“When I was leaving, I told Louie, ‘I’m terrible with accents. Sometimes I don’t understand your mother perfectly; the last thing I want in the world is a misunderstanding with her.’ And Louie said, ‘Don’t worry, she’ll understand you.’
“After the deal was done, I said, ‘Mrs. B, I’ve got to tell you something. It’s my birthday today.’” Buffett was fifty-three. “And she said, ‘You bought an oil well on your birthday.’”
The Blumkins had never had an audit, and Buffett did not ask for one. He did not take inventory or look at the detailed accounts. They shook hands. “We gave Mrs. B a check for fifty-five million dollars and she gave us her word,” he said.44 Her word was as good as “the Bank of England.” Buffett, however, still wanted to make sure that Rose had no regrets.
The contract was just over a page of Carnegizing. It began, “You own a hundred percent of the outstanding stock of Nebraska Furniture Mart, Inc. (‘NFM’) which operates a remarkably successful furniture and appliance retailing business…. Berkshire Hathaway, Inc. (‘Berkshire’) has long admired what you have accomplished together and hereby proposes to purchase from you ninety percent of such outstanding stock.”45 To announce the deal, he held a press conference and showed a video on the company’s history. Mrs. B dabbed at her eyes as the film was shown.46
Buffett had not only found another unusual specimen to add to his collection of interesting personalities. Something about Mrs. B’s indomitable will, history of hardship, and strength of character inspired awe in him.47 “Dear Mrs. B,” he wrote to her. “I have promised Louie and his boys that all members of the family are going to feel good about this transaction five, ten, and twenty years from now. I make you the same promise.”48
Buffett had promised more than that. Mrs. B was used to operating in total control and privacy; she did not want Buffett to throw her financial dress up in the air and show her knickers to the world. He had promised her that the accounts of the Furniture Mart would not be separately reported when Berkshire Hathaway filed its financial statements with the SEC, as of course was legally required.
Buffett had no worries about getting a waiver from the SEC—or rather getting one of his employees to get the waiver. He was a likable boss who never lost his temper, never changed his mind capriciously, never said a rude word to anyone, never berated or criticized his employees, didn’t second-guess people on their work, and let them do their jobs without interference. He also operated on the assumption that if somebody was smart, they could do anything. Charlie Munger said of him, “Warren doesn’t have stress, he causes it.” Dale Carnegie said to give people a fine reputation to live up to, and Buffett had learned that lesson well. He knew how to Carnegize heroic accomplishments out of his people.
The gist of what he told his employees was something like: “You’re so good, this won’t take you any time at all, and it won’t cost anything to do. And, of course, you’ll have it back to me in the next mail. Because you’re just so damn great at what you do. It would take three people to replace you.”49
Verne McKenzie, who had only just finished mopping up the Blue Chip mess, was assigned the thankless task of convincing the SEC to grant an exception to its rules so that Mrs. B would not suffer the pains of an audit or of having to unveil her financial secrets to the shareholders of Berkshire Hathaway. He began to go through torture navigating the government’s unsympathetic maze while Buffett offered blithe assurances that he could easily get this done.50
Buffett, meanwhile, had the happy job of diving into a new business and a new collection of people. He grew fond of Louie and “the boys” he started driving out to 72nd Street at eight-thirty in the evening when the store closed to go out to dinner with Louie, Ron, and Irv, talking for hours about furniture and merchandising. He started taking “the boys” and their wives on an annual vacation.
That fall the Buffett Group lurched across the North Atlantic in heavy seas on the Queen Elizabeth II. Some of Buffett’s friends were shocked when told to send $125 in advance for tips and asked to bring tuxedos for several formal dinners. Joy Ruane was so intimidated by this new hauteur that she showed up with seventeen suitcases.51 The food onboard the ship was “second rate,” said one member, and the agenda a mix of the typical and the unusual: Wyndham Robertson, another Fortune reporter who was a member of the group, on investing during inflation; a session on stock options; George Gillespie and Roy Tolles on splitting up assets in a divorce—a subject on which views ran hot; Tom Murphy on the race between television networks CBS and Cap Cities; and Charlie Munger on Benjamin Franklin. Buffett spoke on using “game theory” to solve economic problems, based on pioneering economist Adam Smith’s “invisible hand,”52 in which people laboring to further their own interests acted collectively for the good of everyone.
All the while, Buffett delighted in telling his friends about the immigrant saga of Mrs. B and her wonderful Furniture Mart, the new money-churning prize he had just bought himself. However, he was almost upstaged by Ed Anderson, who made the prudish members of the group—the majority—fall out of their chairs when he explained his funding of human sexuality research and told with perfect earnestness the touching story of someone who had had a sex-change operation and kept his severed organ in a jar.
But the Buffett Group was falling out of its chairs, anyway. Those who were not below in their staterooms vomiting were imprisoned inside the saloon, where plates slid off the tables and ashtrays flew while the ship rocked and surged across the ocean in driving rain and gale-force winds and they heard story after story of the unsinkable Mrs. B. The Buffett Group was supposed to tour England for several leisurely days upon arriving, but five hours after they landed in Southampton, Rick Guerin was on a plane back to New York.
Nonetheless, through the howling wind, the homilies of Ben Franklin, divorce planning, and penises in a jar, one message came through, loud and clear: Buffett’s affection and admiration for Rose Blumkin.53 He had plans for her and enlisted Buffett Group member Larry Tisch in his behind-the-scenes machinations. In a virtuoso display of gratitude and showmanship, he had decided to turn the geriatric Rose into Cinderella.
With the help of Tisch, who was a trustee of New York University, he arranged it so that both Creighton University and NYU gave Rose honorary degrees.54 At Creighton, the tiny Mrs. B was so overcome that she covered her face with her hands and cried on the stage, saying, “Oy, oy, oy, I never even believe it.”55 Then she spoke of America, the country that made her dream come true. Her advice to the graduating seniors: “First, honesty,” she said. “Second, hard work. Next, if you don’t get the job you want right away, tell them you’ll take anything. If you’re good, they’ll keep you.”56
In the city for the New York University ceremony, the family took care to keep her from seeing the price of her hotel room, for she had been to New York before and thought anything more than $75 for a hotel room was outrageous.57 She had Louie take her to see Ellis Island and Delancey Street, but getting around the city was a struggle, for she felt cheated by the price of a taxi.58 On the morning of commencement, Mrs. B was “robed” with great pomp and circumstance and received her degree alongside Senator Daniel Patrick Moynihan and the poet Octavio Paz.
Despite the august company of the NYU ceremony, when asked which of the two honorary degrees she preferred, Rose did not hesitate. It was Creighton’s. They had bought carpet from her.
Soon after, Berkshire’s auditors conducted the Nebraska Furniture Mart’s first inventory. The store was worth $85 million. Mrs. B, seized with a severe case of remorse after she had sold it for a total value of $60 million, including the share retained by the family, told Regardie’s magazine, “I wouldn’t go back on my word, but I was surprised…. He never thought a minute [before agreeing to the price], but he studies. I bet you he knew.”59 Buffett, of course, could not have “known,” not literally. But he had certainly known there was a whopping margin of safety in the price.
Nevertheless, he practica
lly considered himself a member of the family by now. When Mrs. B turned ninety, the Furniture Mart organized a huge sale, taking out full-page ads for days in the local paper, as it did every year on her birthday. Buffett would tease her about the date of her birthday sales.
“She measured her birthday by the Jewish calendar, which moved around. I used to tease her about that; it really didn’t fall on the same day every year. But I said that the way she moved it around was whenever she needed a little more business. Her birthday was quite flexible. She’d smile and look at me and say, ‘Well, you don’t understand the Jewish calendar.’”
Within two years, however, this fairy tale of a story turned ugly. The indomitable Mrs. B yelled at her grandsons Ron and Irv in front of the customers, calling them bums. As tough a life as she’d lived, and as hard as she’d had to work, who could know more about the business than she? Gradually—and understandably—“the boys” stopped speaking to her.
Finally, when she was age ninety-five, her grandsons overruled her on a carpet purchase and she exploded. It was the last straw. “I was the boss. They never told me nothing,”60 she said, and quit. She also demanded $96,000 in unused vacation pay on her way out the door.61
But sitting at home alone, she acknowledged, was “awful lonely, not to do nothing. I go nuts.”62 In ominous newspaper interviews she referred to her grandsons as “dummies” and, shockingly, “Nazis.”63 She hinted at solo trips to the North Carolina High Point Market, the furniture industry’s largest trade show. She suddenly arranged to have a warehouse she owned right across the street from the Furniture Mart refurbished. She held a “garage sale” in it, and cleared $18,000 in one day, selling “some of her own things.”64 A few months later, “Mrs. B’s Warehouse” was grossing $3,000 a day before it officially opened.
Asked about the impending battle for customers, she snarled to the local paper, “I’ll give it to them.” When the paucity of parking spaces at her new store was mentioned, she pointed to the Furniture Mart’s lot and said, “Park there…they won’t notice.” Soon she was embroiled in a fight with her grandsons over city parking ordinances. She put up a sign: “Their price $104, our price $80.”65 When Bob Brown on ABC’s 20/20 program asked her about the Furniture Mart, she said, “I would it should go up in smoke. I like they should go down to hell….”66
Some time earlier, Buffett had created a saying. “I would rather wrestle grizzlies,” he said, “than compete with Mrs. B and her progeny.”67 Stuck wrestling grizzlies, Buffett acted as he always did when any of his friends’ relationships broke down. He refused to take sides. Mrs. B thought that was disloyal. “Warren Buffett is not my friend,” she told a reporter. “I made him fifteen million dollars every year, and when I disagreed with my grandkids, he didn’t stand up for me.”68 This was torture to Buffett, who couldn’t bear conflict and broken relationships.
Louie, who could do no wrong in his mother’s eyes, made no headway with Rose. “She figured she lost control of this place, and she blew her top,” he says.
“He always treated his mother perfectly,” Buffett says. “It was the hardest thing in the world for her to accept that she was giving up control. And she was angry at the world for having to give up the thing that she loved most.”
After two years, Mrs. B’s Warehouse, while still small, was growing at such a rate that pound for pound, it was trouncing the Mart. Finally Louie intervened again. “Mother,” he said, “you’ve got to sell this thing back to us. There’s no sense competing one against the other.”69 And so Rose called Buffett. She missed the Mart. She missed her family. She was lonely in her house, separated from her family. “I was wrong,” she said; family meant more than pride and more than business. Mrs. B told Buffett that she wanted to come back. With a box of See’s Candies under his arm and holding a huge bouquet of pink roses, Buffett went out to see her. He offered her $5 million simply for the use of her name and her lease.
He added one catch: This time she must sign a noncompete agreement, a contract designed so that she could never again compete with him. This was something he wished he’d done before. The absurdity of imposing a noncompete agreement on a ninety-nine-year-old woman was far from lost on him. Nevertheless, Buffett was realistic. The agreement was cunningly written to outlast Mrs. B. If she retired, or quit in a rage or for any other reason, no matter how old she was, for five years afterward she could not compete with Buffett and her relatives. Even if she lived to be 120 years old, Buffett was taking no chances. “I thought she might go on forever,” he says. “I needed five years beyond forever with her.”
Mrs. B still could not read or write English. Nevertheless, she signed the noncompete, which had been explained to her, with her characteristic mark. The truce made headlines. “And then I made sure she never got mad,” Buffett says. He set about flattering his new employee unctuously to make her so happy that she would never, ever quit and start the clock running on her noncompete.
On April 7, 1993, the Greater Omaha Chamber of Commerce put her in the inaugural class of its business hall of fame, alongside Buffett, Peter Kiewit, and several others. Then Buffett, knees trembling slightly, got up on a stage at the Highland Club and sang in public, for the first time in his life, to Mrs. B on her hundredth birthday. He also donated a million dollars to a local theater she was renovating.
Nobody could believe it. Warren Buffett had given away a million dollars.
And through all of the hosannas, none of it ever went to Rose Blumkin’s head. Not even the million dollars that Warren Buffett had given her. She felt she owed everything, all her good fortune, to this country for the opportunities it had given her. At family events, she insisted that her favorite song, “God Bless America,” be played every time, sometimes even more than once.
“I don’t think I deserve it,” she said, over and over, of the accolades.70 But she did.
45
Call the Tow Truck
Omaha • 1982–1989
Once disembarked from the QE II, Susie Buffett listened to her husband’s tales of Mrs. B or whatever his latest fixation might be from a distance, just like everybody else. She and Warren talked nearly every day on a special “hotline” installed in her apartment. When the phone rang, she jumped up instantly. “That’s Warren!” she would say, and run away from whatever conversation she was having with a friend to answer it. He was still her number one obligation. But unless he needed her, her life was under her own control.
Susie had moved out of her minuscule apartment at Gramercy Tower and into another cubbyhole on the Washington Street cable-car line with a splendid view over the bay. She chose the building because Peter was living there with his wife, Mary, and her two daughters. He was still pursuing his musical career and had started renting out studio time to pay the bills, while writing music for anyone who would pay him—student films, the production company Video West. 1
In the past few years, Susie had lost both of her parents. Doc Thompson had died in July 1981; Dorothy Thompson followed only thirteen months later. Susie was so close to her parents that their deaths left a wrenching hole in her life. Afterward, her hyperkinetic tendencies did not abate; if anything, they increased. Warren had stopped taking her for granted, and his desire to please the woman he now idolized more than ever found expression partly through the money he gave her. In her younger days, Susie’s idea of a shopping spree had been buying a basketful of greeting cards.2 That had gradually expanded to an annual attack on Bergdorf’s shoe department. Warren’s tightfistedness began to let up in light of the unspoken but inexorable reality that he now controlled the money by Susie’s grace and favor. At any time she could take it back and use the money herself. Torn between two fur coats, she wanted to know, “Why do I have to choose?” The answer was, she didn’t.
But mostly the looser purse strings fueled Susie’s penchant for generosity to a ragtag collection of colorful friends that grew and grew. Nobody ever left the beguiling Buffetts. Even Peter’s college girlfriend had
gone to work for Susie as a secretary several years earlier, despite Susie having been the one to break off the relationship before it became an engagement after Peter started having second thoughts. The rising tide of old friends, family dependents, and her new San Franciscan entourage would have overwhelmed almost anyone, but Susie Buffett was not just anyone. Unleashed from the confines of Omaha, with buckets of money at her disposal, she sprang to life as if powered by magic, like the Sorcerer’s Apprentice’s broom. How much do you need for Christmas? Warren said. Oh, seventy-five thousand would do it, Susie replied.3 He wrote the check.
Her special cause was artists, creative types, anyone who had potential or whose talents she felt were not being recognized. She became the sponsor of artist Edward Mordak, who painted the kind of brightly colored contemporary canvases she preferred and wove brilliant feathery wall hangings. But of all the people she aided, her nephew Billy Rogers was her greatest challenge. A brilliant jazz guitarist, Rogers had played with different groups, backing up B. B. King and achieving his greatest success performing as one of the Crusaders. He was married, with a son, and living in Los Angeles. But he had bounced around the West Coast for several years, never staying clean for long before relapsing. Susie remained an optimist and refused to give up on him. No matter how squalid his life when he acted out his addiction, she always treated him like another son.
By 1984, when AIDS had claimed over two thousand American victims and infected two thousand more, Susie had found her next great cause among the gay men of San Francisco. With the disease’s transmission poorly understood and badly communicated, gay-bashing turned to hysteria,4 AIDS was referred to as the “gay cancer” people said that God must be punishing gays for their sexual deviancy.5 Already a mother figure to many men whose families had rejected them, Susie now once again dared to cross a social line, as a rich married woman who acted as a refuge for gay men during the early years of the AIDS crisis.6
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