Episode #408: Neil Dahlstrom, John Deere – Tractor Wars: John Deere, Henry Ford, International Harvester, and the Birth of Modern Agriculture – Meb Faber Research


Episode #408: Neil Dahlstrom, John Deere – Tractor Wars: John Deere, Henry Ford, International Harvester, and the Birth of Modern Agriculture

 

Guest: Neil Dahlstrom has spent nearly 20 years as the resident archivist and historian at John Deere. He’s also the author of Tractor Wars: John Deere, Henry Ford, International Harvester, and the Birth of Modern Agriculture.

Date Recorded: 4/6/2022     |     Run-Time: 50:43


Summary: In today’s episode, business wars hits the farm! Neil’s book is a case study on the evolution of the tractor industry and it’s importance during a time the world was experiencing a global plague, World War & food shortages. We touch on all the major players, including a young Henry Ford. We even walk through he different strategies each company took around pricing and distribution.

As we wind down, we touch on the future of the industry with things like autonomous tractors and drone technology.


Sponsor: AcreTrader – AcreTrader is an investment platform that makes it simple to own shares of farmland and earn passive income, and you can start investing in just minutes online.  If you’re interested in a deeper understanding, and for more information on how to become a farmland investor through their platform, please visit acretrader.com/meb.


Comments or suggestions? Interested in sponsoring an episode? Email us colby@cambriainvestments.com

Links from the Episode:

  • 0:40 – Sponsor: AcreTrader
  • 1:31 – Intro
  • 2:15 – Welcome to our guest, Neil Dahlstrom
  • 5:07 – The inspiration behind Niel’s new book, Tractor Wars
  • 7:08 – The transition of farm work from horses to machinery
  • 9:14 – Business wars tactics used by the different companies
  • 26:47 – How John Deere endured and became the company it is today
  • 31:00 – Neil’s thoughts on the trend towards automation and the next era of farm equipment
  • 35:45 – Neil’s personal story and process being an archivist at John Deere
  • 45:07 – The missing piece Neil has yet to uncover
  • 46:32 – What Neil is thinking about and what’s in store on the horizon
  • 47:23 – Learn more about Neil; neildahlstrom.com; Facebook; Twitter; Linkedin; Tractor Wars

 

Transcript of Episode 408:

Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Sponsor Message: Today’s episode is sponsored by AcreTrader. I’ve personally invested on AcreTrader and can say it is a very easy way to access one of my favorite investment asset classes, farmland. AcreTrader is an investment platform that makes it simple to own shares of farmland and earn passive income. And you can start investing in just minutes online. AcreTrader provides access, transparency, and liquidity to investors while handling all aspects of administration and property management so you can sit back and watch your investment grow.

We recently had the founder of the company, Carter Malloy, back on the podcast for a second time in Episode 312. Make sure you check out that great conversation. And if you’re interested in a deeper understanding, for more information on how to become a farmland investor through their platform, please visit acretrader.com/meb. And now back to our great episode.

Meb: What’s up y’all? We have a really fun business wars show for you today. Our guest is Neil Dahlstrom, the archivist and historian for John Deere, and the author of the new book “Tractor Wars: John Deere, Henry Ford, International Harvester, and the Birth of Modern Agriculture.”

On today’s show, business wars hits the farm. Neil’s book is a case study on the evolution of the tractor industry and its importance during a time the world was experiencing global pandemic, wars, and food shortages. That sounds familiar. We touch on all the major players including a young Henry Ford. We even walk through the different strategies each company took around pricing and distribution. As we wind down, we touch on the future of the industry with things like autonomous tractors and drone technology. Please enjoy this episode with John Deere’s Neil Dahlstrom.

Meb: Neil, welcome to the show.

Neil: Thanks for having me.

Meb: Where do we find you today?

Neil: I’m sitting in Moline, Illinois. We’re about three hours west from Chicago.

Meb: I was just joking with you before the show started, you got a great new book out called “Tractor Wars,” and you have a book poster. And I said, “Son of a bitch, you got a better publisher than I do,” because you got a book poster. I need to hit ours up for some…I guess actually, technically we self-published a few of our books so I’m looking in the mirror at that point. But when did the book come out?

Neil: Yeah, the book came out January 11th. And that’s one of those things it feels like it just happened, it also feels like it happened 15 years ago. But I also got five years that I’ve been working on it so it’s been a long time coming.

Meb: So was the pandemic the final push be like, look, man, you can’t do anything else you may as well finish up this book you’ve been cranking on?

Neil: It’s funny, I kept it a secret and I was about three and a half years in and said something to my wife and she goes, “Is that what you’ve been doing?” I said, “Yeah, but I don’t want to tell anyone because once you say it out loud, then you got to do it.” And I started working from home in March 2020 like a lot of other people.

And a couple of months later I said, “Well, I’m already working all day, every day, I might as well throw this into the mix.” And I did that. The last book I published in 2005 it took five years to find a publisher and I thought, okay, well that gives me five years. And a month later I had a publisher and thought what have I done?

Meb: So you are of the 400 episodes we’ve done, to my knowledge, the only archivist we’ve ever had on the podcast. Tell our listeners what that actually even means because I have a preconceived notion that my wife really disabused me of this morning. So tell me what an archivist does?

Neil: Well, I don’t work in a basement, so that may be the first stereotype I can debunk. But basically, we’re in the business of acquiring, preserving, and making records accessible. And a record is a generic term for everything from handwritten correspondence. In my case from John Deere, a letter written by John Deere, a photograph, a glass plate negative, a film from the 1920s.

Today, it means born-digital records, it means archiving the Internet. But it’s deciding what we’re keeping and who to make it accessible. So if you think about history and what we see and what we write, archivists are on the front lines of what we know and what we have because you can’t keep everything.

Meb: I told my wife I said, “The complementary concept in my mind comes like a collector.” She’s like, “Whatever you do, don’t say hoarder.” Because I give my wife a hard time for being a hoarder all the time and there’s nothing that really tweaks the conversation more than that.

And it’s top of mind for me because we’re renovating our house and I wish I had gone back and said, “You know what, I’m going to go cold turkey. I’m going to get rid of all my possessions and start a new.” But I didn’t and then once you’re in the middle, it’s this infinite rabbit hole of what do I keep? What do I get rid of?

Anyway, that’s not the topic of this podcast, but it may have some threads. Okay, so what was the inspiration for the book? Because this book is fun because coming into it I was like, okay, this is going to be a John Deere history given your position.

But it’s very much a history of not just machine development of the last 200 years and the personalities, but the economic history of the U.S. and the world of course. It’s incredibly timely today, which we’ll get into later given what’s going on in the world. But what was the original inspiration? Why did you decide to put pen to paper for book number two?

Neil: Really, it was a long time coming for me and I guess there’s a couple pieces to it. One is 2018 was the 100th anniversary of the John Deere tractor. So what comes with that is events, and programs, and putting together talking points, and surfacing photos, and information, and films, so you can have a big event and celebrate your history.

The other part of that was questions I’ve been asked over the years that I’ve been unable to answer or maybe didn’t prioritize answering. And people would say things to me like, “Boy, 1918, John Deere got into the tractor business, why so late?” And I thought boy, 1918, that does not seem late to me. But I don’t understand the context, the landscape to know if that was late, was it early? What did that mean?

I came up with this really an answer that was for me more than anything which John Deere was later than those before them and before those after him. And that’s my way of going I have no idea and I’m really bothered that you keep asking me the question, but it’s all relative.

Meb: It’s fun for me personally because so many people in this country are immigrants at some point, whether that’s recent or not so recent. And a lot of my crew on my father’s side came from France and Germany, but in the time period really profiled in the book the 19th century, mostly into Nebraska, and Kansas part of the world. And that whole side of the family, I grew up with farm background and still farmers there today. I have a lot of fond memories of being on the farm in the early days.

But let’s start in the beginning, presumably…and I don’t want to give away all the secrets of the book because we want people to go read it. But it started out not with John Deere but a different personality and a different company that still exists today. So maybe walk us through this transition from…it’s crazy to think about this wasn’t that long ago, but from horses to actual machinery?

Neil: In my perspective, I didn’t grow up on the farm I grew up in one of the Quad Cities. My dad worked for International Harvester he was in the shop building combines. My grandfather did the same thing. I’ve got relatives that work for John Deere. My grandparents met at Minneapolis Moline, a company that comes out of this later in the ’30s.

So my perspective was very much from the corporate archives of when I see records, I have an interest in personalities, I have an interest in people, why did they make decisions. So it’s very much a different perspective versus looking specifically at the machines.

But there’s this transition going on, especially in the United States in the early 20th century, some of that’s led by the internal combustion engine which we start to see on the farm in these small stationary engines or one and a half, three horsepower engines. That all of a sudden, now you’ve got mechanical power to run an irrigation pump or a threshing machine. Larger form of that are these big steam engines.

But you get into the 19 teens World War I, you see other kind of world events. Now all of a sudden, you’ve got personnel shortages, you’ve got a need to produce more with less. And that’s really what it’s all about. It’s the same story we have today.

And you have a company like International Harvester that’s 10 times the size of John Deere. They’re the fourth or fifth largest company in the United States. Today, it’s hard for us to believe, you think about a farm equipment manufacturer, they’re one of the top manufacturers, and half of their sales are outside of North America. They’re very much leading the charge from steam to gasoline tractors. They’re also in the car business like a lot of these early manufacturers are. So you start to see this overlap between early automobile manufacturers and early tractor manufacturers. And that was something that really drew me into the story.

Meb: So what was the initial development and rollout of tractors? Place it for us on the timeline. And was it a scenario where it was just one person, one company that develops it and becomes a monopoly or was there like 100 of these companies all rolled out at the same time? What year kind of timeline would this be?

Neil: So in my mind, 1912 is kind of a big year, and there’s five or six tractor manufacturers. And in fact, it’s really hard to tell because no one was keeping the data. No one is keeping the statistics because a tractor manufacturer really isn’t a thing. You had a number of early companies that started in the late 19th century and they’re building one or two or three machines. They’re all different, they’re crudely manufactured so the idea of a tractor manufacturer doesn’t really exist.

The industry total is a couple thousand machines. So that goes from 1908, 1910, you have a company like John Deere whose board passes a resolution in 1912 that we’re going to investigate the tractor market, and we’re going to figure out whether or not there’s a future, because they didn’t know, and figure out all the different types of tractors. Some of these things are 50, 60 horsepower, they’re enormous machines, there are some smaller ones that don’t work, they tip over.

So that’s 1912, there are 6 million farms in the United States. Most of them are less than 50 acres. So compare that today, the average farm is 440, 450 acres. There are about 2 million farms in United States so a third of what there was 100 years ago. So tractors up to that point are mostly big, they’re built for big farms out West. So if you’re in Illinois, if you’re in Kansas, you’re not buying a tractor because you don’t have enough land. It doesn’t make financial sense for you but between 1912 and 1918, you see this huge boom.

What really changes the game is 1913, a company called the Bull Tractor Company bursts onto the scene. Now its founder, this is his third or fourth go around in the tractor business, he hasn’t gotten it right yet. So he’s a serial entrepreneur, he’s trying to develop the next thing. Well, what he develops is a small tractor. Pulls one or two plows and most tractors are used actually to just pull a plow. It’s used for tillage work in that period of time. But it goes from nonexistent to market leader in a period of a year.

It’s not very effective, it’s not a good mechanical tractor, it breaks down, it tips over. This is big heavy equipment but it’s small and most importantly, it’s affordable. So if I own 50 acres, I can afford to replace two horses with a tractor. So it’s got to make financial success to make that investment.

Now all of a sudden, you’ve got a handful of manufacturers, it goes from a dozen to 100 in a couple years because they say oh, we can design and build a small tractor. So that was really the impetus for this just huge explosion in manufacturers and different styles of tractors in the 19 teens.

Meb: It’s funny, I was watching some History channel overview of the tractor space. And it’s fun to put images to what’s going on because you forget some of these designs. Like you mentioned like the Caterpillar, just like these giant machines and some were steam-powered, and some had the steel wheels and the pneumatic tires like on and on, these little innovations.

But the origins in many cases, Ford and others, it was people designing these things in their kitchen because these were in the early days. So going back earlier to what you think of when you think of invention and innovation. You touched on something that I think is important, as you think about technology adoption at the time, farming in that period was very much a family endeavor. Five hundred acres is still a lot but for many, way smaller than the giant farms of today.

But farming has also been a story of booms and busts. Even recently, farming a lot of crops in the last decade has been pretty subpar style returns but not as bad as back to the overleveraged, what was it, ’80s I think when a lot of farms really struggled. But take us back to the early 20th century, you had a lot of geopolitical stuff going on, World Wars, a pandemic, we can say that, the Spanish flu, a little more familiar today.

But there were a lot of macro trends going on and one of which was the war development of tanks and other things like that. Talk to me a little bit about the influences that played out, was that a massive push for the development of machinery on farms at the time, or was it totally pulled from actual farmers themselves?

Neil: I think it was really all the above, you’ve just got a changing demographic. People are younger there’s a lot of new tech in the world, amazing things like electricity, indoor plumbing, radios. There’s also a lot of really well-paying jobs in the cities. You think about automobile manufacturers in Detroit going to New York City, the allure of the big city similar to today.

So you have young people just leaving because they want to do something on their own. They don’t want to stay on the farm. It’s too traditional, it’s been this way for 100 years, 200 years, I want to go out and do something new.

In addition to that World War I starts in 1914, the United States enters in 1917, that does a lot of things. But one is now young people are leaving to go to war. We’re also shipping millions of horses overseas. So now you have a horse shortage in the United States and you got to replace that power with something. So there are a lot of factors.

And then, of course, you got your early adopters like you do in any industry of farmers who are going, okay, well I want to increase my productivity. I want to go from being a self-sustaining farm meaning I can grow enough to feed my family maybe a couple of hired hands. To okay, well, now I can produce enough that I can actually run an additional business, I can buy more land, I can invest more.

Technology allowed farmers to do that really for the first time. So it’s really a sea change. They called it power farming. That’s what manufacturers started to use as a phrase to talk about this change in the farming landscape.

Meb: Talk to us a little bit how this played out with the different players jostling for dominance? You have a lot of the…what everyone recognizes lemonade style one on one business tactics going on. You had price wars between the offerings and differentiation between features, you have some companies that have sales and distribution that are more localized and more global. Which of the companies survived and thrived in this environment? And then are there any good stories or concepts you think really define that period of the origination of these tractor brands?

Neil: I mean, there are a lot of these stories. Really, the narrative of the book follows John Deere, International Harvester, and Henry Ford. And really when I started the research, it took me three years to figure out who those companies were and how those narratives were intertwined. In 1910, there’s a handful of companies, by 1920, there’s over 160 companies manufacturing tractors. So you have this huge bubble and they’ve all got different ideas.

If we look at the three main companies, International Harvester is the mainstay. They’re the gold standard, they started developing what they called an Auto-Mower. They get in the automobile business, they start developing a couple of different styles of tractors which are reliable and they’re successful, but they’re expensive. We’re talking, it’s going to cost you in 1915 $1,200 to buy a tractor. It’s three times your annual income so these aren’t inexpensive purchases.

You have a company like John Deere that went from $3 million in sales in 1910 to $33 million in sales by 1918 through mostly acquisitions, mergers, consolidation of sales branches, and things. What that means is they borrowed a lot of money in order to make it happen. They’re a little hesitant because they don’t understand the market. And they got to get it right because if they don’t get it right, they’re going to go bankrupt. And they can’t find a banker who’s going to give them enough money to build a tractor factory or to even facilitate designing a factory.

And then you have Henry Ford. The Model T is introduced in October of 1908. And in November, he sends a photo and a short letter to the “Farm Implement News,” which is a farm publication out of Chicago, and says, “I’m developing a farm tractor.” And most people who had read that would have said, yeah, so is everybody else, and who’s Henry Ford?

Six months later, everybody knew who Henry Ford was. He’s got to stop taking orders on the Model T, and all of a sudden, what he has is scale over the next couple of years. And I love the Henry Ford story. This is one of the things that sucked me into this overall. The assembly line is really what accelerated the tractor industry.

Henry Ford grew up on a farm. He often talked about just how monotonous farm work was. He used the word “drudgery” all the time. He didn’t understand traditions on the farm and how a farmer just did the same thing over and over again and it just drove him crazy. He saw a steam engine when he was 12, and resolved that he was going to build something to reduce drudgery on the farm.

But the assembly line allows him to do that. He designs a tractor and now he can crank them out. But his model is different. His model, like the Model T, is one size fits all. International Harvester has a number of different models, a number of different sizes when we talk about horsepower. So they’ve got a better understanding of their clientele because they know that every farm is different, every crop is different, every geography is different, methods are different. And it changes from year to year, depending on a lot of different factors.

Henry Ford said no, “I’m going to build a lot of them, I’m going to build them cheaply.” And when he made that announcement that he was going to bring a farm tractor to the United States, people just waited. They said, “I love my Model T, I’m going to wait for Henry Ford.” Well, it took until 1918 for Henry Ford to bring a tractor to the United States. International Harvester is the market leader.

A company like Caterpillar is not really in the mix because, well, first of all, Cat doesn’t exist until 1925. The companies that went on to form Caterpillar, they’re building these truck-type tractors, they’re shipping them overseas for the war effort. Their strategy is different. We’re selling to the government. These other companies are selling domestically. So when the war ends, that shakes things up quite a bit.

And then you see all these great folks. Daniel Hartsough is one of my favorites. He’s the founder of the Bull Tractor Company that builds this first small tractor. He’s a pastor from Minneapolis, and he sells his car and buys some farmland out West. He and his son develop and build a farm tractor and nobody wants it. They’re able to find one person to buy it and they say, “Okay, well, we didn’t get it right, we’re going to design something different.” They do. They don’t get it right, they’re able to sell it and build something different, which eventually becomes the Bull Tractor Company, and they kind of get it right.

When that fails, he goes on and does something else. And so you see all these people who come and go. They fail, they raise some more capital. So it’s a very dynamic industry, which is not what I was expecting. I was expecting, well, here’s a dozen companies, they figured it out and they just slowly grew the market. It’s a lot more chaotic, it reminds me very much of the dot-coms of the 1990s where all of a sudden if you’re building a tractor it’s really easy to raise capital. And six months later, you’re probably skipping town and hiding from your creditors.

Meb: Well, most of these that did raise capital, was it friends and family or bank at that time because there’s not a whole lot of the Silicon Valley venture industry at this point that’s funding tractor development, or was it corporations, like who was funding most of these?

Neil: It was mostly friends and family, then you see these other large organizations that were self-financing. In the case of International Harvester, they’re self-financing. And Harvester is interesting because they grew out of two huge companies, McCormick and Deering, who had cornered the harvesting business. So 80% of the products sold on the farm was grain harvesting because that was where you were making the greatest productivity gains.

So because they were formed of these two companies, they had two separate dealer networks. And they developed two separate lines of tractors, they’re called Titans and Moguls that were basically distributed through these different dealer channels. They were self-financing. They went from a few machines to a couple thousand machines and that was enough to lead the industry.

John Deere, who’d gone through that period of acquisitions and mergers had entered new businesses, they were going to the bank and saying, “Hey, this is the plan, what can you do for me?” And they said, “Well, we’re not going to do anything for you until we start to see some returns on the previous loans.” So they went about it in a very different way.

And what they wanted to do was figure out the one type of machine that was going to satisfy the most number of farmers. So they were very much in the Henry Ford camp more than the International Harvester camp to start. So as you can expect, it runs across the board.

Meb: Here we are obviously, with Deere and Company, John Deere is now over $100 billion market cap company, it’s obviously survived and done exceptionally well. And is close to all-time highs on the stock I think, over 400 bucks a share.

In the ensuing decades, tell us what the story was. Was it a story of traditional creative destruction and simply survival auto the companies fall away in the free market competition? Who became the juggernauts of this space over the ensuing decades?

Neil: It’s really a story of ebbs and flows and ups and downs. And the book ends in the late 1920s. And kind of the comment I’ve had from most people so far is “Okay, well, clearly, this is the first chapter. What happens next? Where’s the sequel?”

Meb: Say, good, this is a trilogy, baby.

Neil: Yeah, that’s right, the tractor war trilogy. I started already, we’ll see how it goes. But you go from this handful to 160 plus manufacturers, and then by 1930, you’re down to 30. So this kind of sparks this period of consolidations where you have early innovators in the tractor industry. Now all of a sudden, there’s three or four of them getting together and saying, okay, we have to develop what they called the full line. Which is we just can’t build tractors, we just can’t build plows, we got to build everything that you need on the farm, we’ve got to be a one-stop-shop. And that’s what really emerges out of this period.

You also start to see a major shift in machine forms. And that’s really where Henry Ford got into trouble as he said, “Well, here’s my tractor, one size fits all.” That’s great for the first couple years now you know all the things you really need so you want to see an evolution of the machine forms. And you see that with a number of manufacturers.

But then it gets to a point where you’ve got to produce so many, you’ve got to build an infrastructure, you need mechanics, you need sales branches, you need dealerships, you need ongoing service, all of these things, so it becomes very capital intensive.

One of the things to me that’s really fascinating about this period is the way they were buying raw materials, they were buying a year in advance. So basically you are projecting what you needed. This idea of real-time production that we have today, we don’t build it till you buy it, didn’t exist. So in this period, it was okay, well, we’re going to build 5,000 tractors, we better sell 5,000 tractors. You’re in trouble when that doesn’t happen. It happened to John Deere in 1921. They went from sales of almost 6,000 tractors to under 100 because the economy stalled post World War I.

Now all of a sudden, you’re sitting on all this inventory and it’s one of those seminal moments in company history when the board of directors got together and said, “Is there a future in this? Is this our exit? Because we’ve only been doing it three years, and we haven’t turned a profit yet.” And in fact, they wouldn’t turn a profit until 1926 I think.

So this is a very long-term business. If you’re a small manufacturer, you can’t afford to float that for that long. And you start to see just the economies of scale for these large manufacturers and they’re able to take a little more risk than maybe the small manufacturer can. That period in the late 1920s, early 1930s, of industry consolidation really changes the landscape, but by then, at least in the tractor business, John Deere and International Harvester have 80% market share. So everyone else is fighting for that 20%.

Again, following the parallel paths of these companies, International Harvester went from market leader to a distant second behind Ford, to all of a sudden industry leader again. John Deere is kind of slow and steady. And that’s what intrigued me. It’s a strange thing to say when I really started writing the book I didn’t know if John Deere had a place in it because I knew they had a small market share when this all started.

They bought the Waterloo Gasoline Engine Company in 1918 in Waterloo, Iowa, they sold 5,000 tractors that year, which is a strong showing. It’s top five. But compared to Henry Ford who sold 30,000 that year, and then sold 100,000 a couple years later, and was telling everyone he was going to build a million a year, it’s small potatoes. And I thought, okay, well, maybe John Deere doesn’t fit.

But then you fast forward a decade, and now you got 25% market share, and then you got 30% market share. It was just an interesting juxtaposition for me that sometimes slow and steady wins the race. In the case of farm equipment, we know that John Deere surpasses International Harvester in 1963. So this book covers the first third of that story if you wanted to focus on the John Deere/International Harvester story.

Meb: It’s the prequel. So good, give us a little preview of book number two. But you’ve talked about Deere before. So what was the story of survival and excellence for Deere? Was it simply just like a blocking and tackling, building a better product? Was it a sales and distribution? I know it’s an international story rather than just a domestic one. But if you could look back as an archivist, what do you see as the main inflection points for Deere as a company and why it survived to be 100 billion-plus market cap company today?

Neil: At the end of the day, this all comes down to decisions. And we always focus on the right decisions. I tend to focus on the 100 wrong decisions that allowed you to make the right decision. And I think one of the formulas for Deere historically, is the ability to change and transform. I spend a lot of time thinking about these eras in company history. And it used to be that there’d be a series of strategic decisions that are made, and you’d ride on that for the next 30 or 40 years.

In business today, of course, you make that decision and you’re going to ride it for a year maybe, if you’re lucky, because you’re constantly evolving and transforming. For Deere you have eras like this period of 1910 to 1918, they went into the harvesting business to compete directly with International Harvester for the first time, went into the tractor business, added these competing lines, you grow your business.

You also have the other side of that which is you’re offering stock for the first time in company history. You’re making investments in employees, you’re attracting talent. We think these are modern concepts, they’re not.

When Deere opened its current headquarters in 1964 in Moline, designed by Eero Saarinen, it was to attract top global talent. They wanted to build a showplace in the Midwest to showcase technology to attract talent. And I think that’s something Deere’s been very good about over the years.

You also make decisions that you don’t know how it’s going to turn out and sometimes it takes 20 or 30 years to figure it out. Whether it’s going into the tractor business in 1921 saying, well, we know the trend now in farm tractors is going from a two-cylinder tractor to a four-cylinder tractor. However, we think we understand our customer better, we’re going to stick with the two-cylinder tractor, which John Deere did all the way until 1960.

A lot of people still associate John Deere with those two-cylinder tractors, the Johnny Poppers, and there’s a lot of loyalty that grows and develops out of that. So I don’t know that I gave a good answer. It’s a lot of small decisions along the way. But at the end of the day, thinking through scenarios, figuring out what’s next, putting your resources into it, it goes a long way. And you know that you can make really big mistakes. Fortunately for a company like Deere, Deere has gotten it right over the years, at least big picture.

Meb: It’s always interesting to see the current events and how things play out. Obviously, farmland and farming, in general, is a huge critical piece of the global human story. You look at what the disruptions happening in Russia and Ukraine currently and that becomes very real.

You have people in the U.S. moaning about high prices, and I can sympathize with that. But then realize the knock-on effects of disruption and even one country of big producers such as wheat and the effects that has in many other poor countries, in particular Africa as well as the Middle East, and it’s very real impact.

But what I was going to say was, John Deere is having a social media moment where if you watch some of the footage in the Ukraine, you have all these cell phone camera capturing Ukrainian farmers towing away the tanks. Have you seen these videos? You see this farmer just pulling away a Russian tank. I don’t even know if they’re all Deere tractors but they all get associated with being John Deere having the brand. Have you seen any of those stories?

Neil: I’ve seen some of those videos.

Meb: You never know in this day and age of fake news. But I saw one picture where there was a photo of John Deere’s grave, wherever that may be and it had a little John Deere tractor toy with the Ukrainian flag towing a tank. I don’t know if it’s real, but it was fun to see.

So we’re seemingly at an inflection point in history where you had this giant period of history where it was human and animal powered. Then you start to have this age of machines that you document but really, that continues for a century or so plus.

And then here we are now in 2022, and I’ve been talking about this the last handful of times I come back from the farm over the years on the podcast, and I say you know, I look around, and I think people have these vacuums that just clean their house 5, 10 years ago uninterrupted. And talk about easy, you know, on a square grid out in the middle of Illinois, Iowa, Kansas, where you bump into something, whatever, there’s nothing out there. Alluding to the fact that we are entering this period where there may not be any human involvement at all, or if so very limited.

And this could just be you talking but maybe this is book three in the trilogy. What sort of impact, and what sort of developments and thoughts do you have on the new trend towards automation, towards autonomy? And it could be drones and planes spraying crops and everything. I mean, I see dozens if not hundreds of startups in this space going on. Any general thoughts on this next era?

Neil: I look at it very generically as this is what’s next. At the end of the day, the drivers haven’t changed in 100 years which is we need to be more productive, we have fewer people feeding more people. There are less than 8 billion people in the world today and there’s going to be 9 billion by 2050. So how do you feed them with less land, and less people working on the land? So you’ve got to solve for that on some level.

I think also you can’t get too far ahead of yourself. And what I mean by that is, if I go back to tractor introduction, tractors didn’t outnumber horses on American farms until the 1950s. So it’s not an instant adoption. I compare that to today if I was an alien and I sat down in Neil’s living room and watched TV, I would think that every automobile built is an electric automobile because that’s all I see. Less than 1% of automobiles on the road are electric.

So these things take longer to adopt and develop than I think we think they do. If we’re talking about autonomous tractors, if we’re talking about using drone technology, these things are happening, they’re being developed, they’re being revised and improved. But that doesn’t mean that everyone goes out tomorrow and buys one because there’s a lot of other factors in the mix and it’s going to continue to evolve.

I do think a big change is the rate of adoption is quicker. I think it’s a slower turnaround time now, and the next innovation is faster than it used to be. You can’t ride that technology for 10 or 15 years because someone’s going to beat you to it. Some of this you see with Henry Ford getting into the tractor business. That’s not a surprise because he was a farm kid who was always interested in tractors.

I think the worry of disruption is very different than it is today because you can come out of nowhere and introduce technology on the farm. And you don’t have to have any background in that because you’re designing technology versus a machine for the farm. And I do think there are some differences there.

So, at the end of the day, I think it’s all just very exciting. I can’t claim to understand most of it, but you’re feeding more people with fewer people. And people are going to adopt that because they want to be more profitable. If this is my operation, if I’m a farmer, I have to be more profitable in order to keep up because I’m going to earn more on my land and I want to continue to build my operation and pass that down to my family and the next generation.

Meb: Yeah, the story is personal for me because I passed on an automation robotics company that John Deere then bought for a quarter of a billion dollars. The funniest part is there are things that are totally within my wheelhouse and I think I’m just too close to it. I really mostly invest in things I have no idea what I’m doing. So the stuff that’s close to me…and I think this is…Bear Flag maybe was the name of it. I can’t remember, something like that.

It’s going to be fun to see what happens. I think this constant human struggle between growth, this Malthusian sort of us increasing into billions of people. And the struggle between prices and innovation and technology has been one that’s been a very human story and it’s going to be crazy interesting to watch how all this plays out. We talk a lot about farmland as an asset class and investing on this podcast, and so I think very much most individuals have under-allocated to this part of the world. So I think it’s fun to see some developments there.

I want to start to dig in a little bit, would love to hear about your story as an archivist at Deere. I was thinking the other day…and you can correct me by the way. But in my mind, it’s part Sherlock Holmes, part detective, part simply curator. And as someone who’s been through…you know, my dad passed years ago, going through all his old stuff and finding things that no one else had known or things both good and bad, or surprises. You read this all the time where people find letters and they’re like, “Oh, my God, this is a revelation,” good, bad, in between.

Tell us a little bit about the process, was this something that was very front-loaded on the work, and now it’s about maintaining and curation, or is it something that’s an ever-evolving story? Just tell me a little bit about your job, what you’re doing?

Neil: It’s changed for me personally over time. I went to school to be an archivist because I learned at an early age I loved history. Once I finally volunteered at an archive and I was going through letters written during the Civil War, I just thought it was the coolest thing that here’s someone writing a letter and I’m holding it. And I can’t believe it survived, wanting to know more about the person, their family, who read the letter, those sorts of things. So that’s really what got me excited.

I’ve learned that I really just very much like going through other people’s things, which is always a lot of fun. I grew up in an era of Indiana Jones so I went through that phase where I wanted to be a world-renowned archaeologist. And then realized I didn’t want to be on my hands and knees in the sun all day long digging and finding nothing.

But for me, it was the evolution, I’ve always been a researcher at heart and I very much like to survey the landscape and see what we’ve missed. And in my world, there’s going to be 1000 antique tractor shows across the United States this year, people swapping stories talking about machines. You can buy plenty of books on the subject. Trying to figure out what we’re missing, what the lessons are.

And for me some of this…I spent five years doing competitive intelligence and market research. And I look at history in exactly the same way. In CI work, we do scenario analysis. You have these tools and processes to figure out what might happen. It doesn’t hurt to do that for something that happened 100 years ago to say, okay, well, what was the landscape? What were the things they could have done? What did they do? And is there something that we can learn from that?

The difference between libraries and archives is, is archives are primary sources. So they can be easily misinterpreted especially if you can’t put the full picture together. So I do like that needle in the haystack. I like the long search. It’s a very anti-Google view of the world, which is I can’t just type in and say why was John Deere against the tractor business?

Specifically, our CEO at the time, William Butterworth, the question that nagged me took me five years to find the answer and almost 300 pages. But I think there are a lot of lessons to be learned there that there’s forces acting on people and what drives you. And I tried to correlate that to my own life, which is, well, sometimes I’m just having a terrible day because I didn’t sleep well, or I only had one cup of coffee.

Well, if you’re William Butterworth in 1918 making decisions about the future of the tractor business and John Deere, I don’t want to oversimplify, but he may just had pressures acting on him and he’s just like, “Forget this, I got bigger fish to fry.”

Meb: What’s interesting about your role is a lot of the knowledge compounds too because there’s context and you read something that a lot of people would probably skip over. But as you accumulate knowledge on the topic you get to triangulate what’s going on.

Would love to hear one, two, three stories about either things you came across or tractors, letters, whatever, exciting, depressing, good, bad, in between that were either just interesting to you, surprises, things that changed your perspective on the company, or the history of what you’ve been working on.

Neil: There’s a couple that pop into my mind. One, one of the most popular tractors of all time was the Farmall from International Harvester and they had a small group of engineers who were building a new machine form. And they finally figured it out. There’s this great scene in the book in December of 1920, where these engineers get together in a room at Harvesters headquarters in Chicago, they put the motion picture on the reel, probably the 16-millimeter projector, and they show a film testing in early experimental Farmall.

And the future CEO Alexander Legge looks at it and says, “This is great we don’t have any money. We can’t do it because we just invested everything into what becomes the McCormick Deering 1530 and 1020, these two machines.” And we recognize it, we probably have enough money to build four or five, which they approve, and then they cut that down to a couple. It takes another three years for them to start understanding that there was a really big market for it. And all of a sudden they got a machine to compete with the Fordson and Henry Ford.

And it’s one of the things that drives Henry Ford out of business, at least in the tractor industry, a couple of years later. One of those great, well, this almost didn’t happen. And what are the cascading kind of events that came as a result of that because you’re chasing the Farmall? And that partially resulted in the general-purpose tractor from John Deere. So these things are all related.

Another story going back to William Butterworth is there’s a letter that he wrote in 1916 where he says, “I’m not going to make the next board meeting but whatever happens, I want you to put a stop to any discussion about our future manufacturing tractors.” So the interpretation of this is John Deere’s CEO was opposed to the tractor, that’s it.

It just didn’t make a lot of sense to me because Deere’s a couple $100,000 into R&D in the tractor business. They built one in 1912, they had a couple other models in 1913, and ’14, they’re three years into development of what becomes the all-wheel-drive tractor.

So why is the CEO opposed but greenlighting money? It just didn’t make sense. Well, I had to go back to 1912, when the board passed a resolution that said, “We’re going to investigate this business.” And then they said, there’s four ways that we could go about it. One of them is build a factory and manufacture tractors. There are other alternatives we can buy someone, we can outsource all the design, we can do all of these things.

So then you go back to William Butterworth and look at the letter and he specifically says, “I’m opposed to the manufacture of tractors.” Okay, that makes sense to me. Well, what’s driving that? What’s driving it is a month before, Henry Ford shows his tractor at a farm show in Fremont, Nebraska for the first time and Deere looks at it and says, “Yeah, we don’t stand a chance. We can’t afford it, we can’t scale, we’ve got to think about our strategy.” And he’s saying, all right, we got three options on the table.

So again, you kind of look at the long game and you have to pay attention to what people say and what they write, versus extracting it. And I know often when I see that letter reused in a presentation and article, they truncate the letter in the sentence and they cut out the important parts of that sentence which says the manufacture of tractors.

Meb: That’s a very 2022 thing to do. Just the headline, chop off the rest of the context and just give you the click bait because with the rest of it, it tells a different story. So we got a bunch of people listening to the show from all over the world every single corner, every country just about. How does most of the new or different information come across your desk at this point? Is it Google Alerts? Are you getting letters from South America from somebody who sent something in? Like, what is the day-to-day process going forward at this point? Is it mostly inbound? What’s it look like?

Neil: It’s mostly us going out and finding something. So it used to be that we just had a pipeline of records because someone would retire or get a new job and they’d say, “I don’t want to deal with this stuff, I’m going to send it to the archives.” It was pretty easy other than the volume.

Then all of a sudden, you have the advent of the digital age where there’s just more volume first of all, there’s a lot more drafts of everything. And you got to be a little more selective and say, okay, well, we want something from this source, or because it’s this product line, or because it’s just so obvious that we need to document the history of this.

And now you’re getting into things like archiving websites, archiving social media, we’re going out and scraping yeah, we’re setting up those alerts. It’s really a challenge because you don’t know that you got it right, you don’t know what’s important necessarily.

So I went out a number of years ago and interviewed a lot of former employees. John Deere formed its precision farming group in 1993. This is when Deere said, “We’re getting into the precision agriculture business wholeheartedly,” and created a separate division. It feels like it was 100 years ago but I recognize that those employees were still with the company. So I went out and did interviews.

And it’s everything from who said yes, what were your other ideas? What did you pass on? Who was in the room? Because you want those details. And then it was other things like, okay, tell me everything that you got wrong, tell me what went badly.

And for me as an archivist, it’s not about that secondary version of, well, we had a brilliant idea, everything was great. My job is to extract the stories so that in 40 years, someone can put those pieces together. And I think the hardest part for me is knowing that we missed more now than ever, but also we collect a lot less there’s just a lot more of it. So how do you get through the volume and actually get at the essence of what you’re trying to accomplish?

Meb: Well, listeners if you email Neil or send him a letter, CC me. I want to hear your crazy John Deere story from whatever corner of the world you’re in. I love the history/Sherlock Holmes. Is there anything that’s like your white whale, you’re like, you know what, I’ve been looking for this for five years now and can’t find it, or there’s an area there’s this missing piece? Is there anything that’s on the search that you’re yet to uncover?

Neil: Well, top on my list is anything connected to John Deere the person because he didn’t leave us a whole lot. We actually have a two-piece wool bathing suit owned by John Deere, believe it or not. We’ve got a few letters. We’ve had things offered to us that we can’t prove that it’s the real deal or had any connection.

Really, number one on my list is a local legend that there’s an underground tunnel that goes through Moline, where there are some abandoned vehicles. And it’s part of a former limestone quarry that was owned by members of the Deere family 130 years ago. And there’s been some stories of people seeing abandoned tractors and automobiles.

The Quad Cities was an automobile hub in the early 20th century and I want to find it, and I want to get into the tunnel. It terrifies me, but it really caters to the Indiana Jones side of my personality. So I’ve been poking around here and there. I’ve heard some stories, none of them matched. So it has nothing to do with archives. I just want to find something really cool.

Meb: As we look out to the horizon 2022 and beyond, what’s on your brain, what are you scratching your head about? What are you thinking about? You’re thinking about putting pen to paper again, you’re taking a little sabbatical from the writing? What’s in store for Neil?

Neil: What’s in store is getting out into the world again. It’s really hard to release a book when you can’t go have book signings and can’t go out and talk to people because part of this for me is the listening side of things. Like I can tell the story, here’s what I put together, you put your work out there. How are you going to fill in the gaps.

So I’m just excited to get out and talk to people to understand what they know. Strangely enough, what did I miss because I probably didn’t get it all right. I did from my perspective but what are the other perspectives? But I’ll spend the summer chasing my 12-year-old around the ball fields probably that’ll be the main thing and then getting out and talking about the book around that.

Meb: What’s the best way to get in touch with you? Do you have any sort of public-facing website or anything? How do people get in touch with you, they want to send you their secret John Deere correspondence from a long time ago?

Neil: Find me at neildahlstrom.com. I’m on Twitter, I’m on Facebook, I’m on LinkedIn so I’m all over the place. Share your stories. If you’ve got the first plow that John Deere built-in 1837, let me know, I’d like to have it.

Meb: Neil. It’s been a blast. You guys check out his new book, “Tractor Wars” on Amazon, and anywhere good books are found. Thanks so much for joining us today.

Neil: Thanks for having me.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com we love to read the reviews. Please review us on iTunes and subscribe the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.

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