The Man Who Built a Bossless Tomato Empire

Chris Rufer is an entrepreneur whose singular focus and unrelenting commitment to growth has created a tomato-paste empire without bosses.

With winch and ropes and hooks
We stacked the bales up clean
To splintery redwood rafters
High in the dark, flecks of alfalfa
Whirling through shingle-cracks of light,
Itch of haydust in the 
Sweaty shirt and shoes.
At lunchtime under Black oak
Out in the hot corral,
—The old mare nosing lunchpails,
Grasshoppers crackling in the weeds—
“I’m sixty-eight” he said,
“I first bucked hay when I was seventeen.
I thought, that day I started,
I sure would hate to do this all my life.
And dammit, that’s just what
I’ve gone and done.
– Gary Snyder

---

The Sacramento River winds through California farm country. A road conforms, snakelike, alongside. To the left of our car passes a freshly built levy, mostly hiding fields beyond. To the right are intermittent structures between river and road—fences, driveways, and houses. The houses seem inconsistent. Because rich people usually cluster in gated communities, I expect every structure along this stretch to reek of ostentation. I am, after all, on my way to meet a man of tremendous means. But this mixed settlement along the river doesn’t strike me as a place a wealthy person would live. Many of the houses are large, but a few are run down. Still others seem, well, normal to me—middle class.

Even the grand home at which we eventually arrived isn’t imposing. It’s lovely and surely worth millions. But it’s tucked away in a kind of don’t-mind-me refinement. The house looked to have been designed to the specifications of someone who needs solace. It was not meant to signal status. Guarded by large old trees, the house’s façade is composed mostly of wood in warm tones. The California autumn has not yet muted the colors in its garden, which invites you to walk around the house in every direction. Its front columns are simple, sylvan with hints of gothic. The place came across as a homestead built for a quiet, reflective patriarch. 

I was there to visit Chris Rufer.

In fact, even if we completely factored out debt—that is, if wealth were measured only in assets and not a life lived richly—I’d be many orders of magnitude less wealthy than he. I’d guess he’s a billionaire, but that’s only a guess. I wasn’t there to interview him for Forbes and stick him onto a chart somewhere with Larry Ellison and Warren Buffet.

I was there to find out what makes him tick.

I only know a handful of super-wealthy people. It’s not just that I lack the resources to run in their circles. It’s also that some wealthy people are rare, and wealthy people like Rufer are even rarer—like diamonds or Van Gogh paintings—but human, agentic, and efficacious. And that rarity comprises gifts and dispositions. In other words, Chris Rufer possesses qualities that most of us lack, intangible but real.

Socratic Dialogue

Before we settled into our interview, I gave Rufer a book to which I had contributed a chapter. The gift was probably as much for me as for him. I wanted to show him that the interview would be worth his time. For someone like Rufer, the opportunity cost of a single sit-down with me is probably greater than I make in an entire year. I had to show some plumage and offer a token to thank him appropriately.

Rufer is tall, maybe 6-foot-2. Feathery eyebrows offer clues about his age. When he smiles, he still seems serious. His gaze is keen, and his eyes seem to exist for two purposes: to solve puzzles and to size you up. I was there to interview him, but immediately, he engaged me in a kind of Socratic dialogue. His expression suggested I frustrated him a little. He’s used to people giving him yes-or-no answers (I tend to play Devil’s Advocate; it’s a curse).

“Can you think of any circumstances under which someone harming you would make you better off?” he asks me from across the table in his stately library.

“Well…” my mind grinds away at philosophical conundrums, which Rufer and I discuss briefly. But as I get further into the conversation with him, I commit myself to being a little more binary with my answers. Doing things that way would give me a better idea of how he thinks.

I soon learned that this dialog format is how he shares his worldview. In other words, answering his questions—simply and directly—leaves you with the sense that you’ve traveled with him through a set of logical premises. You have shared his perspective, at least for a moment. It turns out his worldview is remarkably scalable, as we’ll see. While Rufer is self-effacing about his raw intelligence, he is something of a philosopher by nature. He solves business problems and makes his cases by asking crisp, step-wise questions.

This may be one key to his success.

Soon enough, Rufer ceded control of the interview back to me. 

Building an Empire with a Tomato Truck

I can’t think of anything less sexy than tomato paste—except perhaps the trucks that drive the tomatoes to the processing plant. And yet tomatoes and trucks made Rufer his fortune. It could have been anything, anywhere. If he’d grown up in North Carolina, he might be a furniture mogul. If he’d grown up in Idaho, he might have been a potato magnate. Rufer grew up in California’s Central Valley, so his company, Morning Star, is the logical outgrowth of dropping someone with his gifts into what he terms “cow country.”

Chris Rufer was an introverted kid with natural smarts. He felt lucky to have gone to UCLA, earning only a 3.01 grade-point average in high school. He knew he was going to start a business after college, and, in fact, he effectively started his business before graduating. He rented a truck one summer when classes were out, and the tomatoes were being harvested. He’d had to find two jobs—one at a gas station and one at a factory—just to put together the capital to rent the equipment. As it happened, Chris knew trucks because his dad had owned and operated one.

Behind the wheel of his first truck, Rufer worked through the summer, hauling tomatoes as fast as he could. At one point, he thought about quitting. 

“If I quit now,” he said to his dad, “I’ll end up losing a couple thousand dollars.”

“Hang in there, it’ll work out,” his dad said.

So he worked through that first summer to make only $719 in profit, which he spent on food and rent. He made less money than some of the more seasoned drivers that year, but unlike his competitors, Rufer had an uncanny sensitivity to what was going on around him. As he waited in inefficient lines at the fields, the cannery, and the grading station, Rufer picked up more and more information about the ecosystem of tomatoes and processing. He found problems to solve. 

Time being money, the young driver had calculated how much he was losing doing things the same way and started thinking about how a tomato business might run more efficiently.

“You really should take the tomatoes and skip the scale, skip the grading station, go right to the factory and scale them and just unload them in the flume or sorting tables at the factory,” Rufer said. “I knew I’d be making good money if I didn’t have to wait all this time. I could get 20 loads instead of eight.” 

Sitting there in the queue gave Rufer time to use his smarts. He applied what he’d learned at UCLA under the tutelage of such great economists as Armen Alchien, a trailblazer in applied price theory and transaction costs. Rufer absorbed those lessons, then calculated, iterated, and solved problems. He walked around and talked to the farmers, watched the field hands sort the tomatoes, and observed the patterns within the system. As he thought, he began redesigning the whole process in his head. 

“I figured: sort them in the flume by skimming off the greens and letting the good ones pass. You’d save a lot of money, and your trucks would move faster,” he said.

Rufer had no control over the factory, so he kept thinking about how to game the system. The guys at the grading station got wise to it when Rufer began skirting what he considered poor practices.

“You’d get there, and there would be 15 or 20 trucks waiting to get onto the scale,” he said. “Studying the system a little, I figured out how the paperwork system worked. I started skipping the scale line and going to the grading station line. By then, the line would be down, and I’d get through the whole process faster than the other trucks.” 

Rufer had been cheating a byzantine system, but cheating nevertheless. It turned out that the inefficiency stemmed from California’s regulations on grading and deliveries―dumb laws that had been on the books for years. The poor design of the harvesting practices and processing plant created bottlenecks. Instead of continuing to cheat the system, Rufer eventually fought to have things changed on both the business and regulatory sides.

The Kernel

As I listened to Rufer’s story about his truck-driving days, I grew a little impatient. I wanted to get to the heart of his entrepreneurial rise―the kernel from which a master narrative, or a-ha! moment, would spring. At one point, I interrupted his truck story.

“Okay, so you made a little money doing this truck thing during the summer. But at some point you had to change course. At some point, you’re not hauling tomatoes anymore. What happened?”

“We were always hauling tomatoes,” he said flatly. “Today, we run 240 trucks and 400 truck drivers.”

I should have known better than to interrupt. This was the kernel. The essence of Rufer’s tale was that he’d built his empire one tomato truck at a time. Early on, he had used his ability to “telescope”—micro to macro and back—present to future and back, solving problems, developing a grand vision, and administering his growing business step by step. He’d started with his scratch pad, calculating fixed and variable costs and sketching ideas. In the back of his mind, he always saw the big picture. Tomatoes and tomato paste processing had essentially become an outgrowth of the countless mental revisions Chris made while trucking.

By his second harvesting season as a trucker, Rufer had become more confident. He had figured out how to reduce his fuel costs and enlisted the help of others to begin running multiple trucks. He started thinking about what kind of money he could make if he ran a fleet of trucks. Most working stiffs want to make money and go home, but Rufer wants to do everything better. Instead of twiddling his thumbs in his truck or talking junk with the other drivers, he crunched numbers, ran marginal analyses, and designed and redesigned systems in his head. 

“Man, if I could just change this and this and this, I could get rich,” he said, reflecting on his mindset in those days. “But at the time, there were just too many outside factors: what the growers were doing, what the harvesters were doing.” 

Rufer’s tendency to tear things down into their constituent parts and identify weak links came as naturally to him as breathing. And eventually his tomato-hauling business outgrew trucking, enabling him to exert tremendous influence on the steps that used to slow him down.

“The difference is to see the whole―the outside factors impacting your business, instead of just the narrow factors of your business.”

Family, Education, and OCD

Before I tell you any more about how Rufer built his tomato-paste empire, I should let you know that he credits his genes, family, and formal education in equal measure. His grandfather had run a filling station and taught him the value of hard work and gaining a basic head for business. He earned an economics degree from UCLA, a degree in agricultural sciences from California Polytechnic (Cal Poly), and returned to UCLA to get his MBA. By the time he’d bagged his final degree, he was already ahead of most of his peers. He had started building his business and getting grime under his nails. Rufer knew the rhythm of the seasons. It was as if what would become Morning Star had been germinating in the central California soil all along.

Bob Chitester, who produced Milton Friedman’s landmark Free To Choose, had introduced me to Rufer. Chitester joined us for the interview and asked, “Did you have to dig down deep to be successful?” 

“Not really,” Rufer admitted.

“So it’s hardwired,” I said.

“Yes,” Rufer admitted. “It’s not unusual for entrepreneurs to have at least a mild case of obsessive-compulsive disorder. Whatever it is, I’ve got it.” 

Most of us think about Edison’s adage about success being 1 percent inspiration and 99 percent perspiration. For some, it’s 99 percent compulsion. There is a very real sense in which entrepreneurs are born. I imagine Howard Hughes sitting in his hygienic inner sanctum, giving orders to the one or two people he trusted. Rufer didn’t strike me as a Hughes; his mild case of OCD is what you’d want if you like to have both success and friends. But this pathology, talent—whatever you want to call it—is a critical ingredient of his success. What most of us think of as persistence and patience might just be a milder form of obsession.

“I want things in order. My mind wants it to fit,” Rufer explained, “and my mind has a drive to figure the puzzle out—to make sense of the information I’m receiving.”

“But what about the bigger picture? The longer view?” I asked.

“Isn’t it similar for you as a writer?” Rufer asked, lapsing into his Socratic style.

“I suppose it is,” I replied. 

I thought about this very article. Writing anything—especially in long-form—requires the writer to settle on a big-picture theme or idea that unifies the work. Then you’ve got to outline. Then you write. And that involves rendering the details, letter by letter, sometimes improvising. None of this includes the rewrites and the editing, which is a more collaborative smoothing process. Mentally, though, you have to be prepared to click down two or so orders of magnitude. Then, you have to click back three or four to see if it all works as a whole. All this happens in your head. Writing is the ability to do this with just words and concepts, but in business, you’re doing it with resources and people.

Then there is enlightened risk-taking—the “vision thing” successful innovators have. When Rufer was on the verge of moving from trucking tomatoes to processing them, the industry groupthink was that tomato paste had little value. It’s just a byproduct, they thought. 

“Making products out of tomato paste was not all that well known,” Rufer recalled. “Heinz, Campbell’s, and other companies were making tomato paste within their factories,” but outside California, no one saw any value in it.

One entrepreneur’s trash is another’s treasure, and Chris Rufer had the economics down. He noticed trends such as improving technology and believed he could create a new, valuable market. Investors were still living in an old paradigm. Rufer believed his business model was correct and that people would want what they didn’t realize they wanted yet.

Turns out he was right.

“After five or six years of pounding the pavement on Sand Hill Road in Menlo Park, in Davis, in Fresno…I probably logged fifty-thousand miles trying to raise money,” Rufer said.

He finally raised money from three growers but could only negotiate 10 percent of the profits. The major investor told Rufer no one his age ought to make a million dollars in a year. Still, Rufer took his 10 percent and built a plant. The company that eventually became Morning Star Packing Company had been born. After a few years, the investor wrote a check to Chris Rufer for one million dollars.

Visionaries, Organizers, and Hybrids

Rufer described what it was like to build and run a business. He likened the process to creating a painting. First, you move in close, employing just the right brush strokes and swirls in the layered daubs of pigment. The flush of a woman’s cheeks, achieved with the master’s bristles, is premixed on the palette. Then move back, far back. Appreciate the gestalt: the faces in the foreground, blurrier objects in the background, zigzagging reflections of trees in water.

“You can’t paint the painting back here, though,” said Rufer, showing distance with his hand. “You have to move in close to create the details.”

Rufer was not suggesting he is a kind of artist, though maybe he is. It’s another way of describing that telescoping process in his mind—micro to macro, future to present, and back. It’s seeing what will be possible three years out while simultaneously formulating the steps needed to get there. That requires a rare combination of gifts.

Good entrepreneurs are visionaries or organizers. Great entrepreneurs, such as Steve Jobs or Henry Ford, are both. Recall that the once-great General Motors never had a visionary-administrator hybrid at the helm. Most people don’t realize that Billy Durant was the visionary and Alfred P. Sloan was the administrator. Historian Burt Folsom writes admiringly of Durant:

In 1904, after test-driving a Buick over the potholes in Flint and the mud of the countryside, [Billy Durant] took the challenge of building the car industry almost from scratch. Durant the salesman sprang into action. He entered the Buick in a New York auto show—and came home with orders for 1,108 cars: not bad considering that only 37 Buicks had ever been made. In 1908, after just four years making cars, he had the best-selling car in the business. […]

Durant and his main rival, Henry Ford, both envisioned mass appeal for the car. Ford, however, thought his company should be built around one standard car: his low-priced, no frills Model T. Durant, from his years in the carriage business, knew that if he were to prevail as the auto leader he needed many different types of vehicles to cater to different incomes and tastes. He scoured the country with the idea of having Buick merge with other companies that could carve out a niche in the auto market. He bought Cadillac for its luxury cars. He formed General Motors in 1908 by consolidating thirteen car companies and ten parts-and-accessories manufacturers.

Durant was a visionary, but by 1911, General Motors was losing money. Ford was selling more cars, so a group of Boston stockholders ousted Durant from the GM leadership. In the wake of Durant’s ouster, they tried to run GM more conservatively. But Durant’s time was not yet over, according to Folsom.

With capital and expertise he mustered from friends, he started making the Chevrolet, a new economy car that quickly captured a large share of the market. Durant then cleverly traded much of his Chevrolet stock for GM stock, and soon held a controlling interest in both companies. In 1916, he triumphantly returned to GM for a final four-year term in the driver’s seat.

During his second presidency, Durant bought Fisher Body and Frigidaire to add to his Chevrolet, Oldsmobile, Cadillac, and Buick. Joining the GM team were Charles Kettering, who invented the self-starter, and Alfred Sloan, a brilliant organizer who wanted annual model changes.

It took Durant to set a course and overcome the gravity at liftoff. But it was the organizer Sloan who helped GM grow and remain competitive well into the 20^th century. According to the Alfred P. Sloan Foundation:

Mr. Sloan was elected President of General Motors in 1923, succeeding Pierre S. du Pont, who said of him on that occasion: “The greater part of the successful development of the Corporation’s operations and the building of a strong manufacturing and sales organization is due to Mr. Sloan. His election to the presidency is a natural and well-merited recognition of his untiring and able efforts and successful achievement.” Mr. Sloan had developed by then his system of disciplined, professional management that provided for decentralized operations with coordinated centralized policy control. Applying it to General Motors, he set the corporation on its course of industrial leadership. The next 23 years, with Mr. Sloan as Chief Executive Officer, were years of enormous expansion for General Motors and of a steady increase in its share of the automobile market.

Durant and Sloan are synonymous with entrepreneurial greatness today―at least among business historians and MBA types. But each brought a different kind of acumen and a different kind of management philosophy. 

Maven, Relator, or Evangelist?

Authors Bijoy Goswami and Malcolm Gladwell share another way of understanding entrepreneurs, which can be sourced from The Bhagavad Gita. In The Tipping Point, Gladwell discusses the role of three basic behavioral types in spreading messages. But as Goswami points out, these “core types” appear in just about every sphere of life.

They are: Mavens, Relators, and Evangelists (MRE). We have already referred to them as Head, Heart, and Gut primary types elsewhere.

Mavens are motivated by knowledge. They want to discover and create knowledge. Think Einstein. Relators are motivated by relationships. They’re well-connected, seeking to form new relationships and deepen the ones they have. Think Princess Di. Evangelists are motivated by action. They take action and energize others to act and take action on their own. Think Steve Jobs.

The rarest value creators may be hybrids of the above. If the rarest entrepreneurs are both visionaries and organizers or Mavens and Evangelists, Rufer may be among the few who can be called both. Maybe he’s a different creature altogether. The point is not to put him into a Venn Diagram for MBAs but to understand what makes him rare.

Chris Rufer

Self-Management

Harvard management guru Gary Hamel says that “management is the least efficient activity in your organization.” To most people, that’s counterintuitive: Isn’t management there to make an organization more efficient? But Hamel was undoubtedly inspired to make that claim once he’d met Chris Rufer. You see, Rufer believes something very odd for an executive: management is unnecessary. 

At Morning Star, there is no hierarchy. Employees have different responsibilities, to be sure, but the self-management philosophy means the company organizes itself in the manner of an organism—that is, from the bottom up. Planning a company in rigid units and silos, as the father of “scientific management” Frederick Taylor famously suggested, is bad juju—at Morning Star, anyway.

Companies need not be organized like machines with people as cogs. According to Rufer, companies are living systems composed of living beings, each of whom has a brain, responds to rules and incentives, and can solve problems through collaboration. If you have these things, you don’t need a layer of people whose job it is to order others around. Command and control can be counterproductive.

Self-management derives from concepts familiar to those who are suspicious of bureaucracies:

• “Flatter” organizations

• Self-directed work teams

• Employee empowerment

• Reduced bureaucratic processes

• Distributed decision-making

None of the above aspects works in isolation. They are part of a holistic system of management, which Rufer has turned into a guiding philosophy. Morning Star sets it out as follows:

Self-Management, simply stated, is an organizational model wherein the traditional functions of a manager (planning, coordinating, controlling, staffing and directing) are pushed out to all participants in the organization as opposed to a select few. Each member of the organization is personally responsible for forging his own personal relationships, planning his own work, coordinating his actions with other members, acquiring requisite resources to accomplish his mission, and taking corrective action with respect to other members when needed.

What are the implications of this management philosophy?

Formal hierarchies dissolve. The traditional model awards certain people in the organization the authority to issue orders that others must carry out. Self-management recognizes that those considered “subordinate employees” in other organizations often have more highly localized and specialized knowledge. That is, employees are usually “the ones who have the greatest insight into the management of their day-to-day functions and who are […] in the best position to take immediate action when circumstances demand a response or a change in course.”

Sometimes, an individual ought to have more decision-making power, sometimes less. But Rufer believes all of that can be negotiated internally by a team that stands to benefit from local, well-reasoned decision-making. The team decides what colleague makes what decisions in what contexts—sometimes on the fly. And according to self-management, the profit centers of the organization benefit from getting more out of every team member. “Colleagues” also benefit from the more autonomous arrangement because people tend to be happier when they are trusted and given greater latitude to make good decisions. That doesn’t mean they always do. People screw up. But devolved decision-making reduces the likelihood that any failure will be catastrophic.

“Everybody does better if they’re freer to pursue their own paths,” Rufer said about self-management, whereas in most companies, “a manager fits other people into a system and says ‘here’s how you relate to other folks.’ And that’s pre-defined.”

Rufer believes in holding people accountable while giving them much more responsibility to take action and seek out others for collaboration. “Trusted people will gain influence,” he said. “True leaders will come about.” Self-organization follows because self-management embodies the basic ideas of individual freedom, voluntary association, and the rule of law. You are equal before the rules, and you are rewarded relative to your ability to be productive for your team and, by extension, the organization. It’s no coincidence that Chris Rufer thinks that’s the way society ought to work, too.

The big paradox is that most organizations embrace hierarchy—stiff, bureaucratic, and byzantine. That is, most companies concentrate power at the top and waste resources on excessive planning and hiring middle managers who produce little. Managers and executives accustomed to hierarchy resist change. In contrast, adherents to self-management work as if they keep F. A. Hayek books by the bedside. They believe allowing people to organize themselves is a more natural and humane way to work toward a common goal. In such organizations, change is less difficult. “Authorities,” as such, become arbiters in resolving conflicts, tone-setters, visionaries, and those whom team members designate to make immediate project decisions (if necessary). The employees—scratch that, colleagues—subordinate themselves to the mission.

The burning question is: does it work? In the Harvard Business Review, Gary Hamel writes:

Over the past 20 years, Morning Star’s volumes, revenues and profits have grown at a double-digit clip, claims Rufer. Industry growth, by contrast, has grown by 1% a year. As a private company, Morning Star doesn’t share its financial results, but I was told that the company has funded virtually all its growth from internal sources, which suggests it is robustly profitable.

In my conversations with Rufer, he echoed Hamel’s claim. He sought partner-investors early on in order to break into the tomato-processing business, but by the time that arrangement wrapped up, Rufer reinvested his profits to grow. This self-sustaining growth and profit cycle has created thousands of jobs and made Rufer a rich man. When I say rich, I mean he has a net worth some would consider a grotesque maldistribution.

But is it?

This foregoing is excerpted from my 2011 book Superwealth: Why We Should Stop Worrying about the Gap Between Rich and Poor. I wanted to publish this today while I’m at meetings in the Morning Star headquarters in Sacramento, more than a decade after writing this. Today, I work as a colleague in Chris Rufer’s charitable foundation, where he is not my boss.