There are Two Types of Companies . . .

by | Jul 23, 2019


Pappy Van Winkle is considered by many to be the finest bourbon in the world. Some even regard it as the best whiskey in the world. Their whiskey often sells for thousands of dollars a bottle. Case in point: I attended a charity auction a few years ago where a bottle of 20 year-old Pappy Van Winkle sold for $2,400. What’s the key to the Van Winkle distillery’s success? They make decisions in accordance with their business philosophy which hangs on a bronze plaque above the entrance to their distillery:


Van Winkle focuses on making the greatest whiskey – not being the biggest or most profitable distillery. The Van Winkle business philosophy is similar to Steve Jobs’ view of what made Apple special under his leadership. Below is a quote from Steve Jobs explaining the success of the iPod as compared to competitors like the Zune which was Microsoft’s unsuccessful attempt to compete with the iPod:

The older I get, the more I see how much motivations matter. The Zune was crappy because the people at Microsoft don’t really love music or art the way we do. We won because we personally love music. We made the iPod for ourselves, and when you’re doing something for yourself, or your best friend or family, you’re not going to cheese out. If you don’t love something, you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much.

From Steve Jobs, by Walter Isaacson

Thus, the “why” matters. So, there are two types of companies: (1) those that have a “why” that’s non-financial and (2) those companies whose “why” is really just to make money. Note that it is imperative that the purpose or the “why” is real and employees have to be incentivized to follow the why. If the main incentive an employee has is to open more new accounts then that’s what they’ll do (think Wells Fargo fake account scandal) vs. whatever the company thinks the purpose should be. The culture has to be built around the why.

In his book Start with Why, Simon Sinek accurately notes:

“People don’t buy what you do. They buy why you do it.”

When a company treats you primarily as a source of profits you can feel it.

Other examples of companies with great non-financial purposes:

Southwest Airlines believes in “democratizing the skies” which means to be a low-cost carrier and also to have great transparency with respect to fees and how it deals with its customers. It also doesn’t have first class (or as they say – “every seat is first class”).

Tesla wants to accelerate the world’s transition to sustainable energy. They don’t just want to sell cars and make money. They want to ignite an electric car revolution. Its sister company SpaceX wants to make humanity a multi-planetary species.

Whole Foods wants “To nourish people and the planet” and thus focuses on extremely high quality and healthy foods.

The company Life is Good is in business to spread the power of optimism. They want to make people smile.

Companies with strong non-financial purposes have customers/clients who are more loyal and often enjoy more profitability and growth. By strong non-financial purposes, I mean actual purpose that the company lives and breathes – not disingenuous mantras that the employees don’t believe or which do not guide management decisions. The key is that by having a strong non-financial purpose, a company will be excellent and will differentiate itself and the strong financial results will follow.

My firm’s purpose.


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Subscribe To The IFOD

Get the Interesting Fact of the Day delivered twice a week. Plus, sign up today and get Chapter 2 of John's book The Uncertainty Solution to not only Think Better, but Live Better. Don't miss a single post!

You have Successfully Subscribed!

Share This