October 27, 2023

THE OLDEST COMPANY IN THE WORLD

When a Japanese Buddhist temple builder Kongō Gumi was sold in 2006, it ended its 1,400-year continuous operating history. This makes
Kongō Gumi the world’s oldest business. What allowed this company to outlast most empires and even some species? We identify 5 factors
that contributed to its remarkable longevity:

1. Resilient end-markets. Since the 6th century AD, Buddhism was a dominant religion in Japan, which assured stable demand for
construction, maintenance, and repair of Buddhist temples.
2. Family ownership. Ownership was passed down to the next generation of the Kongō family, which created a sense of stewardship
and responsibility to the heirs.
3. Guiding principles. Yoshisada Kongō, the 32nd leader of the company codified ‘family knowledge of the trade’, 16 principles
intended to guide and preserve the business. These covered both business (e.g. listen to what customers say, treat them with
respect) and personal (dress appropriately, drink in moderation) conduct.
4. Adaptability. Departing from the Japanese tradition of passing the leadership to the eldest son, the company chose a family member
- including in-laws - that had the right qualities (health, skill, temperament) to succeed. To survive, the company occasionally had to
take on business outside of its expertise, including building houses and manufacturing coffins.
5. Craftsmanship. For centuries, Kongō Gumi craftspeople honed their craft of building temples (primarily) by hand. The company self-
imposed very high levels of quality, whereby a new worker had to spend 10 years learning the trade and an additional 10 years to
become a master carpenter.

Kongō Gumi’s demise was due to overinvestment in real estate properties that declined in value combined with excessive debt. Although
the company was sold to Takamatsu Kensetsu, the business continues to operate today.

The factors that enabled Kongō Gumi to operate for 14 centuries can be used as a framework for finding durable enterprises today. In fact,
resilience & adaptability, craftsmanship and generational stewardship are common threads among the companies we own in the Enduring
Compounders portfolio. The average “Established Year” in our portfolio is 1978. So far so good…
Shitennō-ji, Japan’s first Buddhist temple, built by Kongō Gumi in 593 AD. Credit: Masaki Hayashi

Sources:

1. https://worksthatwork.com/3/Kongō -gumi
2. https://web.archive.org/web/20160311042613/http://www.bloomberg.com:80/news/articles/2007-04-16/the-end-of-a-1-400-year-old-businessbusinessweek-business-news-stock-market-
and-financial-advice
3. https://asia.nikkei.com/Business/Companies/Japan-s-oldest-company-defies-time-with-merit-based-succession