Diversification

In fact, significant distributions in the early years might have been disastrous, as a review of our starting position will show you.

Charlie and I then controlled and managed three companies, Berkshire Hathaway Incorporated, Diversified Retailing Company Incorporated, and Blue Chip Stamps, all now merged into our present operation.

Blue Chip paid only a small dividend, Berkshire and DRC paid nothing.

If, instead, the companies had paid out their entire earnings, we almost certainly would have no earnings at all now, and perhaps no capital as well.

The three companies each originally made their money from a single business.

First, textiles at Berkshire, second, department stores at Diversified, and third, trading stamps at Blue Chip.

These cornerstone businesses, carefully chosen, it should be noted, by your chairman and vice chairman, have respectively survived but earned almost nothing, shriveled in size while incurring large losses, and shrunk in sales volume to about 5% of its size at the time of our entry.

Who says you can't lose them all? Only by committing available funds to much better businesses were we able to overcome these origins.