Founders - #116 Sam Bronfman (Seagram's and the Bronfman family dynasty)

Episode Date: March 21, 2020

What I learned from reading Samuel Bronfman: The Life and Times of Seagram’s Mr. Sam by Michael R. Marrus.----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 story of Sam’s rise to fame and fortune from a hard life on the Canadian frontier is inherently dramatic and yet touches a familiar nerve in a broad spectrum of the population. There is something in Sam’s response to his disappointments that most people recognize in their themselves. [0:01] I found out about the Bronfman family on Founders #53 Mike Ovitz when Mike Ovitz brokered a deal that led to Seagram buying MCA Universal for $5.7 billion. [2:58]Generational Inflection Point: A single individual that changes the trajectory of his entire family for generations to come [3:35] Why did his family have to flee Russia? [6:42]Sam was ashamed of the poverty is family endured and NEVER forgot it [10:45] Sam starts running his own hotel at 23 [14:35] Sam figures out a new plan to overcome the powerful temperance movement / The good ones know more. — David Ogilvy [18:00] The advantages of Sam’s mail order strategy + Copying and improving on his competitors [20:12]Some people just want it more [22:23]Sam would tell you to focus on the long term [24:26]Sam would tell you don’t waste any opportunity and be a learning machine [31:50]Sam would tell you to learn from the best [35:44]Sam would tell you to think big and appeal to interest [37:20]Sam’s view on money / Go First Class [42:04]After prohibition is lifted Sam goes on a buying spree / Default aggressive [48:53]Sam does something brilliant: He repositions whiskey as a luxury product [53:02]Sam’s personal curriculum [57:30]How Sam’s business survived WWII [59:00]The company proved to be one of Sam’s shrewdest moves; bought with only $50 million in borrowed cash it was sold [by his heirs] in 1980 for $2.3 billion [1:03:35]—“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

Sam is a Canadian tale of rags to riches. The son of a laboring Jewish pioneer from Tsarist Russia, he built a gigantic worldwide company, renowned for the quality of its products and its business acumen. The story of Sam's rise to fame and fortune from a hard life on the Canadian frontier is inherently dramatic, and yet touches a familiar nerve in a broad spectrum of the population. There is something in Sam's response to his disappointments

that most people recognize in themselves. Seagram's whiskey empire rose spectacularly by taking advantage of the huge American markets after the repeal of U.S. prohibition in 1933. From that point, Sam's business and his profits grew by leaps and bounds. He was so successful that his American competitors denounced the Canadian interloper

as imposing unfair alien competition and lobbied Washington for protection. Entering the newly opened United States market in the 1930s with millions of gallons of aging whiskey stored in Canada, Sam undoubtedly had an advantage over his American counterparts at the time of repeal. But he also had raw talent that he knew how to use. Beating the biggest and the most powerful in the United States at their own game, Sam revealed a marketing genius that took the breath away from his Madison Avenue advertising agents.

In a business environment where critics suggested that corners were always being cut, Sam was a fanatic for quality and he took the most extraordinary care to see that his products were always the best. The buying public agreed and sought them out. Sam appears to us larger than life and also full of paradox. Sam was a dyed-in-the-wool Victorian in his personal habits, his family relations, and his social attitudes. And yet he was obsessed with the future. He was endlessly curious, and he was constantly probing on how things were done to see if there was a better way. He was known for explosive bursts of rage, extravagant profanity, crushing denunciations,

and withering disapproval. To some who knew him, Sam will forever be a forthright, curious, warm, and even playful visionary. But to others, he was a volcanic authoritarian, coarse, and iron-willed, who brooked not the slightest deviation from the directions that he defined. Okay, so that was an excerpt from the book that I'm going to talk to you about today, which is Samuel Bronfman, The Life and Times of Seagram's Mr. Sam, and is written by Michael R. Maris. So on Founders, all the way back on Founders number 93, the podcast I did about Mike Ovitz, I told you everything that I learned from reading Mike Ovitz's book, Who is Mike Ovitz? While reading that book, I learned about the Bronfman family because Mike brokered a deal that led to Seagram's buying MCA Universal for $5.7 billion.

For that deal, Mike was working with Edgar Bronfman. So when I started researching him, I realized that Edgar was actually the son of the founder of the company. And that led me to discovering Sam. And it also leads me to my next point, which is why is Sam Bronfman worthy of study? And my answer to that is because Sam is what I would call a generational inflection point. And I define that as a single individual that changes the trajectory of his entire family for generations to come. And so you saw an example of that where the author starts off telling us that Sam is a rags to riches story, that he was born on the Canadian frontier,

excuse me, he was born in Russia, but then emigrated with his family to the Canadian frontier. They endured a childhood of poverty. And yet in one generation after he dies, his son is able, is still running the company, is able to buy another company for $5.7 billion. How does that happen? And so I think that's very interesting to pay attention to and to study. So to that end, this is a two-part series. So part one is going to be based on the book that I have in my hand, which is a 500-page biography of Mr. Sam, as he is called. Part two is going to be based on a booklet that Sam wrote as a supplement to his company's annual report in 1970.

And that book's called From Little Acorns, The Stories of Distillers Corporation Seagrams Limited, which is the full name of the company. And what's interesting about that is Sam, it's a very short autobiography of his life and mainly of how the company came to be. And he wrote that when he was 80 years old. Okay, so I want to jump right back into this book. I want to start out by pulling some quotes that are spread throughout the entire book that'll give you an insight into his personality. So I'm just going to read a bunch of random quotes that are spread over a couple hundred pages.

So first, Sam was known for his intensity, his explosive temper, and remarkable profanity. Business was Sam's sole preoccupation. Besides his business, Sam had few interests. He never liked to do anything that he didn't do well. He had a restless ambition. He lavished attention on the smallest details. His family remembered Sam as literally sprouting ideas. He used to write little notes to himself on scraps of paper that he stuffed in his pocket at irregular moments. His wife described him as a walking loose-leaf notebook.

He was a shy person with very few friends. Few people besides his wife knew how anxious he was in unfamiliar social situations. And then finally, he was utterly self-centered. Sam was a perfectionist in his business and found it difficult to understand why everyone did not have the same disposition. He had a genuine inability to understand the shortcomings of others. Okay, so that gives you a good idea as we go through this. I'm going to start with his early life and then tell you some of the stories on how he built his business. And I think talking about the personality up front gives you an idea of why he may have arrived at some of the decisions he made. So first of all, in that excerpt at the beginning, it talks about his

family had to flee. So why did his family have to flee Russia for Canada? And I'm going to read this excerpt to you real quick. Conditions took a turn for the worse immediately following the assassination of Alexander II in 1881 and the passage of so-called May laws the next year. These supposedly temporary laws were an official calculated response to anti-Jewish riots that followed the Tsar's assassination, and as it turned out, they were beginning of a long-term assault upon the Jewish minority under Tsar's rule. The new laws obliged Jews to abandon village settlements and to move to larger towns, and they placed new obstacles in the way of acquisitions of property and crippled much of the Jewish commercial activity. Now, I bring that up to you because I don't know if you remember when I told you all the way back

on Founders number 33, when we were studying the life of Levi Strauss, his family had to escape Russia and these laws. I'm pretty sure it was the same laws, the May laws, and they decided to escape. In Sam's family's case, they decided to escape to Canada. In Levi's family's case, they decided to escape to America. And then that one decision made by the ancestors of Levi Strauss led to him being able to build his business and opening doors of opportunity to his family. Same thing's going to happen in Sam's family. It's just going to take place a generation later. Another thing to know, before they were forced out, his family was relatively prosperous. So they go from relative economic comfort to abject poverty. And at the time, Sam's a young

boy. I think he's maybe five or six years old. His parents are in their thirties. Okay. So this is a description of the prairies on the Canadian frontier that Sam's family settled in. This is going to give you a good idea of the environment he's in. The first settlers described the scene. The mosquitoes were terrible. Nobody claimed any taxes. There were no roads, but there were plenty of wolves and bears and that troubled us. Okay, so his dad now has the undaunting task to arrive in a new country that he knows little about and find a way to support, I think they have three kids at this time. And the good thing was that Sam's dad was relentlessly resourceful. All right, so it says, at this time. And the good thing was that Sam's dad was relentlessly resourceful. All right, so it says his dad toiled furiously. He worked at a local sawmill. At the mill,

he noted that waste slabs and blocks that accumulated when the logs were cut into planks. He realized that this discarded wood could be sold to households as cooking fuel. He bought it from the mill at 75 cents a wagon load and sold it for $1.75. The Bronfman's were now in the fuel business. At the same time, his dad had to work on his own to construct a family home. Now this gives you an insight into things that we take for granted, they were thankful for. By the end of their first summer, the house had real doors and windows, which was a major improvement because this was sufficient to provide shelter for the winter. However, winter brought new problems because the sawmill ceased to function and his dad was left without merchandise. Now here's where you see an insight into more of his dad's relentless resourcefulness. His dad began a new venture, the frozen fish business.

The idea was to travel by sleigh over 60 miles and buy frozen fish, which he would then market in towns and villages. For several years, the frozen fish business did well and became the family's regular winter occupation. So it was enough to sustain them, but again, they're living in still in poverty. And this is a very important thing to understand, to understand Sam and why he was, he was extremely driven, one of the most driven people I've ever covered. I would say that he had two things in his life and nothing else, which was his family and his work. And this singular focus, this possessive, he possessed like a,

a unyielding drive probably came because he was ashamed of the poverty that his family had to endure, and he never forgot it. So here's an example of that. Sam recorded little of his childhood except to reiterate how painfully he experienced the poverty in which his family lived. Sam later recalled the shame of appearing before his classmates in torn clothes, a humiliation he Okay, so after several years of toiling, oh, and another thing I need to tell you up front. The Bronfman family treated their family as a business. So the kids, there was no time for formal education, as you could imagine. Eventually, they have several different businesses going,

mostly of moderate success. They are not wealthy. Sam is the one that makes them wealthy. And what they do is they're going to pool all their resources together. But they also involve their children into business at a very young age. So right around, I think at this point in the story, he's about 10 years old. And we're going to see Sam's first observation about business. And it gives you a preview into what his life's work is going to be. So it says, after a few years of the fish and the fuel business, the family accumulated a little capital and were ready for more ambitious ventures. They entered the horse trade. So it's buying and selling horses. The stable was a school

and there's a direct quote, the stable was a school. It was a graduator in the study of human nature. It's a really interesting phrase in the book. This may have been the future Seagram's president's first whiff of a business deal. Whenever a sale was completed, the buyer and seller would go to the hotel for a drink. At the end of one day, Sam told his father, the bar makes more profits than we do, father. Instead of selling horses, we should be selling the drinks. So his father actually likes that idea. And the family eventually gets into the hotel business. Now at this time, because when I heard that, I was like, where do they get the money from this? And then the author explains that the hotel business at this time location, it's, it's little more than like a cabin with some rooms that you're renting out. It's not

the, what do you think of as a hotel today? And the interesting thing about the hotel business is they would essentially break even or lose a little bit of money on lodging and the meals they supplied uh for the people uh renting the rooms and they made all their profits from the bar all right so this is how they organize and this was was interesting to me is how they organized their business it says um so I need to back up. So all the businesses are running simultaneously. As they open different hotels, they would instruct different of the kids,

or I guess they're now young adults at this time, to run each hotel. And they're spread through different cities, right? But it's a one family business. So it says money went into a single pool. About this time, Sam dropped out of school to work in the family's establishment so he's still too young to run his own hotel so he goes to work for one of his brothers in a family hotel now he does really well right away he's obviously one thing you're gonna I'm

gonna say I think over and over again today is wow that's a smart move wow that's a smart move wow that's smart move this guy is really really bright and you'll see that today and he has talent right from the very beginning. So he starts running his own hotel at the early age of 23 years old. Okay, so this is him later in life reflecting about this time in his life. So it says, Sam in his last years dwelt upon his early time in the hotels as indicative of the aggressive entrepreneur in the making. Aggressive is an understatement, by the way. The aggressive entrepreneur in the making, competing furiously with his brothers, quickly mastering financial difficulties, and building up his income to a

phenomenal $30,000 a year. We are talking, I think we're in the 19-teens, maybe 1915, maybe 1918, somewhere around there. Building up his income to a phenomenal $30,000 a year and making himself into one of the most eligible bachelors in Winnipeg. That's his own statement there. His brother Harry, who's an older brother, acknowledged somewhat grudgingly the efficient and business-like manner with which Sam carried on his business. Okay, so that's a description of Sam at 23. You could easily say that up until the day he dies. The efficient and business-like manner in which Sam carried on his business.

He was an obsessive, by far. Now, here's the problem. So they're making a little money. The series of what I found so motivating about the life of Sam, other than the fact that he's born in abject poverty on the Canadian frontier, and then six decades into the future, his sons are running a company where they're making multi-billion dollar acquisitions. That's an insane thought to have, is the fact that his story contains obstacle after obstacle after obstacle that he's having to overcome. The business that they're going to engage, remember, this is the point in history, you have huge temperance movements, both in

Canada and America. And so he's got to set up his business in kind of in a series of ever-changing loopholes. The business gets so stressful that his older brother has a nervous breakdown, and Sam just keeps pushing on. So it says at the same time, temperance forces mounted a nationwide campaign against drink. So the minute they get on somewhat better financial footing, now you have this massive social movement. And this is how the author describes it. It says a nationwide campaign against drink, challenging the family's new livelihood, bringing what was the family's greatest challenge to date. And as Sam saw it, their greatest opportunity.

And that's another theme that we see over and over again. Every single book that, that I've talked to you about, it's not, the person doesn't wake up, starts a business and nothing happens. It's, it's great depressions. It's war. It's, it's all kinds of extremely difficult things outside of your control that you're gonna have to engage with and overcome and sam is his life story is a testament to that so let me give you a little more detail about what sam and his family

were up against the temperance this is now in canada at the time the temperance lobby was mobilizing what has probably been the most potent mass movement in Canadian history. The temperance movement drew thousands of citizens to support a campaign to banish the bars. Temperance, its advocates now insisted, was the cause of patriotism itself. In other words, they're telling you that if you support the bars, you're not patriotic to your country. That is an extremely powerful message to a large degree of people living in a country anywhere over the world. And so that is an extremely hard thing for Sam to overcome. So he realizes, he's like, listen, we're fighting in a pro battle. They're going to win.

We've got to find a different way. So the author just said, hey, yeah, this is their greatest challenge. But Sam also realized it's their greatest opportunity. Okay, so he figures out a new plan. Remember, he's in his early 20s when he's doing this. And this section I'm about to read to you reminds me of an idea that I learned from David Olgovie that I just haven't forgotten. I think about all the time. And he says, the good ones know more.

Here's an example of that that sam remembered giving his brother an ultimatum you can run flop houses or piddle about in land deals all you want i'm going east to get into the liquor business this idea involved an ingenious leap into the interprovincial liquor trade a strategy effectively permitted by can. Remember, he's got to constantly set up his business under a bunch of ever-changing loopholes. And this is the first example of that. He read and studied the law and he realized, okay, well, they can stop me from selling alcohol in my bar. But on a local level, like on a state province level. Let me use Canadian terms here. But the federal level, I have this huge loophole that I'm just going to set up my entire

business on. So he says this idea involved an ingenious leap into the interprovincial liquor trade, a strategy effectively permitted by federal Canadian law. Although the provinces had the right to restrict the sales of liquor from within their boundaries, the importation, manufacture, and the selling of liquor from one province to another fell within federal jurisdiction. And the federal government at the time was slow to move against the liquor businesses. So the way forward was clear. It was to sell from province to province under the cover of federal law. I would also add under the temporary cover of federal law. So now Sam moves from Winnipeg. He says Sam went off to move to Montreal

where the major importers and wholesale operations were located and where provincial laws set no restrictions on the sale of liquor. So what does that mean? At this point, he essentially doesn't have a bar anymore, but he has a mail order liquor business. And keep in mind, at this point, he is not manufacturing his own liquor yet. He has to go through all these, it's almost like a series of steps he has to do. Each step, once he gets to that next step, opens up a new opportunity that he can't see yet. So that's a good way to visualize the progression that Sam is going to make through the liquor business. So at this point, he's like, okay, I can't have a bar.

I'll just mail order it and I'll ship it from province to province. So I want to tell you a little bit about the advantages of Sam's mail order strategy and then his also strategy for copying and then improving on his competitors. It says, using the mail, Sam adapted a marketing format that was extremely important in small towns and isolated settlements. Mail order companies dispatched their catalogs far and wide. They stored their goods in warehouses conveniently situated for their markets and reaped the advantages of very low overhead. Remember, at this point in life, they're making a little bit of money, but he doesn't have a huge amount of capital, and he can't borrow any money from anybody. So, throughout a couple times in the family history, they would mortgage their house. And one case is they mortgage their house. A few years later, they pay off their house, and one son is with the father in the bank paying off the house, and the father's in tears.

And his son's like, why are you crying? He's like, because we own our home again. Okay, so it says cash, and here's another advantage cash arrived before the merchandise was shipped and so relatively little capital outlay was required now sam followed in the liquor marketing tracks of hudson of the hudson bay company even down to the to their pricing schedule so the author compared the hudson bay like the Canada version of like Sears at the time, a massive, massive company. But here's the advantage that Sam has over Hudson Bay. He is specialized. He's only focused on one thing.

While Hudson Bay had a huge line of goods and a large corporation to mobilize, Sam enjoyed the advantages of specialization, not to mention an almost unlimited reservoir of his own energy ready to be pumped into the business. If Sam wasn't spending time with his family and he wasn't sleeping, he was focused on his business. He did that when he was young and he did that when he was old. Okay, and here's an example. Not only do the good, the good ones know more, but in life, you're going to run across people that there's just some people that flat out want it more. And they're extremely hard people to compete with. So it says, um, Sam found another, uh,

found another loophole. He found a hotel that remained wet, meaning they could sell liquor under a local option. And where, when, where their liquor license permitted the importation and storage of whiskey. So that's called a loophole. What we're really talking about is institutionalized corruption here. It's not, you know, Sam doesn't write the rules. He's just taking advantage of that. In order to buy the hotel, though, Sam had to outbid the local mayor, who also wanted

it. Rather than wait for the return of the owner of the hotel, who was away at a lumber camp, Sam went directly to see him, traveling for six days by dog sled with a guide. This is Sam talking about the experience. I was cold, uncomfortable, and hungry for six of the longest days of my life. Then when I got to the camp and made the deal with the owner of the hotel, I could hardly face the return trip. So he got it because he didn't wait.

He wanted it more than the mayor. This gives you a good idea into the terrain, the legal environment that Sam is having to navigate to become rich. The Bronfman's business was certainly not made to last. Sam knew it was a temporary, highly fragile enterprise built on constantly shifting legal sands. Speed, therefore, was essential. One of the great things about reading biographies is you're having essentially a one-sided conversation with some of the greatest minds in history, people that lived remarkable lives. And so the way I think about this is that they're talking directly to me, right?

And so, and then now I'm in turn talking directly to you. So the note I left myself is Sam would tell you to focus on the long term. And we see what he would tell us because we see the actions that he prioritized in his life. So it says, Sam loved to tell the story of how he was approached by an executive from Hudson Bay wanting urgently to buy 2,000 cases of Dewars and offering to pay above normal price because they had miscalculated and badly needed the goods to fill an order. Sam's reply was chivalrous and staked out his claim to be treated seriously by the marketing giant. I don't want your money, he said. Just let me have the same amount back as soon as you can. His point was that it was foolish to capitalize on his momentary advantage. With his eye on the long run, Sam wanted a relationship of

trust with the mighty Hudson Bay Company. And remarkably, he achieved just this. Okay, now I'm going to fast forward a few years into the story. Now, this is the environment that Sam is having to navigate at the time that prohibition was legal in the United States. So Canada changed their laws before the United States did, and they also made it legal. Again, remember, they just said there's temporary, what's the exact word they used here? It was built on constantly shifting legal sands. So he's constantly having to adapt and change his business. And so at this time in the story, he owns these things called export houses.

So the way to think about export houses, there's these factory, not even factories, these retail establishments that were close to the border, and they sold liquor to people smuggling it into the United States. So again, under legal law, it's completely legal in Canada, but he's essentially shifting the illegality of his business to the people that want to smuggle it into the United States. And so you could imagine the, let's put it, I mean, who do you think his customers are? They're rum runners. They're essentially drug smugglers. So it says, export houses barred their windows,

padlocked all their doors, stationed armed guards at their entrances. There was trouble occasionally and periodic visits from the police. Raids from hijackers and gunfights sometimes resulted. The real trouble came once the cars entered the United States. So now this is not Sam's problem. This is the problem of his customers. Sometimes they'd find enforcement agents waiting in the ambush. An even greater danger came from hijackers. So, I just told you, there's going to be gunfights.

They're fighting over highly... The reason that, you know, when... Just like the drug trade today. If you make something illegal, that means there's more risk. So, people taking that risk want more return. And so, they know, like, okay, I got the product over the border from Canada, but now people can essentially kill me for this very valuable product. And they definitely did. The export houses reaped handsome profits by selling

to the Americans. The Brompton brothers dominated the trade. I think this has been obvious by now, but Brompton family, Brompton brothers, they keep saying this over and over again. Eventually, Sam emerges as by far the most talented and strongest person even though he wasn't the oldest and so eventually deferred to his they saw his talent they deferred to him and if he's going to own all of the business he'll buy out the rest of his uh his family's going to be wealthy not nearly as wealthy as sam's immediate family uh sam was very much he had like a a he wanted to build a dynasty he wanted to be a generational inflection point and that's exactly what he did all right so let's go back to this point though i'll get there in a minute the criminal element lent an aura of glamour and notoriety liquor sales

yet most of the talks about the paradox here yet most of the commerce was routine it was closely monitored by the canadian liquor authorities and in their eyes, it was above board. As such, it left a paper trail. Utterly routine correspondence penned without the slightest apprehension that some of the traffic might be illegal. And they do have eventually, there's fascinating stories. There's really a history book in addition to a biography about this, the history of prohibition, because eventually the United States states pressures the canadian government so then sam has to set up on like these islands that are off the coast of canada but under french jurisdiction i mean it's it's it's it's it's bananas um okay so this is going to be the foundation now remember i just said

there's like certain steps he has to get to to get to the main opportunity. But he's got to go through these steps to get there. So this is going to be the foundation that Seagram's will be built on. And it's another example of something that we see over and over again. Sam bet on himself. At some point, all of us. I have to bet on myself. You have to bet on yourself. You just have to do of us, I have to bet on myself, you have to bet on yourself.

You just have to do it. You've got to take that leap. So it says, and Sam would tell you that, one of the persistence problems that brothers face as they ship their liquor across the American border was supply. Sam took an audacious step. He decided to blend his own stock. So first he started out with bars. Then he started out,

he's like, all right, forget they're closing down my bars. Now I'm going to go to Montreal and I'm going to be essentially a liquor retailer. I'm going to resell other people's merchandise. Then he built his business up so successfully. He's like, damn, I have this, this constraint on my supply. What's the next logical thing? Okay, well I can, I'll make my own. And then eventually he's going to dominate the American market. We're about a decade, maybe a little less than a decade from now. And dominate he does. He takes 40% of the American liquor market.

Much easier to grasp is what lay behind the whole move into blending. Sam's boundless drive, this is the betting on himself part, Sam's boundless drive and his unshakable belief that in a furiously competitive trade, he could outproduce and outsell anyone in the field. Sam and Harry, that's his older brother and his partner at the time, probably knew as much about chemistry as they knew about chiropractic or choreography. So this is now still before the repeal of prohibition. This little excerpt is going to, the note i left myself is that sam would tell you to stay focused on the long term and that gives you an advantage because it is so rare during his course of his travels he's on vacation with his wife but there's no such thing as a vacation in sam's life it just doesn't exist yeah i'm going to travel with my wife but i'm going to

work the whole time so it says during the course of his travels south of the, he realized that the United States would remain dry for a considerable period of time, but not indefinitely. Taking the long view, he foresaw that better times had to come and the great advantage that would accrue to mature Canadian distilling company that would be poised to enter an eventually open American market. One must always remember that he had an uncanny ability to sniff out new opportunities in the whiskey business. Sam would also tell you not to waste any opportunity and

to be a learning machine. So it says, certainly this was not a holiday tour. Sam scouted the American terrain on the lookout for distilleries, inquiring about equipment, and learning as much as he could about the process of whiskey making. So there's other anecdotes and stories in the book where he would ask a ton of questions over and over again. Later in his life, he'd be visiting, you know, they had operations spread through, I don't even know, like 20 different countries. I mean, it was a massive business. And he just, he would talk to people on the front line and he would just ask a ton of questions and they would talk about what they admired about him. He's like, wow, this guy's

asking some of these questions he was asking would seem like a dumb question. He doesn't care about looking stupid. He wants to collect a ton of information. And then he also wants to think, he wants to know why you're doing what you're doing to make sure you understand it. So there are plenty of people with whom to confer, notably former whiskey makers living unhappily under the Volstead Volstead Act. That's the act that enacted prohibition in the United States and and who were eager to talk with plenty of time on their hands. All right, so I'm going to say it again. Just another genius, brilliant, smart thing that Sam does. So he's like, OK, we're going to have a massive

market, a market way bigger than the one I'm tapping into right now. And it's going to be legal, which means I'll be able to make even more money. And he realizes like, but a lot of people, the longer something is aged in the whiskey business, the more valuable it is, right? The higher and his entire thesis on businesses, if you have, it's very similar to Yvon Chouinard's quality as a distribution strategy that is in the book, Let My People Go Surfing. If you have the best product, you're going to win, right? He also had the best product, but he also made sure he had the best distribution too. Now, what he realizes is like, okay, I'm going to need partners. And who makes the best whiskey in the world?

And this time, Scotland. So he finds his blueprint in Scotland, right? And this reminds me, well, this section I'm going to read you. Back when I studied, I did a two-part series on Enzo Ferrari, one of the world's greatest obsessives in terms of how they make products. And he said something in that book that I never forgot. And he says that the rough quote is something like, there's certain geographies that possess unique skills, right? That you can't find anywhere else on the planet. And in his case, he says in Medina,

they had a special psychosis for building racing cars, right? And that's where he set up. That's where he built Ferrari. In Scotland, they have a special psychosis for making whiskey. So it says, Scotland was where Sam saw his opportunity. His dream was to make blends of whiskey, similar in character to what was manufactured in Scotland, to sell throughout Canada and then to export, just as the Scots were doing around the world. Scotland dominated the global whiskey market in 1924, largely because of a revolution in the production of Scotch whiskey that began in the mid-19th century.

That's what they say, or that's what the author says. But he says the real beginnings, the Scots would have a different opinion, and that's what the author's saying here. The real beginnings, as the Scots would insist, were many centuries before when Scotland made their, it's some Gaelic term, I don't know how to pronounce, but I love what it means. They call it water for life. And isn't it amazing how like super passionate people describe their products? It's not whiskey, it's not Scotch whiskey. It's water for life. For generations, Scotsman handed down the art. So eventually he's going to pick the greatest manufacturer and he's going to think big and get them to partner with him. But I'll get there in a minute. Sam would also tell you that you should be learning from the best.

And it says, this is also goes back to that part where I said he bet on himself. Sam, what in the hell do you know about making whiskey? His friend Shin asked him. Shin, I don't know the first goddamn thing about how to make whiskey, but I'll be goddamn if I'm not going to learn. So there we see his, his super aggressive nature, his love of profanity, and his constant, he was a learning machine. Sam's characteristic solution was to go to the top for his lessons, kind of what we're doing here, right? In this case, to one of the first families of the Kentucky distillers. His teacher was a master distiller. It was probably the best thing for me that I didn't know anything about distilling, Sam later recalled. I lived at the distillery for two years. Sam studied whiskey making, down to the minute details. And there's a lot of paragraphs in this book that remind me

of the hands-on nature that Steve Jobs had, that I've talked about on the six podcasts that I've made about him. You'll see even from how the products are made to being involved in all the decisions to the marketing to everything. So we see the example of that. This is Sam talking about his level of dedication to details. I paid personal attention to every aspect of the production process, to grains, to water and yeast, to milling, to cooking procedures and temperatures, to fermenters, to stills and distilling techniques, to barrels and yeast, to milling, to cooking procedures and temperatures, to fermenters, to stills and distilling techniques, to barrels used to manufacturing whiskey, to packaging and bottling. Now we get to the meeting. Sam would tell you to think big and to appeal to interest. Sam was obviously thinking big. The meeting finally took place in DCL's. That's the company that he felt was the best in the world at the time.

In DCL's oak paneled boardroom, Sam made his pitch to the men who controlled over half of the globe's scotch whiskey trade. That's crazy. From Sam's point of view, his meeting with the barons of the whiskey trade was like an encounter between David and Goliath. This is why he would tell you to think big. He had to. He also had a giant ego, which probably helped too. On the one side sat the haughty, confident masters of the ancient craft, whose family associations with whiskey stretched back to antiquity. On the other side, Sam Bronfman,

a young Jewish boy from Brandon, one of the small fry, as he used to say, whose immigrant parents had come to Canada from Russia. Sam made his case. He was seeking capital for expansion, offering a half interest in his family firm for a million dollars. But he also wanted whiskey that he could import from Scotland and blend with his own neutral spirit in order to produce a scotch type whiskey in Canada. Now he's going to appeal to interest here, which is super important when you're trying to get people on to help you. We have an opportunity here to make scotch the predominant drink in North America, Sam said. I don't think you want to pass that up any more than I do. Prohibition cannot last forever. And when it is repealed, you know, large business at the time, in the future rather. And that is mature stocks of whiskey were in short supply, but they're going to be in high demand.

So he's looking way into the future. He's thinking long term here. So he started, I forgot to, I should tell you at this point, his company is called like Distillers Company Limited or something like that, or limited company. And then he buys Seagram's, which is, remember, he's just a retailer at this point. Now he needs the production to make it to not only to import the Scotch whiskey from DCL, but he's also got he's got to do the blending himself. Right. So he buys Seagram's and then just decides to keep the name. Now, after Sam buys Seagram's, the important part is to understand that this is another step up. Right. Now he's not just retail. Now he's making his own. More importantly, he's on the side of the transaction that he wanted to be on.

He's not just selling other people's products. Now he's going to sell his own product. He's going to keep all that profit. Okay, so now the money is going to grow rapidly. And this is even before. It's going to grow even more rapidly, obviously. It's a different level. It's like an order of magnitude larger once Prohibition is repealed.

Prohibition remained in force in the United States, presenting a remarkable opportunity for Canadian entrepreneurs. Wonderfully, his Seagram's is in Canada, I should point that out. Wonderfully situated to take advantage of a huge market, Sam sold to middlemen throughout Canada. From there, liquor entered the American market thanks to the work of a colorful fraternity of rum runners who sent their merchandise by every conveyance imaginable.

So I just want to tell you a little bit about the ingenuity of some of these people. Most went by boat, but cars, planes, carts, and bicycles. Could you imagine smuggling in liquor on bicycles? Like, what is going on here? This is even crazier, though. Enterprising rum runners packed whiskey into hollowed-out logs and hauled them by sled across the international frontier. Hundreds of thousands of bottles went by this means alone.

By the mid-1920s, cash from these sales began to pour into the Bronfman family coffers. This is where we started to make our real money, Sam said. We had relied mostly on the mail order business in Canada and was insignificant by comparison. At this point, we joined the major leagues. Canadians knew that there was no law against the export of alcoholic beverages from Canada, and they believed it was up to America to enforce their own laws. Moving ahead, Sam would tell you to build your life and your business brick by brick. I build brick by brick, Sam liked to say. Ten years after the first foundations were laid in Montreal,

Sam could look with pride at the edifice that he had constructed. Sam and his British partners, that's DECL or DLC, I forgot what it was. Sam and his British partners had conquered some 40% of the Canadian whiskey market. We're eventually going to do the same in the United States. We'll get there in a minute. Now, this was very, very fascinating. It's another, I'm going to tell you about Sam's view on money, and it's very unique, and I think very smart. He took little interest in luxury goods and had no time for interior decoration, cars, resource vacations, and the

like. But on the other hand, he wanted to surround himself with quality. Sam would have agreed with film producer Adolf Zukar when he said, I have always believed if a man surround himself with quality. Sam would have agreed with film producer Adolf Zukar when he said, I have always believed if a man surrounds himself with good things, he sets a standard in his own lives as well as those of others. Uninterested in money for what he could buy, Sam never carried any cash. It was almost impossible to get him to spend money, his son said. But money was nonetheless important. You were somebody if you had money, his son Edgar explains Sam's view. And if you had a lot of money, you were more of a somebody. Parsimonious about small things, likely the imprint of his family's struggle with poverty,

Sam was famous for turning off the lights in his office and complaining about minor extravagances. Sam's nightmare was being poor. As his daughter recalls, his early life poverty was an overriding shame. At 50, my father would shudder when talking about going to school with holes in his pants. He did not want his children to be subject to that. Now, that's the first part of his views on money. That's not the smart part. I mean, that is smart. But what is really smart is he looked at money like a barbell. So he says, essentially, my interpretation of his opinion is spend no money. But if you do, you better spend it on the best.

So he has this idea of go first class. I'm going to tie it into what I just told you. Remember, you're not getting a dollar out of me, but when you do, I better be spending money at the very best. Son, if you got to spend money, Sam told one of his advertising men, go first class. Sam's admonition was hardly restricted to advertising and indeed extended to every nook and cranny of his business. First class in Sam's admonition was hardly restricted to advertising and indeed extended to every nook and cranny of his business. First, first class on Sam's mind meant quality and a concern for quality was meant to govern every phase of his operation from distilling to blending, aging, packaging, advertising and sales. So I'm going to pause there, go back into this a minute. There is no Kindle version of this book, but if there was, I would guess that

if you could, usually I use, I buy, I try to buy both physical and Kindle versions of the books. I prefer reading obviously a physical book, but Kindle is just super helpful in doing research and prepping and essentially being able to search the book. If there's a Kindle version of this book, I think the word quality might be the single word that appears the most. I just needed to tell you that so you understand the mindset of Sam. Back to this. He was a fiend for quality, Edgar contends. That's his son.

Insisting that his father, who was reluctant to spend money in principle, would lavish fortunes to upgrade his equipment or improve his techniques. And he would spurn shortcuts in the interest of higher profits. He would insist that no control of quality could be relaxed, that no exception be permitted, and no concession made for short-term gains. So I have a love, like I'm sure you do, of finely made beautiful products. But I like the idea of spend almost, you know, be frugal, spend as little money as possible on things that don't matter. But things that do matter, spend the most, spend as much as you have. I like that barbell strategy idea. I do not know if it's been explicitly expressed in any other book that i've read so far for the podcast i think it's a really really interesting and good idea and especially the application

sam's application of that that you know i'm gonna i'm gonna hire the best advertising agents something you know i'm gonna have the best uh uh the best materials needed, uh, for the creation of my product, um, everything. I'm going to hire the best people. I just think that's really, really smart. And then, you know, at the same time, don't be wasteful, which is why you see like an older, filthy, rich Sam walking around the office, turning off lights and, and getting mad when you spend money on things that don't matter. Um, I'm going to take a short tangent here. There's a, there's a bunch of supporting casts in the book that I'm eliminating. It's really interesting because this guy named Lou appears a bunch of times, and Sam hates him. But what I found most interesting is that they were enemies that were remarkably alike. Let me just tell you a little bit about this. I'm going to use a source of fiction here. Well, let me just read it to you. It's easier. To outsiders unequated with what lay

behind their quarrel, the two titans of the liquor industry appeared remarkably alike. Both were self-made men of Jewish background. Sam and Lou were tough, autocratic visionaries who had built their business from the ground up, and neither had a modest view of their own achievements. They were also widely known. The novel, The View from the Fortieth Floor, had a leading character that was modeled upon both Sam and Lou. In a revealing scene, the character tongue lashes his sons with a speech that either of the two rivals might have, in reality, have uttered. So they didn't like each other, but they were very similar. This gives you an insight of both their personalities based on an excerpt from this novel. A business is something living, something you put together with your belly and your heart.

It isn't something you put together just with money and brains that you hire. Brains like you, I can hire anywhere. Business is when you want something to be alive because you had a dream about it. We were a triple A credit rating before you pissers were able to button your own pants. So Sam was hard on everybody around him. And he, from the very beginning, he designed the company so his two sons would take over, which they indeed did. I cannot imagine how hard he was on them. But in my mind's eye, when I'm reading this book, I imagine that excerpt from the novels,

it probably happened in real life to a very frequent degree. Let's just put it that way. He was extremely hard, iron-willed person. He just was. So unfortunately, you know, he had a deep love of family. You'll see that soon, obviously. But, you know, he was, he had a set of high standards and he insisted everybody around him meet those standards. So you could imagine when you don't meet those standards,

how he would express himself. Okay. After prohibition is lifted, Sam goes on a buying spree. And I found this was very interesting. Kind of reminds me of the frantic energy or activities similar to when I was reading Warren Buffett shareholder letters, although you'll see maybe not the way Sam negotiated. I do think what he did here was smart because he realized he's got a massive advantage and he's going to make up for it. So it says Sam developed a virtual mania for inventory, meaning he wanted aged scotch because now what he thought was happening was going to happen is happening.

And now he's going to have he's going to essentially corner the market on aged scotch. Aged scotch whiskey, I think is the right term for it. Sam developed a virtual mania for inventory. His every instinct calling for more whiskey to be purchased or produced and put away in barrels. Inventory wins them all was one of his favorite remarks. Sam's post-repeal buying spree began when he picked up the 147-year-old Rossville Union Distilleries.

Just a few months later, he bought the Calvert Distillery. Now, this is how the negotiation for Calvert Distillery went, which is found very surprising, but gives you an indication how valuable and how much he believed that inventory wins all. So this is the person that he was negotiating with, talking about the negotiation. I intended to trade Calvert over a table for the stiffest price I could get out of him, meaning Sam. But he threw it all back to me and said, you set the price and whatever it is,

it's a deal. Sam moved boldly, as he often did when a unique opportunity came his way. Eager to acquire Brown's stock of Scotch whiskey, Sam managed to buy the company in 1935. Brown was the guy doing the negotiation for Calvert Distillery. That tells you why. He's like, listen, just name the price because I want your whiskey. Whatever you think that price is, it's going to be way more valuable in the future. So I'm buying that. And so he says, with this company as our base this is now sam talking we began immediately to

lay down stocks of select scotch whiskeys for maturing a strategy that served him well years later we when despite a worldwide shortage of scotch he was able to draw upon long-aged quality whiskeys okay so there's two things going on in that paragraph you have to know. One, he had massive buffers, financial buffers, inventory buffers. He understood that the world is complex and that there's things that are going to happen that are beyond your prediction and you have no control over. And it goes against a lot of advice. I see entrepreneurs like people give entrepreneurs in present day where it's like they're just making your company more fragile. Study the businesses that survived. They know things that these people in modern day do not. And you could tell they don't know it because, yeah, you might be more efficient or quote unquote more optimized right now. But if shit hits the fan, your company's going away. The people that survived had redundancies. Sam had redundancies. And what are they talking about? A strategy that served him well years later. He's doing stuff that's not for short-term benefit. He's doing stuff that's going to serve him years later.

Served him well years later when despite a worldwide shortage of scotch, he was able to draw upon long-age quality whiskeys. You know what they're talking about? They're talking about World War II when his distilleries and his production is taken over by the Canadian government. So a lot of his other competition,

this destroyed and gave him a huge advantage, destroyed his other weaker competitors because his weaker competitors, they had less inventory and less money. And so now this unpredictable event, World War II comes, right? And if you ever study World War II, it's hilarious to watch the projections of humans.

They're like, oh, it's going to be a few months. We'll be fine. Oh, it'll just be a few, you know, maybe some casualties. No one can predict how long wars are going to last or how many people are going to die. And if they, they tell it same with financial, um, uh, financial crisis thing with anything it's beyond our understanding. So what happened is these people were over-optimized. They were quote unquote, more efficient than Sam. And yet their entire stock was wiped out because they couldn't produce

anymore. And then now they have, they can't age their whiskey. So now they sell lower quality product. Well, Sam is still a higher quality product. He just gave more percentage, gave more of the market that they never recovered from. He's just so,

this guy is so smart. Okay. Um, Sam does, here we go again. Here's another note. Sam does something brilliant. He repositions whiskey as a luxury product.

Uh, so this is still, I'm not to World War II yet. I'll get there. This is in the 1930s. And this is why people said Sam was a marketing genius. Sam supplied a reassuring social context for a once marginal product. He's talking about, he's advertising to Americans after Prohibition.

Practically everything about Seagram's advertising in this period immediately following her appeal was designed to reassure. Here's a sample advertisement from 1934. From the oldest stocks in Canada, Seagram's Limited own and have in storage more than 15 million gallons of fine aged whiskey, the largest supply of anybody in Canada, by the way. Behind it stands the reputation of these world-famous distilleries and the guardianship of the Canadian government. What is he doing? He's appealing to authority there. Distilled, matured, and bottled under the strict supervision of the Canadian government.

That's the end of the ad. Unhappy with the image of whiskey being gulped by poor people in grimy bars, which was how people thought about whiskey, which is weird because I don't think that's how people think about it today and i think sam played a key role in shaping how we view it so it says unhappy with the image of whiskey being gulped by poor people in grimy bars sam wanted to portray it being sipped in the quiet dignity of a london's men men's club by cultured gentlemen now what else happens if you could reposition your product? Not only is it higher quality than the stuff that they're used to getting, but his repositioning his luxury product allows him to charge more, right? We realized from the very beginning that the industry must build itself on a class basis, Sam once said. And there's no clearer demonstration of what he meant

by class than Seagram's brilliant moderation campaign in 1934 with an ad entitled, We Who Make Whiskey Say Drink Moderately. It says, the moderation ad was a brilliant marriage of the themes of responsible consumption and gracious living. Whiskey, before repeal, the text implied, was a raw, harsh, inexpensive product that was often consumed unwisely, in excess. Seagram's whiskey, in contrast, properly distilled and then brought to full mellowness and full wholesomeness by aging, was in the tradition of fine living. So I've told you over and over again, he focused on quality products, but he's also extremely focused on distribution and making sure his sales volume is as good as it possibly can be. So this is a Seagram's company philosophy that is as interpreted to his salespeople. And it really could be an insight into Sam's personality. It says, there was a highly aggressive spirit that Sam helped inspire, meaning within the company.

When you attack, attack vigorously and never give up until you win. Go all out. Do not keep your foot on first base, ready to retreat in case you fail. This is how Sam communicated his desire desire for high standards the best whiskey has not yet been made sam like to repeat to his production people urging them to constantly to improve to upgrade their operations and to set higher standards for themselves now listen to how sam spoke about his own products quality in sam's mind was intertwined intertwined with prestige. This is a direct

quote from him. The selling power of prestige has always been and continues to be the basic idea behind all of your company's advertising, he told shareholders. This ties into how he repositioned the entire whiskey industry, right? So he continues. Every Seagram advertisement is designed primarily to accomplish one thing, to sell Seagrams, and not just whiskey, to sell the fundamental principles of the House of Seagram, the craftsmanship, the traditions, the experiences, the quality, and the prestige that have made Seagram whiskeys famous since 1857. But prestige cannot be acquired quickly. It cannot be bought. It cannot be claimed. It must be earned by the slow process of winning respect and goodwill through fine products and consistently fine advertising. That is a fantastic way to communicate not with external shareholders,

but with the people inside your company that's yeah that's that's good all right um i had this idea that just stumbled out of like it's a thought i've had over and over again um and i i randomly came up with a name for it because i was searching for it's like yeah you need to be a lifetime learner etc etc and i was like really what we all need we need our own personal curriculum. Like the most interesting people, the most successful people in the world, their education doesn't stop after they're done with school.

It continues until they die. And so I just call that a personal curriculum. This is Sam's personal curriculum. And if you think about it, as I read this to you, like Founders is a large part of my personal curriculum. As you read, as you listen to these podcasts and read these books, it becomes a part of your own personal curriculum. Now here's Sam's version of that. Never having completed high school, Sam put great energy into self-education, much of it centering on literature.

For a person without formal education, his literary interests were considerable. Sam was constantly reading. Besides the business papers he brought home every night, he enjoyed good books, biographies, history, and poetry. He could quote reams of poetry by heart. Sam had a genuine respect for people who were learned, as he would call them. This was a category of people he ranked together with, quote, industrialists who had made the top grade and these were uh as as a person's worthy of respect so people that self-educated and people that succeeded in their business were basically the people that he had the most respect for

now we got to the part we're getting to the part of remember he did all this planning he did not know in the 1930s that World War II was coming, but he was prepared. He had a series of redundancies that almost no other competitors did. And this is going to, he's game over, game, set, match. It's over now. You didn't do this. He did. And there's no recovering from it.

It's just really smart. So it says shortly after the outbreak of the war, the Canadian government mobilized distillers. They ordered them to convert to the production of alcohol that was used in the manufacture of military goods. Sam needed no coaxing. He wanted to do this. He was an extremely patriotic person. Think about all the opportunities that the country he emigrated to gave him, you know? It says he told shareholders that Seagram became an essential war industry. So as you can imagine, if they're making stuff for the war, they can't make their product. That's why it was so important for him to have these huge, massive reserves. Canadian distilling, this is Sam talking, Canadian distilling had taken its place shoulder to

shoulder with major industries like steel, automobile, radio, transportation, communications, and other in the ranks of those who were doing their war tasks quickly, quietly, and efficiently. Seagram scientists, and that also gives you an idea of what he valued, quick, quiet, efficient work. Seagram scientists were among the first to adapt whiskey distilleries for war production. Sam tirelessly spun off ideas to assist the war effort. Seagram advertisements boosted war bonds and stamps. They didn't have to do this, but this is why he's doing this. And the company produced and distributed posters to raise morale on their own money. The purpose of these programs was not merely to improve productivity, but in Sam's words, was to create a sense of responsibility as citizens in a world

which need now more than ever well-informed citizenship and leadership. Okay, so switching gears here, I came across this short anecdote I think is good advice on how, if you ever have to deal with a person like Sam in your life, how to deal with them. And it comes from an interaction that Sam has with one of his young employees. This is much later in his life. This is after he's within. So I didn't finish that thought. Let me get there. So I'll get to this part in a minute.

But what happens is Sam is patient. So the repeal is done. He waits a year before he enters the market and starts selling. Because what happens is all the people that did not have his same strategy they unleash on the american market cheap low quality not aged whiskey so he lets the american publisher drink that in a year in addition to a huge advertising push then he brings out he starts releasing these aged whiskey he's had for almost a decade and what happens the quality goes through the roof or excuse me the quality is so high so much higher in this competition sales go through the roof what's

so interesting is the advertising is so effective and remember it's a luxury product it was more expensive as competitors right that um there'd be uh like surveys throughout america about what kind of whiskey you drink and the percentage of people that lied in the survey, more people than were buying the whiskey said they only drink Seagram's because they wanted to be associated with that brand. I thought that was really, really fascinating. So what happens is he's well-capitalized. He's constantly expanding. At this point, he's got distilleries all over the world um and then the american market just it just blows up you know um they're doing hundreds of millions of dollars a year in sales so that's the final step in this you know staircase of like opportunity that i've been

trying to explain to you all right so this is how to deal with a person like sam robert showed him a new series of ads one day aimed at blue-collar workers. I don't like them, Sam said curtly. Robert replied, they weren't designed to be liked by multi-millionaires. At that point, Robert saw Sam's face flush with anger. You think you're pretty goddamn smart, don't you? He growled. Mr. Sam, Robert replied, if I wasn't smart, I wouldn't be working for you. Sam looked at his employee, smiled, and said, okay, run them. I was there 13 years after that, Robert said, and I never had a minute's problem with that man. When you run into these strong, overpowering, highly driven people, maybe you're partnering with them, maybe you have to work for them. They don't respect pushovers. So you have to push back.

It's like, yeah, he likes that response. Okay, this is another thing that blew my mind. Sam found success outside of the alcohol business as well. So in 1963, Sam, I think, let's see. This is towards the end of his life. He dies, I think, let's see. This is towards the end of his life. He dies, I think, in the early 1970s, maybe 1972, somewhere around there. So it says, in 1963, Sam made his biggest plunge

with the purchase of Texas Pacific, which is a major supplier or manufacturer of coal and oil. There was no question that this acquisition was a remarkable financial coup. So I want to share some numbers with you. With a Seagram working capital of $382 million and earnings of $34 million a year. Whoa. This is in 1963. Earnings of $34 million a year. Sam borrowed $75 million from institutional investors in 25-year promissory notes. He put $50 million of that money as a

down payment on the purchase price of $266 million and undertook to pay the balance out of future revenues. So he borrowed $75, put $25 million in the bank, put $50 million down as a down payment, and he's got the balance on a $266 million purchase price. Okay. Now that is in 1963, 12 years later. By 1975, Texas Pacific had paid off its debt. While in the process, its oil and gas reserves expanded phenomenally. The company proved to be one of Sam Schroeder's moves. Bought with only $50 million in borrowed cash, it was sold by his heirs in 1980 for $2.3 billion. So bought it for $266,000, sold what is that 17 years later by his heirs

for $2.3 billion. Generational inflection point. So now I'm going to move ahead towards the end of his life. Sam found another historical project satisfying, a short, attractive company history entitled From Little Acorns, which Sam wrote and published along with the company's annual report in 1970. The book took its title from David Everett's poem, which closed with the words, large streams from little fountains flow, tall oaks from little acorns grow. Sam liked the thought, and towards the end, he reflected publicly on his own humble origins from time to time, as he never would have done before when he was on his way up.

Sam wrote a dedication for his son Charles, explaining the additional symbolism that he saw in the picture of an oak tree. Now this is Sam writing. This story of the building of our company is also partly the story of my life, but with one of the lessons of my dear parents, to be steadfast and true, and to build my life brick on brick. The symbol to the left is of the tree firmly planted with strong roots in the ground and growing ever upwards.

The branches denote our children and grandchildren, also the people of our organization spread around the world. The trunk is your mother, and I pray also represents you and your wife and the branches of your children, and someday please God your grandchildren. With all my love, Papa. I will leave the story there. If you buy the book using the link in the show notes, you'll be supporting the author and the podcast, and I'll talk to you again soon.