Billionaires get restless. Google founders Larry Page and Sergey Brin are the latest proof point, having just announced Alphabet, an elaborate corporate shakeup that trims their involvement in their company’s core search/ads business, so they can spend more time chasing wild new ideas on the periphery.
Billionaires get restless. Google founders Larry Page and Sergey Brin are the latest proof point, having just announced Alphabet, an elaborate corporate shakeup that trims their involvement in their company’s core search/ads business, so they can spend more time chasing wild new ideas on the periphery. Everything might work out. But if their gamble does succeed, they shouldn’t hang a portrait of careful investor Warren Buffett in their offices.
Page and Brin are acting like cowboys, and the right role model for them is the old-time Idaho tycoon J.R. Simplot.
Simplot became unimaginably rich by the 1960s, thanks to his emergence as the potato king of America. His engineers figured out how to make frozen French fries taste good; McDonald’s sold those fries to billions of people. Money kept pouring in, and there wasn’t any need to redirect that cash into the potato patch. Nature’s sun and rain made everything run just fine. So Simplot diversified like a demon, spending money on whatever intrigued him … just because he could.
Iron-ore mining? Running a fish farm? Why not. Other Simplot adventures included drying onions, making plywood in Colombia, meat packing, getting into the coconut business and (briefly) operating a gold mine in the Dominican Republic. The parallels to Google’s spending habits of recent years — which include everything from self-driving cars to the attempted purchase of a synthetic-hamburger business — are striking.
Alaskan gold miner 1916 (Photo credit: Wikimedia/Library of Congress)
I spent some time with J.R. Simplot in 2004, at age 95, a few years before his death. Although he couldn’t remember every detail of his career, he covered the highlights with aplomb. Lots of other specifics came from Simplot’s most business-minded son, Scott Simplot.
“It was as if my father had this belief: ‘Try everything,’” Scott Simplot told me. “We went into a lot of things that didn’t work.” Some ventures simply didn’t make business sense. Other times, events conspired against the Simplot family’s interests, such as the nationalization of the Dominican Republic gold mine. Yet J.R. Simplot kept trying — and eventually he hit the jackpot with an early investment in Micron Technology, a young Idaho company in the semiconductor business. Never mind the jokes about potato guys who wanted to make chips of any kind. Those Micron investments ultimately turned out to be worth billions.
The key lesson: visionary founders can hit the jackpot more than once. Freewheeling dashes in new directions can sometimes pay off, even if there’s no semblance of a disciplined planning process in picking new targets. But this can be very chancy. Analysts, employees and fellow investors should brace themselves for plenty of stumbles in this new search for greatness.
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Article originally posted in Forbes website.