Founders - #197 Founder of the Rothschild Family Dynasty

Episode Date: August 11, 2021

What I learned from reading Founder: A Portrait of the First Rothschild by Amos Elon. ----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----Riches cover a multitude of woes.Only a few crumbling bricks are left today of the dark, foul-smelling alley in Frankfurt where, in the second half of the eighteenth century, a disenfranchised Jew named Meyer Rothschild founded a European banking dynasty.Rothschild was a man of seemingly inexhaustible energy and ingenuity.He raised five famously gifted sons, veritable money-making machines, to carry on his work after him. Their names overshadowed his own and became synonymous with colossal wealth, extravagant living and hidden political power.A century after his death they would still ask, in all seriousness, if a great war was still possible in Europe if the House of Rothschild set their face against it.Rothschild's origins were certainly modest. There was little reason to foresee his destiny. The personal circumstances of his life were difficult throughout. They suggest a saga not only political and financial but also human and dramatic – more dramatic, perhaps, than that of his flamboyant sons. The sons were not persecuted human beings, legally confined to the squalor of a congested ghetto.The old ghetto where Rothschild lived his entire life was a narrow lane, more slum-like and overcrowded than any other tenements in Frankfurt. A closed compound, it was shut off from the rest of the city by high walls and three heavy gates. The gates were guarded by soldiers and were locked at night, and all day on Sundays. In it lived the largest Jewish community in Germany in conditions of almost total isolation, and apartheid.How they managed to survive under these circumstances and at times even to prosper was a mark of human enterprise and ingenuity.Every petty principality minted its own currency. The only coins from outside the city that were accepted as payment were those which had the same silver content as the Frankfurt gulden. All others had to be exchanged before a purchase could be made. Constant variations in the exchange rates offered knowledgeable moneychangers ample opportunity to profit.The spirit of the place was workaday and businesslike. A city ruled "by the God of this world – Money".At home, from an early age, he was apprenticed in the family business. Everybody in the family, boys and girs, were expected to help.As a thirteen-year-old orphan, with a few coins in his pocket, the future tycoon launched out alone into the world.Besides learning the rudiments of the financial business, Rothschild broadened his knowledge of rare and antique Jews were disencoins and historic medals. Coins had fascinated him since early childhood.He was acquiring a certain amount of historical knowledge without which he might not have been able to find his way. Coins and medals attracted collectors who often bought them as an investment. By the time he was eighteen, he had become something of an expert. He read every other book or paper he could find on the subject.Selling a few old coins could not possibly make him rich., But it was a means to establish contacts with persons of wealth, power and importance. Such a person was the young Crown-Prince Wilhelm, who would play a decisive role in Rothschild's future career. Wilhelm was the presumptive heir to his father's vast fortune. His pedigree was one of the finest in Europe.Rothschild threw himself into his business with determination and zest.He ran something like a mail-order business. In 1771 he published the first of several printed coin catalogues which he sent out during the next twenty years at regular intervals to potential customers all over Germany.He brought to his work a certain natural flair, a knowledge of human nature and a capacity to generate trust.As a rule, he preferred to minimize profits in the hope of increasing turnover and consequently his prices were often lower that those of other dealers. He was ready to lower them even more, at times even at a small loss, in the hope of more profitable business in the future.Thrifty Guttle Rothschild spent only a fraction of this annual income on her household; a large part was pumped back into the business.There was little, if any, visible wealth. The family's modest lifestyle did not reflect the true extent of Rothschild's accumulated riches, which he continued to channel back into the business. Rothschild had an inborn compulsion to hide his wealth.Long after his death one of his sons quoted him as saying: "Something three people know about is no more a secret".He shunned all conspicuous displays of wealth.He practised his old policy of maximizing volume by minimizing profits. His competitors, who for decades had handled the affairs of the landgraves of Hesse, were gradually squeezed out. By 1807 Rothschild enjoyed a near monopoly.No one in the family was idle.Yet as a critical and strict father, he also anguished over Nathan's casualness and disorganized work habits. A lack of order would make a beggar out of a millionaire.While other bankers mostly awaited orders to reach them, Rothschild went out to solicit them.It paid homage to their father's "proven industry, good business sense and experience, who through his tireless activity from youth to advanced age, was the sole cause for the present flourishing state of the business and the worldly happiness of his children".They reflected an overriding desire to perpetuate unity among the brothers, prevent the dispersion of capital and retain, as far as possible, the compact, disciplined, well co-ordinated character of the family firm.His astonishing concentration on business continued as before.His main concern in his last hours was to secure the continued happiness and prosperity of his sons. He knew that riches came and went. He had seen in his lifetime fortunes dissipate through waste, vanity or infighting among heirs. Fortunes, he warned Amschel: do not keep longer than two generations.For two reasons: one, because house-keeping and other expenses are not considered; two, because of stupidity.He urged his "dear children to relate to one another with mutual love and friendship". He knew his sons were strong-willed, difficult, impulsive men. He was afraid of their tempers. On his deathbed he urged them once more to remain united at all cost. It had become an obsession with him. He said on his deathbed: Amschel, keep your brothers together and you will become the richest men in Germany.----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

Only a few crumbling bricks are left today of the foul-smelling alley in Frankfurt, where in the second half of the 18th century, a disenfranchised Jew named Meyer Rothschild founded a European banking dynasty. Rothschild was a man of seemingly inexhaustible energy and ingenuity. He raised five famously gifted sons, veritable money-making machines, to carry on his work after him. Their names overshadowed his own and became synonymous with colossal wealth, extravagant living, and hidden political power. A century after his death, you could still ask, in all seriousness, if a great war was still possible in Europe if

the house of Rothschild set their face against it. Rothschild's origins were certainly modest. There was little reason to foresee his destiny. The personal circumstances of his life were difficult throughout. They suggest a saga not only political and financial, but also human and dramatic. More dramatic, perhaps, than that of his flamboyant sons. The sons, after all, were not persecuted human beings, legally confined to the squalor of a congested ghetto. The old ghetto where Rothschild lived his entire life was a narrow lane, more slum-like and overcrowded than any other tenement in Frankfurt. A closed compound, it was shut off from the rest of the city by high walls and three heavy gates. The gates were guarded by soldiers and locked at night and all day on Sunday. That was a description of the unbelievably terrible conditions that the Rothschild dynasty sprang from.

And it was an excerpt from the book I'm going to talk to you about today, which is Founder, a portrait of the first Rothschild and his time, and it was written by Amos Elon. Okay, so just a few things before I jump into the book. One, this is going to be part one of a three-part series on the Rothschild dynasty. I obviously want to start with the patriarch of the family, the founder. So this book talks a little bit about his sons, but almost all the highlights and stuff I'm going to talk to you about today is going to focus on him. The next two books is more about the continuation of the dynasty that Rothschild laid the foundation for. And I want to read several books on this because I'm obsessed with things that last a long time.

I have a ton of books that I haven't got to yet about other companies that have lasted for hundreds of years, other family dynasties that I think are interesting. And two, I'm also fascinated by this idea of people that are generational inflection points, single individuals that change the trajectory of their family forever. When I think of generational inflection points, the two people that come to mind right away are people like Sam Bronfman. This is founders number 116. If you haven't gone back and listened to that podcast yet, that's the founder of Seagram's. Chung Ju Young, that's founders number 117. That's the founder of Hyundai. Out of everybody that I've studied so far on the podcast, I don't know if anybody started in a worse position than Chung Ju Young. His family was

so poor that he had to eat tree bark in the winters. And he winds up in one lifetime becoming the richest man in Korea. There's actually a video that i keep on my phone that i've watched more times than i'd care to admit probably hundreds of times it's probably not an exaggeration and it's actually a clip that comes from the show game of thrones and if you haven't seen the show if you don't know the characters i'm about to talk to talk about don't worry what braun the character braun says is really the main point and um i think describes what a generational inflection point is and where these people usually come from so in the scene he's actually holding uh two lannister brothers hostage and saying hey your

sister put a bounty on your head uh she's willing to give me this one kingdom we made a deal a long time ago that if anybody ever paid me to kill you you'd give me you double their offer what is double and he's and one of the brothers says hey i'll give you high garden high garden is just a rich castle and land in the series and so jamie says to braun the one holding him hostage temporarily holding him hostage he says high garden will never belong to a cutthroat and so he means never going to belong to somebody like you. You know, you're not a noble person. You came from the bottom.

Now he's worked his way up. Bronn, the character that I'm about to read the quote from, if you've watched the series or read the books, that character had a very advanced understanding of human nature. And he used that understanding of human nature to go from, you know, essentially the lowest rung of society and constantly work him work his way up to better and better circumstances. Not very different than what we're going to see today in this with Rothschild in this book. But Braun's response is what I watch over and over again. And he says to Jamie. So remember, Jamie says, Highgarden will never

belong to a cutthroat. And Braun says, no. Who were your ancestors? The ones who made your family rich? Fancy lads in silk? They were fucking cutthroats. That's how all the great houses started, isn't it? With a hard invading other lands, killing people. In our does, you either flee or I kill you. But either way, I'm getting your treasures. you more details on the conditions in Frankfurt, Germany at the time when Rasha was alive and what he had to deal with, just the harassment and constant confinement. And it says tolerated or oppressed, at times massacred, at other times expelled, robbed, and then tolerated again. Jews were always at the mercy of the moment, subjected to elaborate rules, enunciated from time to time. And he uses the German word, which it's going to translate into Jew statue. So this is the rule of law that only guards non-Christians, or I guess not even non-Christians, Jewish people specifically. It's obviously a Christian-dominated country. It regulated the personal details and professional lives of Frankfurt Jews, or city, I guess in this

case, down to minute details. It severely limited their freedom of occupation, of movement, and it imposed loyalty oaths on Jews, which included particularly humiliating references to them as members of an accursed race. In a city where Jews were discriminated against by the authorities and habitually massacred by the population, they had to pay an annual tax for the protection of their person and property. Now, I'm giving you this background because it's important, because you will see what Rothschild learned from his environment. And actually, the advice he winds up giving his sons,

and to a large degree, they wind up ignoring later on in life. But we'll talk about that on the two books I'm doing after this one. So it says, by 1760, when this story starts, most Frankfurt Jews were pawnbrokers, money changers, and dealers in secondhand goods. How they managed to survive under these circumstances, and at times even to prosper, was a mark of human enterprise and ingenuity. So think about that sentence. And if you listen to the podcast I just did on Churchill, where the author of that book, Eric Larson, says at the very beginning, like, how the hell? I thought about the bombing, the German bombing on England, the first year that Churchill was prime minister.

And it's hard to fathom. You bombed every night, I think, for 50-something days in a row. It's like, how the hell did Churchill deal with it? So let's go back to this sentence. How they managed to survive under these circumstances, and at times even to prosper, was a mark of human enterprise and ingenuity. Two vastly different times in human history, two vastly different experiences, same exact idea though. Frequent house controls known as visitations were conducted by city officials to make sure all these regulations were kept. The Jews had to be in the ghetto by nightfall when the gates were locked until the following morning. Okay, so a little bit more background about the time in history. And this is really think about this section that I'm

about to read to you. This is the opportunity that Meyer exploited. I'm going to call him Rothschild because the author just refers to him as the Rothschild, but his first name is Meyer. This is the opportunity he exploits because of the place in time and history that he's living. It says Germany in the mid 18th century was a cluster of more than 100 states ruled by absolute sovereigns. Every petty principality minted its own currency. The only coins from outside the city that were accepted as payment were those of which they had the same silver content as the Frankfurt Golden. I think I'm pronouncing their local currency correctly. All of this had to be exchanged before a purchase could be made. So let's just pause there. Germany in the mid 18th century. This cluster, there's

hundreds of states. They're ruled by their own absolute sovereigns, right? They they insist on having their own currency that means if you're traveling from city to city they call it state but it's the distance is what you and i would think of like cities right so if you're traveling to city city guess what you have to exchange your currency they're not going to accept it this is the opportunity that meyer's family uh winds up exploiting um so it says all others had to be exchanged before a purchase could be made. Constant variations in the exchange rates. And this is not, I'm talking about this is, I need to back up. The great Rothschild wealth that has become infamous in the world, that comes in the second generation. That's more led by Nathan Rothschild, which is Meyer Rothschild's, it's not even his oldest son, but he's like the leader.

He's so formidable of an individual and so smart that his other siblings would defer to him to some degree but there's there's like a the way to think about how Rothschild built his dynasty it wasn't all at once he just took whatever opportunity was in front of him did the best he could and then use that to to get to the next it's like a thing of like walking up a step of stairs it's like I get into that next step then once I'm up there I have a better vantage point can look around. Maybe there's another opportunity I can exploit. But he did that over his entire life until he dies. And there's some great quotes about how his sons remember him and the fact that they understood even long after he was dead, that his constant energy and toiling from the time he was, he's on his own, he becomes a orphan at 12 or 13 years old until he dies at 68 years old.

He never stopped working. So anyways, constant variations in the exchange rates offered knowledgeable money changers ample opportunity to profit. So that is going to be what Rothschild does. Well, I keep running over my points. Let me remind myself to be patient. We'll get there. Provided they maintain close contacts with well-informed correspondents abroad. The local market generated a need for letters of credit, bills of exchange, and other paper devices to avoid the inconvenience and danger of sending large amounts of gold and silver coins abroad.

Bills of exchange were promissory notes to pay a certain sum to the bearer on a certain date in the future, usually after a few weeks or months. Before their due dates, such bills were often traded at a discount. The discounting of bills yielded good profits and was practiced by bankers. Bankers and money changers were often also wholesalers in, let's just say goods, wools, cottons, silks, wines, that kind of stuff, dyes, tobacco, spices. So another thing to know. The vast majority of the Rothschild business, they're going to make the dynastic wealth that's going to be created in finance. At this point in the family history, they're mainly just a seller of goods, of secondhand goods, right? They do banking and financial transactions on the side, as we'll see.

And eventually, the family goes all in on finance. Before Rothschild dies, his family stops. They're no longer trading goods. They're completely focused on finance. And then just a sentence that gives you an idea of the city of Frankfurt for both Jews and non-Jews. It's all about the money. The spirit of the place was work day and businesslike. It was, quote, a city ruled by God, by the God of this world, money. Okay, so here's an example of what this crazy environment that he's living in, a lesson that he passes on to his sons.

So there's this idea of all these noble people, usually their religion precluded them from like charging interest and doing certain financial transactions. So you'd see a lot of Jewish people actually assistant like dukes and royalty, like running the treasury and getting loans and doing all this other stuff. They were called the people that did this were called court Jews. Rosh Haul is going to wind up becoming a court Jew, but he learned something from Oppenheimer. And really the note of myself on this page is hide your wealth lest you invite envy. Now, why would he say that? Why would he tell his kids that? Because what's going to happen to Oppenheimer right here?

Oppenheimer was the privileged director of finances for the Duke of Wartenberg. In his prime as a court Jew, Oppenheimer had been able to live in Frankfurt with his mistress outside of the ghetto. A vain, power-hungry man, he made many enemies. After the Duke dies, Oppenheimer was tortured and hanged publicly in a cage. The lesson of Oppenheimer's execution was not lost on his Jewish contemporaries. It taught them to hide their wealth. I actually listened to a crazy podcast. It's called Prophets of Doom. It's four hours long. And it's part of Dan Carlin's Hardcore History series. And it's about this, this idea where you're hanging people publicly and putting them in cages. His episode, Prophets of Doom, was about public executions in cages in munster germany and to

this day you can actually google munster germany and you see these cages are still on the top of the churches there it's really really it's one of the most remarkable podcasts i've ever single episodes ever heard it's just unbelievable how uh cruel uh humans can be to each other more about the living conditions in the ghetto fight they wind up having uh i think eight five out of their eight children survived at this point in history they have more kids after that but um it says five survived the disastrous unsanitary conditions uh the ghetto was not exposed to the sun it was damp and chilly in the winter and then human and fly infested in the summer uh the the yard out front was muddy and floored with waste waters that would not run off. The house was shared by two families of 10 or 12 people each, and it would also have

to accommodate their business as well. The five Rothschild's children all shared one small bedroom. Every corner, every nook up to the roof was used. And like a sign of advancement. Take a look how crazy this is. A sign of advancement was when you could have enough money where you could buy. At one point, Rothschild's making enough money that he can buy three-eighths of one house. This is a little bit about the environment in the ghetto. There was, of course, a pervasive addiction to money and trade in the ghetto.

And I know that for myself. I imagine you don't become one of the wealthiest families in history without this addiction. This is what the education and schooling of Rothschild was when he was a kid. The education provided was entirely religious. All forms of knowledge outside the sacred books were ignored. Instruction was wrote. Classes began early in the morning and lasted through most of the day. The five books of Moses were read through systematically, verse after verse.

The teacher ruled with an iron hand, freely using the cane. The education's main purpose was to impart a never-ending exercise in memory and concentration. Whatever else this education achieved or failed to achieve within its overly narrow horizons it was said to sharpen the mind like no other and imbue pupils with an intellect quicker and more agile than that of the average graduate of a german high school at home from an early age he was apprenticed in the family business so this is something as soon as you're as soon as you can basically walk you're working for the family business see he does the exact same thing with his kids. Everybody in the family, boys and girls, were expected to help. Rothschild was sent out on errands to other money changers in the street.

So a long time ago, somewhere in the 100s, early 100s, I read the book on a biography of Hedy Green. Hedy Green was one of the richest women, self-made women in history. She was so rich that she would bail out loan money to New York City. And her family, which actually she grew up, I think in New Bedford, Massachusetts was the name I'm going off memory here, was the name of the city. It was at one time one of the richest cities in the world per capita because it was where at the time they were whalers. And there's all kinds of byproducts that when you were whaling at this time, you could sell. And so her family did the same thing. And she talks about in that book where you can't get a better education.

And she was her grandfather because her family, her mom and dad wanted a son. And when she came out as a girl, she was just kind of ostracized and like sent to her grandfather's. They were so like distraught over that. But anyways, her grandfather took her around and he was one of the most successful businessmen in the city and she she helped with his books she went to his meetings and you should i think she's like 11 years old at times something like that and she talks about there's no better education a girl could get than being well versed in business and then she you know she kind of applied that with passion and zeal for throughout through the rest of her life okay so let's go back to rothschild he's sent away to a jew seminary, then his parents die, and this is when he starts apprenticing in the banking business at age 13. A few months after

the boy's departure, an epidemic of smallpox swept through the disease-infested ghetto. Rothschild's father died. He was not yet 12 years old. Then his mother dies nine months later. As a 13-year-old orphan with few coins in his pocket, the future tycoon launched out alone in the world. Family connections had secured him an apprenticeship at the banking firm of doesn't matter the name. The choice of the firm revealed foresight, ambition, and design. The firm was a prominent family of bankers in which for the past 100 years had branched out. Young Rothschild could acquire experience in finance and learn the fine art of being a court Jew, which was the only career that enabled a Jew to escape the limitations and

humiliations imposed on him by the law. Every ambitious Jewish merchant at the time aspired to be a court Jew. Court Jews, and this is why this is, it was like terrible. He's in the ghetto, but also fortunate at the same time that he happened to live where he lives because the court Jews were a peculiar German phenomenon. They only existed here. Princes were in constant need of credit to furnish their armies with guns, their mistresses with jewelry, their court with fine cloth, and their cooks with French and Italian delicacies. There was little need for a court Jew in France, where there was a central bureaucracy was more developed, or in Italy, where an advanced baking system had existed since the late Middle Ages. In the relatively backward German lands, court Jews used their family contacts across Europe to supply kings and princes

with the credit they need to pay for their personal and political extravagances. I double underline that part because if you really think about what his sons were able to accomplish, they did. They took that idea and put it on steroids. They would supply kings and princes with credit they needed to pay for their personal political extravagances. Most of that, the most expensive thing that princes and kings needed to raise money for was war. Because like I said earlier, you have Napoleon running around, you have all these people running around, you're going to build a nice castle. Oh, that's a nice castle. Well, I have an army that can overtake your castle. So you're constantly needing to build up not only to defend yourself,

but also to go on the offense because that's how you're building. These people are building a lot of wealth. A story was told of a certain Jew who upon being asked why Jews were proud, though they were not princes and had no part in government, he replied, we are not princes, yet we govern them. And so again, when you think of the word Rothschild, right, you think of, I think most people think of, yeah, they're really rich. They're like, you know, new world order type. They run the world because of statements like this, because of things like this. Yes, I'm not a prince, but I govern them. I control the money supply and therefore I am technically more powerful than they are.

Since Rothschild may have been happier in Hanover than he had been in Frankfurt. Oh, so this is where he's in Hanover, Germany, where this is where he's doing his his apprenticeship. And this is why he might have been happier there than in Frankfurt, because in Hanover, Hanover, the atmosphere is more liberal and relaxed Jews were disenfranchised there, but they were not molested by street urchins during the day nor locked into a ghetto at night. He rushed out gained experience in foreign trade learned how to issue uh bills of exchange apprenticeship in the 18th century was a form of bondage apprentice apprentices were bound to their employees for a predetermined period of service i think this lasts what like six or seven years

the first two or three years were often spent in menial work serving the master and his family they were paid no salaries but they received free board, like free housing. Besides learning the rudiments of the financial business, Rothschild broadened his knowledge. Now, this is really smart. Rothschild broadened his knowledge of rare and antique coins and historic metals. Coins had fascinated him since an early childhood. The bank had a rare coin department. This is where he's apprenticing, had a rare coin department. And his work there gave him an opportunity to deepen his expertise. This is really smart.

So I've talked about, I think, the best talk on YouTube that I've found. It's by the investor Bill Gurley. It's called Running Down a Dream, How to Survive and Thrive in a Career You Love, I think. I've talked about it over and over again. And he has this idea. He compares the approach to their craft of three different people. Danny Meyer, the famous restaurateur that's still alive today. Bob Dylan, the musician.

And Bobby Knight, the coach. And he draws in one hour. In one hour talk, he draws parallels between how everything they do. And it's like they're all in different domains, different disciplines. And yet they approach their craft the same way. And one thing I learned from that talk was it is possible to know more. You may not, it's not, may not be possible to be smarter than other people, but at whatever you work, whatever you're working on, it is possible to just literally collect more information than other people. And he gives examples of how Bobby Knight did that, how Danny

Meyer did that, how Danny Meyer did that, how Bob Dylan did that. He calls them like sponges. They were just completely obsessed. And we see the same thing with Rothschild. So he's like, I have an interest in these rare coins, and this is going to be really important because other really wealthy people, princes, dukes, kings are also obsessed in these little like trinkets and stuff. So he's like, okay, I'm just going to go and know more about this than any other person on the planet. He was acquiring a certain amount of historical knowledge without which he might not have been able to find his way. Coins and metals attracted collectors who often bought them as an investment. By the time he was 18, he had become something of an expert. He read every other book or paper he could find on the

subject. That is also an idea we've seen before. Warren Buffett was asked by, I think it was a group of students that want to be investors. Hey, how can I be what you are? Pointed to like a stack of financial reports, read 500 pages of that every day. And he says, knowledge, just like money compounds. And he also said, I know you won't do that. It's simple but not easy. You are not willing to sit down and read or learn more than other people. And that is why I'm going to get the advantages that you won't. Rothschild is doing the same thing. I'm going to know as much as possible about these.

And this is going to turn into like a mail order business. The reason I'm telling you this is because this provides like knowing more. By knowing more, you actually open yourself up to asymmetric opportunities. So he winds up doing all this research. He's spending years

learning about coins and he's going to be, the coins are going to open the door to developing relationships with unbelievably wealthy patrons at the time. And one of these patrons that he meets through this

is going to lay the foundation for his generational wealth. It's so fascinating. By the time and one of these patrons that he meets through this is is going to lay the foundation for his generational wealth it's so fascinating by the time he's 18 he becomes something of an expert he read every other book or paper he could find on the subject and he happened to encounter a young nobleman this guy named general von ostroff who was an ardent coin collector and took a liking to him ostroff commissioned rothschild to locate and buy for him certain coins and medals for his collection. It was an acquaintance that would prove useful to Rothschild later on because General von Ostroff is going to introduce him, introduce Rothschild to his single most important patron that he has in his entire life. That would not have happened if Rothschild did not set year after year after year of the accumulation of knowledge, historical knowledge,

without which he might not have been able to find his way. That is a direct quote from the book. That is such an important point. And that opportunity still exists to this day. There's a misfit named Dustin that sent me a message. He starts listening to a podcast. I think he has the record. This was like when I had like 180 episodes. He had read like 53 of the books or some crazy number like that. And he's like 53 of the books or some some crazy number like that and he's like listen he was already making a couple hundred thousand dollars he's like I doubled my business so now he's making a couple hundred thousand dollars more he's like this is a direct result from the knowledge I learned in all these books that I found from

your podcast like it's simple as that and this is not a new idea read poor Charlie's almanac there's a quote in that book that I've never forgotten there's there's a there's ideas worth billions in a $30 history book and yet you go around to average normal people and ask them how many books have you read what do you like what what set of professional knowledge have you added in addition to the the hours that you're putting into work in the last year most of them just look at you blankly this is an idea laying in plain sight that no one's even willing to do what does that say about our species the nature of human human, just to do the most, the minimum amount possible. It's ridiculous. And I don't know when I read stuff like that, it just gets me fired up

because it's so important. Think about how crazy this turn of events just happening to take an interest, happening to go all in realizing he obviously is a very, the rush out to very smart and driven person, you know, but the idea is like, I'm going to make myself a world expert or an expert in Europe on this. By the time I'm 18 years old like i'm going to make myself a world expert or an expert in europe on this by the time i'm 18 years old i'm going to read every single possible thing i can about this like the opportunities that led him to in the future is just it's it's staggering then if you think about that like as the first domino that has to fall to to building of what one of the greatest fortunes that human history has ever seen. It's astounding. And it just comes from, going back to Bill Gurley, it is possible to know more. And if you think

about it, in the age of the information age that we live in, it's a hell of a lot easier for you and I to do this than it was back then. There's no excuse not to do that. And that's another thing, I think, watching that Bill Gurley's talk is so important because he tells you, he's like, there's no excuse. You know, I'm going to find the quote. Hold on one second. OK, I pulled up my notes. I'm going to leave the link. You can keep these notes. OK, I'll leave a link in the show notes on the Misfit feed, obviously, where you can just read. You can link to the video. Right. I also made a 16 minute mini podcast. I love this video. I'm

going to read all my notes, but I want to bring, it's not going to take me long. Let me go off on this tangent because I think it's, it's valuable. I'm just going to run through it real quick, but this is the quote that I was thinking of that made me stop and go look for these notes. And this is like, when I, when I read the notes about this Bill Gurley talk, and when I watch it, it's, it holds you accountable because he tells you about what other people are doing. And he says there's no excuse for you not to do this. It holds you to a higher standard. It's just, again, I think it's good to have external pressure.

Like, okay, you can do this too. And really, why are you not doing this? Come on, this is a high-value activity. You're being ridiculous if you don't. He says the good news. This is Bill Gurley talking. The good news. If you're going to research something, this is your lucky day. Information is freely available on the Internet. The bad news. You have zero excuse for not being the most knowledgeable person in any subject you want. The information is right there at your fingertips. So that's exactly what Rothschild

did. He is the most knowledgeable person in this. They a, I don't think I have a quote in there, but I remember from reading the book, they have a list of, like, the ghetto, I think it's not only for the ghetto, but every single citizen of Frankfurt, like, what they do, like, who they are, where they live, and what they do. And he was the only one that was, like, the rare coin and metal, I don't know if it's collector, salesperson, whatever term is on there, but I remember jotting down on the margin, one of one, the only one.

So let me just read through these quotes. I know I've won a tangent, but this is so good. So he says, I was inspired by three people who were heroes of mine. I noticed a pattern amongst them. This is what I'm here to talk about. He's giving a talk, if I remember correctly, I think it's to the University of Texas MBA students.

A dream job is a career where you have an immense passion. Life is a use it or lose it proposition. Most humans take one career path. If you have only one shot, why not do what makes you most happy? Because again, these are just random little quotes from the talk that I wrote down when I watched it. And I've watched this over and over again. I want to tell you three stories of luminaries and then five guidelines I've learned from what they did. The first story is about Bobby Knight. What ended up making Bobby Knight successful isn't what happened in the gym. It is what he did outside. This is the part I just mentioned how most other humans are not willing to do this. In fact, I just reread my highlights

from Les Schwab's autobiography, maybe Founders 105. I mean, you know how to find these things, just search in your podcast player, right? But that's a book that Charlie Munger said, hey, you need to read Les Schwab's autobiography. Charlie Munger tells me to read a book, I'm going to read the book. And in that book, he talks, so he's like, you know, I started, I was poor, started this tire company in my 30s. It winds up being one of the most successful tire companies in the Pacific Northwest. And in the book, he's like, listen, most businesses, like if you're on the ball, if you actually take care of your shit and you're actually doing like working hard, you realize that most people don't

do that. And so that the advantage of just caring more. And that's what he says. Like, I just worked a little harder than other people. And so this is the same thing that's happening with Bobby Knight. It is what he did outside. In the first five years of his coaching career, he befriended five of the top basketball minds. The second story is about Bob Dylan. He was in love with folk music. He studied every folk album he possibly could. Is that not what Rothschild is doing? It's the same fucking idea.

He didn't have money. He would spend hours in record stores listening to the records for free. Bob Dylan took one of the most ambitious actions that anyone had taken to pursue their dream job. He hitchhiked from Minneapolis to New York City. That is 1,200 miles. He had a guitar, a suitcase, and $10. He went to New York to find Woody Guthrie. He loved that Woody played and wanted to know everything about it. Bob was studying, studying, studying, studying. The third story is about Danny Meyer. Actually, I have a podcast, one of the first podcasts I did. It's like a Founders 20 area with Danny Meyer's autobiography setting the table.

It's actually fantastic. The third story is about Danny Meyer. His mom made him journal and take notes. He went back and looked at his notes. He noticed all of them were about food. He loved food. One night he was out to eat with his family. He told, he told them he was going to take the LSAT. I think this was his uncle. Yeah, it is. He told him he was going to take the LSAT the next day. So the, to get into law school, right? His uncle said, why would you do that? You love food. Why don't you open a restaurant? Danny was making $125,000 a year as a salesman. He quit to work at a restaurant for $12,000. He chose the restaurant because he wanted to be around the chef who he admired. He did something really interesting. He made a list of 12 people doing

innovative things in the restaurant industry. He started studying them. This is the same idea over and over and over again. It's in this talk. It's in all these biographies over and over again. He traveled to Europe to work in a restaurant. He had to pay $500 a month to work there. What he does is what you think he would do. He studies. He's watching the chef. He's watching the recipes. He goes on the sourcing trips to see how they pick food at the market. He takes tons of notes. Think about what's happening in the book. This I think a seven year apprenticeship. I didn't know it last time. He's 13 to I think 21, if I remember correctly. Amos is not Amos. Amos is the name of the author. Rothschild is doing the same exact thing. He's learning every single aspect of this house, this house of finance that produces court juice because that's his ticket out.

Right. He's studying. He's watching the chef. He's watching the recipes. He goes on the sourcing trips and how to pick their food in the market. He takes tons of notes. He goes back to New York. He spent six months searching 100 locations to find the very best. This is wild. He spent six months searching 100 locations to find the very best place to launch his first restaurant. 100 locations. Now, we've seen this idea before. The biography of Johnny Ive, right? He's a design student. He has to make these foam prototypes of his designs. His friend comes over to his apartment. Most other design students, they do about 12 different foam designs. Johnny's apartment is full. He did 100. Most people will do 12. Johnny did 100.

Danny Meyer spent six months, 100, searching 100 locations to find the very place for his restaurant. This is a quote that Bill loves of Danny Myers. I spent nearly two years doing the best work ever as a student. And this is Bill's, like, he's adding on to, like, his interpretation of what Danny is saying there. He is most proud of the studying he did on his own, not the studying he did in college. And that goes for everybody.

Your personal curriculum, your personal research and development is the one that you select for yourself is way more important than just sitting in a class. I mean, yeah, that's nice. You went to college. There's millions of people going to college. That's not the differentiation. That's not going to differentiate yourself. That's ridiculous. Just think about it. Danny went on to build 16 high-end restaurants in New York City and founded Shake Shack. The first Shake Shack makes more profit than any of their high-end restaurants. I could eat at Shake Shack every day if I could. I love it. I noticed work harder than anyone else because it will feel like fun. Again, same idea. We just went over Nivol's almanac. He has fine work that feels like play. This should be a personal passion.

It should not be your parents' passion. This should not be what is expected of you. This is another quote that Bill loves that comes from Bobby Knight this time. Everybody has the will to win. People don't have the will to practice. That's a really good way to think about what you and I are talking about right now. When you're going out, listening to this podcast, reading biographies, doing all the other stuff that we're talking about, it's not work, it's practice. It's personal research

and development. Everyone has the will to win. People don't have the will to practice. I think this is a test of whether or not you are pursuing your dream job, the part of your job that would be considered studying or practice. Do you enjoy that part? Number two, be obsessive about learning in your field. Hone your craft. Constantly understand. This is like, I have a hard time sitting down right now listening to this. This entire thesis behind this podcast. And when you start reading these biographies, you learn that the best founders and investors in the world, they study the history of their industry. They know all of them. Be obsessive about learning in your field. Hone your craft constantly.

Understand everything you possibly can about your craft. Consider it an obligation. Hold yourself accountable. Keep learning over time. Study the history. Know the pioneers. This is exciting because it realizes that you and i are on the right path strive to know more than anyone else about your particular craft do you see this

like this theme that bill has in this talk over and over again you should be the most knowledgeable person it is possible to gather more information than someone else here's an interesting story from bobby knight's biography the second time he meets pete newell bob Bobby walks into the room with 74 plays diagrammed on index cards. So Pete Newell was like a famous college men's basketball coach. Okay, so Bobby, again, that's where he becomes infamous and famous for. Bobby walks into the room, second time meeting the guy, 74 plays diagrammed on index cards. Think about how much time would it take to write 74 plays on index cards before you go meet with somebody. He asked Pete to go through the plays with him. He got the number one winner

he could find and made him go through all the plays. Now, why would Pete do this? Because Pete's at the top of his field and he's like, first there's some kind of, like, we just have this nature that like to pay it forward. You know, when you see these autobiographies written by these famous entrepreneurs, successful entrepreneurs in their life, they constantly talk about, listen, man, this is all the stuff I learned for decades in my career. I want to pass it forward. I want the next generation. Phil Knight explicitly says that in his autobiography, Shoe Dog. I want to pass this forward.

I want it to make it to make your job and your goals and entrepreneur and artist, whatever you want to do a little easier by just learning from my experience. But they also respect passion respects passion like this guy loves what he does and everybody wants to talk to somebody passion is infectious me and you talk about this over and over and over again passion is infectious if you have bobby knight coming in there's like look at all these plays a diagram let me please talk about it i want to know what you think about this that person's going to usually respond positively he got the number one winner he could find and made him go through all the plays. These quotes, next quote here, these quotes really drive home the point I'm trying to make to you. Bob Dylan calls himself a musical expeditionary,

a sponge. There's a ruthlessness in the way Dylan finds sources, uses them, and moves on the ruthlessness of an artist's best instincts and so now he compares that to what danny meyer did he talks about danny meyer's process for opening a barbecue restaurant um and now um bill is quoting danny meyer's biography interesting he just another again red flashing light he just referenced bobby knight's biography now he's referencing danny meyer's biography another super accomplished hyper successful person reading biographies we've seen this over and over again this is clearly important do not just listen to this podcast you've got to read the books i've seen other people describe founders as like a summer like i'm summarizing books i understand shorthand it's kind of just a weird podcast what the hell are we doing over here i am not summarizing books books that

can be summarized are not books that are that are worth reading biographies are worth reading they will change your life they will infest into your brain and they'll nourish your soul that's why you see so many super smart super productive people do this so now he's going to go and give us a quote from our story from Danny's autobiography. During one 36 hour road trip, I tasted, this is Danny talking, I tasted 14 different variations of chopped pork, each defined by a subtle difference in texture, the degree and type of smoke used, the amount of tomato or vinegar in the sauce, how much heat was applied to the meat, how much or how little crackling got chopped up and tossed in. And really, he's just saying like, this is the level I'm willing, this is how much love I have for what

I'm doing. This is how deep and how much knowledge I'm willing to go and gather. The good news, I'd already read this to you, but it's so important, might be the most important part of this whole thing. But the good news, if you're going to research something, this is your lucky day. Information is freely available on the internet. The bad news, you have zero excuse for not being the most knowledgeable person in any subject you want. The information is right there at your fingertips. More advice from Bill. Develop mentors in your field. Take every chance you can to find somebody to teach you about the field you want to excel in. Document what you hear and share it with others. So he talks about he did this. He's like, I had the remarkable fortune to meet with Stan Druckenmiller and Howard Marks.

I read everything they write. I listen every time they speak. I got to talk to them for a few hours about investing. The things they said changed some of the actions I am taking in my work. Embrace peers in your field. Have discussions with them. This is how you learn. This is the way to hone your ideas. Always share your best practices. Don't worry about

proprietary advantage. It is a non-zero-sum game. Let's keep going on. I'm just going to read two more because I want to get back to this book. When someone asked Tom Petty what advice he would give, he said, do something you really like and hopefully it pays the rent. As far as I'm concerned, that is success. That's a quote from Tom Petty and then it says um in his book setting the table uh now he's quoting Danny Meyer's book again Danny uses the phrase professional research I think I just used it and I acted like that was my my phrase I got that from Danny I definitely did not make that up I definitely learned that from Danny sometimes I say personal curriculum personal research development but I like his idea of professional research that is

when you're not working the research you're doing to get you better at your craft. Danny uses the phrase professional research constantly. I think it's an interesting phrase. Do you go home at night and study for yourself to improve your own skill set? Most people don't do that. I think that ties together a lot of ideas that you and I have been speaking about.

Let me go back to the book. I want to give you this example of this asymmetric opportunity. Selling a few old coins could not possibly make them rich, but it was a means to establish context with persons of wealth, power, and importance. Such a person was the Crown Prince Wilhelm. This is the most important patron. This is also the guy that Napoleon jacks later on. Such was the person, Crown Prince Wilhelm, who would play a decisive role in Rothschild's future career Wilhelm was the heir to the to his father's vast fortune and his pedigree was one of the finest in Europe so you can start selling he injured he gets introduced by the guy that's become his largest

patron and the person he winds up taking a lot of his the money he uh this guy winds up making and loaning it out and this is where they start getting into like funding wars and and country debt and all other kind of stuff uh says with a young wife at his side uh rachal threw himself into his business with determination and zest this is really more about his personality he spent a large part of his time traveling between neighboring cities um where where he'd be introduced to like these rich like think of them as noble. His target market was the rich. And why is that? Because he's going to start this mail-order business. Think about it, he's doing mail-order in the 1700s, how crazy is that? So he gets introduced to all these noble people that were interested in Rothschild's coins, jewels, metals, and other unusual items.

And so he says he ran something like a mail-order business in 1771. He published the first of several printed coin catalogs which he sent out during the next 20 years at regular intervals to potential customers all over germany so it's like the king of bavaria the duke of weimar i'm going to skip over listing all these people but you get the point uh several of these catalogs were uh were 10 to 16 pages long and they still existed you can still get copies of them uh they were luxuriously bound in gold embossed leather some were furnished with he would actually put the person's name so it's like targeted down to the person's name so you put your not only is it leather and gold embossed but

has your name on it rothschild spent much time and effort on their preparation of course he did each coin was carefully oh this is important. He understood the importance of storytelling. Listen to how he describes this or maybe copywriting. Each coin was carefully dated, visually described and identified by its number in a recent scientific handbook. Unlike coins traded in the normal exchange of business, the value of rare coins and metals depended not on their silver or gold content, but on their beauty, history, and state of preservation. So he's telling the story. It's very similar to the value that you might get in art, right? This is the sentence I referenced earlier. The Frankfurt Commercial Register, an address book of 1778,

listed Rothschild as the city's only dealer in antiques, metals, and objects of display. This page is good because it gives us his basic philosophy. And again, these are basic business fundamentals. They worked in his time, they'll work today, they'll work in the future. I'm just going to give you my note here. He studied human nature. He preferred lower prices and higher volume. He optimized for long-term relationships. He watched expenses and he invested most of his profits back into the business. Is that Rothschild or is that Jeff Bezos I just described? He brought to work a certain natural flair, a knowledge of human nature and a capacity to generate trust. As a rule, he preferred to minimize profits in hope of increasing turnover.

And consequently, his prices were often lower than those of other dealers. He was ready to lower them and at times even take a small loss in hopes of more profitable business in the future. His affairs prospered during this year, says his talks about. So his wife is obviously involved in the business as well. This is a whole family operation. And even when they were unbelievably wealthy, they never moved out of the ghetto and they wouldn't let like their you wouldn't. They would never like try to flaunt their wealth. Wealth is his. His wife winds up outliving him by like 30-something years, and she was extremely resourceful.

If she was alive today, she'd be a successful entrepreneur in her own right. Her name is Guttle, I think. Thrifty Guttle Rothschild spent only a fraction of their annual income on the household, and they pumped a large percentage of the money back into the business. The bulk of Rothschild's business was still trade at this point in their history. As a banker, he was still waiting for his main chance. Now, this blew my mind. So his English cousin, George III, for use as cannon fodder in the American war. So he needs more people willing to travel from Europe to America because they got to put down these ruffians of the world. Remember when I read the biography of Alexander Graham Bell, he comes over. I think he's Scotland. Comes over. He's in Boston at the time. And I think he's talking to his girlfriend. I think he's Scotland. Comes over. He's in Boston at the time.

And I think he's talking to his girlfriend. I think it winds up being his wife. And he says something that's hilarious to me. It's somebody that grew up in America. And he's like, America's the home for the last bastion or the last home for all the ruffians in the world. I just thought they were crazy, wild people. So he says the sale of soldiers had become a major export industry. The soldiers were not mercenaries. They were ruthlessly pressed into service. So this is kind of screwed up. If you think about it, you take these poor peasants and you make them go and fight to the death. And this is how Wilhelm makes his money. So, you know, I'm sure you've studied human history. Then, you know, the savagery of what humans are willing to do to other humans can never be underestimated. So it's full of stuff like this. It says in the seller's market, the terms were exceedingly tough on his English

customer. But George III had already been rebuffed by the Russians and the Dutch, and he had no choice but to accept Wilhelm's oppressive terms. Wilhelm makes a ton of money doing this. And so Wilhelm hires a bunch of other people multiple it's not just one person to help him change money and then invest in the profits from the American Revolution and all this other stuff none of the payments benefited the country

the crown prince considered the entire country his private domain his net profits in 1776 from such businesses were estimated at several millions and you have to see what he when he gets the money what he has to do with it he had to convert his english bills into local currency by selling them at a discount to local bankers so that's where you have people like a bunch of money changers there's a ton of other money changers and other banks and and these are private institutions too it's not when they're using the term bank it's not how we think of like a commercial bank in present day it's not like they're usually private

like family-run uh businesses and partnerships is really the way to think about it um and we i covered more on that when i read the book the house of morgan i think it's maybe founders number 139 something like that but you know jp mor Bank, not the one in existence today, but the people that laid the foundation for that bank are very similar. They were actually inspired. Junius and the, I forgot his partner's name. He wasn't, Peabody, I think might be his name. They were actually inspired by Rothschild and other people like that. So they tried to pattern their business after what the Rothschilds were doing.

More about the benefits of this business. The trade in bills was very profitable. Commissions and other fees could reach more than 10% of face value. So I'm skipping way ahead. This book is a very short book, but I have a ton of highlights. But he winds up becoming, Rothschild becomes a court factor. So they call him the court Jew. And this is just, again, I don't want to deviate.

The fact is he's building his business and he's still in like prison-like conditions in the ghetto. In 1783, 14 years after his appointment as a court factor, Rothschild was finally granted one of those coveted gate passes that allowed a few privileged Jews to leave the quick tangent here in the book. Because another thing that when you study Rothschild, you realize that he believes in the value of secrets. That secrets are extremely, extremely valuable. A lot of this has to do with the fact, you know, if you're flaunting your wealth, you're getting put in a cage and tortured to death. Right? So I'm going to shut the hell up if i was rothschild too

and a lot of this comes with like why when you think of the world the word rothschild you have all these you know conspiracy theories and so this is a little bit about the ghetto they wind up building all these secret passages there's rumors that he hid like when after napoleon tries to take over wilhelm's like entire fortune some of wilhelm's fortune was hid in these like secret tunnels and i want to tie this together with with something else i did in the past it says every recess in the walls in every free corner behind every stairwell under the roof and in the rooms upstairs was used for storage little actual space was left for living the 10 children shared two rooms under one roof the most remarkable thing about the house however was a secret cellar that was built and was reached through a door

concealed by a false wall anything hidden and now not only is it hidden then you have the secret cellar but it's also connected to other and he winds up getting like police come to his house and stuff happens later on his life and they don't find anything And it's probably because he had the foresight to build this. Anything hidden in the cellar could not easily be found during the search of the house. And when I highlighted that, I didn't even know his house was searched. That comes towards the end of the book. A feature that would prove useful in later years. An underground passage led from the secret cellar to the secret cellar of a neighboring house. It was easy to pass. It was to pass easily. And it was possible,

excuse me, to pass easily and unseen from one house to another without going to the street or climbing the wall out back. And so one of the craziest books that I ever did for the podcast was all the way back on Founders number 31. That is one of the longest podcasts I've done. It's on Peter Thiel. I did his book, obviously, Zero to One, which is a no-brainer. But more interesting was how Peter actually operates in the real world. And so there's this book written by Ryan Holiday called Conspiracy. The full title is actually Conspiracy, Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue. It's fantastic. I own the audiobook, the Kindle version, and the hardcover version. The paperback version looks a lot cooler, actually.

But anyways, I think during the time I was doing research for that book, I listened to a podcast with the author, and Ryan Holiday said two interesting things. One, he said that, if I'm not mistaken, I hope it was the same podcast. This was years ago, so maybe my memory is betraying me right now. But he said something that was really fascinating, that Conspiracy was one of his lowest-selling books,

which is insane to me, because I've recommended that book to so many people and bought it for so many people because I just think it's not about, again, you don't take things for literal. I'm trying to pull lessons from this. And I'm going to read a quote from the preface where I think Ryan nails it. But on this podcast, he describes, he succinctly describes what he learned about the conspiracy that Peter Thiel engaged in to eliminate an enemy. Right. And this is I took notes on this podcast. I saved a screenshot of this and I keep it in that folder. I always tell you about that. I run through just to remind me of certain things I don't want to forget.

And he says it was ruthless efficiency and hyper competence. That is a hell of a sentence. It was ruthless efficiency and hyper competence. That is a hell of a sentence. It was ruthless efficiency and hyper competence. So let me read this quote, because I think people miss the value of conspiracy, right? They think it's like this, this network or this cabal of people controlling things behind the scenes. But a study of history and a study of human nature is humans conspire all the time, some successful, some unsuccessful. But Ryan's takeaway from something, I mean, how long he had to interview all the parties involved, had to do all the research, had to write an entire book on conspiracy. There's a lot in that book.

And we're taking it in the positive sense, right? And let me just read it to you because he says it better than I do. Okay, so this is from the book Conspiracy. It is also a book about the controversial word and method, conspiracy, which has long terrified and intrigued. There is an unpleasantness in talking about conspiracies. I'll grant that. Yet conspiracy is a neutral word. That's the point I was poorly trying to make earlier.

It depends on what one does with it. Our tendency to shy away from this truth creates a profound ignorance on how things really work and what it means to be strategic, to be powerful, and to try to shape events rather than simply be shaped by them. That's why I think entrepreneurs should read the book Conspiracy because you're trying to change the world. You realize that the world is way more malleable than we think and that we can actually contribute to it and change it and affect the lives of other people, usually through products and services. Conspiracy entails determined, coordinated action done in secret, always in secret, that aims to disrupt the status quo or accomplish some aim. Peter Thiel has famously become associated with one question which he uses in interviews and over long dinners. What important truth do very few people agree with you on? I'll give you my answer. Remember,

this is still Ryan writing, right? Perhaps we have few, and I agree with him 100% on this, I think he nails it. Perhaps we have too few conspiracies, not too many, too little scheming, rather than too much. What would happen if more people took up plotting, coordinating how to eliminate what they believe are negative forces and obstacles and tried to wield power in an attempt to change the world? We could almost always use more boldness and less complacency. We could use less telegraphing of our intentions or ambitions and see what secrecy, patience, and planning might accomplish. I'm going to interrupt Ryan's writing there. That's exactly what my understanding of when I read this book on Rothschild.

Like he secretly plotted. And in some cases he has to secretly plot because he could wind up drawing unnecessary attention to him and because of his race or his religion he could wind up being killed. We could use less telegraphing of our intentions and ambitions and see what secrecy, patience, and planning might accomplish. We could use a little more craziness and disruption, even from the people we disagree with. This book is my homage to that complicated idea told in part through the complicated story of one almost unbelievably conspiratorial act. Please use it wisely. And so let's go back to this idea. Now back to the book. This is another

example of Rothschild's desire to hide his wealth and his love of secrets. There was little, if any, visible wealth. There was little if any visible wealth right the family's modest lifestyle did not reflect the true extent of rothschild's accumulated riches which she continued to channel back into the business i actually now i just started the second book and i'm not very far into it that i'm going to read uh for the next podcast and it made me think of um because they kept referencing like vast wealth and so i went to go look at some of these estates that rothschild's owned it's unbelievable how in such another direction that his ancestors or his sons and I guess future generations went away from, you know, what he thought was very important,

which he continued to channel back into the business. This coupled with Rothschild's inborn compulsion to hide his still modest wealth. And he even taught this to his sons. And this is one of my favorite quotes in the entire book. Long his death one of his sons quoted him as saying something three people know about is no more a secret something three people know about is no more a secret there is uh i do have to tell you like his sons are working with him in the business from the time from a young age uh the books i'm reading for parts two and three, they're going to we're going to go into way more detail, especially with his son, Nathan. I find it's just really fascinating. But I'm so I'm omitting them from here because I really want to focus on on the founder, the patriarch, you know, the generational inflection point of the Rothschild dynasty. This is an example of, you know, them profiting from war. War breaks out and Rothschild's services are in demand. See, when you think of these governments, they're not very sophisticated. A lot of the infrastructure and services they need, they have to go out and hire for. So Rothschild takes advantages of the skills they lack by providing them. So there's English-Prussian-Australian war against revolutionary

France. This is when Napoleon is going to come through and wreck shop. I do have a book. Eventually, again, almost all the biographies are going to be on entrepreneurs, but just like Churchill and Napoleon, you have to do Napoleon. I'm interested in who influences the influencers, right? And when you go and study these entrepreneurs, they're constantly referencing people like Napoleon, taking ideas from him, taking ideas from Churchill. So anytime I run down, I find people like that, I'm obviously going to run down biographies and do that in the future. I don't know when. I got a huge queue and a large part is because I'm getting so many thoughtful recommendations from you guys. My queue is going to be hundreds, 500 books deep like i'm not going to have anywhere to put

these books uh france was relentlessly sucking frankfurt into a maelstrom of international affairs the large armies assembling nearby provided a natural market for enterprising businessmen rothschild secured a contract to supply remember he's still doing he's doing a little finance little banking but vastly his he's still reselling and wholesaling and stuff like that. Good. Rothschild secured a contract to supply the Austrian army with wheat, uniforms, pack horses, and other equipment. In addition, he was to arrange the regular distribution of the soldiers' wages. Rothschild's profit as a pay agent and supplier of fodder to the Austrian military provided his first major capital

accumulation. That is why I'm reading that section to you. A little update on his, again, I, I, I, I already said this, but again, it's not, did not all happen at once. He has several like significant events that they give him one step up, but it's just, I'm going to grab the opportunity, going to accumulate all that money, going to throw it back in the business and we keep expanding this is where his the nature of his business around 1797 uh the detailed description of 1797 reflects the nature of his affairs and the diversity of his main business partners debtors as well as his creditors they were located in frankfurt and most other german markets also in vienna paris amsterdam and london and this is where he starts so rothschild's thought the is where he starts so Rothschild

thought the bank the house of Rothschild is thought of as like a one of the first like multinational banking institutions as you can think about like that it's not it's hard to categorize because it's they were very unique in what they like not only how how they raise their money but also how they employed it and the book talks a little bit about that but um oh let me finish the sentence. Some of Rothschild's biggest creditors at the time were becoming silent partners, or investors in his company. But anyways, back to this.

This is where Rothschild's going to establish his first foreign branch. That's like the famous blueprint, the Rothschild blueprint, where he sends all his sons out to the main cities in Europe. And then they collaborate extremely closely and he tries for as long as he's alive he he basically is like the what's the person that's that's in charge of like the puppeteer like the one that that that's running pulling all the strings um and then eventually you know he still he still produces very formidable uh sons that wind up vastly like taking the dynasty to the stratosphere

compared to where it was when the first Rothschild died. The bulk of his business was still trade, not banking, and more of it was in English imports. Young Nathan was in charge of this. And I'm just going to give you an insight. Again, I'm going to talk a lot more about Nathan in future podcasts. In 1978, Nathan had a confrontation with one of these traveling salesmen. Nathan, who acted as though all of Europe depended on his goodwill, Nathan was incensed at the man's arrogance. He resolved to go to England himself and buy the products of that country without the cost and inconvenience of a middleman. So a

middleman was rude. Nathan's the buyer for the Rothschild family. This middleman was rude to him. He's like, forget you. I'll cut you out. He also felt constrained by a dominant father and two elder brothers. So this is another, even if there was not, I mean, who knows the influence? Obviously, Meyer had a huge influence on Nathan, but Nathan is an extremely strong, formidable individual, just like his father. So he winds up going to England and it says Rothschild was establishing his first foreign branch. I want to go back to that Rothschild M.O. though. The fact that your margin is my opportunity.

He winds up getting a near monopoly because of that. Rothschild owed success. He himself was more outgoing and quick-witted than his competitors, but he offered better terms. He practiced his old policy of maximizing volume by minimizing profits. His competitors, who for decades had handled the affairs, this is that Wilhelm guy, were gradually squeezed out. And by 1807, Rothschild enjoyed a near monopoly. Another example of the Rothschild family

benefiting greatly from war. These are the Napoleonic Wars. They just provide a massive opportunity. This time Nathan's in England. He says England was the center of the English, Manchester was the center of the English textile industry. Nathan was amazed to discover that prices there were sometimes a fraction of what they were in Germany.

Large armies were gathering everywhere on the continent and those armies had to be clothed and the demand for all kinds of cloth was constantly rising. Nathan threw himself into the challenge with the fervor of youth, and then we start to see, we have all these, like, correspondence between Nathan and his father, and so we see the way Rothschild parented. He was a critical and strict father. He anguished over Nathan's carelessness and disorganized work habits. Dear son, a father who has to think of the happiness of all his children must be excused if he wants to know the real state of your fortune.

My dear Nathan, you must not be angry with your father. Unfortunately, you are not very good in writing. You should engage a secretary. He starts criticizing his bookkeeping. He says, if you are so disorderly, especially because you have no one to help you, you will become a victim of thieves all around. This actually happened to Rothschild. His bookkeeping was very sloppy. It winds up being one of the persons helping him wound up stealing quite a bit of thieves all around. This actually happened to Rothschild. His bookkeeping was very sloppy. One of the persons helping him

wound up stealing quite a bit of money from him. A lack of, and this is still in the letter he's writing to his son, a lack of order will make a beggar out of a millionaire. In my youth, I was, just as you are now, a very active merchant, but there was no order in my business. And he talks about, you know,

I didn't have any, I just schooled in religious. He's like, the reason was I was a order in my business and he talks about you know i didn't have any i just schooled in religious he's like the reason was i was a student in the talmud but i had learned nothing of practical business you have brains but you need to learn to keep order so the landgrave that's that wilhelm guy um this is when rothschild starts acting as an international banker international broker because this guy's throwing guy has so much surplus of money. And he doesn't know where to put it. So this is by helping Rothschild. Rothschild was able to gain access to land gross funds.

He was able to negotiate large loans to foreign governments at little risk for himself. He's using essentially the assets, almost like a state asset. This guy's like he's not like it's not like a personal fortune. It's like the size of like a state asset. This guy's like he's not like it's not like a personal fortune. It's like the size of like a state. Right. And then using those those assets and loaning it out to other, you know, with interest, obviously, to other foreign powers. The Landgrave had large surpluses and was ready to buy up large packets of foreign state bonds, much in the same way that pension funds today acquire shares in Treasury bonds. As an institutional broker, Rothschild's function was to match the Landgrave with the right borrower. He negotiated prices, rates of interest and dates of maturity. And so we also see him as Rothschild builds up his own business.

The note of myself here is default aggressive. He's not sitting around waiting like his competitors are. Other bankers mostly awaited orders to reach them in their offices, their trading halls. Rothschild went out to solicit them. Default aggressive. waited orders to reach them in their offices their trading halls rothschild went out to solicit them default aggressive and so now we see napoleon kind of wrecking shop we see the cutthroat that is napoleon you're realizing hey this guy over here in castle that's the name of the city he's like really rich it says napoleon ordered his troops to march on castle his generals were to arrest wilhelm and confiscate his treasures quote fromote from Napoleon, he is practically a Prussian and he sells his subjects' blood for money.

Listen to how Napoleon ends this. This is the Hess. That's the family, right? The house of Hess will cease to reign. The French troops reach the outskirts of Kessel on October 31st, October 1806. That same night, Wilhelm bounces. He escapes from the city disguised in civilian clothes. Yeah, good idea, buddy.

And so what happens is he this is there's a lot of, you know, theory and myth and conspiracy around this event where he gave his entire fortune to Rothschild. This author saying, no, it's impossible. You wouldn't have anywhere to put it. But he does escape, and he's able to, I think he goes, like, he gets on Dutch lands or something like that. But anyways, he spreads it all over the continent. Napoleon, I think, jacks, like, half of it, at least. So it's a substantial fortune,

because it was one of the largest fortunes in Europe at the time. And then he tries to, he hires other people, like this guy named buderis which is like wilhelm's like right hand guy to hide you know find places for his fortune the fortune that napoleon has taken and really this is the note of myself is remember rothschild telling his sons that three people know a secret it's not a secret so buderis is trying to escape through like the french army and he discovers that oh all these secret hiding places for wilhelm's fortune is no longer secret says buderis was shocked to

discover that wilhelm's secret hiding place had become public knowledge everywhere people were talking of the treasures hidden quote-unquote in the castle and so there's examples in the book where even you know sometimes this is downplayed nathan winds up saying publicly like yeah this guy sent us a bunch of money and this is the late years after his dad died but anyways this opportunity napoleon napoleonic wars are giving them an opportunity to get really rich because they can defy napoleon napoleon says hey you're not sending we're not importing any any lands i have controlled you're not importing anything, any English goods. And so his, what happens is when you pass that law, it's not like they're going to stop importing goods.

It just becomes a black market. And things on the black market are a lot more expensive than if it was above board and you have all these people competing, right? So his son Nathan is in England and he has access to all these goods. And so they're going to have this huge markup. It says less than a month after the Wilhelm had given Rothschild access to his money, Napoleon provided him with a golden opportunity to put it to profitable use. Napoleon announced the closure of all the continental ports. He says, Napoleon says, no ship which comes directly from England or her colonies will enter many of my harbors. All trade with England

was prohibited. Napoleon had not reckoned sufficiently with the ingenuity of the Frankfurt merchants, from the Rothschilds down to the last peddler, all threw themselves with gusto into trade in contraband English goods and made a good deal of money. The trade in English and colonial goods never flourished in Frankfurt so much as it did after the imposition of the French blockade. Rothschild and his sons played a major part in the orchestration of this boom. His brothers were in attendance at all ports of call to forward the merchandise on. The brothers spread out to take care of all the details. They go to Hamburg, they go to Dunkirk, they go to Amsterdam.

Rothschild coordinated everything. French attempts to stop them were half-hearted and ineffective. So it's during this, there's all these rumors that you're involved, you're laundering money for this guy we kicked out of here, you're selling goods, but Rothschild's too good to get caught, much too smart. So they come to his house, they're like, we're going to catch you now, buddy. The investigation now turned in the direction of rothschild uh the investigator suspected that rothschild was administering administering the exiled wilhelm's fortune fortune and that he had been the channel through the rich recent uprising had been financed but he lacked proof so some of that money went to hiring like a militia to try to get his lands back that that failed

though so anyways they show up at his house um nothing like this had been seen in the ghetto for a long time rothschild and his two sons were placed under house arrest the house was systematically searched rothschild endured a rough interrogation that lasted several hours um it says the investigator it shows the investigator is fairly well informed, but lack concrete proof. The search did not provide anything. Rothschild wife and their daughters were also questioned, but they had been drilled to stick to an agreed version and they were that they were not in contact with the disposed Wilhelm and they had absolutely nothing to do with the failed uprising. And so this is what the family learned from this experience. The experience served as a warning to see a more cautious course between the exiled Wilhelm and the new masters of Frankfurt.

Henceforth, the rush. And they also realized, hey, we're not going to we're not going to be like we're too concentrated. We need to serve not just this guy that has a vast fortune, but let's go out and find all the states that can use our services. Henceforth, the Rothschilds would no longer limit themselves to the service of a single sovereign. And it's at this point where all the sons are now grown. He spreads out and they're laying the foundation. The chapter is called Forging the Dynasty and that's a great way to think about this.

It says on September 27th, 1810, Rothschild and his sons drew up a new irrevocable partnership agreement. This is very important. And again, I'm just very fascinated by things that last a long time, especially things that can be done outside of one lifetime. That is just it's like catnip to me. It's very fascinating.

So it says and this is where they're like laying them out. You know, some weird. There's definitely some weird shit here. Right. Lots of them wind up marrying like nieces. They're marrying cousins, which, you know, is semi-common. Then he is intent on keeping in the family in more ways than one. Obviously, they were forbid to pass any kind of inheritance.

It only had to go through the son because they didn't want a Rothschild woman to marry another person. It's not a Rothschild. Then that dude have some access to their wealth. They did this, you know, very much like nobility. it made you marry other members of the family and stuff like that like you have uncles marrying nieces and you know that kind of thing um but this idea that you know we are keeping like the family unit is the strongest single structure in human history if we can keep it together and that's the way i would think of that's how my interpretation of how rothschild thought right so he says um in the old agreement partnership agreement um they had been junior partners in a firm directed exclusively by their father the new partnership because he's almost dead here uh you know he's in the 60s the new

partnership agreement refined these roles and established a new delicate balance between the chief and his grown-up sons the sons were authorized to commit the firm and given the right to signature the new deeds stimulated their industry by granting them more substantial shares in the business profits so now they have more skin in the game it paid homage to their father's quote proven industry good business sense and experience who through his tireless activity from youth to advanced age was the sole cause of the present flourishing state of the business and the worldly happiness of his children in other words this guy is the generational inflection point for the rothschilds talks more about this this partnership agreement and why it was set up this way. The absence of Nathan's name in this document is noteworthy. He was not, however, disinherited.

On the contrary, Nathan was on the best terms with his family. Amschel, I don't know how to pronounce his name, Amschel, was four years older than Nathan but recognized Nathan's superior ability. He wrote, or excuse me, he deferred to Nathan, calling him our dear and wise teacher. Nathan's name was left out of the official document because as an English citizen living in enemy territory, it was deemed politically wise at the time. So another secret here. The document throws a fascinating light on Rothschild's evolving dynastic scheme.

The line of succession would be strictly limited to male offspring. The partners and their heirs were enjoyed not to molest the company with litigation. Again, keep it private, right? Litigation's public. Heavy penalties were foreseen for breaking this rule. All differences had to be submitted to neutral arbiters appointed by the parties and their decisions was final.

They reflected an overriding desire to perpetrate unity among the brothers, prevent the dispersion of capital, and retain the compact, disciplined, well-coordinated character of a family firm. So this is a year before Meyer dies. It says his astonishing concentration on business continued as before. They call him an old single minded self. Okay, so it does not seem like he had much room in his life for any many things other than his business. I'm not going to spend too much time, like I said, on the sons. And this book's almost over. But I do want to pull a quote from his son, Nathan,

who inherited that exact same mindset says Nathan was single minded in his pursuit of business and more business. He was at a dinner party one time and someone expressed a hope to him that Nathan's children were not too attached to business. On the contrary, Nathan answered this. He's like, no, I wanted to do this. I wish them to give mind and soul and heart and body and everything to business. That is the way to be happy. It requires a great deal of boldness and a great deal of caution to make a great fortune. And when you've got it, it requires 10 times as much wit to keep it. So that gives you an insight into the extreme, extreme outliers that you and i are studying

at this moment these are not by any means normal people they are not balanced they are completely in and two things before i get to his last day on this earth was that at this point they are assuming at this point but his entire life he could have lived anywhere he wanted to as well as he needed to be he never left the ghetto. They had a slightly better house in the ghetto. I think they owned the whole thing instead of three-eighths. But him and his wife, his wife would refuse to move away. He didn't want to move away. He just thought it was his, that's where he was born. That's where he's going to live. And it gets a little better now that it's the control, like the masters of Frankfurt are different. But I just found that very interesting and surprising.

And then just to bring you up to date, this happens before he dies. From this date on, the House of Rothschild's trade in goods of all kinds declined. Nathan was leading the family to a more lucrative field. He was becoming to play an active role in English war efforts. So this is where they're going all in on finance and banking. All right, so this is Meyer Roth're going all in on finance and banking um all right so this is

uh meyer rothschild's last day on earth after dark upon returning home to break to break the fast he felt ill and was put to bed or his last few days rather on the following morning he insisted on getting up and go out and going out to visit his son as he walked down the ghetto for the last time he felt a great pain and collapsed in the street. He was carried back to the house where his condition grew worse. He called in his lawyer and revised his will. His main concern in his last hours was to secure the continued happiness and prosperity of his sons. He knew that riches came and went.

He had seen in his lifetime fortunes dissipate through waste, vanity, or infighting among heirs. Fortunes, he warned his son, do not keep longer than two generations, for two reasons. One, because housekeeping and other expenses are not considered. Two, because of stupidity. In his will, he avoided the disclosure of his total assets by simply selling his shares in the business and all other possessions to his five sons for a nominal sum. His love of secrets to the day he died, if you can think about that. He urged his dear children to relate to one another with mutual love and friendship. He knew his sons were strong-willed, difficult, impulsive men.

He was afraid of their tempers. On his deathbed, he urged them once more to remain united at all costs. It had become an obsession with him. He said on his deathbed, Amschel, keep your brothers together and you will become the richest men in Germany. Unfortunately, he didn't live to see how much of an understatement that was. That is where I'll leave it for the full story. Read the book. If you want to read the book, if you buy the book using the link that's in the show notes on your podcast player, you'll be supporting the podcast at the same time. That is 197 books down, 1,000 to go.

And I'll talk to you again soon.