Buying a Business 49products are professional-quality kitchen tools and pantry food items;
some 80 percent of the products are exclusive to the company or can
only be bought from TPC representatives.
Today, the Pampered Chef has 950 employees in the United States,
Germany, the United Kingdom, and Canada, and its products are sold
by over 71,000 independent consultants during in-home demonstra-
tions. Over one million kitchen shows were held throughout the United
States in 2002, producing sales of $730 million. And the only debt the
company has ever incurred is the original $3,000 seed money.
In 2002, Doris Christopher realized that in case she either keeled
over or decided to slow down, the Pampered Chef needed a backup
plan. So, on the advice of her bankers at Goldman Sachs, she approached
Warren Buffett. That August, Christopher and her then CEO, Sheila
O’Connell Cooper, met with Buffett at his headquarters in Omaha. A
month later, Berkshire announced it had bought the company, for a price
thought to be approximately $900 million.
Recalling that August meeting, Buffett wrote to Berkshire share-
holders, “It took me about ten seconds to decide that these were two
managers with whom I wished to partner, and we promptly made a
deal. I’ve been to a TPC party and it’s easy to see why this business is a
success. The company’s products, in large part proprietary, are well-
styled and highly useful, and the consultants are knowledgeable and en-
thusiastic. Everyone has a good time.”^10
Buffett is often asked what types of companies he will purchase in the
future. First, he says, I will avoid commodity businesses and managers
that I have little conf idence in. He has three touchstones: It must be the
type of company that he understands, possessing good economics, and
run by trustworthy managers. That’s also what he looks for in stocks—
and for the same reasons.
INVESTING IN STOCKS
It is patently obvious that few of us are in a position to buy whole com-
panies, as Buffett does. Their stories are included in this chapter because
they give us such crisp insight into Buffett’s way of thinking.