J.R. Simplot: A Billion The Hard Way Deep Dive

J.R. Simplot: A Billion The Hard Way Deep Dive

One of the pieces of feedback I get consistently is that I share a lot of books in Upstream, but many of you have commented that it can be challenging to find the time to read them. So what I want to do occasionally is share some of my highlights and key takeaways from books I've read in audio format.

I probably won't ever do an audio deep dive on something like Clayton Christensen's "Innovator's Dilemma" or Hamilton Helmer's "7 Powers" due to sheer breadth. Those are textbooks, essentially. But what I thought would be interesting is to highlight books that can be told more as stories, with interesting anecdotes and learnings for agribusiness professionals. Similar to the Founders Podcast by David Senra.

Last week, I was re-reading a book called "J.R. Simplot: A Billion The Hard Way," and I thought it would make for a compelling first episode.

The Simplot story has meaningful takeaways for agribusiness professionals, including about vertical integration, leveraging technology in your business and understanding commodity markets at a visceral level.

The YouTube Video Can be Viewed Here:

Five Key Takeaways

1. Find value in waste — Simplot built his first significant dollars from bum lambs, cull potatoes, and then gained further by leveraging processing byproducts into feed for his animal operation.

2. Vertical integration compounds advantage — Vertical integration allowed Simplot to capture increased margins at various points in the value chain while maintaining tight control over quality and supply reliability. There are examples in using potato byproduct in animal operations, to entering the fertilizer segment, to even acquiring a saw mill and establishing a wood packaging manufacturing business so that he could control the shipping assets for his dehydrated potatoes.

3. Technology is an advantage — Leaning into technology enabled the real expansion of Simplot initially with an automated potato sorter, then also leaning into dehydration technology, to then leaning on technology for frozen fries. Betting early on equipment and research created outsized returns where he saw a specific problem.

4. Know your economics — Understanding costs at a granular level delivers the best opportunities to allocate capital, identify synergy and differentiate the business. Knowing his costs to produce a pound of beef allowed him to have confidence investing in research to see how high they could increase the use of potato byproduct in animal feed rations, ultimately improving his economics drastically.

5. Have an appetite for Risk — Early in his career, Simplot was more capital-constrained than idea-constrained, something consistent with other empire builders like Rockefeller. This reinforces what Elon Musk often talks about: take on more risk than feels comfortable. There's a telling detail about Simplot's disagreements with one of the Micron founders — Simplot was inherently optimistic that things would work out and wanted to continue to reinvest in the business rather than pay a dividend, while they were more pessimistic. Great founders often have an almost irrational confidence that they can solve all problems. Optimism is an edge.

Upstream Ag Professional members can access the podcast itself and transcript below.

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