Thoughts on Leadership: See’s the Day

By Gino Blefari

This week my travels found me first in Chicago, meeting with the impressive team at Berkshire Hathaway HomeServices KoenigRubloff Realty Group for Sales Rally 2019. We kicked off the morning with a power walk along the lakefront trail. After, I spoke to the group about how to have a breakthrough year, which encompasses a good morning routine and habits of success.

From the winds of Chicago to the lights of Las Vegas, I then attended ICSC REcon 2019 with HSF Affiliates Executive Vice President of Global Field Operations Michael Jalbert and Michael Fields, managing director, Berkshire Hathaway Commercial Real Estate. REcon is an annual convention focused on bringing innovation to the retail real estate industry. The event provides commercial brokers a chance to connect with established and emerging retailers as well as technology startups and digital pioneers.

This year, our team met with Kathleen Pelzman, real estate manager for See’s Candies; Elena Riedell, who oversees real estate specialty leasing at the company; and Linda Feldman, See’s Candies senior real estate paralegal. During our meeting, we spoke about Berkshire Hathaway Commercial Real Estate brokers helping the See’s Candies team find locations for new stores and of course, we discussed the historic Berkshire Hathaway heritage of the See’s Candies brand.

The company was founded in Los Angeles in 1921 by Charles See, his wife, Florence, and his mother Mary. Famously, See’s Candies was bought by Warren Buffett’s Berkshire Hathaway Inc. in 1972 for $25 million—the company generated $4.2 million in pre-tax profit that year. In 2011, Buffett, who has called See’s Candies “the prototype of a dream business,” reported that See’s Candies brought in $1.65 billion in total profits since its purchase four decades ago.

Speaking about the company, Buffett said: “Buying See’s Candies was not only a good investment for us, it was a positive learning experience. We discovered that we had purchased a company that held itself to a high standard of business ethics—product quality, service integrity, and the right sort of relationships with employees and suppliers. See’s Candies became our model for investment in other quality companies … [See’s Candies was] a company that taught us early a vital lesson about the way to do business.”

Those fundamental values were instilled in the company from the very beginning, when the family opened See’s Candies shop and kitchen at 135 North Western Ave. in Los Angeles and sold candy made from Mary See’s original—and beloved—recipes. (The company is today headquartered in San Francisco.)

The first important value for See’s Candies was quality, and specifically, the quality of the product and its ingredients. When See’s Candies first arrived in Los Angeles, it was among hundreds of well-established confectioners. The competitive landscape for candy was fierce and Charles See immediately recognized that to set his business apart from others, he must focus on using only high-quality ingredients to make his candies. Supreme, unmatched quality allowed See’s Candies to quickly expand to 12 stores in Los Angeles by 1925.

Another important value was innovation, which included the adaptability of the business model. When the Great Depression arrived, bringing with it record levels of unemployment, businesses quickly succumbed to the pressure of an economy in sharp decline, but See’s Candies prevailed. To weather the financial storm, Charles enacted several important measures, including cutting prices. Conventional candy cost 80 cents at that time but Charles lowered See’s Candies to 60 cents and then 50 cents without compromising on quality. He also cut his own salary and the salaries of his team members. Famously, he visited the See’s Candies landlords and told them to lower the rent, too, because “lower rent is better than no rent.”

With these flexible changes in place, See’s Candies didn’t have to fire a single employee or close a single store, even as the Great Depression roared with economic menace around the country. Charles also used the closing of competitors’ shops to strengthen his team and acquired talent from other companies for key leadership positions.

When World War II caused rations on food supplies like butter, sugar and cream, Charles again remained nimble and innovative to avoid changing Mary See’s prized recipes. Instead, he rationed the candy allotted to various shops, and because See’s Candies provided the only good chocolate a consumer could buy, customers lined up around the block—like they do today for a new iPhone release—eagerly awaiting their See’s Candies.

Service is also a core value found at the center of See’s Candies. In 1987, See’s Candies cut 14 pieces from its product line and immediately, the company was inundated with letters from angry customers. The two varieties that caused the sourest reactions were brought back and See’s Candies then-President Charles N. Huggins sent a letter of apology and a gift certificate to every customer who wrote in with a complaint.

So, what’s the message? In business, everything begins and ends with values. Values like trust, integrity, stability and longevity ensure long-standing companies like See’s Candies are never bitter and always sustainably sweet.