Yesterday, Richline CEO Dennis Ulrich announced he would retire this summer and would be handing the reins of the company he founded to Richline president Dave Meleski. Here, Ulrich talks with JCK about how he built Richline with help from owner Warren Buffett, his views on the future of the jewelry industry, and the best thing that Buffett ever taught him.
JCK: You said you first discussed setting up a jewelry company with Warren Buffett at an event for [Buffett-owned] Ben Bridge Jeweler.
Dennis Ulrich: When I first met him, it was just a funny type of comment, kind of a faraway thing. Then in 2007 I had decided to sell my business [Bel-Oro], and I was talking to different private equity firms. I talked to [Ben Bridge CEO] Ed Bridge and he said, “I’m willing to introduce you [to Warren Buffett].”
Probably a week later I was speaking to [Buffett] on the phone, and he asked me three things: “What have you done with your business? Where can you take the business? And how much do you want for the business?” I said, “Can I have a little time to get back to you?” He said, “Sure. I have all the time in the world.”
So a few months later I had written up a four-page document and I sent it to him on a Friday. He read it on Saturday because every Saturday, he goes into the office. On Monday, he called me and we spoke maybe 20 minutes on the phone.
He said, “Your company is really too small for us. Maybe if you could find another company your size.” I called up Ed Bridge and said, “What did he mean by that?” And he said, “What he said is exactly what he meant.”
I called up Dave [Meleski] at Aurafin, which was probably our largest competitor. Its business was very similar to ours. At first I wasn’t able to tell Dave who the potential buyer was because Warren said, “You use my name, people think they can get more money.” Eventually, I did have to tell him who the partner would be. Then we shook hands on the deal.
And then you grew by acquiring a lot of companies.
Both our companies [Aurafin and Bel-Oro] were primarily gold companies. We were doing about $400 million in business combined. The jewelry business was very fragmented. A lot of small businesses, some of them good companies, were looking for exit plans. So that was our strategy from the beginning. I think over the years we did 23 acquisitions. Most of them worked, but they didn’t all work. But from all of them were learned something and got talented people.
It seems like you are branching out from acquisition into things like smartwatches.
We are primarily known for running businesses and acquiring businesses. It’s not a mandate; it’s just an opportunity when it makes sense. The value could be good, or the people, or the accounts, or the right product line. But organic growth is very important to our business also.
The Samuel Aaron and Honora acquisitions were very important acquisitions for us. Samuel Aaron brought us a lot of information about diamonds. Over 50 percent of the business is diamonds. There is a lot of opportunity to grow.
With smartwatches, there was the idea of innovation and industry disruption. The smartwatches didn’t work out well for us, but we learned a lot from it and other things have developed that have paid off.
Is there anything that you feel really helped you with your association with Warren Buffett?
I think the best example is, if you realize in July 2007, we were at $400 million and [the] gold [price] was at $618. Then 2008 occurred, and gold went to [close to] $2,000 an ounce and the economy tanked. I called him up and said, “Everything we told you, we’re not going to be able to deliver.” He said, “Dennis, you have a run a good company in the past. Your competitors are doing worse. You have to take advantage of the situation and when you come out of it, you will be stronger.” Obviously it helped that we were backed by substantial resources. That enabled us to hold our costs—though we did reduce some—and we were able to take advantage of opportunities in the business and acquire good companies and talent. And when we came out of it in 2010, our business really was a lot stronger and bigger.
Also, he gives us a lot of responsibly for management and with that responsibly comes a commitment that you don’t want to disappoint.
What do you see as the future of the jewelry industry?
Jewelry has been around for thousands of years and will continue to be around. I think where and how it’s sold will continue to evolve and change. I’m not writing off any of the brick-and-mortar stores. I think how they interact with the consumer will change, and it’s already starting to change, whether it’s supported by online or by an in-store experience or different unique products or making sure that the people in the store can relate to today’s consumer, whether it’s a millennial or a couple celebrating their 50-year wedding anniversary.
Do you still plan to stay involved with the industry?
I don’t look at this at the end of my career and the contacts and the relationships. I want to stay in contact with my friends. I think I can help the industry by mentoring young people to get involved in the industry. It’s a challenge getting young people involved in the business, and it’s important and it’s something we need to do more work on. So I’m looking forward to that.
One of the most important things I feel I’ve accomplished other than Richline is the involvement with Jewelers for Children. It’s a great charity, and I want to stay involved with it.
Is there any one key morsel of knowledge that Warren Buffett has taught you that you want to share with us?
Don’t do anything that you wouldn’t want your family to see on the front page of the newspapers. It’s running a business with integrity and respect for all your stakeholders. That is something that our industry needs to work on. But it’s something I’m proud of with Richline.
Image courtesy of Richline