Google is a boring company. So are Facebook and Apple. Have you ever been inside these companies? A bunch of people crouched over computers talking bits and bytes. BORING.
Where will Google, Apple and Facebook be in fifty years? They may not be around, and if they are it is likely they’ll look nothing like they do today. Parts of these companies will fall into the abyss and be replaced by something else, or the whole company will disappear and be replaced by something better. Constant innovation is almost impossible under managerial change over long periods of time. Even Mr. Jobs agreed that technology is short-lived, making it very hard for companies to remain on top:
So where does that leave us? Most ideas fail. Most startups fail. In the long-run, most companies disappear. In the words of Paul Graham, “…the number of failed startups should be proportionate to the size of the successes”, which they are. This means the odds are not in our favor, the market is fairly efficient and profitability and adoption are unlikely. Every day I try to think of new companies to start and new ideas that will help owners of existing companies. I can’t help it. It’s like a disease. I’m obsessed with ideas. Most of these ideas are terrible. Most won’t matter in five years let alone five months. Many of them never see reality and stay on the pages of my notebooks. Some of them get started and a few of those become something.
After a year of writing down ideas every day I got frustrated and wanted to figure out how to make my ideas better so I could start better companies, or help existing companies implement lasting ideas. Putting the nuts and bolts together is really hard. Technology is especially hard because it changes so fast.
I thought maybe there are ways to make success more likely. We don’t need to be Mark Zuckerberg or Drew Houston, we’re just looking for a small piece of pie to make our lives secure and free. A small piece of a trillion dollar economy would be more than enough for most of us to live the rest of our lives. So I started researching.
Most people think of success as being the richest or sexiest company – the best of the best; the winner of all. Nike comes to mind. Apple, Tesla and Beats are all “winning” and these companies are SEXY. But how likely is it that you too can start the next-sexiest zillion-dollar company and win in your category? Pretty unlikely. That’s okay because success isn’t defined by one method, and that’s a lot of pressure to put on yourself anyway. We all know stress erodes us. Let’s avoid stress. My research pointed in new directions.
While considering the seemingly overnight success of sexy companies I sometimes get frustrated enough that a quiet surf break on a Costa Rica beach sounds like a good early retirement plan. When I get frustrated I seek inspiration and hope. I find hope in the history and stories of incredibly resilient businesses from around the world. Many of these businesses started small, with a single person or idea, and slowly grew to brands we know today, and many are still small companies that just persist every year. This was the core of my research.
My definition of personal success is freedom to choose what I want to do every day. Successful companies provide freedom to their owners by creating meaningful products and services (maintaining relevancy), maintaining flexibility and defensibility, producing profits (on average, not every year), building lasting relationships with their customers, and serving specific vertical markets effectively.
After reading a lot about company history I compiled a list of the most successful companies in the world. There are almost 2,700 companies. Old companies have a lot of insight into successful business models. They’re not what you might think, and they are not immune to disruption (newspapers, for example are in the midst of huge disruption), but they hold clues that can help us be smarter and better entrepreneurs.
What I call the most successful companies don’t include modern “tech” but fundamental companies that serve the most basic needs and problems. These companies feed, entertain, shelter, clothe, communicate, protect and help people. These companies may never be rich like Google or sexy like Nike, but they have soul, meaning and history, and they do pretty well (some of them are rich, but you’d never know it).
Going through the companies in my list, I started noticing trends. Withing my research I found ten common clues of building successful businesses. The clues point to things that may be useful in our own ventures, tech or not.
Clue 1: Stick to the basics. Make something that people always need; maybe it’s something new. Consider the underlying foundation of the business. Publishing, for example, is not about printing, but is about communicating. The underlying need is the reason these companies exist.
Clue 2: Be patient. Think in ten or twenty-year terms rather than a few months or years, and don’t ignore technology. Just because they’re old and successful doesn’t mean they can’t be disrupted.
Clue 3: Be unique. Serve unique customers or unique areas and markets; don’t be afraid to pick a niche. It’s okay if the business has natural constraints. Like a neighborhood bar, these businesses can be more than enough for what you need, even though they’ll never be the next Instagram.
Clue 4: Be reliable and trustworthy. Only reliable and trustworthy companies survive. You might fake something over the short term, but long-term you will be discovered as a fraud and disappear, even if it’s a slow death.
Clue 5: Be customer-centric. Focus on what the customer needs and not on what you need. Knowing what the customer wants and needs (even if they don’t know themselves) will ensure long-term success.
Clue 6: Simplify. Complicated business models rarely last.
Clue 7: Be an artist. Business models can be copied, art can be copied, but character is timeless. Be the artist. Always, as David Foster Wallace says, “Make Great Art”.
Clue 8: Love what you do. It takes time to build something, and you must believe in what you do every day. “You’ve got to find what you love” (thanks Mr. Jobs).
Clue 9: Focus. Pick one thing and stick to it. You will become the best and brightest of that industry and your chances of success will expand greatly.
Clue 10: Let go. You can’t predict the future with 100% accuracy. These companies did not know they would be the most successful companies when they started, and they can’t predict where they’ll be in another 100 years. Focus on the right things and let the success happen. Don’t ignore the obvious threats or valuable tools (like technology).
Of the 2,691 companies in the list I compiled and analyzed, the top ten industries account for 1,176. The top ten segments are sake, hotels, breweries, confectioneries, restaurants, wine, food (all food except those food items listed separately), newspapers, banks and distilleries.
The earliest company still existing today is a hotel in Japan, founded in 705, the Keiunkan.
Some of the other oldest market segments include soy sauce, insurance, jewelry, construction, publishing, firearms, retailing, paper, tea, porcelain, watches, farms, bakeries, real estate and coffee.
Only 286 are in the United States, and of those, the oldest by year is a farm (1632) but most are insurance or newspapers. NOT SEXY but what does this tell us? We’ll always be worried about things that could happen to us. Security is as important to us as food and beer is pretty high on the list (Yuengling founded 1829 in Pottsville). We like to have fun. Fun, safety, sustenance, shelter. Sound familiar? The basic needs of people have been constant.
Though tech is sought after because it scales quickly, there are some things that software just can’t eat, like food, beer and real estate (though it can change the way these businesses operate and compete). However, it is obvious that banks, newspapers, publishers and lawyers are all being disrupted as we speak. Old does not mean successful, but adaptation does.
This gives me hope. Though entrepreneur extraordinaire Elon Musk is changing the world, there are opportunities everywhere building businesses in industries that have served the needs of people for centuries. We can find those opportunities if we focus on the needs. It may not be billions, but it is probably more than we’ll ever use in our lives.
Old also doesn’t mean immune to disruption. Publishing, seventeenth on our list, has suffered severe disruption: no longer do publishers control the fate of publications, but I would argue it is the publishers that got lazy and forgot to understand their business at the core.
Sometimes I get tired of hearing about the new Snapchats, Instagrams or Summlys because I know it is unlikely they’ll be around in ten years and I get jealous that I didn’t think of them first and make a few million. So I like to think about the meaningful companies with history like the 1,300 year old hotel where I can stay in Japan, or a 1,300 year old brewery (Weihenstephan Abbey, 768) that still uses the same recipe. With these companies I feel a connection, meaning and rich history. An experience shared with countless others throughout history, and hope that there are needs beyond fleeting. These are the most successful companies in the world, started with grain, water, ideas, blood, sweat and tears.
Honestly, I still love Google, Apple, Nike, Beats, Dropbox, Tesla and the disruptors changing the world in sexy new ways. I’ll always be a little envious that I wasn’t the mastermind behind those companies and revel in their success. Instead of copying what everyone else is doing, let’s consider doing something totally crazy: starting the next 1,000 year-old company for you and the next 33 generations. If it has to do with the basic needs of people, chances are we’ll be onto something.
Now, who wants a 200 year old beer?
p.s. for the spreadsheet of my research and all the companies within, email me at firstname.lastname@example.org and I’ll send it to you