Founders - #16 Titan: The Life of John D. Rockefeller

Episode Date: December 8, 2017

What I learned from reading Titan: The Life of John D. Rockefeller by Ron Chernow. [0:01] Rockefeller was a unique hybrid in American business, both the instinctive first-generation entrepreneur who founded the company and the analytical second-generation manager who extends and develops it. [0:30] Having created an empire of unfathomable complexity, he was smart enough to see that he had to submerge his identity in the organization. [0:43] Don’t say that I out to do this or that. We ought to do it. Never forget that we are partners. Whatever is done for the general good is done for the good of us all. —John D. Rockefeller. [0:55] He preferred outspoken colleagues to weak-kneed sycophants. [1:14] That he created one of the first multinational corporations, selling kerosene around the world and setting a business pattern for the next century, was arguable his greatest feat. [2:48] The spot chosen for the new refinery tells much about Rockefeller’s approach to business. . . Able to ship by water or over land, Rockefeller gained the critical leverage he needed to secure preferential rates on transportation which was why he agonized over plant locations throughout his career. [6:02] This is before the invention of the car. Kerosene was the main byproduct of oil. People used it to have lighting in their houses. Before Rockefeller, only rich people were able to do this. After Rockefeller, everyone could do it. [6:41] There’s a lot of people making money in refining. People hear about other people making money in refining. They follow in like lemmings and this causes refining capacity to be triple the amount that is actually needed. By then 90% of refineries were operating in the red. [7:46] “So many wells were flowing that the price of oil kept falling, yet they went right on drilling.” — John D. Rockefeller. [8:08] “Often-times the most difficult competition comes, not from the strong, the intelligent, the conservative competitor, but from the man who is holding on by the eyelids and is ignorant of his costs, and anyway he's got to keep running or bust!” —John D. Rockefeller [8:57] As someone who tended toward optimism, seeing opportunity in every disaster, he studied the situation exhaustively instead of bemoaning his bad luck. [10:55] Rockefeller is hated for the creation of a cartel. He is hated for succeeding at it. There are many people trying to do very similar things. They would criticize Rockefeller for what they were attempting to do themselves. [14:46] From the outset, Rockefeller’s plans had a wide streak of megalomania. He said, “The Standard Oil company will someday refine all the oil and make all the barrels.” [15:35] Rockefeller decided that the leading men [executives] would receive no salary but would profit solely from the appreciation of their shares and rising dividends which Rockefeller thought a more potent stimulus to work. [17:10] He was pretty crazy. He had three daughters and a son. By the time he had his son, he had more money than he could spend in a lifetime. His son remembers growing up and only wearing dresses because his dad refused to buy new clothes. [17:38] Rockefeller never allowed his office decor to flaunt the prosperity of the business, lest it arouse unwanted curiosity. [19:33] His strategy would be to subjugate one part of the battlefield, consolidate his forces, and then move briskly onto the next conquest. [19:54] The year revealed both his finest and most problematic qualities as a businessman: His visionary leadership, his courageous persistence, his capacity to think in strategic terms, but also his lust for domination, his messianic, self-righteousness, and his contempt for those shortsighted mortals who made the mistake of standing in his way. [20:50] Rockefeller had such a fanatical desire to control expenses. He’d show up to work at 6:30 in the morning and leave at 10 at night and the entire time he was rooting out inefficiencies. If he could save a penny he would. As a result, even if someone was in the same business Rockefeller’s business was much more profitable —even before he built his cartel. [23:34] Rockefeller was extremely secretive. He equated silence with strength. He didn’t like people who bragged or told other people what their intentions were. [25:06] The depressed atmosphere only strengthened his resolve. [28:57] One Rockefeller biographer called the drawback an instrument of competitive cruelty unparalleled in industry. [30:55] One other factor tempted the railroads to come to terms with Rockefeller. In a far-sighted, tactical maneuver he had begun to accumulate hundreds of tank cars —what you would ship oil in if you don't want to use barrels—which would be in perpetual and perpetually short supply. [32:05] One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and crafted mutually advantageous terms. Instead of ruining the railroads, Rockefeller tried to help them prosper albeit in a way that fortified his own position. [37:57] This is the insane part. Between February 17th and March 28th, Rockefeller swallowed up 22 of his 26 competitors. This makes him the world’s largest oil refiner at 31 years old. [40:32] Rockefeller was dedicated to secrecy: Many of these competitors didn’t even know they were being bought by Standard Oil. [47:24] Rockefeller would constantly overpay for competitors just to knock them out of the business. [47:58] He was now living a fantasy of extravagant wealth that would have dwarfed the most feeble daydreams of his father. Few people beyond the oil business had ever heard of him. [48:26] It is very hard to compete with somebody you don’t even know exists. [48:56] It is a lot smarter to make money quietly so you don’t invite competition. [49:11] The Prize: The Epic Quest for Oil, Money & Power[49:52] Books are the original links: If you read Sam Walton's book you realize he was the Jeff Bezos of his day. Or said another way Jeff Bezos is the Sam Walton of his day. Bezos read Sam Walton’s book, was inspired, and outright copied a lot of Sam’s ideas. [50:51] The reason I think it is so interesting to explore the history of entrepreneurship is that you see the same ideas over and over again just applied in different fields. [56:53] Taking for granted the growth of his empire, he hired talented people as found, not as needed. [57:10] Many employees said he never lost his temper racist voice, uttered a profane or slang word, or acted discourteously. [57:20] Rockefeller seldom granted appointments to strangers and preferred to be approached in writing. [57:25] He constantly expounds on this idea that you shouldn't waste time nor money. That they were very much interrelated. He didn't waste his time talking to people...what people call networking now. He just worked. He came up with his ideas and then worked every day to enact those ideas. [58:08] He wants the sort of person to persist in a flawed situation. [58:15] Rockefeller was the sort of stubborn person who only grew more determined with rejection. [59:51] Success comes from keeping the ears open and the mouth closed. [1:00:02] A man of words and not of deeds is like a garden full of weeds. [1:01:00] Do not many of us who fail to achieve big things fail because we lack concentration--the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else?  ----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

Rockefeller was a unique hybrid in American business, both the instinctive first-generation entrepreneur who founds the company and the analytical second-generation manager who extends and develops it. He wasn't the sort of rugged, self-made mogul who quickly becomes irrelevant to his own organization. For that reason, his career anticipates the managerial capitalism of the 20th century. Since he never owned more than a third of his company, he needed the cooperation of other people. Having created an empire of unfathomable complexity, he was smart enough to see that he had to submerge his identity in the organization. Many people noted that Rockefeller seldom said, I. This is a direct quote from him. Don't say that I ought to do this

or that, he preached to colleagues. We ought to do it. Never forget that we are partners. Whatever is done for this general good is done for the good of us all. He preferred outspoken colleagues to weak-kneed sycophants and welcomed differences of opinion so long as they weren't personalized. By creating new industrial forms, Rockefeller left his stamp on an age that lauded inventors, not administrators. That he created one of the first multinational corporations selling kerosene around the world and setting a business pattern for the next century was arguably his greatest feat. Okay, so that was from the book that I want to talk to you about today. It's called Titan, The Life of John D. Rockefeller by Ron Chernow. And those three paragraphs just appeared about 220 pages into this 700-page biography.

And there's a few times where I couldn't figure out how I wanted to start this podcast or what I wanted to talk about because the book delves into like his early life, goes into great detail, how he got his start in business, and then how he created Standard Oil, which is what he's most well known for. But I think that those few paragraphs give you an idea of why that's so important. Because there's been plenty of businesses built throughout time that were wildly successful, similar to Standard Oil. But he was the first, really credited with the first person that created what is very common today, which is a multinational corporation,

except he was doing this in the 1800s. What I want to focus on for the purpose of this podcast is the strategy that he used in business, which I found most fascinating. So I want to talk to you about something called the Cleveland Massacre, which before I read this book, I knew nothing about. But before we get there, I want to give you an intro to the Cleveland Massacre that gives you an idea of the mind he had with business. And this is just a short two paragraphs. So let me go ahead and read that to you. The spot chosen for the new refinery tells much in miniature about Rockefeller's approach to business. He exercised an option on a three-acre parcel

on the sloping red clay banks of a narrow waterway called Kingsbury Run, which flowed into the Chihuahua River and thus provided passage to Lake Erie. A mile and a half from downtown Cleveland, it seemed at first glance an inauspicious site for the new refinery. In these outskirts beyond the city limits, cows browsed peacefully and trees still shaded the waterway. But for Rockefeller, the inconvenience was outweighed by the fact they would soon adjoin new railroad tracks. On November 3, 1863, proudly flying the Union colors, a gleaming locomotive of the Atlantic and Great Western Railroad pulled into a Cleveland station decked with bunting and launched decked with bunting and

launched a new era giving the town access to new york city via the erie railroad and to a valuable direct route to the pennsylvania oil fields before i read you the last sentence remember at this time almost all of the world's oil besides some large russian oil fields came from pennsylvania um so that's why pennsylvania the pennsylvania oil fields, came from Pennsylvania. So that's why the Pennsylvania oil fields are so important. And this is the last sentence here. Able to ship by water or over land, Rockefeller gained the critical leverage he needed to secure preferential rates on transportation, which was why he agonized over plant locations throughout his career.

So they're saying he did this because he needed the leverage to secure preferential rates on transportation. Now, why is that important? Well, this has to do with probably the single best idea he ever had in business. And again, it depends on whose perspective you're looking at it from, because his competitors certainly didn't think it was a great idea. But for him, it was undoubtedly a great idea. So this is going to lead me to what's known as the Cleveland Massacre. And the Cleveland Massacre is going to be, I would say, the bulk of this podcast, and I think is the most important idea to understand how Rockefeller became the richest person maybe in the history

of the world. Now, there's obviously some ambiguity over this because you have to account for the difference between purchasing price and what is actually valued. But the estimates that I've read and seen say Rockefeller in today's money would be worth somewhere between $300 and $400 billion. Or, to look at it another way, three to four times as rich as the richest person is today. So let me jump into the Cleveland Massacre. It's really interesting. By the late 1860s, this dynamic produced a persuasive slump in the oil industry, keeping it depressed for the next five years. So to give you some context right there, Rockefeller's already owned some refineries in Cleveland.

And just like today, there's booms and busts in the oil market. There was back then. So we're in a persuasive slump in this time period. Low kerosene prices. Now, remember, again, this is before the invention of the car. So kerosene was the main byproduct of oil. People used it to basically have lighting in their house. But before Rockefeller, only really rich people were able to do this. After Rockefeller, everybody could do it. Low kerosene prices, a boon to consumers, were catastrophic for refiners who saw the profit margin between crude and refined oil prices shrink to a vanishing point.

Rampant speculation had so overbuilt the industry that total refining capacity in 1870, which tripled the amount of crude oil being pumped. Okay, so there's a lot of people making money in refinery. People hear about other people making money in refinery, so other people about other people making money in refineries so what do they do naturally they follow in like lemmings and this causes the refining capacity to be tripled and triple the amount that they actually need which then kind of screws everybody else over by then Rockefeller estimated 90% of all refineries were operating in the red. At this bleak impasse, a leading Cleveland rival, John Alexander, offered to sell his interest to William Rockefeller at 10 cents on the dollar

as the entire industry faced ruin. William Rockefeller is John's younger brother and his business partner. One of them, one of his business partners. Worse, the oil market wasn't correcting itself according to the self-regulating mechanism dear to neoclassical economists. Producers and refiners didn't shut down operations in the expected numbers, causing Rockefeller to doubt the workings of Adam Smith's theoretical invisible hand. So many wells were flowing, this is a direct quote from him now, so many wells were flowing that the price of oil kept falling, yet they went right on drilling.

The industry was trapped in a full-blown crisis of overproduction with no relief in sight. So that part actually reminded me about another quote that appears later in the book. So I'm going to jump ahead just to this quote from Rockefeller and then back to the Cleveland Massacre. As Rockefeller noted, this is a direct quote from him, oftentimes the most difficult competition comes not from the strong, the intelligent, the conservative competitor, but from the man who is holding on by the eyelids and is ignorant of his cost.

And anyway, he's got to keep running or bust. So to me, that is a great explanation of what's happening around the time right before the Cleveland Massacre, where he's saying, it's not the intelligent people I can reason with. It's the person who doesn't even know his cost, doesn't even realize that every barrel of oil that he's refining, he's losing money on but keeps going anyways because he has to do something. All right, so let's go back to the setup of the Cleveland Massacre. Thus, in 1869, one year after his stellar railroad coup, which we'll get to in a minute, Rockefeller feared that his wealth might be snatched away from him. As someone who tended toward optimism, seeing opportunity in every disaster, he studied

the situation exhaustively instead of bemoaning his bad luck. He saw that his individual success as a refiner was now menaced by industry-wide failure and that it therefore demanded a systemic solution. This was a momentous insight, pregnant with consequences. Instead of just tending to his own business, he began to conceive of the industry as a gigantic interrelated mechanism and thought in terms of strategic alliances and long-term planning. Rockefeller cited the years 1869 and 1870 as the start of his campaign to replace competition with cooperation in the industry, what is also known as monopoly. The culprit, he decided, was, quote, the overdevelopment of the refining industry, end quote,

which had created ruminous competition. If this fractitious industry was to be made profitable and enduring, he would have to tame and discipline it. A trailblazer who improvised solutions without any guidance from economic text, he began to envision a giant cartel that would reduce overcapacity, stabilize prices, and rationalize the industry. That description right there kind of sounds like what OPEC tries to do today. Except Rockefeller had this idea, let's see, 1869. If Rockefeller first expounded this idea among refiners,

he was anticipated by the very drillers who later railed at his machinations. During the Civil War, they had formed an Oil Creek Association to curtail production and lift prices. And on February 1st, 1869, they again met in Oil City to create the Petroleum Producers Association to protect their

interests. Again, I would say these are precursors to what OPEC does. What's interesting about this part is what Rockefeller is most hated for is the creation of a cartel. But I would say he's only hated because he's the one that actually succeeded at it. As we're going to see, there's many people that are trying to do very similar things. And interesting enough, they would criticize Rockefeller for what they were doing themselves. So let's go back to the book. To devise a comprehensive solution for the industry, Rockefeller again needed money. Money to create economies of scale, money to build cash reserves to endure downturns, money to heighten efficiency.

And here's another direct quote from him. And to buy in the many refineries that were a source of overproduction and confusion, we needed a great deal of money, end quote. The tricky part for Rockefeller and Flagler, this is, Flagler is Henry Flagler, which is one of the founders, co-founders of Standard Oil. He's famous in his own right. He developed, I would say, much of Florida. So his name's like all over St. Augustine. He developed Miami, Miami Beach. So there's all, you'll see his name constantly. And he's actually a really, like a flamboyant, interesting historical figure. I'm going to go back and see if I can find any biographies on him because I learned a little

bit about him in this book. And he's's just he was way more flamboyant and way more interesting as an individual than I think Rockefeller was Rockefeller is interesting because of his business strategy Flagler was just a he was just insane so let me go back to this the tricky part for Rockefeller and Flagler was how to supplement their capital without relinquishing control the solution was to incorporate which would enable them to sell shares to select outside investors. I wish I had the brains to think of it, said Rockefeller. It was Henry Flagler, meaning Flagler's idea. Luckily, and here's the weird part.

This next section, this is going to seem very bizarre to us today because starting a company is relatively easy. You have one-person companies with the help of the internet that are multinational corporations per se. So that never existed in the 1860s. In fact, you'll see that some states, like you could have a company in one state and you're literally, it's illegal to do business in another state rockefeller had to devise um trusts and and a network of a complex network of companies to get around because he he sold kerosene all over the world okay so here let's go back to this lucky many states had now passed laws permitting companies to incorporate the one hitch and it was a formidable one for rockefeller was that these

firms couldn't own property outside their state of incorporation. To finesse this restriction would require endless legal legateur main. I'm not sure what that word means. On January 10th, 1870, the partnership of Rockefeller, Andrews, and Flagler was abolished and replaced by a joint stock firm called the Standard Oil Company, with John D. Rockefeller as president, William Rockefeller as vice president, Flagler as secretary and treasurer. Besides echoing their Standard Works refinery, the name advertised the uniform quality of their kerosene at a time when consumers feared explosions from impurities. With $1 million in capital, that's $11 million in contemporary money, the new company became an instant landmark in business history, for there was no other concern

in the country organized with such capital, Rockefeller said. I want to take a break real quick here to let you know he's also doing this. He's in his 20s. So he started refining oil when he was about 24, if I'm not mistaken. So he's really young, and we'll see at the end of this what's about to take place. He's still really young when this happens. You'll see in a minute. Already a mini empire, Standard Oil controlled 10% of American petroleum refining, as well as a barrel-making plant, warehouses, shipping facilities, and a fleet of tank cars. Tank cars is what was used to transport oil if you didn't want to put it in a barrel.

From the outset, Rockefeller's plans had a wide streak of megalomania. As he told Cleveland businessman John Prindle, quote, the Standard Oil Company will someday refine all the oil and make all the barrels, end quote. He gets very close to that, actually. Despite his lack of legal training, Flagler drew up the act of incorporation. Nearly 60 years later, when the document was dredged up in a legal dispute, people were stunned by its simplicity. Instead of a fancy embossed paper dripping with seals,

one reporter described it as a cheap-looking legal paper, faded yellow, and of evident poor material, granting the Standard Oil Company the right to engage in business. This economical, no-nonsense approach appealed to investors, as did Rockefeller's decision that the leading men would receive no salary, but would profit solely from the appreciation of their shares and rising dividends, which Rockefeller thought a more potent stimulus to work. So he wanted everybody aligned, their incentives aligned. And we see this one decision where he said no one's going to get salary, and you're going to profit solely from dividends and shares.

This is what makes him the richest man in the world, the appreciation of Standard Oil stock. Standard Oil started out in a modest suite of offices in a four-story building known as the Cushing Block on the public square. The office, shared by Rockefeller and Flagler, was somber and austere. So I'm not going to go into it too much in the podcast, but the book spends an unbelievable amount of detail talking about Rockefeller's rough childhood. They didn't have a lot of money. His dad had a bigamist.

He had multiple families. He wound up abandoning the family later on but his what he did for work he was like one of those um frontier herbal doctors that would go around and sell like snake oil basically at very large prices and um and he was raised in basically by his mother who was a extremely pious and devout religious woman and they had like that Puritan streak where they they would drink they wouldn't play cards it wouldn't smoke he was rock for his very straight age and they were very um they wanted to make money but they didn't want like ostentatious like display of it he was very against that and there's stories in the books where him and his partners start making tons of money,

and they go out and buy yachts and stuff, and he just admonishes them left and right. I mean, he's pretty crazy. He already had enough wealth. Let me give you one anecdote real quick before I go back to the story. By the time he had his son, right, he had three daughters and a son. He had more money than he could probably ever spend in his lifetime. His son remembers growing up and only wearing dresses because his dad refused to buy new clothes. Rockefeller's level of frugality was something I've never seen anybody adhere to it so much. And to the point, let's go back to the book.

Rockefeller never allowed his office decor to flaunt the prosperity of his business, lest it arouse unwanted curiosity. That's actually really smart. Okay, so back to the book. From the start, he owned more shares of Standard Oil than anybody else and exploited every opportunity to augment his stake. Of the original 10,000 shares, he took 2,667. Rich investors did not line up to invest in Standard Oil, among other reasons because it was an inauspicious time for new ventures. On September 24, 1869, the infamous Black Friday, Jay Gold and

Jim Fiske's scheme to corner the gold market by manipulating President Grant's monetary policy collapsed, fomenting financial panic and ruining more than a dozen Wall Street houses. Beyond that, the speculative aura of the oil industry still deterred many reputable businessmen. Rockefeller never forgot how his scheme was savagely derided as a rope of sand, or how sage businessmen told him that similar attempts to create a Great Lakes shipping cartel had misfired. Quote, either this experiment will result in a great success or a dismal failure. As Rockefeller recalled, it was a course which older and more conservative businessmen shrank back from and regarded as reckless, almost to the point of insanity. Embittered by these skeptics and set out to prove them wrong, Rockefeller managed to pay

dividends of 105% on Standard Oil stock during the first year of operations, despite one of the worst financial bloodbaths in the industry's early history. So that's really impressive as well. The man with the hypertrophied craving for order was about to impose his iron rule on this lawless, godless business. As he scanned the field of battle, the first target of opportunity lay close to home, the 26 rival Cleveland refineries. His strategy would be to subjugate one part of the battlefield, consolidate his forces, then move briskly onto the next conquest. His victory over the Cleveland refiners would be the first,

but also the most controversial campaign of his career. That's exactly why I'm telling you about it now, because I think it's the most interesting. The year revealed both his finest and most problematic qualities as a businessman. His visionary leadership, his courageous persistence, his capacity to think in strategic terms, but also his lust for domination, his messianic self-righteousness, and his contempt for those short-sighted mortals who made the mistake of standing in his way. What rivals saw as a naked

power grab, Rockefeller regarded as a heroic act of salvation, nothing less than the rescue of the oil business. The state of the kerosene trade had further deteriorated in 1871 as prices sagged another 25%. As competitors skidded into bankruptcy, Standard Oil declared a 40% dividend with a small surplus to spare. So I'm going to interrupt the story one more time i don't know if i'm going to cover it later in the podcast but there's at one point where um rockefeller has such a his entire life he has such a fanatical um desire to control expenses so he'd work when he was first starting out his young 20s he'd show up at 6 30 in the morning and leave at like 10 at night and the entire time he was just rooting out any inefficiencies. If he could save a penny, he would do so.

And as a result, he wound up, even though people were in the same business, his businesses were much, much more profitable than his other refiners, even before he started to build this cartel. So there's a story in the book where this guy, Rockefeller, is trying to buy his refinery. And he's like, no, I don't want to. I'm not going to sell. So Rockefeller says, I'm his refinery and he's like no I don't I don't want to um I'm not I'm not gonna sell so Rockefeller says I'm gonna show you my books and his competitor looks at his books he's any real it comes to realization oh my god he can he can produce oil at a profit that cost me a loss like I can't beat him so he wound up having to sell his refinery to him so there's actually a method to his to his madness a lot of people think it's

ridiculous when you have that much money but i would argue i don't think he would have accumulated that much money if if the frugality didn't come first because i gave him such advantages over the people that didn't control their their expenses and therefore if your industry like they just said the entire kerosene kerosene industry can can drop 25 in one year well it could wipe you out when it you out. He's only doing a 40% dividend, but you're losing money. Well, he can stay in this position in perpetuity. You can't. So therefore, it just gives him this huge strategic advantage.

And we're going to see what he starts doing here. We're going to get into his strategy, which is what causes the Cleveland Massacre. In late 1871, Rockefeller engineered the covert acquisition of Boswick and Tiltford, New York's premier oil buyers, who owned barges, lighters, and a large refinery at Hunter's Point on the East River. A former Kentucky banker who had also dealt in cotton and grain and peddled Bibles, Jabez Abel Boswick, that's his name was a devout baptist in the rockefeller mold strict almost to sternness in his business dealings preferring justice to sentiment the purchase of boswick's firm gave rockefeller a sophisticated purchasing agency

at a critical moment so check this out oil prices were now being set on exchanges in western pennsylvania with powerful syndicates pushing aside the low pushing aside the lone speculators who had once dominated trading so in a sense they had a trading cartel where he's trying to build an oil and transportation cartel the move set a pattern of stealth that shadowed rockefeller's career he renamed j.a boswick and company the newly acquired firm brazenly feigned independence of Standard Oil while acting at its cat's paw. So here's something we're going to see a lot. One is Rockefeller was extremely secretive. He thought he equated silence with strength, and he didn't like people that bragged or that basically told other men or other people, rather, what their intentions were or how well they were doing.

And then his dedication to always be able to cover his tracks. So he could have said, OK, we're going to buy this thing, and this is now just a subsidiary of Standard Oil. He never did that. He kept them as independent. And so, again, think about before the age of the internet. He winds up building this network of hundreds of what we would call holding or shell companies today. And so you wouldn't be able to track who actually owned it.

And very few people even knew it. The people buying in refineries didn't actually know who the owner was in many cases. So he took secrecy to a very – I mean, very similar. If you remember the podcast I did on Steve Jobs, Steve Jobs was very much a believer in secrecy to a very – I mean, it's very similar. If you remember the podcast I did on Steve Jobs, like Steve Jobs was very much a believer in secrecy. So I would say Rockefeller as well. On January 1, 1872, the Standard Oil Executive Committee, bracing for the tumultuous events ahead, boosted the firm's capital from $1 million to $2.5 million and then to $3.5 million the next day. So remember $1 million at this time was about $11 million now. And I would say it's even more because this book is over 20 years old. So it'd be $11 million in 1996. So now he's basically raised three and a half times that amount of capital. And we're going to see why. It was a sign of Rockefeller's exceptional self-confidence that

he gathered strong executives and investors at this abysmal time, as if the depressed atmosphere only strengthened his resolve. We were gathering information which confirmed to us the idea to enlarge our own standard oil and actually take into partners with us the refining interest would accomplish the protection of the industry as a whole. So that's a weird sentence, but basically he's saying we figured out, hey, to protect the industry, we had to buy up our competition. On January 1st, 1872, the executive committee made its historic decision to purchase certain refining properties in Cleveland and elsewhere. They referred this as a historic decision. I definitely agree with that when you see why. The seemingly innocuous resolution was the opening shot of a bloody skirmish that historians came to label the cleveland massacre

the mayhem in cleveland began when rockefeller struck a clandestine and richly ironic deal with tom scott the overlord of the pennsylvania railroad okay so two things here one he starts making these secret deals, which is basically what he does his entire career. And two, now remember at the introduction, I said he always focused on transportation. So he picked that one refinery because he could ship by rail if they gave him the prices he wanted. And if not, he could ship by water, which would basically allow him to squeeze them. So now he's doing this deal with pennsylvania railroad because at the time you had the majority of this is before um pipelines which he also gets into later on so most of oil was was either uh shipped uh but the vast majority was uh transported over the

railroads to implement this scott had obtained a special charter for a shell organization bearing the blandly misleading name of the South Improvement Company. After the Civil War, the Pennsylvania legislature had created dozens of such charters by special enactment. These improvement companies possessed such broad, vague powers, including the right to hold stock in companies outside Pennsylvania, that some economic historians have christened them the first real holding companies. Okay, so to make their cartel, they're using this thing called the South Improvement Company, which is a new charter and a new vehicle in which to conduct business and the ideal instrument to create an extremely secretive transportation and oil cartel. And we're going to go into details real quick. Under the terms of this proposed PAC, the railroads would sharply raise freight rates for all refiners. Okay. So prices are going up to move your oil, right? But refiners in the SIC, so the SIC is the Southern Improvement Company. The book sometimes refers to it as SIC and

sometimes they use the whole world, the whole words, just so you know what that is. But refiners in the SIC would receive such substantial rebates, up to 50% off crude and refined oil shipments, that their competitive edge over rivals would widen dramatically. In the most deadly innovation, the SIC members would also receive drawbacks, could also be called kickbacks, on shipments made by rival refiners. That is, the railroads would give the SIC members rebates for every barrel shipped by other refiners. On shipments from Western Pennsylvania to Cleveland, for instance, Standard Oil would receive a 40-cent rebate on every barrel it shipped,

plus another 40 cents for every barrel shipped to Cleveland by its competitors. So they get compensated, the Standard Oil gets compensated if the railroad used their tracks to ship for Standard Oil's competitors. One Rockefeller biographer had called the drawback an instrument of competitive cruelty unparalleled in industry through another provision Standard Oil and other SIC refiners would receive comprehensive information about all oil shipped by their competitors invaluable in under pricing them so not only are they getting a discount for what they're shipping they're getting paid for every barrel that their competitors ship and as a byproduct of that, they know exactly the volume that their competitor is doing.

The SIC members were naturally sworn to secrecy about the inner workings of this alarming scheme. All in all, it was an astonishing piece of navary. I don't know what that word means. Grand-scale collusion such as American industry had never witnessed. Now, this is the part that kind of explains everything, because it's like, why would they do that? Why did the nation's leading railroads offer Rockefeller and his confederates terms so generous as to render them all but omnipotent in oil refining? How did they benefit from this association? First, the railroads had engaged in such fierce

price wars that freight rates had fallen sharply. No less than oil producers, they needed somebody to arbitrate their disputes and save them from their own cutthroat tactics. The cornerstone of the SIC was a provision that standard oil would act as an evener for the three railroads and ensure that each received a predetermined share for the oil traffic. 45% of the oil shipped by SIC members would travel over the Pennsylvania Railroad, 27% on Erie, and 27% on New York Central. Unless the railroads had greater control over the oil business, Rockefeller knew they could not make the divisions of business necessary so as to prevent rate cutting. Rockefeller would become their official umpire and try to govern their pool in a fair, disinterested fashion. One other factor tempted the railroads to come to terms with Rockefeller. In a far-sighted tactical maneuver, he had begun to accumulate

hundreds of tank cars. Again, I told you those are what you would ship oil in if you didn't want to use barrels, which would be in perpetually short supply. The SIC, and right next to this, not only did I highlight it, but I put exclamation points. He was extremely good at things like this. There's a lot of parallels, I would say, between what I learned about Rockefeller and what I learned about the current richest person in the world, Bezos. And this is one of them. And I'm going to go into more details on that a little later on the podcast. The SIC soon exposed as an infamous conspiracy, so people found out, was a masterful move in Rockefeller's quest for industrial domination.

Both refiners and railroads were struggling with excess capacity and suicidal price wars. Rockefeller's supreme insight was that he could solve the oil industry problems by solving the railroads problems at the same time, creating a double cartel in oil and rails. One of Rockefeller's strengths in bargaining situations was that he figured out what he wanted and what the other party wanted, and then crafted mutually advantageous terms. Instead of ruining the railroads, Rockefeller tried to help them prosper, albeit in a way that fortified his own position. So I'm going to skip ahead a little bit in the book so we can see what this leads to. The conspirators committed a major strategic gaffe by omitting the New York refiners, who therefore sided with the Oil Creek refiners to pressure the railroads.

So the competition has figured out what's going on with SIC, and now they're going to try to break it up before it even begins. To head their liaison committee, the New Yorker founders appointed a suave 32-year-old named Henry H. Rogers, who had the flashing eyes and confident air of a young buccaneer. Okay, before I go any further, I've got to tell you about Henry Rogers. There's two interesting parts. Rockefeller constantly took adversaries, and then after they had their competition or their battle or whatever you want to call it, he winds up getting a lot of these people to work for him in Standard Oil. Henry H. Rogers, who's breaking up the SAC, there's two interesting parts. One, he comes to work for Standard Oil after this. And two, Rogers was Mark Twain's best friend, which was just random

when I read that. It was really surprising. So this is what Mark Twain said about this guy, Henry Rogers, who you just learned about now. He is not only the best friend I have ever had, but he's the best man I've ever known. And later in the book, Mark Twain and Henry Rogers, and even Rockefeller hang out together. It's interesting. Twain calls Rogers a pirate. He's like, that's what I like about him, though. He admits that he's a pirate. So and this is at the time Rogers was only 32 years old.

So when Rogers met Tom Scott at a Philadelphia hotel on March 18th, I remember Tom Scott's the guy running one of the railroads and who started working with Rockefeller at the very beginning to create the SIC. When Rogers met Tom Scott at a Philadelphia hotel on March 18th, the railroad chief struck a conciliatory note, admitting that the SIC contract was unfair and offering a similar deal to the exploded New York and Pennsylvania refineries. So their cartel is breaking even before it begins, but Rockefeller is still going to use this to its advantage. So they have a meeting, and they agree to break it up, Rogers and Scott. Okay, so we're going to get to the very interesting point right here. The meeting dealt a blow to Rockefeller, for the railroads agreed to abrogate the SIC contract and rebates and drawbacks and institute uniform rates for all shippers.

That's not good for him. The serpent had been killed in the egg. Far sooner than Rockefeller, the railroads had foreseen the political reaction and inevitable defeat. In this era, before railroad regulation and antitrust regulation, the SIC contract didn't violate any obvious laws, only a universal sense of fair play. So I just want to interject there. You're probably familiar with the Sherman Antitrust Act. That was written because of Rockefeller. And it's something that's still brought up anytime there's a hearing against monopolistic companies. they do that under

the Sherman Antitrust Act. In early April, the Pennsylvania legislator canceled the SIC charter while a congressional committee a month later branded the scheme the most gigantic and daring conspiracy ever to confront a free nation. On 1872 rockefeller capitulated and wired the oil producers that all contracts between the sic and the railroads were now void in his own defense he's added i state unqualified unqualifiedly i just i don't think i'm pronouncing that correctly that reports circulated in the oil region and elsewhere that this company or any member of it threatened to depress oil are false on this this is the interesting part on the I keep saying this is the interesting part. All this is interesting to me, but this is another interesting part maybe I should say. On this

last count, Rockefeller was probably sincere for what he envisioned was less a conspiracy against producers than against consumers. A united effort to ensure steady prices and adequate adequate returns on investment till the very end he saw the producers outrage against him as a shot as a shot through with envy and hypocrite hypocrisy the produ this is now a der coat from rockefeller the producers held to the view that their rebates were wrong unless their rebates were given to them that's actually a really good point all right so here we go now we're going going to, this is the Cleveland Massacre. It always mystified Rockefeller that people made such a fuss about a phantom company. There was never a shipment made or a rebate or drawback collected under the South Improvement Plan.

Though only a latent threat, the scheme acquired lasting infamy for two reasons. First, Rockefeller's fiercest critics regarded it as a dress rehearsal for the grand pageant, the place where he first revealed his master plan to be implemented in a thousand secret, disguised, and indirect ways. There's his secrecy again. The second reason, and first of all, I would agree with his critics there. He's telling you what he's going to do. He just doesn't do it this way. He's going to find another way to do it.

The second reason for all the latter attention was that during this brief interval while the SIC was alive, Rockefeller engineered his most important coup, the swift, relentless consolidation of Cleveland's ref refineries which gave him irresistible momentum the threat of the sic critics alleged was the invisible club that he waved over the cleveland refiners forcing them to submit to his domination now this is the insane part between february 17th and march 28th so we're talking about a week, what is that, a month and nine days, a month and 11 days rather, between the first rumors of the SIC and the time it was scuttled, Rockefeller swallowed up 22 of his 26 competitors. This makes him the world's largest oil refiner at 31 years old. So what we just learned is the SIC it was only a

threat it was something that was real but they hadn't start shipping getting the rebates but other people had found out and because of that that threat was so severe they all sold out to him in a month and now at 31 he's the world's largest oil refiner he eventually gets that share Well that that market share up to almost 90% which is why they say Standard Oil was was monopoly So what I want to do there, so the Cleveland Massacre is I just said that he basically gives him the outline, right? But people find out the legislation cancels the Charter and now he's got to find other ways to do it Well, it's a lot easier to build a cartel when you've just swallowed up 22 out of your 26 competitors. So now he's got Cleveland on lock, and he starts to do this exact same thing he did in Cleveland

all over the country for the other regions of oil refineries. And the way he does that, he still goes and makes these secret deals with the railroads. He's just not doing it through the SIC anymore. So he obviously liked this idea. He thought it gave him an advantage. So I'm not going to spend as much detail on this next part as I did with the Cleveland Massacre. The Cleveland Massacre unfolds over 20-something pages. But there are a few pages. the next chapter after this they talk about how he does this on a national level okay so my notes here say it's the cleveland massacre on a national level and i just want to grab a couple of paragraphs out of there i couldn't

read the whole part because this is also you know 20 30 pages maybe an hour worth of hour and a half worth of reading um but there are some interesting points here and then we're going to get to get to what the end result is again this is happening he's extremely young so the cleveland massacre happens he's 31 years old now the part i'm telling you about happens a few years later so he's still in his early 30s in september 1875 standard oil formed the acme oil company a front organization to take over local refiners under archibald's guidance. Archibald is this guy that was his competitor that wouldn't sell out to him, eventually sells out to him. And then just like he did with Rogers and other people, he says, hey, come work for me. And now Archibald goes out and

is just racking up refineries for Standard Oil. And many of these people don't even know they're being bought by Standard Oil. We're going to see that here in a minute. Within months, he had bought or leased 27 refineries, moving at such a hectic pace that he nearly drove himself to collapse. Over the next three or four years, Archibald heralded the remaining independence into Standard Oil. At least, and here's the interesting part, I gotta stop saying that, here's another interesting part. At least one prominent refiner contended that he was subjected to coercion by Standard Oil when he tried to build a new refinery. Samuel Van Sickle, the pipeline pioneer, said a Standard Oil representative had offered him a good salary to abandon the project.

He then said, this is a quote from Samuel Van Sickle, He then said that I could make no money if I did refine oil. He also said if I did, I could not ship it. He said he would say to me confidentially that they had made such arrangements with the railroads in reference to freight, in reference to getting cars. He knew I could make no money if I did make oil. Van Sickle bowed to superior force. So the cat's a little bit out of the bag. They're saying, hey, listen, just let us buy you out. And we've been paying your salary just to not do this project. And the guy's like, no, I'm going to continue. And he's like, well,

that's fine. We're going to make sure that our costs are so low that you can't make money refining oil. And even if you were able to make money, your oil is not going anywhere because we own the railroad tracks. How are you going to get it there? And so he had no choice but to sell. Again, I'm going to use this example, but if you read the Everything story, Brad Stone's fantastic book about Jeff Bezos and the age of Amazon. Jeff Bezos does this very similar situation to diapers.com. They wanted to stay independent. He wanted to buy them, and then he just starts slashing prices and is able to basically absorb losses way longer. He basically just waited them out, and then they sold.

And there's, again, a ton of other examples that come to mind when you read both the books, like when you read about how Jeff Bezos runs his company and some of the strategies that Rockefeller made. So let's go back to this part because I want you to understand how crazy it's going to get right now. In May 1875, Rockefeller completed his grand design of controlling all the major refining centers when he convertly bought J.N. Camden and Company of Parksburg, West Virginia, and then rechristened it the Camden Consolidated Oil Company. And we're going to see why he was so secretive and how this plays to his advantage here.

Camden's correspondence documents the stealth involved in this sort of takeover. Before consummating the sale, Standard Oil requested an inventory of his properties and was ready to send its expert superintendent to investigate. Yet Johnson, Newland, Camden himself, this is the guy that's selling to Standard Oil, a well-known Democratic politician feared that the superintendent of his barrel factory might recognize McGregor. McGregor is the guy that is being sent by standard oil to do the inventory and warn standard oil quote this is from camden who's selling out to rockefeller right now we would prefer having him to come here but don't see how he could do it without exposing the

whole thing i find the superintendent of the barrel factory is a little curious about what is going on end quote that even a superintendent was kept in the dark about the new owners underscores the priority that standard oil placed on confidentiality and we're going to see why the camden deal remedied a flagrant weakness for rockefeller who dominated refineries in the areas served by the new york central the erie and the pennsylvania railroads there was only one gaping hole left in the map, the territory controlled by the maverick Baltimore and Ohio Railroad. Anybody that's played Monopoly will recognize that as the B&O Railroad. In short, the B&O was providing comfort to the last independent refiners still holding out an open rebellion against his imperial rule. So again, what he did in Cleveland, he's been expanding everywhere. The last part that he hasn't been able to consolidate is this place up in Baltimore

that's serviced by the B&O Railroad. And we're going to find out why at this point he wasn't able to do that. The president of the B&O, and I know there's a lot of names in here. A lot of the names aren't that important. I get really confused when I'm reading these books, and there's just so many people you have to keep track of. So I'm gonna say them just because they're in the book, but don't worry if you don't remember.

The president of the B&O, John Garrett, had long exhorted Camden to fight the standard Goliath and offered him marked down freight rates to do so. Okay, so what's happening here? This guy Camden's been competing with Standard Oil. Eventually he agrees to sell to Rockefeller. But before he did this, B&O, who wants to fight back Standard Oil, is giving him markdown freight rates. The exact same thing that Rockefeller's competitors said that gives him an unfair advantage. Now that he had, unbeknownst to

Garrett, again, so B&O doesn't know this is happening. Now that he had, unbeknownst to Garrett, again, so B&O doesn't know this is happening. Now that he had, unbeknownst to Garrett, defected to Rockefeller, Camden wanted to retain the rates expressively designed to shore up Standard Oil's opponents. So what he's saying there is that he's going to sell, but he still wants to discount in rates because this is going to give Standard Oil even more of an advantage. And the guy giving him the rates, Garrett, doesn't know that he's selling to Standard Oil. On May 11, 1875, scarcely able to suppress his mischievous glee, Camden informed his new owners in Cleveland, quote, Mr. Garrett is coming out to see us tomorrow. I suppose he will encourage us to keep our oil business and fight the combination, that is, Standard Oil.

And he negotiated excellent rates with Garrett. In exchange for shipping 50,000 barrels of oil monthly, he would receive a 10-set-a-barrel drawback on all refined oil sent via the BNO. See, this is the exact same setup as the SIC. He's getting a discount on his barrels and his competitors' barrels, whether shipped by Camden or his competitors. That Garrett revived the infamous drawback when he thought he was fighting Standard Oil shows that nobody could claim exclusive virtues in this business. That spring, Rockefeller gave Camden wide leeway to buy up refineries serviced by the B&O, and he quickly snatched up three more refineries. Okay, so check this out. So Camden agrees to sell to him. Camden gets discounted rate from BMO, which they don't even know it's going to Standard Oil. And then he's using Camden as a front to buy up competitors. It looks like they're just going to sell to Camden so they can all get together and fight Standard Oil.

But they're selling to Standard Oil. At several points, Camden, like Archibald, bristled at the excessive prices he paid, meaning that Rockefeller constantly would overpay for competitors just to knock them out it almost makes me weepy to pay out good money for this kind of junk he told rockefeller this is canon to rockefeller but as it is a part of our duty to mankind i suppose it is necessary to carry it to carry it through without flinching and this is where i'm gonna wrap this part part of the podcast. The completion of the Baltimore campaign left John D. Rockefeller, still in his 30s, the sole master of American oil refinery.

It also meant that he monopolized the world's kerosene market. He was now living a fantasy of extravagant wealth that would have dwarfed the most feeble daydreams of his father, and few people beyond the oil business had ever heard of him. So by the time he's in his 30s, he's expanded the Cleveland Massacre outside of Cleveland and has now monopolized an entire global market of kerosene. And I think what's most impressive to me is this last line, and few people beyond the oil business had ever even heard of him. It's very hard to compete with somebody you don't even know exists.

And I think it shows he just had a – Rockefeller had the ability to just control – like self-control that I've never seen – I don't think I've ever read in any other – like any of the other founders that we've talked about. The idea that you could do this, still be a young man, be fabulously wealthy and no one knows. Because think about like the ego you would have to just completely separate from yourself. The fact that you would just, it's obviously a lot smarter. It's a lot smarter to make money quietly so you don't invite competition, which is what Rockefeller said multiple times throughout the book in his career. But I think as humans, that's very hard to do. And he definitely had the discipline to do that. So while I was reading this book, I found a quote from this other book that wasn't on Rockefeller, but it was on Rockefeller's soul. It was on a bunch of oil

titans. And it's called The Prize. And I want to read the quote to you, and this is the beginning of this short. I just want to talk about Bezos too. But this is a quote on Rockefeller, but I think it could also go for Bezos too. And this is like, again, this goes back to what I've talked to you about on multiple podcasts. It's this idea that I'm really fascinated with. And I've tried to explore in this podcast and not always to in the best way, I don't think. But this idea that books are the original hyperlinks, that they they lead us from one idea to another, just like the modern Internet does. And whether it's like covering Sam Walton's book, which you realize that he was basically the Jeff Bezos of his day, or said another way, Jeff Bezos is the Sam Walton of his day. Like if you read My Life by Sam Walton and then read Brad Stone's book on Jeff Bezos, you're going to see that he just – he was hugely inspired and outright copied a lot of his ideas. He even says that he makes executives at Amazon read that book

to this day. But throughout this entire book, like you have Rockefeller constantly, like he's in the book, I left notes on other founders mentioned in the story that we know, Andrew Carnegie, JP Morgan, Cornelius Vanderbilt, Henry Ford, Henry Flagler. It's just interesting to me how it's almost like they're saying that there's no new ideas under the sun. And the reason I think it's so interesting to explore the history of founders or the history of entrepreneurship is because you see the same ideas over and over again, just applied in different fields. So I want to read this part that I came across. It's not even in this book.

Again, it's in the book called The Prize, and I think it's – I wanted to read these two sections to you right after I talked to you about the Cleveland Massacre and then his expansion of that because you really understand why he did what he did. Okay, so here's a quote. He instinctively – we're talking about Rockefeller, obviously. He instinctively realized that orderliness would only proceed from centralized control of large aggregations of plant and capital with the one aim of an orderly flow of products

from the producer to the consumer. That orderly economic efficient flow is what we now, many years later, call vertical integration. I do not know whether Mr. Rockefeller ever used the word integration. I only know he conceived of the idea. So if you went to school for business, you don't even have to go to school for it, but they definitely teach us in management business classes. But this idea of vertical integration is exactly what Rockefeller was doing. he wanted to control everything from start to end and that's why he gets into pipelines he gets into railroads he gets into uh storage tanks refineries everything um and now this is a note i put this is in the book um but this is where it really to me these two paragraphs uh this just reminds me this screams

jeff bezos to me and going back to this idea where these ideas are linked not only in different books but throughout time instead of instead of wanting to eliminate them rockefeller saw himself as the industry's savior an angel of mercy absorbing the weak and making the industry as a whole stronger, more efficient, and more competitive. Standard oil was growing horizontally and vertically. It added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off competitors, made its products affordable to the average household and to increase market penetration sometimes sold below cost that one paragraph just change out all the stuff related to oil and then add in all the stuff amazon does related to commerce and then even

even the infrastructure needed to deliver that commerce whether it's uh server capacity to to service millions of customers at the same time or what they're doing now how they're slowly edging into the delivery of the packages before it's okay fedex and ups does it now most of my packages that i order not most but a good amount of them come directly from amazon's own own um deliver delivery system and it's funny i don't know if it was ups or fedex but one of them said, maybe last year, recently, where they're like, are you worried about Amazon buying planes and basically as a future competitor, because they're your largest customer now. And his, I think it was a CEO, his response was just so silly. It was

like, oh, you know, logistics is an extremely complicated, low margin business. I don't think Amazon wants to be involved. And it's just like, you're not paying attention. That's exactly what Amazon's gifted at doing. So again, this is Standard Oil. It added its own pipelines, tank cars, and home delivery system network. It kept oil prices low to stave off competitors, made its products affordable to the average household, and to increase market penetration, sometimes sold below cost. It developed over 300 oil-based products from tar to paint to petroleum jelly to chewing gum. And this is where it's going to wrap right here. By the end of the 1870s, which means after these two massacres I've just told you about,

Standard was refining over 90% of the oil in the United States. So he goes from having a monopoly on refining in Cleveland over the course of four or five years. He expands that now in his mid-30s. I think he'd be 35 at this time, 34, 35. Standard is refining 90% of the oil in the United States. It's developing 300 different products based on what you could do with kerosene and petroleum and oil and all these other things. That's why I wanted to get to this one sentence. By the end of 1870, Standard was refining over 90% of the oil in the United States. And if I just went out and started the podcast and told you about that,

or if you just stumbled across it if you read the book, I just don't think that's as impactful as understanding how. How did he get to that point? How is a young guy in his 30s controlling 90 of a massive you know massive uh industry and it's through these the strategy of of these secret companies these kickbacks and these these oil and transportation cartels okay so that's all the part i wanted to tell you about his business strategy um obviously this book is 700 pages long i like there just so much information. And this is why it's taken me even longer to finalize because I kept going back and forth about what to include

and what not to include. And that's not my goal with these podcasts. I'm not Dan Carlin. I'm not going to spend six months making a masterpiece. I think since podcasts are subjective, a good podcast that you can listen to now is better than a perfect podcast that never gets released. So that's all I'm going to share from his actual business strategy and his life. There is some other things. I've talked about in other podcasts that I'm a sucker for aphorisms. So there's just some random parts that I highlighted that don't really fit into a cohesive story that I want to share with you. And then I want to tell you about a quote from the guy that wrote the book that I think is the perfect way to conclude. So here's some just aphorisms.

I think if you just one or two sentences tell you a lot about Rockefeller's strategy or who he was as a person. And I'm going to start with, well, I'll tell you if they're quotes from him or if they're quotes about him. And these are just things that I found personally interesting. So this is about him. Taking for granted the growth of his empire, he hired talented people as found, not as needed. I thought that was a really good idea. So he constantly picked up, he was like, this guy's really smart. And he usually do. I don't have anything for him to do yet, but I'm going to hire him. I'm going to find him something to do. Many employees said he never lost his temper, raised his voice, uttered a profane or slang word, or acted discourteously.

Rockefeller seldomly granted appointments to strangers and preferred to be approached in writing. The reason I brought that in here is because he constantly expounds on this idea that you should never waste time nor money and that they were very much interrelated. And as such, he didn't waste his time talking to people or trying to search out opportunities, what people would call networking now. He just worked. He came up with his ideas and then worked every day to enact those ideas. And then once he put the system in place, by the every day to enact those ideas and then once he

put the system in place like by the time he's in his late 30s he's semi-retired he'd go into the office but then in the afternoon he'd leave and he'd go and like work outdoors and do all this other stuff because the system was already running and how did he do that well uh rockefeller tried to extricate himself from the web of administrative details and dedicated most of his time to broad policy decisions. Here's another one I think is interesting. He wasn't the sort of person to persist in a flawed situation. Rockefeller was a sort of stubborn person who only grew more determined with rejection. You're getting an idea of his personality through these. Standard Oil's strategy was to furnish as little information as possible. I think that's his own strategy. Rockefeller was a very, very quiet guy. And let's talk about, this is a really interesting point. And I'm

eventually going to do a podcast on Vanderbilt, but check this out. This point is worth underscoring. 29 Vanderbilt wants to do business with Rockefeller because remember, well, you don't remember because we haven't done the podcast yet, but Vanderbilt makes his money by monopolizing transportation. This is about 50 years before Rockefeller. This point is worth underscoring. 29-year-old Rockefeller demanded that the 74-year-old Commodore Vanderbilt, that that was Cornelius's most people call him the Commodore Come to him This refusal to truckle bend or bow to others this insistence on dealing with other people on his own terms time and turf

Distinguish Rockefeller throughout his career. That's a really ballsy thing to do man Rockefeller's he's rich by now, but's not he's not vanderbilt rich he's not lifetime rich he's doing well as a 29 year old for sure but the idea that he's making vanderbilt who's probably the most famous one of the most famous people in the country he's like oh you want to come you want to meet you want to do business you got to come come to me it's uh i don't i think that might be the the one paragraph that tells the most about Rockefeller. Here's some of his quotes that are in the book. And again, just gives you an idea of the kind of person he was.

Success comes from keeping the ears open and the mouth closed. Again, this goes on his, he constantly references, he thinks silence is an indicator of strength. A man of words and not of deeds is like a garden full of weeds. This I highlighted because I thought it was interesting. This is when he's almost, he lives to 98 years old,

but I think he's like 60 or 70 when he gives this quote. All the fortune that I have made has not served to compensate me for the anxiety of that period. And he's talking about this period in his life, the one that we just talked about, where he's in a boom and bust industry, fraught with competition.

It could have easily gone the other direction. And he talks about, yeah, it's great I made money, but he had all kinds of health issues later on, even though he survived for a long time. He lost all the hair, everything, his head, his body hair, his eyebrows. He was in a deep depression in the 50s. He started getting better when he stopped working. Here's another one of his quotes. I think it's really something I need to read and really adapt to my own life because I have all these ideas I like to explore. But do not many of us who fail to achieve big things fail because we lack concentration the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else so the context that he's talking about his he had other businesses

but he thought oil was his best shot so he gave up everything else and only focused on oil and no there's the last quote. The impression was gaining ground with me that it was a good thing to let the money be my slave and not make myself a slave to money. And the last thing I want to talk to you about, because I feel like reading 700 pages, the 700-page biography of him. Then I also did independent research online. Um, I still don't know who he is. Like, I think his ideas were, I mean, really, really good. Um, now if you did that, that would obviously be illegal. But at the time he just, his business strategy was just unparalleled, but I couldn't really figure out like, what was like, what did I, how did I want to end this podcast? Like, what did I what was like, what was I going to say about him,

you know, and it's really hard. And then I found this quote from the guy that wrote the book, Ron Chernow. And this is I want to leave you with this. And this is what he's taught his his opinion of Rockefeller, who obviously spent way more time studying them than I did. What makes him problematic and why he continues to inspire ambivalent reactions is that his good side was every bit as good as his bad side was bad. Seldom has history produced such a contradictory figure. I almost think I could have done a multiple part series on this guy. And sometimes I feel like at the end, like there's a feeling of melancholy because there's just so much in here. But that's again, the point of what I'm doing is not to give you a complete summary. It's to just

tell you things I found interesting. And even if you never read the book, you'll learn something that maybe you could apply to your own life. But to get the full story, I really recommend reading the book. And if you want to help support the podcast at the same time, you can go to founderspodcast.com. And if you use that Amazon link, it's what's known as an Amazon affiliate link. If you purchase the book using that link, Amazon gives me a small percentage of the sale at no additional cost to you. So it's a great way for you to get a book that I think is extremely valuable and well worth your time and help out this podcast if you want to help out the podcast. Thank you very much for listening. I'll be back soon.