Ep #17: How Henry Ford Lost the Tractor War (and Why It Matters Today) with Brian Kearney
What can the century-old tractor wars teach today’s AgTech founders about innovation, strategy—and knowing when to let go of the past? In this solo episode of The Land Ledger, host Brian Kearney dives into the book Tractor Wars by Neil Dahlstrom, offering an insightful recap of the early battle for dominance in the agricultural equipment industry. Brian traces the origin stories of three iconic companies—Ford, International Harvester, and John Deere—and unpacks the different strategies each took to shape the future of tractors and ag innovation.
Listen in to hear how International Harvester, once a dominant ag company, missed its moment by clinging to horse-drawn equipment too long, as well as what became Ford's fatal flaw in the ag market. You’ll learn how John Deere employed a slower, more deliberate "infinite game" strategy, what today’s ag entrepreneurs can learn from this history, and more.
Listen to the Full Episode:
What You’ll Hear About in This Episode:
The competition between Ford, International Harvester, and John Deere in the early 20th century.
How Ford’s entry into the tractor market shifted the dynamics.
The scale of Ford’s ambition versus the strategic patience of Deere.
Ford’s fast growth vs. Deere’s long-term thinking.
Parallels between the tractor wars and modern startups.
Key business lessons from the tractor wars.
Ideas Worth Sharing:
“ Here's the thing that most people outside of the industry wouldn't really believe, and it's that farmers aren't against technology. Actually, it's pretty far from it. They're some of the earliest adopters of technology if it makes financial sense for their farm.” - Brian Kearney
“ Something you see a lot with people who've had success in one area, they believe that they'll be able to translate that to other areas or other industries without doing their research. And that destroys reputations and companies.” - Brian Kearney
“ Innovation is only half the battle. Timing, strategy, and humility matter just as much.” - Brian Kearney
Resources:
Brian Kearney: LinkedIn
Tractor Wars: John Deere, Henry Ford, International Harvester, and the Birth of Modern Agriculture by Neil Dahlstrom
The Infinite Game by Simon Sinek
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Read the Transcript:
Brian Kearney: Today in ag, there's a new wave of entrepreneurs that are trying to build that next great ag tech company. They've got money, software, satellite data, drones, AI, but most of them are making the exact same mistake Henry Ford did. They're building something they think is revolutionary without stopping to ask, “Will this help a farmer make or save money?” If it's not doing one of those two, it's probably not gonna work.
Welcome to The Land Ledger podcast, where investing in farmland meets the future of finance. I’m your host, Brian Kearney, here to guide you through the untapped potential of farmland as an asset.
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Brian Kearney: Alright, this is Brian, the host of The Land Ledger, and we're gonna try something a little bit new today. Today, we are going to try a solo episode. A couple episodes back, we had on Neil Dahlstrom, who wrote Tractor Wars, and I loved the book so much that I wanted to do a deep dive into the actual book.
We'll leave a link in the show notes. Please do buy it. It is very interesting. You can learn a lot about the ag world and ag business through it. With that, let's dive into the show. Picture a dusty street on the outskirts of 1875 Detroit. A 12-year-old Henry Ford cannot stop thinking about a lifeless engine that he saw on the side of the road.
Thinking back on that scene, he said, “It was the first vehicle other than horse-drawn that I had ever seen.” His father likely thought nothing of it, but what he did not know is that this started a lifelong search to build the perfect gasoline engine in a car that would transform the world. During this time, the main form of power other than people and horses was steam or small gasoline engines used to power very specific equipment.
The problem here is that steam is incredibly dangerous. It works by building up pressure and then turning that pressure into something that moves the equipment. For agriculture, this was large steam tractors that were only used on the largest tracks. They could not steer, and farmers were frequently killed by them because they exploded all the time. While Ford was working on his engine, he met his hero, Thomas Edison. Listen to this. Ford left the conversation with everything he needed to continue his work: encouragement from Edison himself. When Ford explained his idea for a gas-powered car, Edison slammed his hand on the table and said, “Young man, that's the thing. You have it. Keep at it. Electric cars must keep close to power stations. The storage battery is too heavy. Steam cars won't do it either for they have to carry a boiler and fire. Your car is self-contained. It carries its own power. No fire, no boiler, no smoke, no steam. You have the thing, keep at it.”
“That bang on the table was worth worlds to me,” Ford wrote no man up to then had given me any encouragement. If you think about it, this one conversation changed history. Think of a parallel path where this did not happen. Would Ford have kept going? Probably, maybe. But this gave him the confidence to accelerate and focus on his work. When someone like Edison tells you you have it, you're going to be able to ignore all of the normal people.
You know you are not normal, and neither is Edison. If he sees it, there's some validity into what you're doing. This really just shows the power of encouragement and force of will as well. Both can work, but together they're just unstoppable. So we will fast forward to when Ford was 45 and he launches the Model T.
It dominated the car industry. Other people were making cars, but the majority of the market share was his. This is really important to remember later. I did some math with the numbers written in the book when Ford released the Model T, and it's pretty insane. It wasn't the cheapest car, but it was the best value.
For example, it was 825 bucks, which is the equivalent of $28,000 now. There aren't many cars selling for that now, but we can at least imagine it. In one year, Ford sold 11,000 cars, the equivalent to $306 million today. And this was when most people didn't have cars. He absolutely dominated the industry.
But this book is not just a history of Ford, though they were vital in creating that technology that allowed tractors to take off, the next company highlighted in the book is one that might be a little bit more recognized in the ag world, International Harvester. At this time, it was the fourth-largest company in the world.
And we'll go back a little bit to 1907. Sales for International Harvester were the equivalent to 3.4 billion in today's dollars, and they paid out dividends to their investors equal to 122 million. They were the behemoth in ag. They had a dealer network to succeed if they ever the tractor market. And at this time, they were focused not on tractors. They were focused on equipment for horses. After laying the groundwork for the two larger players in the industry, Dahlstrom introduced John Deere, and it's hard to imagine today, but they were the underdog in this fight. Deere was slow-moving, but steady. They made implements and knew that they wanted to dive into the tractor market, but were also certain they did not want to be the first mover. They would watch, learn, and act when they knew that they would actually succeed. They were a smaller family-owned business at this time, and they ran like one.
Their goal was longevity. It was not to be first to market. It reminds me a little bit of another book called Infinite Games by Simon Sinek. The main point of the book is that business is like a game. There are two games you can play: infinite or finite games. Infinite games are games where there is no clear ending.
You're playing forever, and typically, you have a core mission that drives you. Finite games have a set end date. They're focused on winning. Typically, there's a number attached to that drive and goal. Both can be exceptionally lucrative, but Ford was playing a finite game and John Deere is playing an infinite game.
Ford wanted to capture the market, and their goal was a million tractors per year. That was not Deere's goal. John Deere's goal was they wanted to stay in business for generations, and they wanted to increase the profitability and efficiency of farmers. This is a game that does not have an end date.
You never stop increasing the profitability and efficiency of farming, and really, that's what makes ag lend itself better to infinite games. Many startups have started to realize this, and venture investors have gotten slaughtered in the market. There have been very few successful exits. The main one being Climate Corp FieldView, and basically, VCs imagined everything would have that same trajectory, but they won't.
That was a complete anomaly. The typical business in this industry is old, slow-moving, exceptionally profitable, and private. It's hard to imagine today when we typically use Detroit as the example of alighted city that is run down, but at this time, you have to picture Silicon Valley today. It's an explosion of innovation, speed, ambition.
Factories were roaring. They were coming online every day. Ideas moved faster than regulators could work through, and Ford knew how to work in that environment. He could scale that. But he could also scale a movement. Ford was not just seen as one of the wealthiest men in the United States, though he was; he was seen as a folk hero. People loved him because he was a master at manipulating the media. Newspapers would run articles about how well he treated his workers, how well they were paid, and how he was driving the cost of cars down so that the average Joe could afford them. That was all true. But he was also doing these things to win.
Ford had an ambition and an ego, and drive that just could not be ignored. But while Ford was sprinting, Deere was kind of walking. They were watching, they were seeing what would happen. Now, William Butterworth, the man running Deere at the time, was cautious, calculated, and strategic. The Deere family had a reputation for building dependable equipment, and they knew that reputation mattered.
So instead of being the first to market, Butterworth decided they'd be the best when the time came. They would let others make mistakes and watch until there was a company they could acquire. He knew that you could not run a business in ag like it was in Detroit. It wasn't a hegemonic market. It was a web of independent operators with completely different soils, climates, margins, and completely different scale.
If you moved too fast, you lost your reputation, and you would be crushed. At this same time, the USDA, and this is still kind of crazy to think about, but they actually believed horses were the best option for American farms. They said that they were more flexible, more familiar, and didn't break down. The bureaucrats in Washington, they still thought horses were better than machines. But here's the thing that most people outside of the industry wouldn't really believe, and it's that farmers aren't against technology. Actually, it's pretty far from it. They're some of the earliest adopters of technology if it makes financial sense for their farm.
By 1910s, small gasoline engines were popping up all over the countryside. Farmers were using them to run everything from water pumps to threshers. Really, the appetite for the technology was there, but it had to solve real problems, and that's still the case today. That's something you don't see in Ag Tech.
Every Ag Tech VC should read this book. That's where Ford reenters the story, not with a car, but now he has a tractor. In 1915, and this part is pretty crazy, he cleared out an old building, behind his lab in Dearborn, and began building what he called the automobile plow. In three months, he had a working prototype.
Now, I can't even comprehend that when it takes us three years to build a bridge now. But he started in, I want to say it was September, and by December, they had a tractor out in the field. That is just wild. And sure, they had the resources of Ford, but I don't think that a company could do that today.
I take that back, maybe something like Tesla could, if there was a Twitter battle. But I do not think that's something that is prevalent. Well, there was kind of a reason for this, too, though. It was, there was a little bit of urgency. World War I had just started, and the view of the American industry and American farmers was that it was our duty to step up. The British needed our help because they did not have the technology to feed themselves. Germany is going to try to starve them, and we did step up. We sent tractors, and Ford's team was the sole mover behind that. They move fast. And typically, Ford was big on perfection.
He wanted his everything to be as good as the Model T. The tractor they delivered was not that; it wasn't beautiful, it was okay, but it was functional and it was cheap. And that's what England needed at the time. But with that momentum, Ford made a really big mistake, and it destroyed his long-term viability in the industry.
What he did is he refused to build implements, no plows, no attachments, just the tractor. To him, the machine was the innovation, and someone else could build the rest because it was lower margin. That short-term thinking cost him dearly in the ag market. Meanwhile, Deere, sitting in the background, finally made their move.
In 1918, they acquired Waterloo Gasoline Engine company, and just like that, they had one of the best tractors on the market, the Waterloo Boy, and a factory they could start with. They were a major player in one fell swoop. It wasn't really flashy. They didn't have the media savvy of Ford, but it was the right move at the right time.
And during this time, Ford still did not see the issue. He thought Deere could not compete because they did not think big enough. They planned on making a thousand plows for the Ford tractor and their plows were the best for the Ford tractor. And Ford told them, “Hey, you need to make 100,000.” He went and talked to executives at Deere, Ford did.
And they said, “Look, that's not our sales policy. Our sales policy is we're going to make a thousand plows for the tractor.” And Ford kind of stepped it back and he said, “Okay, how long have you been in business?” And Deere said, “80 years.” He asked, “Well, okay, how much money have you made in those 80 years?
They said, “Well, 55 million.” To put that in perspective, that's the equivalent to a billion dollars today. Ford said, “Okay, well, 80 years of your sales policy has accumulated you 55 million. My sales policy makes me more than that each year. Draw your own conclusions.” It's almost stunning that someone would say that to another business owner.
The confidence there is crazy. But that's also something you see a lot with people who've had success in one area. They believe that they'll be able to translate that to other areas or other industries without doing their research, and that destroys reputations and companies. We see that a lot in media, when people start talking about politics, because they're actors or actresses, they really have no experience, but they believe because they're good at this one thing, they'll be good at others. And that's what Ford did here. Selling tractors to farmers is a completely different animal than selling cars to the average American.
So Ford was focused on making a million tractors a year. Deere was focused on making the right tractor for the farmer who'd use it for decades, and then there was International Harvester, the proverbial elephant in the room. At the time, Ford was dominating the car market. International Harvester was the fourth-largest company in the world.
They had 3.4 billion in today's dollars, and again, paying out massive dividends. They also had one of the best dealer networks in ag and a complete line of horsepower equipment. They knew that the future was changing, but they weren't quite ready before now. Rather than treat the tractor as a standalone machine, what International Harvester did kind of changed agriculture.
They built the farmall system. It wasn't just about replacing the horse. They wanted to rethink the entire workflow of a farm. their president, Alexander, I think Legge is how you pronounce it, I'm not sure, was ruthless. And he had no time for nostalgia or looking back at what they had done. When he walked into a meeting, you either had the results or you didn't, and you might be fired. He was also just a cold-blooded killer when it came to business. He once visited a farm who offered up a bull as collateral, and this is one of the more wild business stories I've ever heard. He asked the farmer to see the bull, the farmer pointed to the field and said, “Well, it's dead.”
And he had buried it. He had no bull and he had no money to pay. Legge asked for a shovel, and the man said, “Well, why do you need a shovel?” And he said, “Well, I'm gonna go dig up that bowl and I'm gonna sell the bones to a rendering plant so we don't have a total loss.” The farmer ended up paying the claim.
That's just insane. Now, he was convinced that with farmall, they were going to change the ag system, and what was the farmall system? It was a one-stop shop for every single implement you need. Think current agriculture. Each brand has all of their own equipment that sometimes plays nice with other brands, but usually not.
And that was the idea of farmall. Of course, again, not everyone liked this change. The National Horse Association pushed back really hard and they were defending a way of life that just wasn't gonna work anymore. It wasn't really about the tractors; it was about losing their identity and tradition, but the wave was already there.
Then when Ford had a chance to recalibrate, he actually doubled down on his stubbornness. He still wouldn't make implements. He didn't get feedback from farmers to pivot. And in 1921, he controlled 75% of the tractor market. In 1932, just 12 years later, he was under 15%. They never recovered, and now you don't really see Ford tractors except 30, 40, 50-year-old tractors, though many do still run. My father-in-law has a Jubilee Ford tractor, and it's awesome. It actually works pretty well. But looking back, the lesson is pretty clear. Innovation is only half the battle. Timing, strategy, and humility matter just as much.
Today in ag, there's a new wave of entrepreneurs that are trying to build that next great ag tech company. They've got money, software, satellite data, drones, AI, but most of them are making the exact same mistake Henry Ford did. They're building something they think is revolutionary without stopping to ask, “Will this help a farmer make or save money?”
If it's not doing one of those two, it's probably not gonna work. Farmers aren't buying tech just for the sake of tech. They're buying tools that put food on the table, pay off their note with the bank, and leave something better for their kids. It's the only reason they'll buy a new technology. There's a reason why flashy startups keep failing in ag.
It's not because farmers hate change. That's kind of bs really, it's because these tools often ignore the balance sheet. They don't understand the rhythm of the seasons or the decades-long mentality that drives a farm family. But there's still hope. Practical innovation grounded in realitystill does win.
Tools that drive direct-to-consumer sales, platforms that actually reduce input cuts or streamline compliance, AI that makes crop planning easier and faster would be interesting. Certain moonshots, they make sense. They multiply what a farming family can do. The story of Ford Deer and International Harvester isn't just history, it's a mirror into the current time. It shows us how different paths, speed, caution, systems, thinking can all lead to either success or failure depending on how you play them. The question we should all be asking is, what lessons from a dusty road outside Detroit still echo in the fields of America today?
It's Brian Kearney with The Land Ledger. Thanks for listening. Let us know what you think. Respond if you like this format. We think we're gonna do it a little bit more. Let us know. Thank you.
And that’s a wrap on this episode of The Land Ledger.
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