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The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [293]

By Root 3412 0
she borrowed $500 from a brother to open a store called Blumkin’s in a basement near her husband’s pawnshop. But the furniture wholesalers didn’t want her as a customer, because their dealers complained that she was underselling them. So Rose went to Chicago, found one sympathetic man, and ordered $2,000 worth of merchandise from him on thirty days’ credit. The time came due and she was short, so she sold her own house furnishings cheap to pay off the debt. “When my kids came home, they cried like somebody will die,” she recalled. “Why I took away the beds and the refrigerator? The whole house, an empty house? I told them, they were so nice to me I can’t stand it not to keep my promise.”14 That night she took a couple of mattresses from the store for the family to sleep on. “The next day I brought in a refrigerator and stove,” she said, “and the kids quit crying.” 15

In school the other children picked on her son, Louie, for having a pawn-broker as a father. He found it painful but ignored their taunts, worked in the store after school, remained a good student, and became an all-American diver at Tech High while delivering sofas until midnight. His mother by now had established the Nebraska Furniture Mart and moved to larger quarters. In a side business, she sold and rented out Browning automatic shotguns during hunting season. Louie’s favorite job was testing the guns by firing them into cinder blocks in the family’s basement.16

By the time the United States entered World War II in 1941, Louie had enrolled at the University of Nebraska, but he dropped out to enlist in the service after only a few semesters, still just a teenager. During the war, he and his mother wrote each other every day. His mother was discouraged, and he urged her not to quit.17 Because the big wholesalers refused to sell to the Nebraska Furniture Mart, Rose had become a furniture “bootlegger,” traveling on trains all over the Midwest to buy overstock merchandise at five percent over wholesale from stores like Macy’s and Marshall Field’s. “They could see she knew what she was doing,” says Louie. “They were fond of her and would say, here’s this dining-room set that just came in. It wasn’t easy or cheap, but she got it.” Rose said, “The more [the wholesalers] boycotted me, the harder I worked.”18 You don’t own the country, the country belongs to everyone, was her attitude.19 She developed a lasting hatred of big shots. “When you’re down they spit on you,” she said. “When you start making some dollars they start paying attention. Phooey. Who needs them? Give me the middle class and I’ll be happy.” Her slogan was “Sell cheap and tell the truth, don’t cheat nobody, and don’t take no kickbacks.”20 When she made a sale, she also told the employees, “Deliver it before they change their minds!”21

Louie won a Purple Heart at the Battle of the Bulge. After the war, he came straight home to Omaha in 1946 and went back to work. He learned everything about merchandising: buying, pricing, inventories, accounting, delivery, display. To Rose, nobody was as good as Louie. Ruthless with her employees, she screamed at them at the top of her lungs: “You worthless golem! You dummy!” But after his mother fired them, Louie would hire them back.

Four years later, the store was prospering, but then the Korean War began, and sales started to sink. Rose decided to give the business a boost by adding carpet to her line. She went to Marshall Field’s in Chicago and told them she was buying carpet for an apartment building; they sold her three thousand yards of Mohawk carpet for $3.00 a yard. She retailed it for $3.95, half the standard price, although the fact that she had lied to Marshall Field’s seemed to bother her for years afterward.22

Rose had managed to launch a successful carpet business by giving her customers a better price than the other carpet dealers. But carpet maker Mohawk filed a lawsuit to enforce their minimum-pricing policies—under which manufacturers required all their retailers to charge a minimum price—and sent three lawyers to court. Rose showed up alone.

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