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What I Learned Before I Sold to Warren Buffett: An Entrepreneur's Guide to Developing a Highly Successful Company
Expert advice for those who want to create a solid company
Through hard work and determination Barnett Helzberg built his small family owned business-Helzberg Diamonds-into a successful company that caught the attention of Warren Buffett. Buffett was so impressed with the business that in 1995 he decided to purchase Helzberg Diamonds through his holding company Berkshire Hathaway. Helzberg shares his thirty years of experience in running a successful business and outlines the steps needed to prosper within a challenging business environment. Through "helpful hints" and words of wisdom, Helzberg offers a proven road map for entrepreneurs and business owners looking to build a solid company that will stand the test of time. What I Learned Before I Sold to Warren Buffett is a comprehensive guide that will help readers get their businesses on the right track.
Barnett C. Helzberg Jr. (Kansas City, MO) was President of Helzberg Diamonds, Inc. from 1962 to 1995, a period during which he expanded his family-owned business to 143 stores in twenty-three states. His business practices have been a key ingredient to the success of Helzberg Diamonds.
Through hard work and determination Barnett Helzberg built his small family owned business-Helzberg Diamonds-into a successful company that caught the attention of Warren Buffett. Buffett was so impressed with the business that in 1995 he decided to purchase Helzberg Diamonds through his holding company Berkshire Hathaway. Helzberg shares his thirty years of experience in running a successful business and outlines the steps needed to prosper within a challenging business environment. Through "helpful hints" and words of wisdom, Helzberg offers a proven road map for entrepreneurs and business owners looking to build a solid company that will stand the test of time. What I Learned Before I Sold to Warren Buffett is a comprehensive guide that will help readers get their businesses on the right track.
Barnett C. Helzberg Jr. (Kansas City, MO) was President of Helzberg Diamonds, Inc. from 1962 to 1995, a period during which he expanded his family-owned business to 143 stores in twenty-three states. His business practices have been a key ingredient to the success of Helzberg Diamonds.
224 pages, Hardcover
First published March 21, 2003
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March 5, 2025
“Hello, Mr. Buffett,” I said. “I’m Barnett Helzberg of Helzberg Diamonds in Kansas City.” “I believe that our company matches your criteria for investment,” I said.
It might have been simpler to sell to the highest bidder, but that notion seemed as sensible as choosing a brain surgeon based on the lowest price rather than on talent and reputation.
I had purchased four shares of Berkshire Hathaway stock in 1989 just so I could attend Berkshire’s annual meeting
Managers run their own shows. They don’t have to report to central management,” he said. “When we get somebody who is a .400 hitter we don’t start telling them how to swing.”
Berkshire was then one of about a dozen companies in the United States that had a AAA rating from Standard and Poor’s. Buffett told us after our negotiations, “You are associated with a company that is really regarded as one of the bluest of blue chips.
Dad gave me summertime employment when I was 15 selling. I became president of Helzberg Diamonds in 1962 at age 29, when my father became ill and asked me to take over.
He beat every quota and earned more than the boss. The next year, his boss cut his commission. By then, Kauffman had had enough. He quit and started his own pharmaceutical business, packaging his own products in his basement and sell ing them from the trunk of his car. In 1989, Kauffman sold Marion Labs to Merrell Dow for $6.5 billion.
Helzberg Entrepreneurial Mentoring Program (a program for less experienced entrepreneurs to be matched up with more experienced entrepreneurs)
Thinking you can start your own business or wanting to be your own boss, just because you hate your job, when you really have no desire or stamina to go it on your own, is courting disaster. Some people are more enamored by the concept than the reality.
“Teenage Watch Club.” The advertising told teenagers that they could come in with parent’s permission and purchase any watch up to $50 and establish their own credit.
When you are operating a group of retail stores, there is always the usual bell curve of weak to great performing stores. You make more money closing bad stores than opening new ones. Peter Drucker calls that “feeding the problems and starving the opportunities.”
they bought my soul offering free car washes and free Diet Coke. I am looking forward to my next auto purchase—and will certainly shop there.
If I forget when you come back I will give you a free topping
How about a nice handwritten note out of the blue thanking them for paying promptly or just thanking them for their business?
At Helzberg Diamonds we were happy to clean rings in our ultrasonic machines for our visitors and replace watch batteries free.
For a great book of horror stories and success stories about customer service, you’ll enjoy WAYMISH ...Why Are You Making It So Hard...for me to give you my money? by Ted Cohn and Ray Considine.
You need to give positive reinforcement to those who render great service to the customer. At Helzberg Diamonds I sent personal hand-written notes
When I picked up my car, the manager had a note on the invoice that if any of my grades of the service were under 5 to let him know.
Use a three-strikes-and-you’re-out policy on employee retention when poor customer service is rendered.
Take the temperature of your relationship on a regular personal basis!
Invest in your present customers. Don’t focus on new business to the exclusion of those feeding you!
I firmly believe the best customers you may ever have will be the ones who came to you angry but were disarmed by your willingness to listen and to respond sympathetically to their complaints.
The object is not to satisfy the customer but to delight the customer.
What was not anticipated is that hearing aids are a very individual item, like trying on shoes. We sold 40,000 hearing aids at $29.95. Over two-thirds came back because they didn’t work for everyone.
The failed venture didn’t affect our core jewelry business and we were able to exercise an option to return unsold hearing aids to the manufacturer. We had negotiated that option up front as a way to reduce the risk to us of going into a brand new business—one we clearly didn’t understand.
we decreased the risks inherent in reaching into a new market by transferring in proven managers and associates from successful stores.
What is the amount of risk we can take at the present time? How important is the opportunity?
You cannot always judge your potential for success by the lack of success of others. If someone else isn’t making money in a particular market, it doesn’t mean that you can’t. Perhaps your competitors simply haven’t done a good job of exploring all the possibilities of the market.
Our average sales per store grew in volume to more than $2 million by the time we sold the company in 1995. At the time we had grown to 143 stores, mostly mall-based.
Your biggest risk may be not taking one.
You miss all the shots you never take. —Wayne Gretzky
One of the worst plans I ever instituted was having managers act as owners by rewarding them purely on a profit basis. the corporate office should control payroll and expenses and let the store managers concentrate only on sales, sales, and sales. That did it!
bonuses should be based on both sales volume andnet profit. No one should be working on a pure profit bonus. It encourages short-term thinking
Many large companies falter because their leaders never establish a succession plan.
never tell anyone to do their best. Give specific expectations.
We had a longstanding relationship with First National going back about 30 years. We had gotten the usual letter reassuring us that a $500,000 line of credit was available to us when, as, and if needed. We hardly noticed the last paragraph of the letter which would rescind the bank’s obligation if our creditworthiness changed.
Having more than one supplier for each critical need provides you with options and security. Get second sources now, when you do not need them.
Their leases enabled developers to borrow on them to build the projects.
all mall rents are based on the higher of a dollar minimum or a percentage of sales, the higher the sales, the more rent for the landlord. If our store could do $1 million in the same footage as the competitor who did $500,000, our rent would be $50,000 and his $25,000; rents were then generally 5 percent of sales.
Our goal became: “to be the highest dollar volume per square foot jeweler in each mall.”
Treat the illness, not the symptoms.
financing our own receivables
You could set diamonds upside down and Cecil could still sell them.
Cecil’s success rippled through the company
Learn on the other guy’s nickel.
MBWA (management by walking around)
Go to industry gatherings to network and find a few friends
Set up a peer group to critique each other’s businesses. Set clear ground rules that you want criticism, not compliments.
At three o’clock in the morning he would wake up and exclaim, “I’ve got the answer.”
he bought big newspaper advertisements and staged promotions, including free airplane rides and watch giveaways.
My idea of a group decision is to look in the mirror. —Warren Buffett
How did we learn these things? From focus groups of non-customers and customers. Those focus groups gave us a lot to chew on; we had no previous clue that customers were confused by the name “Jewelry 3.” They can help test new ideas, improve existing projects, create new sales campaigns, and tell you what is important about customer service. A focus group session can be a cornucopia of ideas for your advertising team.
if cost is a concern, consider having a college marketing class develop a focus group project.
His advice was always to the point, unvarnished, and valuable. Want to increase your chances of making a great decision? Find someone who disagrees with you.
Try these three magic questions with associates, customers, and suppliers, if you really want the truth: 1. What do you like that we are doing? 2. What do you not like that we are doing? 3. What are we not doing that you would like?
We found the less we sold, the better we sold what was left
Sins of omission and half-truths are perceived and can destroy credibility earned over many, many years.
The more quickly the news, bad or good, gets to your associates from you, the better chance you have of avoiding communication challenges.
Luck is where preparedness meets opportunity. The harder you try the luckier you get.
“What did you learn?” This is a question to ask yourself after each successful and, especially, unsuccessful experience
Another trick of learning is to believe that you are going to have to teach the subject in the future. For some reason this technique helps most folks improve learning.
Ask, “What did I learn?”
♦ Ask, “How will I prevent this from happening in the future?”
♦ Ask, “How can I repeat this successful outcome in the future?”
prices should be raised in very minute amounts over a long period, even if the need for an increase does not exist at a given time. Your customers will be far happier with the price if you avoid a major surprise and shock. you could put a rat in lukewarm water and raise the temperature 1° an hour and he would not jump out even when the water started boiling.
Rule of 72: If you divide 72 by the percentage of increase, that tells you how many years it will take to double the initial amount.
I have repeatedly heard MBA students say they could not come up with a new idea and that is what they were waiting for to start their business.
The point is that if you are truly driven to be an entrepreneur, you need not wait till the skies open up and pour a sparkling new idea on you. You can also talk to customers of those businesses to ask:
• What do you like in the service or merchandise you are getting?
• What do you not like in the service or merchandise you are getting?
What would you like in service or merchandise that you are not getting?
Your due diligence should also include suppliers, potential customers, and even industry competitors in other areas of the country where you would not be operating.
Oliver Wendell Holmes once said, “All generalizations are wrong including this one”
take the names of the references the applicant gave you and ask them for other references
nothing focuses the mind like knowing you are to be executed in the morning.
A friendship founded on business is better than a business founded on friendship. —John D. Rockefeller
The top 25 sales associates each month received a small gift with a handwritten personal note from me.
I realize that our success came from other sources over which I had no control:
◊ Severe mistakes and financial problems of competitors. ◊ Population growth at the jewelry-buying age levels. ◊ Just plain good luck!
Dad’s rule of thumb was that if you have been doing something for five years or more, you should take a look at it; it may be outdated.
We tried it once and it didn’t work. Could the timing have been wrong? How about that all important factor, the execution of the idea? If that approach were taken, none of us would have learned to walk! Mr. Edison would have given up quickly on the light bulb.
Deliver bad news before they hear it from others.
In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you. —Warren Buffet
store was there to serve on the customer’s terms, not the store owners’.
we would walk over to encourage potential customers to bring their food inside and jokingly tell them they were especially welcome if they shared!
Adding to the fun, Carousel Snack Bars put up signs that said, “You are welcome to show off your Helzberg Diamonds while enjoying your food and drink.”
annual Christmas, birthday, or anniversary follow-up, or for the five-year follow-up.
It is handy for vital items such as renewal reminders on trademarks, where I put the reminder in followup for three different days.
talk about the situation, not about the personality.
Enron, Andersen, and Tyco.
It might have been simpler to sell to the highest bidder, but that notion seemed as sensible as choosing a brain surgeon based on the lowest price rather than on talent and reputation.
I had purchased four shares of Berkshire Hathaway stock in 1989 just so I could attend Berkshire’s annual meeting
Managers run their own shows. They don’t have to report to central management,” he said. “When we get somebody who is a .400 hitter we don’t start telling them how to swing.”
Berkshire was then one of about a dozen companies in the United States that had a AAA rating from Standard and Poor’s. Buffett told us after our negotiations, “You are associated with a company that is really regarded as one of the bluest of blue chips.
Dad gave me summertime employment when I was 15 selling. I became president of Helzberg Diamonds in 1962 at age 29, when my father became ill and asked me to take over.
He beat every quota and earned more than the boss. The next year, his boss cut his commission. By then, Kauffman had had enough. He quit and started his own pharmaceutical business, packaging his own products in his basement and sell ing them from the trunk of his car. In 1989, Kauffman sold Marion Labs to Merrell Dow for $6.5 billion.
Helzberg Entrepreneurial Mentoring Program (a program for less experienced entrepreneurs to be matched up with more experienced entrepreneurs)
Thinking you can start your own business or wanting to be your own boss, just because you hate your job, when you really have no desire or stamina to go it on your own, is courting disaster. Some people are more enamored by the concept than the reality.
“Teenage Watch Club.” The advertising told teenagers that they could come in with parent’s permission and purchase any watch up to $50 and establish their own credit.
When you are operating a group of retail stores, there is always the usual bell curve of weak to great performing stores. You make more money closing bad stores than opening new ones. Peter Drucker calls that “feeding the problems and starving the opportunities.”
they bought my soul offering free car washes and free Diet Coke. I am looking forward to my next auto purchase—and will certainly shop there.
If I forget when you come back I will give you a free topping
How about a nice handwritten note out of the blue thanking them for paying promptly or just thanking them for their business?
At Helzberg Diamonds we were happy to clean rings in our ultrasonic machines for our visitors and replace watch batteries free.
For a great book of horror stories and success stories about customer service, you’ll enjoy WAYMISH ...Why Are You Making It So Hard...for me to give you my money? by Ted Cohn and Ray Considine.
You need to give positive reinforcement to those who render great service to the customer. At Helzberg Diamonds I sent personal hand-written notes
When I picked up my car, the manager had a note on the invoice that if any of my grades of the service were under 5 to let him know.
Use a three-strikes-and-you’re-out policy on employee retention when poor customer service is rendered.
Take the temperature of your relationship on a regular personal basis!
Invest in your present customers. Don’t focus on new business to the exclusion of those feeding you!
I firmly believe the best customers you may ever have will be the ones who came to you angry but were disarmed by your willingness to listen and to respond sympathetically to their complaints.
The object is not to satisfy the customer but to delight the customer.
What was not anticipated is that hearing aids are a very individual item, like trying on shoes. We sold 40,000 hearing aids at $29.95. Over two-thirds came back because they didn’t work for everyone.
The failed venture didn’t affect our core jewelry business and we were able to exercise an option to return unsold hearing aids to the manufacturer. We had negotiated that option up front as a way to reduce the risk to us of going into a brand new business—one we clearly didn’t understand.
we decreased the risks inherent in reaching into a new market by transferring in proven managers and associates from successful stores.
What is the amount of risk we can take at the present time? How important is the opportunity?
You cannot always judge your potential for success by the lack of success of others. If someone else isn’t making money in a particular market, it doesn’t mean that you can’t. Perhaps your competitors simply haven’t done a good job of exploring all the possibilities of the market.
Our average sales per store grew in volume to more than $2 million by the time we sold the company in 1995. At the time we had grown to 143 stores, mostly mall-based.
Your biggest risk may be not taking one.
You miss all the shots you never take. —Wayne Gretzky
One of the worst plans I ever instituted was having managers act as owners by rewarding them purely on a profit basis. the corporate office should control payroll and expenses and let the store managers concentrate only on sales, sales, and sales. That did it!
bonuses should be based on both sales volume andnet profit. No one should be working on a pure profit bonus. It encourages short-term thinking
Many large companies falter because their leaders never establish a succession plan.
never tell anyone to do their best. Give specific expectations.
We had a longstanding relationship with First National going back about 30 years. We had gotten the usual letter reassuring us that a $500,000 line of credit was available to us when, as, and if needed. We hardly noticed the last paragraph of the letter which would rescind the bank’s obligation if our creditworthiness changed.
Having more than one supplier for each critical need provides you with options and security. Get second sources now, when you do not need them.
Their leases enabled developers to borrow on them to build the projects.
all mall rents are based on the higher of a dollar minimum or a percentage of sales, the higher the sales, the more rent for the landlord. If our store could do $1 million in the same footage as the competitor who did $500,000, our rent would be $50,000 and his $25,000; rents were then generally 5 percent of sales.
Our goal became: “to be the highest dollar volume per square foot jeweler in each mall.”
Treat the illness, not the symptoms.
financing our own receivables
You could set diamonds upside down and Cecil could still sell them.
Cecil’s success rippled through the company
Learn on the other guy’s nickel.
MBWA (management by walking around)
Go to industry gatherings to network and find a few friends
Set up a peer group to critique each other’s businesses. Set clear ground rules that you want criticism, not compliments.
At three o’clock in the morning he would wake up and exclaim, “I’ve got the answer.”
he bought big newspaper advertisements and staged promotions, including free airplane rides and watch giveaways.
My idea of a group decision is to look in the mirror. —Warren Buffett
How did we learn these things? From focus groups of non-customers and customers. Those focus groups gave us a lot to chew on; we had no previous clue that customers were confused by the name “Jewelry 3.” They can help test new ideas, improve existing projects, create new sales campaigns, and tell you what is important about customer service. A focus group session can be a cornucopia of ideas for your advertising team.
if cost is a concern, consider having a college marketing class develop a focus group project.
His advice was always to the point, unvarnished, and valuable. Want to increase your chances of making a great decision? Find someone who disagrees with you.
Try these three magic questions with associates, customers, and suppliers, if you really want the truth: 1. What do you like that we are doing? 2. What do you not like that we are doing? 3. What are we not doing that you would like?
We found the less we sold, the better we sold what was left
Sins of omission and half-truths are perceived and can destroy credibility earned over many, many years.
The more quickly the news, bad or good, gets to your associates from you, the better chance you have of avoiding communication challenges.
Luck is where preparedness meets opportunity. The harder you try the luckier you get.
“What did you learn?” This is a question to ask yourself after each successful and, especially, unsuccessful experience
Another trick of learning is to believe that you are going to have to teach the subject in the future. For some reason this technique helps most folks improve learning.
Ask, “What did I learn?”
♦ Ask, “How will I prevent this from happening in the future?”
♦ Ask, “How can I repeat this successful outcome in the future?”
prices should be raised in very minute amounts over a long period, even if the need for an increase does not exist at a given time. Your customers will be far happier with the price if you avoid a major surprise and shock. you could put a rat in lukewarm water and raise the temperature 1° an hour and he would not jump out even when the water started boiling.
Rule of 72: If you divide 72 by the percentage of increase, that tells you how many years it will take to double the initial amount.
I have repeatedly heard MBA students say they could not come up with a new idea and that is what they were waiting for to start their business.
The point is that if you are truly driven to be an entrepreneur, you need not wait till the skies open up and pour a sparkling new idea on you. You can also talk to customers of those businesses to ask:
• What do you like in the service or merchandise you are getting?
• What do you not like in the service or merchandise you are getting?
What would you like in service or merchandise that you are not getting?
Your due diligence should also include suppliers, potential customers, and even industry competitors in other areas of the country where you would not be operating.
Oliver Wendell Holmes once said, “All generalizations are wrong including this one”
take the names of the references the applicant gave you and ask them for other references
nothing focuses the mind like knowing you are to be executed in the morning.
A friendship founded on business is better than a business founded on friendship. —John D. Rockefeller
The top 25 sales associates each month received a small gift with a handwritten personal note from me.
I realize that our success came from other sources over which I had no control:
◊ Severe mistakes and financial problems of competitors. ◊ Population growth at the jewelry-buying age levels. ◊ Just plain good luck!
Dad’s rule of thumb was that if you have been doing something for five years or more, you should take a look at it; it may be outdated.
We tried it once and it didn’t work. Could the timing have been wrong? How about that all important factor, the execution of the idea? If that approach were taken, none of us would have learned to walk! Mr. Edison would have given up quickly on the light bulb.
Deliver bad news before they hear it from others.
In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you. —Warren Buffet
store was there to serve on the customer’s terms, not the store owners’.
we would walk over to encourage potential customers to bring their food inside and jokingly tell them they were especially welcome if they shared!
Adding to the fun, Carousel Snack Bars put up signs that said, “You are welcome to show off your Helzberg Diamonds while enjoying your food and drink.”
annual Christmas, birthday, or anniversary follow-up, or for the five-year follow-up.
It is handy for vital items such as renewal reminders on trademarks, where I put the reminder in followup for three different days.
talk about the situation, not about the personality.
Enron, Andersen, and Tyco.
Currently reading
September 24, 2008I'm reading this for one of my MBA classes - Barnett is actually one of the "professors"! He's a fantastic man - smart, with tons and tons of anecdotes and advice to give about running a successful business (Helzberg Diamonds!).
January 5, 2020
To differentiate a jewellery business in malls requires good execution around selling and its people. These stories are shared well in this book. Very easy to read and digest. All seems common sense but then many businesses fail...
June 28, 2020
This book gives out lot of wisdom from a person who sold his business to warren buffet. To be successful have your heart in your business and business in your heart. Obsession does not guarantee success, on the other hand lack of obsession does guarantee failure.Celebrate your winners.
February 6, 2019
One of my personal favorite books.
February 4, 2015
The author wrote a decent guide to his mantra behind running his business, with more focus on systems/thought processes in place. Reading it makes me understand why Berkshire decided to purchase Helzberg Diamonds. The book is a bit more general than specific in detail/depth, though this is presumably the objective of the book - to cover most aspects of running a business.
April 11, 2008
This dude started Helzberg Diamonds and sold his business to Warren Buffett. This is his account of how to build a business so successful that the richest man on the planet wants to buy it.
Read
April 17, 2010from motley fool
Displaying 1 - 8 of 8 reviews