Helzberg Diamonds Executive Delivers 2004 Myron Wang Lecture
it came time for diamond dealer Barnett Helzberg Jr. to sell the
family business, he had a few requirements. First, the former chairman
of the board of Helzberg
Diamonds wanted the company to remain in Kansas City because
he was convinced that the Midwest is the best place to do business.
Second, Helzberg Diamonds was never to be taken public. Third, new
management would not come in and fire any of the employees, especially
the ones who built the company. For Helzberg, one man could meet
these criteria, and that man was Warren Buffett.
Helzberg went to Wall Street and hired Morgan Stanley to help him
sell Helzberg Diamonds to Buffet-owned Berkshire Hathaway. According
to Helzberg, the initial asking price for the jewelry chain would
make Bill Gates look like a pauper. As a matter of fact, he had
to bring in a CPA to say the price with a straight face. Berkshire
Hathaway's counter was under Helzberg's asking price, but it was
a non-taxable stock offer. Helzberg accepted.
The Helzberg family had owned the jewelry chain since it was established
in 1915. Barnett Helzberg Jr. had taken the firm from 15 units to
more than 145 units in 23 states. By the time the company sold in
1995, it was the third-largest jewelry store chain in America. Helzberg
attributed the company's success to Helzberg Jewelers employees
as well as to some good market fortunes when a competitor went out
of business. Helzberg however, "couldn't grow up to the economics"
and felt the need to sell.
In his book, What I Learned Before I Sold to Warren Buffett: An
Entrepreneur's Guide to Developing a Highly Successful Company,
Helzberg explains his motives and gives his wisdom as he chronicles
his career through six sections: managing, decision making, hiring,
inspiring, communicating, and focusing.
After the Warren Buffett story, Helzberg opened the lecture to
questions. When asked his advice for the retail world, Helzberg
pointed out that the retail world is thriving and cited specific
examples of Kansas City businesses. Rainy Day Books, for one, is
not devoured by Barnes and Noble because the store caters to the
needs of serious readers. He said Kinkos "does it better"
and is cleaner and nicer. "Take an industry. Work in it. Study
it," Helzberg recommended. He gave another example of a man
named Danny from Kansas City who went to Costa Rica and fell in
love with coffee beans. Now Danny is selling to the finest restaurants
out of his basement. "Danny thinks coffee is nirvana, food
of the gods," Helzberg said. And it is that belief that propels
him. "Entrepreneurs believe they're doing something almost
sacred or holy," A jeweler might believe his calling to be
sacred because he supplies the wedding rings that are a part of
the sanctity of marriage.
When asked how to clone the passion, Helzberg advised having people
on your team who are just as passionate as you are. After all, as
Helzberg said, "there's something inherently exciting about
-- Sharika A. Sarkett