Founders - #287 The Founder of Rolls-Royce

Starting point is 00:00:00 The historic first meeting of Rawls and Royce took place in 1904. The two men could hardly have come from different backgrounds. C.S. Rawls had been educated at Cambridge and moved comfortably in London society among his aristocratic and wealthy friends. Henry Royce had known poverty and hardship all of his life. The only university he graduated from was the one of Hard Knocks. The one characteristic they had in common was a certain prickliness. This is how Rolls described the first time he met Royce. You may ask yourselves how it was that I came to be associated with Mr. Royce.

Starting point is 00:00:35 For years, I had been engaged in the sale of foreign cars. I wanted to be able to recommend and sell the best cars in the world. The cars I sold were the best that could be got at that time. But I always had a sort of feeling that I should be selling English cars instead of foreign ones. I noticed a growing desire of my clients to purchase English-made cars. At the same time, I could not come across any English-made car that I really liked. Eventually, I was fortunate enough to make the acquaintance of Mr. Royce, and in him, I found the man that I had been looking for for years. It was immediately clear to Rolls that Henry Royce was an unusual talent. Rolls at this time had a prejudice against

Starting point is 00:01:20 two-cylinder engine cars, and so he climbed into the passenger seat of Henry Royce's little two-cylinder car, prepared for all the vibration and roughness that were usually associated with that type. To his amazement, he found that the car had a smoothness and a quite phenomenal degree of silence. He came, he rode, and he was conquered. That is an excerpt from the book I'm going to talk to you about today, which is Rolls-Royce, The Magic of a Name, The First 40 Years of Britain's

Starting point is 00:01:50 Most Prestigious Company, and it was written by Peter Pugh. So this is my second time reading this book. The first time I read it was like three and a half years ago. It was originally episode 81 of Founders. I wanted to read it because I think a main theme of Henry Royce's life is that you can actually build world class products and an amazing business without having to invent anything new. His main talent was an ability to observe, think about and then improve on existing machines and products. And he says this himself. He's like, I didn't invent the automobile. I just took every component of the automobile, improved the quality, and the sum of those parts led to the quality that Rolls-Royce is still known for 100 years after he started the company. And this idea has been in front of my mind. I just did this three-part series where I

Starting point is 00:02:35 read all of Paul Graham's essays on episode 277, which is the third in that three-part series. There's this essay that Paul writes that's called Hackers and Painters. And Paul has this line that I absolutely love. And he says, a great product has to be better than it has to be. And he says, relentlessness wins because in the aggregate, unseen details become visible. I'm going to read this line. This line could, he's just, in this case, he's talking about, Paul's just talking about Leonardo da Vinci and Michael Jordan and others. This could be the great, this could be a great description of Henry Royce. All those unseen details combined to produce something that is just stunning, like a thousand barely audible voices all singing in tune. And so the way I think all this ties

Starting point is 00:03:13 together is because there were painters before Da Vinci. There were basketball players before Michael Jordan and there were people making cars before Henry Royce. Yet what they all have in common is they were relentless and relentlessness wins because in aggregate, unseen details become visible. And so with that, let me jump into Henry Royce's early life. This podcast is about Henry Royce because even though C.S. Rawls was the co-founder of Royce, he died just a few years after the company started. He actually died tragically in a plane crash. He was actually flying one of the early Wright Flyers made by the Wright brothers, and he was the first English person to be killed in a plane accident. And so

Starting point is 00:03:51 most of the early history of Rolls-Royce is built around the very domineering personality and engineering genius of Henry Royce. It says he was descended from generations of farmers and millers. His grandfather had been a pioneer in the installation of steam power in water mills. Unfortunately, that talent skipped a generation. Royce's grandfather was successful. His father was not. And as a result of his father's lack of success, Royce actually grew up in poverty. His father, James, trained to be a farmer before moving on to milling.

Starting point is 00:04:15 James proved to be unreliable and seemed unable to apply himself consistently. I think you can already see where we're going. This is a main theme in the history of entrepreneurship that's going to show up over and over again. By the time Henry Royce was born, his dad was in financial trouble. He died in a poor house at the age of only 41. I think around this time, Royce is eight or nine. The reason I said that you could probably see where we're going is because there's this main theme that pops up over and over and over again. It comes from the biography of Francis Ford Coppola that I covered back on episode 242. You can always understand the son by the story of his father. The story of the father is embedded in the son. Think about, you could not have a more

Starting point is 00:04:55 opposite description of Henry Royce and the person he was than that description the author just gave us of his father, James. James proved to be unreliable and seemed unable to apply himself consistently. Henry Royce is going to have the opposite problem. He works so much, he almost works himself to death. Henry Royce, therefore, knew poverty in his early life. When he was four years old, he was already earning money bird scaring in the fields. After his father died, he sold newspapers and delivered telegrams. His life may have been very, very different if it wasn't for the fact of this random act of kindness

Starting point is 00:05:25 from his aunt. This act of kindness is actually going to change the trajectory of Royce's life. Fortunately, when he was 14, an aunt agreed to pay $2,200 a year for him to be an apprentice at the Great Northern Railway Works. He learned a great deal about machining in the workshop. After three years, his aunt was unable to continue her support. This was a serious setback for Royce since failure to complete his premium apprenticeship denied him skilled status. So even though he has the knowledge, he doesn't have the credential, he winds up having to take a job that's for less pay than he would have if he would have actually completed his apprenticeship. He says he found work as a toolmaker with an engineering firm. He was paid $60 a week and he worked from 6 a.m. until 10 p.m. So even from a relatively young age,

Starting point is 00:06:10 we're around 21. He's around 21 where we are in the story right now. He was interested in both machinery and electricity. So he's actually a mechanical engineer and an electrical engineer. This is his first job with an electric company. His interest in electricity led him to a job with the Electric Light and Power Company in London. He progressed so well that he was actually promoted to be a first electrician of an associated company of the power company. This wound up being an important twist of fate because that company, a few years later, is actually going to go out of business and went into liquidation. And then Royce had saved some money and set up his own business, which he named after himself. So it was the FH Royce and Company. And this is where we get the

Starting point is 00:06:43 first introduction of what I mentioned earlier, the main point of the book. Royce had an ability to think about and improve existing machines, existing products. So his company starts out making like small electrical items like electric bell sets, switches, fuses, filaments, that sort of thing. But they eventually move on to building complete installations of dynamos. A dynamo is a machine that's used to convert mechanical energy into electrical energy. So it's also sometimes referred to as a generator. And so this is what Royce said about his skills at this time. And so he's looking at existing dynamos. He says, in spite of insufficient ordinary and technical education, I managed to conceive the importance of sparkless commutation and the superiority of, don't worry about these

Starting point is 00:07:24 terms. I'm skipping over a bunch of the terms, they're just technical terms, and the superiority of the drum-wound armature for continuous current dynamos. This goes on for quite a while. That's not the important part. What I think is the important part, this is the theme, this is why I wanted to reread the book. I need to drill this idea into my head over and over and over again. Everything around you can be improved. These improvements can be the foundation of a wonderful business, exactly like Rolls-Royce and one of my personal heroes, James Dyson. And so this section ends with this fantastic sentence. This ability to observe, think about, and then improve on existing machines was to be a consistent theme throughout Royce's life. And then Royce talks about the early days of his business, how it was very tenuous on the borderline of success and failure. And we see an early glimpse into this legendary

Starting point is 00:08:08 work ethic and this intense drive to not wind up like his father. For many years, I worked hard to keep the company going through these very difficult days. I personally kept our few machine tools working on Saturday afternoons when the men did not wish to work. Many times our position was so precarious that it seemed hopeless to continue. Certainly, he became obsessed with work, often staying late into the night and even all through the night. On a number of occasions, those arriving next morning would find him at work at his workbench, asleep with his head in his arms. And the main problem with this business is that it's inconsistent. The company can do well over the next few years, actually does relatively well over the next decade or so, but there's constant booms and busts. And so during

Starting point is 00:08:48 an economic recession, this is what causes Royce. He's looking around for other products that he could make, that he could use his talents and actually make. And so this is why he starts making cars. Helping Royce make the decision to build a prototype motor car was the post-war slump. This is in 1903, which left his company, along with many others, with spare capacity. Royce was mindful of the survival of his company and faced with declining orders, felt that the motor cars could be a new product

Starting point is 00:09:14 in which he could use his talents as an electrical and mechanical engineer. And this is where it became clear to me that Henry Royce is another example of something that you and I talk about over and over again. It pops up in the history of entrepreneurship that the timing is really important. Royce happens to be at the right place at the right time with the right set of skills. And so while Royce is actually experimenting and building his first prototype car, C.S. Rolls asked this other guy

Starting point is 00:09:38 that they both know, this guy named Edmonds, if he knew of a source of new cars. This is how Rolls meets Royce. And so we see the foundation of the Rolls-Royce company comes from frustration. Royce is looking at the existing cars and he deems them inadequate. This is reminds me, this is why I say it reminds me of James Dyson. If you haven't listened to, I did, I think the best, I've done a number of episodes on James Dyson. I think the best one is probably episode 200. So it says frustrated with the inadequacies of the Decauville, I think is how you pronounce it, which was essentially the standard, like the high standard in automobiles at the time. And so Royce is examining the existing

Starting point is 00:10:14 car and he said he saw he could build on it. Royce decided to make a prototype car of his own. And then the author makes a good point here. Some have tried to give the impression that it was almost by chance that Royce became involved in designing a motor car. Royce was not a man to rely on chance. He saw the motor car had a great future and that it would be an ideal product for his business. And this is a description of the main theme of the book. This part is excellent. There was nothing revolutionary about Royce's car. He had taken the best of current automobile design and improved on every aspect of it. I do not think that Royce did anything of a revolutionary nature in his work on motor cars. He did, however, do much important development

Starting point is 00:10:51 and a considerable amount of redesigning of existing devices, existing products is the way you and I would think about this, so that his motor cars were far and away better than anyone else's motor cars. He paid great attention to the smallest detail in the result of his personal consideration to every little thing resulted in the whole assembly being of a very high standard of perfection. It is rather to Royce's thoroughness and attention to even the smallest detail than to any revolutionary invention that his products have the superlative qualities that we all know so well. So as you can imagine, somebody with insanely high quality standards and expectations is unbelievably difficult to work with.

Starting point is 00:11:35 So he's definitely hard on the people around him, but he's also very demanding on himself. And there's going to be a fantastic quote about that here. He was a hard taskmaster, but it was only fair to add that he drove no one harder than himself. One employee said later, I not only admired him, I was one of the few people who were genuinely fond of him. Henry, this is an incredible quote. Henry Royce ruled the lives of the people around him, claimed their body and soul even when they were asleep. Now just stop here and imagine and try to put yourself in his shoes

Starting point is 00:12:04 and look at his life through his eyes. Right. Your father was chronically sick. He was lazy and didn't apply himself. He dies while you are young. He's like eight or nine years old. You grew up in poverty. You took a job, every job you get as young as four years old. You were saved by an act of charity. And now you have the opportunity to apply your rare set of skills to build a valuable company and create wealth. Of course, you are going to take it seriously. A lot of this reminds me of Coco Chanel.

Starting point is 00:12:35 I read her biography. I've actually done two episodes on her, but the last time I read a biography on her was episode 199. And she grew up in poverty. She was an orphan. Her mom dies when she's young. Her dad skips out.

Starting point is 00:12:45 And she talked about just, I want control. And it was very rare. You know, she's starting a bit, first of all, like how it was so unbelievably rare for women, like women to be able to start their own company in the early 1900s. And she has great lines in those books where she talks about like, you know,

Starting point is 00:13:00 for the first time she has independence and control and like the fate is now in her hands instead of just felt like life was something that was happening to her and she said they didn't understand how important this was to me and then later in life she still has that level of drive and dedication to her work where she says she said she said uh one of my favorite quotes of her she says it is immoral to play at earnings one's living she had a deep love of fashion she loved building her fashion house but she took it very

Starting point is 00:13:25 seriously. And there's also a line in that fantastic biography I'm going to read to you. She devotes her energies, talking about Coco Chanel, obviously, she devotes her energies to barely noticeable refinements of details of her suits and dressers. Listen to this description of how Henry Royce worked, and you will see that same mindset. And it says, this is a story on the quality work in detail from one of the first apprentices at Rolls-Royce. My favorite story of Rolls-Royce workmanship, design and quality to the Americans when they asked me about it, as they often do,

Starting point is 00:13:53 is the use of taper bolts instead of rivets. I remember Royce carefully explaining to me how a hot rivet never filled a hole when it cooled and a cold rivet was punishing the metal too much. So hot rivets won't do, cold rivets won't do. That's fine. We'll create something new. So we made taper bolts and we fitted them perfectly in a hand reamed hole.

Starting point is 00:14:16 It is such details that explain the difference between Rolls-Royce and other cars. It was Royce himself who taught us all the principles, which carried on in the whole organization. Think about that. Royce is the one that comes up with the principles and he spreads it through the entire organization. This reminds me of one of my favorite descriptions ever. I've read, I don't know what, 10 books on Steve Jobs and it says he made and remade Apple in his own image. Apple is Steve Jobs with 10,000 lives. Inevitably, whenever you hear a brand that is known for quality,

Starting point is 00:14:50 a brand that in many cases outlives the original founder, right? Whether it's a Ferrari, a Rolls Royce, an Apple, an Estee Lauder, a Chanel, you can always tie it back to one insanely dedicated and obsessed founder. They create the culture from the very beginning, and in many times that culture is a reflection of their personality. It is who they are. He made and remade Apple in his own image. Apple is Steve Jobs with 10,000 lives.

Starting point is 00:15:16 We are seeing that same principle applied at the very beginning of Rolls-Royce, 120 years ago. It was Royce himself who taught us all the principles and which were carried on through the entire organization. And I think this next part is an excellent way to think about a product. I wrote when I read this part, this sings to me, this first car, like its successors, were not revolutionary in any single part, but in the excellence of the whole. Quality as a strategy. This gives you an idea of the quality of Royce's work. Reliability was the strongest feature of

Starting point is 00:15:50 his cars. One of them was returned in 1923 in perfect running order after 100,000 miles run over the hilly roads of Scotland. It was a standard of reliability none of Rolls-Royce's competitors could come near to emulating. And as you can imagine, one element of his personality was that he was a control freak. This part just made me chuckle because he's in the middle of building a car and giving everything to building that car. They're successful, so they have to expand. And he's like, well, I need to dedicate just as much time and energy into building the machine that makes the machine, which is the factory, right? Royce, though he was deeply engaged in the development of a new six-cylinder car, still found time to design most of the factory buildings himself. And then Royce makes an

Starting point is 00:16:33 incredibly important decision. They should do one thing and do it well. He did not want to dilute his skills, his skill set over making multiple cars. He's going to focus on one. The other vital early decision made by the new company was to concentrate on one model. And now that Royce had produced a model superior to all its rivals, Rolls-Royce would devote its energies exclusively to this model. Instead of diluting his skills over three or four models, Royce could concentrate on bringing one model to perfection. And there are those who would say that this new six-cylinder Rolls-Royce, the Silver Ghost, is the most famous car ever made. Now this is crazy. So this, I, the Silver Ghost, is the most famous car ever made. Now, this is crazy. So this, I think the Silver Ghost came out in 1908. I think the first one

Starting point is 00:17:09 was made in 1908. This goes to show you that a good idea can last for an unbelievable long time. This is how, this is one of the ways they marketed the Silver Ghost, you know, over 100 years ago. I remember seeing car commercials when I was a kid that took this idea and are still using it. It says, to prove its smoothness of the silver ghost and lack of vibration, a glass full of water was placed on the car while the engine was taken up to 1600 revolutions per minute and not a single drop spilt. And I just want to pull out one part that I think is interesting because I think it speaks to the fact that overregulation and usually overregulation caused by special interests can actually cripple or kill a new industry. In the early 1900s, the automobile was a very it's a new industry.

Starting point is 00:17:52 And so Thomas Edison actually makes a cameo in this book and says, like, Britain's essentially overregulated their own industry and allowed the Americans to seize control over one of the most important industries the world has ever seen. So it says, in Britain, the development of cars was held back by laws designed to protect a former way of life and the interests of the railway companies. So they had this thing called the Locomotives Act. And it stated that, listen to this, this is so incredible. First of all, if you're driving a car, there has to be at least three people. So why would you have to have three people in a car? At least three people had to be employed to drive the vehicle. While the vehicle was in motion, one of the three passengers was required to proceed the vehicle on foot by at least 20 yards.

Starting point is 00:18:38 So you're calling up your friends like, hey, guys, let's go for a drive. By the way, which one of you is going to walk in front of the car the whole time? Like, that's ridiculous. The speed limit was four miles per hour on country roads and two miles per hour in towns. There was a license fee of $1,000 a year per county in which the vehicle was to be driven through. Faced with these restrictions, early motoring pioneers were forced to spend time trying to have such laws repealed rather than on the development of the cars as thomas edison observed the motor car ought to have been british you first invented it in the 1830s you have roads only second to those of france meaning as the quality of the roads you have hundreds of thousands of skilled mechanics in your midst but you lost your trade by stupid legislation and prejudice.

Starting point is 00:19:29 So then we get to the part in his life where he almost works himself to death. I think he's at 48 years old at this point. C.S. Rolls had just perished in a plane accident, plane crash, like I said. That was in 1910. The next year, it says another calamity struck the following year when Royce himself was taken seriously ill. Long years of overwork and neglect on the needs of his body finally took their toll. Doctors were pessimistic about his chances of survival. They eventually are going to send him to a warmer climate. This is when Rolls-Royce becomes a distributed company. Like the headquarters are in London and then the factories in Derby in England. And then Royce and his design team, up until he dies, I think about 20 years from where we are in the story, they're actually going to work in the south of France, which I'll get to in a minute. But right now,

Starting point is 00:20:06 he's really sick, and he's still working from bed. Eventually, his partner, there's this guy named Claude Johnson. Claude Johnson describes himself as the hyphen in Rolls-Royce. He plays an unbelievable, important role. He's like the business guy, the business manager to Royce's engineering genius. And so Claude eventually is going to save Royce's life by taking him and taking him on a long extended vacation. Essentially, the only way you could get this guy to stop working is if you put him in a car and just drove him around Europe, which is exactly what Claude did. So it says, Royce's mind, undistracted by the management of the factory, he kept his staff busy with a continual stream of ideas from his very fertile brain.

Starting point is 00:20:43 Often his health kept him in bed all morning, and this was the period of his greatest mental activity. Without making a single note, he would design a new component in his head. After lunch, he would explain the component and the plan to his assistant. The assistant would write up blueprints, and then they'd be sent to Derby, where their factory is, and then the finished parts would then be sent back to Royce. Royce would then turn them over. This new part that came from his mind is now in his hand. Okay, this is essentially what's happening in the book. Royce would turn them over in his sensitive hands, criticize them, and then redesign them. And then this next part is interesting for two reasons.

Starting point is 00:21:15 And both those reasons remind me of Warren Buffett and Charlie Munger. One, I love this idea. Warren says a loss of focus is what worries Charlie and me the most, which is exactly what's going to happen with a competitor of Rolls-Royce and never happens with Henry Royce. But also because Charlie and Warren talk about they didn't like betting on companies at like the beginning of an industry because there may be like, I think they use the example of like the American car industry is like 2000 startups and yet only three survive. And so at the beginning of this industry, Rolls-Royce had all these other competitors.

Starting point is 00:21:43 And one of them was this very formidable company called Napier. And Napier's founder got rich and got distracted. And so this is going to benefit Rolls-Royce too, because all the talented engineers from Napier go to Rolls-Royce. And he says, I saw that his, meaning Napier's, interest in his, so it's a car company named after the founder, okay? I saw that his, Napier's interest in Napier's cars was beginning to wane. There was not the old enthusiasm, and there was a certain air of indifference as regards to the class of work that left the factory. His chief interest seemed to pass from the factory to his own bank account, which was never the case in the early days. This is why Jeff Bezos says missionaries make better products, right? Royce was a missionary. Napier just wanted to make money.

Starting point is 00:22:22 Eventually, a lot of the most talented engineers left Napier for Rolls Royce was a missionary. Napier just wanted to make money. Eventually, a lot of the most talented engineers left Napier for Rolls-Royce. So today, Rolls-Royce is well known not only for the cars, but they build high quality airplane engines. That actually starts because World War I breaks out. There's a need for domestic airplane engines. I don't think there was even like, I think the industry was barely, you could even barely call it an industry at this time. So the reason I'm bringing this to your attention though is because Royce just takes it on his own. He's like, OK, well, I'm just going to try to design my first airplane engine, even though the board told him not to. And he just, it just, it was irrelevant to him. It did not matter.

Starting point is 00:22:56 He's like, I'm going to do what I want to do. At the same time as the Rolls-Royce board was deciding not to make airplane engines for the government, Royce was already designing one. Not for the last time, Royce was ignoring what the board had decided in his absence. And then we see the same level of quality and dedication and obsession he applied to his cars, he's applying to airplane engines now. He already had an engine ready to test in late 1915. It was expected to give 200 horsepower, but gave 225 horsepower on its first run. However, Royce was not satisfied.

Starting point is 00:23:26 He strove to increase power, reduce weight, and fuel consumption, and at the same time, improve reliability. Royce was testing every part of the engine to destruction. And this is so crazy. As he's building this, right, his work is so detailed, and like he's writing not only memos for himself, but memos for all the people working for him, that the company decides to make these notes into a book

Starting point is 00:23:46 that they're eventually going to call the Rolls-Royce Bible. So impressive were the writings from Royce that Claude Johnson had Royce's memos on the subject printed and bound in a book. In the preface of that book were these words, in the opinion of the board of directors, the memo and letters written by Mr. Royce in connection with the design, testing,

Starting point is 00:24:01 and manufacture of these engines are so admirable as evidence of extreme care, foresight, and analytical thought that the directors decided to have them printed and bound in order that copies may be available for study as an example to all grades of Rolls-Royce engineers present and future. This book became famous as the Rolls-Royce Bible. It was described by, quote, the achievement of a thinking designer. So how good were these engines? What was the quality level?

Starting point is 00:24:32 So good that the enemy thought they were amazing. This is high praise for Royce's engine design from an unexpected source. The engine received praise from the enemy that it was aiming to vanquish. A young British airman was instructed to fly to an airfield in France and landed by mistake at a German base. When the Germans inspected the engine, they said, quote, one of the most interesting of hostile aeroplane engines on the highest plane and

Starting point is 00:24:55 respective design is undoubtedly the Rolls Royce. And so something that was a theme throughout the history of Rolls Royce is they were obsessed with control. Royce is obviously obsessed with control. So much so, this is the first, a company that was so focused on quality that they risked going to prison. Remember, this is wartime. So it says, when the Ministry of Munitions tried to force Rolls-Royce to get a dozen or so other firms to make their engines, Claude Johnson took the bold stand, saying that he would tear up every drawing and go to prison rather than risk... Listen to this. He would tear up every drawing and go to prison rather than agree to risk inferior skills of other companies.

Starting point is 00:25:35 Johnson said that the plan of using other manufacturers was futile and would yield nothing but mountains of scrap. He had his way, and other companies were not licensed. And they continue with this obsession with control after the war. When the war ends, so like that four-year period of World War I, there was essentially like the automobile industry in Britain was essentially frozen, right? So they get out after the war and there's like this boom and then this slump.

Starting point is 00:25:59 And so there's a lot of other car companies that are merging. And so Johnson and Royce were talking like, do you want to merge our company with other car companies that are merging. And so Johnson and Royce were talking like, do we are we like, do you want to merge our company with another like with other car companies due to this like post war market uncertainty? And Royce and Johnson are like, Nope, I'd rather retain control even if the even if what I was in control over, I want complete control, instead of like a larger size, right? So it says Johnson and Royce wanted to be their own men. Royce admitted it, I prefer to be absolute boss over my own department, even if it's extremely small,

Starting point is 00:26:28 rather than to be associated with a much larger technical department over which I only had joint control. And so this podcast is heavily focused on Henry Royce, but I do want to point out something because Claude Johnson dies about a decade before Henry Royce does. And it's really, it's this highlights

Starting point is 00:26:43 that sometimes you need the right partner, whether they're a co-founder or not, so they can actually compliment your skill set and actually compensate for the skills that you lack. Claude Johnson was that right partner for Henry Royce. This is perhaps an appropriate moment to compare the qualities of the two men and see how well they complemented each other.

Starting point is 00:27:00 Without Royce, the peerless engineer, there would have been no Rolls-Royce cars, that much is certain. But without Johnson's organizing ability and flair for publicity, there would probably have been no company to exploit the cars. Johnson thought not only of external relations, like public relations, right, but also those inside the company. What does that mean? As you can imagine, Henry Royce is not a people person. Royce's lack of what today are called interpersonal skills with his managers and employees is well known. Although he engendered quite remarkable loyalty in spite of being a hard taskmaster, Johnson was more aware of human relationships. And then it makes this point that I referenced earlier that maybe Johnson's greatest contribution was the fact that he saved Royce from himself. Perhaps Johnson's greatest contribution to Rolls-Royce

Starting point is 00:27:45 was his understanding of Royce himself and his unselfish action in 1911 in taking him on an extended trip through Europe, which almost certainly saved Royce's life. Johnson also understood that both Royce and his employees would probably function better if they were kept apart. This is what I referenced earlier, that the design element is going to be on its own island in the south of France, and then the production and the HQ is going to stay in England. It was a happy coincidence that Royce's doctors prescribed sea air. If Royce had stayed in Derby, where their factory is, his obsession with detail might well have hampered the commercial viability of the growing organization. And so this is how Rolls-Royce was actually set up as a distributed company. This gives a

Starting point is 00:28:22 first-hand view of how the company operated in the 1920s. The control of the company was vested in three widely dispersed groups. All designing was carried out in the South of France. That's where Royce is. All the directors except Royce were based in London and all the production stayed at the Derby Works. Because Royce's word was law throughout the company, the apex of this administrative triangle

Starting point is 00:28:40 was undoubtedly the team of designers working under Royce in France, in the south of France. This kind of reminded me of about like when Steve Jobs came back to Apple, like his tight design, his tight relationship with Johnny Ive and the other designers, like they were secluded. It was very hard to even access the department they worked in. That's what popped to mind when I read this. They worked in monastic seclusion in an office situated in the middle of a village about a quarter of a mile from Royce's house. This is wild and probably a good idea. To ensure a minimum of distraction, the office was forbidden the luxury of a telephone.

Starting point is 00:29:17 This was the team responsible for the design of every car and all their components from 1919 until Royce died in 1933. In matters concerning the actual model which eventually went into production, Royce's decision was final. He is going to die at the age of 70. He's another example of somebody who loved what they did so much that they did it till he died. The night before he died, he sat up in bed and drew a sketch on the back of an envelope which he gave to his nurse and housekeeper, telling her to see that the boys in the factory got it safely. Henry Royce was quite simply a genius. And thanks to a meeting with C.S. Rolls and his partnership with Claude Johnson, the benefits of his genius were spread and shared by the whole country and indeed by the world at large. We have noted his belief in hard work. A.G. Elliott,

Starting point is 00:30:07 who joined Rolls-Royce and rose to be chief engineer and who served the company for 44 years, said this, Everyone who worked with Royce knew that he was a perfectionist. They knew how he would test parts far beyond anything they were likely to have to withstand on the road. Some found his habit of changing and improving designs extremely frustrating, but he wanted his designers to be improving all the time. In Royce's view, such an approach saved time in the long run. This tradition of obsession with functional perfection long outlived him and indeed is paramount in Rolls Royce today. Never one of the world's greatest man

Starting point is 00:30:46 managers, Royce was able to concentrate on what he knew best. His mind undistracted by the management of the factory, Royce kept his staff busy with a continual stream of ideas from his fertile brain. Royce's striving for perfection in everything he did was epitomized by a comment he made to a neighbor after he had stripped and rebuilt the neighbor's lawnmower. Royce said, whatever is rightly done, however humble, is noble. And that is where I'll leave it. Highly recommend picking up 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. You can also find all the links at founderspodcast.com. If you're looking for a further way to support the podcast

Starting point is 00:31:31 and you want to listen to my AMA Ask Me Anything episodes where you can ask me questions directly and then I answer them on the episodes, that link to subscribe to that is down below as well and available at founderspodcast.com. I just published the second of the AMA episode a few days ago. That is 287 books down, 1,000 to go. And I'll talk to you again soon.

Founders - #287 The Founder of Rolls-Royce

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