniture, they used to kick me out and say, Don't bother us. We're not going to sell you nothing. I used to almost start to cry. My face would get red and I'd say, Someday you'll come to my store to try to sell to me and I'll kick you out the same way you did to me. And then her punchline here is hilarious. This is why I think he's framed going out of business.

• 14:48David Senra?

  She definitely has a chip on her shoulder and it takes great pride in in competition. And I just, I could picture her looking at these framed, going out of business sale, like advertisements of her competitors with glee, because the way she ends this story, the punchline is, I outlived them all. But of course, with any business, there's ups and downs. Here's one of the downs. In 1950, business slowed down. This is after the Korean War. Business slowed down and Mrs. B. found herself unable to pay her bills. She was worrying night and day. A local banker came into the store to buy a cabinet and asked why she was so upset. After listening, he gave her $50,000 of his personal money as a 90 day loan. She then had to think of a way to earn the money to pay back the loan. This is really smart.

• 15:29David Senra?

  So she rented the Omaha City Auditorium for $200 per day and held a three day sale. She took in $250,000 from the sale, paid off all of her loans and never borrowed money again. Unfortunately, this is the same time that her husband dies. Isadora had a heart attack and died. They were married for 36 years and Rose would be a widow for 48 years. Mrs. B. once asked if she believed that she had a tougher time succeeding because she was a woman. She said, "Me? No, sir," she answered. "When it comes to business, I could beat any man and any college graduate." She was relentless. Another example of that, in 1961, half of Nebraska Furniture Mart was destroyed by a fire. The resulting fire sale generated a line two blocks long to buy hugely discounted items

• 16:13David Senra?

  that had been exposed to the smoke. One of my favorite maxims from the history of entrepreneurship is, "Problems are just opportunities in work clothes." She's like, "Okay, can't pay my bills, gets this loan, does a three-day limited sale, makes five times the amount of money." Right? Then, fire comes. "Okay, well, what can I do? Now I have a bunch of inventory I need to get rid of. Hugely discounted just because it has a little bit of smoke damage." People love saving money. Couple of years later, actually about 15 years later, 1975, a tornado took out the entire Nebraska Furniture Mart building. The tornado also destroys a post office next to the mart. So what does she do? She buys the ground and built on it to expand the business. We have turned every tragedy into a positive. That's another way of saying problems are just opportunities in work clothes.

• 16:58David Senra?

  Then it goes into a description of her insane work hours and her dedication, the fact that work was a hobby for her. With her children grown and out of the house, she devoted her entire existence to growing Nebraska Furniture Mart. She loved the game of selling. She didn't care a bit about the money. It was all about making the sale, she said. Louis, her son, came back after World War II in 1945 and joined the business, showing the same intelligence and business acumen as his mother, and I think long after she passed away. He was still, I just saw him in the, I was reading through all my highlights in Berkshire and Warren's shareholder letters, and as of like 92, when Louis was like 92, he's still working in the business too. "His calm management style balanced out his mother's quick temper, and he would often hire back employees who had been freshly fired by Rose. She could have quit working at any time, but the simple action of going to work and

• 17:43David Senra?

  being productive kept her interested in life and energized." David Ogilvy has a great quote on this. He says, "Retirement is fatal." "When I was poor, I was ambitious," she said. "I always wanted my kids, I always wanted that my kids should have what I didn't have. I wanted to show poor people that there's a future in life. If you try, you can have it." Mrs. B. took time off of work to take classes to become a US citizen. A fellow member of Mrs. B's class recalls asking her, "You were here for 30s," this is hilarious, "you were here for 37 years before becoming a citizen. How come you waited so long?" "I was busy," Mrs. B said. And Mrs. B has some good maxims. This is one of them. "Business is like raising a child. You want a good one. A child needs a mother and a business needs a boss. My hobby is figuring out how to advertise, how to undersell, how much hell to give my competitors.

• 18:28David Senra?

  I'll never forget how they treated us when we were poor." This is, I think this is my favorite part of the entire book. A 1977 local newspaper article sums up Mrs. B's temperament on work ethic. "What's your favorite thing to do on a Sunday afternoon? Visit my customers at my store. What is your favorite thing to do on a nice evening? Drive around to check the competition and plan my next attack." "Favorite movie in the last year? Too Busy." "Favorite book in the last year? Don't Have Time." "Favorite cocktail? None. Drinkers go broke. If you want to be in business, be sober." "Favorite place? My store." And finally, last question. "What's one thing that needs, that most needs to be done in our state or in our nation?

• 19:12David Senra?

  Clean out all the lazy ones." This just made me think of something. There is something that I think adds a little flavor to life. I was rereading past highlights and there's something about David Ogilvy that was in this biography of David, written by somebody who worked with him. Because I think all the books I've done on David Ogilvy, he wrote himself. He's the best writer I've ever come across for the podcast. Let me read this because I just realized, like the stories I'm about to tell you, we're going to add to our Rose file. And this will make sense. This comes from "The King of Madison Avenue, David Ogilvy and the Making of Modern Advertising", which I covered all the way back on episode 169, in case you missed it. I'd also read the book. It's excellent. But this is, I think, pretty sure this is like one of the very beginning parts of the book.

• 19:57David Senra?

  And so the author who I used to work with, or worked for Ogilvy, said, he was 52 and famous. I was 33 and a junior account executive. Early on, he wrote a letter to one of my clients. After listing eight reasons why some ads prepared by the company's design department would not be effective, he delivered his ultimate argument. The only thing that could be said in favor of the layouts is that they are quote unquote "different." You can make a cow look different by removing the udder, but that cow would not produce results. So began my David file. Almost everyone who worked at the agency kept one. And this is something that was repeated in another context for people that knew Ogilvy. And they said, almost everyone who brushed up against the man has a David story. And so this is, I think, like, all this stuff's happening

• 20:39David Senra?

  on the next few pages, like, oh, this is, we're gonna add to our Rose how special and unique this individual was. And I just think these people add like so much spice and flavor to life. In 1990, Mrs. B drove her cart into a metal post and broke her ankle. She didn't go to the hospital until the next day. She was back at work the next day. The next year, she took a corner with too much speed and turned the cart completely over, gashing her head on a grandfather clock. The wound required stitches, yet she was back in the store two hours later. She is 97. This is insane. There was a luncheon where Mrs. B was being honored. The luncheon was dragging on, and at about 1:15, Mrs. B stood up and hollered, "What is wrong with you people? Don't you have jobs? I'm going back to work." And she left. Here's another addition to the Rose file. Warren Buffett said during the opening remarks

• 21:24David Senra?

  at the 1993 Berkshire Hathaway Annual Meeting, "I'd like to introduce Berkshire's managers, except Mrs. B, who couldn't take time off of work for such foolishness, like a shareholder meeting." And this is what I was mentioning earlier. Mrs. B developed successful merchandising practices long before they were adopted by mainstream retailers. She had established the idea of a discount store making small profits on large volumes. Sam Walton didn't open his first discount store, leading to the Walmart empire, until 1962.

• 21:54David Senra?

  The company still follows these principles. It is run very fiscally conservative, conservatively. Mrs. B always felt that the days of the depression could return at any time. We still run the company like the depression is coming back. We have no debt. Though she never spent a single day in a classroom, she had a savant's capacity for arithmetic. So this is the idea of she gets interviewed on ABC's nationally televised show 2020, and people can't imagine, can't believe how fast she is with numbers. But it's another example of this maxim that you and I talk about all the time, that the public praises people for what they practice in private. How, she's been working in the carpet department for half a century. How many times you think she had to multiply how much per yard or per square feet

• 22:39David Senra?

  by the size of the customer's space? And so it says, her skill was witnessed by the entire country on a television broadcast. They're like rolling through the store on her cart and she's being interviewed. And he would just throw out random numbers. It's like, okay, let's say carpet's $12.95 a yard. I want 30 yards. How much is that? In less than a second, Mrs. B would reply, "And if my room is 12 by 14 feet, how many?" And then she'd cut him off, 19 yards, she'd reply before he'd even finished his sentence. "She was the most brilliant salesperson I have ever met, but she's a lousy manager. She is terribly abusive." Who was saying this? Oh, this is one of her former employees. "She's terribly abusive to her employees. She charms her customers, though. She's a workaholic.

• 23:21David Senra?

  She operates on almost zero margin, and she is one tough, feisty woman." And so that's another, actually, good idea for you and I, where it's like, you know, she's the most brilliant salesperson ever. She is gifted at what she's doing, but she brought in her son to kind of balance out. She's really great with customers, but maybe not good with employees. Okay, so bring in somebody that's way more calm, that's better at dealing with employees. And like they said, she may fire an employee, but then her son, who's more calm, might hire that person back after the fact. And then here's a story I referenced earlier where Warren had previously tried to buy this business. Warren Buffett had known of the business and was aware of its success from living in Omaha. He admired the Blumkins business savvy. In the late 1960s, he had offered $7 million for Nebraska Furniture Mart, an amount, this is hilarious, an amount

• 24:05David Senra?

  that Mrs. B turned down while calling him cheap. Two decades later, Warren came into the mart again for the purpose of making Mrs. B another offer. This time it was $60 million for 90% of the company. Mrs. B and Buffett shook hands on the deal. No lawyers were involved, and there was no audit and no inventory was taken of the merchandise. Buffett said, "If she ran a popcorn stand, I'd want to be in business with her. She's just plain smart. She's a fierce competitor, and she's a tireless worker." And this is one of my favorite things that he said, and I think is a good idea for us to think of, are we the answer to Buffett's question? That'll make more sense in one second. "One question I always ask myself in appraising a business is how I would like, assuming I had ample capital and skilled personnel, to compete with it. I would rather wrestle

• 24:50David Senra?

  Grizzlies than compete with Mrs. B. They buy brilliantly. They operate at expense ratios competitors don't even dream about, and then they pass on to their customers much of the savings. It's the ideal business, one built upon exceptional value to the customer, that in turn translates into exceptional economics for its owners." That is a great, I need to read that line again. "It's the ideal business, one built upon exceptional value to the customer, that in turn translates into exceptional economics for its owners." And I couldn't find it in my highlights, and it's not in any of my notes, and it's not in this book. But I swear, I remember this idea of like, they buy brilliantly. There's

• 25:32David Senra?

  a beautiful simplicity to Rose's approach to her business, right? And I'm pretty sure I had heard somewhere or read somewhere that they buy all their inventory from one manufacturer. But this idea, when I read that, I was like, okay, I want to make sure that... My approach to my own work is like, okay, I want people to describe me that way. It's like, I'd rather wrestle grizzlies than compete with him and what he's doing. And I think that's just a good maxim for us to keep in the back of our minds. Like, is that applicable to me? And if it's not, what can I do to make it true? In turn, Mrs. B also admired Buffett. Mrs. B said, "My hero is the middle class, the immigrants, and Warren Buffett. He's a genius. I respect him a lot. He is very honest, very plain, and his word is as good as gold."

• 26:16David Senra?

  Another addition to our Rose file. Rose is the only founder that Buffett had to buy out twice. So, the good thing about the business is it was a family business. This is after Buffett already owns it. She's still working. They bring in like multiple generations of lumpkins. And so, she loved working with her son, and she hated working with her grandkids. And so, this is what's going to cause her to leave. "Nobody wanted her to leave," said Louis. That's her son. Mrs. B said she was not upset with Louis. "He is one in a million," she said. However, she said, "However," she had used the name Hitler to refer to her grandsons, Ronald and Irvin. They have a fight over pricing and control of the carpet department, which she considered was her domain.

• 27:00David Senra?

  And of course, Rose, like all of history's greatest entrepreneurs, are obsessed with control. And so, she quits, and she starts another business. "It'd probably be the first for a 96-year-old woman to start a business, but I feel capable of doing it and want to prove to Buffett and my grandsons." She was upset at Buffett because she felt that he had sided with her grandsons over this. They wind up patching things up. "Want to prove to Buffett and my grandsons that I can do it. I could outsmart any 25-year-old." So, that's how old her grandkids are. Mrs. B quickly became bored after leaving the store. She hired a chauffeur. This is hilarious. I keep saying that, but it is. I laugh so many times reading her story. I absolutely love her. "She hired a chauffeur who drove her around Omaha each day and took her to other stores. She looked in the windows and checked to see how many cars were in the parking lot." She's 96.

• 27:43David Senra?

  It didn't take long for her to plan her revenge. "I want to be my own boss. Nobody's going to tell me what to do. I had enough. I'm going to let them have it. Thank God I've still got my brains. I've got health, money, and strength, and common sense. I know how to beat everybody." The new store was directly adjacent to the Nebraska Furniture Mart. This is adjacent. I heard it was across the street, but it's, they can see it one way or another. And so, she's asked, "Would you like to see Nebraska Furniture Mart go out of business?" She says, "It should go out, it should go up in smoke. I like that they should go, they should go to hell," she replied. The reason she's able to move so fast is because there's really no, it's, everything's black and white. There's really no like shades of gray with her. And so at this point, she felt, you know, they took away her carpet department. They tried to override her decision.

• 28:27David Senra?

  So that's it. You're going to go to hell. And Buffett picks up on this. So everything with Mrs. B knew how to do, she would do fast. She did not hesitate and there was no second guessing. She'd buy 5,000 tables, or sign a 30-year lease, or buy real estate, or hire people. There was no looking back. She just swung. The rules of running her business were very simple. Sell cheap, tell the truth. Fortunately, Mrs. B lived long enough to reconcile with her family. The first relationship to be patched up with was Warren Buffett. Rose was angry with him because she felt that he had sided with her grandsons. Two days before her 98th birthday, Buffett once again bought her roses and chocolates and brought it to her job. "He's a real gentleman," she said after accepting Buffett's peace

• 29:07David Senra?

  offering. She settled her differences with her grandsons and sold Mrs. B's warehouse, the new company, to Nebraska Furniture Mart for $5 million with a provision that she could keep control of the carpet department. This time Buffett made sure to have Mrs. B, at age 99, sign a non-compete agreement. And then Mrs. B looks back at this time, and really she's just saying, you know, "Control's obviously priority number one. Maybe I was wrong. Maybe I was too hard on them," Mrs. B said on the feud with her grandsons. "I'm very independent. If things aren't run the way I want it, I don't like it and I get very mad." And this is an excellent way to end Rose's story. The woman who never attended school and couldn't read or write was the recipient of some distinguished college degrees. Rose's

• 29:50David Senra?

  long life allowed her to accumulate numerous experiences in the community and in business. She was forever grateful that she was able to come to the United States. In fact, at every family gathering, she would insist that they sing "God Bless America." It was her favorite song. "The people who were born in this country don't appreciate all these wonderful things like those who've come from out of darkness." So when I had lunch with Sam Zell, That was episode 298. This is one of the things that we talked about in detail because his experience as a kid was similar to, what his dad would tell him was similar to what my dad told me. His father escapes Poland, you know, the persecution of the Jewish people, of the Nazis. And he'd tell Sam over and over again, "You have no idea how lucky you are that you were born in this country." My father was born in Cuba, fled Castro.

• 30:34David Senra?

  And he would tell me that over and over again. So he says, "The people who were born in this country don't appreciate all the wonderful things like those who came out of the darkness. I loved the United States since the day I came here." On her 100th birthday, she said, "All my wishes have come true. American people were wonderful to me, and I made a success. I never expected that much, and I did a pretty good job." That's a hell of an understatement. Mrs. B did a fantastic job. She officially retired in October 1997, and she died at the age of 104 the next year. Upon hearing of her death, Warren Buffett said, "We were partners, and in most ways, she's the senior partner. She's forgotten more than I'll ever know." "Aspiring business managers should look hard at the plain but rare attributes that produced Mrs. B's incredible success. Students from 40 universities visit me every year, and

• 31:18David Senra?

  I have them start the day with a visit to the Nebraska Furniture Mart. If they absorb Mrs. B's lessons, they need none from me." And that is where I'll leave it for the full story of Mrs. B. There's a bunch of other remarkable managers profiled in this book as well, but I think the book is worth buying just for the Rose Blumkin chapter alone, even if you only read that chapter, chapter one. I will leave a link. If you buy the book using that link, you'll be supporting the podcast at the same time. Another way to support the podcast is to sign up for Founder's Premium. I've been making a lot of AMA Ask Me Anything episodes, and subscribers to Founder's Premium can listen to those. I think there's like 21 or 22 available, and I'll be updating that feed every week. That link is obviously down below and available

• 32:02David Senra?

  at founderspodcast.com. And I have a free email newsletter. If you want to receive an email from me, a friend of mine would actually chastise me because it's like, I was so inconsistent. So I'm going to update it every time I read a book. And he's right. He was completely right about that. So what I do is I just, usually every book, I think the last one, the last email I just sent out was on the mine and Napoleon book. I think I have like 76 or maybe 86, something like that, different highlights from that book. And so it takes me forever, but I think it's really valuable. Where I try to say, okay, what are the top 10 things I want to remember most? And I try to get them into like sentences, almost like maxims. So anyways, if you're interested in getting an email from me with the top 10 highlights of all the books that I read for the podcast, that link is also down below and available

• 32:46David Senra?

  founderspodcast.com. That is 303 books down, 1,000 to go, and I'll talk to you again soon.