As our family embarks this week on our annual pilgrimage to Omaha for the Berkshire-Hathaway Annual Meeting, it brings to mind my all-time favorite example of a family business sale. In recent posts, I addressed the challenges owners face in selling their family business “baby.” Those are choppy waters to navigate. Not all ships complete the voyage successfully. The story of Rose Blumkin’s sale to Warren Buffett is especially legendary.
Tales abound how a small company with a quality product grew by mega proportions after acquisition by Berkshire-Hathaway. Mrs. See’s candy is a case-in-point. Today’s focus is on another business matriarch anointed by Buffett: Rose “Mrs. B” Blumkin.
Berkshire bought 90% of Mrs. B’s Nebraska Furniture Mart for about $55 million in 1983. Buffett declared that Mrs. B, an “89-year-old carpet sales woman would ‘run rings around’ the best corporate executives and business school graduates in America.” (Theron Mohamed, “Warren Buffett: Elderly Carpet Seller Better than America’s Best CEOs,” Business Insider, Dec. 26, 2022.) As usual, Buffett’s prophecy proved true.
Like my four grandparents, Mrs. B immigrated from Eastern Europe as a young child, just in time to escape the Holocaust. She arrived in America penniless and not knowing a word of English but loaded with wit, wisdom, and a tireless work ethic. Similar to my Uncle Joe who pushed a fruit cart to send money home to bring over his parents and siblings, young Rose did the same by selling second-hand clothing.
In 1937, Rose sold all her home furnishings and appliances to raise $500 to open Nebraska Furniture Mart. Over the years, her children and grandchildren joined her, growing the business to today’s sales of $1.6 billion and more than $80 million in after-tax profits.
Buffett saw the writing on the wall in 1983 and convinced Mrs. B to cash out. She reluctantly agreed to sell, citing two reasons: (1) to create liquidity to pay high estate taxes; and (2) to avoid having her kids squabble over the company after she was gone. Rose and her family stayed on to run the business.
The story gets better. After she retired at age 95, Mrs. B found she couldn’t stand retirement. (Is anyone surprised?) Only months later, she opened a competing store across the street called Mrs. B’s Clearance and Factory Outlet and quickly grew it to Omaha’s third largest carpet store. Buffett couldn’t resist—he bought her new store within five years and merged Mrs. B’s two companies. As author Mohamed points out, Buffett “joked that he wouldn’t let Mrs. B retire again without signing a non-compete agreement.”
Rose Blumkin worked until 103 and then died a year later in 1998. Retiring was probably a mistake. Her grandchildren and great-grandchildren now run Nebraska Furniture Mart.
As we now head to Omaha, I’m inspired to go pay tribute to Mrs. B’s legacy.
Marvin E. Blum
Rose Blumkin, pictured on her scooter in her Omaha carpet store, ran (or wheeled) rings around other CEOs, enticing Warren Buffett (right) to buy her store. Blumkin grew Nebraska Furniture Mart into the nation’s largest furniture store before retiring at 103.