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This chapter is from the book

The Value of Family Lore

Growing up, my siblings and I were raised on stories of E. A. Stuart’s persistence in the face of repeated setbacks in starting the Carnation Company. Those lessons resonate in us to this day, and I hope that our family stories make this discussion of wealth management less academic and more tangible to you, regardless of your financial or familial situation.

There’s a delivery drop box from one of E. A.’s notable business failures—a dry goods business that flopped before he founded Carnation—that we keep in the kitchen of our Cape Cod summer house. We keep this drop box around for an important and symbolic reason: to emphasize that wealth isn’t to be taken for granted and isn’t easily attained. “You may have inherited wealth, but in this family you are expected to work hard” is the message my siblings and I got from our parents growing up.

The story of how E. A. Stuart ran Carnation in its early years contains important lessons—not just for running a business, but also for managing the wealth that a business creates. Many of his ideas, in fact, form the core principles espoused in this book:

  • Consistent profits are critical to successful growth. In its 86 years as an independent company, through two world wars and the Great Depression, Carnation lost money in only three years. The keys to this remarkable track record were prudent diversification, modest leverage, recurring cash flow, empowerment of people, and careful measurement of results.
  • Take measured and informed risks. The entrepreneurial risks he took and his well-honed intuition were always grounded in his deep knowledge of his business.
  • Align your interests with customers and suppliers. E. A. Stuart was always looking to partner with people, not to gain the upper hand as an adversary.
  • Conserve your wealth. He worked hard and was frugal. To this day, my mother takes real pride in describing her family as “understated people.”
  • Be useful. This was E. A. Stuart’s ultimate measure of success.
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