Founders - #87 Thomas Watson (IBM)

Episode Date: September 1, 2019

What I learned from reading The Maverick and His Machine: Thomas Watson Sr. and The Making of IBM by Kevin Maney.----Come see a live show with me and Patrick O'Shaughnessy from Invest Like The Best on October 19th in New York City. Get your tickets here! ----Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. --- ----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

Thomas Watson began his life at age 40, after Dayton, Ohio nearly ruined him. In Dayton, Watson experienced fantastic success and near destruction. All of it had to happen for IBM to exist at all, and for Watson to take his place among history's great business figures. Alright, so that's an excerpt from the book that I read this week, and the one I'm going to talk to you about today, which is The Maverick and His Machine, Thomas Watson Sr. and the Making of IBM,

and it was written by Kevin Manning. Before I jump into the book, let me just tell you where I found this book. I was actually listening to Marc Andreessen talk. He's the one that invented the Mosaic browser, which turned into the company Netscape. But he's also rather well-known because he's the co-founder of the venture capital firm A16Z. And he was talking and I was taking notes on some of the stuff he was saying. And let me just read this to you. He says, the entrepreneurs of the past were extreme characters. I'm thinking of Thomas Watson Sr. If you want to know what it is like to work

for someone who is harsh read a book on Thomas Watson senior he makes all of today's entrepreneurs look like cream puffs so as soon as I heard him say that I just went ahead and um and ordered the book he also blurb for the book too but mark like every single other founder that I've studied studied founders that came before him in fact he says something that I think is really pertinent to what we're doing here, like the point behind founders. So this is another quote from Mark. He says, there are thousands of years in history in which lots and lots of very smart people worked very hard and ran all types of experiments on how to create new businesses, inventing new technology

and new ways to manage, etc. They ran these experiments throughout their entire lives. At some point, somebody put them down in a book. For very little money and a few hours of time, you can learn from someone's accumulated experience. There is so much more to learn from the past than we often realize. You could productively spend your time reading experiences of great people who have come before you and learn every time. So I just bring that up because this is one of my free episodes of Founders. If you're a long-time listener, you already know. I give half my podcast away for free. I don't have ads or any other ways to support the podcast,

except for people that actually are learning from the podcast and get value out of my work. And then the other half, I call it the Misfit Feed. You sign up. It is a way to pay a small amount per month or actually now there's an annual option too. So if you're interested in hearing and supporting the podcast and hearing half of all the podcasts I've ever done, I do two extra podcasts every month just for the Misf, and you can unlock the entire back catalog. And I think what Mark is saying here, for very little money and a few hours of time, in this case on a monthly basis,

you can learn from someone's accumulated experience. I think that's the best way to clearly tell you what's the value proposition for these episodes of Founders. But if you listen to them, I think it's pretty obvious to you. All right, so let me go ahead and jump into this book. There's a lot of notes here, and this is going to be – it's a strange one. I'm just going to tell you that up front. You know what?

I'm not going to run over my own points. So let me get into – we're going to start out in the introduction of the book. And at this time, I'm going to tell you more about his early life like I always do. But for now, I want to tell you about this opportunity because, you know, it's kind of a weird way to start a book. Saying that, you know, he made a lot of, he had a lot of success in Dayton, but it almost destroyed him. Like, what does that mean? And then what does it mean starting your life at 40? So he's being recruited.

He works for this company called National Cash Registers. I mean, as the name, you can pick up from the name, they sell cash registers. And they have basically a monopoly on cash registers, which is a giant industry in the early 1900s. So he's telling his dad, he's like, oh, I'm getting promoted. They're going to make me, they're going to let me run my own business, my own subsidiaries of National Cash Registers. And then I'm going to tell you why that's so bizarre though. But before I get into that, I just think this is really good advice

that he gets from his dad. So he says, he told his father that he'd have a budget of a million dollars, an amount that was unfathomable to both father and son. Keep in mind, like I said, this is the early 1900s. I think it's 19, yeah, 1903. And then this is what his dad said that I thought is good advice. He says, well, I'm very pleased about that because what you've been doing, meaning he was just a sales manager for the company, what you've been doing, hundreds of men can do, but now you're doing something different, something new. And I think that is even more true today. I think that it's really smart moving forward to anchor yourself around what actually makes you unique, especially in the information age. All right, so let me tell you about this fake company

that National, I'm going to just call them NCR moving forward, that NCR makes and they want Watson to run. And they're creating a fake company because they want to build a monopoly. And this is important to the story of Watson's life because he winds up catching a charge, a criminal charge. They try to put him in jail. And that's why he says winds up catching a charge and a criminal charge. They try to put him in jail. And that's why he says his life starts at 40 and he's almost destroyed.

And I'll tell you more about that in a minute. So it says he went undercover while creating the, it's called the Watson's Secondhand Cash Register Company, a phony entity set up and funded by NCR. NCR wanted the secrecy so it could slip into the used business, meaning used cash register business, quietly and ruining it from within. Watson's a rather highly skilled operator, though. So this fake company actually grew into a successful profit-generating company, and it was all a ruse. The profits were an unintended consequence. The business's real purpose was to destroy the competition. So what does that mean?

Well, in the late 1980s ncr is run by this guy named patterson and patterson is extremely important to the life story of watson as well um and i'm going to tell you more about him but he was basically like a cult leader and a dictator and somebody that watson essentially like almost like an older brother father figure that watson essentially patterned his life after. He took some of the pattern. Patterson has some good ideas about running business and a lot of terrible ones. And Watson borrowed both the good ideas and unfortunately the terrible ones. So it says in the late 1890s, Patterson realized that NCR was creating its own competition.

NCR was so good at making cash registers that the machines tended to last for years. Independent dealers started buying used cash registers from establishments that either went out of business or bought or purchased newer models the dealers then buffed them up and sold them more often than not to someone who otherwise would have bought a new ncr machine so this occurring to a dictator personality like patterson was completely um unacceptable to him. So it says, for nearly five years, Watson ran the used operation and ran it well. It was an extraordinary success. He's young.

I think he's like 27 at this time, right around there. In city after city, used cash register businesses were devastated. Okay, so then I want to tell you a little bit more about this Patterson. And the note I left myself is Patterson created a cult. And what I didn't know at this point in the book that becomes extremely obvious once the book is finished, Patterson created a cult, Watson did too. Early IBM, the only way I think, the only accurate way based on the information and the reporting in this book,

and the author does a fantastic job because he has access to like, IBM gave him access to all their archives and there's tons of information in this book that are available nowhere else. Watson created a cult. I remember watching this documentary on Scientology. I think the leader of Scientology now

Is this guy named David Miscavige Watson and Patterson have Heavy, heavy David Miscavige Scientology vibes So I just need to put that up there There's going to be some things today That we're going to learn about Watson That are good ideas that we can take to our own lives

There's going to be a lot that's not I wouldn't recommend replicating. This was a very flawed, like everybody. I mean, I'm an imperfect human being too, so I'm not trying to cast judgment, but you can't understand the life of Thomas Watson without realizing that he's got something, he's got extreme tendencies and personalities in both directions. So it says, if Patterson sermonized that it was right that NCR had an obligation to rid the business of interlopers at whatever cost, Watson would have seen no reason to argue. Watson had grown up poor and had failed in his early attempts at business. He wanted to escape his past. He looked up to Patterson like a religious figure. And the inner circle of Watson, once he gets to IBM and then he develops the culture of her,

he ran the business from the time he was 40 to almost 85. It's the same thing. It's the exact same thing. It's really kind of spooky. So this is a little bit more about Patterson's personality. He says, Patterson ran NCR like a Napoleonic dictator. He was a tyrant. He wanted total control of NCR and the lives of everyone who worked there. He fired men without reason and prompted them equally without reason. Excuse me, promoted them equally without reason. He was a master of manipulation. So one of my favorite, this is going to date me, one of my favorite movies, funniest movies

when I was a kid, I don't know, I was probably like 10 years old when it came out, was Jim Carey's Ace Ventura Pet Detective. And he has this funny scene where he's realizing that the person he's trying to capture and the detective are the same person. So he's like, Einhorn is Finkel. Finkel is Einhorn. When I'm reading about Patterson and Watson, I kept saying that over and over again. Patterson is Watson. Watson is Patterson. So I just read that paragraph to you about Patterson. Now I'm going to read the exact same paragraph, but read it with Watson. and it is still true. Watson ran IBM like a Napoleonic dictator. He was a tyrant. He wanted total control of IBM and of the lives of everyone

who worked there. He fired men without reason and promoted them equally without reason. He was a master manipulator. Everything that was said that the author is saying about Patterson is definitely true about Watson. Now, this is actually interesting because I learned a new word this week. Let me pull it up so you know I'm not going to be able to pronounce it. I was listening to a podcast about an author who wrote a biography on Churchill, which is kind of interesting, like writing one now, because he says there's over a thousand biographies of Churchill. Winston Churchill is one of the most, has to be one of the most studied people in human history. And so I was interested in the process of writing a biography of like, what, like his, how do you, how are you going to write something new

that's been studied so frequently? And he brought up the point with the person he was interviewing, because the person he was being interviewed by had read the book. And he's like, it's definitely not a hyography, however you pronounce that word. And so I had to look that up, because I've heard the word before, but I didn't know what it meant. And so it's a biography that idolizes the subject, it's auditory writing about another person, the writing of lives and saints. And same situation here. The author, Kevin, he definitely did not write a hierography or however you pronounce that word. He does praise a lot of Watson's decision-making or personality traits that led to success.

But he also, which I loved, he points out that there's a downside. he calls him narcissistic um completely self-involved a master manipulator and i'm not trying to cast judgment on him i understand that unfortunately the traits that can make us extremely successful when applied in the wrong way or in a in an improper domain can also lead to um you know your downfall. They can be extremely negative. I just think it's important for us to understand that about human behavior and to constantly be aware of it. Every single person, every single founder we've studied so far has great traits

and they have traits that make them imperfect. And Watson was no exception to that. So before I get into his early life, and I want to tell you, even though in hindsight, this company is like a fake company, he took it really, really seriously. And he studied from not only from Patterson and other people that came before him, but other people that had similar jobs than him. And so in studying them on trying to do his job better, he actually accidentally discovers the machine that IBM would come to monopolize because just like Patterson built a monopoly and a trust, IBM, early IBM was

that. They controlled like 90% of the accounting and tabulating market. And this is an era before computers. So they were electromechanical machines. They were not computers. That's not the – like you think of the IBM, you know, maybe 30, 40 years ago, they're going to computers. Now they do all kinds of different stuff. It's rather remarkable that the company still – I just looked up.

They did like $80 billion in revenue last year. But this is how he discovers a machine that in a few years from now, he builds a company that would actually monopolize. So he meets with a friend of his that works at Eastman Kodak. Kodak, George Eastman, the founder of Kodak, I actually have a book on him. He'll eventually appear on a future Founders episode. But Watson's meeting with his friend named Ames. And he says, Ames had the same kind of job as Watson, a sales manager, but he just worked at Kodak. Ames told Watson that he had a new system that could monitor the performance of each salesman.

So this is Watson talking. He says he had a chart on the wall. He said, here is Hambly, this guy, this sales guy, in Kansas City, and he did so-and-so. And on such-and-such day, he was in St. Louis, and he went through this. He's talking about sales numbers here. And my head began to swim around because I thought, in fact, to tell you the truth, I thought I was just about as good as sales manager as Ames. I said, Bill, that's his first name, by gracious, I would like to find out how you know how to do that. So essentially Ames has a better way to

monitor the performance of the sales people that he's put in charge of managing. Ames walked Watson to the accounting department and showed him they're called Hollerith machines after the person that invented them, which tabulated information using holes punched in cards. This just opened my eyes, Watson said. So he realized, oh, I thought I was doing a good job. And then I was exposed to somebody who's actually doing a way better job. So at this point, let me step back in the story. I want to tell you a little bit more about his early life because it is rather inspiring the fact that he grew up really poor, dies really wealthy, and didn't really start his own company until he was 40 years old.

So he's born in 1874. Watson lived nowhere near anything that could be called a city. He lives in this family farm out in rural New York. Watson's father never knew success. He combined farming and lumbering but fell victim to bad luck and his lack of business savvy. The Depression of 1873 to 1879 kept the family struggling all through Watson's youth. And this is a really important sentence here. It says, Watson didn't seem to have any outstanding talents. He found little value at school,

so he winds up leaving school early. I don't even know. Maybe like the equivalent of like a high school education, maybe a little less than that. So he winds up looking for work and he gets a job keeping the books at a general store. This is in 1891. He winds up, then he gets another, his first job as a salesman. So another thing to understand Watson is he's a co-founder of IBM. He essentially runs it because IBM is basically a one-person company, especially because the other co-founder dies. And I'll tell you a little more about him.

But Watson thought of himself as a salesman. He thought salespeople were the most, like, that's his first few jobs. That's why he had success. That's who he managed for most of his career. And so this is him getting his first sales jobs after the job at the general store. And he was selling sewing machines and musical instruments in the back of a wagon. I mean, that's insane. So it sent Watson to call on potential customers. This was Watson's first salesman job. The work frustrated him.

He made little money. Watson quit and moved to Buffalo to try selling sewing machines. He had some success at here, but he has experience early on. Watson's superstitious, so this is actually an important experience in his life. So he'd sell sewing machines during the day. At the end of the day, he'd end most of his days at a local saloon. One evening, Watson stopped in a bar and stayed until closing. When he came out, his horse and wagon and the showing machines on it had been stolen.

Watson reported his loss to his boss and was promptly fired. Watson concluded that alcohol can never be mixed with business. So this is important because I don't know if he drinks for the rest of his life. In fact, he has such control over, remember when I referenced Patterson wanting control over not only the work that his employees do but their entire lives. Watson would look down upon and basically preach the idea that you're not to drink. If you work at IBM, you are not to drink, even off hours. And it's because of this unfortunate experience that he had early on. Watson tried selling shares in a building and loan company for a man named C.B. Barron until Watson eventually figured out Barron was more of a huckster. So he's selling fake shares. Next, Watson opened a butcher shop. The shop ran out of cash and Watson had to

sell it. I'm spending a lot of time here just so you understand. He was not born with any skills, not really educated, didn't really have success to 40, that doesn't matter. It didn't stop him from being able to create and run a wonderful business. So I think, you know, I like to dispel this myth that if you don't figure things out, if you're lucky, I'm not saying like wait to your holder to try to try to do it. If you know what you do and you have success when you're early. And I've, I've talked to a lot of people listening to the podcast through email. And there's a lot of like, I'm, I'm super impressed by a lot of lot of i call them kids i don't mean that derogatory because when i was 19 or 20 i didn't certainly didn't feel like a kid um but you know when as

you get older your definition of the youth they everybody looks then you won't understand this if you're at this age now but you certainly do if you're older. Like, you know, when you're 19 or 20, you think you're an adult, and you are, but, like, then you get to your 30, and you're like, oh, 19 or 20-year-old looks like a kid. I'm sure, like, when I get to my 40s, it'll be the same thing. So I'm just amazed at how, like, ambitious and, like, on point a lot of these young people are. It's extremely inspiring.

But I would say that's more likely and not understood. Like if you're one of those people, you have an advantage and don't let your foot off the gas in that case because most people don't get it together. There's tons of examples in these books where people not really figuring out

until later in life. Watson was an example of that. So it says, Watson trugged to the local NCR office to transfer the installment payments on the store's cash register to the butcher shop's buyer. This is how he gets a job. At the NCR office, he talked, this was another like important event in his life. At the NCR office, he talked with salesman John Range. Watson asked Range for a job and continued calling on Range until Range said yes. So's another thing one thing i did learn from

from watson is the value of perseverance he definitely did not give up easily um so as you could imagine watson is super motivated because he's not been having success he's every single thing he's doing is one failure after another he has no money he doesn't want to live life like that so it says watch watson like range and soaked up everything Range could tell him about selling. Nine months after joining NCR, Watson moved up to full sales agent in Buffalo. Four years later, NCR assigned Watson to run its struggling Rochester, New York office. Watson, only 27, turned the branch around and made it one of NCR's best. Okay, so now I'm going to skip several years ahead. Now, the reason I wanted to tell you about that part, because the fact that he took his job so seriously, the fact that he was

so successful at it led him to the opportunity to run that fake company, right? So we're going to fast forward to him running the fake company for a while. We're going to be 1912 when he actually gets indicted. Now, this is important to understand because he has to go through the stress and the struggles. IBM would not have existed, at least not in the incarnation it was when Watson ran it, without this. And I think it's extremely important to understanding that it was like a fuel to him. So let me just read some of these highlights to you. So there's a newspaper article on February 22nd, 1912. It says the lead headline, NCR men indicted by the federal grand jury. 30 officials and employees of the

National Cash Register Company were indicted on charges of criminal violation of the Sherman antitrust law. So not only is Patterson indicted, but Watson's one of the 30 people. And this destroyed him. It says the shock of the reality of a jury proclaiming him guilty, because they wind up losing a case, of being labeled a criminal had a profound and lasting impact. If there was a single moment when Tom Watson changed, when he decided that a squeaky clean image and reputation were paramount in business and in life, this was that moment. He was portrayed as a villain. I don't ever think he recovered from that. That's actually the writer. That's actually the writer. It's actually the writer.

I don't know if you call him a friend, but he definitely knew Watson. That was Peter Drucker, who you might know because I've referenced one of the best quotes about entrepreneurship come from Peter Drucker. He says, entrepreneurship is not an art or a science. It's a practice. That Watson didn't recover was to his benefit. The trial and verdict forced him to realize that there were also bigger things in his job and his advancement. It also gave him something to prove,

that he wasn't a self-centered crook. If Watson had never been brought to trial, he wouldn't have become the kind of leader who could build IBM. Another interesting personality trait about Watson is, so they're convicted criminals, then they take it to appeal. And while they're appealing it, they're offered, if I'm not mistaken, I might have the timeframe wrong, but they're offered, you know, like a plea agreement. Say, hey, just admit wrongdoing. And then, you know, you're not, I think they might've got probation. They weren't going to go to jail. Every single

other person but Watson took that deal. He's like, nope, not taking it, not taking it, not taking it. Like I'm not, like he was so important to him to not admit wrongdoing, even though he was definitely guilty. He was a hundred percent guilty. But again, he had, you know, everybody talks about Steve Jobs, reality distortion field. Watson had that too, to an extreme. And unfortunately, he applied it to like his family life, jobs, all kinds of stuff. And again, it might've worked in business, but I'll tell you a little bit more about, uh, you know, where he, he messed up in my opinion as a, as a father. Um, so the appeal, they wind up winning on appeal. Uh, I forgot the exact reason why. Um, and I didn't include it in the highlights of the show, but just know that he's not going to go to

jail. Um, actually he doesn't, at this point, what I'm about to read, he doesn know that he's not going to go to jail um actually he doesn't at this point what i'm about to read he doesn't know he's not going to go to jail so he gets patterson has like i said before he's like scientologist vibes to me this like at least the documentary i'm referencing where david miscavige that manipulates everybody around buddy around him patterson's doing the same thing and he doesn't like the attention that watson was getting and he winds up firing him kicking him out of the company which is kind of crazy. So let me just tell you about Watson's time. This is what it talks about, how it destroyed him. He has to start over at 40. He said he had been at NCR for 17 years. This is the terrible situation he found himself in before founding IBM. So it's important. At the age of 40, Watson lost a job and felt the need to leave the city he had adopted as his home. While his wife

was about two months shy of delivering their first child. Worse, he still had a jail term hanging over his head. What company was going to hire a top executive who might soon go to prison? Watson started making trips to New York to see what jobs he could find. So think about that. It's hard enough starting a company. Imagine starting a company when you're 40. You don't have too much money. You could be potentially in jail for a year, and your wife, right? I want to spend some time talking about Charles Flint because I haven't found another book on him. And Charles Flint has an unbelievable life story. And I can't believe I can't find a biography about him. Because if I did, I would do that immediately. So let me just tell you a little bit more about that. So it says, Watson had an appointment with Charles Flynn, who would change Watson's life with a job offer. 64 years old when he met Watson, Flynn had already packed his life with more adventures than a room full of ordinary men.

Flynn started his first dockside business at 18. He came from a family of shipbuilders and captains. They were, this is on the coast in Maine. So he started his first business at 18, and then he won a job with trader William Grace. This guy is famous in his own right. William R. Grace, by approaching him on a ferry and saying he'd initially work for him for free. In 1872, Grace organized W.R. Grace & Company as a shipping and trading firm and asked Flint to join as a partner. Interesting enough, this company, W. grace and uh wr grace company is still in business after 130 years i love seeing stuff like that uh wr grace established the marine midland

bank they sent the first commercial ship through the panama canal they introduced shrink shrink wrap packaging to the food industry and grew into today's chemical and construction materials conglomerate what it's amazing. Flint got involved in, this is the crazy life that Flint lived. Remember, he's a co-founder of IBM in addition to all this stuff. Flint got involved in South American shipping and politics. An opportunistic arms trader, Flint retrofitted commercial ships with dynamite guns and sold them as battleships to warring South American nations. He smuggled torpedoes across Colombia to his military customers in Peru. Theodore Roosevelt, then the Secretary of Navy, asked Flint to use his skills to help the United States obtain warships.

Flint and Roosevelt become friends. Flint had been a friend of President Roosevelt, Harrison, and McKinley, an acquaintance of dictators and royalty around the world, and a sportsman who hunted and fished with steel magnets Andrew Carnegie and Charles Schwab. That's one of the craziest paragraphs I've ever read in any book. He was jovial and supremely self-confident. He rarely failed to deliver on promises, no matter how outrageous. He loved inventions and gadgets. He latched onto automobiles soon after they were first sold to the public and funded a race car in the late 1890s. He had one of the first incandescent lights installed in a New York City residence.

So the reason I'm including this is because this goes through a bunch of the founders that we've covered. We've covered Carnegie. I've talked a little about Charles Schwab in relation to Carnegie. I'll eventually do a book on him by himself. He's buying cars from Ford, who I've covered at length, like, I don't know, three or four different times. I just covered the book Empires of Light, which talks about the very first houses in New York City being lit up by Thomas Edison.

J.P. Morgan being the very first one. Another one, he says he saw the potential of airplanes and got involved with the Wright brothers. I did a podcast on them as well, cutting a deal to sell their airplane overseas. Flint's international trading led him in 1872 to start pulling together rubber exporters until he eventually created a monopoly called US Rubber.

So that's the important thing about Flint. This is before the German Antitrust Act, his life at least. And that's what he did. He set up trusts. He'd buy a bunch of companies, eliminate competition because he thought it was more efficient.

And he did this. So he says over the following 30 years, Flint put together 24 trusts. And so a little bit about that, this point in history to understand, like now, you know, they'd be in jail. He'd be in jail if he did this. But trusts were tolerated and seen by many at the time as beneficial. Years later,

attitudes towards trust would take a dramatically darker turn. Among his trusts, Flynn had his hits and misses. One of his last and one of his worst, and it would be, one of his last was one of his worst, and it would be the unlikely and inglorious beginning of IBM. So what does that mean? IBM was not called IBM. Watson names that later. It is called one of the worst company names in history. Computing, so he merged three or four companies together, including those holo-rhythm machines I mentioned earlier, and he calls the company Computing Tabulating Recording Company,

or CTR for short. It didn't work. CTR started life bloated with debt. It achieved no economies of scale and no market advantages of a trust. Flint desperately needed someone to come in and save his experiment. That's when Watson walked through Flint's door. So Flint is going to partner up with Watson even though Watson has a jail sentence hanging over his head. I already told you this point but it's worth repeating a few pages later he considered starting a business but didn't have enough capital the anti-trust verdict guaranteed that

Watson would find hard to borrow money or lure investors so I literally left myself listen think about the point in Watson's life that was the beginning of IPM no money convicted criminal and a looming jail sentence so they do a. He's going to bring him in as a partner. And the note I left myself is never cap your upside. This is actually really smart. Makes Watson eventually, this agreement right here is going to make Watson, there's a list, like it's early like Forbes 400, except it's not on net worth. It's on actual income. And Watson becomes the highest paid CEO in America for several years. That helps him become super famous.

So it says Watson would get 5% of CTR's profits. It gave Watson great financial upside. So I think that's just a rule in life, never capture upside. I've never had a job or any kind of environment where I had a capped upside. I was lucky enough, my first job I got at 15, I worked at a car wash, and a few months later I got promoted to become a detailer. And when you're a detailer, you get paid hourly, you get paid tips,

plus you get paid commission on not only the jobs you do, but if you sell, when you're not detailing, if you sell an upgraded service, you get a percentage of that. So you could sell, let's see, see get three percent i forgot what it was this was 15 years ago more than that but um yeah you get let's say three percent of the sale three percent for doing it hourly rate plus tips so while i was in high school i was making like at the time this is early early 2000s maybe i don't know the exact year, maybe year 2000. And I was making like $400 a week in high school.

Like it was actually really, it taught, it was a really good lesson for me that never capping my upside, never working for like an agreed amount salary. I've never done that in my entire life. Because I think like you don't, companies are paying you a salary and then they're capturing the upside if they do well. obviously people like that for stability because what if something goes wrong

then the company has to pay for the downside but i think for as an individual you definitely want to cap never kept your upside that's why people are entrepreneurs because they feel the market's not going to accurately like assess their true value and that they'd rather prove what their value is so in here watson does a great deal. He's getting 5%. Think about that. I don't know how long this goes on, but it definitely happened several years into, because IBM was this massive company during World War II, and he's getting 5% of the profits. So he makes a lot of money. Now, unfortunately, his net worth is never, I mean, it's still really good, but he owned at that time, once the shares get diluted, he owned like one to two percent of IBM. So he made a lot of money. Obviously, he's paying income tax on that money.

But his net worth was never commensurate with the amount of money he made because he had such a small ownership. OK, so I think this is a great idea. Watson didn't storm in with a vision, meaning now he's running the company. He certainly did not proclaim that he saw tabulating machines as CTR's path to greatness. The only vision Watson communicated to CTR in those first few months was that the company was going to become a glorious institution. This is what I mean. He's starting, he is laying the foundation of his cult right here. We're going to be a glorious institution. We're going to be great. This is actually like the positive aspect of a cult without the manipulation part but but telling people and convincing them and and being optimistic I think or is really really smart considering CTR's

condition that pronouncement was enough to convince a lot of CTR employees that the new boss was a nut many who had been with CTR saw our company decline not one of greatness so it's a big problem. You're taking over a company. Everybody thinks it sucks. Even if it does suck, you have to convince them that in the future it won't. The restraint showed Watson at his best, a charismatic, forceful leader who, because of circumstance, chose to apply patience and savvy. Watson's force of personality, though, would not stay in reserve for long.

Now, right after this, he learns that he's not going to go to jail. And then the book talks about this is his why. This is what was driving him. This is why he gets so insane later on in life. Watson finally broke free of the worst episode of his life. But the desire to bury his past now consumed him. He had to prove Patterson made a mistake. And he had to prove to the world that he was a moral and straight-shooting businessman.

To do that, Watson needed to build CTR into a great and admired company and this is where we see that the the the separation between Watson the person and IBM the company starts to evaporate to the point at the very end there is no separation and I'm not recommending that. I want to be clear. He was, I would say, a terrible husband and a shitty father. And that's why towards the end of the book, I started having a distaste for him. I think the perseverance, the optimism, the charisma, I like those characteristics. But I have a hard time respecting anybody. I don't care if you make a billion dollars.

If you're a crappy dad, you failed at life. It doesn't matter um and i i think you know i mean there's some there's some stories in the book that i'm not even gonna talk about they're just it's terrifying the way he would talk to his kids he would talk to his kids wives later on in his life like he was just he was obsessed with status and like other people like like adulating he would self-adulate, but he constantly craved compliments from other people. People that got promoted in IBM were the people that would kiss his ass all the time.

That's a bad idea. That's a terrible idea in business. And if it wasn't for the fact that he had some good strategic moves, essentially why IBM was successful at this time was because he he creates a monopoly he does exactly what patterson did he had 90 of the market that's why it's successful he confuses that with like his own greatness and if he had if he was operating in a normal environment where he did not have a monopoly and his staff they talked about like he want his son eventually

takes over the company but he makes you know he doesn let go until he's like 85 or something like that. I forgot the exact age. But he said if his son didn't take over, he had nobody that was qualified to run the company. That's an indictment on your leadership. If you run a company for 40 years and you have not, there's nobody that can take your place. God forbid you die early or whatever the case is. Nobody, because he didn't keep anybody around. He did not, he only wanted people to tell him how great he was this is it's a weird book man it's

it's bizarre to me um now there's some good ideas i mean this is not one of them this is i jumped way ahead what i just got done telling you is way it's probably 20 years maybe 15 years in the future we're at this ibm doesn't exist yet see He hasn't renamed it. It's still CTR. He does have, I think, somewhat of a good idea here. It's not always a good idea, obviously. It depends on the talent that you have, but he did prefer to promote from within. He liked training his own people. Why? Because he's building a cult. Watson ran on the seat of the pants in sync. He reached into every corner of CTR to find talented executives. He did not look outside of the company. So I'm saying it can be a good idea.

I need to rephrase. Sometimes you need to go outside the company. When I joined the company, Watson said in a speech years later, there were plenty of ideas lying around, but many of them seemed too big for the organization to handle. The directors told me,

you have to go out and hire outside brains before you can build up this company. I told them that's not my policy. I like to develop men from the ranks and promote them um so he has this he has this quote he says i've preached and preached and preached this is actually a good idea too i just i guess what really influenced my the way i think about him and again this is my opinion it doesn't matter like it's not important what i think to anybody except myself like there's a lot of quotes in the book from like they you remember he went to ibm the author went to ibm's archive and like the minutes of these meetings i just cringe i would never allow anybody to talk to me like that and but at some point i'm like all right well there's people that

are viewing watson different than i'm viewing. Like they're ostensibly adults. If they don't like the environment they can leave. I just don't think you should treat people this way. So he says, but he does have good ideas. He says, I preach and preach and preach to study the business, study the business, study the business. So I believe in that.

I think anything that you craft, like you should be, you should study. You should try to be as, you're gonna spend half your waking life working on something. You might as well be as good as possible at it. And I, I, I, um, I'm motivated by and admire people that, that in all forms, uh, that, that get really good at their craft. So I think what he's saying here, but like, here's an example of, um, some quotes from some of these meetings. He says, the fact

that I criticize some, some one or two or three little things doesn't mean that you men haven't been working and haven't been trying. It doesn't mean that I'm dissatisfied with all of you either. But in business, especially in a business like ours, where there are so many things to take into consideration, it behooves every man to analyze every report that comes out. It says, Watson's criticized their retention rates. So in this meeting, this is what I'm talking, this is now my own notes that i'm summarizing because i don't want to read an entire page i'm just telling you what happened um he says watson criticized their retention rates he was wrong and they weren't as bad as he thought but he was still mad because they didn't know it was a mistake they didn't know their own numbers so to me you should

know your numbers you study the business like you're what are you doing at work like don't do anything unless you're going to do it well right um that's a good like we're never going to achieve that goal all the time because we're imperfect but it's a good like uh something to like a north star if you will but he doesn't like the problem is like he's yelling at them and then he's not even right you see what i'm saying here like he's saying you should know your numbers but you didn't even you didn't even have the numbers correct. So that's what's like, he does all these kinds of weird decisions and the way he talks. And like, he has meetings where he's got 12 of his highest paid executives and he'll spend two hours just talking, talking and they don't say anything. There is no pushback as far as what I'm learning,

what I learned from the book. And that's just not, I don't understand why, one, from the founder CEO perspective, why you'd want that environment. Two, you know how bored these people must be? And then I thought to myself, well, David, you might be wrong. They might have really loved this guy that they literally think everything out of his mouth

is just pure wisdom. And they love to sit there and be lectured to. It's just, it's not for me. literally think like he's everything out of his mouth is just pure wisdom and they can't they love to sit there and be lectured to it's just it's not not for me uh this is another example note that i leave a lot in the book watson was building a religion watson was building a cult i leave these notes everywhere uh so let me give you an example he preached about health a topic far afield from a typical business presentation he told the audience get enough exercise fresh air eat the proper quality of food and get enough sleep a whole package of watson-like traits began to percolate through ctr watson carried the culture of his old company ncr inside of himself

he transplanted aspects of it into ctr in both companies salesmen who who met or beat their quotas became club members for that year They attended a week-long annual convention. Watson would reconstitute other NCR cultural artifacts, such as the Employee Country Club, a schoolhouse for training, and a company-wide newspaper that served as a propaganda organ. Watson pushed to infuse optimism into the culture of CTR. So that's a positive among a sea of, you know, there's a bunch of negatives in here.

He wanted everyone to share his faith in the company's future. Most of the people inside of CTR never had a reason to think grandly about the company. Again, these are good things that he's doing. CTR had been falling apart, but Watson wanted employees to see what he saw, that CTR had a vision of something way beyond our present conception, meaning our present state. I think that's a good idea, and I think it also applies to individuals. All those things mean unlimited opportunities for every one of us who started in this business. Slowly, Watson won converts to his religion, and it talks about either you converted or you left. There was really no gray.

You were going to buy in or you were going to be expelled. Okay, so now this is actually a good strategy that Watson does. At the time, CTR is going to lose a bunch of their patents. So the note is like, what do you do when your technology is outdated and your patents are about to expire? He doubles down on innovation. So he says, better technology translated into sales. Thinking of the lessons from his friend Charles Kettering, Watson decided to fund a laboratory full of engineers like Kettering. So it might be Kettering, but I think I've heard it pronounced Kettering.

You might have heard that name before. He was a founder, sold his company to GM. And then Charles Kettering winds up being the head of research at General Motors from like 1920 to 1947. So it kind of overlaps with like what some people think is like the glory years of General Motors. And he did that by doubling down on engineering. So he gets this idea. They met, Charles and Watson met at NCR. And eventually Charles left NCR to start his own company and then sells that to GM. So he's learning from other people around him, very smart. And this

idea of saying, hey, the only thing we're going to be able to do is invent our way out of this predicament. So this is in 1917 Watson recruited James Bryce who would come to rival Kettering as one of the most important or Kettering as one of the most important product developers of the century. Brilliant and moody with a dry sense of humor Bryce was named CTR's chief engineer. He worked on or directed

nearly every new tabulating product over the next two decades. He ended up with more than 400 patents to his name. And in 1936, he was honored by the US Patent Office as one of the 10 greatest living inventors. This is the very foundation of which IBM built its monopoly on. So this is a really good strategic decision here by Watson. I thought this was funny. I don't know if this joke is going to land, but I think Watson was the Kanye West of his day. He gets sent a survey about himself for the National Encyclopedia of American Biography,

and you're going to see his answers. His answers show that he was in the early stages of a couple of tendencies that would worsen as he grew older, self-absorption and overconfidence. See, it's not just, I mean, the author is the one that really convinced me of, that's why I keep saying like this guy was a little crazy. The author talks about this over and over again. Self-absorption, narcissism, overconfidence, like all this stuff. One section asked for physical and mental

characteristics. Watson answered in the third person. A tall, erect figure and dark eyes, dark direct eyes that appear to see through people and situations at first glance. He's talking about himself. This is crazy. And with complete understanding are probably the two physical characteristics that dominate one's initial impression of Mr. Watson. His manner of speaking is to the point. Eyes and speech tell of a keen mentality that is always alert and searching. Another heading was special gifts and avocations. Watson answered, Mr. Watson has a pronounced gift for public speaking,

and he's continually being called upon to exercise it. Do you know where this public speaking is taking place? It's taking place within the company, IBM. Who decides who speaks? Watson. He's saying he's a great public speaker, and he's always called upon to exercise it. He's calling upon himself to exercise it. This guy's insane. Under dominating personal characteristics, he answered, tremendous vision, indomitable will, unswerving determination.

So I laugh when I read stuff like that. That's obviously the negative part. Here's another positive part. He's got to figure out what his product's going to be. So he's like, he's got to figure something something out they were selling time clocks and scales and all this other stuff and says um you know those products were not excite tabulating machines would so he's realizing this is a good decision by him uh they were increasingly becoming known as punch card machines because they recorded information using holes punched through rectangular cards a peculiar language that no one but a specialist could read. And this is why I think it's a good idea. Yet tabulating machines had a quality that caught people's imagination.

Other machines automated physical work, making hands more productive. Tabulating machines automated mental work, making brains more productive. There had never been anything quite like them. So it's almost like a very prehistoric, I can't think of the word I'm looking for, but like a computer, but like such a tiny version of one. But this is why I think it's interesting because he got in at the very beginning. So he actually has a chance to shape the industry. So he says, because there had not been nothing quite like these tabulating machines

and because they were only beginning to be adopted by an industry, the field in the 1920s laid wide open to new ideas. For this reason watson increasingly turned his attention toward data processing as he called it well before most anyone else so he's ahead of his time he clearly understands the importance and i think the reason i bring this up is because mainly in the world of atoms and not are mainly world of bits not so much in the world of atoms like we're in the very beginning like what jeff bezos talks day one of the internet i think a lot of different parts of the internet

um are wide open for people to to still invent and and and shape what the future is going to look like um just like in in watson's day the tabulating and this is extremely important like think about how many businesses needed need data processing. All of them? A ton of them. So he's got a giant market here. So he ditches the slow growth industry. Go for, I'm reading my own notes,

go for the one that has a future and one where you can have an advantage. I kind of just said that. Well, this is him laying it out to, I think he's already renamed it to IBM because it says, Watson then pointed to where IBM wanted to go. There isn't any limit for the tabulating business for many years to come.

This is all quotes from him. We have just scratched the surface in this division. I expect the bulk of increased business to come from tabulating. Because the potential, the potential, the potentialities, I don't even know what that word is,

are greater, and we've done so little in the way of developing machines in this field, underneath that statement lay a number of reasons other than the thrill of new technology. Why Watson zeroed in on the punch card business. When seen together, the reasons click like a formula for total domination. IBM would never be able to make sure it was a world leader in scales or time clocks, but it could make certain that it was the absolute lord of data processing. The formula began with patents. Watson had learned the value of patents while at NCR and from Kettering. Inventions could drive sales and patents could keep competitors at bay by preventing them from introducing similar inventions. It is a formula

in full boil in the technology industry of the 2000s what is the author saying there that history doesn't repeat human nature does he's doing the same stuff happening today or in this case when the book was written what like 10 years ago 15 years ago um that was happening in the 1920s uh it says once let's see what was i trying to remind myself once you decide what you want to do find other ways to optimize your strategy. For example, we want patents and we'll... Okay. So he makes a decision that's the hardest part. Then he's going to drive forward and he just said, I'm going to build this company on patents, right? Well, one way to get patents, right? What I was saying, find other ways to optimize your strategy. Well, for example, we want patents and we'll either invent them, but we'll also buy them. We'll buy yours too. And that's what he does. Watson acquired more patents by buying upstart competitors. For instance, IBM bought J. Roden Pierce, another guy, fledgling punch cards machine company to get Pierce's patents and to get Pierce who would go on to win more patents

as an IBM engineer. Controlling the key patents on tabulating systems help make life difficult for the competition because competitors would have to invent entirely new technology or license IBM patents. That's one paragraph. It's also why when almost right before he dies, he gets hit, IBM gets hit with an antitrust suit because of this, because they created a monopoly. And now here's another example of really good ideas and personality traits from Watson. It's not like he was a super talented person. Let me just read and you'll understand.

I mean, he was obviously talented, but that means he didn't have innate talent. He just thought about things and made some good decisions. He made some big bets and he got them all right. Data processing was a young technology. Watson realized clever engineers would be able to improve punch card machines. Clever salesmen would find new applications, new customers. The company that could fund the best research and development and the best marketing could outdistance any competitor.

So he's laying out his blueprint here. And this applies to every company. IBM was the one company that could afford both. Watson had no epiphanies. No voice spoke to him about the future of data processing. Because I'm not a big believer that you can predict the future. I think the world we live in is way too much complex. And you should go about it in almost like a Watson-type manner.

He had no epiphanies. No voice spoke to him about the future of data processing. He didn't have a grand vision for turning IBM into a punch card company. He got there little by little. One observation after another over a period of 10 to 12 years. If Watson did possess a tremendous vision, an abdominal will, and unswerving determination, referencing his own answer to the survey, the trait served him by helping him toil through more than a decade of figuring out what his company would be.

I think this applies to almost every single company. The overnight success is largely a myth. Very few people get it right at the very beginning. of figuring out what his company would be. I think this applies to almost every single company. The overnight success is largely a myth. Very few people get it right at the very beginning. When I'm reading this, this is very much why I admire the way Jeff Bezos thinks of companies. You invest the time, you be patient, and you persevere. And he has a great quote that I reference all the time. This is a quote from Jeff Bezos. The biggest oak starts from an acorn. You've got to be willing to let that acorn grow into a sapling and then into a small tree. And then maybe one day, it'll be a big business on its own. You've got to invest the time.

Watson's showing this. He didn't know what he was doing. He just said, oh, I'm going to make a couple of good decisions and keep going figure it out oh so okay so Watson he collected friends but he also studied especially other founders and there's a founder a few years older than him that he learned and became came to almost love and it's this guy named George F Johnson again there's no I couldn't find any books on George F Johnson either or else I would interesting says Johnson was already the industrial king of the region. He has a company close to where some of IBM's buildings are. Watson was a recently fired executive facing a jail term and running a company that, as Johnson would later say,

he's describing the condition of CTR when Watson came on board, had all the intents and purposes of collapsing. Even with that, though, it kind of shows you Johnson's like this really sweet, nice guy. Johnson met with Watson and offered Watson encouragement and assistance. He did that. He had no, Watson could offer him nothing. Nothing. And he still did this. I think it's a good idea.

Watson would always say how much he appreciated it. Johnson proved to be a manager like no other of the era. In an age of carpetbaggers and all-powerful business barons, Johnson felt a company should be a community of equals, all working towards the same goals in sharing and the wealth he created. According to the author, he's the one that comes up with the idea of profit sharing. One of his oft-repeated slogans was, I'm out to make all of this concern, meaning a company,

not to take all of I can out of it. He put everyone on a first-name basis, a stark contrast to the era's accepted business formality. This is something Watson did not learn from him. He did not like people who call him Tom. He built homes and sold them to employees at cost. He offered free meals in a company restaurant, free legal aid and medical care. He built glorious extravagant parks and left them open to the public. In 1919, Johnson instituted a plan that he dubbed a profit-sharing, modestly commenting that it was a comparatively new idea in an industry, and an idea that is common today.

He decreased the workday from nine and one-half hours to eight hours, prompting 12,000 employees to spontaneously rally around his home to thank him. Johnson never stopped winning the reverence of his workers. I don't want you confused. He's friends with Watson. Watson was much meaner. Johnson never stopped winning the reverence of his workers and the communities in which they lived. As time went on, he used money and his personal fortune to build one of the world's largest public swimming pools. He built a series of carousels that he donated on the condition that they forever be free to anyone

who wants to ride them. A few of them remained operating and free to the public into the 21st century. Watson's management approach in the 1910s came nowhere near Johnson's. IBM ran its factories for efficiency. Although IBM didn't treat manufacturing employees any worse than most companies of the day, it didn't treat them particularly well either. So learning from Johnson is causing Watson to change some of the stuff because he has to compete with Johnson he says this factory is set in a labor market where most people particularly the best workers wanted to work for Johnson the residents weren't so sure

about IBM the smart thing for for Watson to do would be to follow Johnson's lead. Before I read this to you, my own notes, this is the mentality I find is very common in founders, but also taken to some degree, you have to ask yourself, is this the environment that you want to create? I don't think there's one right way to create a business. I don't think there's one right way to manage a business. I think you have to be who you are. I'm just telling you this is not for me. Watson felt he could unleash tirades at his managers with impunity, and for the most part he could. No one dared question or cross him.

Executives rationalized his behavior by telling each other, if you weren't worth putting together, he didn't bother to tear you apart. That's like some Stockholm Syndrome stuff to me. They were willing to take it because they wanted to be part of IBM. They were building machines that had never been before existed. They worked with brilliant engineers and sharp managers who blended together

to form this odd but magnetic cult of sober people who made the company their life and ambition. Few other American companies offer the promise and excitement of IBM or such an opportunity to get rich. And some people liked it. I'm just saying that's why I've never worked in a big company.

I just couldn't. But it doesn't matter. There's some people who like it. So many felt blessed to be able to follow Watson. He was such a strong personality, so sure of his leadership and so driven, people hitched themselves to him like rail cars or locomotive. Once they did and once they proved their loyalty, Watson gave back, whether it was bonuses, quick promotions, paid vacations, or compassion during an illness or family crisis.

Watson did have a religious faith about IBM. He had unrelenting optimism in the face of calamity. This is how he acted in the Great Depression. Melancholy has seized most of the business world. The U.S. economy contracted by 8% in 1930 and another 7% in 1931. Unemployment rose to more than 20% of the population. Companies closed factories and cut production. Companies were in no position to install new tabulating machines. The market for office equipment plunged 50% in 1930 and kept sinking. Watson knew the facts about the broken economy, but

the situation didn't fit his plan, so he decided to bulldoze through the facts. His words always reflected optimism. Watson's action backed up the facts. His words always reflected optimism. Watson's action backed up his words. He made two dangerous decisions. One, he would keep factories running and lay off no one. And two, he would increase spending on research and development, even as companies around the world slashed their R&D budgets. These decisions came within a sliver of ruining the company,

so they almost run out of money. But when the economy picks up again, they have by far the best R&D. They have tons of well-trained employees and they have the best R&D department, the best products. So it winds up working out. It's a huge gamble. If it failed,

if the depression would have extended and the business didn't pick up, it would have been the end of the company, but it wasn't. And Watson did this throughout his whole life. He would place his fate in innovation. So you have to, like, he has skin in the game. I have respect for him in that case.

So it talks about, like, he's in the middle of depression. He's building this giant R&D facility. They say it's very similar to, like, Xerox's Palo Alto, like, the park that's famous or Microsoft's research in the late 90s. Research center in the late 90s. So it says, how could Watson justify this? He spent a million dollars for something as amorphous

as research and development when businesses were falling apart and nearly one quarter of Americans barely had enough to subsist. But building the lab had a logic to it. Somehow Watson had to stimulate demand. He had to come up with products that companies couldn't resist, whatever the economic conditions. Again, thanks to Charles Keitering's

influence, Watson believed that R&D would drive sales. So Watson decided to build up a lab, pull engineers together, and get them charged up to push the technology forward. That's why I think like this, he's such a perplexing person to me. He's such a, like a bizarre, like he's got really good ideas like that. And then cringy personality traits. And yet to me, I do still find it inspiring in the sense that like, it's just another example that you do not have to be a perfect person to build a great business. All right, so check this out. He's doing all this and then he's kind of saved by something he has no control over. So in 1935, the depression's so bad that the US Congress passes the Social Security Act.

Actually, that's the whole name, the Social Security Act. And overnight, the demand for accounting and data processing machines exploded because every single business now had to do data processing and accounting on a scale never before seen in the United States. And guess what? IBM could meet the demand because it had increased the production the last few years. So it's kind of luck in that sense because he didn't control it,

but he was the only company prepared. So this period of time became IBM's slingshot. Revenue jumped from 19 million in 1934, going up to 25 million in 1936, and then it would go all the way up to 31 million in 1937. It would climb unabated for the next 45 years. This is where IBM comes, the IBM that we know, and it builds the foundation. Oh, that almost goes on there in the 1990s. From the moment until the 1980s, IBM would utterly dominate the data processing industry, a record of leadership that was unmatched by any industrial company in history. I think Watson's in his 50s. He might be in his 50s by now. Peter Drucker asked Watson years later if he had anticipated the Social Security Act. Watson said that he hadn't. Of course, the act

was debated and written about well before it was passed but watson said he had no idea would impose such a record-keeping burden on businesses and the government no one did otherwise congress congress might never have passed the act act watson did not foresee that act uh watson did not foresee that act combined with ibm's reticent readiness would not only save the IBM but propel it toward tremendous growth okay so I mean that's the essentially the most important thing to know about IBM like from here on for the rest of Watson Watson's life well towards the very end he brings his son on board and um they eventually have to get into the new field they call electronics. IBM would have never gotten to electronics, two things.

One, if the son wasn't already in the company, and two, if the antitrust suit didn't happen because they had to venture into – like they had to go move into more competitive markets because the government was correct. Like they definitely had to uh with the punch card machines and all that technology um this though so i what ibm is also famous for the for their um their slogan it's called think and this is actually a good idea by watson i think um i like it so it talks about his morning routine i'm just just going to skip over. So he's going to finish breakfast. He's going to usually leave. Okay.

But then he does something on some days that's really smart. And I think sometimes it doesn't look like work, but is work. Unless he needed time to think through an idea, he wouldn't go into the office unless he had thought through four or five items he wanted to get done. If that meant sitting with a cup of coffee for an hour or two, that is what he would do. That very much reminds me, it's attributed to, sometimes I've heard it attributed to Abraham Lincoln, but it's that quote, if you give me six hours to chop down a tree, I'll spend the first four sharpening the

axe. I do think rigorous, uninterrupted deep thinking about something now you obviously you could take that to to to the extreme where like you if you don't pair it with action that that's kind of it's not beneficial but this is something watson would allow even his employees if they came in late and they were actually thinking about a problem that's he encouraged it he had the word think everywhere in people's offices they also had a bunch of like it was really weird like in the book it talks about a lot of the offices and headquarters would have you know how many offices you're gonna have like tons maybe hundreds they would have framed pictures of watson in there so again more culty vibes but this is actually

really good idea and then the dedication because this guy's a workaholic worked all the time that's all he thought about and still he would sit down and be like i need to think about this this is actually a really good idea. And then the dedication, because this guy's a workaholic, worked all the time. That's all he thought about. And still he would sit down and be like, I need to think about this. I need to come up with a better solution. And I understood that it's extremely important. So this is, I'm going to quote at length here now,

something I've talked to you about before that, uh, the question I kept, you know, I thought about a lot when I was reading this book, like how could someone with so many faults build a great company? And, you know, the, the takeaway is that perfection is not required. And so to that, I think it's motivating to me. Hopefully it's motivating to you. It's like, there's no such thing as a perfect human human but yet even in spite of our weaknesses or our imperfections like we we still can do this all right so says thomas watson was volatile and self-aggrandizing he could be domineering unbending demanding and a maddening micromanager. His company, however, projected an aura of classiness, excitement, and strength.

IBM was a darling of American business. It had marshaled monopoly control over tabulating machines and automated accounting systems, which had become critical to the operation of companies in every major industry. The company's traits and successes attracted the most talented people coming out of universities. Those elite men and women in turn built better products, came up with better ideas, and managed their

departments more effectively, making the company yet more successful, which attracted more talented recruits over and over again in a virtuous cycle. How could a man burdened with so many glaring faults build a great company? Watson inspired loyalty. He came through for people when they needed him, and he did more than they expected. He took extraordinary action during the Dayton flood.

There's a huge flood in Ohio, and he wound up organizing a massive relief effort. He was extremely helpful there. And acted similarly when Birkenstock's son was killed. One of his employees' one-year-old son was killed in a car accident. He was there for them. When Irv Gorton lost everything, that's somebody that he hadn't worked for in like four decades,

would write letters because he was like poor and destitute and Watson would send him money every time. And then after Gorton died, he had four daughters, and his daughters wrote letters saying about how much Watson's acts of kindness meant to them. And when the trains crashed in Port Jarvis, same thing, train clash with a bunch of IBM employees, he was there. He did smaller versions of such deeds often. The beneficiaries never forgot, and the effect of those acts rippled out. The

stories got around. As much as he promoted himself and thought the world revolved around him, Watson also generously gave credit to others. He would publicly name those who came up with a great idea. He lauded his engineers whenever possible in speeches to audiences outside IBM. He rarely failed to thank and praise the thousands of employees. People who met him often ended up telling him secrets as if he was a best friend or accepting his advice as if he was a father. Different people were drawn to him for different reasons, but something made everyone want to look at him and many to follow him. The cult was so fervent you either bought into it or eventually resigned. Once the non-believers were sifted out,

the company was left with an army instinctively devoted to Watson and IBM. Some of Watson's small decisions and actions were horrendously bad, but the big ones, he got right. That is where I'm going to leave the story. Where we're at in the story, he still runs the company for like another 15 or so years. If you want to get the full story, I leave a link in the show notes. It's also available at founderspodcast.com. It's Amazon affiliate link. If you buy the book using that link, I get a small percentage of the sale, no additional cost to you. It's a great way to support the author for all the work they did, support yourself by reading a great book,

and support me and the ongoing production of this podcast. Speaking of the ongoing production of this podcast, I just want to remind you that if you haven't already, if you're one of the many people that have sent me nice messages, have left reviews, done all these nice things, talked about how much you've learned from this podcast, but have not yet signed up to the Misfit, please do consider. It's a small amount of money. You can sign up on the annual plans, even less money on a monthly basis.

And it's a way for me to keep this podcast going. It's the only way I'll be able to dedicate all the time that I do. And I still think that out of all the entrepreneurship podcasts out there that come out on a weekly basis, I don't think anybody else prepares more than I do. I have the hardcover version of this book. This is like a, I don't know, like a 14, 15 hour read.

Takes me longer obviously because I have to stop and highlight and think about it. It's the hardcover version's 450 pages so it's an unbelievable amount of uh information i have to go through to try to i floating this idea about like really thinking about the podcast like like idea idea archaeology that i'm going through just like the way somebody goes through and studies like a site for relics like i'm studying these books and sifting through hundreds of years of of history to pull out interesting ideas because the same for the same reason the quote that i opened the podcast with about mark andreessen like there's a value in studying them there's tons of smart people most of which you know there's more smart people dead

than they're probably there and they are alive um and they have all these ideas for us to to use i mean they spent that there's hundreds of years of history where lots and lots of very smart people worked very hard ran all types of experiments and then they ran these experiments throughout their entire lives and at some point somebody put them down in a book so i think that's obviously very valuable information so i am asking you if you have not done so already please sign up it takes unbelievable no amount of time you can listen to these the Misfit Podcast, which are private exclusive feeds in your podcast player like anything else. You unlock all the old ones that I've done, all the past ones I've done.

Plus, I do two every week. Then the one I'm doing next week. So I want to talk to you about that real quick. I am almost done with this. I'd be shocked if this wasn't the longest podcast i ever do um i'm read i'm reading 50 years of warren buffett's shareholder letters on berkshire hathaway and the book so i have the hardcover book um i made a mistake though i bought the hardcover book that only goes to 2014 it's 700 pages but it's not like it's not like a normal book.

It's the size of a textbook because it's 50 years of Warren Buffett laying out how he thinks about business. And so that's the next Misfit podcast I'm doing next week. I just had to buy the Kindle version because I realized the hardcover version I bought, if you look it up on Amazon, you'll see that there's a yellow copy. Don't buy the yellow copy because it goes to 2014. It's a light blue copy that goes to 2018, maybe 2019. 2018, actually. Anyways, I'm releasing that. Now, here's the problem. There is a slight chance that it's not going to come out on time because I am in, there's a hurricane coming right towards me. And it's called Hurricane Dorian. It might be a category four. If it's that

big, I got to get the hell out of here. I can't stay here. So I might have to evacuate. I'll know by like tomorrow, by the time you listen to this podcast, there's a good chance I might've fleed. I've been through enough of these things. I'm not, I can't stay for a storm like that. It's extremely, extremely dangerous. So I'm going to bring all my equipment, all my books, everything with me, but I have no idea where I'll be or what the conditions will be or anything. So I'm going to bring all my equipment, all my books, everything with me, but I have no idea where I'll be or what the conditions will be or anything. So if I'm obviously interrupted like that, I won't be able to record, but I'll update. I might just like record like a little episode on my iPhone and release it and tell you guys, you know, publish it to the podcast feed. So you see

that it's not coming out on time. Hopefully that's not the case. I mean, these things, these storms are unpredictable. The cone, the uncertainty is just off the charts. So I have no idea what's going to happen. And so I just have to react to that uncertainty. So there's a chance.

So if you haven't signed up for the Misfit feed, do that. Not only you're doing it for selfish reasons to support yourself because there's tons and tons of valuable information in the Misfit feed, just like there's tons and tons of valuable information in the Misfit feed,

just like there's tons and tons of valuable information in the free feed. But not only that, you're going to get the amount of useful information that Warren Buffett has that's going to appear in this next podcast would pay for years of subscription to the Misfit feed. You're going to spend half your waking hours working. And if you could find ideas from really smart people, you can apply to your work. The return on that investment, and that's why I really think about it.

Like, I don't think about it in price. I think about it really is an investment. This is an educational thing that you're buying. It's professional research, in the words of Bill Gurley and Danny Meyer, the founder of Shake Shack. That's what they call their extra work that they do. Professional research. I really like that term.

So anyways, I think it's a no-brainer. Hopefully, you do as well. If you're getting any value, please do consider doing that. Thank you very much. I will update you. And then next week, Warren Buffett, I have like, this week was insane. This is the most, I think this week, I ordered 10 different books sent to me by listeners. So if you have a book that you recommend that you want me to cover send it all over send them over i i i i'm pretty sure i've ordered every single one just whatever like i don't need to think about it i just buy it um there's like i don't even know how what what my queue is right now it's got to be for more than 40 different books that i have to get to um so i don't know when they'll be out but if you if you if you have sent me a book, I will eventually turn it into a Founders episode. That's what? That's almost a year worth of books. It's really quite

remarkable. So send that to me. You could send it to me on Twitter at Founders Podcast, or you can email me, david at davidcenter.com. Thank you very much for listening. Thank you very much for your support. If you like the podcast, tell your friends about it. I will talk to you next week.