Invisible Companies

I have thought about this a lot over the years and tried to spot these companies - many of them are the type of business that Berkshire Hathaway would love to find.

Some of them are a little more visible simply because they’ve scaled and developed a moat - logistics, particularly trucking in the UK, and international cargo shipping, stand out here for me. But also social care, floristry and grocery wholesaling, weird sectors in aviation (I worked in that for a while), all sorts.

And then I look at family businesses that shouldn’t be able to exist all the time. In my nearest town centre there is a grocer, a fish shop and a butchers on the high street. Common sense tells us the extra large supermarket built on the outskirts of the town in the 1990s should have obliterated them, but no.

In the UK there is a common assumption that a lot of vape shops, barbers and even some takeaways are fronts for money laundering (and that definitely happens - there is a chicken shop in one Northern town I know that to my knowledge has no ability to actually sell you chicken, nor can the 4 others next door to it). But there are definitely some that are making good money via the legal route.

As a software guy I look for opportunities to sell to them and there’s one theme that stands out across many of them that is also an invisible sector: have you noticed how many small companies make and sell touchscreen tills/cash registers? In the UK it seems to be a thriving cottage industry.

There's a whole genre of YouTube cartoon videos about this.

Dry cleaners.[1]

Parking lots.[2]

7 boring businesses.[3]

[1] https://www.youtube.com/watch?v=_B0cASirKyE

[2] https://www.youtube.com/watch?v=La4SAUvmKz4

[3] https://www.youtube.com/watch?v=ebaiF97mCtM&pp=ugUEEgJlbg%3D...

There are many opportunities to start the your own invisible company. I once started a small business ($33k/year) that sold exactly one product to one company for a few years. One thing the article glosses over in the Steven Ross discussion is that this guy was clearly entrepreneurial: he was able to see the gaps and find or build solutions to fill them. You can in fact build a business around solving a "simple" problem for one business, and because it is a small scale you are essentially invisible to the would-be competition.

Here is the entire article compressed from 21k characters to 176:

It’s easier to get away with large margins and not spawn competitors if nobody scrutinizes you, and it’s easier not to get scrutinized if you are small or the domain is boring.

Not a knock on the article. It’s nice to double-click on a concept and explore it with examples and from many angles. But for me, it would have been easier to start with that framing, because it took way too long to understand the purpose of the article, atleast for me.

My impression is that these companies are less invisible than ever thanks to the massive growth in private equity since Ross' era (the 50s-80s). I keep hearing stories about pest control businesses and HVAC companies that get inundated with messages from search funds.

Fortune's Formula by William Poundstone strongly insinuates Kinney Services got started as a gambling front, so possibly a poor example of a boring business turning a healthy profit.

One of my favorite topics, and one that many people argue exists. The conventional thinker really dislikes this concept, as if it points out some personal flaw of theirs. I mention that only because it really sticks out, the personalized perspective people take on this idea of invisible companies they cannot see.

Constellation Software (mentioned in the article) is such an interesting company.

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