Forbes Profile Of Dennis Albaugh

Forbes Magazine had a profile on Dennis Albaugh, who has made a billion dollar fortune in the pesticide business.

I found this article to be very inspiring, because Albaugh started small and, at several critical points, took unconventional actions and big bets to advance his business.

His first challenge came in 1979, when he first started working for himself. He had mortgaged his house and spent $2,000 in savings to buy a used truck and 1,500 gallons of weed killer. He was driving it from Des Moines to a customer in Aberdeen, S.D. The truck had a leak, and he ended up arriving with an empty truck.

However, he did not let this setback put him out of business. He got the angry customer to give him 3 more days, rented a truck in Des Moines, and got the supplier to give him more weed killer on credit.

His supplier then sold the weed killer factory to another company, who was going to cease manufacturing it. Albaugh got a small business loan for $100,000 and bought the mixing tanks and pumps. He became a manufacturer.

In the 1990's, one of his competitors wanted to sell its factory for $750,000. He could not find a bank to lend him the money. Albaugh bought the plant anyway, by being creative, and getting the current owner to give him the inventory before closing. He liquidated the inventory to raise cash. Once he bought the factory, his sales increased from $10 million to $26 million.

He bought his ingredients from an Australian firm, and Argentinean firm, and Dow Chemical. Once, in a dispute with Dow, he threatened to replace them by manufacturing his own chemicals. He actually went ahead and bought the equipment, forcing Dow to offer a better deal.

In 1995, he decided to acquire his Argentinean supplier, which was four times the size of his company. Also, at this time Argentina was in a recession and having a bank liquidity crisis. He was turned down by 25 banks. He raised $20 million by pledging his company. Then, after months of searching, he found a bank in Argentina to lend him the money.

In 2002, Argentina's economy collapsed and the peso lost 70% of its value. Instead of panicking, Albaugh took advantage. He refinanced the Argentinean supplier purchase with a loan from the U.S. He also went ahead and bought more assets in Argentina, including a glyphosate factory - using both cash and products from his Argentinean plant.

The glyphosate purchase was perfect timing. Glyphosate is the active ingredient in Monsanto's herbicide Roundup. Monsanto had just released some Roundup-resistant seeds, which meant that farmers could be more aggressive with applying it. This boosted the demand.

Glyphosate also went off patent and Albaugh was able to use his Argentinean plant as leverage to get good terms with Monsanto. The business has been wildly successful.

He continues to make big bets. Four years ago, he spent $55 million on three sugar mills and 11,000 acres of sugar cane in Argentina, when their owners had been losing money for years and the price of sugar had been depressed for years.

After Hurricane Katrina knocked out sugar crops and refineries, world sugar prices more than doubled.

Now, when people are predicting the housing market will crumble, he is bankrolling a 1,031-acre development in Des Moines, that will have 3,555 homes.