More tantalising than revealing - he is focused on quanta tive metrics - that's good, he pays extra not to make mistakes, hell that's almost unique (I assume some bonus based on errors in stock reconciliation) - but what are his sales channels look like? Who are his suppliers and how does he handle them? Does operating under the radar give benefits better than just being modest?
And yes the big question - why now?
And the second big question - how many other quiet billion dollar or even just 8figure companies are out there?
“I tried to put our name on the trucks and he didn’t want any part of it,” said Edward Albertian, a former C&S president, to Bloomberg. “He wanted to continue to be stealth and operate in this little, dinky Keene, New Hampshire, marketplace.”
Little, dinky marketplace that brings in over a 1 billion dollars in sales...
Sounds like what happened is the original reporter in Boston came across him, did some investigating, and found out how wealthy he is. Also sounds like he didn't really want the publicity, preferring to live a quiet life. If he ever intends to sell, his competitors certainly know about him, and I expect equity firms know about him as well.
> "[Cohen] has lots and lots of customers. And he delivers all of his goods in unmarked trucks, so that's how he stays secretive. C&S... does not have its branded trucks as other companies, like Sysco (SYY), its competitor, would so he's able to stay under the radar."
This makes no sense. "Under the radar" from who? Joe and Jane Average on the street maybe, but stores that are making orders are going to have reps dropping by, and the suppliers are going to KNOW that if Store A is carrying product XYZ, and it's not getting it from (e.g.) Sysco, it's coming from somewhere else. I can't imagine unmarked trucks keep C&S off the radar from anybody who actually cares.
Edit: On re-read, maybe it -is- supposed to be stealth from Joe and Jane Average. Initially I thought they might be attributing "stealth" to the success of C&S. I guess they really just wanted to be quietly (to the public) doing their work. In that case: great job invading privacy Daily Ticker. "Nobody's Business" indeed.
Perhaps under the radar from politicians who would otherwise demand political donations as protection against onerous government actions? It says the local town council was even unaware of how major an employer the company was.
That's not exacty how polticians treat billionaires, or anybody really. I'm not saying its free of corruption by any means, but almost nothing that transparently corrupt occurs
Sure it is. They wouldn't describe it as I have in plain language but that is basically what goes on albeit with the veneer of propriety provided by campaign fundraising events and congressional horse trading.
I really doubt this, but random speculation. It reminds me of Gus Fring from Breaking Bad. Rich, stays under the radar as much as possible, and has a perfect front for smuggling stuff in his trucks.
Most B2B businesses are little known to end customers. In this case I think more so because they would only deal with a small number of people running and managing shops by name. Something like salesforce for example though has products used by a large number of employees so is probably more well know amongst non tech people.
C&S is a fascinating company. As a former employee, the insight for me is that you can make a lot by disrupting a large, old industry.
What they don't highlight is that they grew from about $500m in revenue to $20bn in about 20 years from 88 to 2006: http://bit.ly/1a12pkU. C&S did this by innovating on management models at the warehouse, having a capital model which grew its cash position as it expanded, and helping to support the business case for private equity acquisitions of major US Grocery Chains.
This article also misses one major point. Rick is innovating again. ES3 (http://www.es3.com/) is the largest automated warehouse in the world. As this warehouse scales, it could take a full step out of the grocery supply chain for the east coast.
I've resigned myself to the fact that most really rich people became so doing things I'd have never in a million years imagined you could get rich doing.
Many of these "I'd never have imagined you could get rich doing... (groceries|steel|lumber|shoes|silverware|bandaids|etc) examples take generations to build the business large enough to actually "get rich." They're definitely not "get-rich-quick" schemes but slow, methodical progress made on capturing a portion of industries with billions worth of turnover per year. Obviously counter-examples exist (Cotsco, etc.) but by and large these stories involve generational contributions to the business.
Self-maintained groups and incentives based on performance. It would be interesting to adopt this in the tech area: the amount and quality of your unit tests means you get paid more.
You can also do code analysis: look at branching factors; code duplication; runtime performance; etc
This might be hard to implement in a company setting; but it may be easier to apply with contracting work.
IBM was big into quantitative code metrics in the '60s through '80s, but the practice ended up developing a bad reputation, since the metrics inevitably created perverse incentives to game the metrics themselves, and sometimes got in the way of doing the right thing if it didn't fit the rigid model's idea of the right thing.
This is basically a version of Campbell's law, from a 1976 paper by Donald T. Campbell: "The more any quantitative social indicator (or even some qualitative indicator) is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor."
Lines of code per unit time (LOC) is probably the most notorious, but there have been dozens of attempted improvements. Function point metrics were a late-'70s approach (also out of IBM) that tried to fix some of LOC's shortcomings as productivity metric, but turned out to be highly correlated to LOC and also problematic. There are dozens of books from the past 50 years with titles like "Applied Software Measurement" and "Measuring the Software Process", but they've become associated with bureaucratic bigcorp software engineering.
Or the "cobra problem". The British put a bounty on cobras in India (to reduce snake-bites). So the snake-catchers bred cobras (some of which escaped, making the problem worse).
I can remember in the 90s being part of a team where Software Lines of Code (SLOC) was a monthly metric. Highest won a bottle of champagne. People actually stopped writing loops. It got a bit crazy.
I don't have a good answer for you, but let me shoot a question back at you: "How do you determine whether the code you're looking at is good or bad?" Surely, there's an algorithm you run in your head that looks at specific features of the code and analyses them. All I'm saying is that there may be a way to automate that algorithm and use it to drive incentives. Even if the algorithm is as simple as "make sure X and Y unit tests pass."
It's easy to make unit tests pass. To defeat this kind of gaming, you'd need extensive code review of the unit tests. But that circles around to your point: when you look at code there's something that tells you whether it's good or bad. That algorithm can't be based on passing tests, because tests are code too and also need review.
If you had a team of completely selfless developers, you could probably have code-reviews and peer-reviews drive incentives. But as soon as the team suspects it's a zero-sum game and they're competing for a limited prize, they're going to stab each other in the backs, and your best developer will be the prime target. That'll make your best developer leave, and the next-best becomes the target, until all you're left with are lousy developers who are only good at office politics.
Dysfunction may arise when you are unable to measure all the relevant dimensions of the work being performed. People will often shift their effort to the dimensions that are being measured and ignore the remaining tasks, no matter how important they are. This results in less value being delivered compared to a scenario with no measurement based incentives.
The author mentions software development as an area that is specially prone to dysfunction.
Just make the metric to be money and it will work. It takes a big re-org to put the tech tasks in terms of profits, but it's possible to a big extent. Break the software into ownership domains that are peer reviewed and monitored on how much money they contribute. Then sell the software in packages assembled by customers or your internal marketing and solution consultants. This way you encourage the developers to talk to the customers or marketing to collect input and requirements what needs to be done next. Developer can choose to work on something profitable or something cool and obscure, but make no money on it, it's his choice. In both cases, the developer is motivated to be efficient.
Anyone at all interested could have found out about the company, it's been near the top of Forbes list of largest private companies for years (which is even mentioned in the companies Wikipedia article):
I'm guessing most people haven't heard of half the companies in the top ten, unless you're a consumer business you can be huge and almost no-one will recognize your name.
Here's a little test, how many of these companies do you recognize:
In the US once a certain number of people hold stock you have additional financial disclosure laws. But if it's owned by a single owner / family, you're never forced to go public regardless of revenue. That wouldn't make any sense, since you'd basically be forcing the owners to sell their shares whether they wanted to or not.
I took the comment as meaning "go public", somewhat confusingly, in a colloquial sense of "not be stealth" or "go public with their numbers" rather than "becoming a publicly owned, stock-market-traded company". The latter is indeed not the case in Canada; you can have a large privately owned company. But above a certain threshold you have to at last disclose annual revenue figures.
Sorry, yes, I meant become publicly trade-able. I assume this is done to force companies over a certain size to open their books? Maybe I've misunderstood how it works in Ontario/Canada as well, considering the other comments mentioning the number of shareholders.
That was also based on the number of shareholders, not the number of employees. Facebook began issuing RSUs, which don't count towards the limit, to employees when they started approaching the 500 shareholder limit, but I believe trading on SecondMarket pushed them over 500.
Also I think Facebook was originally a partnership and then converted into a DE c-corp. I don't think they were ever a CA company.
Not at all. What you're referring to has to do with exceeding a certain number of shareholders. In fact many Fortune 500 companies are privately held. Koch, SC Johnson, etc[1], not to mention the myriad large companies that are taken private by private equity firms.
Unless Bloomberg is coercing internet providers into handing over his emails and getting secret court orders to record his web traffic, it doesn't seem like a very good comparison.
Investigating people, especially those with any kind of political, economic, cultural, academic, or other influence, based on publicly available information and whatever people are willing to tell you if you ask, is a pretty traditional part of American public life. There's no right to force people to be disinterested in what you do and refrain from writing articles about it, as long as they collect the information by legal means.
I hope that's a joke. As one reply here mentions, the financial press typically avoid pissing off the rich, but I would not include Bloomberg in that list.
Bloomberg have been battling the government in the courts for years over FOIA requests to disclose secret information to the public on a variety of issues.
For example they were very aggressive in investigating and publishing details of secret dealings between the largest US financial institutions and the government during the financial crisis:
Bloomberg Sues Fed to Force Disclosure of Collateral (Update1) [1]
Wall Street Aristocracy Got $1.2 Trillion in Secret Loans [2]
Fed’s Once-Secret Data Compiled by Bloomberg Released to Public [3]
As well as publishing details on billionaires who manipulate the system from the shadows (e.g. the Koch brothers):
David Koch’s Chilling Effect on Public Television [4]
Koch Funneled $1.2 Million to Governors Battling Unions [5]
Koch’s Iran Link Causes Democrat to Send Donation to Charity [6]
The financial press rarely acts to piss off rich people. This article was probably written with the billionaire's consent. I don't know why, but I would not be surprised if they planning to take the company public.
And yes the big question - why now?
And the second big question - how many other quiet billion dollar or even just 8figure companies are out there?