When Warren Buffett devoted a substantial section of his 1983 Berkshire Hathaway (BRK.B) (BRK.A) shareholder letter to the story of Rose Blumkin — better known as “Mrs. B” — he wasn’t just celebrating the company’s purchase of Nebraska Furniture Mart. He was telling the business world that some of the most enduring competitive advantages are forged not in corporate boardrooms, but in grit, frugality, and an obsession with customer value.
It’s a tale that remains as relevant to modern investors and entrepreneurs as it was four decades ago. The story exemplifies just what it is that Buffett looks for in an acquisition and in a business leader, and can help investors understand what they should look for when investing in a company.
In 1917, at just 23 years old, Rose Blumkin talked her way past a border guard to escape Russia and start a new life in America. She had no formal education, didn’t speak English, and began with nothing.
By 1937, after years of selling used clothing, she saved $500 — enough to open her dream business: Nebraska Furniture Mart. Facing entrenched, well-capitalized competitors, she relied on unconventional tactics: radical frugality, relentless price competition, and legal resilience. When cash ran out early on, she sold furniture and appliances from her own home to pay creditors in full.
Rose constantly undercut competitors so dramatically that they tried to block her supply lines, pressuring manufacturers not to sell to her. When she was dragged into court for allegedly “violating Fair Trade laws,” she won every case, and even sold the judge $1,400 worth of carpet after proving her pricing worked.
By the early 1980s, her single store was generating over $100 million in annual sales — outselling all competitors in Omaha combined.
Buffett famously said, “I’d rather wrestle grizzlies than compete with Mrs. B.” From his perspective, Nebraska Furniture Mart had the trifecta of business excellence:
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Savvy purchasing: sourcing inventory better and cheaper than competitors.
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Lean operations: expense ratios so low that rivals couldn’t imagine them.
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Customer loyalty: passing on savings instead of padding margins.
It was, in Buffett’s words, “the ideal business — one built upon exceptional value to the customer that in turn translates into exceptional economics for its owners.”
Buffett purchased 90% of the business in 1983, leaving family members in key management roles. Mrs. B, then 90 years old, kept showing up seven days a week to personally sell carpet.
While the business world has shifted from brick-and-mortar showrooms to e-commerce platforms and digital-first marketing, Mrs. B’s principles remain timeless:
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Obsess over value, not hype: In an era of viral brands and influencer marketing, sustainable growth still depends on giving customers more than they expect for the price they pay.
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Operate lean: Venture-backed startups often burn through capital chasing scale, but Mrs. B’s model shows how low overhead and disciplined purchasing can create enduring competitive moats.
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Play the long game: Mrs. B fought legal battles, endured supplier pushback, and navigated multiple economic downturns, yet never compromised on her value proposition.
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Lead from the floor: Even as an owner, she remained deeply involved in sales, reinforcing company culture through example.
Mrs. B’s story also speaks to investors looking for the next great compounder. Buffett didn’t buy Nebraska Furniture Mart for its short-term profits; he bought it for its unbeatable market position and operational culture. The story is the moat. They grew because people loved the business, and people loved the business because they always strived to do right by their customers. Integrity, discipline, and customer-first thinking matter as much as — if not more than — the financial statements.
Buffett notes that capital allocation in a bad industry is like “struggling in quicksand.” In other words, even a great operator can be dragged down if the sector is fundamentally flawed. People need furniture now just as much as they needed it 100 years ago, and just as much as they will need it in 100 years.
Recognizing a moat is crucial. The store’s cost advantages and buying power made it difficult, if not impossible, for competitors to win customers without losing money. This means Mrs. B was going to be the leader in the area, and nobody around could change that.
In a global economy dominated by online retail giants like Amazon (AMZN) and fast-scaling disruptors in every sector, Mrs. B’s example is a reminder that moats are built in the details: buying better, spending less, and treating customers better than anyone else.
Whether you’re a startup founder in fintech or a private equity investor looking for durable businesses, the lesson is clear: find — or build — the Mrs. B of your industry, and you’ll have a business worth owning for decades.
Buffett bought into Nebraska Furniture Mart for one reason: he recognized a business so good that price almost didn’t matter. For modern investors and entrepreneurs, the challenge — and opportunity — is to recognize the next Mrs. B before everyone else does
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
