Here comes the reaper

Happy Tuesday.

Consumer credit, car loans, point-of-sale financing... Every version of "buy now, pay later" runs on the same logic. Time the payment to when the customer has money to spend.

Cyrus McCormick worked this out in 1850, while selling farm equipment to people who only had cash once a year.

The Founder

Cyrus McCormick was born Feb. 15, 1809, in Rockbridge County, Virginia. His father, Robert, had spent years trying to build a working mechanical reaper to replace the scythe. He failed.

Cyrus, at 22, succeeded. The reaper was demonstrated in 1831 and patented in 1834. Early commercial sales were nearly nonexistent, though: two reapers in 1841, seven in 1842, 50 in 1844.

In 1847, McCormick moved to Chicago and opened a factory in partnership with the city's first mayor, William Ogden. They began looking for a way to sell at scale.

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The Moment

The reaper cost $125; approximately $5,000 in today's terms. Farmers needed it before harvest season but didn't have free cash until Fall, when they had sold their crop. The dominant arrangement for selling agricultural equipment was cash upfront. That mismatch kept dozens of McCormick's sales stuck for more than a decade.

McCormick restructured the terms around the agricultural calendar. Buyers put down $35 plus freight at delivery, received the machine in time for harvest, and paid the balance after their crop was sold in December.

Obviously, this path is risky because there's a chance people won't/can't pay. But the credit loss across his entire customer base turned out to be less than 5%.

At the same time, he built a distribution network to solve a second problem. A reaper that breaks down during harvest is not just inconvenient. It is an existential crisis for the farmer. McCormick recruited local merchants as exclusive territorial agents, placed them under state-level supervisors who earned commissions on every sale, and trained each agent to demonstrate the machine in actual field conditions and to handle repairs during the harvest window.

The credit structure addressed the financial barrier. The agent network addressed the knowledge and service gap. Each sale came with a trained local representative who had a financial stake in the customer getting full value from the machine.

By the mid-1850s, more than 4,000 McCormick reapers were sold annually on installment plans. By the eve of the Civil War, between 80,000 and 90,000 were working across Midwest fields. By 1870, annual sales crossed 10,000 machines per year. McCormick's company eventually became International Harvester.

The Playbook

1. Price is rarely the barrier.

McCormick's $125 reaper was not affordable as an upfront cash purchase. When extending it over a harvest cycle, though, it wasn't a problem.

Before discounting a price, ask when your customer has the money. Structuring payment terms around that moment often unlocks more demand than reducing the sticker price.

2. Behavior change requires boutique service.

Farmers in the 1840s had never seen a mechanical reaper operate. McCormick's agents demonstrated the machine in field conditions, explained what could break, and guaranteed quick repairs when it mattered.

If your product requires customers to do something they've never done, there will be fear and uncertainty attached. Thus, the sales motion needs a service layer attached to it.

3. A guarantee only works if the product works.

McCormick offered a full refund if the machine didn't perform as promised. This was on an expensive item, at a time when no other farm implement came with any warranty at all.

The guarantee was more risk transfer than anything: He moved the adoption risk off the farmer and onto himself. This was only something he could afford because the machine was reliable. Sales happen when customers are comfortable, which happens when you have genuine product confidence.

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

See you in the inbox,

Simon Litt

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The Founder

Orlando is where inspiration goes to work.﻿

The Moment

The Playbook

Know a founder we should cover?

Orlando is where inspiration goes to work.