”Growth itself contains the germ of happiness.” – Pearl S. Buck
On a weekend trip to visit NOS (number one son) LF in New Orleans, we took the ferry to Algiers, the poor cousin neighborhood that is located just across the Charles, to see something called Blaine Kerns Mardi Gras World.
A ramshackle guide bus transported us from the dock to an industrial part of town just next to the river, where 14 large yellow storage facilities stood. Inside them, were dozens of huge Mardi Gras floats and hundreds of oversized images of animals, people, and fantastic creatures of the imagination.
As I toured the odd, but oddly impressive, complex, I found myself thinking about Blaine Kern, the entrepreneur behind this unusual business. A pamphlet in the gift shop provided some details.
In the 1950s, young Blaine Kern found employment sculpting paper-mache figures for Mardi Gras parades. It was good work and pretty good money, but not the future Kern saw for himself. He had ambitions of becoming a big businessman.
His strategy was very similar to the one suggested in Message #129 (How to Knock Off Your Employer and Have Your Own Little Business). He worked long hours and mastered the craft of float building. He made useful contacts suppliers and fellow craftsmen and put aside every nickel he could. Finally, when the time was right, he quit and set up his own little operation, working out of a rented warehouse just across the river from the French Quarter.
To attract customers, Kern undercut the competition, sometimes charging half the going rate. (We’ve talked about this strategy many times.) He also spent a lot of his time and some of his money buying drinks for officers of the local krewes (the membership clubs that buy and pay for Mardi Gras floats). According to a guide I spoke to, Kern was an indefatigable worker. In the early years of his new business, he was working almost round the clock, but making less than he did when he was employed.
One by one, Kern attracted new customers. They liked the prices he offered and his willingness to do whatever was asked. Gradually, as his work became in demand, Kern increased his prices. Eventually, people were willing to pay him the going rate . . . sometimes more . . . for his good work.
Kern soon realized that he could offer his customers another benefit: inexpensive storage space. He bought up property adjacent to his own and built warehouses on it. Pretty soon, his storage income was as great as his float-building enterprise.
He plowed his rental profits back into the business, paying down mortgages and buying new property. Eventually, he owned 14 large warehouses, which were used either as factories or storage facilities.
By developing ways to reshape and repaint Mardi Gras figures (using new materials like fiberglass and Styrofoam), he was able to service customers who wanted to change their displays from year to year. This provided Kern with a third profitable line of income.
Finally, in the 1970s, he started to sell tours of Mardi Gras World to New Orleans visitors. Eight to 16 times a day, depending on the season, a group of 30 to 50 tourists takes a guided tour of a couple of warehouses and sees a video for an average price of $9.
Today, Blaine Kern employs more than 100 people. Based on what the tour guide said (that the business handles 80% of the float building for the Mardi Gras industry) and the snippets of conversation I had with Kerns people (there are more than 40 large krewes in New Orleans, each with revenues in excess of $500,000), I’d guess the business does about $10 million to $15 million in new building and renovations, another several million in rental income, and maybe another million in tour business.
Net profits? Hard to say. Probably between $2 million and $5 million.
Because of the reliable nature of these revenues, I’d guess the company is worth at least $15 million and possibly as much as $50 million. Throw in another $5 million (or more) in real estate and you have a nice little family fortune all created in the span of a single lifetime.[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]