Founders - #37 The Fish That Ate The Whale: The Life and Times of America's Banana King

Episode Date: September 9, 2018

What I learned from reading The Fish That Ate the Whale: The Life and Times of America's Banana King by Rich Cohen.---When he arrived in America in 1891 at age fourteen, Zemurray was tall, gangly, and penniless. When he died in the grandest house in New Orleans sixty-nine years later, he was among the richest, most powerful men in the world. In between he worked as a fruit peddler, a banana hauler, a dockside hustler, and the owner of plantations on the Central American isthmus. He batted and conquered United Fruit, which was one of the first truly global corporations. [0:01]Zemurray’s life is a parable of the American dream. It told me that the life of the nation was not written only by speech-making grandees in funny hats but also by street-corner boys, immigrant strivers, crazed and driven, some with one good idea, some with thousands, willing to go to the ends of the earth to make their vision real. [0:31]How Sam Zemurray started: He’d arrived on the docks at the start of the last century with nothing. In the early years, he’d had to make his way in the lowest precincts of the fruit business, peddling ripes, bananas other traders dumped into the sea. He worked like a dog and defied the most powerful people in the country. [2:26] He was driven by the same raw energy that has always attracted the most ambitious to America. You did not need to be a Rockefeller to know the basics of the dream: Start at the bottom, fight your way to the top. [3:35] He believed in staying close to the action—in the fields with the workers, in the dives with the banana cowboys. You drink with a man, you learn what he knows. There is no problem you can’t solve if you understand your business from A to Z. [4:33] His real life began when he saw that first banana. He devised a plan soon after: he would travel to where the fruit boats arrived from Central America, purchase a supply of his own, carry them back to Selma, and go into business. [6:24]See opportunity where others see nothing: The bananas that did not make the cut were designated “ripes” and heaped in a sad pile. These bananas, though still good to eat, would never make it to market in time. As far as the merchants were concerned, they were trash. Sam grew fixated on ripes, recognizing a product where others had seen only trash. [6:54] As far as he was concerned, ripes were considered trash only because Boston Fruit were too slow-footed to cover ground. It was a calculation based on arrogance. I can be fast where others have been slow. I can hustle where others have been satisfied with the easy pickings of the trade. Zemurray stumbled upon a niche: overlooked at the bottom of the trade. [8:08]His business grows rapidly: Because Zemurray discovered a patch of fertile ground previously untilled, his business grew by leaps and bounds. In 1899, he sold 20,000 bananas. Within a decade he would be selling more than a million bananas a year. [9:30]An interesting story about Why was Zemurray’s company so profitable so quickly? Hint: No expenses. [13:47]Was there a precursor? Of course there was. The world is a mere succession of fortunes made and lost, lessons learned and forgotten and learned again. [17:59] If you looked into his eyes you would see the machinery turning. Part of him is always figuring. You listen to a man like that. He knows something that can’t be taught. [20:19]Study those that came before you. Avoid their fate: He paid special attention to the old-timers who had been in the trade since the days of wind power. They were former big timers now just trying to survive. [20:40] Zemurray goes deep into debt to buy as much land as possible: There are times when certain cards sit unclaimed in the common pile, when certain properties become available that will never be available again. A good businessman feels these moments like a fall in the barometric pressure. A great businessman is dumb enough to act on them when he cannot afford to. [23:13] He believed in the transcendent power of physical labor—that a man can free his soul only by exhausting his body. [26:07] Unlike most of his competitors, he understood every part of the business. He was contemptuous of banana men who spent their lives in the North, far from the plantations. Those schmucks, what do they know? They’re there, we’re here! [26:21] These banana companies were so powerful that they overthrew presidents. Multiple times. [27:47] Pretend you are Sam Zemurray. You’ve been summoned to Washington, called to account by the Secretary of State, warned. What do you do? Put your head down, shut up? Sit in a corner? No Sam Zemurray. [29:57] He disdained bureaucracy, hated paperwork. He ran his entire business in his head. He will telephone division managers in half a dozen countries, correlate their reports in his head and reach his decision without touching a pencil. [34:06]He was respected because he understood the trade. By the time he was 40 he had served in every position. He had worked on the docks, on the ships and railroads, in the fields and warehouses. He had ridden the mules. He had managed the fruit and money, the mercenaries and government men. He understood the meaning of every change in the weather, the significance of every date on the calendar. There was not a job he could not do, nor a task he could not accomplish. He considered it a secret to his success. He refrained from anything that took him away from his work. [37:46] Manager vs Maker Schedule [39:43] He began to visit boatyards. He wanted to build a fleet so he would never again be dependent on other companies to haul his product. He wanted control. In everything. [40:32] It was a contrast of styles: the executives who ran United Fruit had taken over from the founders and were less interested in risking than in persevering. Zemurray was the founder, forever on the attack, at work, in progress, growing by trial and error, ready to gamble it all. [42:53] Here was a self-made man, filled with the most dangerous kind of confidence: he had done it before and believed he could do it again. This gave him the air of a berserker, who says, if you’re going to fight me, you better kill me. If you’ve ever known such a person, you will recognize the type at once. If he does not say much, it’s because he considers small talk a weakness. Wars are not won by running your mouth. I’m describing a once essential American type that has largely vanished. Men who channeled all their love and fear into the business, the factory, the plantation, the shop. [46:42] Two different approaches to buying land. One entrepreneurial, one the opposite: United Fruit did what big bureaucracy-heavy companies always do, hired lawyers and investigators to find the identity of the true owner. This took months. In the meantime, Zemurray simply bought the land from them both. He bought it twice—paid a little more, yes, but if you factor in the cost of all those lawyers, probably still spent less than United Fruit and came away with the prize. [47:50]Why the book is called The Fish That Ate The Whale [49:46] The greatness of Zemurray lies in the fact that he never lost faith in his ability to salvage a situation. Bad things happened to him as bad things happen to everyone, but unlike so many he was never tempted by failure. He never felt powerless or trapped. He was an optimist. He stood in constant defiance. For every move there is a countermove. For every disaster, there is a recovery. He never lost faith in his own agency. [51:45]You gentlemen have been fucking up this business long enough. I’m going to straighten it out. [58:07]Sam’s defining characteristic was his belief in his own agency, his refusal to despair. No story is without the possibility of redemption; with cleverness and hustle, the worst can be overcome. I can’t help but feel that we would do well by emulating Sam Zemurray. [1:04:05]  ----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. 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When he arrived in America in 1891 at age 14, Zemuri was tall, gangly, and penniless. When he died in the grandest house in New Orleans 69 years later, he was among the richest, most powerful men in the world. In between, he worked as a fruit peddler, a banana hauler, a dockside hustler, and the owner of plantations on the Central American Isthmus. He battled and conquered United Fruit, which is one of the first truly global corporations. Samuri's life is a parable of the American dream. Not history as recorded in textbooks, but the authentic, cast-strength version. A subterranean saga of kickbacks, overthrows, and secret deals. The world as it really works. This story can shock and infuriate us, and it does,

but I found it invigorating too. It told me that the life of the nation was not written only by speech-making grandies in funny hats, but also by street corner boys. Immigrant strivers, crazed and driven, some with one good idea, some with thousands, willing to go to the ends of the earth to make their vision real. It meant anyone could write a chapter in that book, be part of the story, vanish into the jungle, and re-emerge as a figure of lore. If you want to understand the spirit of our nation, the good and bad, you can enroll in college, sign up for classes, take notes, and pay tuition. Or you can study the life of Sam the Banana Man. So that is

from the preface of the book that I want to talk to you about today which is the fish that ate the whale the life and times of America's banana king and this is by Rich Cohen. So this is one of the books that I found using since I buy so many biographies of entrepreneurs on Amazon it's been Amazon has recommended this book to me for quite a while and just it has a fantastic title so I eventually ordered it and it just sat in a pile of books that I have that I'm eventually going to turn into future episodes of founders and so I picked it up one day and I started reading and I couldn't put it down. So that's how it kind of jumped ahead of some other books that I had that I thought,

I kind of thought I knew where I was going next. But this one grabbed me by surprise because it's such a, the writer, this is the first, I think the first book of Rich Cohen's that I've read, but he's really, really talented at telling stories. And it's helpful to start with such an amazing life story as Samuel Zamuri. So let's jump right into the book. Let's not waste any time. And I'm just going to go through it in a chronological order. And as always, I'm going to hit the highlights and the ideas that stuck out to me.

If this is your first time listening to Founders, every Founders episode, I read going to hit the highlights and the ideas that stuck out to me. If this is your first time listening to Founders, every Founders episode, I read a biography of an entrepreneur and then just share ideas and highlights that were interesting to me. It is not meant to be a summary, but it is meant to give you a good idea of who this person was and how they lived their life and some of the ideas they had. Okay, so let's jump right into the introduction. He worked like a dog and defied the most powerful people in the country. By 1905, he owned steamships, side wheelers across the Gulf of Mexico, heading south, returning with bananas. Okay, so I'm going to skip ahead and I'm going to focus on his early life, which I might be my favorite part of reading all these books because we get to see how they started out before they become the people we know them as and so the note i left myself on

this page was poor but ambitious so uh i'm skipping over a large part of his early life he was born in russia very poor his dad died early leaving his family in poverty. When he's 14 years old, he emigrates to the United States. He has some family in Alabama and he starts out doing just physical hard labor. So we're going to pick up when he's 16. By 16, he was as hardened as the men in all the photos, a tough operator, a dead end kid, coolly figuring out angles where's the play what's in it for me his humor was black his expla his explanations few he was driven by the same raw energy that had always attracted the most ambitious to america then push them at then push them to the head of the crowd grasper climber nasty ways of describing this kid, who wants what you take for granted. From his first months in America, he was scheming, looking for a way to get ahead.

You did not need to be a Rockefeller to know the basics of the dream. Start at the bottom and fight your way to the top. Though immensely complicated, he was, in a fundamental way, simple, earthy. He believed in staying close to the action. Keep that in mind. It's going to be really important later on. We're going to get to a story that happens when he's about 50 years old that illustrates that sentence, that he believes staying close to the action. In the fields with the workers, in the dives with the banana cowboys, you drink with a man, you learn what he knows. There is no problem you can't solve

if you understand your business from A to Z, he later said. Okay, so let's skip ahead a couple more pages. This is some more info for us, giving us an idea of what his early life was and what some of his first jobs were. Sam did not care for crowds and parties. He had a restless mind and a persistent need to get outdoors. He liked to be alone. You might see him wandering beneath the lamps of town, a tough, lean young man in an overcoat, hands buried deep in his pockets.

He stacked shelves and checked inventory in his uncle's store. Now and then, he dealt with the salesmen who turned up with sample cases. He stood in the alley amid the garbage cans and cats, asking about suppliers and costs. There was money to be made, but not here. He interrogated customers. He was looking for different work and would try anything, if only for experience. His early life was a series of adventures, with odd jobs leading to another odd job. Much of the color that would later entertain magazine writers, Sam's life had the dimensions of a fairy tale. So it says much of the colors that would later entertain

magazine writers were accumulated in his first few years in Selma. And then it says Sam's life had the dimensions of a fairy tale. Now we're going to see part of this. Remember what the intro said. When he dies, he's living in the largest house in New Orleans. A very, very rich man. He combed trash piles on the edge of Selma, searching for discarded scraps of sheet metal, the cast-off junk of the industrial age, which he piled on his cart and pushed from farm to farm, looking for trades. Wire for a chicken coop and returned for one of the razorbacks and the pen. A series of jobs followed, tried on and thrown off like a thrift store suit,

like the thrift store suits. He was a house cleaner and a delivery boy. A delivery boy, sorry. He turned a lathe for a carpenter. By 18, he had saved enough money to send for his brothers and sisters, half a dozen pale young Jews who turned up in Alabama in the last years of the 19th century. But his real life began only when he saw that first banana. He devised a plan

soon after. He would travel to Mobile, this is Alabama, where the fruit boats arrived from Central America, purchase a supply of his own, carry them back to Selma, and go into business. And before I move on to where he starts to see opportunity where others see nothing, there's something I really enjoy about this time period, about reading about these characters that came up during, let's say, the late 1800s into the early 1900s, whether it's Samuels or Murray or Levi Strauss or Henry Ford or Rockefeller or the Wright Brothers, all of which there are past Founders episodes about. But there's like an industriousness that's like common in all their characters.

So I just find that personally interesting. So let's skip ahead. This is where he realizes at a very young age an opportunity so it's a seeing opportunity where others seen nothing and so as we know he's headed to Mobile he starts to go to the docks and he realizes hey maybe I can buy the bananas that everybody else is throwing away and then resell them really really quickly and so we're gonna see the genesis of his banana empire right here. The bananas that did not make the cut were designated ripes. So that word ripes is in the

book constantly, so you're going to need to know that. And heaped in a sad pile. A ripe is a banana you have left in the sun that has become freckled. These bananas, though still good to eat, delicious even, would never make it to the market in time. In less than These bananas, though still good to eat, delicious even, would never make it to the market in time. In less than a week, they would begin to soften and stink. As far as the merchants were concerned, they were trash. Sam grew fixated on ripes, recognizing a product where others had seen only trash.

It was the worldview of the immigrant, understanding how so-called garbage might be valued under a different name, seeing nutrition where others only saw waste. He was the son of a Russian farmer, for whom food had once been scarce enough to make even a freckled banana seem precious. As far as he was concerned, ripes were considered trash only because Boston Fruit, that's a big company at the time, and similar firms were too slow-footed to cover ground. It was a calculation based on arrogance.

I can be fast where others have been slow. I can hustle where others have been satisfied with the easy pickings of the trade. Zamuri had stumbled on a niche, ripes, overlooked at the bottom of the trade. So that's going to set up his idea. And then we're going to talk a little bit about how he turns this into a business and how he succeeds. Well, you're going to see some numbers here. There's just his business grows at a mind blowing rate. OK, so let's go into the more details on Sam's business. He had soon made his name as a uniquely resourceful trader.

The crazy Russian who bought the freckled bananas he was pure hustle every morning before first light he was at the docks with a pocket full of bills he purchased every ripe and overripe and about to be ripe he could lay his hands on the important this is the this is where it's smart how he pitched it because it was turned into a mutually beneficial relationship for the for him and the importers. The importers were happy to get money for what in other towns was considered trash. Because the Murray discovered a patch of fertile ground previously untilled, his business grew by leaps and bounds. So check this out.

In 1899, he sold 20,000 bananas. In 1903, he sold 574,000. Within a decade, he would be selling more than a million bananas a year. When Andrew Preston, this guy's an important part of the the story when andrew preston the president of united fruit visited mobile in 1903 he asked to meet samuel zamuri the russians selling the ripes no photos of this meeting were taken no minutes recorded but it was significant the titan who began the trade shaking hands with the nobody who would perfect it. So what they're talking about there is the story, the reason the book is called The Fish That Ate the Whale is because the whale is the company that Preston founds. This guy, Andrew Preston, him and two partners.

And they're like a generation older than Samuels and Murray. So by the time Sam enters the banana trade, for all intents and purposes, United Fruit Company, which is Preston's company, is basically a monopoly. And they do something very smart where they, we're going to talk about later in the book, United Fruit Company would constantly partner with almost every up-and-coming company in the banana trade.

And the Whales United Fruit Company, the fish is the company that Samuel starts, that eventually overtakes. And we're going to see how he does it because it's genius. This story is just crazy. I can't recommend this book enough, not only for what you learn about business, but just the story in itself. There's so many times I put down the book and I'm like, I cannot believe what I'm reading is true. And then I'd go on the internet and be like, oh my God, this is true. Okay. So let's get back to this because I don't want to go on too much of a tangent until I give you some more details that will make more sense in the future. Okay. So no photos of this meeting were taken, no minutes recorded. Okay. It says the Titan, which is Preston, who began the trade, shaking hands with

the nobody, which is Zemuri, who would perfect it. Preston later spoke of Zemuri with admiration. He said the kid from Russia was closer in spirit to the banana pioneers, him being one of them, than anyone else working. He's a risk taker, Preston explained. He's a thinker and he's a doer. And remember that sentence because eventually Preston dies, his partners die. And like any other large company, once the founders are out of there, they're taken over by professional managers, usually highly credentialed managers. And we're going to see that they do a disastrous job in the stewardship of United Fruit Company.

Oh, and so one part that I skipped over in the book, but I think is important to the story is how Samuel Zamori actually succeeds. Because why would, why is he able to buy a product that other people thought were garbage? Because they did, like he said, they weren't fast enough to get the ripes to other markets. So what he did is he'd buy them, he'd jump on a train, and he'd learn this through trial and error. First, he thought, okay, I'm going to buy and jump on the train and then just sell them back home in either Selma or in Selma, Alabama. But they rotted. The trains went so slow, they rotted. So what he wind up doing is

there'd be a bunch of stops. The reason they ride is because the train has to stop in a bunch of different cities. So he would call ahead and I guess wire ahead is probably the, he would send notice that, hey, at this stop, there's going to be a bunch of bananas for sale for dirt cheap. And so other merchants in all these cities on the way back to Selma would line up once he sufficiently put out the word, would line up and

buy the bananas right there from the side of the train. And then he'd go to the next stop. And that's how he made tons of money. And he realized, oh, I don't need to take them back to Selma and try to sell them really quickly. I can sell them on each train stop and have almost no inventory by the time I get back home. So that's how he winds up selling, you know, from 20,000, then he sells to 575,000 a couple years later, and then more than a million bananas, which we just went over. Okay. So now let's jump a little bit ahead after his meeting with Preston. He says a few years before, Zemuri seemed like a fool buying garbage. Lots of people told him that, you know, you're an idiot kid. These are worthless. What are you doing? Et cetera,

et cetera. Now look at what he had accomplished. Selling hundreds of thousands of bananas a year, he'd become one of the biggest traffickers in the trade. And remember, he's really, really young. He's in his early 20s at this point. And he'd done it without having to incur, oh, this is the important part. And he'd done it without having to incur the traditional costs. His fruit was grown for him, harvested, and shipped for free. He was like a bike racer riding in the windbreak of a semi-truck, the semi-truck being United Fruit. By his 21st birthday, he had $100,000 in the bank. In today's terms he

would have been a millionaire so what they're talking about there's people like United fruit Boston fruit all these other companies they would own the plantations are they would usually where the bananas are grown which is in tropical regions right then they'd have to have all these huge costs to get them there so they'd what happens in story, a lot of these governments would require them to be bribed so you could ship your fruit on their railroads in their countries. And in many cases, like some of the founders of United Fruit were the ones that actually built the railroads.

Many people died doing this. It was very dangerous work. And then not only that, once you got the bananas and the produce out of the jungles, once you got to port, you needed ships. So they had United Fruit at the time, I think, had the world's largest private navy for all intents and purposes. So this had a huge amount of capital costs is what I'm trying to get to. And somehow, Zemuri realized, hey what I'm trying to get to you. And somehow, Zemuri realized, hey, I don't have any of that.

I buy the bananas, I buy a ticket, I ship the bananas on railroads in the United States, and I sell them right out of the train. And that's how he's able to be, this becomes so profitable. Okay, so let's skip ahead. What I love about this book, too, is there's really no fluff. There's some parts later on where they deviate into really interesting territories that I don't think I'll share on this podcast because it has to do with overthrowing governments and things kind of outside of our scope.

But he tells the story really, really quickly. The book is only 240 pages, so we should get to these highlights really fast is what I'm saying. Okay. So we're going to get to the point where the whale and the fish partner, and at the time, the whale doesn't know that how powerful this fish is going to become. So what happens is by 1905, Zemuri is very, very successful. He set up shop. He took on a partner. He starts buying other companies. And usually for strategic reasons, like they have ships that he's going to eventually need because he's not going to stay just having other people grow his bananas forever. So the people, the executives and the founders at united fruit company are are watching him and so

like i said before they start to um invest in all these other companies very similar to like what we see in like the tech industry now like think about google like the united fruit company is kind of like google it's it's a massive multinational corporation except it exists where that was actually in a time period where that was actually really really rare so it's massive resources you're talking about they're going to be making 40 50 million dollars a year in profit in the early 1900s so who knows what that would be in today's dollars so they they want to get their tentacles they're the united fruit company is called el pupo elo, which is octopus in Spanish.

And they're, well, let me just read this part and you'll see why. Such partnerships were the way of United Fruit, the style that earned the company the nickname, The Octopus. They wrapped their tentacles around every startup in the industry. In those days, UF either owned a piece of you

or was intent on your destruction. United Fruit took a 25% stake in Hubbard Zemuri, but remained a silent partner. So Hubbard Zemuri is the predecessor to Zemuri's company, which is C-U-Y-A-M-E-L is the name of the company that eventually after he buys out his partner, is what it becomes. Skipping ahead. So it talks about, well, this just kind of reminds me of what we're doing here.

Let me just read this. I just left the note founders here. If you study these lessons, you will understand the development of the banana business, how it grew from mom and pop trading posts into an all-powerful behemoth. In certain ways, Sam Zermury was without precedent. The pushcart nebbish, the fruit job they're called fruit jobbers he came from nowhere to create not just a fortune but an archetype he was the gringo in platonic form he seemed to strive for the sake of striving to hustle to prove it could be done swinging his machete as the sun

beats down face bathed in sweat you see him astride on his white mule in the doorway of the cantina. Was there a precursor? Meaning to him, of course there was. The world is a mere succession of fortunes made and lost, lessons learned and forgotten and learned again. Okay, so let's skip a little bit ahead. What they're talking about there too, he's foreshadowing. Once his operation grows big enough and he starts to expand and realizes, hey, I can take on the behemoth in my industry, he goes into the jungles of Honduras and sets sets up his own shop and he lives half the time in honduras and half the time in new orleans and he's not like the executives of united fruit who they're they're headquartered in boston they just sit uh they sit in the office and try to dictate

like the banana trade from there he's actually like doing the physical labor among uh his workers in the field which is which is, very rare at the time. Okay, so let's, I'm going to jump ahead to when he's already 29 years old. And it says, at 29, he was rich, a well-known figure in a steamy paradise, tall with deep black eyes and a hawkish profile. His friends were associates, his mentors and enemies the same he was a bachelor and alone but not lonely he was on a mission after all in quest of in quest of the american dream and were circumspect and deliberate as a result and this is his company which i don't even know

if i'm pronouncing correctly but qml q q lML, whatever that is, was operating as an importer, not growing bananas, but buying them from Central American farmers. Zamuri's worries were about supply, setting up a good price, working out deals with exporters. The firm was grossing several hundred thousand dollars a year, most of which went to pay farmers and sailors and local official officials who had to be bribed so this is the part of the reason i wanted i read the paragraph at the beginning where it talks about you under if you under if you study his life you understand um like business as it really is and um you know in this case it was just

you're growing a product in another country and you need that product exported to your, to the home market. And, you know, there's local officials that stood in that way. And if, if you wanted to get your produce, your product out of there, you had to pay them. If you looked into his eyes, you would see the machinery turning. That's what Frank Brogan told me. Frank Brogan is this guy who used to work with him. It's just the sort of person he was, explained Brogan, who worked for Zemuri in South America. He was one of those guys. Part of him is always figuring. You listen to a man like that. He knows something that can't be taught. Skipping ahead, study those that came before you and you can

avoid their fate. He knew everyone by name, but he knew everyone by name there, but paid special attention to the old timers who had been in the trade since the days of wind power, grizzled and tobacco stained in flop brim hats as sunburned as pirates. They were former big timers now just trying to survive. So what they're talking about there, he'd go down the docks, he'd make all these, he was a very private person, but he constantly pumped people for information to try to give him some kind of advantage. And what he discovered over time was there's a lot of people that used to be successful in the banana trade.

And then the banana trade would try to kind of chew them up and spit them out. But they were still, so they were not successful any longer, but they still had information. So what he would do is he'd go around and hire these people and he'd use them as basically consultants or advisors. And what he's trying to do there is trying to avoid the same fate they had. So he's like, okay, well, they were making money like I'm making money now. So what got them off track and how can I avoid that? And moving ahead, he winds up getting married. He has his first daughter and he's starting to change, you know, like we just described. He's just an importer, right? He's not growing his own bananas,

but now he's like, okay, now I think it's time to expand and get bigger. It was after the birth of Doris, that's his daughter, that Sam Zimuri decided he needed to get bigger and make more. The only way to do this was to expand. So he's talking about making more money. And the only way to do this was to plant his own bananas. It was a realization that sent Zimuri down the path he would follow for the rest of his life, a tortured path that led south into the jungle. And so we're going to get into how he lays the foundation for what eventually built his empire. It says, Zamuri traveled to Honduras in the early weeks of 1910.

He'd been there previously, but it was his first extensive tour of the country that eventually become his home. When Zamuri arrived, it was a kind of frontier town untouched by government or law. There was gunplay every night, the streets awash in liquor and gold. Because Honduras had no extradition treaty with the United States, it had become a criminal refuge filled with Americans on the lam.

So the book just goes into story to highlight some of these characters down there most of them were like bank robbers and stuff like that where they uh they'd steal a couple hundred thousand dollars and they would just uh try to set up life uh abroad in honduras so this is his moment this is where he makes his play so it says zamuri bought his first partial of land on the edge of oma an old colonial town on the north coast of Honduras. Much of the property ran along the southern bank of the Cuomel River. That's where he's going to take the name of his company. This was long, and we're going to see another strategy of Zemuri is finding opportunity where others only see garbage, right?

So this is another manifestation of that. This was long considered junk land, neither valued nor tendered. For $2,000, all of it he borrowed, he got 5,000 acres. He was soon back in New Orleans wondering if 5,000 was enough. So with much success, he moved from Selma alabama to new orleans a few years earlier and that's where he sets up his shop there are times and this is the important part there are times when certain cards sit unclaimed in the in the common pile when certain properties become available that will never be available again a good businessman feels these moments

like a fall in the in the barometric pressure. A great businessman is dumb enough to act on them even when he cannot afford to. So Murray returned to Honduras in the spring of 1910 with a plan, achingly simple, beautifully effective. Head north beyond the last paved road into the delta of the QML River, flash the roll, and buy as much land as he could until his cash ran out. He was playing with borrowed money. Having tapped out every line of credit in New Orleans and Mobile, he had gone on to the banks in New York and Boston. Whoever was lending, he was accepting. He was out there, overextended and vulnerable. He must have worried about the risk, but he had to knew that this was his moment.

The land would not be this cheap forever. In the course of a few months, he accumulated the uncleared acres that would constitute his first plantation. He had superior information, understood something important lost on the Hondurans. To the peasants, the land was swamp and disease, nothing that will still be nothing in a hundred years. Sam knew better. Because he was raised on a farm, he realized the meaning of all that black soil beneath the weeds. Because he worked as a jobber, he realized the meaning of all that black soil beneath the weeds. Because he worked as a jobber, he realized the worth of the fruit that would thrive in that soil. This land, picked up for a song, was in fact the most valuable banana country in the world. Okay, so now I'm going

to skip ahead because I want to give you a description of how he worked. Zomuri worked in the fields besides his engineers, planters, and machete men. He was deep in the muck, sweat-covered, swinging a blade. He helped map the plantations, plant the rhine zones, clear the weeds, lay the track. This is important. He believed in the transcendent power of physical labor, that a man can free his soul only by exhausting his body and we're gonna see an insight into something that he carries with him his

entire life and he says unlike most of his competitors he understood every part of the business from the executive suite suite where the stock was manipulated to the ripening room where the green fruit turned yellow he was contemptuous of banana men who spent their lives in the north, far from the plantations. Those schmucks, what do they know? They're there, we're here. Okay, so I want to skip ahead. This part, the left I know, is defying the US government. So he, the crazy part about this guy is he like, he just saw, he had the very pragmatic approach, no matter what was taking place. He's like, okay, well, this is a problem. So let's just think, let's get smarter and let's think about how to solve this problem.

And I feel like he applied this to everything. Remember, he's setting up business in countries where there's a lot of, you know, like almost every country, I should say, there's a lot of corruption. And so sometimes he would get on the wrong side of like a president of the country. You know, some people like, oh, man, this might be the end of my business. Samuels and Murray didn't think that way. He said, OK, well, how do we get rid of this guy and put in somebody more favorable to me? So the book, there's large parts of this book that I'm gonna have to skip over, unfortunately, but they just have all kinds of backstory and history.

And I went, like I said earlier, and went and looked up a lot of this and read more about it. And a lot of it's true. Like these banana companies were so powerful that they overthrew presidents multiple times. So he's back in New Orleans. He gets summoned to the Secretary of State. And it's this guy named Knox,

Philander Knox. So I'm going to skip over part of their meeting and I want to get to the main part of what they're talking about. And it talks about, hey, you know, I don't want you, basically the Secretary of State is telling them, hey, don't, I don't know what you're doing in Honduras, but we have larger, like larger concerns of the U.S. government, and I don't want you, you know, messing around down there. Because at this time, Zemuri is planning on funding a coup to overtake the Honduras leader.

Okay, so, and this is him talking about it. He goes, I was doing a small business buying fruit from independent planters, but I wanted to expand, Zimuri told the American Magazine. I wanted to build railroads and raise my own fruit. The duty on railroad equipment was prohibitive, a cent a pound. And so had and so i had to have concessions that would enable me to import the stuff duty free if the banks were running honduras and collecting their loans from custom duties how far would i have gotten so that's his problem right when zamuri stood to leave knox warned him a second time don't meddle keep your head down stay out of it i better not hear you've got yourself mixed up in the politics of Honduras.

Zamuri nodded and seemed to agree, but Secretary Knox was not so sure. Though he tried to put people at ease, Zamuri often struck those in power as a man who could not be controlled. That's 100% correct, by the way. If you want to know what he's going to do, forget what he seems to agree to and figure out what's in his interests. Sure, sure, you won't hear I've gotten mixed up in Honduras. As soon as Zemuri was gone, Knox made some phone calls, gave some orders. Actually, he said calls. I don't know if that was on the phone or not. He told officials from the Department of the Treasury to put together a secret service team in New Orleans. He wanted the banana man monitored. He was not to leave the country,

nor were any of his cohorts. Pretend you're Samuel Zemuri. You're 32. You've been in America less than 20 years. You lived in Russia before that in a poor farming town filled with rabbis. Now you're here, an entrepreneur of considerable means, but still somewhere in your mind, the little Jew who snuck in the back door. You're a husband and father with a young daughter and another child on the way. You've been summoned to Washington, called to account by the Secretary of State, warned. What do you do? Put your head down? Shut up? Sit in a corner and thank God for your good fortune? Well, maybe that's what you would do, but not Sam Zemuri. He muttered all the way back to New Orleans. Don't get involved? How about I overthrow

the fucking government? Is that too involved? You made a deal with the president of Honduras, Miguel Davila? Well, what if Senor Davila wasn't president no more? Consider the audacity in defying Philander Knox and J. Pierpont Morgan, J.P. Morgan. Sam Zemuri was challenging two of the most powerful men in America. So I got to give you some background there. Why is J.P. Morgan tied up in this? Because at the heart of the reason the State Department in Washington is getting involved in these Central American states, and it's something that continues today, is because they loan them a lot of money.

And so these governments are in debt, usually to very rich American bankers. And so the government is acting as a proxy for these bankers to get these governments to repay their loans, or at least start paying the interest on the loans. So does Samuel Zamuri listen to Knox? No, he does not. At this time, he's rather rich and he owns a bunch of boats.

So he uses the boats of his fruit company and the money he's accumulated for running the fruit company buys a bunch of weapons. He has a guy named, that used to be in the Honduran military, I think. His name is General Bonilla. And he basically hires a bunch of mercenaries

and bankrolls General Bonilla to do a coup. So I am going to skip over that because they go into a lot of detail that's kind of outside the scope of what we're trying to take away from this story. But it is very fascinating. If you want to buy the book and read it, I would definitely recommend it. So I just want to jump ahead to the outside of the scope of what we're trying to take away from this story. But it is very fascinating. If you want to buy the book and read it, I definitely recommend it. So I just want to jump ahead to the results of the coup.

Bonilla did not forget his benefactor. One of his first official acts was to have Congress give Zemuri concessions covering the next 25 years. This is the reason why Zemuri bankrolled the coup to begin with. Zamuri's settlement included permission to import any and all equipment duty-free, to build any and all railroads, highways, and other infrastructure he might need. They gave him a $500,000 loan to repay all expenses incurred

while funding the revolution, as well as an additional 24,000 acres on the north coast of Honduras to be claimed at a later date. No taxes, no duties, free land. These were the conditions that would let Sam Zamuri take on United Fruit. Okay, so I want to skip ahead. I found his routine very interesting, so I want to share a little bit about that now. He's up early each morning and eats a breakfast of raw vegetables and bananas. In other cases, I might not linger on what a man had for breakfast, but such details fascinated and confused Zimuri's competitors.

Executives at United Fruit were bewildered by reports of the jungle-dwelling Russian who had been living for weeks on nothing but figs, or who had taken a fast cure, meaning he fasted for 20 days, and who had been seen standing on his head beside a shade tree in the process of proving or disproving that inversion benefits the digestion. I kid you not. So every day he'd eat breakfast and he'd stand on his head because he thought it helped him digest his food. As for the reports, sales figures, and yields, the length of the average banana, the market rate per stem, Zermury went through these fast.

A scan, a few mental notes, done. He disdained bureaucracy, hated paperwork. So seldom does he dictate a letter that he requires no full-time secretary. So what they're talking about is he never liked to leave records of anything. He basically ran his entire business in his head. He will telephone division managers in a half a dozen countries, correlate their reports in his head, and reach his decision without touching a pencil. Okay, so this is the path to competition. So remember we talked about Preston took an, Andrew Preston, one of the founders of United Fruit,

took an interest in a young Samuel Zemuri and he bought a 25% stake in his company. So now what's happening to United Fruit is they're being accused of monopolistic actions. And so the Justice Department makes them sell back their interest in other companies as a way of kind of like divesting their monopolistic power, which wasn't really the root of the problem to begin with. But this action by the Justice Department opens up the path, the competition, direct competition between Samuel Zemuri's company, QML, and United Fruit. It says, though the Justice Department never filed any charges, the investigation had the desired effect. By forcing Preston to sell his shares in QML, the government created a competitive market.

It did this by assuring Zamuri the freedom to develop into a genuine competitor. In later years, when Zamuri had grown powerful, analysts spoke of the mistake UF had made. They had underestimated a dangerous rival in Zamuri. In fact, the executives at United Fruit, Preston and Keith, these are some of the founders, first among them, understood the geniuses of Zemuri from the beginning. They had long been dazzled by his rise from the docks, but it was a matter of triage. Cut off the leg to save the body. Cut free the banana man to save the company. So this is really interesting to me because there's quite a juxtaposition here and something you see commonly Preston and Keith are

founders they know that if if you have a kid that arrives penniless and in a few short years builds himself a mini empire like that person obviously knows something they're different from normal people they're very like founders see a lot of founders, like they understand the thinking of other entrepreneurs, right? And they have a respect for that. Now you're going to compare that to the people that take over the company after Keith and Preston and the founders die, and they're the exact opposite.

They come from rich families. They're very credentialed they look down on zamuri and what they think is i've gone to business school and i know like basically they even say like you can't teach me anything about business and that just from for i think for from entrepreneur respect uh perspective, that makes zero sense. Not only can he teach you more about business, or he can teach you something about business, he knows way more than you do.

And that arrogance you're going to see later on, it's one of my favorite stories that we're going to cover today, leads to their downfall. Okay, so the Justice Department, and you're going to also see that through the course of the book, the Justice Department kind of changes their mind. So later on, they make Zamuri sell back to United Fruit, his entire company.

Almost like a schizophrenic nature to the regulators that were watching what he was doing. Okay, so now we're going to skip ahead. He's 40. And this is another example of how he works. He was respected because he understood the trade. By the time he was 40, he had served in every position, from fruit jobber to boss. So keep that in mind with what I just said,

how that these executives at United Fruit that never started a company for themselves literally thought he couldn't teach them something about their business when he's done every single job in that business and they've done one. It's very bizarre to me. All right, he worked on the docks, on the ships, and railroads, in the fields and warehouses. And remember the quote I read earlier, where he's like,

if you know your business A to Z, there's no problem you can't solve. I think that's really like fundamental for us to all take with, to understand and take with us in our lives. Okay, so he worked on the docks. He did that. He'd ridden the mules. He's also something I didn't cover, but he's famous for the... I forgot the term in Spanish, but it roughly translates to the gringo on the mule. He crossed almost the... While he was looking for the land he was going to eventually buy, he crossed almost the entire country of Honduras on a mule. Okay, He had managed their fruit and money, the mercenaries and government

men. He understood the meaning of every change in the weather, the significance of every date on the calendar. There was not a job he could not do nor a task he could not accomplish. He considered it a secret to his success. And why is that a secret to success? Because although it's obvious that you should be doing this, because it's hard work, most people won't. And I love the fact that he's gained all by doing, he's gained all this knowledge, this hidden knowledge, the secret that you could only uncover by actually doing the hard work. And now he's using that to, he's exploiting that advantage over the people that didn't do the same. Okay. So he was up every morning at dawn, having breakfast, standing on his head,

walking in the fields. As far as possible, he refrained from giving interviews, addressing shareholders or attending functions. And this is so important. So important. When I look at like the different schedule, I love that essay by Paul Graham. It's the difference between a manager schedule and a maker schedule. This guy was running a massive corporation, but he had a maker schedule. So he talks about this. So why is he refraining from giving interviews? Why is he not addressing shareholders? Why is he not attending functions? All of which took him away from his work. He was one of those men who toiled all day, every day, until they had to be rolled away in a chair.

This is hilarious. When he failed to appear at a reception in Havana, Cuba, which had been thrown in his honor, a lieutenant tracked him down to the wharf where he was going over manifest documents with a ship's purser. He was wildly ambitious and innovated like mad. That's 100% accurate innovation we're going to get to more in that in a minute as soon as he had full control of his company he began to visit boatyards he wanted to build a fleet so he could this is another i think really

important where there's a i think a misunderstanding of a lot of people, like why, um, like I think entrepreneurship has been glamorized, which is good. A good thing in my case, as we've talked about in past podcasts, like people think, oh, entrepreneurship must be at an all time high, which when in, at least in America, it's, it's at a low of people starting new businesses. But so some people might want to do it because there's like a, like you, you look upon some people, I hate to use the word like glory, because I don't, I don't think in these terms, but like, you know, they want like, they want admiration from other people,

whatever term you want to put down on that. Some people do it because they understand that if you're successful, it's a path to a lot of money. But I think fundamentally, at least based on the books that we've covered on this podcast so far, it's one about control, about a lack of desire of other people telling you what to do or having control over how you live your life. So why is he going out and buying land, growing his own bananas, and now he's out here in the boat yards buying his own fleet. And it says he wanted to build a fleet so he could never again be dependent on other companies to haul his product. He wanted control in everything. So you'll see he, by the time he's done, he owns from the fields, the transportation to the sales, like he controls the entire thing. Okay, so, and this is something that's just super, super important.

And this is the, we're going to see this to compare and contrast a few times. But this is founder, the difference between a founder and a CEO. Okay, so it says, by 1925, Zemuri had paid off his creditors and he was free and clear. He invested most of his profit back into the business. QML was the rising star of the banana trade, the first company to challenge United Fruit in a generation. It was not about numbers. When it came to market share and volume,

UF was as dominant as ever. QML was harvesting 8 million bunches a year. Remember, he started out first year, 20,000. Now he's doing 8 million bunches. United Fruit was harvesting 8 million bunches a year. Remember, he started out first year 20,000. Now he's doing 8 million bunches. United Fruit was harvesting 40 million. QML employed 10,000 workers. United Fruit employed 150,000. See, we're still setting up the fish overtaking the whale. They're kind of demonstrating the difference in scale here. QML had working capital of 3 million. United Fruit had a working capital of 27 million. So it's talking about the difference was it wasn't market share, it wasn't size. It was about profit margin. Oh, this is speaking to my heart. I love efficiency. The efficiency of trade, the morale and skill of the employees. It was increasingly clear Samuels and Murray had built the better business.

QML was superior to United Fruit in a dozen ways that did not show up on a balance sheet. UF was a conglomerate, a collection of firms bought up and slapped together. There was a lot of redundancy, duplication of tasks, divisions working against divisions, rivalries, confusing chains of command. And remember this section is about the difference between a founder and a CEO and we're going to get to that right here. QML Fruit was the Green Bay Packers by comparison. Every decision was made with confidence and authority. Zamuri could move without waiting for permission or a committee report. He could take risks without fear of losing his job he could hire or fire with surety because he actually lived in honduras and knew the situation on the ground it was a

contrast of styles the executives who ran united fruit had taken over from the founders and were less interested in risking than in preserving. Zamuri was the founder, forever on the attack, at work, in progress, growing by trial and error, ready to gamble it all. The difference was best seen on the plantations, where Zamuri was constantly inventing. Most people looking at a banana see a delicious fruit. When Zamuri looked at a banana, he saw room for improvement. Jeff Bezos quotes on competition, which he's got a bunch of them. But in the book, The Everything Story, I love this.

He's like, most companies focus on competition. We're not one of those companies. Let's focus on the customer because the competition's never gonna send us a dollar anyways. In 1925, first tried to, Victor first reaches out and tries to buy the company. And it says, turning down the offer,

Sir Murray said, hell, I'm having so much fun and I'm a young man. Why should I quit? And so that's going to lead us into the note I left myself, which is founder versus CEO part two. We're going to get a little bit more into this war that is going on between Victor and Zamuri. A corporation ages like a person. As the years go by and the founders die off, making way for the bureaucrats of the second and third generation, the ecstatic risk-taking just for the hell of its spirit that built the company gives way to a comfortable middle age. Where the firm had been looking forward and creative,

it becomes self-conscious in the way of a man, pestering itself with dozens of questions before it can act. How will it look? What will they say? If the business is wealthy and strong, the executives who come to power in these later generations will be characterized by the worst kind of self-confidence. They think the money will always be there because it has always been. Cutter, maybe I might have been pronouncing his name incorrectly before. I think I said Cutler always been. Cutter regaled reporters with stories of his early days

working on a horse wagon, hawking beets, carrots, and tomatoes. He was setting himself alongside Sam the Banana Man, as in, I too was a peddler. I too came up the hard way. I too know what the Russian knows. But if Cutter ever did work as a peddler, he did so in a way of a summer job. Cutter's work was done by way of character building, a luxury of the middle class. Zamuri's work was done in order to survive. You might picture the leaders of the banana trade side by side in 1903. So now they're flashing back because this is taking place over 20 years earlier. Or later, rather.

In 1903, Cutter, standing with his graduating Dartmouth class in cap and gown, indistinguishable from the rest. Zamuri, racing through the Mississippi Delta in a boxcar, the ripes piled up behind him like a wall. In 1924, he, meaning Victor Cutter, became the first president of the United Fruit who had not been a founder. Though probably the best of the second generation, Cutter was simply not made of the stuff of the old-time banana man.

Remember, when Zemuri's coming up, when Preston's coming up, when all these other founders are coming up, it's the wild, wild west in the banana trade. Now we're almost two generations later. It's like kind of settled into these big, large corporations. And the kind of people that are attracted to like the new frontiers are the exact opposite of the people that are attracted to like hierarchical bureaucracies. So he says he's just simply not made of the stuff of the old banana man. A few of the more perceptive students of the trade asserted that the most likely contender

for leadership was Samuel Zamuri, still being described by Cutter as that little fellow in Honduras. So they're talking about when Andrew Preston and Minor Keith and the rest of these guys died, they should have tried to buy the company and put Samuel Zemuri in charge. Instead, they handled Zemuri with contempt. And so it talks about why this is a really bad, this paragraph, so why this is just a really poor calculation by Cutter and the rest of the executives at United Fruit. Here was a self-made man filled with the most dangerous kind of confidence he had done it before and believed

he could do it again this gave him the air of a berserker who says if you're going to fight me you better kill me if you've ever known such a person, you will recognize that type at once. If he does not say much, it's because he considers small talk a weakness. Wars are not won by running your mouth. I'm describing a once essential American type that has all but largely vanished. Men who channeled all their love and fear into business, the factory, the plantation, the shop. So I would actually disagree with slightly there. I do think there is a change, but he's talking about describing once a Central American type that is all largely vanished. I don't think they've vanished.

I think they've gotten better at hiding this kind of personality. Since if you're not a fellow entrepreneur or founder, you can find some of these personality traits as off-putting. And on the very next page, so again, Victor's tried to buy the company. He's like, no, I'm not going to do this. So now they're in full competition. And this is the two different approaches to acquiring disputed land. And again, I think this is another difference between a founder and a CEO. So what's happening is Sam is going down to Honduras and Guatemala and buying up all this land at rock bottom prices. Well United Fruit notices what he's doing like oh we can do this too. So there's this single piece of land that's in between on the border of both Honduras

and Guatemala and the problem is that there's deeds there's proof of ownership by Guatemalans and Honduras that they own the land okay so the united fruit wants to land and so does Sam what is united fruit is the first one to discover the problem oh we can't buy this because it's not clear who owns it so what does united fruit do they go and they hire attorneys and they're okay, figure out how to do this. Like, can you solve this problem for us? Okay? And Sam takes a very, very different approach.

So let me just read this to you because I love this part. This is one paragraph, and it's perfect. When this mess of deeds came to light, United Fruit did what big bureaucracy-heavy companies always do, hired lawyers and investigators to search every file for the identity of the true owner. This took months. In the meantime, Zamuri, meeting separately with each claimant, simply bought the land from both of them. He bought it twice, paid a little more, yes, but if you factor in the cost of all those lawyers, probably still spent less than UF and came away with the prize. I love that little anecdote.

Okay, so like I said earlier, State Department and the Justice Department, they changed their mind and they were at once they wanted competition in the banana trade. The banana trade is now too important to their national interest in Central America. So the result is a government-mandated merger. Remember, Sam never wanted to sell. He only sold when he was forced to by the government. But remember this part because UF – well, you know, I'm not going to ruin the surprise. We'll wait until I get there in the podcast. Okay.

Sam – so this is the results of United Fruit for his shares of QML. His stake after the merger would be valued at more than $30 million. A figure worth considering as it would make Zamuri, who had arrived in Selma, Alabama with nothing three decades before, one of the richest men in America. As part of the agreement, Zamuri, who would now become the majority owner of the United Fruit stock, remember that part, agreed to retire from the banana trade. So they're basically buying out their competition with the help of the government and and he they're forced him to sign a non-compete agreement saying hey you cannot work for another you cannot start another banana company and you cannot work for another banana company but we're gonna see why they didn't they failed to calculate in advance another alternative that left him

an opening to get back in the banana business and that is overtaking united fruit and running that company and that's why the book is called the fish that ate the whale so the next sentence the next i'm skipping way ahead now and i left a note that said optimists because at his heart he was, but this story is so much more than that. All right. Let, um, I'm just going to read it. So it's so good. Okay. So here's the problem he has. He's the largest shareholder. Um, but he's the largest shareholder in a company run by incompetent people. And it says in 1928, UF had made $45 million in profit. In 1932, it made just $6 million, an 85% decline. The Zemuri fortune, once figured at $30 million, was now valued at less than $3 million. The greatness of Zemuri lies in the fact that he

had never lost faith in his ability to salvage a situation. Bad things happen to him as bad things happen to everyone, but unlike so many, he was never tempted by failure. He never felt powerless or trapped. He was an optimist. He stood in constant defiance. When the Secretary of State teamed up with J.P. Morgan and the Honduran government in a way contrary to Zamori's interests, he simply changed the Honduran government. When United Fruit drew a line at the Utila River and said, you shall not cross, he crossed anyway. When he was forbidden to build a bridge, I didn't cover this story, but it's hilarious.

When he was forbidden to build a bridge, he built a bridge, but called it something else. For every move, there is a counter move. For every bridge, he built a bridge but called it something else. For every move, there is a counter move. For every disaster, there is a recovery. He never lost faith in his own agency. With his fortune fast diminishing, it was time to act. And now we're going to see what we learned a little bit about him, how he does his work. He started by asking two questions.

First, are the challenges facing United Fruit part of the systemic failure of the global economy, meaning there's nothing to do but hope and pray? And second, if the answer to the first question is no, what can be done to move the product, increase profits, resuscitate the company? How can UF be saved? Where did Zemuri go for answers? Did he meet with the economic experts and college professors? Did he call Daniel Wing, the chairman of UF's board, and Victor Cutter, its president, and ask, do you have a plan? And even if they did have a plan, so what? These were the same men who had run the company into a ditch. He went to the docks instead, where he spent the winter of 1932 walking through warehouses and standing on the decks of banana boats, talking to fruit peddlers and captains, loaders

and stevedoers. The people who really knew. He peppered them with questions. He wanted to know the specifics, the mood on the isthmus, the color and the size of the latest harvest, the speed of the crossing. How fast is the captain running her? This is so stupid. Watch this. Or I guess listen.

Is he letting out all the stops? In this way, he learned, among other things, that the banana captains were on orders from Boston to lay off the throttle and cross the gulf at paddle speed, thus saving gasoline. But a man focused on the near horizon of cost can lose sight of the far horizon of potential windfall. By quick calculation, Sam realized that whatever money was being saved on fuel was being lost on the high percentage of fruit that ripened during the extra days on the water. These schmucks! They're losing more than they're saving!

In June 1932, Zamuri traveled to Boston to attend a meeting of the board of directors. Remember, he's the largest shareholder. The corporate officers discussed a request from a plantation manager who wanted $10,000 to build an irrigation ditch in Guatemala. The executives called on experts who detailed the costs and benefits of the project. Zamuri grew restless. To him, such a debate was symptomatic of a greater problem.

The executives running United Fruit did not understand their role, what they could and could not do. He raised his hand and stood to speak. This man in Guatemala, he's your manager, isn't he? Yes. Then listen to what your man is telling you. You're here. He's there. If you trust him, trust him. If you don't trust him, fire him and get a man you do trust.

So after he gives a speech, they basically just shrug off any of his concerns and don't listen to his ideas. And he says later on, he goes, I knew that I could render great service to United Fruit if given the opportunity. But the directors turned me down so so Murray as we've kind of already established he's not one to take just go home and take you know take his ball and go home and do nothing so what he does is he goes around and he meets secretly with a bunch of other shareholders of United fruit saying hey we need to do something these guys are gonna destroy all of the value in our shares. And what happens is, well, they all agree to line up behind him.

But he does this in secret. So he goes, when Zamuri spoke to the board again several months later, he had with him a bag full of proxies. Now remember this word proxy, which are the voting rights turned over to him by other stockholders. Along with his own shares, these proxies could give Zemuri control of the company, though he kept their existence a secret. So what I'm about to read to you actually really happened and was reported. And the quote, he says, is almost verbatim. It was reported in multiple newspapers at the time,

and it is fantastic. And now we're going to see, again, the difference between a founder and a CEO. He says, the chairman of the board i'm using ceo interchangeably with executive so it says the chairman of the board was daniel wing who descended from an old new england family the president president of the first national bank of boston wing looked askance at the uncredentialed ill-bred strangers who wandered in off the street. To him, Zamuri was still Sam the Banana Man, the fruit jobber from the docks. He already knew what Sam could teach him about business.

Nothing. When it was finally his turn to speak, this is Zamuri, he chose each word carefully, explaining his ideas in the thick Russian accent that he could never shed. When Zimuri finished, Wing smiled at him and said, Unfortunately, Mr. Zimuri, I can't understand a word of what you say. The men at the table started to laugh. Zimuri's pupils narrowed to pinpricks. His hand turned into fists. He muttered and then stormed out. Perhaps the board members believed Zamuri

had been chased away and he was fleeing back to New Orleans. In truth, he had only gone to retrieve his bag of proxies. Returning to the boardroom, he slapped them on the table and said, you're fired. Can you understand that, Mr. Chairman? You gentlemen have been fucking up this business long enough, Zemuri told them. I'm going to straighten it out. later analysts pointed out the flaw in the non-complete clause the murray signed at the time of the merger it barred zamuri from working for a rival or starting a new fruit company but it did not foresee the outlandish possibility of zamuri taking over united fruit itself and that's exactly what he does he takes over he puts himself and points himself as president of the um company fires victor cutter who is his old adversary fires most of the board

and basically starts to to to remake the image of the company in his own and of the united fruit into his old company so i want to talk about a little bit of how he does that really fast. And it said, remember, he's like in his 50s at the time. So he thought he was going to be retired. He winds up, well, I don't want to ruin it. I'll get there. For Zamori, it must have been a second youth. Once again, he had a job and he knew just what to do.

He overlooked nothing. Not the traffic of the Great White Fleet. Many of the ships were leaving the Isthmus half full, which is obviously really not smart. Not the confused looks on the faces of the plantation managers, some of who had risen through the ranks merely because they had never defied Boston. So some background. He doesn't, once he takes over the company,

he doesn't stay in Boston. He goes back to where the, like, he goes back to Honduras. He goes, and now United Fruit is much larger than the company he was running, so they have plantations all over the Caribbean and Central America. He places and he starts just basically putting competent people in place of where incompetent people were. So this is not to confuse looks on the plantations managers, some of whom had risen through the ranks merely because they'd never defied Boston.

Wherever he found a man who could not act or was slow to decide, he replaced him. I realized that the greatest mistake the United Fruit management had made was to assume that it could run its activities in many tropical countries from an office on the 10th floor of a Boston office building, Zemuri said. The management had tried to tell every executive in every country exactly what he must do and how he must do it. Executives on the spot were treated like messenger boys. I completely reversed that policy. So this is again, another difference between founders and business people. We learn all the time that founders are very into decentralized command. They want a flat structure whenever they

can. They do not want all decision-making to be centralized, right? But in management, they kind of teach you the exact opposite. Most of the people we've profiled on this podcast believe in hiring the best people and letting them do the job you hired them to. And he's going to hit right on it right now. He goes, so they were treated like messenger boys. I completely reversed that policy. I laid down what might be called a constitution for the company.

This constitution provided for a maximum of home rule in the field. It was established as a fixed policy that if a plantation manager could not handle his difficulties reasonably satisfactory, we would appoint some man who could. He solved the problem of half-empty ships, selling some, mothballing some, renting out space and others. A united fruit ship did not leave port until it was packed. The great white fleet, which had been costing the company to operate, began to earn. He had UF's holdings reappraised. the value of the machines and land had collapsed during the depression, saving millions in taxes. He cancelled stipends paid to independent growers who had been augmenting the company's own banana supply.

He left fields fallow, further decreasing banana supply and controlling the market price. On some plantations, he replaced bananas with sugar cane, a staple always in demand. Realizing that the company had been overly dependent on a single product, he looked for other crops to plant. Coconuts, pineapples, quinine trees. From Boston to Bogota, he weeded out superfluous employees until one of every four was gone. It was not these policies of loans that turned everything around. It was also the energy behind the policies. The six-week tour, meaning going out into the fields. The firing and hiring. The tough decisions made about the fleet and the fields. A light was burning in the pilot house. A firm hand had taken hold of the tiller.

United Fruit's stock price stabilized and then began to climb. It doubled in the first two weeks of Zimuri's reign, reaching $26 a share by the fall of 1933. This had less to do with tangible results, it was too early for that. Then the confidence of investors. If you looked in the newspaper, you would see that the new head of the company landing his plane on a strip in the jungle, anchoring his boat on the north coast of Honduras, going here and there, working, working, working. In a time of crisis, the mere evidence of activity can be enough to get things moving. Though Zamuri would stay at the helm for another 20 years, United Fruit was saved in his first 60 days. And now I want to skip ahead towards the end of the book.

The next 20 years, he runs United Fruit. It becomes extremely prosperous. He retires and then falls into decay like most corporations do. But I want to close on this. Sam Z, Sam the Banana Man, El Amigo, the Big Russian, the Gringo. He was not an easy person, nor is his biography without controversy. To some, it's the story of a great man, a pioneer in business, a hero. To others, it's the story of a pirate, a conquistador who took without asking. Sam's defining characteristic was his belief in his own agency, his refusal to despair. No story is without the possibility of redemption.

With cleverness and hustle, the worst can be overcome. I can't help but feel that we would all do well by emulating Sam Zimurri. Not the brutality or the conquest, but the righteous anger that sent the striver into the boardroom of laughing elites, waving his proxy, shouting, you gentlemen have been fucking up this business long enough. I'm going to straighten it out. That is where we're going to leave the story of Sam the Banana Man. If you want the full story and you want to support this podcast at the same time, go to founderspodcast.com forward slash books. You'll see not only this book, but every single other book that I've covered so far on the podcast.

And like I said, I think last week, somebody sent me, I think it was, somebody sent me an email saying that they wanted to know the books in advance of the podcast. So by the time this podcast is released, if you go to founderspodcasts.com forward slash books, you're also going to see the next book that uh like the the book that next week's podcast will be on it ought to be up there so that's the best way to to find out so i could just keep everything in one spot oh what i want to do is i'm like i said uh before i'm going to keep every single founders podcast free and available to everybody and just as you saw i went we went to this whole podcast without any ads. Just like we study entrepreneurs on this podcast, I've been studying other podcasters and the way they make their podcasts sustainable so they stick around and they're able to continue to

create podcasts over a long period of time. And one of the ones, my favorite podcaster on the planet, I would say is Dan Carlin of Hardcore History. And he has a really interesting business model where he relies almost entirely on support directly from the audience. So he has a way you can donate on like a reoccurring basis. So what I did is if you go to founderspodcast.com forward slash donate, I set up a way to, you can pick any amount that you want. I have some suggestions there. And it's a way to support this podcast on a reoccurring basis so I can make this sustainable and keep doing these podcasts for you. Every time I do a podcast, there's some extra information that kind of fall, that just gets left on the cutting room floor.

Sometimes it's like a five-minute story. sometimes it's like a five minute story sometimes it's like a 20 minute story but i'm going to start um adding like uh extra so if you anybody that supports uh the podcast on a reoccurring basis will get emails uh shortly after the release of every free podcast episode of just little extra bits and ideas from the book. So what that allows me to do is leave the main podcast open and free for everybody. And then also a way to give back for people that are actually supporting this podcast and everything I'm setting up here. So I also got another email and it's really fun. It's really interesting to me. And I like it that people are really concerned. They're like sending me ideas on how to make the podcast sustainable. So one one person was telling me, hey, there's too much friction in the Patreon account. Like if I could just tap, I would have signed up. And he made a really good point. So so I just removed all the friction from being able to support this podcast. You can use Apple Pay.

It fills out the credit card information for you. It's super fast. It's the best way to buy anything. The second thing. So I was, last week I talked about, hey, if Founders Podcast is my notes and highlights on these biographies, and there's information that we want to get out of there that are valuable to all of us in our lives. Well, I do this the same way I take a lot of notes and highlights on books.

I do the same thing when I listen to podcasts. And I listen to a lot of, almost every other entrepreneurial podcast that I know about takes the form of like an interview with an entrepreneur, which is why I decided to do Founders this way because it's a little different. Well, I've been taking a lot of notes

and those notes are actually, there's a lot of information in these interviews that you might not get to, you might not have the time. So I started something called Founders Notes. And instead of making, right now I had it in a Google Doc or maybe making like a website. I was like, no, that's not, that's the wrong, that's the wrong form for that. Because what I like about podcasts is I could subscribe once and then every time they have new content It just pushed to me into my podcast player. So I'm gonna do the same thing for founders notes It's a paid email news. This isn't some quick email newsletter It the first one the founders notes come out every Sunday founders podcast comes out every Monday

So Sunday morning the one I sent out this week It's 2,400 words long. And it's not a wall of text. What I do is I take an hour of audio because normally an interview with an entrepreneur is about an hour. Sometimes it's less, but I'm just using that as a way to describe what I'm doing. You take an hour of audio and I turn it into tweet-sized bits of knowledge that you can read quickly. So what happens is the format is this week, there was five different podcasts and they're not just podcasts that come out this week.

They're ones I find interesting. I don't just listen to things that come out now. I re-listen to a lot of podcasts and I go back and search for different things. So what happens is you get an email from me and the title, everything is, the title is a link. So if you read the ideas and the title is a link. So if you read the ideas in the little tweet bit size of knowledge and you want to hear more, you can just click on that and it takes you directly to the podcast. Every single idea I put in bullet form

so it's really easy to read. And like I said, it's about the size of a tweet, maybe a little, sometimes maybe two tweets. And if that idea is interesting to you, I also include the timestamp in which I heard that particular part. to you, I also include the timestamp in which I heard that particular part. So you can jump right to that part if you want additional context. Same thing. A lot of entrepreneurs, these are entrepreneurs that, you know, there's no really

books written on because they're building their companies now as opposed to, you know, you're not going to write a book on somebody until after they build a company. And they have a lot of like interesting ideas. They recommend a lot of books that are helpful to them, which I then turn into a link to you for you. If they mention a tool or software or website, I find so many, like not only do I find different products this way, but I find like different tools that I can actually use. That's also turned into a link directly in the email so you can get more information. I really like what I made. I've read it several times. I think there's a lot of value there, way more value than just $5 a month. And I'm going to

release one every Sunday. So you get four a month. And there's substantial information here that I think is useful to you. So if you want to support this podcast, I'm trying to find ways that will make it sustainable, but are not outside of like our scope. And what are we trying to do here? We're trying to all be like, get ideas to make our lives. So if you want to support this podcast and get something in return, please sign up for Founders Notes. I don't think you're going to regret it. And again, tools for learning. On the bottom of every podcast, in the podcast description,

you'll see I leave a link for the book. But I also leave another link that the link expires this December. But it's a way to get two, if you want to listen to the book and you don't already have an Audible membership, it's a way to get two free audio books. So that's another way to support.

That's in the podcast description and on the podcast website as well, Founders Podcast for all this stuff. And then final, the last thing, and then we can just close on this, is reviews. If you want to support the podcast but are not in a financial position to either be an ongoing subscriber

and get extra content or to subscribe to the email newsletter or buy a book, to either be an ongoing subscriber and get extra content or to subscribe to the email newsletter or buy a book, then there's an easy way that's really still valuable and a great way to support is just leave a review. If you leave a review anywhere you can, Apple Podcasts is the best, but Google Podcasts, anywhere. If you leave a review, you screenshot it and you email it to me, I'll reply back with a link to reviewer only podcasts. So first of all, let me give you the email address. It's foundersreviewsatgmail.com. And this is also in the show description in case you want to double check that you got it correctly. And what I'm doing is I've made one so far. I'm about to record another one too.

But I'll make about four a year. And they're going to be reviewer-only podcasts, which means that I'm not going to publish them anywhere else. When you send me a screenshot, I reply back with a link directly to the reviewer-only podcast. I could ramble forever about all kinds of stuff and why this is important to me, but, um, I think we're now finally on a path to making this sustainable, to making sure that these podcasts are coming out every Monday. And hopefully what we're,

what we're doing is we're at a very beginning of a decade plus long journey of understanding the mind of an entrepreneur and using ideas from their minds to benefit our lives. So as always, I want to end with a token of gratitude. I love podcasts. I love listening to them. I love making them. And if it wasn't for you, the listener, I would just be sitting here talking to myself.

So thank you very much for listening. Thank you very much for the support. I will talk to you next week.