9 Feet of Manure: 4 Things that Could Never Happen — Until They Did
by Randy Kaufman, with research assistance from Dustin Lowman
“In 50 years, every street in London will be buried under 9 feet of manure.”
In 1894, when the London Times made that now infamous allegation, it seemed pretty reasonable. Upwards of 50,000 horses a day were carrying people and goods to and fro. As the horses strode about town, they were also, shall we say, going about their own business, to the tune of 1.2 million pounds of manure every day.
(I’ll pause for a moment while your stomach settles.)
Moreover, the waste attracted flies, and the flies carried diseases. The world’s first urban planning commission, meeting in New York City at the end of the 19th century to discuss possible solutions, found none. Urban life seemed doomed to drown in its own byproducts.
That was, of course, until Henry Ford came along, and made horse-drawn vehicles obsolete in one fell swoop. As cars, buses, and trams quickly became the primary means of urban transportation, the Great Horse Manure Crisis was smoothly averted.
Today, it’s something we can laugh at — in large part because of its fecal focus, but also because it was a problem that was literally declared unsolvable, and then got promptly solved. In essence, the hopeless urban planning commission could not envision a future in which horses were not the primary engine of urban transportation. This is the part I want to focus on: In their minds, the future was just a linear extension of the present. Their mental models didn't account for some innovative, disruptive force changing the fabric of life.
As an investor and an advisor, I frequently preach the gospel of humility, and of resisting overconfidence. You may feel certain that the future will resemble the present in fundamental ways; in all likelihood, it won’t. Let’s review a few key moments in history where prominent figures issued direly wrong judgments.
“What use could this company make of an electrical toy?”
Thus spoke William Orton, president of the Western Union Telegraph Company, when offered the chance to buy the patent for the telephone — the “electrical toy” in question. While Orton’s callous dismissal of the telephone was no doubt one of the most wrongheaded business moves of all time, he was not the only one who failed to envision the ultimate reach of the telephone. Alexander Graham Bell himself saw it merely as an audio version of the telegram — certainly not a camera, and a planner, and an addictive access point for all the information in human history…you get the idea.
Fast forward to 2019: Western Union generated about $5.3 billion of revenue. Not bad, but a day late and many dollars short of Apple’s $260.2 billion. Orton, like our aforementioned urban planners, failed to envision a future in which things had fundamentally shifted. I would also wager that, as a powerful man at the helm of a successful communication company, he was suffering from overconfidence — “My way is as good as it gets,” that kind of delusional thing.
“Not to mince words, Mr. Epstein, but we don’t like your boys’ sound.”
We can only imagine the disappointment that overcame Brian Epstein as his promising young group, the Beatles, was turned away from London’s Decca Records. Dick Rowe, seeing no potential in the moptops, turned them swiftly away, adding, “Groups are out; four-piece groups with guitars particularly are finished.”
Rowe wasn’t alone; no fewer than four prominent British record labels turned down the Beatles. It wasn’t until an ambitious young upstart at EMI’s Parlophone label took a waiver on the group, and steadily transformed them into the fab four. That upstart’s name, by the way, was George Martin — now widely regarded as one of the greatest producers of all time.
Since we have Rowe’s quote at hand, we’ll focus on him. His greatest mistake, perhaps, was mistaking recent trends for underlying truth. Some four-piece guitar-based groups were down in the charts, so he assumed it meant all four-piece guitar-based groups were “finished.” He focused on this mistaken assessment, undervaluing the material in front of him and like so many before him, and after, was fooled by randomness.
To date, the Beatles have sold roughly 600 million records.
Take My Oil…Please
As you may already know, the price of US oil turned negative for the first time in history in April 2020. Yes, that literally meant a West Texas Intermediate (WTI) oil barrel was being sold for minus $37.63 — firms were paying people to take oil barrels off their hands. In the earliest rounds of COVID-19 lockdowns, when people were barely leaving their houses, a dearth of demand left oil firms with an enormous supply surplus, to the point that they were effectively buying back storage space.
Most of you may also remember when, in the late-2000s, oil prices spiked to nearly $150 per barrel, and going to the gas pump felt like signing a tuition check. Gas prices undergo somewhat regular flux, peaking up around $100 and bottoming out at about $25 per barrel. But as the world reeled in the early days of the pandemic, the oil industry experienced an unforeseeable drop in demand, for which it was completely unprepared.
If, in 2019, I had described a world in which:
Oil prices were negative
24,000 restaurants had suddenly closed
College students weren’t allowed to have parties
Broadway was shuttered
No spectators were allowed to go to baseball stadiums
We’d be cheering an unemployment rate of a mere 7.9%
I’m pretty sure you would have claimed I was marginally insane. I wouldn’t fault you for treating my idea like William Orton treated the telephone, or like Dick Rowe treated the Beatles.
Modern Manure Crises
My overarching message is this: The impossible can happen — it has happened repeatedly throughout history and it will happen again, and again. As it relates to our contemporary challenges, this has two major implications: First, it’s tempting to view COVID-19 as an unsolvable problem. In fact, COVID-19 may be that, at the moment — but that doesn’t mean it will stay that way forever. I don’t know who will do it, or how they’ll do it, but it’s entirely possible that some transcendent innovation will make this all seem like one more manure crisis.
And second, remember, always, to check your hubris at the proverbial door. You may think you have a clear idea of how things function, and you may think that means they’ll function that way, reliably, forever. As Leonard Cohen once said about one such thinker: “He was drowning in some deep mystery, like a man who is sure what is true.” You grow by understanding what you can and can’t control, not by assuming you know what the future will hold.
After all, today’s manure forecast could be tomorrow’s Model-T.
PS. Some more irresistible quotes
“Man will never reach the moon, regardless of all future scientific advances.” - Dr. Lee DeForest, Father of Radio & Grandfather of Television
“There is no likelihood that man can ever tap the power of the atom.” - Robert Millikan, Nobel Prize in Physics, 1923
“I think there is a world market for maybe five computers.” - Thomas Watson, chairman of IBM, 1943
“A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make.” - Response to Debbi Fields’ idea of starting Mrs. Fields’ Cookies
“Drill for oil? You mean drill into the ground and try to find oil? You’re crazy.” - Drillers whom Edwin L. Drake tried to enlist in his project to drill for oil in 1859
“The abdomen, the chest, and the brain will forever be shut from the intrusion of the wise and humane surgeon.” - Sir John Eric Ericksen, British surgeon, appointed Surgeon-Extraordinary to Queen Victoria, 1873
“Everything that can be invented has been invented.” - Charles H. Duell, U.S. Office of Patents, 1899
As always, if anything in this article sparked your interest, please don’t hesitate to reach out!
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