Founders - #237 Julio Lobo (Cuba's Last Sugar Tycoon)

Episode Date: March 16, 2022

What I learned from reading The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon by John Paul Rathbone.----Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com----[2:02] Beyond Possible: One Man, Fourteen Peaks, and the Mountaineering Achievement of a Lifetime (Founders #236)[3:22] This is a cautionary tale.[6:18] One of the main lessons of the book is just how fast things can change.[6:25] The History of Cuba in 50 Events[10:14] Lobo walked with a limp due to a murder attempt 14 years before that had blown a four inch chunk out of his skull.[12:29] One of the most human of all desires is to perpetuate what you have created.[12:55] Lobo thinks he has leverage when he really doesn’t.[18:39] He dies in poverty. Imagine having $5 billion and then at the end of your life having to rely on an allowance from your adult daughters.[20:30] I think about what Charlie Munger says: Don't try to be really smart. Just try to be consistently not dumb over a long period of time.[20:58] Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams (Founders #146)[22:59] Chico, I was born naked. I will probably die naked. And some of the happiest moments of my life happened when I was naked.[29:01] From an early age it was apparent that Lobo sought not only wealth but glory too.[30:21] He was an individualist who did not spare himself any sacrifice to attain his objectives.[31:26] The clearest path to wealth is building a business that benefits somebody else's life. Make a product or service that makes somebody else's life better. Do that for a long period of time and keep improving it.[33:45] His father told him I would much rather you make your mistakes now than later when I may not be around to pick up your pieces.[38:16] It turns out that almost being executed makes you impatient for large success.[40:32] If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it. —Warren Buffett from The Essays of Warren Buffett (Founders #227)[45:09] Think about the type of funeral you want. There is a story about a person who died. The minister said it is now time to say something nice about the deceased. After long time a person came up and said, “His brother was worse.” That is not the kind of funeral you want. —Charlie Munger[50:34] Alfred Nobel: A Biography (Founders #163)[52:30] The Fish That Ate the Whale: The Life and Times of America's Banana King(Founders #37)[54:26] They almost resorted to a duel, which was still common in Cuba at the time, where differences were often settled with machetes at dawn.[1:04:34] There are times when chasing the things money can buy, one loses sight of the things which money can't buy and are usually free.[1:05:10] The Almanack of Naval Ravikant: A Guide to Wealth and Happiness (Founders #191)[1:05:17] A calm mind, a fit body and a house full of love, these things cannot be bought, they must be earned. —Naval Ravikant[1:08:52] His business collapsed like a house of cards.[1:09:34] It was the same ending that befell so many other famous speculators throughout history.----Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com----“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

Cuba has known many rich men since Christopher Columbus first introduced sugar cane to the island. Thomas Terry, the most successful sugar planter of Cuba's colonial years, left $25 million on his death in 1886. Not bad considering that then the richest man in the world, William Astor, left just $50 million. Yet Cuba does not have to look back more than a century to find extreme riches. In Havana today, to have Croesus-like wealth is referred to be as rich as Julio Lobo. Julio Lobo was the richest man in Cuba before Castro's revolution did away with such men. Lobo's life frames the 60-odd years of the pre-revolutionary Cuban Republic. He was born in 1898, the year that Cuba won independence after 30 years of fighting against Spain, and he left the country in 1960, two years after Castro's guerrillas came down from the hills. In his heyday, Lobo was known

as the King of Sugar, not just of Havana, but of the world, with an estimated personal fortune of $200 million, about $5 billion in today's dollars. Yet he was also a financier of such talent that Castro's government, which was communist, asked Lobo, a full-blooded capitalist, to work for them after the revolution had begun. So Lobo captures the period's contradictions too. Lobo's life has the explosiveness of a Hollywood movie. He swam the Mississippi as a young man. He fenced in duels. He survived assassins' bullets,

and was put against the wall to be shot, but pardoned at the last moment. He courted movie stars, raised a family, and made, and then lost, two fortunes. That is an excerpt from the book I'm going to talk to you about today, which is The Sugar King of Havana, The Rise and Fall of Julio Lobo, Cuba's Last Tycoon, and it was written by John Paul Rathbone. So it's funny, on the last podcast I did on the book Beyond Possible, which was written by a very inspiring figure named Nims Persia, this mountaineer and special forces operator from Nepal. Something Nims said in the book where he's climbing mountains and he passes, actually I'm

just going to read the excerpt for you real quick in case you missed it. He says he's climbing one of the highest mountains in the world and he, there's a number of unpleasant reminders of the harsh and unforgiving nature of life at high altitude. I passed at least three corpses along the way, the most unsettling being a man in a bright yellow summit suit whose jaw was set askew in a grin. I kept thinking of the man in the bright yellow suit. And now you hear Nims' inner monologue. He says, that could be you if you don't take care, brother. I still had plenty of hard work to do. And so I tried to translate that idea that Nims had in his inner monologue to our primary purpose on the podcast, which is to learn from the people that came before us. And what I realized is like, hey, it's a good idea to

study dead companies. Please send me book recommendations on entrepreneurs that failed or companies that were once successful and then fell from that perch. And so I got several book recommendations, a bunch of books I ordered for that, but we didn't have to wait long. And this book, I didn't know that going into this book. This book has been on my desk for quite a while, probably for a few months, and I didn't know picking it up that this was actually going to be largely, I didn't know until I got to the end of the book, that this is going to be largely a cautionary tale. And so let's go to the introduction. The author tells us why he is writing this book, why he spent so many years crafting this story. I had been fascinated by those elegant, decadent years all my life. The curiosity was an inevitable outgrowth of my mother's exile.

She was born in Havana and raised in a conventional upper-class Cuban world. My mother was a close And so this book weaves his family's story with the life story of Julio Lobo. A lot of it comes from what he learned from his mother. There's a ton of pictures of his family. And one of this, one of the pictures that he shares in the book will also demonstrate the vast wealth that Lobo had. And so he's describing his mother as like a teenager. Another shows my mother with a group of friends standing in the shallow end of a swimming pool. It is a photograph of a swimming pool at one of Julio Lobo's many estates outside of Havana. It is also the same pool that Lobo filled with perfume so that Esther Williams, the Hollywood starlet, could practice her swimming routines when she visited the island. So Lobo had enough wealth, not only did he have multiple vast estates, but so much wealth that

he could actually fill a swimming pool with perfume. Okay, so the way the book is set up, it starts at the end of his empire crumbling. It's 1960. He's 63 years old. He's going to be forced to flee Cuba, and he has almost all of his assets on the island. So let's go to this meeting that he's going to have. Che Guevara summoned the sugar magnate Julio Lobo to his office at the Cuban Central Bank in Havana. It would be a midnight meeting. The Cuban Revolution was barely 18 months old. An inexperienced government was remaking the island. Lobo was then the most important force in the world sugar market.

62 years old, he was known as an authoritarian empire builder who handled about half the six million tons of sugar that Cuba produced annually. And so just to give you a background of why this is so important, almost the entire Cuban economy was sugar. There's estimates that it was at the low end, 30 percent responsible for 30 percent of Cuba's entire GDP. I've seen numbers as high as 60 percent. And so we have this one guy who over many decades, like four decades, had built up this empire where he's essentially controlling half of that. As part of his personal fortune, he controlled 14 sugar mills in Cuba. He owned hundreds of thousands of acres and they had just so keep that in mind.

So they're saying he owns hundreds of thousands of acres. Castro had just put out a decree that no one could own more than I think 900 acres. So he's well above that limit, right? So he owns hundreds of thousands of acres of land, had a trading office in New York, London, Madrid, and Manila. He also owned a bank, an insurance company, shipping interests, and a telecommunications firm. And then we get into, I think one of the main lessons of the book is just how fast things can change. So at the same time that I'm reading this book, I actually read this 51-page book.

It's called The History of Cuba and 50 Events. I've read a bunch of History of Cuba because my dad was born there. And so just like this author, I grew up on stories of Cuba and Castro and everything else. And a lot of the history of Cuba is dictator after dictator, foreign power after foreign power just running or ruling the island. And so the reason I say one of the main reasons, the lessons of the book is just how fast things can change and how you shouldn't really rely on your ability to predict the future, which is the downfall of Lobo many times because he was primarily a speculator. Logo had beef with Batista, who was in power before Castro. And so Lobo actually helps Castro get to

power. And he doesn't realize because no one did the weird thing about if you go back and read a lot of history of Castro's like the first few years before he took power in the first few years after people are saying, no, no, he's not. He's not. You know, he's for democracy. He's not a dictator. They were saying he's even anti-communist. And so we get a little bit of that. Lobo had fiercely opposed the corrupt Batista government. We didn't care who overthrew Batista, he said, so long as somebody did. He had even helped finance Fidel Castro's rebels a few years earlier. Now, that's important because, let's say it's 1956, he's helping, 1955, 1956, he's helping finance Fidel Castro's rebels.

Four years later, Castro is going to destroy his $2 billion fortune. That is the lesson there. That, however, was before Castro's plans, and eventually his communist leadings had been fully revealed. And then this is the punchline here. Since then, much of Lobos' land, although not yet his sugar mills, had been confiscated by the rebel leader whom Lobo had once helped. And so then the author points out that Lobo was not alone in making this mistake. A lot of people didn't like Batista the second time he took power. So the most recent time right before Castro overthrew him. And so his mom is in, there's this famous scene if you've ever seen Godfather 2, one of my favorite movies of all time, where Michael and Fredo are in Cuba the night that

Batista flees and that Castro takes power. So his mom, John Paul's mom was there too. There's pictures of the New Year's Eve party. And so this is her like a very common interpretation of what happened at the time of the event. So it says Havana was, this is his mom talking, Havana was buzzing. There was excitement and hope in the air. She's writing in a diary at the time. And so he's reading his mother's diary many years later. The whole country seemed to be behind Fidel. Cuba was free of Batista and all that he represented. We were on our way to true democracy. Think about how crazy that statement is. I mean, I'm not faulting her. I understand why she said that. But Fidel was literally the opposite of democracy in the following days. And then his it's funny because his mom comes around full circle. She winds up

like most cuban exiles detesting and hating castro in the following days my mother watched the televised show trials of patisa's henchmen led by che guevara and succumbed to the hypnotic chant it's in spanish i'm going to translate it against the wall against the wall she felt remember she's young too like she doesn't understand her father nails it he it right away. She felt that there was no difference between a mock and a real trial, as the outcome would have been the same. But my grandfather, her father, viewed the proceedings and subsequent firing squad executions with distaste and maintained that they marked the beginning of the end. He was right. A few weeks later, And so then we go back to this meeting that Lobo is having with Che,

and the author does a great job of just talking about how crazy Lobo's life was. This is just unbelievable. Like so many of the stories that we study on this podcast and why I think reading biographies is just so important. You just see the full scope and the wide variance that can happen in one lifetime. Lobo walked with a limp due to a murder attempt 14 years before that had blown a four-inch chunk out of his skull after he supposedly refused to pay $50,000 in protection money

to a gang of Cuban mobsters. The machine gun bullets had also shattered his right leg and left knee. So later on, he winds up having to leave Cuba when he's in his 60s, goes to New York, winds up making a giant mistake, which we'll talk about later on, losing another fortune, then having to essentially retire in poverty in Madrid. When he's an old man, he's like 80 years old, he winds up slipping outside, falling and bumping his head.

He has to get surgery. The surgeon in Madrid, half a century later, still finds shrapnel in the base of Lobo's skull from this assassination attempt. It's insane. I'll get to more about the shooting later, um inside the central bank was a mess gavera who had only been can you imagine you this is how stupid castro's who should be the president of the central bank che gavera are you kidding me gavera had uh only been central bank president for a few weeks but the once pristine financial building was dirty and disorganized with papers all over the floor. And so there's all these things that

are happening in the mind of Lobo as he's sitting there talking to Gavir. I want to pull out three sentences for you. They're all separate and they tell you a lot about him. He had, Lobo has this like intense fascination with Napoleon. That's throughout the entire book. He had, I think, one of the largest collection of Napoleon artifacts in the world. He had his death mask. He had locks of his hair. He had like a bunch of letters that he wrote. He had some of his molars and his teeth. And so you can really think of like Lobo as like the Napoleon of sugar. Like there's a lot that you can learn from this guy that I think some positive traits he has. But there's also, like I said, it's a cautionary tale. Lobo used to say that Napoleon was a lonely character and so was he.

Lobo was candid to the point of brutality, but he can't do that right now in this meeting. And then three, he talks about why he stayed around, why so many people had the presence of mind to get the hell out of Cuba. And not only did he stay way longer than he should have, right, but he kept all of his assets on the island. And he says, one of the most human of all desires is to perpetuate what you have created. And so now we go into the dialogue that Guevara and Loeb are going to have. I went back and I have a highlights on the next, a lot of highlights in the next two or three pages, and then went back and left a note after.

And it's a note to myself. Like, this is a dangerous game to play. Like, no money in the world is worth this. So it says, to separate Sugar from Cuba, Lobo knew. Essentially, Lobo thinks he has leverage when he really doesn't. Because you're expecting, like, you think you're dealing with rational actors. Castro and Guevara, and you can prove this because they have a 50-year, in Castro's case, Guevara dies, obviously, but Che dies, obviously,

but Castro has a 50-year history of incompetence. Because Lobo is going to make the point that, of course, sugar is so important to the financial health of our island, we can't just cut it off. You're not dealing with rational people. And I guess I should preface this entire podcast. Obviously, I was raised on stories of this my whole life. I met a ton of Cubans that came over on rafts, like a kid, I'm talking about like a little kid. What's my first memories when I'm like five, six, seven, eight years old, is meeting people that risk their

lives coming over on rafts to get to America and to flee Castro. You're talking about hundreds, the estimates is something like hundreds of thousands of people that did this. The people that died on the low end, you're talking about from 1959 until now, the low end estimate is 16,000 Cubans died at sea trying to escape this brutal dictator. On the high end, that estimate is 100,000 people.

Many of these people being children so this is not like i can't be unbiased here so i'm just warning you that like there's a and i had a conversation with myself before i started like do not be induced into a state of rage but there's many times i'm reading the book and i was induced into a state of rage because i cannot for the life of me understand the people that also view this event in a positive light they say things like oh look at the high literacy rate look at the education when I've met hundreds probably thousands of people that fled Cuba for the United States not one of them would tell you that Castro was good for their country their home

the one that they had to flee in many cases cases leave family behind. There's a great, I was listening to Anthony Bourdain as prep for the podcast too. I was listening to Anthony Bourdain talk about, you know, he famously went to Cuba like six years ago when they had recently opened it up to more Americans at the time. And he had filmed there. He said, essentially, like when you sit down with somebody, it becomes political because you're sitting down with local Cubans and they have no food. All they have is rice and beans, small portions of that. The author goes to Cuba for research of the book. And what a local Cuban will say to somebody else that he doesn't like to corrupt government official, you know what their insult is? It's in the book.

That guy eats a lot of meat that's how they know the government is corrupt because they get meat and we don't these people don't even have food or the internet it's just a wild it's just a wild story it's just a wild crazy experience also just something that just fundamentally altered like my view on the world so it says to separate sugar from cuba lobo knew one might as well chop away the arterial system of a body and imagine that it could somehow survive so despite che's plans for soviet style industrialization and self-sufficiency cuba's revolutionary government needed sugar because of that it also needed men like lobo or at least he thought this was the aim of che's meeting that night castro was going to seize Lobo's sugar mills in a few days, and Che wanted to convince Lobo to stay and keep his expertise in Cuba. So Che's smart enough to realize that they need his skills,

but dumb because listen to the offer he thinks that this person is going to accept, right? The offer that Che was going to make Lobo was a relatively modest salary. He's going to pay him $2,000 a month and the right to keep one of your homes. This is a guy worth $200 million at the time. Nobody's going to take that deal. So Che says, it is impossible for us to permit you, who represent the very idea of capitalism in Cuba, to remain as you are. Lobo was used to playing all the angles as a speculator. He may have remembered Napoleon saying, I am sometimes a fox and sometimes a lion. The whole secret lies in knowing when to be one or the other.

And so Lobo starts to become the fox. Lobo asked Guevara how he could integrate himself in with the revolution. Che laid out his terms. Lobo would become general manager of the Cuban sugar industry under the revolutionary government. His job would be to nationalize all aspects of the business. He would lose all of his properties but one and keep an income of $2,000 a month. So then the author talks about this interview he did with Lobos, essentially like his right-hand man, somebody he worked for a long time.

This guy is Leon. He's still alive. Lobos is long dead by the time the book was written. Leon is living in Miami like many Cuban exiles and it says Leon had just celebrated his 91st birthday when I talked to him and so he's talking now Leon is relating for us the meeting that Che and Lobo are having and he says the notion that Lobo might surrender his empire his creations to anyone else let alone a communist government was impossible and so Lobo plays it cool. He's like, let me think about this. Let me get back to you.

Lobo had already made up his mind outside on the street. As he got back into his car, Lobo wondered if his refusal to reveal that decision had consigned him to prison or worse. And so what I meant is about this, this is not a game you want to play. He is trying to outwit and essentially escape, right? From people that for the past two years

have put people up against walls and murdered them in for entertainment they literally they did this in stadiums they did this as a public spectacle and so now we get into one the first aspect of the cautionary tale it's like you humans are very bad at predicting the future and And so it says Lobo simply couldn't conceive that his empire was gone. And that's the thing. He's losing the empire technically in 1960. He lost it the day Castro took power. And if he would have acted then, he could have saved.

He dies in poverty. He dies in poverty. Imagine having $5 billion and then at the end of your life, having to rely on an allowance from your adult daughters. It did not have to be like that. Other rich businessmen wind up figuring out ways to get, they saw the writing on the wall, right? So it says other businessmen had already taken their money out of Cuba. One family, the Gutierrez family had moved $40 million abroad. You could have got money out. There's so many things going on.

You leave. So my dad's dad, I think about him a lot because I didn't know. He died when I was too young to remember him. And so there is a narrative that only the rich were able to flee Cuba. Even the author kind of makes that because his mother's family was rich. That's not true at all. My grandfather was not rich. Uh, he worked as a butcher and then he worked in a factory that produced socks. And so even though I don't know him, or even though I never got a chance to know him, I owe my life to that man. Cause somehow he knew. So you go to 1950, if you, if you go to 1958, my grandfather's around 37 years old. He's got a wife

and a young son. That son is my dad. And in 1959, my grandfather knew enough that we got to get the hell out of here now. And he fled to New York, eventually went to Miami. He went to a country that he didn't speak the language, had no skills. My grandfather had no skills. He had no education and he had a young family to protect and provide for. That one decision by someone I never knew changed the entire trajectory of my life. I'm just so thankful for that. I have like tears in my eyes. All right. So it goes back to this Lobo. And so essentially what he's saying, what the author's saying is like you know lobo didn't have to do this right he was he just makes so many bad decisions he's really smart i think about what charlie munger says it's like don't try to be really smart just try to be consistently not dumb over a long period of time lobo has some brilliant

moves and then he erases all the the gains he gets from his brilliant moves by being dumb. And this is the case. Like Lobo had continued. So all these other people are moving their money out, right? Many of them escape. Some get stuck there. Lobo had continued to invest in Cuba to the last. He winds up buying.

Remember Milton Hershey, the founder of Hershey Chocolate? I did his biography a long time ago. It's like founder's number 146 if you haven't listened to it. Right before this happens, Lobo does one of his biggest deals ever, and he has to take out a giant loan from an American bank to buy Milton Hershey's, Milton Hershey's long dead by this point, but to buy Milton Hershey's sugar factories, because Lobo was constantly trying to expand his sugar mill empire in Cuba. And so that's what it means. Like Lobo had continued to invest in Cuba to the last. This was a bad decision because he was going to wind up

in the future. And I'll get there later. He's going to wind up speculating in New York, trading sugar commodities, losing money, so much money. And then he gets a margin call on this loan. And that that that puts him in bankruptcy. And then by that time, he's too old. That's it. Like he crapped out. So says Lobo had continued to invest in the last lobo believed like so many others that he could somehow control castro or that the americans who are only 90 miles away would and so he makes another fatal mistake in early 1960 so a few months before he's talking or a few weeks before he talks to che and has to leave lobo insists that a letter of credit worth millions of dollars of sugar cargos

that was dispatched to the United States should be remitted to Havana rather than to his office in New York. Well, that was a gigantic mistake because then he could flee to New York with millions of dollars, right? If I don't do that, the revolutionary government will take everything he explained at the time. They're going to take everything anyways, Lobo. Now it was the clear, I guess I just ran over my own point. Now it's clear that the government would take it all anyway. The next day, Lobo went to his office in Old Havana. When he arrived,

the building was roped off. Guards were posted around the doors and a former office boy was wearing a militiaman's uniform and sitting behind his desk, his feet up, smoking a large cigar. So now you have a young kid that used to work in your office and look how he's going to talk to him. Now we've got you where we want you, he said to Lobo. How is that, replied Lobo. Stripped of everything.

Almost naked. Chico, I was born naked. I will probably die naked. And some of the happiest moments of my life happened when I was naked. That's actually pretty funny. Lobo shot back and then left. That afternoon, Lobo caught a crowded flight to Mexico. And from there, he flew to New York.

He took with him a small suitcase. He left behind his art collection, his palaces, his vast enterprises. Lobo was then 62, and if not an old man, then at an age when most people think of retiring rather than starting again. As he was ready to leave the island, he told his secretary, this is the end. Of course, it was not the end. It was just another beginning, and everything that came before or that follows after flows from this thought. Now, this is absolutely wild. I think if you go through the book and look at my notes, this is wild is the most common note I have in the

book because his father, Julio's father, is also thrown out of his country by a dictator named Castro. They were Venezuelan. They actually had to flee. They were not Cuban. They wound up settling in Cuba after getting thrown out of Venezuela. And then his mom, I love Lobo's mom. We're going to get there in a minute. So this is Lobo's dad and his quick life story. He's 14 and his father dies. So then he, at the age of 14, he starts working at the national bank, working as a clerk to support his mother and family. Six years later, after learning accounting, French and English in his spare time, he was appointed chief accountant. By the time he was 22, Lobo's dad had joined the board of directors.

This is insane. Three years later, he ran the bank. It was a remarkable achievement. And then just like at the apex of Lobo, his son's life, where he gets thrown out, he's like, oh, I got this huge opportunity in front of me. He gets kicked out of the country. Life seemed to be full of promise until President Cipriano Castro threw them out of the country. And so I think when he gets thrown out of the country, same situation. He's like 25. I think he has two young kids. Lobo's already born. He gets an opportunity. He's like, maybe I should go to America. He gets a job offer from somebody new to be a deputy manager of the North American Trust Company.

At the time, the North American Trust Company also had an office in Havana. So that's how they wind up in Havana. And so this is the wild twist, because many years in the future, his mother is going to try to physically assault the Castro that kicked her out of her country, which is Venezuela. So it says, from his father, Lobo inherited ambition and humor. From his fiery mother, he inherited a sharp temper. May the mountains fall on your head. Virginia had shouted at Castro's, this is the Venezuelan Castro, at Castro's presidential palace as she left Caracas, shaking a fist at the despot who had run her family out of the country.

Virginia exacted a more satisfying revenge 13 years later. This is wild. Castro by then was deposed from power and then had arrived in Havana to drum up support for a counter-revolution. So Virginia found out where he was staying, headed to Castro's hotel, and waited in the lobby. When Castro appeared, she rushed him with her umbrella, and the hotel staff had to pry it from her hands as she beat her old enemy in the head. And so as the author constantly visits Cuba during the writing of the book,

there's also these fantastic characters that have nothing to do with the story. I just want to pull out one sentence here because I just love this. There's a poet and a writer. Her name is Dolce Maria. She's 89 years old when she wins this Spanish, this European literary prize due to her writing and her poetry. And I just love the fire in her. And I obviously think this is the wrong path she took, but I like what she says here. And so when she wins this award at 89 years old, the interviewer is asking her, the interviewer said, why had you not left the island after the Revolutionary? Dolce Maria simply replied, I was here first. And there's also devastating stories.

So you know what an exile is. Obviously, they flee the country. They say conditions got so bad in Cuba, and there's a couple of people you know what an exile is obviously they flee the country they say conditions got so bad in Cuba and there's a couple people that are interviewed in this book they're called in exiles and these are people actually let me just find it real quick and I'll just read to you it says in the book I wasn't even going to put this in but I thought it was just I don't I don't think I've ever heard this before so it talks about uh he's interviewing a very old lady she never went went out, she said. The last time she made a day excursion was three years ago. Besides, where would she go?

Everything was so expensive. So she stayed indoors and scrapped by on their ration cards and a monthly pension of 150 pesos a month from the government. The government supports her so great. You know what 150 pesos a month is? Seven dollars. Other than weekend visits by her children and then some of her kids were able to escape and emigrate to the United States. That was it. Such isolation made Angela, Angela and Maria extreme examples of in exiles.

People who have turned their back on Cuba, they find ugly or threatening and stay indoors. It is a mirror image of the exiles abroad. So they literally isolate themselves in the house because they and i wrote i'm not gonna tell you what i wrote in the margin i've already lost a little bit so far so um the lady i'm talking telling you about she i think she's like 90 years old at the time and her she's she's cared for by her daughter who's 75 74 something like that so there's just crazy stories in the book it's basically the point i'm making to you so now we go to lobo's early life really his father plays a huge role in

the trajectory of his life he counsels him a lot of the lobo family saved letters and they let the author read them and a lot of those letters have survived or just like a a father counseling a young son at this point he's like college age. And he says Lobo was both a loner and an adventurer. The incidents that he remembered from his childhood show the same determination and impulsiveness of his later life. It was an explosive mix as his father foresaw. He would write to him, and a lot of this is in Spanish, Control your passions. He would counsel his son.

From an early age, it was apparent that lobo sought not only wealth but glory too and so lobo is just a teenager when he learns about people this is another sugar wealthy sugar founder this guy's name is manuel rionda and he owns this company called or he owned the company called cubicane cubicane was the largest sugar company in the world rionda called it his baby lobo was spurred on by the fortunes that men like his father and Rionda made. So Rionda owned sugar mills. His father is a commodities trader and sugar is one of the things that he trades. There's other things like peas and all kinds of different other commodities. But what Lobo decides to do, he's like, no, no, I'm going to focus on sugar. And so he winds up going to the United States.

He goes to LSU, so Louisiana State University, and he's studying sugar engineering. I didn't even know there was a degree path like that. So basically the benefit Lobo had was the fact he found what he was going to focus on at an early age. And so he focuses on it when he's 18 up until he loses everything when he's in his 60s. And so then we get his personality. These are the positive, in my opinion, the positive parts of his personality. Even as a young man, he focused everything with a passionate and single-minded determination. His friend in college describes him. He was an individualist who did not spare himself any sacrifice to attain his objectives. He has a fantastic work ethic.

This is when Julio was in his 20s. This is advice from his dad, one of the surviving letters I was just telling you about. Most of the surviving letters are from his father. They began offering sage advice to a young man about to begin his career, and they end in tones of respect towards a man he regarded as his equal. So they wind up being partners. His father then retires, and Lobo takes over and drastically expands the business. And his father says, take care, work with faith,

cultivate your spirit, and dominate your passions. That's something he repeats over and over again. Dominate your passions. Don't let them dominate you. It's actually really good advice, and I'm not sure lobo actually heeded that advice and so in the book there is a million stories of these boom and busts that happen in commodity markets i'm going to read this to you this is a huge boom and bust during his first year in the sugar business i'll tell you like my own takeaway here i don't understand like i talked to a lot of entrepreneurs founders they're just it seems like

they're just so obsessed with speculation. When to me, the clearest path to wealth that you actually have influence and control over is building a business that benefits somebody else's life. Make a product or service that makes somebody else's life better. And then do that for a long period of time. Keep improving it. That seems to me to be the surest path to wealth. There's so much energy and attention dedicated to, instead of doing that, to speculating

and trying to make money really, really quickly. And then they wind up, for every few people that actually succeed at doing that and then get out at the top, there's thousands of people you don't see that held on too long and were absolutely ruined, Lobo being one of them. I just don't understand this.

It's not that I don't understand this obsession with speculation. Human history is full of people that want to get rich for doing the least amount of work possible. I just don't think your goal, your stated goal actually, is more likely achieved through speculation than it is through just building a business that you own and control and you can actually influence the outcome of. By the end of March, the sugar price had risen to $0.12. By mid-May, it stood at $0.20 and a half cents. Up and up and up rose the price of March, the sugar price had risen to 12 cents. By mid-May, it stood at 20 and a half cents. Up and up and up rose the price of sugar, as did the harvest, to 3.75 million tons,

the second highest in Cuban history. Then, just as fast, down, down, down, down, down, the price fell. By August, it had dropped to 11 cents, and by Christmas, it had dropped to 3 cents. During the first year in business, Lobo, the future king of sugar, the man who would later say, I am the market, watched his fortunes balloon and then collapse. And so this is about like the money that he's running. The firm is still controlled by his father. It's called like Galvin Lobo at the time.

His father sells and escapes the worst part of the crash. And he does something that's actually kind of smart here. His dad, that is his dad sees like his, you know, keeps on dominate your passions like you're you're extremely focused. You work really hard, but you're also you're to risk on in the business that we like. We have to survive. Right. And so he actually promotes Julio more quickly than he wanted to. And that seems counterintuitive because Julio could make some drastic mistakes, right? But his point was, it's like, I want you to make your mistakes early in life when I'm still alive so I can help you. I don't think I've ever come across that idea

before. Like that was really interesting. Now he directed, now Lobo directed their operations, day-to-day sugar trading operation. It was a fast promotion to a senior position. But as his father told him, I would much rather you make your mistakes now than later when I may not be around to pick up your pieces. So to me, his father is older. He's been involved in business since he was 14. He understands that mistakes are inevitable. No one is going to get through their career without making mistakes. So therefore, I need to accelerate my son's learning so I can

actually, because this guy's very passionate and has the heart of a speculator, that he could get himself in trouble. And if I'm not around, maybe I'm dead or whatever the case is, he can get himself in trouble. Hopefully by putting more, heaping more responsibility on him, he'll actually absorb the lessons as he goes through these inevitable mistakes that he's going to make. And so there's other stories in the book of sugar barons, people that made a lot of money in sugar and did not wind up losing everything in their lifetime like Lobo does. One of these is the author's great-great-grandfather,

and the note of myself is the author's great-great-grandfather was a G. His obituary described him as a man of simple habits who woke at 5 o'clock every morning and worked at his standing desk until the last hour. He left behind 12 children, 32 grandchildren, 16 great-grandchildren, and a business worth $8 million. That is an insane amount of money. You're talking about $8 million. I think this is in like 1920. And so I fast forward a few years in the story, his dad winds up being right

because Hulu is going to lose a ton of money because he's buying the dip. You know, buy the dip? Well, it keeps falling. So like you didn't buy the dip. You're about to go bankrupt. The sugar price continued to drop. Two and a half cents was enough to cover production costs. In 1932, I mean, you know, sugar prices have gone up to 30 cents a pound.

Like it's crazy that the swings in this market and a lot of this is because like there's all kinds of corrupt governments trying to control quotas and there's cartels all this other stuff i'm omitting from the book uh so this is in 1932 so you need two and a half cents to break even right and julio's trying to buy not only sugar but he's also buying mills. Two and a half cents was enough to cover cost productions. In 1932, the price dropped to seven tenths of one cent. Mills closed, unemployment grew. Lobo wrote to his father of the disastrous results suffered by our house over the past four years due solely and exclusively to me. And then he asked his dad to be relieved of his management duties.

I would rather work as a foot soldier. Lobo had been humbled for a moment. And so this is early 1930s. He's also, the hard part here is you're not only in a wildly volatile commodities market, but you're also dealing with several dictators coming through. There's a coup. This is another, I don't know if I have myself on this page. This is wild.

So this is Machado and this is another another myself on this page this is wild so this is machado this is another dictator and he was a cuban dictator who was feeding his enemy literally feeding his opponents to sharks like you got on his bad side and he'd feed you to sharks what the hell is happening here he winds up getting deposed he fled cuba by plane as he flew over the island he saw the cuban sky stained red by fires of the burning homes of his former former supporters the violence unleashed by machado's departure was unlike any other that cuba had experienced since its independence throughout the island gunshots and shouts summoned witnesses to impromptu executions there was a new york times correspondent that was in Havana at the time, and he watched one of Machado's supporters reach his end outside the Capitol building. This group identifies, hey, this is a former supporter, and they rush him.

A huge stone smashed against the side of his head. A bullet struck him in the breast. He sagged, clinging to a light post for support. His revolver empty, so he tried to shoot his way out of this, and that wasn't successful. The crowd were howling like devils and closed in across the street on the balcony of his hotel. His wife and two children saw him beaten to death. The body was completely unrecognizable when the mob finished their work. And this is when Lobos put up against the wall and saying he's going to be shot.

Can you imagine living through this? Shortly after the siege, a group of armed guards came to Lobo's office and arrested him. The soldiers told Lobo that he was to be shot the next day for plotting against the government, which he never did. It is largely believed this happened because Lobo, throughout his entire life, was constantly critical of all these different governments that happened in Cuba over the span of his career career have these restrictive sugar policies. He's operating in – this is not a free market by any means.

And so he's blindfolded, put up against the wall. He protested his innocence and was released when the authorities realized they had made a mistake. And it turns out that almost being executed makes you impatient for large success. Only a year had passed since lobo had been put up against the wall and had been put up against the wall and almost shot the humility the humility that lobo had felt years before when he offered his resignation had also passed lobo now felt impatient even in the midst of a global depression he wanted to take on the world his opportunity came in 1934 with a remarkable feat of market manipulation he's He tried to corner the sugar market multiple times throughout his life.

Lobo never commented on how he cornered the New York sugar market that December. It was, he would merely say later, the only perfect squeeze that was ever pulled off. And then as he's telling the story, he goes back. The author talks about when he's in Cuba doing research. I'm just going to pull two things for you. I think it illustrates why this is so frustrating to me. Although a nation of naturally savvy entrepreneurs, Cubans have been subject to a half-century experiment in socialism that has ground most of the economy into dust. So he's walking down the street.

He says, psst, someone had whispered to me from a dark Havana doorway in the early 1990s as if he were a pimp or a drug dealer. You want to buy some cabbage? And he also talks about how speculation is in the early 1990s as if he were a pimp or a drug dealer you want to buy some cabbage and he also talks about how speculation is in the blood he says cubans also have a particular fondness for speculative wages before castro cubans bet on cockfights the lottery high lie horse races baseball and every sort of device that casinos could think of my dad when i was a kid he took me to cockfights and again i, I was young, I was probably like eight years old. And I don't know if at the time, I made the connection, but I certainly do now where it's just like, well, you know, people, people spend all this time sports betting and betting on cockfights and all this other stuff. It's just like, but none of you guys are wealthy. In fact,

most of you are pretty poor. And so my point was like, can't you deduce like, if you're engaged in this activity constantly, and you think it's great, like all this gambling, speculation, whatever you want to call it, sports betting, but you're not wealthy, and you've been engaged in this for a long time, clearly that's not a profitable activity you should be directing your attention to. And clearly over the long term, you don't really have a high chance of success. There's a quote, and Warren Buffett, I think, nails this, of why you should just focus on building a business. Have some kind of control over that. He talks about speculation in his shareholder letters.

Let me read this quote to you. This is Warren speaking. If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There's nothing improper about that. I know, however, and this is really, Warren puts into words better than I can, like my feeling on this. There is nothing improper about that. I know, however, that I am unable to speculate successfully and I'm skeptical of those who claim sustained success at doing so. And Lobo is going to be the perfect example of what what Warren Buffett's about to tell us, because he's got this these wild gyrations in his wealth, makes a lot of money, loses it, makes a lot of money, but he died poor, relying on the charity of his adult children. There is nobody alive that would pick that path in advance.

You know what? You know how I want my life to end? I want my life to end by getting an allowance for my two adult daughters as an 80-year-old man. So Warren says there's nothing improper about that. I know, however, I'm unable to speculate successfully and I'm skeptical of those who claim sustained success at doing so. Half of all coin flippers will win their first toss. None of those winners has an expectation of profit if he continues to play the game.

Lobo continued to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it. Now remember that sentence. The fact that a given asset has appreciated in the recent past is never a reason to buy it. Now, remember that sentence. The fact that a given asset has appreciated in the past is never a reason to buy it. When he finally goes bust, everybody's saying, sell, you can book a profit. He's saying, no, it's going higher. It did not go higher.

So the author quotes John Maynard Keynes a few times. I was surprised to see Keynes quoted multiple times in Warren Buffett's shareholder letters as well. And I think Warren probably understood part of this from what Keynes had written. And Keynes had once argued that the speculator is not so much a prophet as a risk bearer. If he happens to be a prophet also, he will become extremely, indeed, preposterously rich. And we know that most humans are not prophets so this is really how give you an insight into how lobo worked and again i think if he just applied all this energy to building a business instead of speculating like he would have died

wealthy lobo had a legendary appetite for work lobo's days began at dawn an office boy would arrive at his house at 6 30 each morning carrying a clutch of decoded cables that had been sent overnight from Lobo's agents in Europe, the Middle East, and Asia. Lobo worked his way through the messages over breakfast, wrote his replies, and then the office boy would return to the office to code the telexes and send them off. When Lobo arrived at the office about 8 o'clock, replies from his morning cables had waited him. In that way, I gained a huge advantage over my competitors, he said, who got into their Wall Street offices at 10 a.m. At his peak, Lobo handled almost half of Cuba's sales to the United States of sugar, half of Puerto Rico's sales of sugar, and almost 60% of the Philippines. Some believe the sheer size of his operation gave him a dangerous ability to rig market prices to his own benefit and to the industry's harm. Lobo's response to such talk was always to shrug.

No one man can control a commodity as big as this. Lobo would respond to 600 messages a day, and he would eat lunch at his desk. This is more on his love of speculation and how he viewed money-making as an intellectual competition. Speculators are also, by their very nature, outsiders. They observe dispassionately from the sidelines, waiting for the moment to strike. Lobo viewed viewed business as an almost intellectual exercise like a game of

chess if you get it right lobo used to tell me you get the you get the other man into checkmate that is where the fun is now here's another problem so there's other notes that i just left i notes they're not even in the book like this this book spawned so many thoughts and really again i'm talking to myself when i say this stuff like this is very cautionary tale for me um two notes let me tell you these other two notes that i put on my desk that aren't even in the book but one has to do with exactly what he's saying he's like oh i like to check meet other men and do all this other stuff right he dies he winds up collecting way more enemies than friends during his life. And very few people, a handful of people, even bother showing up to his funeral.

And so as much as I don't want to emulate Julio Lobo, to the degree that I want to avoid a lot of his sentences, the opposite direction I want to copy, you know, I've told you over and over again, one of my personal heroes, Charlie Munger, no doubt. And he said something at a commencement address that i absolutely love and i think it talks about like you don't play games like this like this is just a silly stupid way to go through life and so charlie munger again he's famous for saying like think of the outcome that you want and work backwards from that right and so he says think about this is charlie speaking now

his advice as an old man old successful man he's given to young people right this is very important to pay attention when when like this this knowledge has passed the generations in my opinion think about the type of funeral you want there's a story about a person who died the minister said it's now time to say something nice about the deceased nobody came forward after a long time a person came up and said his brother was worse this is not the type of funeral you want and i think what lobo mistook is like yeah i'm competitive i'm driven i want to be the best i possibly can i want like my life's work to be as good as possible but i feel no desire to pull other people down as i do that and in fact it's the opposite i try to encourage people try to help people as much as possible

because i want a lot of people that actually give a shit about me at my funeral. Or technically, I want nobody to be there because I want to outlive everybody. But you know what I mean? Like the day is going to come like people in your life, they're going to live longer than you are. Like you really want a funeral? That's how they described his funeral. A handful of people. A handful.

Four, three, two people. You lived your entire life you built massive wealth you lost it all and most people thought you were a jerk and this is why i think charlie said also another thing is why he tells us to read a bunch of biographies and not just collect ideas he's like you got to become friends with eminent dead because the ideas stick to you like we talked about in the past like if your product can evoke emotion you win biographies read and books in general evoke emotion i'm not going to forget the story that i have read here because of the emotions that it drew on me it's like you have this huge like smart

capable man making mistake after mistake after mistake and it's unnecessary that's like the tragedy in all this this is not necessary you can be rich and still be liked you can be rich and nice to other humans there's a lot of non-business lessons in this book it's more of a lesson on like what kind of life do you want i don't want julio lobo's life i would like a life like munger he's surrounded by family they seem to love him he's got people that respect him he tries to help people he shares everything he knows he wound up getting rich as hell like and he stayed rich he clearly like he clearly has figured some stuff out like he knows some things that we should probably like pay attention to when he speaks and read his writing and all this other stuff i don't know i just don't feel that way about julio and just it's a again i'm repeating myself i'll move on it's just a tragedy it's a cautionary tale that is the reason why you want to listen to this podcast or why you want to read the book.

These are some traits, positive traits that Julio had. This is more in his schedule. He still found time to exercise regularly, which was very unusual in those years. He fenced, he boxed, and he sunbathed. He also organized his growing Napoleon collection, and he read copiously. So that's where I'm most jealous of Julio. He's got this beautiful, and there's a picture of it in the book, if I'm not mistaken. He's got this beautiful private library, and he spends a lot of time – a lot of his time reading. And for the rest of his life after he destroys his business, he just reads and studies and stuff like that.

And so, again, I think I'd be not doing you – I'd be doing you a disservice if I don't warn you against the siren sound of speculation. Lobo, he made a bet that – he's 41 years old at this point, sorry. He makes a bet that sugar is going to spike because it's the beginning of World War II, and he's saying sugar is going to spike because it did so at the beginning of World War I. And it doesn't, and now he's pushed to the brink of insolvency. It soon became clear there would be no major disruption to Europe's sugar crop that year and therefore no spike in the sugar price either. Lobo had a position that was huge. He had over 300,000 tons of sugar and he had lost a fortune.

He faced losses of $4 million, which is $60 million in today's money. Lobo was in his New York office. He put the phone down and stood at the window of his office, 23 stories above Wall Street. It was late at night. Death is nothing, said Napoleon, but to live defeated and inglorious is to die early. So he talks about, like, he was married. He gets divorced twice. asking i've been a good son a good father a good brother although though not as lobo admitted a good husband so he talks about like he he was married he winds up getting he gets divorced twice he just cheats on his wife all the time and then the second time he marries a gold digger they're married for less than six months and she takes a million dollars from him because they had a prenup a million dollars that he she winds up marrying a rich industrialist they still write letters even though they're they're uh like. She wants to marry another rich guy.

He's writing her letters from a small apartment in Madrid, so that million dollars should have come in handy. I've been a hard and honest worker, and while you may have reasons to punish me, why are you punishing the rest of my family too? Then he stood up and walked out of the church and caught a train uptown. When he arrived at his hotel, he had a string of messages waiting for him. The French government, Lobo read, needed prompt delivery of 300,000 tons of refined white sugar, the same size as his position. Thanks, and so this, just this random act wound up saving him from being insolvent at 41. Now remember, he's going to be insolvent in 63, 64. Thanks to good fortune, the grace of God, everything ended well.

But it was a very dangerous moment for the house, meaning his, he called like, you know, the house of Morgan. Like these banks used to be called like house, the family names. That's what he's referring to there. But it was a very dangerous moment for the house. Lobo later remembered in his memoirs, it was also the only time in my life when I truly felt lost. Now that is a crazy statement and the author explains why. Lobo wrote that last sentence in his 70s as he reviewed his life from exile in Madrid. It seems odd that someone who had suffered

a homemade bomb exploding in his face that he was trying to find a way to before he started working in the sugar industry. He was inspired by the life story of Alfred Nobel who made a ton of money selling dynamite. I covered that on Founders Number 163 if you haven't heard his life story. So he's thinking he's gonna make like a improved grenade and make a fortune just like alfred nobel and it winds up blowing

up in his face he had like crying shards of glass out of his eyes for for weeks and stuff it's pretty crazy uh so says exploded in his face had been put up against the wall to be shot and seen the bulk of his fortune confiscated after the revolution should call the almost hidden moment in a dark office on wall street the only time when he felt he all the other stuff, maybe it was outside of my control. This I did to myself, and so that's why it was my darkest period. So eventually he runs out, the speculation ends, like the markets changes so much that he can't find a way to make money. So he's like, okay, I'm going to switch strategies. I'm going to still try to trade sugar commodities, but I'm going to actually produce sugar and own mills. And so this is

now the second half of his career where he's just starts collecting all these mills in Cuba. So it says to this date, he had only worked as a financial speculator, buying and trading sugar. Now he started to purchase mills. So he starts this in 1943. He buys his first one, then buys two other plantations in 1944, another one in 1945, in 1946. I'm not going to tell you the names. It's irrelevant. This is happening over like a decade. And his strategy was like, i don't want to buy a single big mill i want to have a

bunch of small months none of them was large but together they made a massive operation by the end of the 1950s so this is now 17 years after he started this lobo's mills produced over half a million tons of sugar which was nine percent of the cuban harvest the crop they milled each year was worth more than $50 million. And so something he does that's actually smart is he actually shows up most of these. So if you remember Sam Zemuri, the entrepreneur from that book I did all the way back on Founders No. 37, which is The Fish, the Ate, the Whale, the Life and Times of America's Banana King. He had a massive advantage because he started at the very bottom of the banana industry. He knew how to do literally every job. He'd work the he could run the business he could buy ships he could do

everything and what sam did that other his competitors didn't it's like he'd be where the production happened so he'd be in honduras i haven't read the book in a while so like the other countries that he operated in while most other founders and runners are i guess they were professional managers they weren't even founders professional managers of his competitors were away in like boston and very far away so that's the same thing that's happening in cuban sugar mills a lot of them are owned by americans and other places they're essentially like tried to manage who like remotely and so he is still trading so he works seven days a week uh lobo and so but he'll show up and he actually manages like he'll show up and be and like walk the mills he gets to know the people and everything else so it says uh these the frequency

of these unannounced visits set lobo apart from the tradition of absentee owner managers lobo did did not travel to his mills as a tourist one of the things that i learned is that you can't manage a mill by remote control he said he would stop talk with workers, many whom he knew by name and who knew him as Julio in turn. This lack of pretension was one of Lobo's most appealing features. And so that's something we've seen over and over again in the history of entrepreneurship. Sam Walton, Les Schwab, Ingvar Kamprad, they're saying, they all say, get out of your office and get into your store. Stay close to the money. Be where the money is happening, where the money is made. And then, again, these are just wild, crazy stories.

This is a wild book. There's another one. I left myself. Imagine having to settle your business disputes with a machete. Lobo had argued bitterly with another planter named Nunez. They had once been co-investors, but had quarreled over everything. They almost resorted to a duel, which was still common in Cuba at the time, where differences were often settled with machetes at dawn. I mean, just imagine that.

You co-invest with somebody else. You have a disagreement with another founder, with an investor. You're arguing over email, and it's like, okay, we're not coming to an agreement here. I'll meet you tomorrow at dawn with a machete. Now we're going to have another mistake that Lobo makes. And it's his arrogance. Like, I'm not afraid of these people. There are certain people in life that you should absolutely be afraid of, especially known murderers and gangsters.

Lobo was at his desk when the phone rang. It was Alberto Alvarez, which was one of the ministers of state at this other dictator that's in charge currently at the time in Cuba. What are you still doing in your office so late, asked Alvarez. I don't know why this seems strange to you, Lobo says. I'm often here until much later. It's only 7 p.m. Well, take care. I want to warn you that they are going to kidnap you. They refer to the trigger-happy – there's a term. It's called – they're political militias that had fought against Machado in 1933. This is many years later. And they started out as political militias and have since degenerated into gangs of armed thugs.

They were student revolutionaries of old and are now much more interested in money than liberty. So they go around targeting people, robbing people, and now they're starting to try to assassinate very rich business people in Cuba. And so Alvarez hears about a plan that they're going to kill Lobo,

so he warns Lobo. Lobo thanked Alvarez for calling, put the phone down, and turned to Carlotta. Carlotta is his longtime secretary. He told her, massive mistake here too, Lobo. He told her he wasn't worried about the men that were supposedly going to kidnap him. They know they won't get a cent from me, he said. Despite the minister's

warning, Lobo recalled that he felt in a buoyant mood. So he gets into the car, starts taking a drive home. He discounted the possibility that anything serious might happen. Everything else was going so well in his life. So his business is doing fantastic. Then there's a car that starts trailing him. The car had been trailing him for a while. It suddenly drew close to his rear bumper and the first shot came through the back window, whistled past his head and punched a hole through the windshield. There is a picture on this page of Lobo after his shot and it is grotesque. Then the attackers pulled alongside firing from close range. The next shot hit Lobo in the head and it is grotesque. Then the attackers pulled alongside firing from close range. The next shot hit Lobo in the head, right leg and left knee. Lobo's car swerved and crashed

into a telegraph pole. So the car speeds off thinking they killed him, right? The lights of the nearest house flickered and went out. Inside that house was a 24 year old doctor who was having dinner with his wife. He ran to the front door to find out what was going on, and he saw the car on his front lawn, steam rising from the crumpled hood, and rushed to see if there were any survivors from the crash. I am Julio Lobo, groaned the folded body inside the car. I am wounded. Call my family. Then Lobo blacked out. It was the 43rd shooting that year. So again, you you're not afraid something that's happening all the time that doesn't make any sense five blocks away at lobo's home his daughter leonard

lenore i don't know how to pronounce her name was brushing her hair listening to a popular radio show when the announcer suddenly broke off the program we interrupt this broadcast to bring you extraordinary news that julio lobo has been shot and. And so now we find there's another note I left myself that was similar to a note I left previous in the book. This is where he's talking with Che. This is not a situation you want to find yourself in. No money in the world is worth this. So he's in the hospital.

This reminds me of another Godfather scene when they try to kill Don Corleone, Michael's father. And then Michael and another guy have to actually pretend like they're detectives and they're protecting them. They essentially try to kill them, right? They're unsuccessfully try to kill them. So then they try to put a hit on them in the hospital. They're going to try to kill him in the hospital again. So it says a colonel from the administration burst into the room and approached Lobo's bed. In the name of General Perez, the acting head of the army,

you can stay here as long as you need to until you're fully restored to health. Turning to the rest of the people in the room, he added in a loud voice. Mr. Lobo, you can be sure that you will be fully protected by the army while you are here. But it was a pantomime performance of military authority because the colonel then came closer to the bed, bent over Lobo's head, and whispered in his ear. If I were you, I'd leave immediately as the people who shot you are nearby. And so they wind up whisking him away to another hospital where he can actually have protection. If I were you, I'd leave immediately as the people who shot you are nearby. And so they wind up whisking him away to another hospital where he can actually have protection. And he essentially wants to, he's still not recovered, obviously.

He wants to make a confession before he's having a dangerous surgery, a surgery that he may not ever wake up from. And so he has to speak to a priest. Father, I've lost a lot of blood. The wounds make make it hard to concentrate and i've forgotten how to confess i just want to say that other than killing and stealing i have broken all other of the commandments many times absolve me father i cannot remain conscious anymore and this is now the darkest period of his life he has these several times he has these things where it's like something traumatic happens he's like oh maybe i'll change my ways but he can't he's like completely obsessed with work to the detriment of everything else he wrote that work left him with a flat taste in his mouth it used to be a source of diversion and pleasure for me and i was starting to feel enthusiastic again about fresh projects but no longer he felt like an uprooted tree which cannot be transplanted

without fear of damaging its roots he said that he could not make plans and was unsure of what to do and that he needed to think things through. So he's in the United States at the time, and he's thinking, maybe I'll just stay here. He winds up going back to Cuba and building up his company again. And then there's death and destruction all around him. Lobo sought out fresh consultations after his return to Cuba. He and Maria divorced. She had long known about his affairs.

Formal separation was only a matter of time, and it was easier with their two daughters grown and abroad at school. He found only more sadness and death. Less than a year later, his mother died. Virginia, who had seemed almost immortal in her family's eyes when she had smashed an umbrella over Castro's head, the Venezuelan Castro, had been unwell for several months, slipping in and out of a coma, no longer recognizing the familiar faces around her bed. Six weeks later, Lobo's spry 80-year-old father collapsed, felled by a broken heart. His father had been married to Virginia for 55 years. Death caught him on a glorious December morning as he dressed for battle at the office like a good

general with his boots on two months later on valentine's day lobo's younger brother jacob committed suicide with a bullet to his head so think about that uh within a span of let's say a year and a half lobo's almost assassinated he gets divorced his mother dies his father dies and his brother commits suicide and then he has all these throughout his his life he talks about like money he almost like wants to give up everything he says money and he's writing this is uh before he loses everything and money does not only not only does not bring happiness sometimes it destroys it and i sometimes even think it is no less than the devil's invention the only way this is 10 years before he loses

everything uh 13 years before he loses everything the only way money can bring happy and this is he got so close he knew it he just didn't act on it act on it the only way money can bring happiness is as if it used if it if it is used to do good and to help the less fortunate and then it goes into this this like parallel between like he's essentially he's trying to emulate napoleon and these traits are not bad negative in and of itself, like if you direct them in a positive manner, right? So it says, doubtless Lobo saw himself reflected in Napoleon's character. So he's talking about the things that he learned from Napoleon that he thinks he has as well. An infinite capacity for taking pain. I feel like me and you have been talking about this over and over again.

My favorite quote from the founder of Four Seasons, excellence is the capacity to take pain. An infinite capacity for taking pains. An sense an indomitable will and a firmness of action again direct these traits directed in a positive direction you can you can actually not only improve your life right but everybody else's uh lobo had an extraordinary ability to create but to uh but to create one has to believe firmly in what one is doing when he embarked on the a course of action, he applied all his energies until he achieved it. All these are positive thoughts and traits. He went direct to his objective. Often he achieved it. Sometimes he failed, but he had the uncommon courage to accept the consequences of his actions. He never complained when a project failed, and he was always prepared to start again. One sentence here, I just wrote

the same. I do this as well. Talks about he's got this extensive library that I'm jealous of. He jotted down notes in the margins of histories, memoirs, and biographies that he collected. So a few years before Castro takes power, he's trying to do a deal with Batista. Batista's really corrupt at this point.

Doesn't want him working up, and Lobo is under a great deal of stress, and he winds up having a heart attack, and a few months later has a stroke he says i was traveling on the highway of life at a breathtaking speed and in doing so could neither heed nor appreciate the landscape so essentially it's too focused on work that i'm not actually enjoying it now i could take my blinders off and leisurely enjoy the vista i'm glad and relieved this is my compensation so again all these like periods of self-reflection usually come after something tragic like i almost almost went bankrupt, I got shot, in this case I had a heart attack and stroke. But they're temporary, and he goes back to his old ways.

The life I had been living could hardly be called life, looking at it retrospectively, Lobo said. I hope that my chances will be better this time and that it will enable me to live life to the fullest. It was only a passing fancy. Even as he recuperated, Lobo admitted to a growing restlessness and continued to act on it. It was as if the sugar business that ran in his veins made rest impossible. And so even while he's close to dying, he still can't. He's compulsively working. Lobo closed negotiations to buy a new mill, signing the deed from inside an oxygen tent. A telephone by his bedside kept him in touch with the daily ups and downs of the international sugar market a made for a ghoulish scene the stricken millionaire supposedly

at death doors at death's door unable to desist from his schemes and he knows like because there's all these notes like these notes he left people in letters just one line here there were many assholes in cuba lobo wrote I was the biggest of them all. This is another example. He's got these several recollections throughout the book like this. This is after his second divorce. And again, I think it's just a warning from somebody from the grave. There are times when chasing the things money can buy,

one loses sight of the things which money can't buy and are usually free. And he talks about the fact that he treated women as essentially his objects. He has love for his daughters. But he never had like a happy home, a happy relationship with any women in his life. They were essentially like just further conquests on the path of his constant empire building. So I think that's interesting. He's talking about money, right? There are times when chasing the things money can buy. One loses sight of the things which money can't buy and are usually free.

One of my favorite quotes from that book we did a little while ago, The Almanac of Naval Ravikant, when Naval says, a calm mind, a fit body, and a house full of love. These things cannot be bought. They must be earned. I think there's like an echo to that idea that Naval had in that book that Lobo's writing in this letter. It's like I'm chasing money, things that can be bought, and that caused me to lose sight of the things that are actually valuable, and they're so valuable because you have to earn them, but they're also free. So now we get back to the point where he's forced to flee Cuba, and this is just what a sentence. On the flight from Havana, the last great capitalist to leave Cuba carried with him only a regulation small suitcase and what he could fit in his pockets.

And so he escapes to America. He's in New York. And it says for every Cuban like Jesus, I don't know how to pronounce his last name, who had bought a sugar mill in Venezuela, or for every business family like the Gutierrez, which had transferred 40 million abroad before the revolution, most other Cubans had kept what money they had on the island. That included Lobo. So the only thing he has in New York, it says he has a total of all these contracts and stuff, that totaled $5 million, which is a fraction of Lobo's original 200 million fortune. So immediately he goes from 200 million fortune down to five, right? But here's the problem. Some of these loan guarantees are by American banks.

So he has actually a negative net worth when he comes to America. He still owns Citibank, almost $7 million from the purchase of the Hershey Mills, a debt that he had secured against his own name. This reduced his net worth to less than zero. Although he was 63, an age when most people think about retiring, he set back to work with a zeal. So then I left myself here is this is not going to end well. This is where he just, he loses everything speculating again. The revolution had robbed Lobo of his sugar mills, but he still had his contacts, his prestige and his traders instincts. The year 1963 was the wildest in the sugar market in four decades. Lobo's New York office would handle a fifth of all foreign sugar that entered the United States.

Some of Lobo's speculations had gone exceptionally well. At the start of the year, sugar price was at 2.5 cents a pound. By May, it was at 13 cents. Prices then rose another 2 cents in one week. Lobo had bought 100,000 tons at 11 cents per pound a position worth 22 million dollars prices began to rise again leon that's the guy that uh that i mentioned earlier that interviewed with the um the author when he's 91 years old living in miami leon urged him to sell he could sell declare a fat profit and give everyone a handsome bonus leon remembers telling

lobo but lobo ever willing to take the risk, the big risk, wanted to let his bet ride. The market is going higher, he told Leon. Lobo could not resist the siren call of great opportunity, the possibility of doing better than merely well. With a big win, Lobo could pay off his old Hershey debt, and he could even start to rebuild his empire. The trouble was that it was really tough to fight the decision of a man who had such a record of good decisions, remembered Leon. The sugar price edged ahead by half a cent and it seemed that Lobo, 66 years old, still had a magic touch. But all men make mistakes and as Karl Popper said, great men make great mistakes. The sugar price began to fall. When the descent accelerated, Lobo could not wiggle out of his position. The sugar price dropped to 4.5

cents. Lobo had bought at a price more than twice as high. He had lost $6 million. Now that Hershey deal returned to haunt him. On July 1st, squeezed for cash due to his trading losses, Lobo missed a $500,000 payment on the $6 million he still owned Citibank. When he skipped the payment, the total of Lobo's Hershey debt immediately came due. Learning of this, sugar traders demanded immediate payment of the $6 million that Lobo separately owned him. His business collapsed like a house of cards. Lobo declared bankruptcy and sought Chapter 11 protection.

Lobo made brave promises at first. He said he would roll up his sleeves, keep working, and trade his way out of losses. I will take the consequences, as I always have in the 45 years of world sugar trade, he said. I'll pay everyone, he added confidently. But he was crazy, Leon remembered. There was no way he could pay. Our lawyer said Julio should be taken to see a psychiatrist. This was a man who had always kept his word with the world,

and now he just didn't understand that he couldn't. And this next sentence is exactly why you and I are engaged in studying the history of entrepreneurship. It was the same ending that befell so many other famous speculators throughout history. My creative years are over, Lobo said. A man who had once moved markets with a nod of his head, who had expected subordinates to snap to attention

when he came into the office, now lived off the monthly payments that his daughter sent him. And that is where I'll leave it for the full story by the book, The Sugar King of Havana, The Rise and Fall, The Fall of Julio Lobo, Cuba's Last Tycoon. I'll leave a link in the show notes. If you buy the book using that link, you'll be supporting the podcast at the same time. If you have a friend or a colleague or a family member and you want to buy them a gift

subscription, give them a gift subscription to Founders. I'll leave a link in the show notes as well. And you can also go to founderspodcast.com and you'll see in the header, buy a gift subscription. That is 237 books down, 1,000 to go. And I'll talk to you again soon.