Letters

Has anyone thought to ask for a noncompete agreement? Also, 7 other things worth your time.

When Jeff Bezos announced he’ll be stepping aside as CEO of Amazon, I wondered for a second if he might have been the longest-tenured CEO in America.

Nope, I quickly realized. Not even close. For example, Warren Buffett has been CEO and chairman of Berkshire Hathaway since 1970, when Bezos was six years old.

I’ve been reading all of Buffett’s annual shareholder letters for a project—at least the ones going back to 1977, which are online. There’s so much history there, and I realized something along the way: When he wrote many of these, Buffett couldn’t have had any idea that people like me would still be reading them years later.

But, you get some fascinating insights and fun stories when you do it this way.

One favorite starts out in 1983. On his birthday that year, Buffett met with an 89-year-old businesswoman named Rose Blumkin (known to all as "Mrs. B") to acquire 90 percent of her company, Nebraska Furniture Mart (NFM), which she’d started with $500 in 1937.

"I'd rather wrestle grizzlies than compete with Mrs. B and her progeny," Buffett wrote—and he later revealed that he’d found her so trustworthy that when he bought NFM, he didn't even audit the inventory or check the accounts receivable.

"We gave Mrs. B a check for $55 million and she gave us her word," Buffett wrote. "That made for an even exchange."

Buffett was effusive in his praise of Mrs. B over the years, along with her children and other relatives who worked at NFM:

  • In 1985: "I am also happy to report that NFM's chairman, Rose Blumkin (the legendary "Mrs. B"), continues at age 92 to set a pace at the store that none of us can keep up with."

  • In 1987: "[T]oday NFM is far and away the largest home furnishings store in the country ... Mrs. B continues to work seven days a week. ... It's clear to me that she's gathering speed and may well reach her full potential in another five or 10 years. Therefore, I've persuaded the board to scrap our mandatory-retirement-at-100 policy."

  • In 1989: "The Nebraska Furniture Mart had record sales and excellent earnings in 1989, but there was one sad note. Mrs. B ... quit. ... At age 96 she has started a new business selling -- what else? -- carpet and furniture. And as always, she works seven days a week."

  • In 1992: "At the end of last year, Mrs. B decided to sell her building and land to NFM. ... I am delighted that Mrs. B has again linked up with us. ... This time time around, Mrs. B graciously offered to sign a noncompete agreement -- and I, having been incautious on this point when she was 89, snapped at the deal."

Mrs. B continued to work, and to be lavished with Buffett's praise, until shortly before her death in 1998, at age 104. Asked once to explain what secrets she and her family had that made them so successful, he said there were four simple points:

  • First, they "apply themselves with [intense] enthusiasm and energy."

  • Second, they "define with extraordinary realism their area of special competence and act decisively on all matters within it."

  • Third, they "ignore even the most enticing propositions falling outside of that area of special competence."

  • Finally, they "unfailingly behave in a high-grade manner with everyone they deal with."

A final detail I noticed: On his birthday that day when Buffett met with Mrs. B to buy her company, he was 53. She was just about to turn 90, which is Buffett’s age now. (Since we started out talking about Bezos, I’ll mention that he’s just turned 57.)

That also means that by Mrs. B's standards, Buffett should be running Berkshire well into the 2030s, at least. I have to ask: Has anyone thought to get him to sign a noncompete agreement?


7 other things worth your time

  • The U.S. expects to pass the grim milestone of 500,000 deaths from Covid within the next two days. But we’re at a point where public health experts disagree sharpy on the future outlook. Dr. Anthony Fauci says it's "possible" that Americans will still be wearing masks in 2022. But writing in The Wall Street Journal, Dr. Marty Makary of the Johns Hopkins School of Medicine and Bloomberg School of Public Health, says he expects that “Covid will be mostly gone by April, allowing Americans to resume normal life.” (USA Today, WSJ)

  • “United Airlines grounded 24 of its Boeing 777s on Sunday after one plane experienced an engine failure and spewed debris over a northern Denver suburb this weekend.” (Denver Post)

  • This is pretty wild: The governor of Rhode Island is slated to become President Biden’s secretary of commerce, so the lieutenant governor will succeed her. That’s creating a vacancy for lieutenant governor, and there’s an unusual selection process: anybody can apply through an online portal. So far, at least 79 Rhode Islanders have submitted applications, ranging from current politicians, outsiders, and a high school student slated to graduate in June. (WPRI)

  • Four year colleges generally have survived the pandemic with only a limited reduction in enrollment. But community colleges are down 10 percent nationwide, which has a big effect on the bottom line and the prognosis for the future. (Axios)

  • All schools in England will reopen as of March 8, according to a plan that UK Prime Minister Boris Johnson will outline today in parliament. (Bloomberg)

  • The U.S. Fish & Wildlife Service says it cloned an endangered ferret, from the DNA of another ferret that died 30 years ago. (USFWS)

  • Some Texans whose power didn’t go off during last week’s storms are facing astronomical electrical bills, since the state’s largely unregulated, market-driven utility system. “My savings is gone,” said a 63-year-old Army veteran who “nearly emptied his savings account” to pay a $16,752 electric bill. “There’s nothing I can do about it, but it’s broken me.” (NYT, $)


Thanks for reading. Photo courtesy of Flickr user DonkeyHotey. I wrote about this before for Inc.com. If you’re not yet a subscriber, please sign up for the daily Understandably.com email newsletter—with thousands of 5-star ratings from happy readers.

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