Warren Buffet primarily owns American Express via his holding company, Berkshire Hathaway, and its subsidiaries. Indeed, Warren Buffet has a 20.4% ownership stake in American Express; followed by The Vanguard Group, with 6.33%, and BlackRock, with 6.1% ownership. American Express generated $52.8 billion in revenue in 2022 and $7.5 billion in profits.
History of American Express
American Express is an American financial services corporation with a primary focus on credit cards, payment processing, and traveler’s cheques. The company was founded in 1850 and was the result of a merger between entities owned by Henry Wells, William G. Fargo, and John Warren Butterfield.
In April 2023, American Express occupied number three on the Fortune Best Companies to Work For List. The company is also one of the world’s most valuable, with first-quarter revenue in 2023 reported as $14.3 billion.
Here is a look at the company’s history and how it has evolved since its inception.
The origins of American Express
American Express was founded on March 18, 1850, and was the result of a merger between three companies involved in the transportation industry:
- Livingston, Fargo & Company (formerly Western Express) – founded by Henry Wells and William G. Fargo in 1845.
- Wells & Co. (formerly Livingston, Wells & Co.) – founded by Henry Wells in 1846 and subsequently owned by Wells at the time of the merger, and
- Butterfield & Wasson – founded by John Butterfield and James D. Wasson.
With Wells as President and Fargo as Secretary, American Express (then an unincorporated association) specialized in the express delivery of valuables, goods, and other packages.
American Express is founded
By 1862, American Express operated over 890 offices and almost 10,000 miles of railway and express routes across the United States. Its success attracted the attention of competitors – notably the Merchants Union Express Company who remained a bitter rival for two years.
On November 25, 1868, the two entities merged to form the American Merchants Union Express Company. This was later renamed the American Express Company in 1873.
When Fargo died in 1881, younger brother James Congdell Fargo started what would become a 33-year stint at the helm of the company. Over the years, he introduced innovations such as money orders (1882) and traveler’s cheques (1891) and later oversaw the company’s first offices in France, England, and Germany, among others.
Change of direction and expansion
When the U.S. Government nationalized the express industry in 1918, American Express pivoted almost exclusively to banking and travel-related services.
Years later, in 1958, the company debuted its now-iconic green charge card in the United States and Canada. Over the 60s, 70s, and 80s, American Express acquired various investment, insurance, and publishing companies to diversify its interests.
In 1972, the first card-issuance partnerships were established in South America and Europe to grow the business and brand around the world. This growth accelerated in the 1990s and was no doubt helped by the introduction of the Membership Miles rewards program in 1991.
Four years later, American Express released its first cobranded card in collaboration with hotel chain Hilton. According to its website, the deal marked “a seismic shift in the company’s thinking, demonstrating the power of partnership to help serve our mutual customers.”
Recent initiatives
American Express released its best-in-class mobile app in 2010, which was soon followed by its Small Business Saturday initiative to encourage Americans to support small businesses.
In 2014, the company launched the machine learning-based Amplify Fraud Protection to protect users from malicious actors anywhere in the world. American Express’s Corporate Card program was refreshed in 2019 with new flexible tools and solutions for business travelers.
The following October, the company announced a $1 billion action plan to promote ethnic, racial, and gender equity across its colleagues, customers, and communities.
Key takeaways:
- American Express is an American financial services corporation with a primary focus on credit cards, payment processing, and traveler’s cheques. The company was founded in 1850 and was the result of a merger between entities owned by Henry Wells, William G. Fargo, and John Warren Butterfield.
- The company’s early success attracted the attention of competitors – notably the Merchants Union Express Company who remained a bitter rival for two years. On November 25, 1868, the two entities merged to form the American Merchants Union Express Company. This was later renamed the American Express Company in 1873.
- When the U.S. Government nationalized the express industry in 1918, American Express pivoted almost exclusively to banking and travel-related services. In 1958, the company debuted its now-iconic green charge card in the United States and Canada and later acquired various investment, insurance, and publishing companies to diversify.
Key Highlights
- Ownership and Financials:
- Warren Buffet’s Berkshire Hathaway owns a 20.4% stake in American Express.
- American Express generated $52.8 billion in revenue and $7.5 billion in profits in 2022.
- The Vanguard Group and BlackRock are other significant shareholders.
- Founding and Merger:
- American Express was founded in 1850 as a result of a merger between three transportation companies.
- Henry Wells, William G. Fargo, and John Warren Butterfield were key figures in its inception.
- Early Success and Rivalry:
- By 1862, American Express had over 890 offices and extensive railway and express routes.
- The company had a notable rivalry with Merchants Union Express Company.
- Merger and Name Change:
- American Express merged with Merchants Union Express Company in 1868.
- The resulting entity was renamed American Express Company in 1873.
- Shift to Banking and Travel Services:
- In 1918, due to government nationalization, American Express shifted focus to banking and travel-related services.
- Iconic Charge Card and Diversification:
- American Express introduced its green charge card in 1958 in the US and Canada.
- Over the years, the company diversified by acquiring various investment, insurance, and publishing companies.
- Global Expansion and Partnerships:
- The company expanded internationally, establishing offices in countries like France, England, and Germany.
- It initiated card-issuance partnerships in South America and Europe in the 1970s.
- The Membership Miles rewards program was launched in 1991.
- Co-branded Cards and Innovations:
- American Express introduced cobranded cards, starting with Hilton in 1995.
- The company released its mobile app in 2010 and launched Small Business Saturday to support local businesses.
- Amplify Fraud Protection, a machine learning-based security measure, was introduced in 2014.
- Equity and Social Initiatives:
- In 2019, the Corporate Card program was updated for business travelers.
- American Express announced a $1 billion action plan in 2019 to promote equity across colleagues, customers, and communities.
- Recent Recognition and Financial Performance:
- In April 2023, American Express was ranked third on the Fortune Best Companies to Work For List.
- The company reported first-quarter revenue of $14.3 billion in 2023.
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