Old Gems Becoming Future-Driven Greatness—Will Your Company Be Next?
Updated: Apr 13
Article by Rik Raats
How Old Gems Can Oftern Surpass Startups
—There is a specific kind of alchemy required to look at a "dusty" legacy and see a diamond. True entrepreneurial greatness often isn't about inventing something from thin air; it’s about recognizing the hidden lifeblood in an "olden vehicle" and refueling it with a modern vision.
The Syndicate for the "Responsible" Few
Who could ever have imagined that GEICO started as a kind of syndicate association solution to offer government staff affordable insurance? Founded in 1936, the Government Employees Insurance Company was a niche bet.
The "gem" was the data: government workers were statistically safer drivers. By bypassing agents and selling directly to a select "syndicate," they lowered costs—a model that eventually disrupted the entire industry. Today, it’s a global powerhouse, but its heart remains that original, efficient "member-only" logic.
From the Hathaway Shirt to a Trillion-Dollar Icon
Before it was a global conglomerate, Berkshire Hathaway was a struggling textile mill. The "Hathaway" name was iconic in the 1950s not for stocks, but for the "Man in the Hathaway Shirt" advertising campaign. When Warren Buffett bought the mill in 1965, it was a "dying" asset. Yet, he used the remaining capital from that "olden vehicle" to acquire insurance companies. The textile mill is gone, but the name now represents the gold standard of global capital.
The Loom and the Architect: The Berkshire Hathaway Rebirth
Before it was a trillion-dollar conglomerate, Berkshire Hathaway was a struggling textile mill. The "Hathaway" name was iconic in the 1950s not for stocks, but for the "Man in the Hathaway Shirt" advertising campaign. When Warren Buffett bought the mill in 1965, it was a "dying" asset—a decision he later called his "biggest mistake" because the textile industry was a capital-draining trap.
The Munger Pivot: From "Cigar Butts" to Quality
The true transformation began when Buffett’s partnership with Charlie Munger
solidified.
Munger, the "architect" of the modern Berkshire, broke Buffett's habit of "cigar-butt" investing—finding a dying business at a deep discount for one last "puff" of profit.
The Blueprint:
Munger convinced Buffett that it was "far better to buy a wonderful company at a fair price than a fair company at a great price".
The Insurance Engine: They recognized that insurance offered a "golden goose": float. This is the pool of premiums collected today to be paid out as claims much later. By running these insurers conservatively, they gained a virtually perpetual stream of cost-free capital to invest.
The Breakthrough: In 1967, they acquired National Indemnity for $8.6 million, gaining $20 million in investable float that funded the next half-century of growth.
The textile mills were finally shuttered in 1985, but the "olden vehicle" had already provided the lifeblood for a global empire.
The Bean Wholesaler that Found a "Third Place"
In 1971, Starbucks was a simple coffee bean wholesaler in Seattle. It didn't sell lattes; it sold the tools to make them. It took a marketing mind to see that the "old gem" wasn't the beans—it was the experience. By layering the "Third Place" concept—a home between work and home—onto a traditional wholesale model, it transformed from a local shop into the world's largest coffeehouse chain.
From Stagecoaches to the Black Card
Before it was a status symbol, American Express was the 1850s version of a freight forwarder. They moved physical gold and stock certificates via horses and stagecoaches. The pivot happened when they realized that moving value was more important than moving crates. They leveraged their reputation for security into traveler’s checks and eventually the world’s most elite payment network.
Can Your Company Be the Next?
The most vital question for any business owner today is: Can your company be the next? Many owners sit on "olden vehicles" they believe have run their course, but the truth is that a legacy often just needs a new map. All it requires is the right idea—the right business plan to bridge the gap between "then" and "next."
A company is never truly "finished" if it has a foundation of trust, a history of service, or a specialized niche. The "magic" happens when you stop looking at the depreciated assets on a balance sheet and start looking at the untapped potential of the brand's soul. Often, the transition from "un-sellable" to "unstoppable" is simply a matter of shifting the business model to meet the modern world’s needs.
The Renaissance Pivot: How Raats is Capitalizing Legacies
This brings me to why your own "old company" might be tomorrow's star. It has become my beloved hobby—and I just can’t stop. I pair European Bonhomie with an American Entrepreneurial mindset.
I am Rik Raats, and my deep roots and curiosity have grown me into the skin of a Renaissance businessman: entrepreneur, marketing expert, musician, and horse trainer. My career spans the ocean, connecting the best of two worlds. I was raised partly by my grandmother, born in 1902, whose contagious curiosity kept her ahead of every curve. She made her world a better place by writing letters to officials when she feared that the darkness under the bridge of the A12 viaduct in Wilrijk was a dangerous spot for ladies returning home late. You bet she was a divine and avid writer.
Though I was "built and assembled" in 1965, the engine under the scalp is fueled with fresh-as-a-daisy branded "idea-oline." In my M&A activities, I discovered tremendous opportunities in companies the owners considered not even worth selling. By adding a modern business plan to these "un-sellable" vehicles, I’ve seen disappointed men become "kings of the street," fathering new futures for young entrepreneurs who bought an "olden vehicle" that is now the leader in its niche.
I love capitalizing legacies. Sometimes, the leader of tomorrow's niche is already parked in yesterday's garage—it just needs a driver who knows how to bridge the old world with the new.
Do you have an "Old Gem" gathering dust?
If you are sitting on a legacy business and aren't sure of its next chapter, let's talk. Whether it's a "syndicate" with untapped data or a "textile mill" with hidden capital, every story has a second act. Don't let your vehicle stay in the garage—it might just be the engine for the next market leader.
send an e-mail to raats@raats.com and we'll be happy to get back to you.
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