2003: Buffett Discusses Blue Chip Stamps

WARREN BUFFETT: You’ve heard us talk here about the importance of our managers. However, occasionally, Charlie and I get involved in management ourselves. And we would normally be too modest to claim any great accomplishments.

But we have had one rather incredible performance which, since Charlie participated in it as well I do — I think if we put up the slide on the company that Charlie and I have managed personally, you’ll see that this entity — you can’t — Charlie, here it is, right here.

It’s one where we took over 30-odd years ago. And as you can see, the 46,000 became — what?

VOICE: That’s the wrong slide.

WARREN BUFFETT: Oh. Excuse me. Are you sure? Oh.

VOICE: Oh, yeah.

WARREN BUFFETT: OK. Well, I guess we better put up the next slide.

We — (laughter) — they got that first one — they got it reversed. We were doing 120 million when we took over, and we’re now doing $46,000 a year. But we may get a bounce one of these years. (Laughter)

That was a company that also had a lot of float — (laughs) that we were attracted to. And the interesting thing is, you know, this was Blue Chip Stamps.

Although Blue Chip was a copy, of a sort, of Sperry & Hutchinson, which really was the main inventor of trading stamps on any large scale in the country, and they go back to the 19th century.

But if you think about it, S&H Stamps — Green Stamps — or Blue Chip Stamps, had many similarities to frequent flyer miles. You know, the only difference being that, you know, you got them a lot at, like, grocery stores and all of that and then you had to lick them and put them in a book. Whereas now, it’s all done electronically.

But the basic underlying business was very similar to frequent flyer miles, which have this incredible hold on the American public. But somehow, we were not able to make the transfer.

We haven’t yet made the transformation, let’s put it that way, from the lick-it stamp to something that the public will accept.

But we’ve still got $47,000 of revenue annually from the entire state of California, so we’re building a base. (Laughter)

Charlie and I continue to spend most of our time working on this one.