The Growth Was the Strategy

The first In-N-Out Burger stand was barely ten feet square. Harry Snyder built it in Baldwin Park, California, in 1948 with a small investment and a two-way speaker system he wired himself so drivers could order without leaving their cars. He was thirty-five. The burgers were fresh. The menu was short. When he died in 1976, there were eighteen locations.¹

Seventy-eight years later, In-N-Out operates roughly four hundred stores across eight states. The menu has barely changed. The burgers are still fresh, never frozen. The company has never franchised. Never taken outside investment. Never gone public. Lynsi Snyder, Harry's granddaughter, is the sole owner. She is a billionaire.²

Four hundred locations in seventy-eight years is not a failure of ambition. McDonald's has 44,000. Subway peaked above 40,000. The fast-food industry measures success by unit count, and by that measure In-N-Out should have been embarrassed decades ago. It was not. The economics would have supported four thousand locations, possibly more. The average In-N-Out generates roughly $5.8 million per year, nearly fifty percent more than McDonald's average. Lynsi Snyder has turned down offers from, in her words, "princes."³

Lynsi Snyder is the last of the Snyders. Her uncle Rich, who had expanded the chain to ninety-three locations, died in a plane crash at John Wayne Airport in 1993. Her father Guy, who took over after Rich, struggled with addiction and died in 1999. Her grandmother Esther ran the company alone until her own death in 2006. Lynsi inherited full control at thirty-five.⁴

She said she could never see a time where she would franchise or go public. "The only reason you would do that is for the money and I wouldn't do it. My heart is totally connected to this company because of my family and the fact that they're not here."⁵

The constraint is not incidental to what In-N-Out is. The constraint is what In-N-Out is. No franchising means every store is company-owned. Company-owned means control over quality, wages, and hiring. Starting pay runs $19 to $21 an hour, well above the industry average. Store managers reportedly earn over $160,000. The hamburger tastes the same in Texas as it does in California because no franchisee decided to cut a corner to make the quarter work.⁶

This is not a modern strategy. In 1623, an Armenian alchemist named Avedis discovered a bronze alloy in Constantinople that could be hammered into cymbals without cracking. He kept the formula secret. His family has kept it secret for fourteen generations. The Zildjian Company, four hundred and three years old, still family-owned, still in the cymbal business, has never licensed the alloy, never franchised the process, never taken outside investment. The constraint is the company. It has outlasted the Ottoman Empire.⁷

September 14

In 2022, Yvon Chouinard gave away Patagonia. Not sold it. Not taken it public. Not handed it to his children as a wealth vehicle. Gave it away.

On September 14, the Chouinard family transferred one hundred percent of the company's ownership to two entities. The Patagonia Purpose Trust received two percent of the stock, all of it voting shares, to control the company's direction. The Holdfast Collective, a 501(c)(4) nonprofit, received the other ninety-eight percent, all nonvoting shares. Every dollar of profit not reinvested in the business would go to fighting climate change. The announcement carried five words: "Earth is now our only shareholder."⁸

Patagonia reported $1.47 billion in revenue for the fiscal year ending April 2025. Between the transfer and that date, the company paid $180 million to Holdfast. The money funded more than two thousand grants in twenty-two countries.⁹

Nobody can buy Patagonia. Nobody can take it public. Nobody can force it to grow. Nobody can load it with debt and extract the returns. The trust structure is irreversible. Chouinard did not refuse growth. He made refusal permanent.

Eleven years earlier, on Black Friday 2011, Patagonia took out a full-page ad in the New York Times. It showed a photograph of the company's R2 Fleece jacket under the headline "Don't Buy This Jacket." The ad listed the environmental cost of making the garment and invited customers not to purchase it. Sales increased thirty percent the following year.¹⁰

Ninety-two

Jason Fried and David Heinemeier Hansson started 37signals in 1999. Their product, Basecamp, became one of the most widely used project management tools in the world. They employed fewer than a hundred people as of late 2024. They have never taken venture capital.¹¹

In 2006, Jeff Bezos acquired a minority stake through his personal investment company. It remains the only outside money the company has ever accepted. When asked about their valuation, Fried posted on the company blog: "How much are we worth? I don't know and I don't care."¹²

In September 2009, 37signals published a satirical press release announcing that their valuation had topped $100 billion following a "bold VC investment." The satire was the strategy.¹³

Fried has called venture capital a force that "kills more businesses than it helps." The constraint of a small team, no outside capital, and no obligation to explain quarterly results produced speed and quality that scale would have dissolved.

The cost of becoming visible

Four hundred million

In July 2005, a consortium of private equity firms led by KKR, Bain Capital, and Vornado Realty Trust acquired Toys "R" Us for $6.6 billion. They put in $1.6 billion of their own money. The rest, more than $5 billion, was debt loaded onto the company they were buying.¹⁴

Before the acquisition, the capital structure of Toys "R" Us was 30 percent debt and 70 percent equity. After the deal closed, it was 78 percent debt and 22 percent equity. The company that had defined American toy retail for a generation now owed $400 million a year in interest alone. Not to suppliers. Not to employees. To the investors who had bought it.¹⁵

While the PE firms owned the company, they collected $464 million in fees and interest payments from it.¹⁶

In September 2017, Toys "R" Us filed for bankruptcy. Revenue at the time of filing was $11.1 billion. Revenue before the buyout had been $11.2 billion.¹⁷

The top line had not moved. The company was still generating over $450 million in annual operating earnings. But operating earnings could not cover $400 million in interest and the rest of the debt structure. By the following year, it had closed 800 stores and laid off 33,000 people. The company was liquidated. Not because it could not sell toys. Because it could not service the debt that the people who bought it needed it to carry.

The leveraged buyout turned a functioning business into a financial instrument. The instrument required cash flow visible enough to service $5 billion in obligations. The number became the business. When the number stopped working, the business stopped existing.

The planner who moves the chess pieces assumes they will stay where they are placed. But the pieces have their own principle of motion. Amazon moved. Consumer habits moved. The economy moved. Toys "R" Us, frozen in place by $400 million a year in fixed obligations, could not move with them.¹⁸

In-N-Out, during the same period, had no one moving its pieces. The company was not a financial instrument. It was a hamburger stand, family-owned, with no debt, no outside investors, and no obligation to perform for anyone other than the person at the window. Its constraint was its immunity.

One employee

In June 2020, a company called Nikola Corporation went public through a merger with a special-purpose acquisition company. The presentation projected a future of hydrogen-powered trucks. Revenue projections, manufacturing timelines, market share estimates, all of it detailed and specific.¹⁹

Within weeks, Nikola's market capitalization reached roughly $30 billion. It briefly surpassed Ford Motor Company. The SPAC had implied an enterprise value of about $3.3 billion. The market decided it was worth nearly ten times that before a single truck had shipped.²⁰

Commercial-scale production never materialized. The founder, Trevor Milton, was convicted of securities and wire fraud in October 2022 after prosecutors demonstrated that he had faked a product demonstration by rolling a truck downhill to simulate it driving under its own power.²¹

On February 19, 2025, Nikola filed for Chapter 11 bankruptcy. Its stock, which had traded as high as $79 per share, was delisted from Nasdaq at less than five cents. After the filing, the company's workforce dropped to one person.²²

Nikola was not unusual. In 2023, at least twenty-one companies that had gone public through SPAC mergers filed for bankruptcy. More than $46 billion in lost investor value. WeWork went bankrupt in November. Near Intelligence filed for Chapter 11 less than nine months after its stock began trading.²³

Companies acquired by private equity firms are roughly ten times more likely to go bankrupt than comparable companies without PE ownership. About twenty percent of large leveraged buyouts end in bankruptcy within a decade. The control group's rate is two percent. In 2024, PE-backed company bankruptcies reached a record 110. In the first quarter of 2025, private equity was behind 70 percent of the largest corporate bankruptcies in the United States.²⁴

The pattern extends beyond PE. A study of the five thousand fastest-growing companies in the United States found that within five to eight years of their rapid expansion, two-thirds had shrunk, gone out of business, or been sold at a loss. The growth was the prelude.²⁵

The mechanism is the same in every case. The buyout or the public listing makes the company visible to the system that extracts from it. Visibility creates obligation. The obligation to service debt, to report quarterly, to justify the valuation, to grow at a rate that satisfies the people who made the company visible. When the obligation exceeds what the business can sustain, the business dies. Not because it was a bad business. Because the cost of being visible consumed it.

Underground

For roughly two thousand years, across a region spanning 2.5 million square kilometers of highland Southeast Asia, approximately one hundred million people lived outside the control of the states that surrounded them. They were not primitive. They were not forgotten. They were, in the language of the political scientist who studied them, "state-evading."²⁶

These populations deliberately adopted practices that made them impossible to govern. Where lowland states depended on grain, which ripens visibly, can be assessed by tax collectors, stored in granaries, and transported for trade, the hill peoples planted root crops. Cassava grows below ground. It requires little care. It can be left in the soil for two years without spoiling. If a state wants your cassava, it has to come and dig up the tubers one by one, and then it has a cartload of little value and great weight. There is a reason no state in history was ever built on cassava.²⁷

The hill peoples did not stop at agriculture. They maintained oral traditions instead of written records, because writing creates a ledger that administrators can read. They organized in egalitarian structures rather than hierarchies, because hierarchy creates capture points. They adopted fluid identities rather than fixed ones. Every choice pointed in the same direction. Away from visibility. Away from the system that would assess them, count them, and extract from them.²⁸

The conventional reading is that these populations were left behind. They chose to be left out. "Hill peoples are not pre-anything," the researcher concluded. "They are better understood as post-irrigated rice, postsedentary, postsubject, and perhaps even postliterate." They had seen what the state offered. They declined.²⁹

A public company is grain. Its financials are visible above ground. Its earnings ripen on a quarterly schedule. Its value is stored in a stock price that anyone can read. Its performance is transported to analysts, board members, shareholders, and regulators, the same way grain was transported to granaries and tax offices. Every number is assessable. Every number creates an obligation. And the moment the numbers become visible, the system that reads them begins to extract.

A private company is root crops. Its financials are underground. Its earnings ripen when they ripen. Its value is not stored anywhere the system can read it. Nobody outside the company can assess it, tax it, or demand that it grow at a rate determined by someone who has never been inside the building. The system cannot extract from what it cannot see.

In-N-Out planted root crops. No public financials. No quarterly earnings calls. No analyst coverage. No obligation to explain why four hundred locations is the right number. The company is invisible to the system that extracts from growth.

Patagonia went further. The trust transfer was not a refusal to be visible. It was an irreversible structural change that prevents visibility from ever being imposed. Nobody can acquire the company. Nobody can load it with debt. Nobody can demand quarterly performance. Chouinard buried the company so deep that no one could ever dig it up.

The moment In-N-Out goes public, it becomes grain. Analysts ask why only four hundred locations. The board pressures expansion. Franchising gets proposed. Quality degrades because the franchise model optimizes for margin, not for the hamburger. The thing that made the company worth billions is destroyed by the mechanism designed to "unlock" the value. The word unlock tells you everything. The value is inside the constraint. Removing the constraint does not free the value. It eliminates the thing that created it.³⁰

The distinction

The question is not whether to grow.

Companies that chose their own terms grew to hundreds of billions. Public. Quarterly reports. Shareholders. Neither was destroyed by its visibility, because the growth was theirs.³¹

The question is who held the controls.

Toys "R" Us did not choose to carry $5 billion in debt. The PE firms chose that for it. Nikola did not choose to be valued at $30 billion before it had shipped a single truck. The SPAC mechanism chose that for it. Twenty-one SPAC companies did not choose to go bankrupt within two years of going public. The obligation imposed by the listing chose that for them.

In each case, the growth was not the company's strategy. It was the strategy of the system that made the company visible. The company was just the instrument through which that system extracted its returns.

Growth chosen by the company, on the company's terms, at a pace the company controls, can compound for decades. Growth chosen for the company, by a financial structure that needs a return, at a pace that serves the structure and not the business, consumes the business. The distinction is not between growth and restraint. It is between who decides.

In-N-Out decided. Harry Snyder decided with a $5,000 investment in 1948. Lynsi Snyder decided again every time she turned down a prince. Patagonia decided. Chouinard decided permanently on September 14, 2022. Zildjian decided four centuries ago and every generation since has decided the same way. The ones who let someone else decide are gone.³²

The stand

"If you're not growing, you're dying" is the most repeated line in business, recited in investor decks and board meetings and analyst calls as though repetition made it true.

In-N-Out has not grown at the rate the market demands for seventy-eight years. It is not dying. Patagonia removed itself from the market's reach entirely. It is not dying. Zildjian has been making the same product with the same secret for four hundred and three years. Not dying.

Toys "R" Us grew. Eight hundred stores closed. Thirty-three thousand people lost their jobs. Revenue was $11.1 billion at the end. Almost exactly what it had been at the beginning. Nikola grew. On paper, instantly, to $30 billion. The truck rolled downhill. One employee remained.

The companies that planted root crops, that kept their formulas secret, that built structures no one could acquire or extract from, are still standing. The companies that became grain, visible and assessable and available for harvest, were harvested.

Harry Snyder's stand was ten feet square. He made burgers. He wired his own speaker system. He knew what he was building, and he knew what he was not. Seventy-eight years, four hundred locations, and a family that lost three of its members before the business outlived them all.

The growth was the strategy. The constraint was the company.