Berkshire Annual Letter 1999 (Part 1)
The majority of Berkshire’s managers are wealthy, and work because they love their businesses. Even though the businesses are owned by Berkshire, these managers are given authority to run them as if they were their own.
Here’s a story of how one of their managers truly wanted their business to do well.
Bill Child is the manager and former owner of R.C. Willey, Utah’s dominant home furnishing business.
As Bill is a Mormon, therefore his stores are never opened on Sunday. Despite operating with this disadvantage, Bill still managed to grow his business from $250,000 of annual sales in 1954 to $342 million in 1999.
In 1997, Bill suggested to Warren that they opened another store in Boise. Warren was initially relunctant about expanding to a new territory with a no-Sunday policy against other entrenched rivals that were opened every day.
Bill offered to do a remarkable thing: To fund the purchase of the land and of building the store, and to sell it to Berkshire at cost if the store was successful. If expectations fall short, Berkshire did not have to take over the store.
As it turned out, the store was successful and Warren Buffett purchased the land and building at cost back from Bill. Bill did not want to accept even a single cent of interest for the two years his funds of $9 million were tied up.