This is a truly excellent post and it addresses something I myself have pondered many times.
In my book, 'Fabric of Success', I discuss how Anthony Deden shares a poignant anecdote about an Arab date farmer who, with great satisfaction, planted saplings that would take 40 years to produce commercial-quality fruit, almost certainly not within his lifetime. The dates being harvested today were planted by previous generations, for which the farmer is grateful. His work in planting trees for the benefit of his children and grandchildren is selfless, involving significant short-term opportunity costs, but he understands that his task is to protect, preserve, and enhance what he was given to manage. It isn’t about him or a desire for personal enrichment. To coin a Steve Jobs expression, it’s about being a missionary rather than a mercenary. The durability and future value of the business is all that matters. If everyone who inherited control of the date farm followed his example, the farm would forever prosper. If not, it would eventually fail.
Deden suggests that many corporate leaders today are overly focused on the short term. With the average tenure of a public company CEO being around four years, there is little incentive for them to make decisions that will benefit the company and its shareholders for decades to come. Instead, they often concentrate on poorly designed short-term remuneration targets which encourage the wrong type of thinking. This explains why Deden avoids investing in the vast majority of public companies. Instead he advocates investing in businesses with long-term leadership, typically founders or families, with a demonstrable bias towards achieving enduring success across multiple generations.
This all speaks to the mindset of the management and the corporate culture. There is a wonderful freight company in New Zealand which is worthy of study for anyone who is unfamiliar with it. It's called Mainfreight and it was established by Bruce Plestead. In 1979 he established a corporate constitution which he named 'The Mainfreight Way'. At its core, it had a 100-year vision which influences all recruitment, staff training, customer and supplier relationships, growth strategies and capital allocation. Essentially, every decision is made by considering what is best for the company to endure for the next 100 years. The book about Mainfreight is titled "Ready Fire Aim: The Mainfreight Story" by Keith Davies, published in 2013. Highly recommended.
To adopt this kind of mindset, management need to be long tenured. Both Deden's date farmer and Plestead were in it for the long-term. But consider that the average tenure of a CEO for a US public company is only 4.2 years, and you can see why this is a problem. Every time management changes, shareholders are essentially rolling the dice on their investment. And with each roll, there’s always the risk of a bad outcome. The question is - how many times are you willing to take that gamble? I am publishing a great video on this topic tomorrow on my Substack entitled, "Rolling the Dice: The Leadership Gamble" if anyone is interested. In this analysis on Phil Carret, I also explore the importance of great long-term management: https://rockandturner.substack.com/p/phil-carret-learn-from-the-best?utm_source=publication-search
Warren Buffett was influenced by Phil Fischer in adopting the "favourite holding period is forever". The philosophy here is that interrupting compounding is more costly than most think. I explore this, with supporting facts and figures here: https://rockandturner.substack.com/p/investing-subconscious-myopia . However, with CEOs of most companies changing so frequently, and the potential impact of a new leader being profound, this is not so easy to achieve.
This is why investing in founder led businesses, that nurture talent and promote from within, and which have strong succession plans, is key to this conundrum. These are the kinds of businesses I look for. Examples include Costco, Amazon, Berkshire Hathaway, Mainfreight, Enterprise Rent-A-Car, Fastenal. All of these companies share a corporate philosophy that works. This was the focus of my book, which pulls on the golden threads that run through the fabric of every great business. If you are interested, you can find it on Amazon here: https://www.amazon.com/Fabric-Success-Threads-Tapestry-Business-ebook/dp/B0D6GWV7T5
Wow, thank you, James, for that thoughtful and insightful comment. Lots of nuggets to learn from there and many avenues to continue exploring the topic. Definitely following up with your articles on your Substack, which I recommend to anyone reading this, and will take a look at your book.
Great post. Thanks! Once I reach a certain level of capital I'm planning to invest in businesses that have a chance of surviving forever. Resilience over returns as the post mentions. Imagine compounding for 100+ years at 7-10%. Key part of this plan is to pass down investing knowledge and life wisdom to the next generations.
I'm surprised you didn't mention XOM. It was in the Dow from 1928 to 2020. And it was around for 60 years before that under different ownership. That's going on 155 years. Whoa.
"Control of irreplaceable assets" is by far the most important entry barrier IMHO, and explains XOM's resilience. They own a finite resource and can cherry pick the best businesses along the value chain.
To seed, build, and nurture timeless, intangible human capitals — such as resilience, trust, evolution, fulfilment, quality, peace, patience, discipline, relationships and conviction — in order to elevate human judgment, deepen relationships, and restore sacred trusteeship and stewardship of long-term firm value across generations.
A refreshing poetic take on our business world and capitalism.
A reflection on why today’s capital architectures—PE, VC, Hedge funds, SPAC, Alt funds, Rollups—mostly fail to build and nuture what time can trust.
Built to Be Left.
A quiet anatomy of extraction, abandonment, and the collapse of stewardship.
"Principal-Agent Risk is not a flaw in the system.
If you're looking for 100-year businesses, just look down the street. Local monopolies can be just as resilient as the Dow 30. I'm thinking funeral parlours, food distribution, uniform rentals. The list goes on. And, more importantly, they can be bought cheaply...
My current obsession is billboards. The industry has been growing for 125 years at an 8% CAGR if you can believe it. Check out my post on Clear Channel for more info.
On the local monopolies, yes there are lots as well. Also traditional industries, looking to a pencil manufacturer with more than 100 years for history now.
This is a truly excellent post and it addresses something I myself have pondered many times.
In my book, 'Fabric of Success', I discuss how Anthony Deden shares a poignant anecdote about an Arab date farmer who, with great satisfaction, planted saplings that would take 40 years to produce commercial-quality fruit, almost certainly not within his lifetime. The dates being harvested today were planted by previous generations, for which the farmer is grateful. His work in planting trees for the benefit of his children and grandchildren is selfless, involving significant short-term opportunity costs, but he understands that his task is to protect, preserve, and enhance what he was given to manage. It isn’t about him or a desire for personal enrichment. To coin a Steve Jobs expression, it’s about being a missionary rather than a mercenary. The durability and future value of the business is all that matters. If everyone who inherited control of the date farm followed his example, the farm would forever prosper. If not, it would eventually fail.
Deden suggests that many corporate leaders today are overly focused on the short term. With the average tenure of a public company CEO being around four years, there is little incentive for them to make decisions that will benefit the company and its shareholders for decades to come. Instead, they often concentrate on poorly designed short-term remuneration targets which encourage the wrong type of thinking. This explains why Deden avoids investing in the vast majority of public companies. Instead he advocates investing in businesses with long-term leadership, typically founders or families, with a demonstrable bias towards achieving enduring success across multiple generations.
This all speaks to the mindset of the management and the corporate culture. There is a wonderful freight company in New Zealand which is worthy of study for anyone who is unfamiliar with it. It's called Mainfreight and it was established by Bruce Plestead. In 1979 he established a corporate constitution which he named 'The Mainfreight Way'. At its core, it had a 100-year vision which influences all recruitment, staff training, customer and supplier relationships, growth strategies and capital allocation. Essentially, every decision is made by considering what is best for the company to endure for the next 100 years. The book about Mainfreight is titled "Ready Fire Aim: The Mainfreight Story" by Keith Davies, published in 2013. Highly recommended.
To adopt this kind of mindset, management need to be long tenured. Both Deden's date farmer and Plestead were in it for the long-term. But consider that the average tenure of a CEO for a US public company is only 4.2 years, and you can see why this is a problem. Every time management changes, shareholders are essentially rolling the dice on their investment. And with each roll, there’s always the risk of a bad outcome. The question is - how many times are you willing to take that gamble? I am publishing a great video on this topic tomorrow on my Substack entitled, "Rolling the Dice: The Leadership Gamble" if anyone is interested. In this analysis on Phil Carret, I also explore the importance of great long-term management: https://rockandturner.substack.com/p/phil-carret-learn-from-the-best?utm_source=publication-search
Warren Buffett was influenced by Phil Fischer in adopting the "favourite holding period is forever". The philosophy here is that interrupting compounding is more costly than most think. I explore this, with supporting facts and figures here: https://rockandturner.substack.com/p/investing-subconscious-myopia . However, with CEOs of most companies changing so frequently, and the potential impact of a new leader being profound, this is not so easy to achieve.
This is why investing in founder led businesses, that nurture talent and promote from within, and which have strong succession plans, is key to this conundrum. These are the kinds of businesses I look for. Examples include Costco, Amazon, Berkshire Hathaway, Mainfreight, Enterprise Rent-A-Car, Fastenal. All of these companies share a corporate philosophy that works. This was the focus of my book, which pulls on the golden threads that run through the fabric of every great business. If you are interested, you can find it on Amazon here: https://www.amazon.com/Fabric-Success-Threads-Tapestry-Business-ebook/dp/B0D6GWV7T5
Wow, thank you, James, for that thoughtful and insightful comment. Lots of nuggets to learn from there and many avenues to continue exploring the topic. Definitely following up with your articles on your Substack, which I recommend to anyone reading this, and will take a look at your book.
As promised, I have just published my post "Rolling the Dice: The Leadership Gamble" . Enjoy this great video and accompanying short post. https://rockandturner.substack.com/p/rolling-the-dice-the-leadership-gamble
Reading now.
Svenska Handelsbanken AB is quite an interesting study
Great post. Thanks! Once I reach a certain level of capital I'm planning to invest in businesses that have a chance of surviving forever. Resilience over returns as the post mentions. Imagine compounding for 100+ years at 7-10%. Key part of this plan is to pass down investing knowledge and life wisdom to the next generations.
🙏🏼🙏🏼
Great post, thanks for the mention! Never dull to recite Tony Dean's wisdom.
💯
Interesting food for thought!
I'm surprised you didn't mention XOM. It was in the Dow from 1928 to 2020. And it was around for 60 years before that under different ownership. That's going on 155 years. Whoa.
"Control of irreplaceable assets" is by far the most important entry barrier IMHO, and explains XOM's resilience. They own a finite resource and can cherry pick the best businesses along the value chain.
Hello there,
Huge Respect for your work!
New here. No readers Yet.
But the work has waited long to be spoken.
Its truths have roots older than this platform.
My Sub-stack Purpose
To seed, build, and nurture timeless, intangible human capitals — such as resilience, trust, evolution, fulfilment, quality, peace, patience, discipline, relationships and conviction — in order to elevate human judgment, deepen relationships, and restore sacred trusteeship and stewardship of long-term firm value across generations.
A refreshing poetic take on our business world and capitalism.
A reflection on why today’s capital architectures—PE, VC, Hedge funds, SPAC, Alt funds, Rollups—mostly fail to build and nuture what time can trust.
Built to Be Left.
A quiet anatomy of extraction, abandonment, and the collapse of stewardship.
"Principal-Agent Risk is not a flaw in the system.
It is the system’s operating principle”
Experience first. Return if it speaks to you.
- The Silent Treasury
https://tinyurl.com/48m97w5e
If you're looking for 100-year businesses, just look down the street. Local monopolies can be just as resilient as the Dow 30. I'm thinking funeral parlours, food distribution, uniform rentals. The list goes on. And, more importantly, they can be bought cheaply...
My current obsession is billboards. The industry has been growing for 125 years at an 8% CAGR if you can believe it. Check out my post on Clear Channel for more info.
https://unlovedmonopolies.substack.com/p/clear-channel-outdoor-holdings-inc
wow, will take a look at billboards companies.
On the local monopolies, yes there are lots as well. Also traditional industries, looking to a pencil manufacturer with more than 100 years for history now.