Warren Buffett – Advice for Entrepreneurs: simple rules like that delighting customers, working through other people, associating with people better than you are will cause you to move in a better path.
[Edited transcript by Hoan Do]
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 that each sold the business to Berkshire Hathaway for many many many millions of dollars. Both of them started with twenty-five hundred dollars by a coincidence was 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. The Red Cross got her to Ford 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. 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. There she found a small colony of Russian Jews. She started feeling more at home. As her oldest daughter went to school, she would come home and teach her mother the words she learned in school that day.
This woman, Rose Blumpkin, spent 20 years saving money bringing first her siblings over, her mother and father fifty dollars at a time. She sold used clothing to do it.
She had four children during this period. By 1937, after 20 years, she saved $2,500. She went to Chicago and she bought what she could have furnished her dream, which had always been to open a furniture store. This woman would never gone to school one day in her life. With $2,500 but with the same spirit that the people in this room had about having a dream and working to accomplish that dream, she built a business which she sold to me in 1983 for 60 million dollars approximately. The fourth generation is working in that business. This woman Rose Blumpkin lived well. She worked for me until she was 103. Then she retired and she died the next year. Mrs. B with her $2,500, could not read or write, and she went into a furniture business, and she didn’t bring anything in unique in furniture but she brought a determination to succeed. She knew she could outwork anyone else. She knew she cared about her customers. She worked at very low gross margins. She built this incredible business.
I saw one other woman who did a similar thing with $2,500. I paid her hundreds of millions for her business.
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 was a fellow who was born about eight years before I was he was born in 1922. He was a pretty good athlete, didn’t like school much. His company hires more college graduates each year than any other company in the United States. He went to college for a year and then dropped out. He really wasn’t that interested in the school and the year he dropped out was 1941. When the United States was under attack, he went down to the Army Air Force recruiting station to volunteer. They turned him down because he had hay fever. He went over to the Navy and again volunteered and they took him. They put him on an aircraft carrier. He flew small fighter planes during World War II. Then he came back to the Midwest.
By this time, he would be 23 or 24 years old. He actually kind of went from one job to another for a short period of time. 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 said to his boss: “could I go into car leasing business with you,” The boss said: “well if you’ll cut your salary in half and you’ll come up with $25,000 ( which he borrowed), we can become partners in a car leasing company.”
My friend Jack started at age 35 at the car leasing business. He had seven cars. It was pretty slow. In fact one of the things he did was whenever the phone rang, he let it ring three or four times so people would think that he was very busy answering other phones. And of course it was the only call he was gonna get all day. So his first venture was okay but it wasn’t really going to go anyplace. And there’s a lesson in this for all of us. At age 40 he decided with 17 vehicles, he was going to go into competition in the rent-a-car business. So now he’s taking on Hertz and Avis and national and people like that who have hundreds and hundreds of thousands of cars and he’s got 17 cars. And his cars aren’t any different from theirs. He’s buying them from General Motors or Ford or Chrysler and he can’t get the airport locations which those companies have. But he was determined that he would basically offer the customer the friendlier service than they’ve ever seen. And so he started the company and named it after the battleship that he’d flown from in the Pacific, which was the USS Enterprise. When he died about the year and a half ago, his rent-a-car company starting with those seventeen cars was worth more than Hertz and Avis and all the rest of the rental cars put together. The man’s name was Jack Taylor. His son Andy Taylor, the friend of mine, runs the business now.
So this man didn’t invent artificial intelligence. He didn’t do anything that just like Mrs. B selling furniture. Any one of us could have entered those businesses. He lived by the creed basically of delighting his customers and working with people and establishing the relationship with them so that they in turn would want to delight the customers. He learned how to project himself and his attitude toward his fellow man. He desired 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.
It illustrates several points. You don’t necessarily get it right the first time. In the car leasing business, basically we’re competing on the cost of money to finance cars and it’s very hard to delight a customer. 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 did with furniture. He didn’t worry about whether the Federal Reserve was going to tighten or ease. He didn’t worry about whether the stock market was up or down yesterday. He didn’t worry about the things he couldn’t change. He did focus on the one thing he could change. That was the customers experience.
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 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 a genuine desire day-in day-out to delight the customer. I’ve never seen a business that delight the customer and doesn’t succeed. What you want is that customer the next day when they want to rent a car or buy some furniture, what goes through their mind is that it’s the place where they’ve had a great experience. I don’t know the tie and the shirts I am wearing now but I do know I will remember how I was treated what 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 experience.If the memory is of rudeness, indifference, they’re never going to come back.
As a small business owner and as you grow, you have to not only be able to project that interest in people’s well-being in delighting them yourself, but you have to do it through other people. And you won’t be able to do it through people who themselves do not feel they’re being fairly treated and that their views aren’t appropriately considered. So you really do have to learn to multiply yourself through other people.
I advise the young people to come to Omaha that the most important decision you make is the spouse that most of you will likely have and it’s very important to surround your people yourself with people are the better than you are. You are going to move in the direction of the people you associate with. I advise you to seek out your partner in business, your partner life who actually are examples to you rather than somebody that you need to straighten out yourself. And simple rules like that delighting customers, working through other people, associating with people better than you are will cause you to move in a better path.
About the author: Hoan Do is a certified leadership coach with John Maxwell Team. Hoan have led multiple teams at Symantec Inc. across the globe delivering world-class solutions to protect consumers and businesses. Hoan is an expert in building highly performing teams. He believes that the best leader is the leader that could grow his followers to be leaders. Hoan has been organizing mastermind groups at work to share with other leaders about transformational leadership and coaching. He has trained many leaders both inside and outside Symantec via mastermind groups, workshops, and one-on-one coaching.
Coaching inquiry: email@example.com