Founders - #192 Jim Casey (Founder of UPS)

Episode Date: July 19, 2021

What I learned from reading Big Brown: The Untold Story of UPS by Greg Niemann. ----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----Casey pursued a Spartan business philosophy that emphasized military discipline, drab uniforms, and reliability over flash.I had heard stories about the company's tireless founder. He was a living legend. Jim Casey started working from the age of eleven to support a family of five.Casey began at the bottom. He speedily delivered messages and packages on foot. Casey learned about efficiency by doing.Seconds saved become minutes over the day and a few minutes each day mean big dollars.To outsiders the UPS regime has always seemed excessive.People have always bought more than they could carry, and a hundred years ago they had no cars to help them out. When Jim Casey and his partners began their delivery service, it served only department stores, and the UPS role was to complete the stores' retail transactions.Humility was one of Jim Casey's most strongly held values.Our real, primary objective is to serve. To render perfect service to our stores and their customers. If we keep that objective constantly in mind, our reward in money can be beyond our fondest dreams.Service is the sum of many little things done well.Good management is taking a sincere interest in the welfare of the people you work with. It is the ability to make individuals feel that you and they are the company–not merely employees of it.Jim Casey watched the streets carefully. He watched movement. He watched what people sold and what people bought. He was an eternal puzzle solver, his mind constantly preoccupied by every sensory detail involving his core business, packages. He gravitated to them, mesmerized by how they were wrapped and how they were delivered.When traveling between meetings Casey would frequently tell his driver to stop when he saw a UPS delivery in progress. Without identifying himself, Casey would ask UPS drivers what they thought of their job. He'd listen carefully and consider their answers seriously. These informal "man on the street" interviews became an invaluable way for him to assess the efficiency of UPS delivery operations in a way that a UPS manager's filtered version could not.Jim Casey's office was a small stark room, occupied only by a desk, several chairs, and a coat tree. His door was never closed.His answer for sluggish layers of management was decentralization, and his attitude toward employees was an unwavering belief in and respect for the individual.Money and prestige did not push him. Excellence did.Casey's personal code was discipline.Hardly a shining star, Jim Casey was more a steadily burning flame.Distill Jim Casey's lifelong message to its essence and you get: Neatness, humility, frugality, dependability, safety, strong work ethic, integrity.This unassuming ascetic with an iron will based his company and his every move on ethics that he learned as a child. Jim Casey's parents greeted hardship with grit and ingenuity.Jim was by then old enough to apprehend his parents' mounting anxiety, to understand that his father was not healthy by comparison with other men. The worried atmosphere undoubtedly had effect.At the end of the nineteenth century, the number of American children in the workforce reached staggering proportions. Over two million children worked in mines, factories, and sweatshops, many in appalling conditions.For the Caseys, there was no alternative. It was critical. With two younger brothers to protect and a mother and an ailing father to support, eleven-year-old Jim Casey had developed a maturity that belied his age. His family was in precarious straits, and it was up to him to solve the problem.He worked more than ten and a half hours a day, and longer on Saturdays, starting at $3 a week. [He is 11]He picked up and delivered telegrams, mail, and packages —working from 7 P.M. until 7 A.M.It wasn't all telegrams. Many of the night calls were drug addicts summoning a messenger to help replenish their stash.During winters, it rained and rained. Jim was often cold and wet. Wealthy people could afford fancy hotels. Jim often looked with envy at them through the windows, as they sat in the big hotel chairs looking out onto the rain from warm lobbies.Thompson shot and killed Moritz. [Jim’s partner]The cold-blooded murder left the other two boys stricken.The company, founded in that six-by-seven-foot basement office, would eventually become United Parcel Service.Jim wrote to the Chambers of Commerce of every American city with a population over 100,000, asking for names of local delivery firms. He accumulated the names and then initiated a communications link that he called the "Parcel Delivery Service Bureau." The bureau was a means of sharing new methods, ideas, or systems that worked in different cities. Every once in a while, the correspondence disclosed a gem of an idea, which Jim would hurry to implement. [Founders allows you to do the same]Mr. Carstens told them that he would not fund their venture, but that they should not interpret his resistance as a disincentive. He finished with the words "determined men can gave do anything." That comment became an invocation; Jim Casey would use it as a rallying cry time and again.We have nothing to sell except service.Rather than paying up front with cash, they funded these acquisitions by pledging what they had, which meant shares of UPS stock. UPS was to use this strategy numerous times in coming years.The vision beyond retail store delivery made sense to Casey and he later related “Think of the scores of millions of additional packages we would handle if we delivered all those going into each territory, rather than what goes out of the stores we happen to serve."UPS would take on the ICC one city, state, or multistate area at a time.Like Aesop's tortoise, UPS was sure and steady, plodding toward its objective of providing delivery service all over America, moving forward with perseverance and a humility that bordered on stealth. Big Brown was slowly but inevitably taking over the country.As Jim Casey commented “Employee-ownership is credited by the people inside and outside the company with having done more than any other thing toward making our company and our people so notably successful financially and otherwise."Fred Smith and his FedEx was sheer genius. That FedEx was established in 1973 as an airline, not a ground delivery company, is an important legal distinction, because the company was exempt from onerous common carrier regulations. Airlines fall under a different regulatory body (the FAA), not the ICC that regulated trucking companies.And FedEx didn't intend to start up city by city as UPS always had. The concept was hatched nationwide, with its one hub, from the very beginning.Most UPSers took the ostrich approach, ignoring the new company. Some denigrated it, saying, for instance: How are they going to deliver them on the ground? Their network's too small. People don't need that much delivered overnight. Costs are too high. They'll probably go under.Business building, to Casey, depended on the hard work and loyalty that the stock ownership inspired. "The basic principle which I believe has contributed more than other to the building of our business as it is today, is the ownership of our company by the people employed in it."---Transition seldom comes easily. Of course, we cannot clearly see all of the steps ahead. It is always easier to see difficulties than to develop methods of solving them. But first, let us take sight of a goal. The difficulties will be solved in ways we cannot now see.First is the dream, then development, followed by improvement until the dream becomes a reality. Later a new dream makes the products of an earlier one obsolete. This has been the course of industrial history, and in its path have been the victims and the victors of progress. —Jim Casey----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ”— GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

UPS was half a century old in 1957. In June of that year, I was a 17-year-old Californian, right out of high school, and had already secured morning employment. Still, I complained to a neighbor, who always wore a brown uniform, that I needed an afternoon job, too. Why don't you go down to United Parcel?

They always need guys to load and unload in the afternoons. So in June, I became a UPSer, even though I wouldn't be 18 until July. Close enough, they said, and I was assigned to load a trailer in downtown Los Angeles, starting at $1.62 an hour. In August, the company gave us free cake and pamphlets commemorating the company's 50th anniversary. In December, we moved into a new state-of-the-art facility next door where men in suits were always around checking things out. Another UPSer gave me the heads up that one of them was company founder Jim Casey. From the very beginning, I had heard stories about the company's tireless founder. He was a living legend. Jim Casey, the son of Irish immigrants, working from the age of 11 to support a family

of five. In 1907, in a basement beneath a bar, he conceived the American Messenger Company, which eventually became UPS. I drove for UPS for five years and two weeks, and then in 1966, I entered management. All the stories I heard about the company's origins and history took on a new clarity as I met and got closer to the great men who were leading UPS. Great men, including Jim Casey. Though retired, he was still a presence. I was fortunate enough to meet him on numerous occasions. His unwavering insistence on strong values kept UPS and its employees on course. Much later, when I was finishing my career at UPS in the 1990s, books about big American companies and legendary American entrepreneurs were

coming out in droves. Yet the story of our incredible company remained untold. UPS, Big Brown, was by then well-known and yet a mystery. Big Brown, the untold story of UPS, will be the first business biography written regarding this elusive yet highly successful corporation. I'm proud of these pages, an epic snapshot of American business and culture over the past hundred years. You'll read how UPS grew on the heels of the robber barons and the wild west gold rush euphoria by providing delivery service for department stores. Then how it evolved into a common carrier. Led by determined men, the company expanded against the background of the roaring 20s, the Depression, and the rise of the labor movement. Jim Casey remains the center of the UPS universe. And that was an excerpt from the book I'm going to talk to you about today,

which is Big Brown, The Untold Story of UPS, and it was written by Greg Nieman. And I want to thank a misfit named Christina. She's the one that turned me on to this book. I didn't even know it existed. All the way back on Founders No. 151, I covered the biography on Fred Smith, who actually founded FedEx. And that book was undoubtedly one of the craziest founding stories I've ever heard. Let me read. I'm going to tell you how it ties into why I wanted to study UPS, because these giant physical logistics companies are unbelievably difficult to build. And we'll go into that. Jim, it took Jim almost 60 years to actually finally achieve his vision of nationwide delivery. So this is from, again, this is Founders Number 151. The book is called Overnight Success. Federal Express and Frederick

Smith, it's running a great creator. And it has one of the craziest opening paragraphs of any book I've ever read, and I'm going to read it to you right now. At the age 30, Frederick Wallace Smith was in deep trouble. His dream of creating Federal Express had become too expensive and was fast fizzling out. He had exhausted his father's Greyhound bus millions. He was in hock for 15 or 20 million more. He appeared in danger of losing his cargo jet planes and also his wife. His own board of directors had fired him as CEO. Now the FBI accused him of forging papers to get a $2 million bank loan and was trying to send him to prison. He thought of suicide. The story of FedEx is just absolutely incredible. I highly recommend reading that book and listening to that episode if you haven't done so already. It's a book I need to reread in the future because

it's just a reminder. Every single biography that we cover, there's an opportunity for them to quit, to give up, and they somehow find the internal fortitude to resist that urge. And we're going to see that today with Jim Casey, because he actually almost sold his company, the company that he works on from the time he's 17 till he's till he dies, essentially in his 90s. This is and FedEx is going to make another appearance to later on the book. And it's actually really I never made the connection to I read this book, the book that I have in my hand about about how you can attack a

similar problem. So UPS existed half a century before FedEx did, maybe even longer. And it was attacking the same problem from a completely different vantage point. It was very fascinating. So I'll get there. That's later on in the book. First, I want to just give you a little bit about Jim Casey's philosophy. This is from the inside cover of the book. It said, Casey pursued a Spartan business philosophy and that emphasized military discipline, drab uniforms, and reliability over flash, a model that is still reflected in UPS culture today. And so that is not only the culture of UPS, but I would say it's the personality of its founder. And we're going to see more about the personality right here. Drivers have a lot of autonomy. UPS drivers have a lot of autonomy, but at their back is a Byzantine system that evolved over a hundred years along lines conceived by the extremely disciplined and fastidious company

founder, Jim Casey. So let's define that word because we can use a simpler word there. So it talks about discipline and the definition of fastidious is very attentive and concerned about accuracy and detail. His entire business is providing a service that has to be reliable. He has to be obsessed with accuracy and detail. And then the discipline just runs throughout the company. A wily little man, Casey began at the bottom. He speedily delivered packages, messages and packages in the turn of century seattle on foot casey learned about efficiency by doing so this this book does not really go in chronological order each each chapter deals with a specific part of the ups business and then it there's like constant flashbacks to jim casey um so in this case they're talking about okay you start out delivering packages on

on foot 100 years later the business is so much more complex. It talks about even at the very beginning that he would constantly worry about optimizing for efficiency. He wanted to make sure the promises that he gave to his clients he could deliver. So it talks about every motion at UPS is timed, measured, and refined. All movement at UPS are subject to efficiency modifications and institutionalized. As the old maxim among UPS industrial engineers goes, in God we trust, everything else we measure. This is very similar. Essentially, they're just talking about the time and motion studies.

I'll be back on episode number 168 when we read the autobiography of Larry Miller. He essentially built his entire career on finding different routes, thinking outside the box to do tasks that everybody else was doing, but do them faster. And why? The second save become minutes over the day, and a few minutes each day mean big dollars. These methods have lasted. And so then the author goes into just a lot more detail about they measure every single thing. I want to give you the punchline here. And this chapter I'm reading out of is called The Cult of the UPS Driver. And the note of myself is all the best companies resemble cults. And usually what happens to a cult? Outsiders don't understand them. They think they're too extreme. That to outsiders, the UPS regime has always seemed excessive.

And this is about a waiting list and a difficult physical winnowing out process. The long waiting list for driving up to four or five years and the exertion these hopefuls do in the meantime separate the wannabes from the chosen. So he talks about just like it's the same path that he that he followed. The author works for UPS for 40 years. He's definitely a believer. So it comes through. He's definitely part of the cult. So we have to take that into account. But what I would say is what he's talking about here is

starts out sorting packages, loading trucks. It's all physical labor. It's extremely hard. You're well paid for or you're well paid, you're well compensated. You get employee ownership, which we'll talk about more today. But they follow this process. You have to do that before you become a driver. And they do that on purpose because what he just said, the exertion these hopefuls do in the meantime, separate the wannabes from the chosen. You have to really want to do that. Package handling in the hubs is hard and punishing. It's not for everyone. Again, we're in a chapter talking about the cult of the UPS driver. You see the same thing in whether it's in like special forces in the military, some there's always some kind of process that they go through to make sure that you're serious about joining their team. By the time employees have moved a few mountains of cardboard clad

merchandise, they've either caught and this is why they've either caught the UPS commitment or they haven't. If they had that seed of UPS perseverance will spread through their system until they bleed brown blood. And those three words were there, bleed brown blood. That's repeated a few times throughout the book. There's two things I want to talk to you about here that jumped into my mind. First, I want to read you this quote from Zero to One, written by Peter Thiel, that I think echoes exactly what we're we're learning from the book that i have in my hand um it says entrepreneurs should take cultures of extreme dedication seriously is a lukewarm attitude to one's work a sign of mental health is a merely professional attitude the only sane approach the extreme opposite of

a cold is is like a is a consulting firm like a censure not only does it lack a distinctive mission of its own remember this is mission driven why I don't need I shouldn't say remember because I haven't got into it Jim Casey's obsessed he's like he's obsessed with packages like the same way Enzo Ferrari was obsessed with building racing cars and I'll go into more detail on that he felt that the only thing he had the offer to the world was service and he made sure he built an organization that that followed through on that promise of service. So they don't have a distinctive mission of its own. But individual consultants are regularly dropping in and out of companies to which they have no long-term connection. Something in this book that's talked about in detail is this winnowing out this very difficult

process and then getting everybody on board with the same mission and the fact that a lot of the company is owned by the employees is the fact that they work for the company for an extremely long period of time. So it's kind of the opposite of what Peter's saying here. You're just dropping into a company, you're in there for a little bit, and then you jump back out. The best startups might be considered slightly less extreme kinds of colts. Remember, the chapter is the cult of the UPS driver. The biggest difference is that cults tend to be fanatically wrong about something important. People at a successful startup are fanatically right about something those outside it have missed. And so the other weird thought that popped into my mind when I got to this section was I was watching this video on YouTube about towards the end of Steve Jobs life, this guy said,

I think they had, I don't remember the exact name of the video, but it's like, what is it? What's it like to selling your company to Steve Jobs for 200 million or whatever the thing was. And so Steve, the negotiation process was hilarious. I should actually go back and find the video and take notes on it and then share that with you. So after he buys the company, I want to get to the punchline why I'm telling you this, though, is he's constantly exposed to meeting with Steve Jobs and like his small group of people that have been around Steve and working with him for decades. And one time he's in there's like four people in the meeting. He's the only outsider. And he's looking around.

He's like, how the hell did I get here? He's like, I cannot believe I'm in the room with Steve Jobs. He's naming all these other people that have been with Steve forever. And he's daydreaming. And Steve, I guess, picks up on this or not. I guess he does pick up on this and he asks him, whatever, I forgot the guy's name.

Let's just call him Steve. Or no, that's confusing. Let's call him John. John, what do you think of this and he's like what and then he's like oh you know i don't know and then steve's like you weren't paying attention were you and he's like no and honestly my mind was wandering and he's like if you do that again you're out of here he's like you're not he's like everybody else here is an apple guy and then steve says something like i hired I trained them. I just bought your company. You're not an Apple guy yet.

And so that same process that he's referring there to become an Apple person is the same thing that this author went through. He's a UPS guy. He's a UPS person. He went through their process to make sure that he was committed to their mission. People have always bought more. So this is the initial problem that Jim was trying to solve. People have always bought more than they could carry. And 100 years ago, they had no cars to help them out. When Jim Casey and his partners began their delivery service, it served only department stores, and the UPS role was to complete the store's retail transactions.

So that is the original problem that Jim was trying to solve. More on Jim's personality and how it influences how he built UPS. The brown color of UPS apparel was an intentional understatement as a way to project humility, one of Jim Casey's most strongly held values. This is going to echo what Sam Walton taught us a long time ago. Jim valued humility, so did Sam Walton, at least the external appearance of humility. You can have an ego, but what Sam Walton was saying is your ego could drive you, but you don't want to put it on display. He said, I learned a long time ago that exercising your ego in public is definitely not the way to build an effective organization. I think we should listen to him. There's very few

people that have built more effective organizations in the history of humanity than Sam Walton. More on Jim's commitment to service, which is repeated over and over again in the history of humanity than Sam Walton. More on Jim's commitment to service, which is repeated over and over again in the book. And this is something, you know, this is foundational to the history of entrepreneurship. Jim Casey made sure that service was the fulcrum on which all business decisions swing. All right, a quote from him. Our real primary objective is to serve, to render perfect service to our stores and their customers. If we keep that objective constantly in mind, our reward in money can be beyond our fondest dreams, Casey said. That's very similar to what Henry Ford told us. Money comes naturally as a result of service. Jim's commitment to service

was so extreme that he made it the company mantra. This is what he said. The company mantra was service, the sum of many little things done well. Okay, so let's go into how Jim operated. You don't have to be a famous somebody to create a global empire. Jim Casey moved through his long life as reliably and inconspicuously as a plain brown UPS package car travels between pickups and deliveries. Jim Casey had a profitable approach. UPS's ever increasing sphere of service depended on a code of ethics as rigorous as a military academy. Again, military academy, Spartan, discipline. There's repeated over and over again in the book, with some of the best management in the world as ever known. Casey's definition of good management didn't draw attention to himself, but instead focused on getting results through

other people. And this is another main point of this entire book is the fact that employees and management and company owners, they were aligned because they had skin in the game. This is something we, and I'll talk more about this later, but I was reading through, I don't actually know, I think it was, I can't remember if it was in Warren Buffett show how the letters or if it was actually something that Charlie Munger said at a Berkshire Hathaway meeting. But he talked about the importance that he talks, he says, listen, incentives are a superpower, says it over and over again. And one time he said that if you want to learn about how important incentives are in business, read the biography of Les Schwab. And he say, I forgot the

exact quote was something like, he could tell you better than we can, that he built this entire massive, beautiful business, profitable business selling tires in the Pacific Northwest, with the dedication to sharing profits with his employees, something that Jim Casey was extremely, he wanted the employees to be able to capture the upside. And the reason I'm telling you that now is because listen to how he describes what management is. Good management is taking a sincere interest in the welfare of the people you work with. It is the ability to make individuals feel that you and they are, he italicized that word, the company, not merely employees of it. It is the ability to make individuals feel that you and they are the company, not merely employees of it. Jim Casey was a shy man, anything but flashy.

A stranger observing him might have thought this is not a man to be watched. Rather, this is a man who is always watching. So the note I left myself is very simple on this page. Always pay attention. And you will see that he's doing that. This is a great little anecdote because he's 80 years old in this story. This is fantastic. Jim Casey watched the streets carefully. He watched movement.

He watched what people sold and what people bought. He was an internal puzzle solver. His mind constantly preoccupied by every sensory detail involving his core business, packages. He gravitated to them, mesmerized by how they were wrapped and how they were delivered. At the 1972 UPS National Conference, it was held at a resort hotel, gives a sense of his singular obsession. During one of my walks between the dining room, remember, he starts UPS or what comes to be UPS in 1907. This is 1972. During one of my walks between the dining room and conference meetings, I heard someone call out to me.

There, half hidden in the bushes, was Jim, all on his own, gesturing down at a stack of packages. It was evident that hotel employees had prepared them for the post office. Say, what do you suppose these packages are here for, he asked me. I think we should be delivering these packages, meaning UPS and not the U.S. Postal Service. I don't know, I told him, but I'll find out. I knew I had to do something. While he slowly walked back to the meeting, by then he was 80 years old, I wasted no time in notifying our top customer service people who put the wheels in motion. The next day I told him, Jim, I'm told UPS will be delivering hotel packages from now on. What a businessman, I thought. How many of us, top management included, walked past those packages without even noticing them?

On autodidact, he never tired of learning. To keep up on the trends, he read, he listened to the radio, he asked questions. Inquisitive and alert, he didn't hesitate to put himself in situations from which he could learn. Now, this is fantastic, too. And I'm going to tie this into a couple other founders that we studied in the past. When traveling between meetings, Casey would frequently tell his driver to stop when he saw UPS delivery in progress. Now, this is fantastic, too. And this is I'm going to tie this into a couple other founders that we said in the past. When traveling between meetings, Casey would frequently tell his driver to stop when he saw UPS delivery in progress. Without identifying himself, Casey would ask UPS drivers what they thought of their job.

He listened carefully and consider their answer seriously. These informal man on the street interviews became an invaluable way for him to assess the efficiency of UPS delivery operations in a way that a UPS manager's filtered version could not. We saw this before. Every single book I've read, I don't even know how many on Jeff Bezos, but there's, what, four or five different episodes on Jeff Bezos in the archive. It's talked about. Anybody could email Jeff at Amazon.com. He'd have a team constantly getting feedback from real customers,

and they'd find a problem because usually customers can see something that his management's not going to tell them about, right? And so what happens is when he'd find something that he didn't think was right, he'd grab the email, he would forward it to the person that should be in charge of making sure this problem never occurs again, and just puts a question mark at the top. And every time in these books, when an employee gets one of these emails from just puts a question mark at the top and every time in these books when when employee gets one of these emails from jeff with the question mark it's like oh shit i better put everything down i'm doing and find this find out why this is happening and make sure it never happens again because now i have the intention the the the direct attention of jeff bezos and

that is very very scary uh another thing thing, so that's one way. So you got Jim email, or not emailing, Jim interviewing people on the street, customers emailing Jeff Bezos, Paul Orfalo, the guy that founded Kinko's, he had this voicemail system. So he would let anybody in the company call and leave him a message. He didn't filter things through some kind of hierarchy. So like you talk to your your manager your supervisor and talks to his manager and then his manager and eventually he gets it to me and so he'd find out about all kinds of because sometimes there were good ideas so he'd implement them because uh kinko's was set up as like these decentralized like a series of decentralized stores uh and so they would they wouldn't have like like very strict

ways to run the store and so you let them experiment you find the best and the worst bubble up to the top, and then you copy that throughout the company. You avoid obviously the worst mistakes. So again, very similar, a way to find unfiltered information. This is why Jim's thirst for knowledge was one of his most impressive traits. He didn't have much of a formal education,

but he learned so much just by listening. Every new person Jim met had value and the potential of conveying a piece of information or a pearl of wisdom would enhance UPS. And we see this like constant communication. He feels everybody's part of the same. Like we are the company. We're not just employees of it. He wouldn't let you call him Mr. Casey.

Casey wrote in a 1929 UPS policy manual that managers were to be addressed by their first name. This is more on his personality and how he operates. Frugal. That's an understatement. He always watched where the money went and you're going to learn why. Like when you see how this guy grew up,

it's, there's just so many parts of this book where my only note is unbelievable. There's, I was not expecting when you pick up the book, I just was not expecting some of the stuff that's in this book. And we'll get there. He always works where the money went. I have a leftovers from his days of supporting a family of five as an 11 year old. That's not

hyperbolic. That's insane. In the late 1940s, Jim made a friendly suggestion to the president of ATT, which at the time had a monopoly on America's telephones. Noting that the phone lines weren't much used at night, he suggested that AT&T might offer reduced nighttime rates. AT&T implemented the idea, and the resulting savings worked well for frugal Jim and for millions of other Americans. This goes to his own business. He didn't believe in like uh these like company palaces jim casey's office was a small stark room occupied only by a metal desk several chairs and a coat tree his door was never closed the

minimalism dispelled any customer questions about the fairness of ups prices one of my favorite stories to illustrate this and it's just a way to take this idea this important the importance of this idea and keep it logged in your head forever of course it comes from charlie munger he's touring i think it's the buffalo evening news to him and mauren buffett i just bought and he could not believe at the opulence and he just says why does a newspaper need a palace to publish in i love that guy so much all right jim preferred this spartan business style they were all owners of the business and almost without exception they preferred greater profits to splurging on frills. More on how Jim operates. He was, he believed in decentralization and empowering the individual. His answers for

sluggish layers of management was decentralization and his attitude towards employees was an unwavering belief in and a respect for the individual. And I got to that part of the book. I want to read this highlight. This comes from Ashley Vance's fantastic book. It was actually the first episode I ever did of Founders. It's on Elon Musk. Elon Musk, Tesla, SpaceX, and the Quest for a Fantastic Future is the title of that book.

And it talks about, this is at SpaceX. Hold on, let me read my notes. SpaceX quote, but individual. Okay, let me read this from this book. And this is at SpaceX. Hold on. Let me read my notes. SpaceX quote, but individual. OK, let me read this from this book. And this is something I save on my phone, this highlight. And I look at constantly. Not only I think this applies on an individual level, but also staffing your company with a bunch of people like this and giving them the freedom to work without restrictions, without anything slowing them down. Produces. I mean, I just covered the early days of SpaceX. I think it was founders number 172. Somebody just wrote a book. I can't remember. Jim Berger, maybe is his name. It's a fantastic book because it's like the first six or seven years of SpaceX's history, which is unbelievable. And I think there's a lot of

lessons in there that apply to any company, any difficult endeavor. And one of that is the importance of moving quickly, right? You have limited resources. You have to maximize time. And it's a little bit about this from Ashley Vance's great book. And by recruiting hundreds of bright, self-motivated people, this is not different from what Jim Casey did. This is why I'm reading this to you. And by recruiting hundreds of bright, self-motivated people, SpaceX has maximized the power of the individual. One person putting in 16 hour days ends up being much more effective than two people working eight hour days together. The individual doesn't have to hold meetings, reach a consensus, or bring other people up to speed on a project. He just keeps working and

working and working. And again, let's just tie that back into that line from this book, an unwavering belief and respect for the individual. Determined individuals working together towards a goal can accomplish great things. That sounds like I read that. That just came from me. Money and prestige did not push him. This is under the subheading of a life without distractions. And we're going to get to one part where it's like, all right, buddy, you're taking us a little too far, okay? Money and prestige did not push him. Excellence did. He simply had an insatiable desire to do the best job, given whatever circumstances emerged. He did not believe in fame. He believed in excellence. And I think a lot of under, it's really helpful to understand like why he builds his company this

way, why he believes in this. And the fact is that you're going to carry the scars of early poverty forever. Those are your fundamental years. There's no getting out of that. I think of back on Founders number 116, Sam Bronfman, the founder of Seagram's. Unbelievably, they had to emigrate to Canada. They were facing persecution, religious persecution, because they were Jewish, if I'm not mistaken. But anyway, see, I mean, that's another crazy book when you go into all all the stuff he did to overcome. I remember one time he had his business is obviously selling liquor. There's all these regulations against liquor at the time in Canada.

And so he had his business hinged on the ability to buy a hotel because hotels had this like grandfathered and liquor license. He had another guy that was competing to buy the same hotel. The owner had left for like a hunting trip in like the icy tundra of Canada. Sam's competition decides, hey, I'm going to sit around and wait till he gets back and then we bid, Sam hires a dog sled team and a guide to take him six days across the frozen tundra of Canada. They have no food. They have to eat. They have to hunt for their food along the way. Gets to the guy's camp, winds up convincing him to sell the hotel and gets back to town. And by the time he gets back to town, his competition didn't even know. And he's still sitting on his ass doing nothing. Didn't realize that the competition's already over but anyways that reason i bring that

up is because many many years later he's sitting in you know his his mansion uh talking to his daughter if i remember correctly and he's shivering sam bronfman is shivering literally physically shivering at the thought of wearing ratty clothes, clothes full of holes because his family was so poor to school and the shame he felt on that. And that was 30 years later after it happened. So again, you carry the scars of poverty forever. And we're going to see that with Jim Casey.

The eldest of four children, Jim was considered the family patriarch. He was not warm and cuddly uncle, but a gentle, polite, and considerate person. Remarkably, little is known about this founder of a Fortune 500 company. Even people who worked with Jim Casey for decades knew little or nothing about his private life. He really didn't have much of a life outside of UPS. It was almost as if Jim Casey had no private life beyond his lifelong commitment to UPS. It wasn't that Casey had no feelings. Anyone who knew him would tell you that he was caring at his core. He'd stop, he'd listen, he'd inquire. It was only that, unlike the rest of us with normal attachments to friend and family, the context of Jim's caring always had UPS's bookends.

And that explains the company's astonishing growth and influence under his 76-year watch. He worked on ups for 76 years of his life that's insane jim casey the man was subsumed by something greater than himself so i'm gonna go more detail i thought i got to the section i was wrong i got i thought this was gonna go into detail about what happened in his early life yeah i'm i'm gonna get there because it's it's one of the it's the part i wouldn't say it's the most, it might be the most important part of his entire story of like what he had to survive.

And the fact that you, if you are put into an environment like he was and you're able to develop skills to survive in that environment and then you apply those same skills to building a business, no one's going to be able to stop you. Jim Casey was neat as a pin.

He expected the same of everyone who worked at UPS. He had an obsession for tidiness that extended to the package car, to the packages and cars. Seeing mud on the wheels enraged him, which sparked his tightly controlled Irish temper. He encouraged his staff to look at themselves through the eyes of the customer. This is another trait that we see over and over again with the greatest founders. It could all be so simple, as a note of myself, obsess over the customer experience. And the way to do that is to look at things from the customer's perspective. Is this better for the customer or is it better for the business?

And once this idea is lodged in your mind, when you interact with businesses on the regular, you're going to see this over and over again. Oh, okay. You made this decision because it's better for you. You should have made the decision that it's better for the customer. He encourages staff to look at themselves through the eyes of the customer, saying customers judge us by the visual and mental impression they get. If those impressions are to be favorable, we must have the appearance of doing a good job.

Not only does this apply to the physical appearance of plants, which is what they call their, not their factories, but their warehouses, cars, and people. It also applies to the impressions created by the work we do and how we do it. Casey's personal code was discipline. He was not the typical corporate cheerleader. His gospel was not so much inspiring as relentless. He lacked a pithy, dramatic oratory. But this is important. I love this description.

Hardly a shining star, Jim Casey was more a steadily burning flame. You can distill Jim Casey's lifelong message to its essence. And if you do that, you get neatness, humility, frugality, dependability, safety, strong work ethic, integrity. This unassuming, and it says good values were in his blood, this unassuming aesthetic with an iron will based his company and his every move on ethics that he learned as a child, mostly from his Irish mother. Jim Casey's parents, like most Irish at the time, greeted hardship with grit and ingenuity. So it talks about his dad was trying to mine for silver at the time. That's going to lead to his early death.

Her husband, not from the perspective of obviously his mother, her husband was working long hours in dreadful conditions, and he contracted the miner's lung disease, so this is a form of tuberculosis, and began his slow decline. The Casey circumstances were grim, and the prospecting for silver didn't even work out. A financial panic was eroding Jobs' confidence. Henry, this is Jim's dad, went from job to job barely making ends meet, coughing all the while. Henry continued to set out each morning with determination. Desperation dogged their father.

Jim was, oh, this is where it hits you. Imagine being an 11-year-old kid going through this, and this is in the early 1900s. Jim was by then old enough to apprehend his parents mounting anxiety to understand that his father was not healthy by comparison and he started to understand that his father was not healthy by comparison with other men the worried atmosphere undoubtedly had effect and this is where we get to this page where my notes this is unbelievable when your back is against the wall there's only one way to go and that's forward forward. Soon, Henry was unable to work at all. As his dreams ended, his son Jim's began to take shape. At the end of the 19th century, the number of American children in the workforce reached staggering proportions. Over two million children worked in mines, factory, and sweatshops,

many in appalling conditions. For the Casey there was no alternative it was critical with two younger brothers to protect and a mother and an ailing father to support 11 year old jim casey had developed a maturity maturity that bellied his age his family was in a precarious his family was in precarious straits and it was up to him to solve the problem and so this is where he's going to discover the messaging and delivering business More than one person suggested that messenger delivery boy positions were possible for someone so young. Jim Casey goes to a department store. Jim Casey asked the personnel manager if the store had any work he might do. The manager said, our driver could use a helper. It's $2.50 a week. Report tomorrow at 7.45 a a.m sharp. The manager led young Casey to an elderly

man. He was an Irishman as it turned out and he said you go with him today. As the pair climbed into the front seat the driver asked well lad what do you know about street numbers? Nothing the young boy admitted. The driver explained the fundamentals of delivery that even number houses were on one side of the street and odd number houses were on the other side of it. Thus, Jim's growing familiarity with Seattle's captivating streets and alleyways became a source of income. He worked more than 10 and a half hours a day and longer on Saturdays. Reminder, he is 11. He worked more than 10 and a half hours a day and longer on Saturdays, starting at $3 a week. So him and his,

he's the oldest, but his younger brother has to work too. For a while, the two oldest Casey boys supported their entire family on $6 a week. Henry's, this is his father. Now Jim is 14 years old. Henry's respiratory condition continued to worsen and he died on October 30th, 1902. Jim is 14. Again, this is unbelievable. They were very, so now he, he, he all jumped to any job that that would pay him more. Right. And it's all like messenger jobs right now. The telephone is a, uh, like a new technology. And so they have these messenger services. Uh, you know, sometimes it's delivering, Hey, call up. Can you send this message to this person? Can you deliver this package? Can you, any kind of, essentially like a gopher service. There were very few

telephones at the time. Delivering written and verbal messages and then returning with the answers was a big part of Jim's job. He picked up and delivered telegrams, mail, and packages. Jim, this is unbelievable. Jim requested the night shift, working from 7 p.m. until 7 a.m. So now he's working 12 hours a day. Why is he doing that? He's working this so he can try to go to ninth grade. And he winds up, I think, going for like two months and then never goes to school again. It wasn't all telegrams.

And this is more unbelievable. Many of the night calls were drug addicts summoning a messenger to help replenish their staff. For the opium smokers, Jim had to run towards the waterfront where entrepreneurial Chinese distributed their narcotic. Jim intrepidly went into the shadowy exotic corridors to the dealers who for amounts as much as as little as 25 cents would place dabs of opium on a card and then fold it up for delivery. The company Jim was working for also had to supply the cocaine addicts. He sometimes carried trays. This kid is 14 years old. He sometimes carried trays of food for delivery from restaurants. He would have to rush to notify

railroad firemen of emergencies. He would collect bail for jailbirds and even acted as a detective. During winters, it rained and rained. Jim was often cold and wet. Wealthy people could afford fancy hotels, and Jim would often look with envy at them through their slightly fogged windows as they sat in their big hotel chairs looking out onto the rain from warm lobbies. And why am I bringing this up? Because this is something that affects his life his his

life for the for the rest of his life to the busy and driven young man man life in a hotel seemed the height of achievement it is it is thus no surprise that the future prosperous jim casey would end up living exclusively in hotels okay so moving forward a little bit. When he's 15, he starts his own business. He decides, hey, I'm going to do a, instead of working for a messenger service, I can do this myself. Winds up doing that for,

it struggles for about two years. And then here's an, there's like a gold rush happening in Nevada. So he leaves Washington and he goes to Goldfield is the name of the city. And this is another just unbelievable experience that he has to goldfield is the name of the city and this is another just unbelievable experience that he has to endure goldfield already had 600 telephones an incredible number given the

infancy of the technology the phones were all connected through one switchboard at a new telephone telegraph office the boy's timing was terrific the office office manager needed someone to deliver all the messages that kept pouring in. Jim and Tom set up their own messenger business in the corner of that office. With plenty of messages to deliver by foot and by bicycle, they welcomed a third partner, John Moritz. The three learned, and this is repeated a few times throughout the book in different contexts, but it says, the three learned that service was all they had to offer.

It was an exciting time. The numerous messages and errands had the boys busy running and riding their bikes all over town. Unfortunately, the excitement ended in tragedy. John Moritz, his third partner, accidentally ran into a vagrant named Thompson. Thompson shot and killed him. His business partner is murdered.

The cold-blooded murder left the other two boys stricken. They decided to leave Goldfield. So at this point, Jim is now 19. He's back in Seattle. And this guy named Ryan that he knows decides, hey, this is the time we should run, we should just do a delivery business here. And so it says, Ryan said, no one in town runs a decent delivery business, and there's one needed. You and I have the experience. Let's go set up our own office and go into business. This is what's going to wind up

being UPS. UPS starts with $100 and a 42 square foot office underneath a bar. An older friend of the Casey family agreed to lend the young man $100 to launch a new enterprise. Casey and Ryan launched American Messenger Company on August 28, 1907 from a tiny basement office beneath a bar. The company rules were few but hard. Only Jim and Claude answered the phones. Messengers required to be courteous and quick. Only if the destination was too far And so how do you offer around the clock service claude and jim often slept on the desk awaiting infrequent middle of the night phone calls so this the first incarnation of this business that they're set up is very similar to the gopher work that he was doing before where sometimes he's delivering packages sometimes delivering messages but sometimes

they're hired to like babysit my kid follow around my husband to see if he's cheating on me. Just any random thing that a person possibly could want help with. That's the way to think about that service. He doesn't like this. He's like, you can't get really good at something if you don't do it over and over again. So he wanted to narrow the focus of the business. And this is where they come up with the ideas. Like, why don't we just focus on delivering packages from retail stores?

So it says, getting fed up with the nature of some of these errands, the young team cast about for a strategy that would add substance to their business. There's a clothing store called King Brothers. They signed on with American Messenger Company, allowing the store to offer customers same-day delivery. So this is really interesting, too. I never thought about at this point in American history, a lot of people are living in cities. It's not a lot of cars. And so when you're you're shopping, you're shopping in like a downtown area close to where you live, where your apartment is. You don't want to carry all this stuff. But eventually, a couple decades in the future, everybody's got a car. There's this huge demographic shift outside of cities into suburbs and into shopping malls. As you can imagine, he ran the company or he was with the company for 70-something years. There's all kinds of different um environments that he has to

adapt to and to succeed in um and i think i talked about a little bit later on too packages of clothing purchases arrived at the at their office throughout the day and were dispatched along with messages to the same neighborhood effectively this consolidation generated far greater revenue from a single trip so they're delivering, not just from one clothing store, but all the, as many retailers as they can. And they're trying to use like a hub strategy here. So that way one driver for Jim's company can deliver packages to the neighborhood for multiple different retailers. That's what they're talking about there. This was interesting. The first UPS truck was actually a motorcycle.

This was a period of trial and error. Their increasing volume of delivery business often outran their strategies to cope with logistics and accounting, and they had to learn solutions on the fly. They experimented a lot with operations at first. We didn't know what rates to charge, what schedules to operate on,

or even how to record the parcels after getting them. The entire business was learning by doing. And so eventually they figured things out, but business does begin to plateau and they're like, okay, how do we expand? And one thing, the early days of UPS, a lot of their expansion was driven by partnering with other companies. Eventually he's going to start buying up smaller delivery companies too. This is how they start delivering things, not just by bike and by foot, though. This is what I meant by the first UPS truck was a motorcycle. Jim Casey became obsessed with moving beyond this stasis.

He spent many hours pondering ways to become an all-encompassing delivery service that would attract new accounts. To cover Seattle faster and more comprehensively, the founders made a key move that would establish a protocol for future expansion, partnering up. Another young man, 20-year-old Everett Mack McCabe, was American Messenger Company's hardest working competitor. McCabe's company, the Motorcycle Delivery Company, had a fleet of about a half a dozen motorcycles serving the Seattle area, each rigged with baskets and saddlebags. The motorcycle delivery company was a husband and wife team. So Jim talks Mac into partnering up, but Mac's wife is hesitant. Her name is Garnett. And this is another unbelievable twist in the life of Jim and UPS. Mac was excited

about combining forces, but Garnett was initially cool to the idea and needed some convincing. So eventually Jim convinces her. Why does I say that's crazy? Few decades later, Garnett winds up murdering her husband. So she kills Mac. She shoots him in the side of the head. And then she gets put in a mental hospital. And so they start.

There's about four partners of UPS. And Jim's the only surviving one, not too, not in the not too far distant future. Jim, Claude and Mac cast about for a new name that would better identify their plan for the business, which involved focusing on consolidating deliveries for department stores, no more miscellaneous errands. And that's when they come up with United Parcel Service, UPS. So eventually they have so much business, they're running into another problem. They can't stack all, they can't use motorcycles. And so this is another reminder to invest in technology.

This is something that we learned a long time ago from Andrew Carnegie. Invest in technology, the savings compound, and it can be, sometimes it can be the difference between profit and loss. The problem was one, the problem was that you can only stack packages so high on a bicycle or a motorcycle. The three entrepreneurs decided to borrow enough money to purchase a new 1913 Model T Ford. And after removing the passenger body, they purchased a delivery van body for about $125 and attached it to the chassis. So they have an older guy, I think he's a partner. He went to working for them for a while his name's charlie sodder sodder some he's about a decade older than all these guys and he's the one that really pushed them into uh into this new technology at the time which is automobiles so um solderson's respect for automotive technology created several legacies the first was a

commitment to investing in the latest that technology had to offer. That meant automobiles back in 1916. But the same approach through the years has led UPS to embrace other innovations, right up through electronics, software, and microtechnology. And Sir Roadstom, his first name is Charlie. And Charlie is also the reason why UPS trucks are brown. I thought this was fascinating. We can also credit Charlie for UPS Brown. The partners had heard that bright yellow was an attention getter and were poised to paint

the fleet a vibrant yellow. Charlie was appalled. He intervened, explaining that Seattle's department stores presently saw their own vehicles as a great form of free advertising. They would be reluctant to relinquish their deliveries to a company whose conspicuous vans would compete with their own. The idea was that the fleet should blend into the background. Charlie read about recent experiments run by a railroad sleeper car company called Pullman. They found that a certain shade of brown, Pullman brown it was called, held up best when subjected to rain, sleet, and dust. To Jim and many others, the color symbolized the highly respected railroad industry of their day. So that's where they decided to copy Pullman's color.

So after merging with another company, he decides, okay, I need to raise some money. If I'm going to expand, I have this idea. I don't want to just deliver packages in Seattle. I don't want to just deliver packages in the state. I want to deliver them throughout the nation. We're going to see why this was so difficult because a lot of these regulations he had to fight. So he tries to raise money and the failure to raise money actually changes like his approach and reinforces his approach actually. So he talks about this guy, Mr. Carson says, no, I'm not giving you money. He gave what Jim Casey remembered as the most

inspiring talk on the economics of business that he ever heard. Mr. Kasins told him, frankly, that he would not fund their venture, but that they should not interpret his resistance as a disincentive. He finished with the words, determined men can do anything. That comment became an invocation. Jim Casey and the company would use it as a rallying cry time and time again. As the years went by, Jim rephrased the phrase to his own purpose, determined men working together can do anything. And so this is where he has to come up with another way. I don't have money, but I can trade stock. And so a lot of this is where he was very intent on UPS being owned by the employees. They would buy what essentially they're doing is they're buying existing delivery businesses to expand.

And sometimes they buy the businesses out of bankruptcy or receivership, or sometimes they buy the business because the owner wanted to retire but it says rather than paying up front with cash they funded these acquisitions by pledging shares of ups stock ups was to use this strategy numerous times in the coming years okay so now we got to the part about just how difficult why why i wanted to tie this in with the fedex and everything else is the insane amount of difficulty of building a business like UPS and like FedEx is just mind boggling. Jim Casey's ambition had long been nationwide shipping coast to coast to every address in the 48 continental states. UPS, this is wild. UPS didn't accomplish this objective in one fell swoop. Rather, the company doggedly pursued it state by state and in some cases city by city with

applications formidable paperwork and documentation meeting with attorneys and state and federal hearings with occasional peers appeals over a period of 68 years over jim case Casey's lifetime. So why was this so difficult? Because they're regulated by this regulatory body that was created in 1887 called the ICC. The vision beyond retail store delivery made his vision was beyond retail store delivery. It made sense to Casey and he later related. Think of the scores of millions of additional packages we could handle if we delivered all those going into each territory rather than. And so he's just let me pause here.

I'm not being clear. He's describing the opportunity that he's chasing right now. I'm just delivering packages that come from retail stores. Right. So it's like, well, if I can accomplish this extremely hard goal, think about the opportunity at hand. So we start from the beginning. Think of the scores of millions of additional packages we could handle if we delivered all those going into each new territory rather than what goes out of the stores we happen to serve. Since 1887, the Interstate Commerce Commission, I'll refer to that as ICC, had tightly regulated the economics and services of carriers engaged in transportation between states.

The first regulatory commission in U.S. history started to protect against railroad malpractice, but ICC's jurisdiction extended to trucking companies, bus lines, freight forwarders, water carriers, oil pipelines, transportation brokers, and express agencies too. Except for airlines, any business conveyance that charged money to transport goods or passengers from one state to another was under ICC regulation. Remember that for a few minutes, except for airlines. That's blew my mind when we get to that part. So it says UPS would take on this. I'm still describing how difficult this is because this is what he has to do to accomplish this goal. UPS would take on the ICC one city, state, or multi-state area at a time.

And this metaphor really, I think, illustrates the difficulty and the route that UPS chose. Like Aesop's tortoise, UPS was sure and steady, plotting towards its objective of providing delivery service all over America, moving forward with perseverance and a humility that bordered on stealth. UPS was slowly but inevitably taking over the country. UPS did its best to keep a low profile. The thinking was that the company would get further using polite persistence in battling sluggish bureaucracy. Now remember, we're still in pre-FedEx days, so their main competition. It's crazy and even more difficult

when the fact that their main competitor was subsidized by the taxpayer. Listen to this. This was the case despite the fact that the government's parcel post, so the post office, was running at a loss and needed to subsidize package delivery to keep its rates as low as they were. So that's the case back then. Pretty sure they still operated at a loss to this day. And this is the main point. Its rates didn't reflect its cost. That's not the post, the post office's only advantage. As a government agency, it pays no, imagine how difficult it is. You have to battle the ICC on a city by state, city basis, state basis, multi-state basis. And then your main competitor, it doesn't have to, its prices don't have to reflect its costs. And then that's,

and then they have this list of advantages. a government agency it pays no federal state or local taxes is exempt from zoning laws pays no parking tickets or vehicle licensing fees and has access to cheap government credit these are all significant benefits that no private company enjoys and so in an extreme environment like this when you're trying to expand you're you're, you're going uphill. It's extremely difficult. This blew my mind. I was like, wait, he almost sold UPS. And if it wasn't for the financial crash that starts the Great Depression, he would have sold UPS. It says, after negotiations, all parties signed a contract under which a holding company, I'll skip the name,

bought UPS for $2 million and 600,000 shares of Curtis Airplane, which is later known as Curtis Wright Stock. Using the $2 million, and this is why, using the $2 million primarily for expansion, UPS was also able to give its stockholders, which were employees at the time, cash, along with Curtis Wright shares for their holdings. According to the agreement, the three still active UPS partners, which were McCabe, he's not dead yet, Jim Casey and his and Jim's brother would remain with the company to oversee the planned expansion. They were guaranteed management control for five year period. He is so lucky this deal fell through. Right away, Casey had misgivings, regret, regret

and worry moved in to occupy his mind. He and his partners had given up control of everything they had built over the previous decade. More important, Casey doubted that the new management would honor the commitment to his loyal employees, upon which rested UPS's successes. These men had become stockholders, expecting to share in the company profits over coming decades. And an abrupt payoff in stock in another company was certainly not what they had been expecting the and this is why i was like this doesn't make any sense we're you know almost done with the book we're very close to the end maybe 75 done with the book and he's selling the company it's like you this doesn't seem you got to know jim casey up until this point it's like this it struck me as a huge surprise this quick payoff seemed to odds with everything Casey, his partners, and the company had represented when they made UPS stock available earlier.

Then, just as abruptly as the offer to merge had fallen into their laps, so did the solution to undo it. The historic 1929 crash of the stock market. So the holding company winds up agreeing to undo the deal because now they don't have the assets they previously had access to. This did not happen overnight. It took four fretful years and a lot of hustling before all the UPS stock was returned to UPS employees in exchange for the stock that they had signed back. That's the Curtis Wright stock. UPS stock was again offered to the employees. Their independence was preserved.

Jim Casey recalled, we learned in those four years lessons that should never be forgotten. And this is his whole point. As Jim Casey commented many years later, employee ownership is credited by the people inside and outside the company with having done more than any other thing. He's saying it's the most important thing he did. Les Schwab would tell you the same thing. Toward making our company and our people so notably successful financially and otherwise. And that's a note on this page

is to remind you that Les Schwab is founders number 105. It says on the importance of incentives with employee pay slash ownership. Charlie Munger says, read Les Schwab's autobiography. He can tell you better than we can. And then I have a note.

I saw a quote this week that's fantastic. And it talks about how valuable UPS stock was. I forgot the exact number, but some of the people in the early days of UPS, the small delivery companies that agreed UPS to buy them out in exchange for stock, the people that never sold that stock, later on their heirs were so wealthy because of the appreciation just from the stock alone, that they were able to donate $50, $80 million to all these different charitable foundations. And not only Jim Casey went to being extremely wealthy, but this is the quote.

And this is by Nick Sleep, who's a legendary investor, still alive to this day. The best investors are not investors at all. They are entrepreneurs who have never sold. And he put into words something that I'm seeing in the books that I'm reading, right, in these biographies. The best investors are not investors at all. They are entrepreneurs who have never sold. Okay, moving on. This part is called Then FedEx Happened. And this blew my mind and did not make this connection,

at least as vividly, until I read this book. Because they were keeping their collective noses to the ground, UPS was caught napping in the early 1970s as FedEx exploded into the air business. Check this out. Setting itself up as an airline that delivered packages, overnight packages at that. Why is that important? Former Marine pilot Fred Smith and his FedEx was by any measure sheer genius. This is the part that blew my mind. That FedEx was established in 1973 as an airline, not a ground delivery company, is an important legal distinction. This is why it's genius. And this is what I referenced earlier about how you can solve. UPS and FedEx are both trying to solve the same problem.

But FedEx is able to learn from UPS's experience and come at it from an entirely different angle and leapfrog and make rapid improvement on UPS's model just by taking a different strategy. It's fascinating. The FedEx was established in 1973 as an airline, not a ground delivery company, is an important legal distinction because the company was exempt from onerous common carrier regulations. Airlines fall under a different regulatory body, the FAA, not the ICC that regulated trucking companies. So the ICC is what UPS is having to

fight. Remember, city by city, state by state. Fred Smith took a completely different approach. He's like, I don't have to do any of that. And FedEx didn't intend to start up city by city as UPS always had. The concept was hatched nationwide with its one hub from the very beginning. With these modifications, FedEx revolutionized air delivery. And when UPS leadership got serious about next day air, they did the same thing. But this didn't happen for eight more years. Think about the jump that Fred Smith got on UPS. The vast delivery market that had taken UPS 65 years to accumulate was suddenly jarred by this upstart.

Federal Express, a company that no one had ever heard of. Now, think about this. Okay, we've seen this example multiple times. What do you think is going to be the reaction inside UPS? It's this huge, already successful company. It's been at the delivery business for multiple decades. Its founder is very close to the end of his life. We know how they're going to react. This is very predictable. Most UPSers took the ostrich approach, ignoring the new company. Some denigrated it, saying, for instance,

how are they going to deliver them on the ground? Their network's too small. People don't need that much delivered overnight. Costs are too high. They'll probably go out of business. Thousands of UPSers were very busy celebrating their periodic service expansions. They were caught up in following through with all the staffing and planning demanded of opening new territories. We rarely mention the new competition. In fact, UPS annual reports of the late 1970s and even 1980 made no mention of FedEx still decrying the post office at its number one competitor. That's not very different from Henry Ford sticking his head in the stand like an ostrich saying, nope, don't need to improve the Model T. All I need to do is keep making more of them, lower the price. And that gap that UPS left, that eight year gap, Fred Smith

drove FedEx right through just like Billy Durant and Alfred Sloan and GM drove through that gap left by Henry Ford. It's the same thing, the same reaction. History doesn't repeat. Human nature does. And reading about this and being reminded of this, it just makes me excited. Because just like GM took advantage, just like Fred Smith took advantage, we can take advantage of the gaps left by these other stodgy companies that get comfortable. And I'm going to give you a quote later on about Charlie Munger comparing company behavior to biology. It is an entirely predictable and natural outcome of businesses as they age.

And that is why there's always opportunity. That's why I'm excited. That's what makes it exciting. Because there's always a new opportunity that will never stop. I want to talk about just a random, this is going to be real bizarre, the thought that popped into my mind. So it talks about eventually, this is after Casey's dead, and UPS wanted to be, they wound up having,

because they have now tons of competition, a bunch of other delivery, including delivery business, including FedEx is popping up. And so they wind up going public. And it says and then I just I'm going to read you this sentence, these two sentences, because, again, the author, as you can expect, he dedicated his life to UPS. So he's part of the cult. So he wrote something like this. News of the filing left investors slavering for a piece of one of the most stable, lucrative, and promising businesses in the world. A package-hoisting atlas in an industry of mere mortals. God bless him for being enthusiastic about his life work. That's a lot. I mean, that's good.

Most people hate their jobs. This guy is completely bought in. But when I read that, I started looking up things. And I have no idea what – first of all, there was an interview Charlie Munger just recently did. And he's just talking about – he says, like, essentially essentially over the long term, all great companies will die. So this is something he said now recently, but it's something he's talked about his whole career because Charlie Munger is he's he's read hundreds and hundreds of biographies of history books. Like he knows the history of business better than almost anybody else has ever lived. Right. He's he's definitely in the top percentile. And so he says, companies behave like biology. In biology, all the individuals

die, and so do the species. It's just a matter of time. And that's what happens in the economy too. They have their little time, and then they get clobbered. And so when I hear him say something like that, the inevitability about the decline of every company, right? Like it's obviously a passion of mine. I'm interested in entrepreneurship. You are too, if you're listening to this. But it's something that, you know, makes our life can add and make our lives a lot better. But it's also a reminder, like we have to have fun while we're here. Like it is inevitable that everything we do will eventually be superseded by something in the future. That is the natural way of things.

And so I just kept thinking about like what Greg was saying here, the author saying here, like it's a package hoisting atlas in the industry of mere mortals. And I thought about the difference. This combined with the book on Naval Ravikant that I just read, that I just covered a few days ago. And it's about this this unique opportunity because we're living in the information age of like the difference in the businesses that can be built now and so i don't know why when i read this i was like let me look up ups's

revenue to employees um and i had left i already said this but the note is now on this page the author has co-authored a motion to ups that, that's for sure. So UPS revenue last year, I think, last full year, maybe $84 billion. They have 481,000 employees. I'll tell you how this relates to the last podcast I did too. And I was like, what's Facebook's revenue for that same period? So UPS, 84 billion. Facebook, 86 billion. Okay, so almost the same.

Employees by UPS, let's say half a million. Employees by Facebook, less than 60,000. And so I foundced to bots, not to Mexico or China. And it just made me think, not only would it be impossible. You see that FedEx was able to build a similar business way faster using a different technology, right? But we're seeing like the future of every business is this idea where now we can be much more efficient in some domains, obviously, between how much revenue, how many employees it takes to generate, like what is the revenue per employee, I guess is what I'm thinking of.

And really just serves as a reminder, like, yeah, package hoisting Atlas in an industry of mere mortals, but the future, there's always going to be people that are going to come along and exploit opportunities that you don't see. And like, again, what Charlie Munger said over the long term, all over the long term, all great companies will die. And when I read things like that, and when I think about it, it's just like, okay, let's take our work seriously. Let's do the best job possible. Let's serve other people, but let's have fun.

This is another example of Jim Casey sounding like Les Schwab again. Business building to Casey depended on the hard work and loyalty that stock ownership inspired. Quote from him, the basic principle, which I believe has contributed more than any other to the building of our business as it is today, is the ownership of our company by the people employed in it. That sounds exactly like Les Schwab. So I want to close with a quote from Jim Casey, which is echoing exactly what Charlie Munger was saying. And before I do that, I want to set up that quote with a quote from Carl Sagan,

which is one of my favorite quotes on why books are one of the greatest inventions humans have ever come up with and why reading is so important while why you see some of the great some of the smartest most productive people to ever live are constantly reading and carl said what an astonishing thing a book is it's a flat object made from a tree with flexible parts on which are imprinted lots of funny dark squiggles. But one glance at it and you're inside the mind of another person, maybe somebody dead for thousands of years. Across the millennia, an author is speaking clearly and silently in your head, directly to you and I.

Transition seldom comes easily. Of course we cannot clearly see all the steps ahead. It is always easier to see difficulties than to develop methods of solving them. But first, let us take sight of a goal. The difficulties will be solved in ways we cannot now see. First is the dream, then development, followed by improvement until the dream becomes a reality. Later, a new dream makes the products of an earlier one obsolete. This has been the course of industrial history, and in its path have been the victims and the

victors of progress. And that is where I'll leave it for the full story. I recommend reading the book. If you buy the book using the link that's in the show notes available on your podcast player, you'll be supporting the podcast at the same time. That is 192 books down, 1,000 to go. And I'll talk to you again soon.