Founders - #113 A.G. Gaston (Black Titan and the Making of a Black American Millionaire)

Episode Date: March 5, 2020

What I learned from reading Black Titan: A.G. Gaston and the Making of a Black American Millionaire by Carol Jenkins and Elizabeth Gardner Hines----Come see a live show with me and Patrick O'Shaughnessy from Invest Like The Best on October 19th in New York City. Get your tickets here! ----Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---The grandson of slaves, born into poverty in 1892 in the Deep South, A. G. Gaston died more than a century later with a fortune worth well over $130 million [0:01]A 10 year old’s first business idea [5:35] A.G. finds a blueprint to follow: A.B. Loveman [9:00]The remarkable story of Carrie Tuggle and The Tuggle Institute [12:10]The influence of Booker T. Washington [13:35]The power of positive examples [15:27]Joining the army for discipline and opportunity / Lessons from World War I [18:32]Keep your eyes open. Study the people around you. How do they live? What makes them tick? What do they need? [25:05]A. G. Gaston was relentless [27:20]The parallels between Andrew Carnegie and A. G. Gaston [30:26]Exhausted, depressed, and hopeless right before his big breakthrough [33:38]And thus these poor devils keep themselves always under — Benjamin Franklin  / Both Benjamin Franklin and A. G. Gaston valued industry and frugality [38:00]A fundamental change in philosophy for a young entrepreneur [44:30]A.G. starts a funeral insurance company / Inspiration from the life of Booker T. Washington [46:40]CAP YOUR DOWNSIDE! [51:41]Personality: Focus on only on what you can control and have a bias for action [54:00]A.G. starts The Booker T. Washington Business College to help train potential employees [56:00]A.G’s singular focus is on mastering his craft [57:50]—“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Pick any sweltering day in the year 1919. On the outskirts of Birmingham, Alabama, in a small mining village, hundreds of black men are at work, side by side. Some of the men are convicts. Some are war veterans. One of these men is on the verge of taking his first step in the direction of becoming a bona fide millionaire 100 times over. A.G. Gaston started with next to nothing. His mother was a cook in the kitchen of a prominent white family. He never had more than a 10th grade education. After the war, he had taken his

position in the mines as a means of survival, only to emerge utterly determined that his life was worth more than what the mines were offering. That determination was a kind of miracle given the context in which Gaston had been raised. And that miracle is the foundation of the story that you're about to hear. All right, so that comes from the book that I'm going to talk to you about today,

which is Black Titan, A.G. Gaston and the Making of a Black American Millionaire, and is written by Carol Jenkins and Elizabeth Gardner Hines. So this is another book that was recommended to me by a listener and I went to the Amazon product page and read the description and this first sentence was enough for me to know that I had to read the book it says the grandson of slaves born into poverty in 1892 in the deep south A.G. Gaston died more than a century later with a fortune well over 130 million dollars and a business empire spanning communications real estate and insurance so let's go ahead and jump right into the book something to know uh there's two authors one uh author is actually the niece of a.g gaston and uh the co-author is her daughter so they have a lot of um background to give give us because he was the central part of a fairly large family and they have a lot of information that is just not available anywhere else.

Alright, so I'm going to start out with his early life. He was heavily influenced, as that product description just said, he's the grandson of slaves. He actually lived with his grandparents from a very early age. And so their names were Joe and Idella Gaston. And it says, this is what he learned from them. He says, they were former slaves. They wind up being granted their freedom. And then they worked extremely hard

and wind up owning and developing land. They were essentially farmers. And it says, the Gastons were lucky enough to fashion a new kind of existence for themselves one that left a lasting impression of the value of hard work and sacrifice on their grandson so the story of A.G. Gaston is him just like most humans being influenced and inspired by the examples of others So this hard work is something that he engaged in. His niece said that he had a singular focus on financial success, and you'll see that a lot today. So it says, let me tell you a little bit about his mother, which is obviously the daughter

of Joe and Adela. Her name is Rosie. And it says, Rosie Gaston had not been immune to the economic imbalance and the systematic underdevelopment that resulted from it. The only skills she possessed as a cook or a maid were ones in excess in this little town they lived in. I think it's called Demopolis. So this forced her to look elsewhere, a bigger city for work. So what happens is she's forced to leave her son and go to a larger city to seek opportunity. And it says, to give you an idea of that, the author says, What did Rosie Gaston feel on that first hot day when she peeled her son from her skirts and headed down to a road leading to who know where who knew where so why is that happening um his father dies we don't know too much about it

he doesn't really uh ag wrote an autobiography in i think he published it in like the 1960s. And he just says, my father died. And even the, the family doesn't know too, like, they don't know the details of what happened. So his father dies, his mother must leave to seek more opportunity. And so it says, AG would watch closely and learn as first one of his parents, and then the other stepped away from a life that was dedicated to the soil. So they're talking about they're seeking opportunity that's different from the opportunity, the only opportunity presented to his grandparents. So they're leaving a life that was dedicated to the soil

and search out a means of survival based on increasingly skilled forms of labor. His father would die for the promise of the industrial age, and partly as a result of this, his mother would be forced to leave him behind as she, too, attempted to build a life away from the land. Both his father's failure and his mother's success in the newly industrial society would leave lasting effects on the boy, who by the age of 10, had already learned enough of the world to inspire his first business idea. So, his father worked

constructing railroads. As best as the family can put together is he died as a result of that work. Now, they just said at 10 years old, he had his first business idea. What is his first business idea? So, something to some background before I read this section to you is that he was fairly unpopular. He didn't have a lot of social skills. He says he was a square. He was shy, probably had filled with a lot of self-doubt. And so he realizes that through achievement, he can increase not only his financial success, but his social standing. And so he's got, he doesn't have a lot of friends, gives him a lot of time to think even as a young boy.

And so his grandparents had built this really sturdy swing in their backyard and all the other kids in the neighborhood wanted to use it because there was nothing else in the neighborhood like that. So he comes up with this idea. He's not going to make any money here. But he's like, okay, if you give me buttons in place of dollars or coins, you can take—he's essentially selling rides on the swing, but it's not for money.

So he says, the swing that was in AG's backyard had been eyed with envy by the neighborhood children since the day it first appeared. It was the only such swing in the neighborhood. Faced with the trauma of increasing isolation, not to mention a now ever-present desire to make something of himself, A.G. realized in an instant how he might win back his friends. He would turn his swing into a business venture, charging a button for a ride.

This first endeavor was a resounding success, and it came to form the backbone of what would be Gaston's trademark for business development. He had, as he liked to say, found a need and filled it. So what the author is talking about there is he became actually pretty famous. There's a lot of references to it online. A.G. Gaston's 10 Rules for Success. And one of them is that find a need and fill it. He was not interested.

He learned the hard way in producing new products. He winds up later on when he's already wealthy, winds up losing a great deal of money trying to manufacture his own soda. And from that experience of losing a lot of money, he just, he was not interested in ventures that had to produce and had heavy, like, production costs before it would, you could sell it. He preferred to find, to let, like, the demand of customers tell him where his next opportunity was. That's why from the description of the book, where it says he focused mainly on insurance, banking, and real estate. He was not interested

in creating new products. So let me tell you a little bit about, let me just give you a quick description of AG's life at 13 years old. His mother found success working for a wealthy family. She was cooking for a wealthy family, so she made enough money where she could go back and now collect her son and he could live with her. And so it says he was 13 years old and he had never seen a city before. And so this gives you an idea of, yes, she has opportunity, but they don't have a lot of money. So they take the train back to the city and now they need to go back to the house, right? And it says it costs five cents to ride the segregated streetcar. Rosie and Arthur, that's AG's first name,

I'm going to reference him as AG, would be walking. Okay, there's not an abundance of money. Now, there's something that's really important that happens at this time. Rosie is working for a wealthy Jewish merchant family. And so this is where A.G. finds inspiration and a blueprint. And this is going to be the first of many blueprints that he follows in his life. So it says, Rosie had made the transition from log cabin to bustling metropolis seamlessly. So I failed to mention. A.G. grew up, I mean, his grandparents had to build the house

they lived in. So it's a log cabin. We've seen this many times before. I don't think it had electricity. I don't think it had indoor plumbing. Again, we're talking early 1900s in the deep south with the grandson of slaves. Now, her son was with her. She would teach him to become invaluable too. Rosie tapped him on the shoulder, calling for his attention. So they're on their way from the train to the home where she's working in, right? And she says, turn around and look up here, Art.

There's the store. Arthur spun around. The Loveman, Joseph, and Loeb department store rose before him. She's working for the family that owns that store, okay? At the turn of the century, Loveman's store was the largest and most magnificent department store south of Ohio.

A.B. Loveman, this is the person she works for in his house, the company's founding, he's got an interesting story. I'm going to tell you his story, like a short description of how he came to develop that store. A.B. Loveman, the company's founder, had been born in Hungary of Jewish ancestry and orphaned by the age of eight. He arrived in America at 21 and peddled fabrics to support himself. In 1867, he opened his first general store in Greensboro, Alabama. But 20 years later, he had taken on partners and moved into his first Birmingham location.

So they described, the author describes Birmingham at this point in history as their version of like a bustling metropolis. Okay, so that's where where most of the story plays out because that's where his family moves to seek opportunity. AB was an apt model for the young Gaston. In many ways,

he was a self-made man who had risen from poverty to create a successful life and business. He worked diligently and methodically, leaving the house before the sun rose

and staying at the store until late at night to accommodate his working customers. A.G. had examples of a solid work ethic in Loveman, and A.G. would see the potential yield for all that hard work. And this is what he sees as what A.B. was able to work himself into. Prestige, a beautiful home, and people to serve you. At this point in his life, the people serving A.B. is A.G.'s mother, one of the many people serving him.

The boy's mind skidded along in excitement. So once that A.G. was back with Rosie, his mother was insistent. She's like, listen, I do not want you to live the life that I'm living with no education. I'm going to make sure, like his, I'm going to send you away to this thing called the Tuggle Institute. And this blew my mind. So let me tell you the background on, this is the school that AG goes to, but I want to tell you how it got started. So it said in 1908, Carrie Granny Tuggle, a former slave now engaged in welfare work, had appeared before a Birmingham court and requested the custody of a young boy

about to be sentenced to a term in jail. She wanted the state to release him to her, to her care instead. So it says for whatever reasons among among them perhaps the fact that Birmingham was at a time without either a juvenile court system or enough room in its jails to deal with a number of prisoners it already had, the judge granted her wishes. This is the beginning of what's become the first orphanage for the rehabilitation of abandoned and truant children I said soon enough all of granny Tuggle's beds were spoken for because there were few options for educating black children any parents in the known were likely to have struggled to find a way to put their children in granny's care. So Rosie puts AG into granny's care. Now this is the purpose of the Togo Institute. And then here we find, this is where AG is exposed to the greatest influence of his life. So much that he's going

to name a bunch of his companies after this person, and that's Booker T. Washington. And essentially, he reads the autobiography of Booker T. Washington, he also meets him, because Booker T. Washington is going to be involved in the Tugwell Institute, and essentially copies a lot of his ideas and uses it as the foundation for how he wants to live his life. So it says, academic subjects were taught, but it was made clear to the pupils that life for them would not be about Latin and Greek, even if they were proficient in it.

Life, they were taught, would be about work. After the model of Booker T. Washington, the students at the Tuggle Institute did not have to imagine what Booker T. Washington was like. He showed up regularly at the school. In the early 1880s, Washington had taken what he had learned of the world as a well-educated former slave and dedicated himself to the betterment of the black population. This is going to sound, this is a lot, Agee does the same. Gaston recalls being pulled aside by Granny Tuggle many, many times and

seemingly for no reason at all. Others should remind him that he must strive ever further. He must work harder. There was no room for error in Granny Tuggle's house. Now remember this. What is essentially happening there? She's demanding that he reaches his potential. She's demanding excellence. Remember that for when I get to the end of today's podcast. Because his family members are the way that AG remembered granny and the impact she had on his life is the way his family members are going to remember him. Okay. on his life is the way his family members are going to remember him okay so let me tell you a little bit more about the positive of positive uh the power of positive examples um it says in time there was little call for anyone to remind ag of the need to succeed he became quite adept at

putting pressure upon himself the world world of the Tuggle Institute was different from the one he had known. So he talks about, unlike any other blacks he'd ever known, the residents here lived in the two- and three-story homes with shiny floors and fine bathrooms, such as his mother cleaned in the homes of white people. That's a direct quote from him.

So he's talking about like they this this demand for excellence and and reaching your potential and working hard remember he came from a log cabin in rural alabama and now he sees the institute is in a beautiful home a home that he up until this point only thought that white people could live in and so they're telling him no no you no, no, you're just as capable. You can do, you can do anything else you see any other person do. You can achieve as well. This is extremely, extremely powerful. I also think it speaks to the power of reading biographies over and over again.

And why I feel that go throughout history, why so many people draw inspirations from the life stories of others. I just think it's in our DNA. Okay. So it says here, a new world of black potential was to be witnessed and AG wanted to measure up. A distinct black middle class began to flourish in Birmingham. There were black doctors and lawyers, contractors and architects living and working in the city. Remember, he was not exposed to this in rural Alabama on a log cabin. So I was like, whoa, the world just opened up for me.

Blacks had founded their own bank as well as construction companies. The realities of life opened up new possibilities to AG, just like his mother had hoped. It made him aware in a deep sense. It allowed him to believe that not only could he work in a store, he might be able to own it. So at that point, the most successful person that looked like him was somebody that had graduated high school and was able to work in a store where white people shopped. So that's what he was talking about. He was like, whoa, maybe one day I can get an education to work in a store. And now he's like, whoa, no, why stop there?

I want to own the store. It began to disturb him, Gaston would write, to see how hard his mother was forced to work to keep the family afloat. What had once simply been the way things were was thrown into sharp relief by the new world revealed by Tuggle. Arthur promised himself that with the skills he learned by the Institute, he would make a better life for his mother. So what's happening here? He's essentially got a fire growing in his mind and saying, I can change things. I can change the course of my family. I can make my life better. Not

only can I make my life better, I can succeed enough that my mother doesn't have to do what she's doing. So now we're fast-forwarding in the timeline. AG's an adult. He's a young man, 18, 19 years old. He's looking for opportunity. He cannot find a better job with better pay than joining the Army. So he's going to fight in World War I. So this is what I want to draw your attention to right now is joining the army for opportunity, discipline. And we're

going to stay here in the story for a little bit because there's a lot of important things that are happening to him that are going to shape the way he runs his life later. So now he's already in the army and he says, gaston learned in his own words to respect authority and discipline he also gets criticized heavily for doing this later his first real lesson in that arena took form of a direct blow to the face laid upon him by his commanding officer who had no interest in hearing gaston's excuses for why the potatoes had been that he had been ordered to peel was only half full. The punch delivered mid-sentence left Gaston lying on the ground amazed and furious at the inhumanity of such a sudden blow. It occurred to him first to

complain second to go AWOL. He didn't either. Instead, he picked himself up off the ground and stood at attention before the officer, offering a simple but firm yes, sir, as his response. The lesson was brutal, but as far as Gaston was concerned, it saved his life. What's the lesson here there were to be no excuses in the kitchen or on the field and i would add are in life more lessons from world war one now he's in europe serving and fighting in the war those who survive quickly learn to live with fear as a companion

rather than as a driving force. The soldiers learned to accept everything about the front, the noise, the smoke, the bombs, the cold, the wet trenches that stank of the living and dead alike. They learned to take it in stride and move on, move forward. Okay, so as you can imagine, grandson of slaves living in Birmingham, Alabama for the majority of his life. That one sentence could be a description of his entire life. He learned to take it in stride and move on and to move forward. That perseverance, that determination is key to how he winds up working in the mines and then dying with a net worth of $130 million.

They learn to focus on the task at hand. I mean, think about what's happening here. He's exposing himself to some of the most extreme experiences that a human being could have. World War I, if you've studied it even a little bit, it's like one of the most grotesque wars that humans have ever engaged in. And yet when you go through these hard, trying experiences and you survive, you adapt and you overcome, you're going to he's building confidence to realize, OK, I survived one of the worst experiences that could ever happen in my life. He's he's going to see bombings, lynchings, murders.

A good part of the book is about the they call it like the struggle for for civil rights. But when you read this book, it's a war. It's a war for civil rights. But when you read this book, it's a war. It's a war for civil rights. And when I think of the war for civil rights that AG is going to witness and participate in, he did so willingly. So what does that mean?

He has an experience in France. And the words of Booker T. Washington altered the direction of his life. And so let me just read this section to you. It'll make sense after I read this. So he says, the author is comparing and contrasting the difference for a young black man in France in 1919, 1920, compared to that in Alabama. Right? And it's night and day. It says, in France, he was treated like a man.

In France, he could walk the streets without jumping off the sidewalks when a white person strolled by. That was the behavior expected of him back in Alabama. In France, it was clear the white people respected his uniform regardless of his color. They respected his allegiance to democracy and his willingness to fight for it. In France, it seemed anything was possible for a man like A.G. France was a place a black man could live. This much was certain. So the next sentence is probably what you're thinking. So why not stay and make the best of the best situation? Or the best situation, sorry. And so now he's going to hear the words that resonate with him.

Booker T. Washington has made a profound impact on his life already at this point. Cast down your bucket, he could hear Dr. Washington proclaim. Start at home. The experience in France had only served to make Gaston more certain of the fact that Dr. Washington had been right to believe that merit, not color, was the focal point on which a successful life was balanced so it's interesting here people are going to be exposed with the same situation and react differently so if i was when i obviously when you read books like this uh like when i'm reading a book like this i try to put myself in the shoes i'm like what what what decision would i make here and so aeg is inspired by Booker T. Washington.

He's like, you know what? There's great conditions in France. Let me go back home and do the work necessary to make sure that we have the same conditions in Alabama. That wouldn't have been my response. And so I find it admirable. I'm not saying he made the wrong decision. You got to be who you are. If I was in that situation, I wouldn't have went to France. That's just like my own personal operating system. I don't try to fight against human nature. I try to route around it.

Okay, so every chapter starts with a quote from A.G. And I really like this one. He's going to use the word men. This applies to all people, so I'm starts with a quote from A.G., and I really like this one. He's going to use the word men. This applies to all people, so I'm going to change it. It says, a young person should keep his eyes open. They should study the people around them. How do they live? What makes them tick?

What do they need? It goes back to his opinion of what a business is, just fulfilling a need. So when I read that, I thought, what is he really saying in those few sentences? One, he's telling us to maintain situational awareness. And he's also telling us a good way to spot opportunity, which is exact. Now think about that. Pay attention to what is going on around you.

What do they need? That idea is going to make him a millionaire. And I'm going to get there in a minute. Fast forwarding in the timeline. At this point in the story, he's around 27 years old, and he meets what becomes another positive example for him. It says it's this guy named Abraham Lincoln Smith, was a black man on the model of what Arthur dreamed of becoming.

Smith had left that small town that they lived in. I think it's called Demopolis. I'm most likely pronouncing it incorrectly. Smith had left that small town 12 years earlier to found his own blacksmith shop, and his business had been a success since its inception. Smith owned his home and was well respected by the local community. This is very important to A.G. He wanted the respect of other people. He was well respected by the local community, both black and white. He had established himself as a man of great influence in the town.

This is what A.G. wanted. He spoke eloquently and intelligently, despite the lack of any evidence of formal schooling. So one thing to know, this Abraham Lincoln Smith, he's going to wind up becoming a business partner to, and I would say really more important than that is a father figure that A.G. didn't have. And in fact, A.G. marries Abraham's daughter. I'll get there in a minute. So something I realized about the personality, like it jumps off the pages when you read this story. And it's one of my favorite traits for any human being. And that's A.G. was relentless.

I always say that one of the funniest things to, you know, I've spent a lot of time studying Jeff Bezos. I read his biography. I did a podcast on every single one of his shareholder letters. But if you go to this day, many people might not know this, but Jeff Bezos wanted to initially name Amazon Relentless. In fact, he owns relentless.com to this day. If you go to that website, it forwards to Amazon. And I just think it's a fantastic trait for any human to have. And so there's a series of stories in the book that I'm going to omit, but essentially it's just AG running into one obstacle after another, after another, after another struggle, struggle, struggle, struggle.

And AG saying, I don't care. I'm going, I have a goal. I have a singular focus. I will be financially successful and nobody is going to stop me. It says the disappointment continued to accumulate. The life he was leading was nothing like the one he had dreamed of. He spent his time contemplating the apparent hopelessness of his future. The optimism. Now here's the thing. You can be relentless, but that doesn't mean that you're not going to be plagued with series and time times in your life where you're filled with self going to be plagued with series and time times in your life where you're filled with self-doubt the difference between people that succeed and that fail are the

people that that that feeling is inevitable right the people that fail quit they become smaller they run in the other direction the people that succeed keep persisting ag was one of the people that kept persisting so he says there's time spent contemplating the apparent hopelessness of his future. That's going to happen to everybody. He says, the optimism of his youth and early manhood had vanished under the cloak of creeping depression that had come to infect many former soldiers returned from the war. So what does that mean there? He goes back. One of the reasons he doesn't say in France, because he's like, listen, I understand we were disrespected,

but now is a new time in America. We're going to come back as heroes. And what they found is that even though a lot of black soldiers fought in World War I, they came back and the racist people, especially in Alabama and the Deep South, they didn't care that you fought. They still treated you like animals. And so he finds, and a lot of the soldiers and his co-workers that he's going to wind up working in the mines here in a minute,

are former soldiers. And they suffer from PTSD. They're depressed. many of them spend their time doing drugs and alcohol essentially they give up on life they're hopeless um ag falls into depression which you know is going to happen to almost anybody i would say everybody yet he worked he constantly works him way his way through it that's the main theme the main takeaway from the book okay so first, before I get there, I want to tell you a little bit about this. I found this section interesting because

I've done a number of podcasts on Andrew Carnegie, and he's talked about a great deal, Carnegie, that is, in this book. So let me just talk, let me take a tangent here, and let me tell you about the parallels between Gaston and Carnegie. It says, what Gaston could not know at the time was like much, much like industrial giant Andrew Carnegie before him, he would, he would find the beginnings of his wealth in the steel mill. Carnegie, like Gaston, was born poor. He came to America from Scotland in 1848 and worked upon his arrival in a series of low paying jobs, earning as little as a dollar 20 a week as a worked upon his arrival in a series of low-paying jobs, earning as little as $1.20 a week as a bobbin boy in a cotton factory.

Think about how crazy the life story of Andrew Carnegie is. If you haven't listened to my two podcasts I've done on him, go back and listen to him. He starts out making $1.20 a week in a cotton factory, and then he sells his company a few decades later for 500 million dollars in the 1800s that's insane he started in business small by investing his savings in railroads this this blueprint for that carnegie does is very similar to the life story of gaston believing that steel would replace iron as the leading industrial metal he then invested himself in the mines and by 1890 his, his Pittsburgh-based Carnegie company was producing 4 million tons of steel per year. In 1901, Carnegie sold his company to J.P. Morgan for almost a half a billion dollars. Okay, so I need to give you background before I jump into this part of the book. The reason Age AG is depressed this time is because he's going door to door.

He's willing to do anything for money, and there's just not a lot of opportunity. So he's like, okay, the only decent paying job for a black man in the South at this time was in the mines. Backbreaking labor. The reason they got paid, and it's not even a lot of money if you really think about it, but the reason they got paid more than other jobs is because no one wants to do that kind of job. Okay. So that's where he's at. Now the company that owns the mines also built, they do, I mean, some of this stuff is just

disgusting to me. So they build housing for their workers. That's not disgusting. But then they like overcharge, essentially, you can, you show up, they'll give you a job, they'll give you housing, and they'll sell you food and everything else. But it's a huge markup, and it's taken out of your paycheck. So yes, technically, people are doing this voluntarily. It's to me, let's call it what it is. It's slavery under another name. Because by the end of the week, when you deduct this voluntarily. It's, to me, let's call it what it is. It's slavery under another name. Because by the end of the week, when you deduct every single thing they have, they have no money left over. And so what do they have to do?

They can't quit. They're stuck there. All right, so that's where he's at. Now, at the beginning, though, he doesn't view it like that. Because the houses, you have to give the company credit, they actually have electricity and indoor plumbing. That's something that was foreign to AG. All right, it says, the joy that accompanied having a house with electricity and indoor facilities didn't last long. As the realities of life and the mind set in, AG found himself descending once again into hopelessness and depression.

So he experienced hopelessness and depression, found an opportunity, starts pursuing that opportunity. Then he realizes the reality of it, and he's now back in hopelessness and depression. So he experienced hopelessness and depression, found an opportunity, starts pursuing that opportunity. Then he realizes the reality of it. And he's now back in hopelessness and depression. If he quit, if he gave up, then we wouldn't be, we wouldn't be reading about him. Right? So it says this time accompanied by the bone exhaustion that was mining special gift for more than a year, Arthur's life experience was confined to the activities of working, sleeping, and eating. Now this one sentence is going to sum up Arthur's experience here. The question was, how can I escape this? Now this is one of the most inspiring parts of the book. He's exhausted. He's depressed.

He's hopeless. And yet, you can almost, in your mind's eye, you can picture him just through clenched fist and through gritting teeth, yelling, no, I am not going to languish here. I'm not going to perish here. I am not going to let this be the result of my life. am more talented than this I can do better than this and this is right before he stumbles on his first business opportunity that's going to lead to another business opportunity is going to lead to another business opportunity we're in the darkest part of his life and he's about to break out for well a year, AG had been plagued with doubt and confusion.

He had, he wrote, facilitated between renewing my pledge to become somebody and thinking I should forget it. What are we talking about all over and over again? The mind is undefeated. It will play tricks on you. What are you going to do? Are you going to give in?

Arthur's like, or AG's like, nope, not happening. What he realized was that nothing would change unless he took the initiative to change it. You didn't get successful by thinking about whether you were going to be successful or not. You got successful by doing something to make yourself successful. So he's sitting down at lunch with his co-workers at the mine. You could either buy food directly from the company, but AG made enough money where he could move his mother into, his mother lived with him what's her skill? She's a cook. So she would make AG boxed lunches. And they're all sitting there and AG's depressed and he didn't feel like eating. Okay, so this is extremely important day in his life. And they're like, oh, if you're not going to eat, like that food looks fantastic.

Can I have it? So it says, Arthur held his boxed lunch out before him and Junior reached for it happily. That's his coworker. He watched as the man tucked into the meal, sighing with satisfaction at the taste of Rosie's food. Junior looked at Art and smiled. Art smiled back, realizing he had found his business. Remember, he said, look, you just told us, maintain situational awareness. Pay attention to your surroundings. What are people doing? What do they need? In another word,

he said, what will they pay for? So he says, Art smiled right back, realizing he had found his business. Men would pay for these meals, he thought, and he was right. The success of that business venture gave Arthur a taste of industry. And before long, he was once again the boy who had taken so many jobs that he could barely keep up with demand. He began selling peanuts and popcorn on the side. So that's in addition to these box lunches. So he's in business with his mother, right? Once he secured a financial foundation, he began, this is how you just got to grab onto your first opportunity and now let it go and then you can use that to build onto the second the third the fourth and this is the story

of ag's career he just built slowly over time i mean he lived to he's like 102 i think so he has nine decades of working uh so he was selling box lunch. Then he starts to buy and resell peanuts and popcorn on the side. Once he had secured a financial foundation, he began lending money out to his coworkers at a rate of 25 cents on the dollar. So he right here, this is important. Okay. AG is going to realize something about human nature that Ben Franklin wrote about, about 125 years years maybe 150 years before ag is realizing this okay and i'll get there in a minute with uh so he's loaning out money now why is he having to loan out money to his to first of all how does he have the ability

to do that right he's doing that because he saves as much money as possible he's extremely frugal and he's also not just being satisfied with just having a job. He's building all these other income streams and all these other businesses, right? So that's why he has the money. Now, why does he have to lend up the money? He's going to discover exactly what Ben Franklin discovered. With little competition for his services—so first of all, he's lending out money to his coworkers at the rate of $0. cents on the dollar. 25% interest, and they're accepting it. With little competition for his services, AG's wealth took on a snowball effect, compounding biweekly.

He refused to spend his money on the small luxuries they squandered their salaries on. Many of the men who borrowed from AG used that money to impress the ladies. Fancy clothes and long nights in the bar ate up any money they could have saved. Saving became Arthur's primary habit, critical to his accumulation of wealth. It's critical to anybody's accumulation of wealth. A.G. was saving between 66% and 75% of his earnings on a monthly basis. Now, it would be impossible to save at that rate on his salary from the mines. But when you take all the streams of income that he's building up, it was possible.

Now, I said earlier, didn't know I left myself, this reminds me of your old friend and mine, Ben Franklin. He has this quote from his autobiography. And I'm going to read you the whole section. Just remember this quote because it comes at the end. And it'm going to read you the whole section. Just remember this quote because it comes at the end and it just gives me chills when I think about it. And thus, these poor devils keep themselves under. Okay, so let me put this book down and let me pick up Franklin's autobiography. I don't know what founder's number this is, but I already covered Ben Franklin's autobiography.

It's an episode. You can look in the archives and find it. And pretty soon I'm going to do another Ben Franklin podcast on Isaacson's biography of his. Okay, so here's Ben Franklin writing. He says, I took to working at the press. It's a printing press.

Imagining I felt a want of the bodily exercise I had been used to in America. I drank only water. The other workmen, near 50 in number, were great guzzlers of beer. So what's about to happen on the next page is we're going to see that Benjamin Franklin was rare in human history in the sense that he could think and reason from first principles. If you're able to maintain a habit of reasoning from first principles, that puts you ahead of probably 99% of all humans that have ever lived. Most of the time, we're reasoning by analogy, which is another way to say we're copying. Now, none of us are immune to copying. It's embedded into our nature and our DNA. And so you're going to be able to reason through first principles on some things,

but it's so laborious that it's going to be impossible. You're going to find some kind of set of heuristics, some shortcuts. And the way we tend to do that is by copying from other humans. So I know that it's inevitable that I'm going to copy, right? In some areas of my life, I'm going to be capable of producing original thought, but not in all areas. So the way I think about this is like, well,

if it's inevitable that I'm going to copy, shouldn't I be very careful about the things that I let into what I'm willing to dedicate my time and attention on so my hope my thought is well okay if it's inevitable I'm going to copy then I'm going to read a shitload of these biographies of people that have done interesting things because if I'm going to copy I'd rather copy from the greatest minds in entrepreneurial history than some just random dude uh down the block that doesn't know anything. Okay, so we're going to see the compare and contrast between the way Ben Franklin thought and the way most people think.

And he's going to break it down. Remember he just said, I'm drinking water, right? The other 50 people I'm working with, they're drunk all day. They're drinking beer. And beer is a lot more expensive than water. So it says, my companion at the press drank every day a pint before breakfast, a pint at breakfast with his bread and cheese, a pint between breakfast and dinner, a pint at dinner, a pint in the afternoon about six o'clock, and another when he had done his day's work.

Franklin has a point of view in his conviction and he writes like that here's the next sentence i thought it a detestable custom but it was necessary he's supposed to drink strong beer that he might be strong to labor so he's ben franklin's like you're what are you doing this is not a smart move he's like oh i have to drink strong beers i can be strong for my physical labor that we're engaging in every day right so he says i endeavored to convince him that the bodily strength afforded by beer could only be in proportion to the grain or flour of the barley dissolved in the water of which it was made so essentially saying hey why don't you take the material constituents of what you're drinking break it down on a on each individual basis and if you actually need if first of all it's doubtful that it's providing you strength,

but if it is, there's a different way to intake that. He's thinking from first principles here. So he says, which is made, then there was more flour and a penny worth of bread. And therefore,

if he would eat that pint, eat that with a pint of water, it would give him more strength than a quart of beer he drank on however and had four this is the this is where it relates back to what's happening in ag's life right now and the people he's lending money on the ones that are allowing him he's on the bright side of that transaction if you really think about it and that's going to allow him to compound his wealth to where he can compound his wealth and get out of the mines these poor devils keep

them under they stay there and they die there he drank on however and had four or five shillings to pay out of his wages every saturday night for that muddling liquor an expense i was free from and thus these poor devils keep themselves always under. Let's go. All right, back to the book. So this is a fundamental change on the next page. All right, so we already know that he, that AG's saving a bunch of his money.

That money's gonna keep compounding. Now he's saving a huge percentage of it. Then he's loaning that huge nest egg out at unbelievable rates that people that are not as smart, are not as disciplined as AG, they're paying 25 cents on the dollar for that. How fast would your savings accumulate at that rate? That's insane. It's funny to me, too, because there's so much criticism in the book uh of ag you know he's a square he's he's something's wrong with him he doesn't want to go out drinking with the fellas he doesn't want to go out do all this other behavior he's focused on

very similar light of uh of franklin what are the two traits that franklin's known for industry and frugality. You could say A.G. was the same thing. He was industry, which is essentially willing to work, willing to focus on self-improvement,

willing to do the work necessary to improve my life and save the fruits of that labor. And over a long period of time, that's how you go from being the grandson

of slaves to being somebody that's worth $130 million. While these people that were in the mines with you die impoverished. All right, so fundamental change in the philosophy of a young entrepreneur. He's doing this for a little bit of time, and then he eventually runs into, like, he wants to keep going, right? And so he's going to run into a roadblock. He says, no new markets were opening up.

He racked his brain trying to figure out what would work, what would sell, until he realized that it was his methodology that was tripping him up. Rather than figuring out what he could sell, he decided to take a step back and take a look at what the community he was living in actually needed. That's where he goes back to, you need to find a need and fulfill it. It was a turn in his mind away from self-interest and toward public service. And the change was one that would inform his business endeavors for the rest of his life. And so what's needed at this time? This part threw me for a loop. I did not expect this because,

you know, I was told he made his money in insurance, real estate, and banking. Yeah, but how do you start an insurance company from scratch? This is the main business of his life, one we're going to get to right now, right? And it comes from looking around what's happening in the mines. He starts getting involved in burial insurance. in burial insurance, so funeral insurance, and then funeral services. And from that tiny idea springs this massive insurance company that's going to make up the majority of his net worth later on in life. We're not there yet.

It says, AG's entree into the world of the funeral industry is usually represented as a fortuitous accident. He happened to hit on the right idea at the right time, but it is also critical to recognize that AG picked an area of business that had a proven potential for growth and in which he had a bead on untapped population of prospective customers. So what they're talking about there is at the time, not only like, if you could convince a white mortician to do the funeral services, you would, so a lot of them would say, no, no,

I don't want anything to do with burying black people, right? They're extremely racist. The ones that did would give like second class service, I guess is a way to think of that. So that's an issue. The other issue is the cost. They're extremely expensive. I think even to this day after a person's housing, typical average person, their two largest expenditures is housing and transportation. And the third, I think, is funeral, like individual expenditures, funeral. So funeral cost so what he what he comes up with is like well why don't we instead of what they would do is they

would have uh like the church you'd have to go there would be a service at the church and say hey we're raising money to have you know grandma uh buried well you make a donation and what he realized is like well why don't we just have burial insurance? Like, well, I think you start charging a quarter a week and just like you do with any other insurance, like everybody's going to pay in. And then when somebody dies, those expenses are covered because a lot of people, they didn't have any, this kind of insurance. They'd get to an inner life and now you have a huge,

not only is it like you're for your surviving loved ones like the most emotional times of their lives but now they're they're left with a huge bill and so he goes door to door that's how he starts building his business 25 cents at a time so it says uh the beer it's called the burial society um and then uh the note i left on my on this page it says the strength and inspiration AG got from the life of Booker T. Washington. I don't remember what's happening. So let's just read it together and find out. The Burial Society as a concept fulfilled the two major conditions Gaston required before he could invest in any business. It made a genuine need in the community and offered a real opportunity for him to accumulate wealth. The latter of these forces

was reflected in the very name of the company. So he calls this company the Booker T. Washington Burial Society. Booker T. Washington had preached early and often of the necessity of economic independence for the black community. That's something A.G. believed into the day he died. Washington believed that it was through industry that blacks could hope to ameliorate their position in the United States. A.Ge believed that what he uh what he did have by the time the 1923 rolled around was an emergent business interest interest the faith of a sizable and growing clientele and the unflagging desire to succeed so those i should have mentioned that sentence is describing the conditions of of agee's life at the time he's

going to start which he doesn't know yet it's going to be his most successful business and he's drawing inspiration for that business and for that life and the decisions he's making doing the exact same thing that you and I are doing right this very minute his endless thumbing through his copy of Washington's autobiography up from slavery had inspired him to action and taught him crucial lessons. One of these lessons is when opportunity knocks, open the door and invite him to tea. It had also instilled in him a genuine sense of self-reliance. This goes back to the discipline and the extreme experiences that he exposed himself back in the war. From that, he learned he never complained.

He didn't share his problems with other people. He said, this is my life. I'm a believer in extreme self-reliance. I will figure this out. And he kept that discipline and that confidence that he got in surviving these hardships through his entire life. And then once you get back, okay, I survived people shooting at me, telling me I can't build a business? Get out of here. Hanging Washington's name on his business was a not-so-subtle reminder to himself and everyone else who saw or heard it of what dedication to task might accomplish. So he's building this funeral insurance business

slowly and surely. Now he's about 30 years old. And I'm going to read this sentence to you, these few sentences. While I'm reading it, I want you to think, what is he doing here? This is something that almost every single person we've studied in the podcast does. Initially uncertain of the burial society soundness, he held on to his job at the mines while trying to extend membership in the society and increase his financial base to do so he began to

hire insurance agents to take over some of the solicitation car calls so what's he doing there he's capping his downside some people was like I'm going all in I'm gonna I'm gonna risk it what happens so he leaves his job at the mine and remember his job at the mine not only pays somewhat well although it's it's hell you know hell on earth but it also allows him to run his other businesses he's still selling box lunches he's still loaning out money he's still selling anything on the side that he possibly can and in the little time that he's not doing all that he's going door-to-door to sell his insurance and so he, no, no, I am terrified of being a failure,

of being financially insolvent. So I'm going to keep up with this grueling schedule as long as possible till by the time I do jump to this other business, it's a foregone conclusion that it's a success. Eventually, AG builds up the business. It's doing really well. And he has a deal with the companies that doing actual burial services, right? So the funeral home. And he's right now, up until this point,

he was just providing the insurance. He's like, wait a minute, why don't I buy the funeral home? And that's his whole, like eventually he becomes entirely vertically integrated into the death business. So it says, so he winds up buying the company. At this point, he already took on his partner. That's the father figure that I told you about earlier. Gaston had secured for himself a situation that virtually guaranteed a greater influx of money into his own hands.

Because he now owned the mortuary that performed the services for which his insured customers would be paying. He held all the tools necessary for effecting profit and loss margins. He eliminated the middleman and freed up a greater share of the net gains for himself. Just another smart idea. So now at this point in the story, AG is living through the depression, okay? And now he's living

through the depression, but his partner, Dad Smith is what he's called, is dying of diabetes, and AG married Dad Smith's daughter. She's also dying. They don't ever say what her illness is. So Dad Smith dies, and then six months later, his daughter dies. Okay, but this is going to give you an insight into his personality. And that insight is that he relentlessly focused on things that he could control, and he had a bias for action. So it says, not once in his autobiography does he mention the

Great Depression, or they call it the Economic Holocaust. No person who lived through that era was unaware of the devastation. But like Criolla, that's his wife and dad smith's illnesses the depression was nothing a.g could do anything about as in those cases rather than dwelling on what was beyond his power a.g once again buried himself in what he could control his work so once they they both pass away we see more of his personality He's not one to open up and reveal his emotions or his pain. He just grins and bears it. So it says, if A.G. had been a different man, perhaps he would have told us more about how it felt to lose Dad Smith and Criolla one after the other in a period of only six months. Perhaps he would have left us with

some truer understanding of who he was, emotionally speaking, as a human being, but that was not, in fact, the kind of man he was at all. He was a man who counted events without This is a hell of a statement. And if you take this statement in the context of his life, you can understand how he arrived at this, this MO. As if regret and dissatisfaction were luxuries he could either not afford or simply refuse to brook. Now we're going to see, fast forward way ahead in the story. Okay, so he's got a number of flourishing businesses, but he's running into a bottleneck. He can't find the talent that he needs for his growing businesses. So what do you think a person with his personality does? He's like, okay, that's fine.

I'll educate and train these people myself. So this is where he starts another business. And it's called the Booker T. Washington Business College. It says the Booker T. Washington Business College was conceived of and founded by Gaston in 1939 to provide training to potential employees of the insurance company and funeral home. The growth of both companies had necessitated the hiring of additional employees, but Gaston was continually dissatisfied with the caliber of applicants who came knocking on his door in response to his employment ads. Few had the basic training required to work in an office environment. It didn't take long for Gaston to realize that the only way to ensure that his employees were properly trained was to educate them himself and it's really smart not only does he open this up

it becomes a business that can maintain its own profit and it's not just reserved exclusively for people that are going to work in his businesses it grows and then people are trained and then they work in all kinds of businesses so it goes back to him wanting to help his community and to realize that hey you're not going to be able to grab the opportunities out there for you if you don't have the the required skills so so come here and and gain that required skills uh more about his personality i i think i mentioned this earlier, but the note says industry plus frugality. The survival of his business was his central concern. Remember, we go back to the singular focus

we talk about all the time. No matter what the immediate personal cost, he had remained since his early days at the mines both an avid saver and an unabashed penny pitcher. Extravagances were indulged rarely, if ever. And so at this time, he's doubling down on the singular focus, and his singular focus is now mastering his craft. He decided to focus on, and this is his words, becoming the very best businessman I could be. I studied, read, listened attentively to the advice and counsel

of auditors, lawyers, brokers, bankers, and other financial advisors. I learned to quickly digest a profit and loss statement. I realized the great importance of keeping good records, and I was scrupulous about detailed accuracy. I saved a part of all I earned. I was always watchful for sound investments. I insisted on top flight performance of my employees. Another way to say I demand excellence. And learned the hard way not to make the same mistake twice. There's a telling picture of A.G. from this time period in which he's seated in his office. A framed photograph of Booker T. Washington hanging on the wall behind him.

His desk is stacked with books and papers, but what is most visible is a placard. The placard bears just one word in bold letters. Think. It was Gaston's new directive and his personal imperative. He had begun to climb. Like a lot of people, it took Gaston decades to figure out what his life's work was going to be. But once he figured it out, I love that he switched the second most important turn of events in his life, and that's the mastery of his craft. He's like, okay, I'm in it now.

I have it going, and now I'm going to dedicate all my energy and all my singular focus to becoming the best possible person in my craft that I could be. To that degree, he continues his vertical integration here. Starts out with burial insurance, then he's owning the funeral homes, which expands, and now he's like, you know what, I'm just going to own the cemeteries too. In acquiring the new Grace Hill Cemetery in 1951, along with the Mason City Cemetery, Gaston hammered the final nail into place in his vertically integrated business model. Gaston could now control every level of the business of dying from preparation to internment.

He owned the company that insured the burials, the mortuaries that prepared the bodies, and now the place where those bodies were interred. And eventually that burial insurance branches out into a full-fledged insurance company. Now, I'm going to skip over a large chunk of the book because it's kind of, not kind of, it is outside the scope of what we're trying to do here. And this is where the authors do a great job in grotesque detail, necessary grotesque detail, in my opinion, of describing the wars that are happening in Birmingham, Alabama, and other areas of the South at this point in American history.

And I think it's, I've told you over and over again, I've spent, I don't know, thousands of hours by this point reading about military history, listening to podcasts about military history, watching documentaries about military history. I am fascinated by the extremes of human behavior, war being one, excellence and personal achievement being another. There's a lot you can learn on the end of those spectrums, right? So I'm going to skip over a lot of that, but I do want to give you an idea of where he sits in all this and how he viewed it. He had a relationship with Martin Luther King. Martin Luther King, when he came to Birmingham, would stay at the hotel

that AG founded. And AG founded that hotel because black travelers had no place to stay. But there was a bit of contention between them. They looked at things very differently. There was a mutual respect, but A.G. was old enough to be Martin Luther King's father, and he's just more conservative. And his opinion on a lot of this, this is A.G.'s, Gaston's perspective on the war for civil rights. And it's the need to gain economic freedom. And he learned that from Booker T. Washington. And Booker T. Washington, the book spends a lot of time about the criticism

and comparing and contrasting other influential people this time, believed very similarly. And so there's a lot that you could say in this book about this, but I think this paragraph gives you a good summary and an indication into the mind of A.G. Gaston. So he says, we cannot fight and beg from those we fight at the same time. His age and experience had taught him this much.

There would be years before most participants and observers of the movement understood what he meant by this economic imperative. A.G. viewed, and I think he's arguably correct in the context of the time he lived in, but he's definitely correct today, that he understood that power came from economic power. That's his perspective on this. In the context of the book, I'm not versed in this, this time in history. So I don't, I'm not saying that, and obviously in any case, there's never just one right answer. But that statement that he's making there, he got a lot, a lot of criticism for.

But again, he shaped, everybody shaped their own unique experiences and ideas that they collect over a lifetime. And that's what he realized. And that's what he realized. And that's what he kept going. That's why he started a bank, started teaching other black people to invest in real estate, to not spend their money foolishly. He was very much an educator and a teacher like a lot of the people that we cover here.

He gained insights that were unique and perspectives that were unique through his experiences, and he passed that along. Now, some people criticized him for it. Some people thought it was foolish. Other people listened, and he did help a lot of other people maintain economic strength and prosperity. And it's important to understand that his line of thinking not only was it influenced by his own experience, which he felt proved it correct, but he's echoing a lot of the ideas of Booker T. Washington. And A.G. was criticized for that, and so was Booker T. Washington. So let me expound on this a little bit because I don't know if I'm getting to my point here. I think this paragraph will provide you some insight into how him, how Gaston and Washington thought about this. If the critical nature of economic independence, that's really a better way to put it, economic independence. If the critical nature of economic independence was a revelation to many, it was no such surprise to a.g gaston was not a man who would or could have

ignored the importance of economics when considering the welfare of the larger black community least of all because economics was his personal obsession his doctrine of self-improvement had never varied from the lessons he had learned early on in Booker T. Washington's autobiography Up From Slavery. Gaston had never believed that there was any other way up than through economic success. Without economic power, equality becomes merely a catchphrase for rights guaranteed but never fully accessible. All right, so let me go back. Now I want to go and talk a little bit about the unique perspective that the authors had as his niece and grand niece. What would that be? Grand niece. And at this point in the story, he passes away at 103 years old. That's amazing. Okay. So we're going to talk more about the legacy and the influence he had to the people around him.

On a crisp January day in 1996, the flags were flying low all over Birmingham. They had been pulled down from their usual heights above the city's buildings to honor the passing of A.G. Gaston, Birmingham's most famous black entrepreneur. The boy who had ridden into town 90 years earlier on a segregated train coughing from the cinders in the air was now being saluted by the city he had dedicated much of his life to improving. Nothing would have made him happier. In an assessment of his life written 76 years into it, Gaston remarked, I had managed to overcome poverty, limited education, segregation, and discrimination to become a contributor to society with some national recognition.

There ought to be plenty of young people today who could achieve far more than I had. I was 21 years old when Uncle Arthur died, and by then, some of his accomplishments had been impressed upon me. Walking around downtown Birmingham, it was impossible not to notice his name clinging in bold letters to the side of so many buildings. I had learned that he built businesses, that he owned a bank, that he had known Martin Luther King Jr., that he had shaken President Kennedy's hand more than once. Though his climb up from the bottom of society was never discussed, I began to understand why

Uncle Arthur's expectations of us were always so high. Sometimes it seemed impossibly so. There were no excuses in his house. He made it clear that excellence was the only option. It was simply the case that you looked at Uncle Arthur and you knew, you just knew, that this was a man who had done something big. And it made you want to be big someday too. I'll leave the story there. I hope these stories inspire you as much as they do me. If you want the full story, I highly recommend reading the book.

I will leave a link in the show notes. It's also available at founderspodcast.com. If you buy the book or any of the other hundred plus books that I've featured on this podcast using that link, the podcast benefits because Amazon sends me a small percentage of the sale at no additional cost to you. It's a great way for you to get a book that could change your life and support the podcast at the same time. Thank you very much for listening. Please do tell your friends that this podcast exists and I'll talk to you again soon.