In 1983, Warren Buffett’s Berkshire Hathaway bought a home furnishing store for $55 million (serious money 30 years ago and not bad today). The deal was done on a handshake. Even though the company’s financial statements had never been audited, Buffet didn’t ask for an audit. He didn’t take inventory … or verify the receivables … or check property titles. Why would a man renowned for his due diligence take such an outsized risk on a $55 million deal?
The truth is that it wasn’t a risk.
Buffett had been watching this hometown store, Nebraska Furniture Mart, for years. He had even made offers to buy it before. He knew a well-run company when he saw one. And, this business had been built from scratch on its founder’s famous motto: “Sell cheap and tell the truth.” When Buffett finally walked into the store one day (his birthday, actually) and asked its chairman to name her price, he didn’t ask for audits, because he trusted the integrity of the owner.
That owner was the inimitable Mrs. B.
The chairman of the company was 89 year-old Rose Blumkin – “or Mrs. B” as everyone knew her. Mrs. B. had grown up in Russia, never attended school, and started work in her mother’s little general store at the age of six. After immigrating to the States with her new husband, she started selling secondhand furniture out of their home. Despite her “Sell cheap and tell the truth” motto, she wasn’t selling cheap to the Oracle of Omaha himself.
How did Mrs. B pitch her business to Warren Buffett?
Mrs. B. had been pitching to Warren Buffett for years – probably, without even knowing it. Her “pitch” was simply to let the success of her store speak for itself and to back it up with an impeccable reputation for integrity. Buffett didn’t audit the business, because he knew he could trust Mrs. B’s word. In his annual letter to shareholders the following year, he explained, “We gave Mrs. B a check for $55 million and she gave us her word. That made for an even exchange.”
The foundation for any successful sales pitch.
That’s how you pitch to Warren Buffett or any truly savvy buyer. You let them see the real strengths of your product or service, and you always, always tell the truth (even, when the truth hurts or appears to put you at a disadvantage). Do you still need to extol the virtues of your offering? Of course you do. But remember, the most important part of any sales pitch is not the words you use, but the fact that you stand by those words.