Founders - #148 John D. Rockefeller (Autobiography)

Starting point is 00:00:00 I still remember. In some measure, I've been associated with the most interesting people our country has produced, especially in business. Men who have helped to build up the commerce of the United States and who have made known its products all over the world. These incidents, which come to my mind to speak of, seemed vitally important to me when they happened, and they still stand out distinctly in my memory. That is a 70

Starting point is 00:00:27 year old John D. Rockefeller writing in his autobiography, which he titled Random Reminiscences of Men and Events. And the structure of the book is unique. This will be random. And that was intentional. Here's John telling us about how he compiled the book. When these reminiscences were begun, there was, of course, no thought that they should ever go as far to appear between the covers of a book. They were not prepared with the idea of even an informal autobiography. There was little idea of order or sequence and no thought whatsoever of completeness. And it's actually the randomness of this book that I found so interesting. One of the benefits of reading autobiographies is they're further down the path of life than we are at the time they're writing.

Starting point is 00:01:15 And they can tell us what's coming. And also, you can also see what was important after the fact, after they've had many decades to go back and reflect on this. I've actually just went on a walk with a friend the other day and he was asking, he's transitioning. He's been in one industry for almost for over a decade. And he's thinking about doing something new. And he's like, do I have any, do you have any books to, to recommend that I read? And I was like, well, really just read any biography or autobiography, like whoever sticks out. But the one book recommendation I gave him, because the day before I had reread all my notes and highlights on Sam Walton's made in his autobiography made

Starting point is 00:01:51 in America. And I said, Listen, Sam Walton's long dead. But if you could bring him back to life, and you could spend a weekend with him just picking his brain about everything that he learned over his five decade plus career, like what would you pay for that experience? And for the answer, if that was even possible, people would pay many, many thousands of dollars for that experience, if not more. And so the point I was making is like you can't bring him back to life, but you can read his thoughts.

Starting point is 00:02:21 He wrote all the most important things that he learned in his career, wrote them down in a book. And for $6 or $10, you can pick up that book and spend a weekend learning directly from Sam Walton or anybody else. So the way I want you to think about this podcast today is really, it's just, it's a bunch of random thoughts that John D. Rockefeller had, but he's speaking directly to you and I. And I think there's just something fascinating about that idea. Charlie Munger talks about this, the reason he reads so many biographies. He says he makes friends of the eminent dead. So he becomes intimate friends by reading the thoughts and the words of some of the smartest and greatest minds in history. Okay, so let me jump into the book. The first thing, I was actually

Starting point is 00:03:01 even surprised that Rockefeller wrote an autobiography to begin with. If you remember all the way back in Founders No. 16, I covered it's probably the most important biography ever written about him. It's called Titan. It's got to be one of the best selling business biographies of all time. And a main theme of that book is that Rockefeller really prioritized silence and using the element of surprise and not telling people what he was up to. And he talks about that in the beginning of this book. So let me just read this section to you. It has not been my custom to press my affairs forward into public gaze. In Titan, he is quoted as saying success comes from keeping the ears open and the mouth closed. The way the aphorism that I use to express this point

Starting point is 00:03:45 is bad boys move in silence. And I actually want to give you an example from the early career of John D. Rockefeller, of him using this principle. This is actually from the book that I read for Founders No. 31, which is called Conspiracy. And the author is Ryan Holiday. He's given examples of other people throughout history

Starting point is 00:04:02 that use silence to their advantage. So it says, there's a story about a young John D. Rockefeller who found himself stuck with bullying corrupt business partners. He wants to break with them, but he can't because they control the votes. They're squeezing his business to death. They abuse him. They talk about forcing him out. What is he to do? Quietly, Rockefeller lines up financing from another oil man and waits. Finally, there's a confrontation. One of them tries to threaten him. You really want to break it up? Yes. He calls their bluff. They go along knowing that the firm's assets will have to go to auction. They're sure they'll win. Rockefeller doesn't have that kind of money. He's I think like 20, 25 at the time. He bids. They bid. He bids. They bid. Rockefeller wins the auction. A few weeks later, the newspaper announces his new partnership, revealing who had backed his bid and the news that Rockefeller is at 25, an owner of one of the largest refineries in the world on that day his partners this is a direct

Starting point is 00:05:05 quote from rockefeller now woke up and saw for the first time that my mind had not been idle while they were talking so big and loud he would say later they were shocked they'd seen their empire dismantled and taken from them by the young men they the young man they had dismissed rockefeller had wanted it more. And that tactic, just using silence, not telling people what you're up to, is something he used for his entire career. There's another story in Titan where he's buying out, he's attempting to buy out one of his competitors. And he says something along the lines of, I have ways of making money that you know nothing about. It's kind of spooky when you feel how ruthless and relentless this guy was.

Starting point is 00:05:43 One of the main themes of this book, though, let's go back into a 70-year-old version of Rockefeller, is he's constantly talking, and this is what I find so interesting, talking to people that are much older than you, because they have realizations that you might not know at this point in your life. And one thing that he mentions over and over and over again in his book is the importance of relationships. Relationships make life better. He does not go and he says, this is a main theme, he repeats it over and over again.

Starting point is 00:06:11 And he's like, I can't possibly reflect on every single relationship, but I am going to give you some examples. So he says, it would have been a pleasure as well as a satisfaction to dwell with some fullness upon the stories of daily and intimate companionship which existed for so many years with my close partners and associates. But I realized that while these experiences have always been to me among the great pleasures of my life, a long account of them would not interest the reader. And thus it happens that I have but mentioned the names of only a few. He starts hitting on this point again over and over again, how important relationships are important over and over again. He says that in looking back over my life, the impressions which come most vividly to my mind are mental pictures of my old associates. He's going to give us an

Starting point is 00:06:53 example. This is actually kind of funny story of his friend. This guy's name is John Archibald. John had always had a well-developed sense of humor. And on one serious occasion, when he was on the witness stand, he was asked by the opposing lawyer, Mr. Archibald, are you a director of this company? Archibald replies, I am. What is your occupation in this company? He promptly answered to clamor for dividends, which led the learned counsel to start afresh of another line of questioning.

Starting point is 00:07:32 In Titan, they always talk about him burying his individuality in the company, which is really surprising because he was by far the most notorious, most famous of all his partners. But he was very, all of his partners says he doesn't use the word I ever. He always talks about we. There's actually a quote from ever. He always talks about we. Here's actually a quote from Titan. He says, having created an empire of unfathomable complexity, he was smart enough to see that he had to submerge his identity in the organization. And this is what Rockefeller said about that. He says, don't say that I ought to do this or that. We ought to do it.

Starting point is 00:08:00 Never forget that we are all partners. Whatever is done for the general good is done for the good of us all. And so we see that theme. We see that idea again in this autobiography. He says, And you might be wondering, like, why is he reflecting so much on his past relationships? And he's at the age where everybody he knows is dying. And so this is him continuing on the memories of the early days in business, the associations, the friendships he made. He says, I've reached the age when hardly a month goes by, and sometimes I think hardly a week, that I am not called upon to send some messages of consolation to a family with whom we've been connected and who have met with some fresh bereavement.

Starting point is 00:08:56 Only recently, I counted up the names of the early associates who have already passed away. Before I had finished, I found the list numbered some 60 or more. These were faithful and earnest friends. We had worked together through many difficulties and had gone through many severe trials together. So as these people pass on, he's constantly reflecting back on it. And he says like some of the happiest times, our most satisfying times in his life is the early days when he was young,

Starting point is 00:09:24 when their future was in front of them. This is not unique to Rockefeller. I find that when you're reading the autobiographies, you know, most autobiographies are written shortly before they pass on and they almost universally have this. So if you're in that point in your life, we're just starting out, we're still building, which is, you know, the vast majority of us, write down as much as you can, catalog what is happening to your experiences, you're going to want, as you survive, and many decades into the future, you're going to want to relive these experiences. Let me read this quote, I just recently reread my highlights for Phil Knight's great autobiography, Shoe Dog. And he talks about this too.

Starting point is 00:10:07 This is a really powerful paragraph. Let me read this to you. I struggle to remember. I close my eyes and think back. But so many precious moments from those nights are gone forever. He's talking about the early days of Nike. Numberless conversations. Breathless laughing fits.

Starting point is 00:10:27 Declarations, revelations, confidences. They've all fallen into the sofa cushions of time. I remember only that we always sat up half the night cataloging the past, mapping out the future. I remember that we took turns describing what our little company was and what it might be and what it must never be. How I wish on just one of those nights I'd had a tape recorder or kept a journal. So that sentiment from Phil Knight is very much present in the autobiography of John D. Rockefeller as well. And he's going to talk a little bit about that now. He says, we had discussed and argued and hammered away at questions until we came to agree. And it has always been a happiness to me to feel that we had been frank and that he arrived, he sought out consensus as a way of making sure I'll spend as much time as possible together, talking this out, hammering this out, as long as we're honest and frank with

Starting point is 00:11:33 one another, so that we can all come to agreement. And once we make an agreement, we'll commit and then we'll move forward together. So he's going to give an example of using a tactic. I don't even know if you'd call it a negotiation tactic but at the time they want to spend three million dollars improving their business it was still a large amount of money at this point in us in in their business's history and one of the older partners refuses so essentially rockefeller's telling us it's like this is how you can persuade someone to cooperate with you our old partner had made up his mind not to yield, and I can see him standing up in his vigorous protest, with his hands in his pockets, his head thrown back as he shouted, no.

Starting point is 00:12:15 It's a pity to get a man into a place in an argument where he is defending a position instead of considering the evidence. His calm judgment is apt to leave him, and his mind for the time being closed, and only obstinacy remains. As soon as the argument had calmed down, and when the heat of our discussion had passed, the subject was brought up again. I had thought of a new way to approach it. I said, I'll take it and supply this capital myself. If the expenditure turns out to be profitable, the company can repay me. And if it goes wrong, I'll stand the lost. That was the argument that touched him. All his reserve disappeared and the matter was settled when he said, if that's the way you feel about it,

Starting point is 00:12:56 we'll do it together. I guess I can take the risk if you can. A few times in the book, he mentions the importance of speed, of moving quickly. He says, we went pretty rapidly in those days. He's still talking about the early days of Standard Oil. We had with us a group of courageous men who recognized the great principle that a business cannot be a great success that does not fully and efficiently accept and take advantage of its opportunities. He's going to talk about another relationship. This is one of his main partners. This is Henry Flagler. And he's talking about the fact that Henry's not the kind of person.

Starting point is 00:13:30 He kept working way out long after that he needed to. He just had an intense inner desire to accomplish things. So it says the part played by one of my earliest partners, Mr. Flagler, was always an inspiration to me. He invariably wanted to go ahead and accomplish great projects of all kinds. He was always on the active side of every question. And to his wonderful energy is due much of the rapid progress of the company in the early days. So again, he's echoing the need for speed. It was to be expected of such a man that he would fulfill his destiny by working

Starting point is 00:14:05 out some great problems at a time when most men want to retire to a comfortable life of ease. So this is the career Henry Flagler had after his association with Standard Oil. That would not appeal to my old friend, meaning just a comfortable life of ease, just sitting down and not living your life to the full potential. He undertook single-handedly the task of building up the east coast of Florida. He was not satisfied to plan a railroad from St. Augustine to Key West, a distance of more than 600 miles,

Starting point is 00:14:31 which would have been regarded as an undertaking large enough for almost any one man. But in addition, he has built a chain of superb hotels to induce tourists to go to this newly developed country.

Starting point is 00:14:42 This one man, by his own energy and capital, has opened up a vast stretch of the country so that the old inhabitants and the new settlers may have a market for their products essentially what he's really doing he's he's he's rockefeller right now is speaking to the power of the of one individual a formidable individual no doubt but he's really telling us, like, if you have one person driving extremely hard and he can accumulate the money he needs, the help he needs, he can accomplish a lot of things. And it doesn't matter what age you're at, he's doing this in what many people consider quote-unquote retirement age. And he has undertaken and nearly completed a remarkable engineering feat in carrying his road on the Florida Keys into the Atlantic Ocean to Key West, the point that he set out to do years ago. Practically all this, and then he's repeating himself here, practically all this has been done after what most men would have considered a full business life.

Starting point is 00:15:40 And now this is where he starts remembering and sitting down and telling us the early days of his relationship with Henry Flagler. He clearly longs for this this period of time in his early life. He says it was a friend. It was a friendship founded on business, which Mr. Flagler used to say was a good deal better than a business founded on friendship. And my experience leads me to agree with him. For years and years, this early partner and I worked shoulder to shoulder. Our desks were in the same room. We both lived on Euclid Avenue, a few doors apart. We met and walked to the office together. We walked home to lunch, back again after lunch, and home again at night. On these walks, when we were away from the office interruptions, we did our thinking, our talking, and planning together.

Starting point is 00:16:27 So this sounds very similar to what Phil Knight was referencing. Then Rockefeller goes on to talk about the things that he learned from Henry Flagler. And the note I left myself and the way I would really summarize the main point of this paragraph I'm about to read to you is always do your best. Another way to think about this is how you do one thing is how you do all things. Another thing about Mr. Flagler, for which I think he deserves great credit, was that in the early days he insisted that when a refinery was to be put up, it should be different from the flimsy shacks, which was then custom to build in the early refinery industry.

Starting point is 00:17:01 And why were they, why would they half-ass things? Why would they build, you know, such like shanty like structures everyone was so afraid that the oil would disappear that the money expended in the buildings would be a loss so they're trying to save as much money that this was the sort of thing mr flagler objected to and really as i'm i was as i was reading this part i was like well the thought that popped in my mind is it's just really helpful to have people in your life who hold you to such a high standard. While he had to admit that it was possible that the oil supply might fail and the risk of the trade were great, he always believed that if we went into the oil business at all, we should do the work as well as we knew how. That we should have the very best facilities that everything should be solid and substantial in that nothing should be left undone to produce the finest results and he followed his convictions

Starting point is 00:17:52 of building as though the trade was going to last and his courage and acting up to his beliefs laid strong foundations for later years and as he's transitioning from what he remembers about his relationship with henry flagler he's about to tell us about another friend. In between, though, he says something that I thought was interesting. He says, perhaps they, meaning these stories, will not be useless if even tiresome stories make young people realize how, above all other possessions, is the value of a friend in every department of life without any exception whatsoever. He says it over and over again. Friendships are valuable. You realize this more and more the older you get. Do not wait until you're my age to adhere to this advice. Here's another example of friendship. One special friend

Starting point is 00:18:38 I had was S.V. Harkness, and from the first of our acquaintance, he seemed to have every confidence in me. One day, our oil warehouses and refinery burned to the ground in a few hours. They were absolutely annihilated. This is the problem of fire. He talks about a lot in the early days of the refining industry. I guess this occurred quite frequently. Though they were insured for many hundreds of thousands of dollars, of course, we were apprehensive about collecting such a large amount of insurance and feared it might take some time to arrange.

Starting point is 00:19:14 The plant had to be built right away and it was necessary to lay the financial plans. Mr. Harkness was interested with us in the business and I said to him, I may want to call upon you for the use of some money. I don't know that we shall need it, but I thought I'd speak to you in advance about it. He took in the situation without much explaining on my part. He simply heard what I had to say and was a man of very few words. All right, JD, I'll give you all that I have. This is all that he said, but I went home that night relieved of anxiety. As it turned out, we received the check from the insurance company for the full amount before the builders required the payments. And while we didn't need his money, I shall never forget the whole sold way in which he

Starting point is 00:19:58 offered it. Spread throughout the entire book is just explicit suggestions, recommendations, ideas for business. This one is be prepared. You always need to have a buffer. We were accustomed to prepare for financial emergencies long before we needed the funds. This is another one. I would summarize it that work on what interests you, be good at it, but don't let it take over your life. But I fear I'm telling too much about banks and money and business. I know of nothing more despicable and pathetic than a man who devotes all the waking hours of the day to making money for money's sake. If I were 40 years younger, I should like to go into business again, for the association with interesting and quick-minded men was always

Starting point is 00:20:42 a great pleasure. But I have no dearth of interest to fill my days. And so long as I live, I expect to go on and develop the plans which have been my inspiration for a lifetime. During all the long period of work, which lasted from the time I was 16 years old until I retired from active business when I was 55, I must admit that I managed to get a good many vacations of one kind or another because of the willingness of my most efficient associates to assume the burdens of the business, which they were so eminently qualified to conduct. So what he's saying there is I worked hard, but I also took a lot of breaks.

Starting point is 00:21:17 And I also built a an organization that could survive that was not that was not run by just one person, that it could survive as we needed to rest and recover and then come back to work. Another piece of advice directly from John D. Rockefeller, you need to pay attention to details. He repeats this over and over again, not just in Titan, but also in this book. I learned to have great respect for figures and facts, no matter how small they were. And that's something he picks up from a very young age. I would say it's his first job. This is how he got his first job at 16. And it was very interesting hearing him discuss the anxiety about and the the the anxiety that comes about because you're uncertain about how your future like what's what does life have in store for you? And again, I think this is just universal. It doesn't it's John D. Rockef It's almost every single book. The one that keeps coming to mind because it's recent when I read that book,

Starting point is 00:22:09 Hard Drive on Bill Gates, just the idea, you know, we think of Bill Gates, richest person, one of the richest people in the world, hugely successful, but you know, early days of college, might've been end of high school. He was laying in bed. I think the quote was like, I'm being a philosophically depressed guy, not knowing what to do with his life. You know, it's very helpful to realize that people go through this. So he says, but how to get a job? That was the question. I tramped the street for days and weeks asking merchants and storekeepers if they didn't want a boy. But the offer of my services were met with little appreciation.

Starting point is 00:22:42 No one wanted a boy and very few showed any overwhelming anxiety to talk with me on the subject. At last, one man on the Cleveland docks told me that I might come back after the noonday meal. I was elated. It now seemed that I might get a start. I was in a fever of anxiety, lest I should lose this one opportunity that I had unearthed. When finally, at what seemed to me the time, I presented myself to my would-be employer. We'll give you a chance, he said, but not a word passed between us about pay. That was very interesting. He was so desperate to work.

Starting point is 00:23:20 He accepted a job and didn't know how much he was going to get paid. This was September 26th, 1855. I joyfully went to work. He accepted a job and didn't know how much he was going to get paid. This was September 26, 1855. I joyfully went to work. So this job, he's working in the bookkeeper's office at a produce company. And this is, it teaches him a great deal, but this is also where he realizes, hey, you have to pay attention to even the smallest details. As I look back upon this term of business apprenticeship, I can see that its influence was vitally important in its relations to what came after. Gradually, the auditing of accounts was left in my hands. All the bills were first passed upon by me, and I took this duty very seriously. And now he's going to compare and contrast the way that he approached his work with how the

Starting point is 00:24:03 average person, this person he's working with, how the average person might approach their work. And it comes down to, you know, just because you send me a bill, I'm not going to pay it right away. I'm going to be careful. I'm going to make sure that every penny is accounted for. And again, this is not the normal, this is not the way normal people approach their work. He merely, this is his coworker, he merely glanced at this bill, turned to the bookkeeper and said, please pay this bill. As I was studying the same bills in great detail, checking every item, if only for a few cents, and finding it to be greatly to the firm's interest to do so, this is the most important sentence of this whole section, this casual way of conducting affairs did not appeal to me. I had trained myself to the point of view doubtless held by many young men

Starting point is 00:24:46 in business today, that my check on a bill was the executive act, which released my employer's money from the till and was attended with more responsibility than the spending of my own funds. So I have a responsibility greater to something greater than myself. And that's the success of the company I'm working for. I made up my mind that such business methods could not succeed, meaning the idea of just here, hand the bill, just pay it. It's like, I'm not doing that. This is the concluding thought to this section. The training that comes from working for someone else to whom we feel a responsibility, I am sure, was a great value to me. And now we get to the point where he starts his first business.

Starting point is 00:25:23 And again, he's writing these words 50 years after this happens. And he's still fired up about this. A favorable opportunity had presented itself for carrying on the same business on my own account. So I resigned my position. It was a great thing to be my employer. And remember, like Rockefeller is a very silent, laconic man. The next sentence, he actually uses an exclamation point. That's not normal. So it tells you how important this was. Mentally, I swelled with pride. I was a partner in a firm with $4,000 in capital.

Starting point is 00:25:58 As I left that bank, a lot of his early funding, he came from just having, you know, bank loans, small business loans from the local bank. As I left that bank, my elation can hardly be imagined. I held up my head. Think of it. A bank had trusted me for $2,000. Another exclamation point. I felt that I was now a man of importance in the community. I would just say that we probably all want this feeling, don't we? You want to feel that your work is important and valued by others. He just, you know, it completely inflated. Not that he ever had a lack of self-confidence, but knowing that other people believe in what you're doing so much so that they're willing to lend you money. I could

Starting point is 00:26:38 see how, you know, he's holding his head up high. He's like, I'm a respected person in the community. I'm not going to let these people down. I'm going to work even harder. And it's a reminder that, you know, this guy goes on to build maybe the most profitable company of all time. It's got to, if not the most profitable company of all time, one of them. And yet in his early days, he needed help. He said for long years after the head of this bank was a friend indeed, he loaned me money when I needed it. And I needed it almost all the time and all the money he had so he gets money from the bank his father loans him money at 10 interest that's that's mentioned a bunch of times but this is a story about stick this is a story of the

Starting point is 00:27:16 early days of his business uh when he's just running this is before he gets into the oil business by the way um but it really is he's is. I think he's telling us a story about the importance of sticking to your principle. And he says, I well remember about this time, an example of how hard it is sometimes to live up to what one knows is the right business principle. So let me actually stop right there too. Throughout the autobiography, he talks about this idea that there's certain rules of trade or laws of trade. I think it's how he says that there's certain principles of business that never go away. They don't change, and that you should adhere to them. I had a funny thought when I was reading this because I remember Kobe Bryant saying one time, he was talking about all he learned from Michael Jordan, but he felt that people were looking at the same example he was, and they were missing the important points. So he says, I grew up watching Michael Jordan play.

Starting point is 00:28:10 My generation saw the highlights. They saw the fancy stuff. What I saw was his footwork. I saw the spacing. I saw the timing. I saw the fundamentals of the game. So just like Kobe was not allowing himself to be distracted by the fancy highlights, he was more interested in picking up the fundamentals the stuff that he could take from jordan and apply to his own game i feel the same thing like when you read biographies you can do the exact same thing because they're telling you explain many times explicitly so hey don't make the same mistake make sure hey i found this good idea make sure you do that and they say it over and over again uh rockefeller is going to be the same way and i'll go into he mentions a bunch of them and I'll go into more detail later. Let's go back to this story about how difficult it was for sticking to his principles, especially because he didn't have an abundance of money right now.

Starting point is 00:28:53 Not long after our concern, which is his business, was started, our best customer, that is the man who made the largest consignments, asked that we should allow him to draw in advance on current shipments before the produce or a bill of lading were actually in hand. We, of course, wish to oblige this important man, but I, as the financial member of the firm, objected, though I feared we should lose his business because they need the money first, right? The situation seemed very serious. My partner was impatient with me for refusing to yield. And this dilemma i decided to go personally to see if i could not induce our customer to relent so okay i have a disagreement with my partner i'm going to hold firm on this let me see if i can get this customer to see things my way to realize hey this is a bad idea uh this is you know goes against one of our principles

Starting point is 00:29:41 in business it's not smart financially for us it It puts us at a risk. I understand you're the largest one, but you see things my way. Now, this is a very, very interesting turn of events here. Naturally, he was very much disturbed at the possibility of losing our most valued customer. But I insisted that we stick to our principles and refuse to give the shipper the accommodation he had asked. What was our surprise and gratification to find? So he goes to, I skipped over a part, I shouldn't have left out. He goes and talks to the customer

Starting point is 00:30:11 and the customer is kind of mad. He gets mad. Rockefeller fails to convince him, but look what happens next. This is what was so interesting. What was our surprise and gratification was to find that he continued his relations with us as though nothing had happened and did not again refer to the matter. They wind up finding out he was testing them.

Starting point is 00:30:32 I have since believed that he originated the suggestion to tempt us to do what we stated we did not do as a test. And his story, meaning when he told others about this, about our firms, that our firm stands for what we regarded as sound business principles, did us a great good. And so not surprisingly, Rockefeller being extremely diligent, extremely hardworking, watching his cost, dedicating almost all of his time to business at this point in his life. This is his inner, I found some really interesting is this is his inner monologue when he first started succeeding. Listen to what he's talking to himself. As our successes began to come, I seldom put my head down upon the pillow at night without speaking a few words to myself in this wise. Now, this is what he's telling himself. Now, a little success. Soon you will fall down. Soon you will be overthrown because you've got

Starting point is 00:31:23 a start. You think you're quite a merchant. You know, his ego is growing a little bit with his success. Look out or you will lose your head. Go steady. These intimate conversations with myself had a great influence on my life. I was afraid I could not stand my prosperity and tried to teach myself not to get puffed up with any foolish nonsense. So let me go ahead and condense that down to an aphorism I love. You go to sleep on a win and you're going to wake up with a loss. And so Rockefeller saying that he's like, yeah, you have a little success now. Don't let it get to your head. Don't stop doing what is actually causing the success. Don't let

Starting point is 00:32:00 your foot off the gas. Keep going. Not only did he test himself, he was tested by other customers, but his father was testing him. And this is very interesting. And I don't think he liked this, though. But essentially, what his father was doing for him was making sure that Rockefeller was going to be prepared for the unexpected. Okay, so his father's loaning him money for the business at interest. And sometimes he'd call in these loans unexpectedly. Occasionally, he would come to me and say that if loans unexpectedly. Occasionally, he would come to me and say that if I needed money in the business, he would be able to loan me some. And I always needed capital. And I was glad indeed to get it even at 10% interest. Just at the moment

Starting point is 00:32:36 when I required the money most, he was apt to say, my son, I've got to have that money, meaning he wants to loan back. Of course, you shall have it at once, I would answer. But I knew that he was testing me. And then when I paid him, he would hold the money without its earning anything for a little time and then offer it back later. I confess that this little discipline should have done me good and perhaps did. But while I concealed it for him, the truth is I was not particularly pleased with his application of tests to discover if my financial ability was equal to such shocks. This is him bringing up the importance of speed again. You need to move

Starting point is 00:33:11 quickly, especially in the beginning. This is the beginning of his refining business. In those early days, I was a good deal of a traveler, visiting our plants, making new connections, seeing people, arranging plans to extend our business, as is often called for very rapid work. And something also interesting to note is, you know, he's jumping into a brand new speculative industry. Most people thought he was silly. Most people thought that he would surely fail. So it says, to give a true picture of the early conditions, one must realize that the oil industry was considered a most hazardous undertaking, not altogether unlike the speculative mining undertakings we hear so much of today.

Starting point is 00:33:55 I well remember my old and distinguished friend warning me that it was worse than folly to extend our plants and our operations. He was sure we were running unwarranted risks, that our oil supply would probably fail, that demand would decline and he with many others sometimes i thought almost everybody prophesied ruin and i think that that section is a great illustration of one of his main personality traits it's just this is indifference to the opinions of other people he's he's comfortable thinking about things uh working himself uh through to a judgment that he's willing to bet his career on. And he's going to move forward if he thinks it's a good idea. And you don't, it doesn't really bother him. Something that was also interesting, essentially, he's like, I had no idea how big we could get.

Starting point is 00:34:36 All I really focused on was the next step and then doing a good job. And you do that over a long enough time, and you'll usually get what you deserve. So he says, none of us ever dreamed of the magnitude of what proved to be the later expansion. We did our day's work as we met it, looking forward to what we could see in the distance and keeping well, keeping well up to our opportunities, but laying our foundations firmly. More advice from Rockefeller. Summary of this is don't rest on your laurels. Your position is not permanent. He's talking about the people that are,'s retired at this point obviously and the people running

Starting point is 00:35:08 standard oils like our is standard oil success permanent no of course it's not he says it's the present managers of the company were to relax efforts allowing the quality of their product to generate or to treat their customers badly how long would their business last? About as long as any other neglected business. This part is just, it was interesting, maybe humorous to me. It's really just a reminder. There's always new opportunities. And another illustration of this point that you and I talk about all the time that, you know, history doesn't repeat human nature does. One often hears the men of this new generation say that they do not have the chances that their fathers and grandfathers had. You hear that exact same thing today. He is writing this in 1909.

Starting point is 00:35:51 And this is going to be another exclamation point. How strongly he feels that these people are wrong. How little they know of the disadvantages from which we suffered. In my young manhood, we had everything to do and nothing to do it with. We had to hoe our own paths along new lines. We had little experience to go on. Capital was most difficult to get. Credit was a mysterious thing.

Starting point is 00:36:17 Whereas now we have a system of commercial ratings. Everything was then haphazard and we suffered from a stupendous war and all the disasters which followed and as you can imagine somebody that has that mind that mindset that um that disposition this is just a quote directly from him i am naturally an optimist and now he's going to describe a mindset that him and his partners had in the early days they were inspired by the achievements of others they They were not jealous. They thought, hey, if somebody else can accomplish something, I can do that too.

Starting point is 00:36:49 Nor do I admit that we were so small-minded a people to be jealous of the success of others. It was the other way. We are the most extraordinarily ambitious, and the success of one man in any walk of life spurs the others on. It does not sour them. So this is Rockefeller on the difference between the way he ran his business and the way some of his competitors did.

Starting point is 00:37:10 This first sentence is about the mistakes that his competitors are making. We had the type of man who really never knew all the facts about his own affairs. Many kept their books in such a way that they did not actually know when they were making money on a certain operation and when they were losing money. This unintelligent competition was a hard matter to contend with. Good old-fashioned common sense has always been a mighty rare commodity. When a man's affairs, he's going to tell us about a common mistake that his competitors were making. When a man's affairs were not going well, he hates to study the books and face the truth and now he's going to tell us what he did and what his partners did the men who managed a standard oil company kept their books intelligently as

Starting point is 00:37:54 well as correctly we knew how much we made and where we gained or lost we tried not to deceive ourselves and he's going to keep pounding on this. I'd say that his main point is like, if you have troubles, you're better off meeting them head on. Don't ignore them because they're not going to go away. But in between, before I go continue that theme up, he had this sentence that I referenced earlier. He said, my ideas of business are no doubt old fashioned, but the fundamental principles do not change from generation to generation. All right, so going back to taking your troubles head-on, I have spoken of the necessity of being frank and honest with oneself about one's own affairs. Many people assume that they can get away from the truth by avoiding thinking about it, but the natural law is inevitable, and the

Starting point is 00:38:42 sooner it is recognized, the better. And something he repeats in the book several times is you don't deceive yourself by trying to take shortcuts. You've got to build a strong foundation for your business, for your life, and that takes time. And if you do that correctly over the long term, you're going to gain a level of efficiency that the people that are looking for shortcuts and the fastest way and kind of cutting quarters are just never going to enjoy. So it says, sometimes I feel that we Americans think we can find a short road to success. And it may appear that often this feat is accomplished, but real efficiency and work comes from knowing your facts and building upon that sure foundation. Going back to his idea of, you know, unintelligent competition, he references. So you might be asking yourself, like, why did he have so much competition? Well, in the early days of oil refining, easy profits appear and on cue, the masses follow. And really the section, the main point of this section I wrote down is do hard things so that you have no competition. The cleansing of crude petroleum was a simple and easy process. And at first, the profits were very large. Naturally, all sorts of people went into it.

Starting point is 00:39:52 The butcher, the baker, the candlestick maker, all began to refine oil. And it was only a short time before more and more of the finished product was put on the market than could possibly be consumed. And so a lot of these people didn't really know what they're doing. They're producing at a loss. Eventually they're going to go bust. And it leads him to his next point here that, you know, building this business that I made was extremely hard. It is supposed to be that way. He said, we had our troubles and setbacks. We suffered from severe fires and the supply of crude oil was most uncertain. Our plans were constantly changed by changing conditions. We developed great facilities in

Starting point is 00:40:30 the oil, erected storage tanks and connected pipelines, and then the oil failed and our work was thrown away. At best, it was a speculative trade. And I wonder that we managed to pull through so often, but we were gradually learning how to conduct a most difficult business. And I really think that that last sentence is extremely important. We were gradually learning how to conduct a most difficult business. So if you're reading through the lines there, he's saying all these people that had the same troubles that we had, this had the same setbacks that we did, they quit. We didn't, we kept working through it. And as a result of that, we gained knowledge that they did not possess.

Starting point is 00:41:06 Now they're off doing maybe they're going back to baking or making candles or whatever it is they're doing. But they're not in this business. And now we know way more than any other competitor. I think that's actually a really astute observation he made and really smart. And now he's going to start hitting on these principles, these fundamentals of business that never change. It really is. This section is a blueprint for success in any endeavor. I would summarize it that low prices to the customer, root out. Rockefeller, just over and over again, you see that same basic playbook. I ascribe the success of the Standard Oil Company to its consistent policy of making the volume of its business large through the merit and cheapness of its products.

Starting point is 00:41:56 It has spared no expense in utilizing the best and most efficient method of manufacture. What are you saying there? I'm going to buy if there's a technology that can make my work more efficient, cheaper over the long run, I'm going to invest in that. It has sought for the best superintendents and workmen and paid the best wages. So I'm going to pay high wages because the best talent only works for high wages. It has not hesitated to sacrifice old machinery and old plants for new and better ones. More technology. It has placed its manufacturing at the point where they could supply markets for the least expense it has not only sought markets

Starting point is 00:42:30 for its principal products but for all possible products meaning sell your byproducts sparing no expense and introducing them to the public in every nook and corner of the world i think i read i think it's something like the he winds up discovering like 300 it's it's an insane number something like that like 300 different byproducts of oil throughout his career that they can then sell and open up new markets um it has not hesitated to invest millions of dollars in methods for cheapening the gathering and distribution of oils by pipelines, special cars, tank steamers, and tank wagons. Next, he talks about that he felt Standard Oil was benefited from the focus of its partners. And another way to think about this is I can't remember who.

Starting point is 00:43:19 It might have been Warren Buffett. It might have been Charlie Munger. But the quotes, they said something like, study how the great fortunes were made. It's not a scattershot approach. I think they were talking about why they're not really into diversification. Andrew Carney said the same similar thing. It's like he wouldn't even own stocks in other companies. He's like, because I don't want to think about stock prices.

Starting point is 00:43:38 I only want to think about building my steel company. And Rockefeller's echoing that same idea here. We devoted ourselves exclusively to the oil business and its products. The company never went into outside ventures, but kept to the enormous task of perfecting its own organization. That is a great sentence, kept to the enormous task of perfecting its own organization. In this next section, he's really talking about the fact that two people can run the same exact business and have vastly different results. Perhaps it's worthwhile to emphasize again the fact that it is not merely capital and plants and the strictly material things which make up a business, but the character of the men behind these things, their personalities and their abilities. These are the essentials to be reckoned with.

Starting point is 00:44:23 What an interesting term, essentials to be reckoned with what an interesting term essentials to be reckoned with i read uh i saw this post actually um that uh it's kind of echoing what john d rockefeller is talking about there and it's by this guy um i actually don't know his name he just took another tech company public and he i guess he's done this few times, but he wrote a post a few years ago and he talks about really the, the intangibles of the individual. And I'm just going to read a few, a few paragraphs from it. Cause I think it's, it is a way to have a deeper understanding of what Rockefeller is trying to tell us that, you know, that the character, the personality, their abilities, these are the essentials to be reckoned with. So he says, as the former CEO of both Data Domain and ServiceNow, two successful tech companies in recent

Starting point is 00:45:07 years, I'm often confronted with questions. What did you guys do? What is the secret sauce? How did you do it? We never thought of ourselves as that different. We certainly didn't think we had stumbled on a silver bullet. Did we just get incredibly lucky twice in a row? With hindsight and reflection, there are observations worth making that may benefit others so there's just two paragraphs i'm going to read to you real quick bottom line there's room up in organizations to boost performance by amping up the pace and intensity so that's the name of this essay it's called amp it up considerable slack naturally exists in organizations to perform at much higher levels. The role of leadership is to convert that lingering potential and supportive results. So he's talking about on like a company basis. I also say you can apply the same idea on an individual basis. Sure, you have not reached. I'm speaking for myself.

Starting point is 00:45:56 There's no way in hell I'm even close to reaching all of my potential that there is there is a lot of slack. And if I could amp it up to use this guy's phrase, you'll get better results, right? So I think, again, main point here applies on the individual level, family level, and business and organization level. The opportunity is right under our noses, but for some reason it does not enter the consciousness. This notion is not limited to business enterprises.

Starting point is 00:46:21 So I just ran over my own point there, right? We see in professional sports all the time how teams go almost overnight from losing to winning with basically the same roster, but different leadership. Call it what you want. The X factor, whatever. It's real. Anybody can dial into this, but not many do. It's not easy because you will drive people out of their comfort zones. There will be resistance. Change change is hard some will vote with their feet if you want to be popular as a leader this may not be for you the role of a leader is to change the status quo step up the pace and increase the intensity leaders are this is the last two sentences i find very interesting leaders are the energy bunnies and pacemakers of the organization. Some people drain energy from organizations, not leaders. They engulf organizations with energy. of hire a guy to do a job that he's never done before. And there's a great quote by Mark

Starting point is 00:47:25 Andreessen that I always think about all the time. And Mark says, I'm a firm believer that most people who do great things are doing them for the first time. Returning to my theory of hiring, I'd rather have someone all fired up to do something for the first time than someone who's done it before and isn't that excited to do it again. So let's see how this relates to the story that John is about to tell us. And he's talking to his partner, his associate, Mr. Gates. And this is John. We're going to start with a quote from John.

Starting point is 00:47:52 How are we to get someone to run these big ships we have ordered? Do you know of any experienced firm? No, said Mr. Gates. I do not know of any firm to suggest at the moment, but why not run them ourselves? John replies, you don't know anything about ships, do you? And it's back to Mr. Gates. No, he admitted, but I have in mind a man who I believe could do it. Although when I tell you

Starting point is 00:48:15 about him, I fear you will think that his qualifications are not the best. However, he has the essentials. He lives up the state and has never been on a ship in his life. He probably wouldn't know the bow from the stern or a sea anchor from an umbrella, but he has good sense. He is honest, enterprising, keen, and thrifty. He has the art of quickly mastering a subject, even though it would be new to him and difficult. We still have some months before the ships will be completed. And if we put him to work now, he will be ready to run the ships

Starting point is 00:48:51 as soon as they are ready to run. Now this is John's response. All right, I said, let's give him the job. And we did. That man was Mr. Bowers. Mr. Bowers went from point to point on the lakes where the boats were building and studied them minutely. He was quickly able to make valuable suggestions about their construction, which were approved and adopted by the designers. When the vessels were finished, he took charge of them from the moment they floated, and he managed these and the dozens which followed with a skill and ability that commanded the admiration of all the sailors on the lakes. He even invented an anchor, which he used with our fleet and later was adopted by other vessels. And I have heard that it is in use in the United States Navy.

Starting point is 00:49:38 He remained in his position until we sold out. We have given Mr. Bowers all sorts of hard tasks since we retired from the lake traffic and have found him always successful. And now this is Rockefeller on rules of trade. And again, another way to summarize this section is how to succeed in any endeavor. Follow the laws of trade. If I can make this point clear to the young man who has had the patience to follow these reminiscences so far, It would be a satisfaction to me and I hope it may be a benefit to him. The underlying essential element of success in business affairs is to follow the established laws of high class dealing. Keep to broad and sure lines and study them to be certain that they are the correct ones. Watch the natural operations of trade and keep within them.

Starting point is 00:50:27 Don't even think of temporary or sharp advantages. Don't waste your effort on a thing which ends in a petty triumph unless you are satisfied with a life of petty success. Be sure that before you go into an enterprise, you see your way clear to stay through to a successful end. Another way to say this is don't quit. Look ahead. It is surprising how many bright businessmen go into important undertakings with little or no study of the controlling conditions they risk their all upon. Study diligently your capital requirements and fortify yourself fully to cover possible setbacks because you can absolutely count on

Starting point is 00:51:12 meeting setbacks. Be sure that you are not deceiving yourself at any time about your actual conditions. Remember, a lot of these are just reviewing other things that he's already mentioned in the book. And again, I think if somebody repeats something, it's obviously, conditions. Remember, a lot of these are just reviewing other things that he's already mentioned in the book. And again, I think if somebody repeats something, it's obviously, it's a way of them telling us explicitly, hey, this is important. Remember this. The man who starts out simply with the idea of getting rich won't succeed. You must have a larger ambition. There is no mystery in business success. The great industrial leaders have told again and again the plain and obvious fact that there can be no permanent success without fair dealing I talk so much about, and keep your head clear, you will come out all right, and will then, perhaps, forgive me for moralizing this in the old-fashioned way. young man who reads so sober a book as this not to lose his head over a little success so he's echoing what he was telling himself these these nightly affirmations that he was telling himself

Starting point is 00:52:31 uh you know 50 years prior uh so let me read that section two again actually it is hardly necessary to caution a young man who reads so sober a book as this not to lose his head over a little success or to grow impatient or discouraged by a little failure. Can't grow discouraged by a little failure because he's going to say it's inevitable. You're going to run in setbacks. You got to learn how to deal with it. He continues. Here again, I would venture to utter a word of caution to businessmen. Let them study their own affairs. Frankly, this has got to be the third or fourth time he's mentioned this, right? And face the truth. If their methods are extravagant, let them realize the facts and act accordingly.

Starting point is 00:53:11 One cannot successfully go against natural tendencies, and it is a folly to fail to recognize them. Now he's going to give us some explicit advice for people just starting out. If I were to give advice to a young man starting out in life, I should say to him, if you aim for a large success, do not begin your business career, whether you sell your labor or you are an independent producer, with the idea of getting from the world by hook or crook all you can. In the choice of your profession, let your first thought be, where can I fit in so that I may be the most effective in the work of the world? Where can I lend a hand in the way most effectively to advance

Starting point is 00:53:52 the general interest? Enter life in such a spirit. Choose your vacation in that way, and you have taken the first step on the highest road to a large success. Investigation will show that the great fortunes which have been made in this country, and the same is probably true of other lands, have come to men who have performed great and far-reaching economic services. Men who, with great faith in the future of their country, have done most for the development of its resources. The man will be most successful who confers the greatest service on the world. Commercial enterprises that are needed by the public will pay. Commercial enterprises that are not needed fail and ought to fail.

Starting point is 00:54:38 And he's going to go more into detail. He's also going to tell you, this is, I'm going to summarize this section before I read it to you because one of my favorite quotes by Edwin Land, when I read the section, I thought of this quote and he says, don't do anything that someone else can do. And so Rockefeller is going to echo that sentiment here. The one thing which such a business philosopher would be most careful to avoid in his investments of time and effort or money is the unnecessary duplication of existing industries. He would regard all money spent in increasing needless competition as wasted. The man who puts up a second factory when the factory in existence will supply the

Starting point is 00:55:17 public demand adequately and cheaply is wasting the national wealth and destroying the national prosperity, taking the bread from the laborer and unnecessarily introducing heartache and misery into the world it requires it's a hell of a sentence here it requires a better type of mind to seek out and to support or to create the new than to follow the worn paths of Success. And then another explicit piece of advice from him. And Elon Musk has said the same thing. He says essentially that you want negative feedback. Let's say if you're showing your product or service to a friend,

Starting point is 00:56:00 they're going to tell you the things they like about it because they don't want you to hurt your feelings. But what you're most concerned with is the things that they don't like. So then you could you can work on the weaknesses and over a long period of time and make your product better. So Rockefeller is talking about this, the same idea says criticism, which is deliberate, sober and fair is always valuable. And it should be welcomed by all who desires progress. And I'll close on this. No matter how noisy the pessimists may be, we know that the world is getting better steadily and rapidly. And that is a good thing to remember in our moments of

Starting point is 00:56:41 depression or humiliation. And I'll leave the story there. I'm pretty sure you can get the Kindle version of this book for free, and I think the other versions are just a few dollars. If you wind up buying the book, please use the link that's in the show notes available on your podcast player. It's also available at founderspodcast.com. By doing so, you'll be supporting the podcast at the very same time.

Starting point is 00:57:03 That is 148 books down, 1,000 to go. Thank you for listening, and I'll talk to you again soon.

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Founders - #148 John D. Rockefeller (Autobiography)

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