The richest orphans in America

Happy Tuesday.

In one Pennsylvania town, the streetlights are shaped like foil-wrapped chocolate kisses.

The man who built that town started with nothing and failed at candy in four different cities before he got rich enough to name a place after himself.

While admittedly pretty awesome, it definitely sounds narcissistic. That's why what he did with his fortune was such a shock.

The Founder

Milton Hershey grew up poor in rural Pennsylvania and left school after the fourth grade.

His first candy shop, in Philadelphia, failed after six hard years. So did his next ventures in Chicago, New York, and Denver.

Denver, though, is where he picked up the trick that made him: caramels made with fresh milk. That one skill built the Lancaster Caramel Company, his first real success.

By 1900, the caramel business was profitable enough to sell. And sell, he did.

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The Moment

For the caramel company, Hershey took $1 million in cash; about $40 million today. But, interestingly, he kept the chocolate-making equipment.

He'd seen chocolate machinery at the 1893 world's fair and become convinced that milk chocolate, which was then a pricey European luxury, could be made cheap enough for anyone. He was right. The Hershey bar made him one of the richest men in the country.

He poured the money into a town in rural Pennsylvania: a factory, houses, schools, a trolley line, a park.

In 1909, he and his wife Catherine opened a school for orphan boys. By his own account, it was her idea.

Catherine died in 1915. The couple had no children.

So in 1918, Hershey made a decision. He took nearly his entire fortune, his stock in the chocolate company, worth around $60 million at the time, and signed it over to a trust for the school.

That's well over $1 billion in today's money, all handed over.

What's more, he did it privately. No announcement. The public didn't find out until the New York Times broke the story five years later, in 1923.

His reason for staying quiet, as he later explained it, was that he didn't want it to look like he was telling people to buy more chocolate to help orphans.

Now, the town was no utopia. In 1937, a bitter sit-down strike at the plant ended in violence.

Even so, the trust held. The company he built still funds the school today, and more than a century on, that trust is worth billions.

The Playbook

1. Sell the sure thing.

Hershey cashed out his proven, profitable caramel business at its peak. Then he bet the proceeds on chocolate, which he hadn't sold yet.

The discipline was in what he refused to sell: the unproven equipment he believed had the bigger market.

A proven business can be the fuel for your next bet, if you're willing to let it go.

2. Build past yourself.

Hershey had no children and no obvious heir, so he engineered his own succession.

He put the company inside an irrevocable trust owned by the school. That structure was so durable that when executives tried to sell the company in 2002, they were blocked and the mission stayed intact.

If you want the thing to outlast you, design the ownership as carefully as the product.

3. Not every move is marketing.

Hershey gave away a billion-dollar fortune and deliberately kept his name off it.

He understood that announcing the gift would have turned a genuine act into an advertisement, and cheapened both.

Some of the most valuable things you do are worth more precisely because you don't put a logo on them.

That's all for this week. Thanks for reading.

See you in the inbox,

Simon Litt

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