Warren Buffett’s annual shareholder letter contained many great lessons on business and the world around us. However, one section got my attention.
Buffett said that though much of finance, media, government and technology are focused on the East and West Coasts, it is easy to overlook the miracles occurring in middle America.
One such miracle is the story of Rose Blumkin. She is truly an American and capitalist hero.
Under Buffett’s management of Berkshire Hathaway, the company has acquired four companies headquartered in Buffett’s hometown of Omaha. The best known of these is the Nebraska Furniture Mart (NFM).
The company’s founder, Rose Blumkin, arrived in Seattle in 1915 from Russia. She was unable to read or speak English.
Mrs. B eventually settled in Omaha and by 1936 started a furniture store with $2,500 in savings. Initially, competitors and suppliers ignored her. World War II slowed her growth, and by 1947, the company’s net worth was only $72,264. Total cash from all sources on deposit totaled $50.
Buffett points out that the balance sheet was missing one invaluable asset: Louie Blumkin, Mrs. B’s only son. Louie rejoined the store after four years in the Army. Louie fought at Normandy’s Omaha Beach following the D-Day invasion and earned a Purple Heart in the Battle of the Bulge.
Once Mrs. B and Louie were reunited, NFM was a force of nature. Buffett added, “Driven by their dream, mother and son worked days, nights and weekends. The result was a retailing miracle. By 1983, the pair had created a business worth $60 million.”
In 1983, on Warren Buffett’s birthday, Berkshire bought 80% of NFM. At the time, Mrs. B was 89 years old and continued working 70 hours a week. Buffett counted on Blumkin family members to run the business with the third and fourth generations doing so today.
Buffett loves to point out that Mrs. Blumkin worked daily until she was 103. When she passed away, she left the nation’s largest home furnishings store.
NFM now owns the three largest home-furnishings stores in the nation, the largest of which is outside of Dallas. Buffett praised them by saying each location set sales records in 2020, despite closing NFM’s stores for more than six weeks due to COVID-19.
There are so many great lessons to be learned from Mrs. B. Some are unique to her character and drive, while others have similarities with others.
The ground-breaking book, “The Millionaire Next Door,” which published in the 1990s, identified certain ancestry groups representing above-average concentrations of wealth. Although Russian families only represented 1.1% of American households at the time, they represented 6.4% of all millionaire households. Amazingly, it was estimated that 22 out of 100 households headed by someone of Russian ancestry had a net worth of at least $1 million. As such, Russian immigrants had the highest concentration of millionaires out of all ancestry groups identified in the U.S.
I suppose escaping Russia in pursuit of freedom, democracy and capitalism served as jet fuel upon the Russian work ethic.
The other thing Rose Blumkin knew was that the road to economic independence is paved by entrepreneurship.
Long before the research into wealth accumulation was conducted, Mrs. B knew certain things about entrepreneurship and wealth accumulation. “The Millionaire Next Door” documented that:
- Entrepreneurs control their destiny.
- Risk is working for a ruthless employer.
- Entrepreneurs can solve any problem.
- The best way to be a CEO is to own the company.
- Entrepreneurs have no limits on the amount of money they can make.
- Entrepreneurs get stronger and wiser each day by facing risk and adversity.
- The average millionaire is a first-generation self-made entrepreneur.
- The average millionaire lives well below their means.
- Millionaires allocate time, energy and money to efficiently build wealth.
- The average millionaire believes financial independence is more important than high social status.
Entrepreneurship and capitalism continue to provide Americans with a path to a better life.
Warren Buffett finished his reflection on Mrs. B’s success, hard work and entrepreneurial exceptionalism by saying that, “When Mrs. B’s large family gathered for holiday meals, she always asked that they sing a song before eating. Her selection never varied: Irving Berlin’s “God Bless America.”