Scott Luton (00:12):
Good morning, Scott Luton here with you on this edition of this week in business history. Welcome to today’s show on this program, which is part of the supply chain. Now family of programming. We take a look back at the upcoming week, and then we share some of the most relevant events and milestones from years past, of course, mostly business focused with a little dab of global supply chain. And occasionally we might just throw in a good story outside of our primary realm. So I invite you to join me on this. Look back in history to identify some of the most significant leaders, companies, innovations, and perhaps lessons learned in our collective business journey. Now let’s dive in to this week in business history.
Kelly Barner (01:10):
Hello, and thanks for joining us. I’m Kelly Barner, owner of buyers meeting point and the host of dial P for procurement here on supply chain. Now you can join me on the third Tuesday of each month for a video live stream that runs from 12 to 1:00 PM Eastern. As I bring together the leading minds in corporate spend management and do my best to blur the lines between procurement and supply chain. I’m guest hosting this edition of this week in business history. So thanks so much for listening in this week show, we’ll be remembering a number of key stories, innovations, inventions, and first that took place between May 10th and the 14th. And our main story this week actually starts on the very first date of that range on May 10th, 1965, but let’s go back and start with a little context. First in 1937, a little boy, living in Omaha, Nebraska bought a copy of a book titled 1000 ways to make $1,000 from there.
Kelly Barner (02:16):
He never looked back a born entrepreneur. He started a variety of small businesses, everything from car detailing and paper routes to selling chewing gum and golf balls. He visited the New York stock exchange for the first time at the age of 10 and filed his first tax return at age 14. The funny thing about that first tax return is that he listed his bicycle and wristwatches deductions paper, route expenses, you know, for $35, he always worked hard, studied hard and invested carefully. He attended the Wharton school at the university of Pennsylvania and the university of Nebraska before going on to from Columbia business school, he believed in value investing a strategy that prioritizes stocks that seem to be trading for less than their book value stocks at the market as a whole is underestimating for whatever reason, as I’m sure you’ve noticed the market has a tendency to overreact to both good news and bad news.
Kelly Barner (03:20):
This throws stock values out of whack with long-term corporate valuation and in turn creates an opportunity. If you can spot it by now, you’ve probably guessed who this story is about. One of the best known value in yeah, Warren buffet, the Oracle of Omaha, it’s been a person of some interest to many, both for his social causes. And for the fact that despite his enormous personal wealth, he insists on living frugally. He earns a salary of about a hundred thousand dollars a year, and he hasn’t had a pay raise in over 40 years. Now on May 10th, 1956, Warren buffet gained a controlling interest in Berkshire Hathaway back then Berkshire Hathaway. Wasn’t the multinational conglomerate holding company. We know it as today in 1956, it was a failing textile company headquartered in new Bedford, Massachusetts, less than an hour from where I’m recording this podcast, buffet didn’t actually intend to buy anything he intended to sell.
Kelly Barner (04:24):
As a matter of fact, he had an agreement to sell his shares to Berkshire president Seabury Stanton and a price of $11 and 50 cents each. When Stanton sent through the official offer to buy the shares at a point lower than they had previously agreed to $11 and 37 and a half cents per share buffet was furious. He started buying up Berkshire Hathaway stock and on May 10th became the majority shareholder with 40% of the company stock in his possession today. Berkshire Hathaway is a conglomerate with almost $900 billion in assets. It wholly owned some very familiar companies, Geico Duracell, dairy queen BNSF, Lubrizol fruit of the loom Helzberg diamonds, pampered chef, and NetJets. It also owns a little over 38% of pilot flying J and his significant minority holdings in public companies like Kraft, Heinz American express brass Coca Cola bank of America and Apple. The extra interest thing about Berkshire Hathaway is that it made brand new history last week, May 4th.
Kelly Barner (05:41):
That has to be the newest history that has ever been covered on this podcast. Believe it or not. Berkshire Hathaway currently trades at $421,420 or so per share. And it’s trending upward. Let me just repeat that and let it sink in. If you want to buy one share of Berkshire Hathaway, it will cost you over $400,000. For comparison. One share of Apple is about $130. One share of Google is about 2300, your dollars. And one sheriff target is a little over $200. So here’s what happened last week. The stock price is so high that the NASDAQ computers can’t compute and display their value anymore. It’s sort of like a why K problem. If your personal history goes back far enough to know what I mean, NASDAQ trades with four decimal places, and they’re just plain out of digits. As a result, the stock temporarily stopped trading for two days and it restarted it very quickly hit the maximum number NASDAQ can handle for now.
Kelly Barner (06:54):
Traders have to go elsewhere for their live data. As the NASDAQ issue, won’t be resolved until May 17th just to bring this piece of history full circle. Warren buffet ended up buying Berkshire Hathaway because of a dispute over 12 and a half cents per share in 1956. And about 65 years later, their stock broke NASDAQ by trading above $429,000 per share. I’d say that was a pretty good trade. No wonder they call him the Oracle. Our next story takes us back in time to when Valley falls company in Rhode Island, the company that would actually evolve into Berkshire Hathaway was just 30 years old. It was also on May 10th, but it was an 1869. When the company lesion of the transcontinental railroad was celebrated with the insertion of a ceremonial golden spike at the east-west connection point at Promintory Utah, the whole railroad was 1,776 miles of track and made it possible to travel from New York to San Francisco in about a week that was blazing fast for the time.
Kelly Barner (08:06):
But this achievement wasn’t just about passenger travel by 1880, the transcontinental railroad was transporting $50 million worth of freight each year. It moved Western food crops and raw materials to East coast markets and manufactured goods from East coast cities to the West coast. And because of its two coastal connections, the railroad also facilitated international trade just three years after the railroad was complete. Aaron Montgomery ward started the first mail order catalog business, the transcontinental railroad, and the other rail lines that followed, made it possible to sell products far and wide without what we call bricks and mortar locations today, most of us are blown away with what Amazon is capable of now, but just think back to what it must’ve been like to receive a package from Boston, somewhere in the Midwest, back in the 1880s, it’s almost thinkable on May 11th, 1947, the BF Goodrich company in Akron, Ohio announced that it had developed a tubeless tire by removing the inner tube and making the tire wall strong enough to resist the pressure of the air themselves.
Kelly Barner (09:22):
Goodrich improved both safety and efficiency. It actually took about five years for Goodyear to receive the patents associated with their invention, but they didn’t let that time go to waste. The tubeless tires were used by taxi drivers and police cars and had proven themselves in traffic and at high speeds, by the time the patents came through, before we close out May 10th to the 14th and business history, let’s celebrate a few birthdays on May 12th, 1918, Mary Kay Ash, the founder of Mary Kay cosmetics was born in 1963. She became frustrated when she was passed over for a promotion in favor, a man that she had trained. So she retired and intended to write a book to assist women in business. The book turned into a business plan. She started Mary Kay cosmetics with a $5,000 loan from her son, nine sales women, okay. In a single storefront in Dallas, Texas, she would imitate the house party business model used by Tupperware and others to expand her company to over $200 million in sales.
Kelly Barner (10:33):
By the time of her death in 2001 on May 12th, 1929, Bernard Bernie Marcus, the co-founder of home Depot was born in Newark, New Jersey after being fired from the handy Dan home improvement center over a corporate power struggle. He and co founder Arthur blank founded the home Depot and completely revolutionized the home improvement experience with their warehouse. It was format on May 14th, 1984. Okay. That birth year is a little depressing. Mark Zuckerberg co-founder of Facebook was born originally intended to be a college social network. Zuckerberg co founded the company with Harvard university, classmates and roommates, Eduardo Saverin Andrew McCollum, Dustin Moskovitz, and Chris Hughes, Zuckerberg and Facebook have been on and off the front cover of the newspapers and in and out of the front seats of congressional hearings for years, as one of the five big tech companies, along with Google, Apple, Microsoft, and Amazon, that might be due in part to Zuckerberg’s business philosophy.
Kelly Barner (11:47):
The company’s original motto was move fast and break things. And it based upon his belief that unless his development team was breaking stuff, they weren’t moving fast enough. On May 2nd, 2014, the internal model was changed to move fast with stable infrastructure, far more mature, but honestly it’s a little bit less exciting. His current personal worth is estimated at a little over $114 billion more than Warren buffet. Who is it? $106.8 billion. Of course, sucker Berg makes more to on paper. His salary is just $1, but when you add in all that quote, all other compensation and quote, he takes home about $25 million a year. Well that just about wraps up this edition of this week in business history. Big thanks to you for tuning into the show each week. Don’t forget to check out the wide variety of industry thought leadership available@supplychainnow.com as a friendly reminder, you can find this week in business history, wherever you get your podcast from and be sure to tell us what you think we would love to earn your review on behalf of the entire team here at this week in business history and supply chain. Now this is Kelly Barner wishing all of our listeners, nothing but the best on that note. We’ll see you next time here on this week in business history.
