Founders - #81 Henry Royce (Founder of Rolls-Royce)

Episode Date: July 22, 2019

What I learned from reading Rolls-Royce: The First Forty Years of Britain's Most Prestigious Company by Peter Pugh. ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

The historic first meeting of Henry Royce and C.S. Rolls took place on May 4th, 1904. The two men could have hardly come from more different backgrounds. C.S. Rolls 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 his life. The only university he'd graduated from

was the one of Hard Knocks. The one characteristics they both had in common was a certain prickliness, perhaps in both case born of shyness than arrogance. And here's a quote from Rawls describing his meeting with Royce a few years later. And he says, You may ask yourself how it was that I came to be associated with Mr. Royce and Mr. Royce with me. Well, for a considerable number of years, I had been actively engaged in the sale of foreign cars. And the reason for this was that I wanted to be able to recommend and sell the best cars in the world, irrespective of origin.

The cars I sold were, I believe, the best that could be got at that time. But somehow, I always had a sort of feeling that I should prefer to be selling English instead of foreign goods. In addition, I could distinctly notice a growing desire on the part of my clients to purchase English-made cars. Yet, I was disinclined to embark in a factory and manufacture myself, firstly on account of my own incompetence and inexperience in such matters, and secondly on account of the enormous risks involved. At the same time, I could not come

across any English-made car that I really liked. Eventually, however, I was fortunate enough to make the acquaintance of Mr. Royce, and in him, I found the man I had been looking for for years. Okay, so that's from the very first chapter of the book that I read this week and the one that 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 most prestigious company from 1904 to 1944. When I started reading the book, I wasn't sure exactly who I was going to profile. And then as you start to read, it becomes extremely clear that I need to solely focus on Henry Royce. So it's probably important to note that I didn't know anything about Rolls Royce other than that they make cars that cost as much as houses. And I had no idea about the founders. I've stumbled upon this book accidentally. There's a thread on Twitter where

people were recommending the best books to read on like the very beginning of iconic companies. So I went through that thread, ordered a bunch of those books, and then one day I just picked this one up and started reading it. And wow, Henry Royce is one of the most incredible people that I've come across since I started reading all these books for the podcast. And I think a good introduction into the life, or more specifically the mind of Henry Royce, is to look at the night before he died. This is from his Wikipedia page. 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. He died before it reached the derby. This was the adjustable shock absorber. And I think that story just illustrates the life and the mind of Royce. He found something that he was extremely passionate about, something he dedicated all his resource and energy to almost to the point of death, which I obviously don't recommend. And I'll talk about that in a little bit. And he did so and he thought about it up

until the very time, the day before he died. Okay, so let's go back into the book. We're going to go starting with, you know, Rolls, his partner, is selling other people's cars at this time. And he was introduced through this guy named Edmonds to the work of Royce because, like he just said, he wanted to see if there was any high-quality British cars. And so this is this idea that I came across first from Yvon Chouinard, which is the founder of Patagonia. It's a quality as a distribution strategy. And this is Rolls being introduced to the work of Royce. And he says, Rolls at this time had a prejudice against two cylinder engines. And he climbed into the high passenger seat of the little royce prepared for

all this vibration and roughness that were usually associated with that type so right off the bat he's like no i don't really i want to sell four and six cylinder engines and he's talking about listen the two cylinders are they're crappy i'm trying to sell quality and he was fully expecting that royce's two cylinders gonna be crap too and it to his amazement, he found that the car had the smoothness and even the pull of the average four, four-cylinder, allied to a quite phenomenal degree of silence. He came, he rode, and was conquered. So many years before Royce met Rolls, he was already an engineer by training. He already had started a company. I'm going to go back to his early life in a minute.

But what I found interesting is Royce started making cars, not necessarily by accident, but basically out of necessity. He already had a business where he was making electric motors and electric cranes, like cranes used for like in ports and moving heavy equipment things like that and so and so we're going to learn a little bit about why Royce had to make the jump into making cars he said helping Royce make the decision to build three prototype motor cars in the autumn of 1903 was the post-war slump which left Royce LTD that's his that was making motors and cranes, among many others with spare capacity.

Royce, mindful of the survival of his company and faced with declining orders and prices, felt that motor cars could be a new product on which he could use his talents as an electrical and mechanical engineer. While Royce was experimenting in building his cars, product on which he could use his talents as an electrical and mechanical engineer. While Royce was experimenting and building his cars, Rolls was asking Edmunds, that's the person that introduced them, if he knew a source of new cars.

And so this of course is nothing new. It's talked about a lot. The timing is extremely important in the success or failure of a lot of different products and they just happen to meet at the most opportune time. All right, so let's go back into Henry Royce's early life. So it says, he was descended from generations of farmers and millers, and his grandfather had been a pioneer in the installation of steam power in water mills. His father, James, in the family tradition, trained to be a farmer before moving on to milling. However,

James did not have a lot of success, and unfortunately, as a result of this, Henry's early life was steeped in poverty. So it says, James proved to be unreliable and seemed unable to apply himself consistently, probably due to his suffering from Hodgkin's disease. By the time Henry Royce was born in 1863, he was in financial trouble and was forced to mortgage the mill. James died in 1872 in a poorhouse at the age of only 41. So therefore, Henry Royce therefore knew poverty in his early life, and even before he was four, he was earning money,

bird scaring in the fields. After his father died, he was four, he was earning money birdscaring in the fields. After his father died, he sold newspapers and he also delivered telegrams. So he started working right away to try to help the family. And Royce was a bit of a workaholic is what you would describe him as today. To the point where he almost worked himself to death. It says, fortunately, when he was 14, an aunt on his mother's side agreed to pay 20 pounds a year, about 2,200 pounds in today's terms,

for him to be an apprentice at the Great Northern Railway Works. So interesting, W.O. Bentley, the guy that founds Bentley and the company which Rolls-Royce eventually acquires, he actually started it as an apprentice in the exact same railroad as well. So he's an apprentice at 14 at the Great Northern Railway Works. He went to evening classes in English and mathematics and learned a great deal about manufacturing and fitting in the workshop. Unfortunately after three years the aunt felt unable to continue her support. This was a serious setback for Royce since failure to complete his premium apprenticeship denied him what was known then as skilled status. However Royce found work as a toolmaker with the Leeds engineering firm. The firm was called Greenwood and Bailey. Although it did not

take long for Royce to secure this job, it was a very worrying time. So just to pause right here, think about this. You're 17 years old. You're extremely poor. Your father's dead. A lot of the family, most of his family had moved to Canada at this point. He had really no support system. So you have two options.

Like you're either going to fail and fall into a life of poverty or you're going to pull yourself out of it. And this is probably where Royce's fierce work ethic came from. So it says, unfortunately, and then you add to the fact of those like your own personal family troubles. But then you have this huge economic depression that's occurring at the exact same time. So that's what they meant by very boring time. And this is a quote from another biography on Royce. And it says, unfortunately, at that time, it was one of our periodical seasons of trade depression. Henry Royce tramped, meaning walked, as he told me himself, many weary miles upon a vain quest. His powerful recommendations opened no doors, meaning the people he was

previously apprenticing under. Great houses were discharging, not engaging men. So you have way more people wanting to work than jobs are available. He must have come very near despair in those fateful days before he found employment. And then when he does find employment, it's not like he's in a great situation. So he finds a job. He was paid what would be the equivalent of 60 pounds in today's terms. Of course, this book is about British history, so that's why I'm using those terminologies. And that was 60 pounds for a 54-hour week. So what does that mean? That means he worked from

6 a.m. until 10 p.m. and all through Friday night. Now, he does find an interest. He really likes being an engineer. Let me read the back of the book real quick so you understand that this guy is just a flat-out genius. So this tells the story of genius, skill, and dedication that gave the world cars and aero engines unrivaled in their excellence. And I'll go into more detail like that. So he picks us up on a rather young age. He really likes engineering. He's really good at designing systems. He's especially good at taking systems other people have designed and improving every single aspect of them, which is basically how he gets his product. And then he has an interest in electricity, which is obviously a booming or soon to be booming industry around this time. So his interest in electricity led to a job

with the Electric Light and Power Company in London. And he progressed well enough to be sent as first electrician to the associated company. So another company called Lane, Kasher, Maxim, and Weston Electric Company. And they were hired to light, like do all the street lighting in Liverpool. And he's right around 20 years old at this time.

So he's doing that work for a while. However, the company winds up going out of business. So it says by the end of May 1884, the company went into liquidation. And Royce, who had saved 20 pounds, set up a business. And he called that business F.H. Royce and Company. So it said F.H. Royce and Company started with small items for individual sales, such as electric bell set, and quickly moved into subcontract work, producing bulb holders, switches, fuses, and filaments,

as well as complete bulbs and registering instruments. So he just took the skill that he was trained in, which was electroengineering, and applied it to products that he thought solved problems that he noticed at work. But they soon moved on to complete installations. Later, Royce said of his skills at the time, so now this is a direct quote from Royce. So he says, in dynamo work, so a dynamo is a machine for converting mechanical energy into electrical energy. Sometimes it's also referred to as a as a generator and so royce says uh in dynamo work in spite of insufficiently ordinary and

technical education he's describing himself i managed to conceive the importance of sparkless communication the superiority of the drum wound armature for continuous current dynamos. Royce and Company of Manchester became famous for continuous current dynamos, which had sparkless commutation in the days before carbon brushes. It's not important to know the details. Just know that he's innovating in the field that he just entered. While at Liverpool from 1882 to 1883, I conceived the value of three wire system of conductor inefficiency and the economy of distribution of electricity.

And also afterwards, the scheme of maintaining a constant potential at a distant point. Both of these are successfully applied. In the early days, I discovered and demonstrated the cause of broken wires and dynamos through the deflection of the shafts by weight and magnetism so this is an example of what i was saying earlier that he had this uh ability that he used all his uh his entire life and that was the ability to think about and improve existing machines and another way to

think about what's happening is here is he's just he's inventing and improving upon the the main technology of his day and that's something he continues with automobiles and then eventually into into airplane engines which is a still both of those lines of business are still in existence today and the latter was caused by the outbreak of World War one okay let's let's see. Okay, so it says, this ability to observe, think about, and then improve on existing machines and instruments was to be consistent theme throughout Royce's life. Okay, I kind of just said that. Profits were fed back into the business. And the reinvestment of those profits were just to the extent that there actually were

profits. The early days of his business was extremely trying and so as with most small businesses life was precarious Royce told an interview many years later and this is a direct quote from him for many years I worked hard to keep the company going through it's very difficult days of pioneering personally keeping our few machine tools working on Saturday afternoons when when men did not wish to work that's what I mean he basically just worked if he was awake he was working. And I remember many times our position was so precarious

that it seemed hopeless to continue. And I think that's an important point, especially when I found that highlight or when I read that and I highlighted it, was there's an alternate history where somebody, in this case, where Roy says, okay, you know what, like this is hopeless. This is, I've come to the decision that I'm going to give up, which is extremely common. And I don't even think many people would blame him if he did that.

But think about all the stuff that you, that he would have missed out, missed out on if he would have quit right then. You would have never had a Roy'sRoyce car Rolls-Royce engine none of the the you know this is now a company that's been around for what 120 he was founded in 1906 so you know 115 years and granted the ownership's changed many times since then but the point is like there's undoubtedly times in your life where you feel this way and and you have quit and I've been I've done that as well. And sometimes that's the right decision and sometimes it's not. And unfortunately, there's no easy formula to understand when is the right time to quit and when it's not. But it is important to realize, to think about it in terms of like,

okay, if I quit now, what are the opportunities I'm foreclosing on, let's say five years from now, 10 years from now, 20 years from now? Because we're talking about this is the late 1800s. The business that he eventually found is eight years away. And then you figure another few years after that from success. So if he would have quit then, he could have foreclosed the opportunity for the airplane engine, which is, based on what I'm reading, some of the highest quality airplane engines in manufacturing like available today well that I that opportunity is 15 years from the point in the we're at in the story um so I just

think it's it's uh extremely motivating to understand that like you know everybody knows the name Rolls-Royce even if you don't know who Henry Royce was you know before you listen to this podcast um but not everybody in like just like in the case of many of these founders that we talk about not many people see the actual struggle and that you know it's not oh i have this idea i'm a freaking genius and it's going to work like that doesn't exist not in the complex environment that we call life so to me i hopefully it's motivating to you because it's definitely motivating to me okay so it says the note i, well, I'll tell you what the note is after. It says, what the business needed was a steady stream

of straightforward work to cover the overheads while Royce could give free reign to his creative genius. 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 a workbench asleep with his head on

his arms. By the end of the 1880s, the firm was sufficiently prosperous for Royce, and this is his partner Claremont, to consider other matters beside the next item of production and the next source of income. So I don't think it's smart to deprive yourself of sleep. I think there's a clear reason that sleep is present and required in so many forms of life on this planet. So it's obviously nature's way of telling us, hey, this is really important. You shouldn't cut this off. But, you know, some people are going to be so obsessed, like in the case of Royce, and they're going to do this themselves. Now, he winds up almost dying because of some of this. Now, there's also like, they're obviously negative to that. There's a, there's a, almost like a, like a positive externality to that too. And I'll get to that

in a little bit. Just remember I said that. But my, my point here is like, this is a classic example of the, of this personality trait that we see, the PSDs. And this is poor, smart, and determined. And I'm not encouraging this kind of behavior, but I understand it when you figure the guy's working from the time he's four or five years old, his dad's dead. He has no support structure at all. He's obviously extremely smart. He was born extremely smart and then kept working at being extremely smart. And I just feel – there's just certain people like this. And sometimes they're middle class smart and determined. But there's a – I wouldn't say special element.

There's just – these people are unstoppable is what I'm saying. Like when you find somebody with all these traits, there's just nothing – they're going to accomplish what they set out to accomplish because they've adapted to the environment they were raised in. You can't replicate that, nor do you want to. This is also, I've heard tons of people that are PSDs talk later in life. They're like, I don't know what to do now because I was the son of a poor man and my kids are the son of a rich man or rich, poor woman, rich woman, whatever, you know, person. It's not just men, of course.

And, you know, because humans will usually, like we're infinitely adaptable, but how do you have your child have that drive and determination that may have been spawned on with the early life realization that, oh, shit, I'm in a bad spot. And if I don't get my stuff together, I'm, this is, my life is going to go poorly. You know, Royce never had children, but if he did, they were never going to be raised in the same economic environment that he was. And I don't know if there's an answer to that. I've just heard a lot of people struggle with it.

Okay, so at the end of 1880s, the company's prosperous, but the prosperity of the business was short-lived. After the war, there's a general slump of trade, and then there was cheaper dynamos and cranes. The way he designs his products, they're best in class, and then eventually people try to knock them off, or they try to make cheaper invitations, and he was really adamant. He's like, I don't care about price. I care about quality. Right. And so he winds up going into the car business by accident because he's, he's still trying to – basically, Rolls-Royce comes as like a spinoff from his electric motor and crane company, right? And so he's like Royce turned his attention to motor cars as a potential new product for the company, okay? And then this part really reminds me. If you listen to my podcast I did with on James Dyson Which is one of my favorite books are read because I guys a nut too. It all comes with not only is this the new

Product line so there's obviously like yeah, he sees that he can that like people are gonna wind up buying these things But it also comes from being frustrated with the with the things that are already out there And so in James Dyson's case, he's using the hoover vacuum the it has a bag he's like this is ridiculous so from the time i think he's like let's say 33 years old uh when he rips apart the hoover vacuum he's like this is ridiculous it takes him 5127 prototypes and and to i think he was 45 years old by the time he has this the famous dyson cyclonic vacuum that he owns completely he could sell um so dyson is very much like a royce like these guys are insane so it says i'm frustrated with the inadequacies of the i don't know how to pronounce this this um this car brand it's

decalville she said frustrated with the inadequacy of this whatever brand although in many ways by the standards of the day it was advanced and therefore he saw he could build on it Royce decided in the spring of 1903 to make a prototype car of his own. 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 that the motor car had a great future and that it would be an ideal product for his business. And this is just fantastic,

especially for people that are not, that are listening to this that are not already entrepreneurs, but I get a lot of DMs and emails from people that have been inspired to take the leap from the podcast. This is a really good way to identify an opportunity for entrepreneurs, whether existing or soon to be. He says, there was nothing revolutionary about Royce's car. He had taken the best of current automobile design and improved on every aspect of it. So this is very, again, I'm going to draw the parallel to Dyson. He talks about, he's like, they're like, why don't you invent something new? He's like, I like to go after markets that are already there. People are already buying vacuums. Now they might be buying a $40 vacuum and it's going to be really hard to

sell them a $150 vacuum, which he wound up becoming a billionaire. So he's proved right that you could do it. So he's like, no, I'll just take, I'll take an already existing market. Look at the ones that are filled with crappy products and I'll design the very best. Same reason you could go down the street and buy, I don't know. Well, I don't even know how much car, like a new car start. Can you get like 10,000, $20,000? Like let's say just an absolutely basic basic car you could do that or you could buy one that costs a house You know, it depends on how you want to build products and I'm not saying go out and buy a build a four hundred thousand dollar car my point being is that there's You already have people buying a product and if you use those products and you can identify

Deficiencies and things that you think should be better then you already have an existing. And then you just have to go and convince people that your alternative is better. And that's not easy either, but it is a good starting point, a lot harder than inventing something brand new and then having to basically create the demand. James's point is that, or Dice's point is that the demand was already there. I just had to show them that they were buying things that were deficient. So I think that, again, that's another way to identify opportunity for entrepreneurs. This is a quote from this guy named Arthur, who was later a manager at Rolls-Royce. And this is him talking about Royce's early work on motor cars. I'm going to read that to you, but the note I also left myself was,

just make things better and you have a product, is kind of what I was just saying. I do not think that Sir Henry did anything of a revolutionary nature in his work on motor cars in the early days. This changes later on. He actually does. He has several inventions. He did, however, do – and, again, that's probably a good point. You start where – like, he didn't know anything about cars. It's like start where you can.

He did, however, do much important development and a considerable amount of redesigning of existing devices and apparatus so that his motor cars were far and away better than anyone else else's motor cars i'm going to tell you more about the quality the the the level of quality in this book when they describe early royals royce's car is mind blowing so he's continuing this is still arthur talking and it says uh he paid great attention to the smallest detail and 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 Sir Henry'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 he's extremely detail-oriented this is what i always find fascinating that these these dichotomies in life or maybe the word is paradox whatever you want to use there there's a lot of traits that you could have that can be extremely they they're they fall on simultaneously both ends of the spectrum right and the hard thing is reconciling both so like you can

be how do you build a great product be unbelievably detail-oriented but you can also take that what is known widely known as a great trait and take it too far to the point where like you're not making anything or the public never sees it and in this case it took like the sickness uh royce almost dies in 1911 1912 i think and i'll talk about this more later, I think. But because he was just, he would, I mean, the level of detail, he literally wanted to design, he would design new bolts and screws.

Like we don't need to innovate on every single thing. But that was just how he worked. And that's why I come away from reading this book with like, damn, you got to step up your game, man. There's people out there because there's undoubtedly people, there were people like Royce before Royce and there are people like Royce alive today and there'll be people like Royce in the future. And just the level of detail that they think about things is extremely inspiring for me. It's like, oh,

it's an ego check there. It's like, okay, this dude is not playing. So there's more quotes. There was very, again, this doesn't come, this is not all positives, right? We've talked about this many, many times. He's extremely hard. Think about the kind of personality that is going to engage in this kind of behavior. Do you think that's going to be pleasant to be around?

It's very hard that you're going to find somebody that's this engineering genius, detail-oriented, and also really personable. So it says, to many, this is somebody that worked with him. He says, to many, he would have seemed a hard taskmaster in those hectic days, but it is only fair to add that he drove no one harder than himself. And this is something I was actually talking to a friend about yesterday that there, you know, what I was just talking about, there's these weird things in life, these, these dichotomies that you have to keep in your head, where like something I always say, I was like, I think that the bigger problem for humanity,

like, I think it's much, there's a much larger problem for people not believing they're good enough than there, there's a problem that people believe that they're too well, too good enough, right? And there could be like a lack of self-doubt that causes somebody to not try something. And what's the end result of somebody not taking a risk and not trying something? Well, humanity as a whole and society in general is deprived of that person's talents

because they never even get off the runway, so to speak, right? And one of the things that I always talk about in my own personal belief is like, listen, you should be your own biggest fan. A hundred years from now, you and everybody you know is going to be turned into dust. Like you have nothing to lose. And I'm not saying take take tail risks. Don't take risks that can ruin you.

But I'm saying like you're not getting another go at life as far as we know. So therefore, like the first step of doing it will do something is believing that you can do that. Now that taken to the to an of overconfidence, obviously not good. But at the same time that you should be your own biggest fan, in my opinion, you also should be your own harshest critic. Now, that's taking a step back and really analyzing, like being able to analyze. Like what are you able to do right now? What are you doing now? Look, analyze your actions. And that's really hard for people to do but that can also be taken to a negative

Like a two of a negative extreme where it's like your own harshest critic that you beat yourself up and make yourself depressed So that's not the goal. The goal is hey have the confidence be your own biggest fan and also Tell it like walk that fine line of paying. Hey hey i'm not doing the best i can in this area of my life this is what i would do differently if and one thing i think is helpful and what i was talking to my friend about is like well what if you just step back and you just try to be dispassionate about your life and just analyze yourself as somebody else may see you and just like identify the areas in which you like oh if i was that person i would do x y and z. And then you've identified the areas that maybe you can prove and then just go and do that. I think that's very helpful.

And I think that – I don't even think that's my original idea. I'm pretty sure I got that from Tim Urban, the writer of Wait But Why. He's got an essay called Grand Theft Life that I think takes like five or ten minutes to read. And I definitely would because it's that idea. It's like think about – like if you ever play Grand Theft Auto, know if your character needs to go make money you take your character to go to work if your character needs to get in better shape you take your character to the gym your character needs new clothes you take your like think about that like what if you ran your own life like that um so anyways yeah Royce is hard and demanding but at least uh he's on other people

but he's also doing it to himself so at least at that point it'd be way worse if he's just sitting with his feet up in the office like you're not working hard enough no he's out there with the guy with the the guys doing the work himself and then again people some people can't work in that environment they're like forget this i'm out but some people will be like hey i actually respect him so this is how one employee saw royce and his name's ivan and this is a quote from him. He says, I not only admired him, I was one of the few people who were genuinely fond of him. This is one of the greatest quotes in the book. Henry Royce ruled the lives of the people around him, claimed their body and soul,

even when they were asleep. And again, I don't think you should treat people poorly i'm not advocating for that but you know you have to be who you are and royce is an extreme character this is also reminds me of a quote that uh came from the everything story that book on jeff bezos where it's like if you're not good jeff will chew you up and spit you out and if you're good he will jump on your back and ride you into the ground this is is actually a quote from somebody that worked. I don't have the guy's name, unfortunately. I'm sorry. But you get the point. He worked for Royce. And he says, my favorite stories of Rolls-Royce workmanship. Design and quality to Americans, when they ask me about it, as they often do, is the use of taper bolts instead of rivets. So he's talking

about the difference between the production quality that Royce insisted upon and then the American counterparts at the time. Remember, if you listen to last week's podcast, Henry Ford is basically the antithesis of Royce. Henry Ford was about low cost mass production. Royce is about high quality, almost handmade kind of production. So it says, It is such details that explain the difference between Rolls-Royce and other cars and Rolls-Royce quality. Also, Royce himself, who taught us all the principles which carried on in the whole organization. And this is another random quote that I think is a good way to think about a product. The first car, like its successors, was not revolutionary in any single part, but in the excellence of the whole.

I think that takes a very special mind to be able to hold all that in your brain and figure out what you're doing. So remember, I said that the first Royce cars were not designed by Rolls Royce. They were still in this other company that he shared with his partner Claremont. And so his partner Claremont did not like Royce working on other things. No factor. Royce doesn't care. You're not going to be able to tell this guy what to do. He's not that kind of person.

Claremont was becoming increasingly dischanted with Royce's diversifications. He did not like the move into cranes. And in the 1899 flotation document, the words, the directors have no intention of launching out into unfamiliar businesses were inserted as for royce's move into car manufacturing claremont was horrified horrified but he was not able to stop him another passage that gives you the idea of quality of royce's work quality is probably going to be the word that's most used in this podcast it's over and over againce's work. Quality is probably going to be the word that's most used in this podcast.

It's over and over again. It's basically like the most important thing to him. He says, reliability was the strongest feature of these cars. One of them was sold to a customer and was returned in 1923 in perfect running order after 100,000 miles run over the hilly roads of Scotland. I think this is also interesting where such early life of the Rolls-Royce company is focused around quality, has all these customer testimonies to the quality of it. I can't help but think that we always discuss, me and you discuss the power of compounding, right?

And I can't help but, I think now, I don't know that much about cars, but the research i was doing before the podcast is saying that rolls royce is like one of the best known brands in the world they said according to what i was reading it was the second only to coca-cola i have no idea if that's true but they're widely regarded as the highest quality cars in the world and i can't help but think that like they could be very well be the highest quality cars in the world i don't know i'm not a car person but I can't help but think that a lot of like that, that,

that reputation compounded. And even if they weren't, let's say you have a brand new company that can do a better job, but they don't have a hundred years of compounding, um, like reputation and brand of, of, of quality work.

The public is not actually going to know, like be able to tell the difference, you know? So this idea where compounding the greatest things in life come from compounding pops up in all different like manifestations. And I have a feeling that the reputation that Rolls Royce enjoys today for, for quality is influenced by that. It doesn't mean they don't make beautiful products.

Now that's not what I'm saying. I'm just saying that like, it definitely enhances it. There's, there's a lot of different reasons why somebody wants to become an entrepreneur a founder and i think uh the one above all is this desire for control and it says royce though he was deeply engaged in the development of a six-cylinder car still found time to design most of the factory buildings himself he did not have time to design the factory buildings he did it anyways this is after they already um the car's in production and it's they're obviously building a factory because they need to

produce more of them and then this is uh his partner rolls so rolls is not going to be featured in this podcast much um royce dies when he's 70 rolls unfortunately dies four years after the company is founded he dies at 32 years old and he was a nut job too but he was like not an engineer he was into like motoring so he'd do like car races then he would fly hot air balloons he eventually uh starts having appreciation for the work of the wright brothers and he's one of the first people in britain to buy a right flyer and he dies in a plane crash i think he might have been one of the first people people to fly over the English Channel and back the same day. Like he was a daredevil in some senses.

And unfortunately he died, you know, really, really young. So he didn't really have much of an influence. Royce was, you know, even though he wasn't really running the management of the company, but he did, like he was the cornerstone of this company so anyways this is rolls on why the qualities of their cars are so high he says we consider that the success of the rolls royce and its extraordinary durability and low cost of upkeep as as exemplified in the 15 000 mile trial last year is entirely due to scientific design to the

original research work and close study of metals, which has been made by Mr. Royce and his assistants in the physical laboratory of the company. We regard this as perhaps the most important department in the works. Of course it is. And what I always find fascinating is this idea I've talked to you guys about many times, is there's Danny Meyer, the founder of Shake Shack, and Bill Gurley, the famous venture capitalist. They always talk about this idea of doing professional research. That is your obligation as an entrepreneur,

as whatever craft you're doing, even if you're not doing it for yourself, when you're not working, to also study, whether you're studying the pioneers of the industry, the history of the industry. In Danny's case, he wanted to open a barbecue, a high-end barbecue restaurant in New York City, and he goes on like, I don't know, like a 14, I can't remember.

He just goes on this road trip and he tastes like 30 different variations of barbecue. And he writes how, like he takes copious amounts of notes on this barbecue is cooked at this temperature. And they use this to like the prep work. And this is how they do this. And he brings it down to like 10 different attributes of great barbecue, that kind of level of detail. And you're seeing this with Royce here as well. He's like, I'm not just manufacturing cars.

Well, what is the source material of what I'm making? So let's go and study scientific design of the metals, of rivets. He has, like I just shared with you, he has opinions on things that are different between hot and cold rivets and the deficiency of both. And this is why we have to do this. It's like like I just shared with you, his opinions on things that are different between hot and cold rivets and the deficiency of both. And this is why we have to do this. It's like, I just, I appreciate that. It reminds you of that great documentary on Netflix,

Jiro Dreams of Sushi. Like, you know, the guy has a very intimate knowledge of the craft that he's been doing for 40 years. And it comes down to like analyzing everything from his own methods, but also starting at the raw materials which um again like if a large part of your life is going to be taking up all your work why don't you want to try to be the best in the world at it and royce is definitely trying to do that um okay so royce would give you advice to do one thing and do it well the other vital early decision made by the new company was to concentrate on one model now eventually they can deviate from that but there's a brand new company it's very extremely

expensive most car companies at the time go out of business so we're not going to divide our attention. It says now that Royce had produced a model demonstrably superior to all its rivals, Rolls-Royce would devote its energies exclusively to the model. So you have Royce focusing on one model once he proved that successful, then the entire organization backs him up on that. Instead of diluting his skills over three or four models, Royce could concentrate on bringing one model to perfection.

And this was Royce's new model. The previous three, four, all these different cylinder models were all based on the experience of the DeKalbville, that's that car I referenced earlier, but manufactured to Royce's standards. This one was revolutionary in every way. And there are those who say that the new six-cylinder Rolls-Royce,

which was called the Silver Ghost, is the most famous car ever made. That's bananas. And this is just, in addition to building a great product, they had an organization that was a great marketer. So Rolls introduced, brought into the company this guy named Claude Johnson.

A lot of people say the company would never have been as successful without Claude Johnson taking care of the business side and Royce doing the product design. And this is some great early marketing of the Silver Ghost. Now think about this. We're talking about the early 1900s. And it says, to prove its smoothness and lack of vibration, which is a huge selling point, it's one of the only cars at the time to be capable of doing so a penny would be placed on the end of its chassis while the engine was running or a glass full of water placed uh on the bonnet while the engine was taken up to 1600

revolutions per minute and not a drop spilt i've seen car companies do that you know 80 years later they put like glass of wine on the engine or something like that more great more great marketing um they drove the silver ghost non-stop between london and glasgow until 15 000 miles had been completed the engine was always kept running except on sundays when it was locked in a garage when the 15 000 miles had been completed johnson invited uh this like quality control department supervisors to strip down the chassis and engine and recommended which parts needed replacing to make the car as good as new. The engine was passed as perfect. The very few things that had to be replaced, the total bill for replacements was about 213 pounds. That's bananas.

I don't even think you could do that in today's cars. It was a standard of reliability none of Rolls-Royce's competitors could come near to emulating. Now, do you see, i hope like this theme is this coming this guy is so detail oriented that nobody was even close to what he was able to do and he wasn't even a train i mean it's a brand new industry so it's not like a lot of people could be trained in the automobile industry but it's just like the power of sticking to the fundamentals and really focusing on what you're doing is um it's just amazing oh this is fascinating this is kind of side to royce's life but um there's regulations in britain slowed down the car industry heavily however and it came from

corrupt lobbying from the the railroad industry in britain development was held back by laws designed to protect a former way of life and thanks to a powerful lobby uh in the house of parliament the interest of the railway companies passed the 1865 locomotives act locomotive act this is just in i think instructive to when we're trying to think about any new technology again history doesn't repeat itself human nature does and you know people not only we have entrenched interests that are going to actively fight against you and do things that are not best for the consumer but they're going to pass silly things because they're worried about this new technology. In some cases, it's not silly, but in this case it is. And they're saying, hey, if you're gonna

have a car, at least three persons had to be employed to drive a self-propelled vehicle while the vehicle was in motion. That means that doesn't mean it's an autonomous car. That means somebody's driving and there's three people in front of them. While the vehicle was in motion, one of the three passengers was required to walk ahead at least 20 yards and they at the time they had to wave a flag and later legislation they let them take down the flag i mean come on man drivers had to give way to all of the traffic the speed limit was four miles an hour and there was also a license fee which would be a thousand pounds in today's terms per county in which the vehicle was used faces faced with these restrictions early motoring pioneers were forced to spend time

trying to have such laws repealed rather than on the development of cars the legal situation did not encourage the development of the nascent motor industry in britain and no less than a person than thomas edison wrote in 1901 now here's a quote quote from Thomas Edison. The motor car ought to have been British. You first invented it in the 1830s. You have roads only second to those of France. You have hundreds of thousands of skilled mechanics in your midst, but you have lost your trade by the

same kind of stupid legislation and prejudice that have put you back in many departments of the electrical field. That's a hell of an indictment from Thomas Edison. So just, again, a reminder, every time a new technology is presented, humans act the same way. A reminder that humans are silly, flawed creatures. Don't let anybody else tell you otherwise.

And this is an example. What happens when you're driving one of these new vehicles? Well, this is their experience. This is a driver. On more than one occasion, I've had drivers of horse of these new vehicles. Well, this is their experience. This is a driver. On more than one occasion, I've had drivers of horse-drawn vehicles, remember what I'm replacing, right, slash at me with their whips

as I've passed them on the road. I've had stones hurled at my head and broken glass bottles deliberately placed in front of my, what they're calling motor tricycles. In driving through London, for example, one was bombarded by jeers and insults from practically every bus driver and cab driver one met those are drawn by courses by the way and this bombardment increased tenfold if a car or motorcycle happened to need adjustment or should

break down on the roadside queen victoria after seeing her son drive a car said i hope you will never allow any one of those horrible machines to be used in my stables my horse stables i am told that they smell exceedingly nasty and are very shaky and disagreeable conveyances altogether do you think a car smells worse than a horse i mean this is just silly nonsense man this is a good example of what a nascent industry looks like progress is slow but assured, although the industry, if it could be called such a thing at this stage, was fragmented and could not agree on basic questions of design.

Should the cars have steering wheels or tillers? Should the engines be cooled by air or water? Should the ignition be electric or hot tubes? Should the tires be solid or pneumatic? And indeed, should the engines be powered by petrol or steam? So a journalist is writing in 1899 about this industry. The industry is highly unstable.

Hundreds of thousands of people, surely millions, have yet to see a motor car for the first time. Again, I just think it's a good idea to look to history to see how people reacted to, they didn't know, they had no idea, they couldn't have known at this time. This is the birth, literally the birth of one of the largest industries ever in ever existence. And this is how people are reacting.

You just can't predict the future. So this is weird. And I can't figure this out. It says, Royce gets sick. But what is the sickness? No one ever says. It's just like it's catastrophic. Well, name it.

Maybe they couldn't figure it out in 1910. It says, following Roll's death in 1910, another calamity struck the following year when Royce himself was taken seriously ill. Long years of overwork and neglect of the needs of his body, this is what I mentioned earlier, in terms of regular meals finally took their toll. So he wouldn't eat or sleep for days on end while he worked. Doctors were pessimistic about his chances for survival. And so now there's all these internal memos. This guy, Peter Pugh, did a great job because he has access. It says uh with unrivaled access to the company's archives this is a unique portrait of both the iconic name and

of british industry at its best and so part of having um access to all these archives is you have these these internal company memos that are that are placed throughout the book which i find fascinating and this is the internal company memo and how they thought about royce's talents and this is um johnson the guy running the company. For all intents and purposes, the guy running the company. This brings me to the point that one cannot help wishing that a portion of Mr. Royce's time should be spent right away from the works, meaning the factory, so that his brain might have the chance of producing for Rolls Royce a somewhat similar but better departure.

So long as he insists on being worried with all the small, petty, irritating details, which he definitely was, which must inevitably surround him so long as he supervises the works. So he's working in the factory with everybody else. His time and the value of his brains to our shareholders must to some extent be lost. That's interesting.

His value of his brain to the shareholders and the value of his brain to the shareholders is incalculable. That is to say his brain is undoubtedly valuable at the works, meaning the factory, but its most valuable property, namely invention, has not sufficient chance to be exercised. So this is what I meant about it's not a good thing that he almost died, but he winds up basically for the rest of his life working what people would call working remotely today, and I'll get into that. So it says, this is Royce.

This is an example. So after this, he's basically bedridden for a while. And he just, that's fine, no factor. I'll work from bed. So it says his mind, and this winds up being beneficial to the company. And again, he's not a people person anyway so just removing for the people his mind undistracted by the management

of the factory royce kept his staff busy with a continual stream of ideas from his fertile brain 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 his plan to an assistant and then later had it put on a drawing board if it was a narrow in there it was found to be i'm just skipping that word i'm not going to try to pronounce it it was found to be mathematically correct blueprints would be sent to derby that's where the factory was and finished parts would come back royce would turn them over in his sensitive hands criticize criticize them,

and generally redesign them. So he did a lot of work with wood before he would even commission it to be made. And he actually has really good ideas about that too, which I think I'd cover. So, okay, this is this guy that tries to do a hostile takeover. He's trying to buy up all the stock and a lot of it's privately held. So Roll's father, after he passed away, had 30,000 shares. And this guy is talking about not knowing human nature. He's trying to do a hostile takeover. So he goes to this guy, the father who just lost his son, and he's like, I'll buy your shares from you.

And his father is going to do what most fathers do. They're like, get lost. Are you out of your mind? Like, what? No. So then his father writes a letter to um to johnson johnson claude johnson's the guy running the company and he's like i love this because this is the importance of control and he says uh he gently reprimand reprimands

johnson remember he just lost his son like a year or two earlier in my in in view of what you tell me you must not mind my saying that you have been lacking in foresight and forethought in not obtaining control of the company, a perfectly easy thing to do. Control is essential to the peace of mind not only of the head of a business but of the humblest employee. So he's not going to sell a stock. He's like, dude, what are you doing here? You guys should have majority control. That's something you should do. Pay attention. I love that. Oh, so there's another luxury car brand

that is called Napier, and this guy Edge was involved. I think he was a co-founder. It's kind of the Rolls version of what the CS Rolls played in Rolls-Royce. Edge was playing in Napier. But anyways, this is just advice on how to get attention for your company at a lower price. Edge was adept at Rolls had been at gaining publicity by writing dear sir letters to major newspapers and journals. It proved to be a lot less expensive than advertising. So again, most of their money had to go into the production of cars. So they'd get advertising basically for free by writing op-eds. They'd manufacture fake fake controversy so edge and napier wound up having beef and they wound up breaking up and i just i'm going to bring up this point because royce didn't

have this problem he was always focused forever on quality and so this is edge describing why they had a falling out he says i saw that napier so napier is like the genius um engineer in this case his interest in napier cars was beginning to wane. There was not the old enthusiasm and there was a certain air of indifference as regard to the class of work that left the factory. His chief interest seemed to pass from the drawing office to his own bank account. And so basically I said, listen, Royce didn't have the problem. He was focused forever on quality up until the day he died because he was doing something that he truly cared about. Another great quote that I remind myself over and over again is from Bezos.

Missionaries make better products. And I definitely believe that to be true. And what's interesting is not only did Edge notice this, but eventually almost all of the talented engineers left Napier for Rolls-Royce because they knew too. They could see it. His heart's not in it anymore. So World War I breaks out. Royce decides to design his first airplane engine at the same time the Rolls-Royce board were deciding not to make aero engines for the government Royce was

designing the Eagle the Eagle engine is uh the engine he makes for the government not for the last time Royce was ignoring what the board had decided in his absence like I said he's you're not gonna be able to control so he's like the board said no we're not gonna do this Royce was ignoring what the board had decided in his absence. Like I said, you're not going to be able to control him. So the board said, no, we're not going to do this. Royce was like, too late, already designing it. This is the state of the airline industry when Royce began. It's not even an airline industry because there is no airline. The airplane, they call aeroplane, I guess, industry.

In the state of the industry when Royce began designing plane engines, on the outbreak of the war, not a single British aero engine was in production or anywhere near it so he's at the very very beginning um in designing the eagle engine what did royce's own experience and the necessity for swiss swift action tell remember he's doing this for the government for the they're at war you can't he's got to move it quickly as quick as they can move and they still move rather slow he should be considering safety cost effectiveness and what was readily usable on the silver ghost the crankcase which was aluminum crankshaft gears lubrication and pistons coolings were all the best available so he used them so he used took what he learned from building car engines took what was available and applied it to building um a first rate engine

and it said uh and then what's the result this guy's a genius he had an engine on the test bed in late february 1915 it was expected to give 200 horsepower but gave 225 horsepower on its first run however royce was not satisfied with that he strove to increase power reduce weight and fuel consumption and at the same time improve reliability oh this is fantastic i gotta find how i can get this his he he took a copious amount of notes, like I was saying earlier, or maybe I didn't say for Royce, I was saying for Danny, but Royce did the same thing. And his work was so detailed that they made his notes into a book. So it says, Royce was testing every part to destruction. And whenever a major increase in power was achieved, a long endurance test would be run to prove that engine at the higher power. So impressive were the instructions from Royce that in December

1915, Johnson had Royce's memos on the subject printed and bound in a limited edition of 100 copies. The book was called The First Aero Engines Made by Rolls-Royce, and in the preface were the words. Here's a direct quote from the book. In the opinion of the board of directors, the letters written by Royce, the engineer-in-chief in connection with the design, testing, and manufacturing 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 the copies may be available for study. And as an example to all grades of Rolls Royce engineers present and future, this, this is why I think everybody building a company right now, whether big or small, should write down their thoughts in detail on them. Because, you know, I'll probably never run out of books on founders, right? There's tons of them out there. But there's not's not i mean and i'm only one person right i can

read about 50 of these a year so let's say let's say for a 20-year period what does that mean you're that's a thousand books something like that that's not that many like there's millions of companies that have that are either already in existence or have existed i would love to get a copy of that book i haven't looked for it i I got to see if I can try to find it, but I think this is something that everybody should do. Okay, so this is interesting. They have a nickname of it. Okay, so the note I left myself was the achievements of a thinking designer. I don't know what I meant by that, but it says the book became famous, the book I was just referencing, as the Rolls-Royce Bible. So that's the nickname, right? On December 19, the Times, the newspaper,

printed a whole article about it concluding, the Bible was printed for the purpose of providing those engaged at the works with an example of engineering living and of impressing upon them the amount of care and thought needed for the design and manufacture of a successful aero engine during the war its author received a remarkable tribute from a german engineer who had apparently studied the evolution of the engine from a six oh from a successive captured machines so they shot down a plane and then reverse engineered it right and this is what he's saying the german guy he described it as a classic example of how a designer can avoid every

possible possible difficulty that can be foreseen in a design and thus ensure success and he declared that many details of the engine and undoubtedly not the result of long continued experiments but the achievement of a thinking designer now my my note to myself makes more sense um this is a first that i've come across A company so focused on quality that they risk going to prison. So there's this department. They're saying, hey, you need to hurry up and manufacture faster. And even if you have to sacrifice quality. And Claude and Royce refused.

And it says, when the Ministry of Munitions tried to force Rolls-Royce to get a dozen or so firms to make their engines, the very great man Claude Johnson took the bold stand that he would tear up every drawing and go to prison rather than to agree to risk inferior skills of other companies. Johnson said that the plan of using other manufacturers was futile and would yield nothing but mountains of scrap. They're all so cocky about the quality of their work. I mean, if they're competing with other people, they're kind of talking about the quality of their work. I mean, I kind of like if they're competing with other people, they're kind of, you know, talking trash here. It's interesting.

He had his way. Other companies were not licensed and Johnson stayed out of prison. However, it almost led to the world's race being nationalized. Think about that, having such confidence in your works. Like we can't even give our plans to other companies. It's just, they wouldn't even know what to do with it. They would yield nothing but mountains of scrap. Oh, here's the driver of the French war minister gives a product review of some of their cars. This is hilarious. So the driver, his name is Eduardo,

and he's writing the company. And they're using their, I'll just read to you. After having studied all the makes of cars, which have passed through my hands, I wished by this letter to express the satisfaction I have experienced, not only, he's listing all the other, like the 40 horsepower car, but these other two Rolls Royce cars that he used, which I drove a year before the war, but also two other ones, which I induced, meaning he convinced the war minister to purchase, right?

So the French war minister is buying it on the recommendation of his driver. I traveled with him, the French war minister, 35,000 kilometers in three months, all over France, but principally at the front, meaning the front of the war. Both our two cars traveled without a single breakdown and always behaved perfectly. We traversed bad roads along deep ruts made by the wheels of heavy artillery and encountered shell holes where the wheels sank to the axle box, for instance, in the woods of Tracy,

where we had to pass between trees without the trace of a road. There I fully appreciated the endurance and remarkable supplements of your cars. It is only necessary to have done the journeys I have in them to be convinced of the quality of your cars i think that's just good good etiquette for humans in general if somebody's making whether it's a company or a person's making a product that you enjoy tell them like good

feedback for them and it's kind of opposite for what most people do they uh they just kind of like you only contact a company when you're like kind of upset Okay, so they had a decision to make after the war ends. Are they going to build cars, planes, or do both? The return of peace after four years of slaughter, the like of which had never been seen in the world before, brought the directors of Rolls-Royce face-to-face with the need to plan the whole strategy of the company. Should they continue to manufacture air engines? Should they return to making luxury cars?

Or should they do both? Cars looked a much better proposition, although nothing new had been developed during the war however the the magnificent silver ghost had been supreme before the war and just as rolls royce had not been able to continue car development neither had any of its rivals so i include that in the podcast because imagine if you if in the industry in which you work in was completely frozen for four years. It's such an interesting thought. And this happens over and over again when we talk about industry associated with war, both usually in World War I and World War II.

It's just something like we're very blessed to not have to deal with and hopefully never have to deal with this. So this is Royce's plans for after the war. Although heavily engaged on aero design, aero engine design during the war, Royce nevertheless found time to think about cars. In a memo dated July 1917, he announced that all post-war chaffsies would have electric self-starters and that he had been studying the

Lanchester gearbox. So he says Royce had already begun to work on the design of a smaller car before the end of the war, fortuitously perhaps because the immediate post-war boom was followed by a slump. Johnson was concerned that not enough people would be able to afford the Silver Ghost and felt that a smaller 20-horsepower car would be a very useful addition to the company's range. Good thing that Royce was already working on that.

And part of the reason is because Winston Churchill, so this is Winston Churchill imposed a road tax on all vehicles of one pound per unit of horsepower. This meant that the Silver Ghost at 48 horsepower would cost its owner about 2,500 pounds per year. So obviously having one that's half the price would save your customers more money. Then there's a lot. Okay. So they talk about this post-war slump. So all car companies, a lot of other car companies are are getting kicked like they're they're having to deal with lack of demand and higher costs and so they're for a for a um short time they're trying to think of like maybe merging a bunch with a

bunch of other car companies you can guess by this point what royce's response is and his is of course i'd rather retain control from a personal point of this is royce from a personal point of view i prefer to be absolute boss over my own department even if it was extremely small rather than to be associated with a much larger technical department over which I just had joint control but Royce was fearful of the future and he says I do not think the present way that is the multitude of small companies doing a great variety of work can possibly stand the competition after the war and I'm anxious that our own position should not be equally weak. I feel that something must be done otherwise the trade of motor manufacturing will leave England.

And so the example of that is the economist pointed out in 1923 total British output of 37,000 vehicles was produced by no fewer than 90 different companies. So there's a lot of competition at the time. Going back to what it's like to work with Royce, this is another internal memo. And it says, unfortunately, we cannot deal with this business until Royce has finished designs of his 20 horsepower car. He says this will occupy him for two or three years. If we were able to employ some other engineer to design the car, Royce would still insist upon criticizing and probably redrawing every part of the design. And therefore he would be overloaded and we should just be, and we would be risking his health. And so it's important to understand how important that,

that Claude Johnson was the success of Rolls Royce. And this is just comparing and contrasting the different roles they played. It said far worse for Roll Rolls-Royce's point of view was the loss of the man who had turned Royce's genius into a commercial proposition. And this perhaps is an appropriate moment to compare the qualities of the two men and to see how they complemented each other. Without Royce, the peerless engineer, there would have been no Rolls-Royce cars and no Eagle aero engines in the First World War. That much is certain. But without Johnson's organizing ability and a flair for publicity,

there would probably have been no company to exploit the cars and aero engines. So they kind of need each other, right? And Johnson thought not only of external relations, but also those inside the company. 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. For example, almost all the workforce from Manchester moved to Derby between 1907 and 1910,

many of them making the journey on foot. They wanted to work with Royce. However, Johnson was more aware of human relationships, though even he might be dubbed paternalistic by today's standards. In the works, there hung notices exhorting the workforce to be accurate and be certain and reminding everyone, you are on your honor not to depart from our standards. Saysson also arranged for badges of merit to be given to those who uh it was felt had earned them so he's just basically said like he was just better understanding how humans they want to be recognized for the work today he would arrange for the whole works management to go to the theater on monday night

he organized regular medical checks and encouraged all types of sports. He had leadership skills and management skills. He didn't have the product genius or the engineering genius that Royce did, but he also had things that are necessary for a company's success. But he also had the numbers to back it up. He said, in purely financial terms, Johnson's record speaks for itself. 1926, Rolls-Royce had made profits of 164,000 pounds and a return on capital of 20%. But perhaps Johnson's greatest contribution to Rolls-Royce was his understanding of Royce himself. This is a really important part.

And his unselfish action in 1911 in taking him on an extended trip through Europe and Egypt, which almost certainly saved Royce's life. They left for like six months together. Johnson, and then he winds up relocating him in the south of France because doctor's orders were to get out of like the cold damp air environment he was in um so what is that if you need dry air is that tuberculosis what's the i don't know the the sickness he had johnson also understood that both royce and his employees would probably function better if they were kept apart so what i meant by royce worked remotely it was a happy coincidence that royce's doctor prescribed

sea air and that Derby, whatever other climactic attributes it offered, could not boast of sea air. If Royce had stayed in Derby, his obsession with detail might have well been hampered the commercial viability of the growing organization. Even when he was in the south of England, so he split his time between South of England and South of France, he would become obsessed with intricacies of a component that might ultimately not even be used in production. And he would become involved in details that could easily have been left to others.

For example, he insisted on designing the toolkits to be fitted into the cars. That's pretty crazy. He could not stand adjustable spanners, and so he designed a full range of double-ended Oprah spanners. However, these did not satisfy him because each different size of nut required a different degree of leverage. He therefore designed a set of spanners with single ends, but with the length of each spanner exactly appropriate to the size of the nut. See, like that's... that's... somebody else could be doing that work.

Somebody else could be doing that work. And so it's just an example of like the extreme, almost detrimental level of detail that Royce had. And this is a firsthand account. Rolls-Royce was very much a distributed company, and so this is a person working directly with Royce at the time. He was giving a firsthand view of how the company operated in the 1920s. In 1923, the control of the company was vested in three widely dispersed groups. All designing was carried out. This designing was carried out where Royce was living, so his house. All the directors except Royce were based in London, and then the

sales departments and manufacturers in Derby. The function of the latter was to make parts of Royce's design. So the factories test them, suggest means of eradicating any faults and finally carry out road endurance tests before releasing them for manufacturer. In essence, this was correct. Although it did not give the full story. There was also a major design office in Derby, albeit under Royce's control.

So it says, this is a more description because Royce's word was law throughout the company. The apex of the administrative triangle was undoubtedly the team of designers working under Royce. So he kept like a small team with him. There's like five or six people. So this is interesting. They worked in monastic seclusion, so like monks, in a drawing office called Camacha, situated in the middle of a village about a quarter mile from Royce's house.

To ensure a minute, this is really interesting, to ensure a minimum of distraction, the drawing office was for a number of years forbidden the luxury of a telephone. Communication between Camacha and another place that the company owned was maintained by the secretary who had to ride a bicycle between the two places. It seemed to me that until his health deteriorated royce made the majority of all the technical decisions as i later found out to my cost if one attempted to turn royce from his chosen path by any arbitrary action one got into very serious trouble very severe trouble indeed this was the team responsible for the design of every car and all their components from 1919 until Royce died in 1933. It says, in matters concerning the actual model, which eventually went into production,

Sir Henry's decision was final, even though the sales department might not always agree that they were getting exactly what they wanted. And now this is the Peter Pugh, the author, wrapping up Henry's life for us. Royce was quite simply a genius. And thanks to a meeting with CS roles, the benefits of his genius were spread and shared by the whole country, indeed by the world at large. We have noted his belief in hard work. He set the example and expected others to follow. As this guy named Ivan, who worked with him in 1920s and who continued to serve the company until the 1960s, observed,

Henry Royce ruled the lives around him, claimed their body and soul even when they were asleep. So that's the quote that's repeated. A.G. Eliot joined Rolls-Royce from the company's great rival, Napier, in 1912. He served the company for 44 years and said of the Silver Ghost, Royce's masterpiece. And this is one of the best engineers that worked with Royce,

describing why Royce was so talented. When I saw the engine dismantled, it revealed new and advanced features of design, which astonished me. It was the first six-cylinder engine that I had ever seen fitted with a crankshaft damper. The first expanding carburetor with such effective schemes of jet and air control.

The first valve gear with the silent scientifically designed cam. And the first high tension jump spark distributor the last name feature being entirely new to motor car ignition elliot recognized genius at work and felt compelled to leave nappier and join rolls royce to see how it was done and he said he's still talking about henry he says henry royce never claimed to be a good draftsman but he had a wonderful eye for line and proportion instinctively knew the right shape for every piece nor was he a trained mathematician but he had his own eye for line and proportion and instinctively knew the right shape for every piece.

Nor was he a trained mathematician, but he had his own way of doing calculations by using simplified methods showing that he had highly developed sense of the fundamental principles of mathematics. And of course, everyone who worked with him knew that he was a perfectionist. They knew he would test parts far beyond anything they were likely to withstand on the road. Some found his habit of changing and improving designs extremely frustrating. He wanted his designers to be rubbing out and improving all the time. This tradition of obsession with functional perfection long outlived him, and indeed is paramount in both Rolls-Royce companies today. His near-fatal illness in 1911 and 1912 may from the company's point of view have been a blessing

in disguise never one of the never one of the world's great man managers royce was able to concentrate on what he knew best and so this is a quote about what he knew best his mind undistracted by the management of 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 local person in this village that he was living after he had stripped and rebuilt this person's lawnmower. And this is a direct quote from Henry Royce and his motto for life, whatever is rightly done, humble is noble and that is where I'm going to leave this story if you want to get the full story and you want to support my

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