Sam Hafermann Summer 2024 Update
I hope that you are keeping well and have some fun stuff planned for the 4th tomorrow. This is my second iteration at sending around a quick update on what I've been working on and any interesting things I've come across.
It was quite an active month after getting back from our honeymoon in Mallorca and having the M&A market pick up a bit after a slower start to the year. I spent the majority of June seeped in learning about the tissue paper industry of all things. This will likely be the topic of my next long-form piece. It's an oddly fascinating, 2,000 year-old industry, with a ton of cool companies each playing an important role in going from forest land to a box of Kleenex.
Topics this Time Around:
I hope you enjoy.
If you no longer want to be on the list, please use the footer of this email to unsubscribe.
Lastly, feel free to write me back with feedback or anything you've read recently that you think I'd enjoy! And if this email was forwarded to you, do consider subscribing directly here.
With warm regards,
Sam Hafermann
The Asplundhs – How a Family Tree Trimmed its Way Onto the Forbes List
I came across Asplundh a few years back while working on a business we were selling called Jarraff Industries. They were Jarraff's largest customer by a mile. Asplundh was buying tens of millions of dollars worth of heavy capital equipment a year, and I had never heard of them.
Family businesses are notoriously fickle, and it is quite rare to successfully transition any business to the second generation, let alone be thriving like Asplundh after the fourth takes over. It's an outlier of an outlier of a situation. Being the nerd that I am, this piqued my interest and I dove a little deeper into Asplundh's backstory. The family came up with a pretty unique form of disciplined nepotism and executed it relentlessly for nearly 100 years to become one of the wealthiest families in America.
Originally founded in 1928, Asplundh Tree Experts now does roughly $6 billion a year in revenue, making them North America's largest provider of vegetation management services for electric utilities and municipalities. The business is still privately held, with over 200 different members of the Asplundh family on the cap table. If you'd like to find out how they did it, and why Asplundh is such a cash flow-gusher of a business, feel free to give the memo a read.
Posts, Papers, and Podcasts
I like to use these email updates to encourage and receive insights from others. As I regularly say in my office “I like to read.” I get sent a lot of interesting material through my work and from perusing niche rabbit holes of the internet in my spare time. When the sender is okay for me to share, and it meets my quality standards, I’d like to do that.
It helps the writer. It also helps me. It’s a virtuous cycle.
Don't Let the Man Tell You How To Sleep
When people say, “you must sleep eight hours a night, or else you will die,” and they don’t have any data to back themselves up — that’s called bullshit. People talk out of their asses a lot more than they would care to admit. Both to others, and perhaps more importantly to themselves.
Bullshit is dangerous because it lulls us into thinking we know things we don’t. It's how people like Bernie Madoff can blatantly steal for 20 years AFTER there was literal proof he was a complete fraud, and why for 1,000 years we believed that heavy things fall faster than lighter things. If you want to truly understand something, whether its a potential investment or anything about the way the world works, you must first clear your mental pipes of bullshit.
The best defense is a healthy dose of skepticism. My mother was an auditor before she had me and (thankfully) was quite helpful in this regard. She constantly drilled the phrase “trust but verify,” among others, into my head from a young age. On the flip side, the best offense to bullshit is a healthy dose of empiricism. If sleep is as obvious as people claim, then you should be able to run a study in your bedroom and see the effects for yourself, which is exactly what the author did in this great article.
While the post is technically about sleep, it’s really about the detection and destruction of bullshit. This is the cornerstone of both quality investment underwriting and scientific training. But if you’ve been in enough investment committee meetings or scientific labs, you'll notice a lot of people seemed to have skipped Bullshit Day while getting their MBAs and PhDs.
And while both skepticism and empiricism are necessary, if that’s all you have you’re still a pedant. This is where a lot of people get stuck. They become perpetual armchair quarterbacks or spiteful Twitter trolls, always ready to shut things down but never brave enough to build anything up.
To succeed in anything, whether its business, investing, science, or whatever your career of choice is, your loathing for bullshit must be outmatched by a love for the truth. That’s what I liked most about this post, Violet (the author) is treating science like we’re all a bunch of innocent toddlers trying to solve a mystery together, rather than opponents trying to beat each other in the stylized zero sum game of rock paper scissors that we call academia.
Mars, Inc. – Inside America's Most Secretive Consumer Goods Empire
I really enjoyed this podcast from the folks at Preferred Shares on the complete history of the CPG juggernaut Mars Incorporated. The company is still private, which is pretty incredible considering it does more revenue per year than Coca-Cola.
As the podcast does a great job of telling, Mars isn't just a manufacturer of staples like the Snickers bar, M&Ms, or Skittles. They are also one of the world’s largest providers of pet food and pet care services. They were really the first large "traditional" CPG company to bet heavily on the pet market, a trend that other companies like General Mills have tried to copy in recent years with limited success.
It all started way back in 1934, not long after the original Mars bar proved a success, when Forrest Mars purchased a small British company called Chappel Bros, which was canning meat by-products for dogs. At the time, pets were eating table scraps all throughout Europe. No one but the original founder (and Forrest) had even thought to consider an alternative. He believed that he could convince pet owners that Chappie’s canned food was more nutritious, and it wasn’t long before Britain and the rest of Europe came around to the idea.
Within five years, Forrest had increased sales fivefold, and Chappie became the cornerstone of Mars Inc.’s pet food empire, which today accounts for nearly half of the company’s total sales. Alongside Bob Dylan and Prince, Forrest Mars is definitely on the Mount Rushmore of badass people that were born in the great state of Minnesota. Plus he's from the same town as my high school gym teacher, shoutout Mr. Fix.
If you want to learn more about the history of the chocolate industry in general, I'd highly recommend the podcast as well as the book The Emperor's of Chocolate. It was written in 1998 so it's a tad dated, but it's definitely one of the better business biographies I've read.
Here are some additional worthwhile reads, listens, and watches:
Danaher – Masterful Capital Allocation and Lean Manufacturing, Combined – Great case study from one of my favorite websites about the history of Danaher Corporation. The life sciences behemoth we now know as Danaher was birthed in 1980 as an investment vehicle through which brothers Steven and Mitchell Rales acquired struggling industrial businesses. They now own the Washington Commanders. Cedric does a great job explaining how they successfully implemented the Toyota method of lean manufacturing across their private equity-style holding company to become one of the best performing public companies of the last 40 years. If you're more of a podcast person, this interview with Mitch Rales and the great folks at Art of Investing is also fantastic. I'll be at their upcoming conference in Scotts Valley at the end of the month. If you or anyone you know is planning on attending, please do reach out, I'd love to grab a beer.
Chasing Paper – How Paper is Made – A National Geographic documentary episode about how paper is made. If you can get past the host's awful corny jokes, it's quite an interesting overview of how paper gets made from start to finish.
Well, that's all I've got for you this time around. I hope you were able to find something that resonated with you.
Cheers and Happy 4th,
Sam Hafermann