Mrs B and the Mohawk Carpet
Dear Friends,
Before women entrepreneurs were a thing, there was Mrs B.
In 1937, Mrs B started the Nebraska Furniture Mart with $500 in cash. In 1983, she sold it to Warren Buffett’s Berkshire Hathaway for a cool $60 million. She was famous for her rock-bottom prices. The $60 million price tag was also a bargain, but more on that later.
Born Rose Gorelick in 1893, her formative years were a series of hard-fought battles. I hesitate to call them wins because they only look like wins when you know how the story ends.
Rose was from a small village in Belarus, then part of the Russian Empire. At the age of 6 she learned about the pogroms that were committed against Jews at the time. “I’m going to America when I grow up,” she declared. When she was 13, she walked (barefoot, to save the soles of her new shoes) to the train station 18 miles away. Her plan was to find work in the nearest town, which she did by impressing a shopkeeper. By 16, she was supervising 6 men. She was 4’ 10” tall.
Four years later Rose married a shoe salesman, Isadore Blumkin. When World War I started, they agreed that Isadore would go to the US while Rose saved money for her own trip. On the eve of the Russian Revolution, Rose began her own journey. She took the long way round: 7 days on the Trans-Siberian railway, another train through China, a boat to Japan, and a six week voyage to Seattle on a cargo vessel carrying peanuts - steerage class, optimized for maximum sea sickness.
Crossing the border from Russia to China, she promised the guard she would come back and give him a bottle of booze. She worried she might be detained otherwise and more importantly, she knew how to hustle.
So, are we winning yet? Rose thought so. “I thought I’m the luckiest one in the whole world.” The Hebrew Immigrant Aid society gave her a warm meal, a hotel room, and a train ticket to Iowa, where her husband had settled. Reunited, they moved to Omaha, Nebraska, a significant railroad city with a large immigrant population. Rose learned English from her kids after they returned home each day from grade school.
In 1937, Rose started the Nebraska Furniture Mart. She was 43 years old, but it was just the beginning for Mrs B. She ruthlessly undersold her competitors, which drove them nuts. “Better to have them hate you than to feel sorry for you.” Despite being illiterate, she excelled at the mental math necessary to make quick deals. She was a machine.
At the age of 56, when some people begin thinking about retirement, Mrs B branched out into carpet, which would become her specialty. She went to Chicago, bought 3,000 yards of Mohawk brand carpet and sold it in her store for half the usual retail price. Mohawk sued her for violating pricing policies, but the judge dismissed the case and bought $1,400 worth of carpet from her the next day. It doesn’t get more American than that.
Mrs B worked 7 days a week and zipped about the Mart on her motorized buggy barking orders to employees and selling to customers. Her daughter arranged the furniture in her home to resemble how it was arranged at the showroom, price tags still dangling. The scene is a poetic reversal from years earlier, when Mrs B had to sell the furniture in her house in order to pay back a loan, much to the protestation of her young children, who rather enjoyed sleeping on mattresses.
The Nebraska Furniture Mart became the largest home furnishings store in the world despite its location in a relatively small metro area. Warren Buffett is an Omaha native who is known for buying well-run businesses, and he wanted the Mart. In 1983, He bought 80% of the business in a (more-or-less) handshake deal. Even though they were both shrewd dealmakers, Warren got a fantastic price despite not insisting on an audit. He had probably done his own estimates of the value of the business before proposing his price. Mrs B was 90 and would retire 6 years later.
This is already a remarkable story but I haven’t even gotten to the best part. Mrs B didn’t want to retire. She was forced out by her grandsons amid a disagreement. On the way out, she demanded $96,000 in unused vacation time, which is the best march-out-of-the-office line ever. She was going stir crazy sitting at home with nothing to do, and realized that Buffett hadn’t thought to have her sign a non-compete agreement.
Mrs B opened another furniture store. Across the street from her old one. And she also sold it to Buffett for $5 million in 1992. She was 99. This time, however, Mrs B offered to sign a non-compete which Warren quickly accepted.
Entrepreneurs sometimes talk about their “second act”. Amateurs!
Keep Going,
Geoff
Notes
Mrs B worked until age 103 (her buggy had to be outfitted with an oxygen tank) and died the next year. She is described in Alice Schroeder’s biography of Warren Buffett, The Snowball. She is mentioned and lauded in over 20 of Buffett’s shareholder letters.
Image credit: Omaha World-Herald