#248 John D. Rockefeller (Titan)

What I learned from reading Titan: The Life of John D. Rockefeller by Ron Chernow. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- [2:15] Rockefeller trained himself to reveal as little as possible [4:22] Once Rockefeller set his mind to something he brought awesome powers of concentration to bear. [4:44] My whole life has been spent trying to teach people that intense concentration for hour after hour can bring out in people resources they didn’t know they had. —Edwin Land [9:00] When playing checkers or chess, he showed exceptional caution, studying each move at length, working out every possible countermove in his head. "I'll move just as soon as I get it figured out," he told opponents who tried to rush him. "You don't think I'm playing to get beaten, do you?" [9:20] To ensure that he won, he submitted to games only where he could dictate the rules. Despite his slow, ponderous style, once he had thoroughly mulled over his plan of action, he had the power of quick decision. [14:49] When John was child, Bill would urge him to leap from his high chair into his waiting arms. One day he dropped his arms letting his astonished son crash to the floor. Remember, Bill lectured him, never trust anyone completely. Not even me. [15:32] The Chief: The Life of William Randolph Hearst by David Nasaw (Founders #145) He didn't care what people thought of him and despised society. [16:13] Rockefeller analyzed work, broke it down into component parts, and figured out how to perform it most economically. [18:49] He was a confirmed exponent of positive thinking. [19:10] Rockefeller was the sort of stubborn person who only grew more determined with rejection. [25:14] Rockefeller wasn't one to dawdle in an unprofitable concern. His career had few wasted steps, and he never vacillated when the moment ripened for advancement. [26:20] He's constantly praising adversity in early life as giving him strength to deal with all the stuff he had to deal with later on his life. [26:49] Pulitzer: A Life in Politics, Print, and Power by James McGrath Morris. (Founders #135) He was so industrious that he became a positive annoyance to others who felt less inclined to work. [27:17] Your future hangs on every day that passes. [36:13] If it is of critical importance to your business you have to do it yourself. [36:42] In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules by Stacy Perman. (Founders #244) [38:36] He would never experience a single year of loss. [39:30] Two quotes from Charlie Munger: The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple. Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger. (Founders #90) You should remember that good ideas are rare—when the odds are greatly in your favor, bet heavily. Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway's Vice Chairman on Life, Business, and the Pursuit of Wealth With Commentary by David Clark (Founders #78) [41:03] He's gonna to have a massive advantage over other people who only wanted to book short-term profits. [42:01] The Clarks were the first of many business partners to underrate the audacity of the quietly calculating Rockefeller, who bided his time as he figured out how to get rid of them. [44:27] He's super frugal on one end of the spectrum. Extremely frugal! Not going to let his business waste a penny. But he's also —on the very other end of the spectrum— willing to spend and to borrow and to go big. I will borrow every single dollar the banks will give me. He is the weird combination of extreme frugality and extreme boldness. [46:08] Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue by Ryan Holiday (Founders 31) On that day his partners “woke up and saw for the first time that my mind had not been idle while they were talking so big and loud,” he would say later. They were shocked. They’d seen their empire dismantled and taken from them by the young man they had dismissed. Rockefeller had wanted it more. [47:13] On that day his partners “woke up and saw for the first time that my mind had not been idle while they were talking so big and loud,” he would say later. They were shocked. They’d seen their empire dismantled and taken from them by the young man they had dismissed. Rockefeller had wanted it more. [47:37] He would never again feel his advancement blocked by shortsighted, mediocre men. [48:16] From this point forward, there would be no zigzags or squandered energy, only a single-minded focus on objectives that would make him both the wonder and terror of American business. [48:38] Random Reminiscences of Men and Events by John D. Rockefeller. (Founders #148) We devoted ourselves exclusively to the oil business and its products. That company never went into outside ventures, but kept to the enormous task of perfecting its own organization. [55:02] He always kept plentiful cash reserves. He won many bidding contests simply because his war chest was deeper. [55:46] Alexander the Great: The Brief Life and Towering Exploits of History's Greatest Conqueror--As Told By His Original Biographers by Arrian, Plutarch, and Quintus Curtius Rufus. (Founders #232) [1:05:37] Twenty-nine-year-old John D. Rockefeller demanded that seventy four-year-old Commodore Vanderbilt, the emperor of the railroad world, come to him. This refusal to truckle, bend, or bow to others, this insistence on dealing with other people on his own terms, time, and turf, distinguished Rockefeller throughout his career. [1:11:07] The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow. (Founders #139) [1:14:16] This is the investment opportunity of a lifetime and they're running in the opposite direction. [1:23:37] His master plan was to be implemented in a thousand secret, disguised, and indirect ways. [1:26:37] I have ways of making money you know nothing about. [1:30:59] You don't have any ambition to drive fast horses, do you? [1:32:59] Risk Game: Self Portrait of an Entrepreneur by Francis Greenburger. (Founders #243) [1:34:42] He was now living a fantasy of extravagant wealth and few people beyond the oil business had ever even heard of him. [1:35:33] Big Brown: The Untold Story of UPS by Greg Niemann. (Founders #192) [1:36:00] American high society in the 20th century would be loaded with descendants of those refiners who opted for stock. [1:39:02] Enzo Ferrari: Power, Politics, and the Making of an Automobile Empire by Luca Dal Monte (Founders #98) [1:39:30] Success comes from keeping the ears open and the mouth closed. [1:40:22] Do not many of us who fail to achieve big things, fail because we lack concentration-the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else? [1:42:31] Copy This!: How I turned Dyslexia, ADHD, and 100 square feet into a company called Kinkos by Paul Orfalea. (Founders #181) [1:42:40] Part of the Standard Oil gospel was to train your subordinate to do your job. As Rockefeller instructed a recruit, "Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it. As soon as you can, get some one whom you can rely on, train him in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.” True to this policy, Rockefeller tried to extricate himself from the intricate web of administrative details and dedicate more of his time to broad policy decisions. [1:49:50] He entered retirement just at the birth of the American automobile industry. The automobile would make John D. Rockefeller far richer in retirement than at work. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested, so my poor wallet suffers. ”— Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  The life of John D. Rockefeller was marked to an exceptional degree by silence, mystery, and evasion. Even though he presided over the largest business and philanthropic enterprises of his day, he has remained an elusive figure. A master of disguises, he spent his life camouflage behind multiple persona and shrouded beneath layers of mythology. He lingers in our national psyche as a series of disconnected images, ranging from the aggressive creator of Standard Oil, brilliant but bloodless, to the elderly man dispensing dimes and canned speeches for newsreel cameras. It's often hard to piece together the varied images into a coherent picture. This has not been for a lack of trying.

• 0:45David Senra?

  Earlier in the century, Rockefeller inspired more prose than any other private citizen in America, with books about him tumbling forth at a rate of nearly one per year. He was the most famous American of his day. Yet even in his heyday of popular interest, he could seem maddeningly opaque, with much of his life unfolding behind the walls of his estates. Rockefeller often seems to be missing from his own biographies, moving through them like a ghostly, disembodied figure. When Random House proposed that I write the first full-length biography of Rockefeller since the 1950s, I balked. How could one write about a man who made such a fetish of secrecy?

• 1:29David Senra?

  When I told them that I couldn't write about Rockefeller unless I heard his inner voice, "the music of his mind," as I phrased it, they brought me the transcript of an interview privately conducted with Rockefeller between 1917 and 1920. As I pored over this 1,700-page transcript, I was astonished. Rockefeller, stereotyped as taciturn and empty, turned out to be analytical, articulate, even fiery. He was also quite funny, with a dry Midwestern wit. This wasn't somebody I had encountered in any biography. I was now eager to do the book. Even with such massive documentation, I had the frustrating sense that I was confronting

• 2:14David Senra?

  a sphinx. Rockefeller trained himself to reveal as little as possible, even in private letters, which he wrote as if they might someday fall into the hands of a prosecuting attorney. The 20,000 pages of letters that Rockefeller received from his more outspoken business partners proved a windfall of historic proportions. They provided a vivid portrait of the company's Byzantine dealings with oil producers, refiners, transporters, and marketers, as well as railroad chieftains, bank directors, and political bosses. Like many moguls, Rockefeller was either glorified by partisan biographers who could

• 2:55David Senra?

  see no wrong, or vilified by critics who could see no right. This one-sidedness had been especially harmful in the case of Rockefeller, who was such an implausible blend of sin and sanctity. The story of John D. Rockefeller transports us back to a time when industrial capitalism was raw and new in America, and the rules of the game were unwritten. More than anyone else, Rockefeller incarnated the capitalist revolution that followed the Civil War and transformed American life. He embodied all of its virtues of thrift, self-reliance, hard work, and unflagging enterprise. That was an excerpt from the book that I reread and the one I'm going to talk to you

• 3:40David Senra?

  about today, which is Titan: The Life of John D. Rockefeller by Ron Chernow. So I originally read this book a few years ago for episode 16. I didn't really know how to do a podcast back then, so I think it's too important of a book to understand the history of entrepreneurship to not redo again. The book is almost 700 pages. There's a lot to get to, so I'm going to jump right in. 90% of what I want to talk to you about today is going to be how he built Standard Oil. There's a few things in his early life that I think we have to cover first, so then it's easier for you and I to understand why he might have made the decisions he did as he builds one of the most valuable companies the world has ever seen. I want to jump to one, the sentence in the introduction that I think is extremely important, because it describes one of Rockefeller's most important traits. And it says, "Once Rockefeller set

• 4:24David Senra?

  his mind to something, he brought awesome powers of concentration to bear." And when I read that, it made me think of one of my favorite quotes from one of my favorite entrepreneurs, Edwin Land, the founder of Polaroid. If you read, I've read five biographies on Edwin Land. He talks about the importance of concentration over and over again. I think this is probably his best quote on the importance of concentration, and this is what Land said. My whole life has been spent trying to teach people that intense concentration for hour after hour can bring out in people resources they didn't know they had. And as you and I go through the way Rockefeller built Standard Oil, it would become very obvious that he spent as just as much time spent working, he spent thinking and concentrating on what he was actually doing. So I want to talk a little bit about his parents.

• 5:06David Senra?

  He becomes like this blend between his mother and his father. He winds up having a deep hatred for his father and a deep, unending love for his mother. Rockefeller's father was a snake oil salesman and a bigamist. He winds up having multiple families throughout his entire life, and he loved money but hated work. So Rockefeller assumes the exact opposite posture as his father. So it says, this is about his father. Throughout his life, he extended considerable energy on tricks and schemes to avoid plain hard work. And then Chernow describes why understanding this part of Rockefeller's life is so important to understanding how he built his company. This marriage fused the lives of two highly dissimilar personalities, setting the stage for all the future heartache,

• 5:49David Senra?

  marital discord, and chronic instability that would so powerfully mold the contradictory personality of Rockefeller. And his dad, Bill, is this crazy character throughout the entire book. What do I mean by crazy? Well, this is before Rockefeller's born. He marries Rockefeller's mom. Her name is Eliza, and decides to say, hey, we're going to move in this, my lover. We're going to call her housekeeper, and I'm going to have babies by both of you simultaneously. So it says, Bill roughly disabused Eliza of any high-flown romantic notions that she might have had about matrimony. Far from renouncing his girlfriend, Nancy Brown, he brought her into the camped house as a quote-unquote "housekeeper" and began having children alternately by wife and mistress.

• 6:33David Senra?

  This affair wasn't the only indignity visited upon Eliza. She was often abandoned by Bill. This is so important because you realize Rockefeller's like an old man from a young age. And part of this is that he felt when he goes and starts looking for his first job, which I'll spend a lot of time talking about, he felt he's like, I have to take life seriously. I have to support. It's almost like he was a father of a family of five at 16 because his dad would constantly run away. So it says, "It's not the only dignity visited upon Eliza. She was often abandoned by Bill. Bill remained a restless and defiant individualist who preferred life beyond the pale of society. And since it was unpredictable when Bill would be back or if he'd ever return, Eliza had to learn how to do a lot with a little. And so, the one tool that she used for this was frugality.

• 7:18David Senra?

  And this is something that, this is a trait that she would instill in Rockefeller from a young boy, that even when he's in his 90s, he lives till he's 97 years old, this trait never leaves him. So it says, "Eliza became extremely frugal and drilled her children in thrifty maxims, such as 'willful waste makes woeful want.'" And I have some crazy stories later on about just how frugal Rockefeller was, even when he was one of the wealthiest people on the planet. So let's go to Rockefeller as a boy. There's three traits that are taking place on this, on this page that he keeps with him through his entire life. He always praised the benefits of adversity. He was always thinking, and he was always persistent. So it says, "In contrast to his father's disdain for manual labor, John gloried in

• 8:01David Senra?

  the rigors of country life, which he came to believe toughened him for later industrial struggle. His frugal boyhood hardened an already stoic nature and made him strong against later adversity." This is how his neighbors remembered him at this time. To other people, he often seemed abstracted. They remembered him with a deadpan face, walking along country roads, lost in thought, as if unraveling deep problems. He was a quiet boy. He seemed always to be thinking. He was a slow learner, but patient and persistent. Rockefeller would later describe himself accurately as reliable, but not brilliant." A few pages later, there's more examples. I wrote on this page, "Treats from his early life that he also used in building his business."

• 8:43David Senra?

  We can see that there was something extraordinary about the way that this boy pinpointed goals and doggedly pursued them without any trace of childish impulsiveness. He is like 11, 12 years old at the time. "When playing checkers or chess, he showed exceptional caution." Remember, this is just a metaphor for, for how he built and managed Standard Oil. "When playing checkers or chess, he showed exceptional caution, studying each move at length, working out every possible countermove in his head."

• 9:13David Senra?

  I'll move just as soon as I get it figured out, he told opponents who tried to rush him. You don't think I'm playing to get beaten, do you? To ensure that he won, he submitted to games only where he could dictate the rules. Despite his slow, ponderous style, once he had thoroughly mulled over his plan of action, he had the power of quick decision. And really, now that I've read this book two times, I don't want to oversimplify it, but really studying the way that he built his company. I was like, oh, this is what happens when amateurs try to compete with a professional. He was so smart, efficient, and ruthless, you just cannot believe it. And one thing that enhanced all those traits was the fact that John was a true believer.

• 9:55David Senra?

  In his heart, 100% for the rest of his life, thought that God gave him a gift. And his gift was making a lot of money so then he could give it all away. And the reason that's important is because true believers are not going to have like the normal self doubts that others or maybe even his competitors will. And this is something he picked up when he was really young. So it says, early in life, he learned that God wanted his flock to earn money and then donate money in a never ending process. I was trained from the beginning to work and to save, Rockefeller explained. I have always regarded it as a religious duty to get all I could honorably and to give away all I could. I was taught that way by the ministers when I was a boy. So we're still in this childhood, but think about this.

• 10:38David Senra?

  He's got traits that are beneficial for when you're building a business, combined with a core belief that this is what God wants him to do, combined with a mother who put a lot of pressure on his shoulders from a very early age because her husband was running around the country half the year and then she never finds out, but fathering and having other entire families. I lost count how many children he sired. I don't know, maybe 10, 15? He's got a gang of kids. So let's go to that. He had his mother's ability to bear a large burden for long periods in an unruffled way. Many neighbors testified that the unflappable Eliza never lost her temper, never raised her voice, never scolded anyone, a style of understated authority that John inherited. I brought that point out because that's how he ran his business.

• 11:24David Senra?

  He never, no one ever saw him get angry. He never raised his voice. He wouldn't yell at employees, none of that. From his mother, he learned economy, order, thrift, and other virtues that figured so largely in his success at Standard Oil. Eliza trained her children to reflect coolly before making decisions. Her frequent maxim was, "We will let it simmer." This was a saying that John employed throughout his business career. And this is important, she really did see her oldest son as gifted. She saw qualities in him still invisible to the world at large. Because she confided in him and gave him adult responsibilities, he matured rapidly and acquired unusual confidence. That's an understatement. As he put it, "I know that in my own case,

• 12:07David Senra?

  I have been greatly helped by the confidence imposed in me since early boyhood." He learned to see himself as a reluctant savior. That is not hyperbole. Not only a reluctant savior of his family, he thought he was like the world's savior of the entire industry. The entire oil industry must be brought under my control for the good of the world. That is how he viewed it. So he says he learned to see himself as a reluctant savior, taking charge of troubled situations that needed to be remedied. So let's skip ahead to one of the times where his father comes. You know, his father would pop up randomly. They would never know when it happens. Maybe he stays for a month, maybe he stays for a few days. But the ruthlessness that is very evident in Rockefeller's career, I believe, was learned from his father.

• 12:49David Senra?

  The bane of John's boyhood wasn't poverty so much as chronic worry about money. And it's easy to see how cash came to see like God's bounty, the blessed stuff that relieved all of life's cares. After the family spent anxious weeks or months running up credit bills and waiting for father's return, Bill would abruptly materialize like a jolly Santa Claus, swimming in money. He would compensate for his long absence by extravagant shows of generosity with his children. For John, money became associated with these brief but pleasurable interludes when father was at home and the Rockefellers functioned as a true family. So remember, this is his opinion of his father when he's still a child. He is not yet of the age where he's old enough

• 13:33David Senra?

  to take the measure of the man that his father actually is. And so these are some of the lessons that his father is trying to drill into him as a very young age. To his son, he conveyed the message that commerce was a tough, competitive struggle, and that you were entitled to outwit the other fellow by any means. He tutored John in a sharp, relentless bargaining style. And so one of the things that Rockefeller had to learn to overcome is the fact that everybody knew that his dad was, you know, a scam artist, that he lied all the time, that he abandoned his family. And so, everybody in the town, in the neighborhood, would obviously gossip about his father. And so John had to learn defense mechanisms to deal with that, right? And so, he learns this as a

• 14:15David Senra?

  kid, but later on, he was almost like impervious to criticism. Like, he would ignore, it's almost like he built his own world within the world. And a lot of that was just because he didn't really care about society's opinions. So it said, "A boy with such a father needed to screen out malicious gossip and cultivate a brazen indifference to community opinion. This bred in him a reflexive habit of secrecy, a fear of the crowd, a deep contempt for idle chatter and loose tongues that lasted his entire life." When John was a child, Bill, listen to what he does. Listen to what his dad does. "When Bill was a child, Bill would, uh, excuse me, when John was a child, Bill would urge him to leap from his high chair

• 14:56David Senra?

  into his waiting arms. One day, he dropped his arms, letting his astonished son crash to the floor. Remember, Bill lectured him, never trust anyone completely, not even me. Never mind the crowd, he told his son. Keep away from it. Attend to your own business." The boy who faced down the vicious talk of neighbors would be extremely well-prepared to walk unscathed and even defiant through the turbulent controversies that later surrounded his life. This reminded me when I read the biography of William Randolph Hearst, all the way back on Founder's Number 145. He was raised in an environment like this. I remember I told you that I went to visit his house. It's not even his house, it's

• 15:39David Senra?

  called the Hearst Castle, it's in California. And one thing that was apparent when you read the biography is that Hearst did not like society. In fact, there's a quote from that book that says, "He didn't care about what people thought of him, and he despised society." That's not an exact fit of the way I think about Rockefeller, but it's close. It's like an echo of that idea. And then there's this long section that just describes all the different work and that John was doing as a young boy. He's like 10 or 11 at this point, but I just want to pull out one sentence because I feel this sentence is really Rockefeller's MO that he uses for his entire career. Rockefeller analyzed work, broke it down into component parts, and figured out how to perform it most economically.

• 16:22David Senra?

  Two more sentences spread out that give you an idea of how he was as a boy and how he was his whole life, in my opinion. One was not supposed to dwell on insults, but keep one's sights fixed on the practical goal ahead. And then the second thing is, I have no recollection of John excelling at anything. I do remember he worked hard at everything, not talking much, and studying with great industry. And so he's a teenager, he's about to go on the job hunt, he wants to work full-time, he wants to support his entire family. Two things before I get there. One, he's all business even as a teenager. In an extremely peculiar arrangement, John, aged 15, was already lending small amounts of money to his father and charging interest. He was never sentimental when it came to

• 17:06David Senra?

  business. He simply charged his father what the going rate was. And then second, an early example of this maxim that John would repeat throughout his life, that success comes from keeping the ears open and the mouth closed. This is a neighbor describing how he was different from other teenage boys in the neighborhood. He sat quietly in his chair, listening to what was being said. So for education, John took correspondence courses. You can kind of think of like, if you took like a college-level class through the mail, is the way I would think about that. So he would take correspondence courses to supplement his education. He wanted to learn about business and bookkeeping, and then I want to get into one of the best days of his life. And he's just, he says he's not brilliant. I would, I think he's just being humble because the way he goes about everything is just really, really smart. So he's taken this course and says it taught double-entry bookkeeping and the essentials

• 17:51David Senra?

  of banking, exchange, and commercial law. Now, remember, this is the 1850s. These are very rudimentary, right? By the time his studies had ended, he had turned 16, and he was ready to flee the traumas of his family life by focusing his energies on a promising business situation.

• 18:07David Senra?

  So he's in Cleveland and his full-time job is looking for a job. And so he says, "I went to the railroads, to the banks, and to the wholesale merchants. At each business, he asked to speak to the top man." Then he got straight to his point. "I understand bookkeeping and I'd like to get to work." Despite incessant disappointment, he doggedly pursued a position. This went on each day, six days a week, for six consecutive weeks. He approached his job hunt devoid of any doubt or self-pity. He could stare down all discouragement. "I was working every day at my business," he said. "The business of looking for work." That's just a really smart way to think about this. "I put in my full time at this every day."

• 18:50David Senra?

  He was a conformed exponent of positive thinking. And then these two sentences gives you a perfect idea of the kind of person that we're dealing with. "When he exhausted his list, he simply started over from the top and visited the businesses two or three times." Another boy might have been crestfallen, but Rockefeller— This is one of the most important sentences in the entire book, in my opinion. "But Rockefeller was the sort of stubborn person who only grew more determined with rejection." Six weeks later, he finally finds a job, and this is what he said about that. "All my futures seemed to hinge on that day. And I often tremble when I ask myself the question, 'What if I had not gotten that job?'" And he takes this seriously for the entire—the rest of his entire life. This is Job Day.

• 19:34David Senra?

  He—I don't care about my birthday, I care about Job Day. He turns it into a holiday to be celebrated for the rest of his life. For the rest of his life, he would honor September 26th as Job Day and celebrate it more than his birthday. So he's working for these merchants and their primary business is like produce and grain. I just want to pull out a couple of highlights here because we see these personality traits that he keeps for his entire life. He is extremely precise, extremely disciplined, extremely frugal, and extremely success—obsessed, rather. "Work educated him, work liberated him, and work supplied him with a new identity." "I learned to have great respect for figures and facts, no matter how small they were," he said. "He chided his rivals." Uh, he hated like sloppiness.

• 20:17David Senra?

  Uh, "Many kept their books in such a way that they did not actually know when they were making money on a certain operation and when they were losing." "He closely reviewed every bill, confirming the validity of each item and carefully adding up the totals down to a penny." He pounced on errors, even if it was just a few cents, and reacted with scornful amazement when the boss next door handed his clerk a lengthy, unexamined plumbing bill and said, "Please pay this." Rockefeller was appalled by such cavalier indifference. He displayed a bulldog tenacity that took people by surprise. This is a great, because this gives you, this is the way I think about him. Like, the language that Chernow is about to tell you and I right here, it really, like,

• 21:00David Senra?

  the visual matches in my mind perfectly as I'm reading the book. He was pale and patient as an undertaker. He would wait until the debtor capitulated. He collected payment from people as if his life depended upon it. And one idea that you and I talk about over and over again, because it pops up in these books, and I think it's completely opposite of how people that are not founders and entrepreneurs think, is that belief comes before ability. You don't accomplish great things and then think that, and then believe you can do it. Now, you believed it way before that accomplishment ever came, right? And so, what he's about to say here, keep in mind, he is saying this, this statement that he would repeat over and over again to everybody, at this point, he talked a lot more. Later in life, they call him the Sphinx. But with the statement he's about to make, he is making a dollar a day at this point

• 21:45David Senra?

  in his life, and he'd go around yelling, "I am bound to be rich." Belief comes before ability. Rockefeller derived pleasure from work and never found it cheerless drudgery. The business world entranced him as a fountain of inexhaustible wonders. He was so obsessed that he was worried. He thought it was like, almost like sinful, so he tries, he tries to set up a system so he doesn't, so he works less, and he fails at it. So, says, "One day, he decided to throttle this obsession. I made a deal with myself not to be seen in the office after 10 o'clock, after 10:00 PM within the next 30 days." It is telling that the young man made such a pledge to himself and equally revealing that he found it impossible to obey.

• 22:31David Senra?

  So then they go into great detail about like his Baptist upbringing, the way he thinks about religion. I just want to give you like an overview so you understand like his life was family, church and work. And that's it. And his religious beliefs informed his approach to work. It says Rockefeller never wavered in his belief that his career was divinely favored. When something good happened, he thought it was God intervening. He believed that. When Benjamin Franklin, so there's a lot of people, Rockefeller, like every single other person we studied, obviously studied people, great people that came before him. So he talks about what he learned from Benjamin Franklin a lot, Joan of Arc, Jesus, obviously. Napoleon, these are people he mentions over and over again. So it says, "When Benjamin Franklin was a boy, his father had pounded into his head the proverb,

• 23:13David Senra?

  'That when you see a man diligent in his business, he shall stand before kings.'" Rockefeller often repeated this. And this is more in his belief system. He didn't think you just got rich and then you stopped working. It's like, no, you work hard, God blesses you, you get rich and then you keep making money. Because the more money you can accumulate, the more money you can actually give away. Which, that's why he ran the largest business of his day, but also the largest philanthropic enterprise of his day. "Even those who amassed great wealth continued to labor since they worked for God's glory and not their own. The gravest sins, according to Rockefeller, were wasting time, indulging in idle chatter, and wallowing in luxurious diversions." He would preach that the man who would be rich must be thrifty.

• 23:53David Senra?

  Rockefeller was convinced that he had a God-given talent for making money and was obligated to develop it. I know I'm repeating myself. I'm repeating myself because this, these kind of statements are in the entire book. Even after, he has like a 40-year retirement. He lives till he's like 97. He's still talking about this over and over again. So if you were born and lived, let's say from 1850 to a little bit after the Great Depression, you saw a ton of financial panics and depressions. So they're going through one right now. It's in, this is in 1857. And he's seeing, because he does the books for his employer, that they're not in a good economic position. And so Rockefeller's approach, like the thoroughness that he had to his job, which was very rare and unusual,

• 24:34David Senra?

  is going to open up the opportunity to become a founder, to be able to work for himself. And so you and I talk about this all the time. It's just stacking opportunities, doing the best job I possibly can right now, because I have no idea what opportunity this will open up five years from now. And once I get to that next opportunity, like you just see further and further. If you just keep taking your craft seriously, keep doing the best you can do. There's going to be a series of unpredictable opportunities that you can grab that would not be available to you if you didn't do the first steps. And so Rockefeller would not have had the opportunity to become his own produce merchant if he didn't put every other bookkeeper and competitor to shame. So it says, "In charge of the books," he could see that the firm had been nearly bankrupted by the economic slump and faced a bleak future. Rockefeller wasn't one to dawdle in an unprofitable concern.

• 25:19David Senra?

  His career had few wasted steps, and he never facilitated when the moment ripened for advancement. In 1958, he was approached with an attractive opportunity. This guy named Maurice Clark, who's a few years older than Rockefeller, worked down the street at one of Rockefeller's competitors. He's like, "Hey, why don't we team up and we open up and we do our own, like, produce house?" And the reason that Clark approached him is because of this. Rockefeller already had the reputation of being a young bookkeeper of more than ordinary ability and reliability, and Clark proposed that they form a new partnership for buying and selling produce. And Rockefeller is over the moon. "It was a great thing to be my own employer," he said. "I swelled with pride."

• 26:03David Senra?

  And so when he was 95, this is how he looked back at this time in his life. "Oh, how blessed the young men are who have to struggle for a foundation and a beginning in life. I shall never cease to be grateful for the three and a half years of apprenticeship and the difficulties to be overcome all along the way." So again, that's another example. He's constantly praising adversity in early life as giving him strength to deal with all the stuff he had to deal with later on in his life. And it's perfect timing. They're going to have exactly one year in business before the Civil War breaks out, and they're going to make... The Civil War makes Rockefeller his first fortune, but he's not matched up with... He's got Clark, and then they take on this other partner called... with the last name of Gardner. They're not on Rockefeller's level. And so there's something I read in the biography of Joseph Pulitzer.

• 26:48David Senra?

  I think it's Founder's Number 135, if I remember correctly. But there's a line that was fantastic, because Pulitzer did the same thing when he was starting out. And it said, "Pulitzer was an annoyance to those less inclined to work." You could think of Rockefeller in the same way. "Rockefeller was bound to clash with Gardner and Clark, for he approached his work with unflagging, humorless energy."

• 27:08David Senra?

  And this is such a fantastic little like, he's constantly repeating himself, repeating things to himself and like, kind of controlling his inner monologue, and I love this. This is what he would tell himself at this point in his career. "Your future hangs on every day that passes." Life was a serious business to me when I was young. He felt, and the reason is because he has to support his entire family. He can't fail. That's just not an option for him. He felt contempt for Clark and Gardner's easygoing ways, and they found him both a killjoy, but also a welcome and a grating presence in the office. So he's kind of, you know, maybe he's not somebody you want to be friends with, but really good at their job is the way to think about that. When Gardner purchased an interest in a $2,000 yacht, Rockefeller roundly condemned this extravagance. Now, this is crazy that

• 27:51David Senra?

  this is happening because they're like, six or seven, maybe eight years older than he is. He's in his very early twenties, maybe 21 at the time. They're close to 30. And so, listen to what he does here. Gardner walks up to his desk. "Hey, John, a little crowd of us are going to take a sail in the yacht. I'd like you to have a go-along. I think it would do good for you to get away from the office and get your mind off business for a while." His young partner wheeled on him savagely. "George Gardner," he sputtered, "you're the most extravagant young man I ever knew. The idea of a young man like you just getting a start in life owning an interest in a yacht? You're injuring your credit at the banks, your credit and mine. No, I won't go on your yacht. I don't even want to see

• 28:30David Senra?

  it." Later on, Rockefeller learned to camouflage his business anxiety behind a studied calm. I almost think of it like a mask. He could put on this mask. You had no idea what he was thinking. It's amazing how much self-control this guy had. So later on, he'd camouflage this anxiety behind a studied calm, but during these years, it was often graphically displayed. And so, the business is doing really well. They're making a good profit, and he does something that's smart here. And so, the way I describe- He would talk to himself every night before he goes to bed to make sure he's like, "Okay, I have a great start, but don't mess this up." It's very common for people, you know, they're poor, now they're comfortable, they let their foot off the gas, and the way I describe this is what he's saying is like, "If you

• 29:13David Senra?

  go to sleep on a win, you wake up with a loss." Rockefeller refused to let that happen to him. He went through the week cautioning himself with proverbs taught by his mother, such as "pride goes before a fall." When he rested his head on a pillow at night, he warned himself, "Because you've got a start, you think you're quite a merchant. Look out, or you will lose your head. Go steady. Are you going to let this money puff you up? Keep your eyes open and don't lose your balance." And so that's what he's saying at the point, at this time in his life, this is what he's saying as an older man looking back at this point in his life. "These intimate conversations with myself had a great influence on my life. I was afraid that I could not stand my prosperity, and I tried to teach myself not to get puffed up with any foolish notions."

• 29:57David Senra?

  And so he talks about it a great deal, the bottleneck at the beginning of his company, or, excuse me, the beginning of his, yeah, I guess, company or career, the bottleneck was always money. It was not opportunity, which is very fascinating, because later on in life, you know, he talks, he criticizes like bankers and Wall Street a lot. So Chernow picks up on this contradiction in, if you study the early career with how he, we talked about later on in his life. He says, "For all his mistrust of bankers, Rockefeller owed much of his rise to their assistance. The hardest problem all through my business career was to obtain enough capital to do all the business I wanted to do and could do, given the necessary amount of money." Why is that important? Because as a partner in a produce house, Rockefeller was strategically positioned to profit from the Civil War.

• 30:40David Senra?

  Talked a little bit about this when I studied his partner, Henry Flagler, last week, so I'm not going to repeat too much of that, it's in the podcast, the last podcast I did if you haven't listened to it. But it says, "Though only 21 at the outbreak of the war, John was effectively in the position of a middle-aged father responsible for a family of six." So I think it's important for two reasons. One, I can't fail. I have too many people that are dependent on me, right? And number two, you see this, he's about to break up with his partners. And the reason is because it almost might seem like a contradiction when you study his career because he was like super frugal, down to a penny, did this entire life, no matter how big his business is. But he was also default aggressive with the amount of money that he would invest and borrow into the growth of his business. And so a few years into the Civil War, it says their annual profits had soared to almost

• 31:24David Senra?

  four times what they had earned during their first year. So then they had one year before the Civil War, and then the Civil War takes their business out, and they were turning profit. I don't think Rockefeller ever had a single year of loss in his entire career. It's insane. But now that number is four times bigger, and this is a result. While he was still in his twenties, the Civil War had converted Rockefeller into a wealthy man, giving him the—this is so important because, again, think about this idea of stacking opportunities. I took my bookkeeping job, right? It's the only job I can get. I took it more seriously than anybody else. This drew the attention of other people, right? The other people in the industry was like, oh, John's on another level, right? That opportunity, taking that opportunity seriously, led me to be invited into a partnership to be my own boss and own my own company, right?

• 32:09David Senra?

  Then, something out of my control, the Civil War greatly increased the value of that opportunity. And the fact that I made so much money from that second opportunity is going to lead me to the third opportunity, which is oil. This is so important. While he was still in his twenties, the Civil War had converted Rockefeller into a wealthy man, giving him the funds to capitalize on a new industry, then flowering in the northwest corner of Pennsylvania. For all the substantial profits booked by Rockefeller during the war, they would be pocket change compared to the profits flowing from the rivers of black gold that were now gushing. And what is the demand that's going to be behind all this future profits? When we're talking about oil... We're not talking about the stuff that goes in automobiles yet.

• 32:52David Senra?

  In fact, that actually happens when he's retired. We're talking about kerosene. We're talking about, this is before the invention of the light bulb. In 1850s, whale fisheries had failed to keep pace with the mounting need for illuminating oil, forcing up the price of whale oil and making, this is one of the, you could think of it, this is one of the competitors for Rockefeller's business, one that he's going to absolutely destroy. So it would force up the price of whale oil because the demand was so great and making illumination costly for ordinary Americans. That meant that only the affluent could afford to light their houses every evening. Both urbanization and industrialization sped the search for an illuminant that would extend day into night.

• 33:33David Senra?

  And so that's why later on, he kind of rejected all his critics because he's like, before this commodity, right, only the rich people could afford to have light at night in their homes. I made it so everybody could. And I just want to pull up one paragraph to you before we get how he gets into oil, which is very interesting because it starts out as a side business. It's, this is what I've tried to explain a few times, and I think Trenal does a better job than I did, is just why it's so important to understand that this was a religious mission for him. It's not the same thing as most people starting businesses. So it says Rockefeller always viewed the industry through rose-tinted spiritual lens, and this materially aided his success.

• 34:12David Senra?

  For his conviction was that God had given kerosene to suffering mankind, gave him unswerving faith in the industry's future. That's important because we got to talk about the fact that he had a longer-term perspective than all of his other competitors. I'll get to that later. Don't forget that part. It gave him faith, his unswerving faith in the industry's future, enabling him to persist where less confident men stumbled and faltered. And so his partner Clark has two brothers that are in the very beginning of the oil business. They're the ones that convinced them to make an investment. And so it says Rockefeller and Clark pledged $4,000 for half the working capital of a new refining venture. This is the industry that Rockefeller is going to monopolize. He's not going to monopolize it with these partners, though.

• 34:56David Senra?

  Placing the 24-year-old Rockefeller squarely in the oil business in 1863. Of the initial $4,000 investment, he said, "It seemed very large to us, very large. Although they were not dreaming that oil would ever supersede their main commodity business, they considered it a little side issue." Okay, so now we're in it. This is where I have a ton of highlights and notes because this is where he's going to start building his oil business. The spot chosen for the new refinery tells much in miniature about Rockefeller's approach to business. A mile and a half from downtown Cleveland, it seemed at first glance a weird place to put a new refinery. But for Rockefeller, the inconvenience was outweighed by the fact that it would soon adjoin new railroad tracks.

• 35:41David Senra?

  And why is that important? Because that gave him the ability to ship by water or over land. Rockefeller gained the critical leverage that he needed to secure preferential rates on transportation, one of the biggest themes of his entire career. Preferential rates on transportation. It's also why so many people hated him. Which is why he agonized, and this is really important too, this last sentence is really important because we've seen this over and over again in the history of entrepreneurship. Which is why he agonized over plant locations throughout his career. He agonized over them. He did not outsource it to other people. If it is of critical importance to your business, you have to do it yourself. This is why Sam Walton picked out the locations himself.

• 36:23David Senra?

  He approved the first 130 Walmarts. We also saw this with Elon Musk when he was building SpaceX. He personally approved the first 3,000 employees at SpaceX because they were critically important to his business. Let's continue on this page. There's a ton of things that are happening. No job is below you. We saw this with Harry Snyder, the founder of In-N-Out. Sell your byproducts. Control that business process. If it's important to your business, try to bring it in-house. This is something Rockefeller does over and over again. And then we'll see that there's a saying that Charlie Munger says over and over again about the importance of betting heavily. That the world does not offer an unlimited source of great ideas. When you find one, you've got to go all in. And we see that Rockefeller believed that. And it's actually going to cause his breakup with the partners.

• 37:08David Senra?

  In a few pages from now. So it says, "In the very early days, Rockefeller was not detached from the practical side of refining as he was when his empire later grew and he withdrew to his office. He was often seen at 6:30 in the morning at the refinery going into the shop, helping roll out barrels, stack hoops, or cart out shavings. Since a residue of," this is the byproduct part, "since a residue of sulfuric acid remained after refining, Rockefeller drew up plans to convert it to fertilizer, the first of many worthwhile and extremely profitable attempts to create byproducts from waste materials." Very few other people, remember, this is the very beginning of the industry, so it's not like, there's a lot of things that they had to invent for themselves. "Shaped by a childhood of uncertainty, he aspired to be self-sufficient in business, no less than in life."

• 37:53David Senra?

  This is what I meant about control. If there's a business process, if there's a vendor that was important to his business, he would find a way to do it himself. Rockefeller reacted to a perpetual shortage of barrels by deciding to build his own. When he was disgusted by a suspicious error in a plumber's bill, he told his partner, "Let's hire a plumber by the month. Let us buy our own pipes and all other plumbing material." The refinery also did its own hauling and loading. Such was Rockefeller's ingenuity, his ceaseless search for even minor improvements, that within a year, refining had overtaken produce as the most profitable side of the business, despite the uneasing vicissitudes," can't pronounce that word, "of the oil industry, prone to cataclysmic booms and busts." That's an understatement.

• 38:37David Senra?

  "He would never experience a single year of loss." That is insane. I almost feel like we should have a minute of silence, thinking about how insane that is. If Rockefeller entered the refining business with some reservations, he soon embraced it as the big, bold opportunity that he had craved. Never one to do things halfway, he plunged headlong into the business, and his enthusiasm overflowed into his home life. Sharing a room," this is before he's married or anything, he's sharing a room with his brother William. William's going to be one of his partners in Standard Oil for basically their entire lives. Sharing a room with his brother William, he often nudged him awake in the dead of night. "I've been thinking out a plan to do so-and-so," he would ask. "What do you think of this scheme?"

• 39:21David Senra?

  He's like 24, 25 years old when he's doing this, keep in mind. Rockefeller leaped into oil with a zest reminiscent of his absorption in the Baptist church. I just want to read two quotes from you. From Charlie Munger, both expressing the same idea. One comes from Poor Charlie's Almanack, the other comes from the book The Tao of Charlie Munger. He says, "The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds, and the rest of the time, they don't. It's just that simple." Second quote, "You should remember that good ideas are rare, and when the odds are greatly in your favor, bet heavily." And this is more about the early days of the oil industry. Really, to think about what's happening here is Rockefeller's early enough to build a

• 40:03David Senra?

  compounding defensible advantage, but late enough to know that this industry won't disappear. And so it says, "The business in the early years was sort of Goldfield rush," he reminisced. "Great fortunes were being made by some of the first adventurers, and everything was carried on in sort of a helter-skelter way. Rockefeller represented the second, more rational stage of capitalist development, when the colorful daredevils and pioneering speculators would give way to the men who had grown up in the hard school of life, calculating and daring at the same time, above all, temperate and reliable, shrewd and completely devoted to their business." That is a great... It's amazing that that sentence can compress the idea and the traits that Rockefeller

• 40:48David Senra?

  used for his business. He was calculating and daring at the same time. He was reliable, shrewd, and completely devoted to his business. By the time Rockefeller arrived in the oil regions, it looked as if oil would be more than a transient phenomenon. Looked that way to him. He's gonna have a massive advantage over other people who had short... who only wanted to book short-term profits. This point is made on the very next page. Rockefeller succeeded because he believed in the long-term prospects of the business and never treated it as a mirage that would soon fade. He had an unfailing knack of knowing who would help or hinder him in his career. So he's having beef with his partners at this point. Let me repeat that. He had an unfailing knack for knowing who would help or hinder him in his career. He recruited the very best.

• 41:32David Senra?

  His team was by far, like, his entire team, as we go through this, you realize, like, oh, all he's doing is recruiting other founders. So the management that went on managing and running Standard Oil for decades were all people that had run their own businesses. And he not only did that for partners, but let's say if you could beat him at something... Whether you're an attorney or like a supplier, you're like, oh, this dude was better than me at that? Okay, I'm gonna go hire him. It was just really, really smart how he approached everything. So he's partnered with the Clarks at the point. He said, "The Clarks were the first of many business partners to underrate the audacity of the quietly calculating Rockefeller, who bided his time as he figured out how to get rid of them." And this is one of my favorite stories. I'll get there in a minute.

• 42:16David Senra?

  I just want to bring out something that's really important. One of the best quotes from Michael Jordan I ever heard was that successful people listen. Those who don't listen don't survive long. Rockefeller would agree if he heard Michael Jordan say that. "He listened closely to what other people said and filed away as much information as he could, repeating valuable information to himself until it was memorized. There was a humility in this eagerness to learn. As he said, quote, "It is very important to remember what other people tell you, not so much what you yourself already know." So we're gonna see what him and his partners are fighting over. And really, we're gonna get to two things before we get there because this is something you and I talk about over and over again. It appears over and over again in entrepreneurship. Bad boys move in silence. Rockefeller was not going to tell adversaries

• 43:00David Senra?

  what he was thinking or what he was going to do next, right? As part of Rockefeller's silent craft and habit of extended premeditation, he never tipped off his adversaries to his plans for revenge, preferring to spring his reprisals on them. He's about to do this to his partners. And why? Because Rockefeller's like this, you know, good Christian dude in his viewpoint, but he also has these things where it like kind of slips from time to time, where you could see that he has just this extreme distaste and disgust for people that don't take their work as seriously as he does. Rockefeller wanted to be surrounded by trustworthy people who could inspire confidence in customers and bankers alike. He drew a characteristic conclusion. The weak, immoral man was also destined to be a poor businessman. And so he wanted you to take it seriously,

• 43:45David Senra?

  but he also wanted you to be bold. He did not come into this industry to take part. He came in to take over. His idea is like, I'm just gonna control everything. Remember, we talked about this over and over again, how robber barons, they just think a lot differently. It's like, I don't even want to buy up like all the competitors. I want to control the whole industry. So it says Rockefeller disclosed an incident that cast light on his relations with his partners. They were very angry when I borrowed money to extend our business of, when I, to extend our business of refining oil. They came to him, "Why have you borrowed a hundred thousand dollars?" That's an insane amount of money, by the way, at this time. "Why you have borrowed a hundred thousand dollars?" they exclaimed, as if it was some sort of offense. So, they had a hard time understanding.

• 44:27David Senra?

  He's like, he's super frugal, on one end of the spectrum, extremely frugal, not gonna let the business waste a penny. But he's also, on the very other end of the spectrum, willing to spend and to borrow and to go big. "I will borrow every single dollar the banks will give me because I believe..." Remember, he's got this like messianic belief in what he's doing. He's this weird combination of extreme frugality and extreme boldness. You know, he's like, "I can't believe they're upset." Like, if I'm doing something bad. "Yeah, I borrowed a hundred thousand dollars at a time where I think, you know, the average American would make something like ten dollars a week or something like that." Like, that's a lot of money. So it says, "It was a stupendous sum, but all Rockefeller could see was that his partners lacked his audacity.

• 45:08David Senra?

  His partners were irked by both Rockefeller's frugality and his extravagant spending, his tight-fisted control of details, and his advocacy for unbridled expansion. These are traits that may seem conflicting in their minds that actually work extremely well together. Daring in design, cautious in execution, it was a formula he made his own throughout his career. By 1865, Rockefeller was 25 years old and decided it was a time for a showdown with his partners." And this sentence I'm about to read to you is the one sentence I remembered from years ago. I actually remembered it differently, but it says, "He wasn't the sort to persist in a flawed situation."

• 45:49David Senra?

  So I had remembered that as, "He wasn't one to persist in a flawed situation. He was gonna either fix it or get out of it." So he has a belief in what he's doing, belief in the future of the industry. His partners want him to slow down, he refuses. So this is where they figure out, this is where the partnership's gonna dissolve. I'm actually gonna pick up a different book and read from it because I read this story. There's this book, Conspiracy, I think it did it for like Founder's Number 33 or 32, I can't remember. It's this book written by Ryan Holiday, and I think his description of what's about to happen in the book is actually really good, so I'm gonna read from that right now. So it says, "There's a story about a young John D. Rockefeller who found himself stuck with bullying corrupt business partners. He wants to break with them, but he can't because they control the votes. They're squeezing his business to death. They abuse him. They talk about forcing him out. What is he to do?"

• 46:33David Senra?

  Quietly, Rockefeller lines up financing from another oilman and waits. Finally, there is a confrontation. One of them tries to threaten him. "Do you really want to break this up?" "Yes," he says, and calls their bluff. They go along, knowing that their firm's assets will have to go to auction. They're sure they're going to win. Rockefeller doesn't have that kind of money. He bids, they bid, he bids, they bid. Rockefeller wins the auction. A few weeks later, the newspaper announces his new partnership, revealing who had backed his bid, and the news that Rockefeller, at 25 years old, is the owner of one of the largest refineries in the world. And this is what Rockefeller said about that. "On that day, his partners woke up and saw

• 47:17David Senra?

  for the first time that my mind had not been idle while they were talking so big and loud. They were shocked. They had seen their empire dismantled and taken from them by the young man that they had dismissed." Rockefeller had wanted it more. Now, back to Titan. Having emerged as his own boss, he would never again feel his advancement blocked by shortsighted, mediocre men. This is all about control and self-belief. He thought that most other entrepreneurs in the oil industry sucked, and he didn't want them on his team. And part of this, again, goes back to his just insane self-belief. Rockefeller had unyielding faith in his own judgment. And so, this is a description where we are

• 48:02David Senra?

  in not only the career of Rockefeller, but also in history. By the end of the Civil War, Rockefeller had established the foundations of his personal and professional life, and was set to capitalize on the extraordinary opportunity beckoning him in post-war America. "From this point forward, there would be no..." This is such a great sentence to think about the way Rockefeller approached it. This is one of the things I most admire about him. "From this point forward, there would be no zigzags or squandered energy, only a single-minded focus on objectives that would make him both the wonder and terror of American business." This made me think of a paragraph I remember from his autobiography. I read that for Founder's Number 148, if you want to listen to it after this episode. And he said, "We devoted ourselves exclusively to the oil business and its products.

• 48:45David Senra?

  The company never went into outside ventures, but kept to the enormous task of perfecting its own organization." That task starts now.

• 48:56David Senra?

  This is why Rockefeller is just in the right business at the right time. Remember, this is before the light bulb has ended. Thomas Edison is 18 years old at this point in the story. Says the war, the Civil War just ended, right? But it had stimulated growth in the use of kerosene. Why? Because it cut off supply of Southern turpentine, which had yielded, which was a key ingredient in a rival illuminant. So imagine you have a product and there's all these world events that are taking place where it's going to knock out of two, you have, there's three, there's three competitive products, you own one of them, right? Or you're about to monopolize the use of one of them and your other two quote unquote competitors are knocked out by the war. So it says, "The war had stimulated growth in use of kerosene by cutting off supply of Southern turpentine, which had yielded, which was an ingredient in a rival illuminant."

• 49:41David Senra?

  "The war also disrupted the whaling industry and led to the doubling of whale oil prices. Moving into the vacuum, kerosene emerged as the economic staple and was primed for a furious post-war boom." One thing Rockefeller was adamant about from the very beginning, no one will have lower costs than me. And then I'll get into the point that you're building a business, stress is normal, it's just something that you've got to work through. "As a self-made man in a new industry, Rockefeller was not held back by precedent or tradition, which made it easier for him to innovate. He continued to value autonomy from outside suppliers." That's just a fancy way to saying, if that business process is important, I'm bringing it in-house.

• 50:21David Senra?

  At first, he had paid $2.50 for barrels before he showed in an early demonstration of economies of scale that he could manufacture them himself more cheaply. Soon, his firm made thousands of blue barrels daily for less than a dollar per barrel. So I was paying $2.50 from this outside supplier. Rockefeller was always convinced he could do things better than other people. He gets it down to a dollar. So a dollar fifty times thousands of day, thousands a day. Remember, we're in the 1860s. This is crazy. Other refiners bought and shipped, oh, this is, this is wild to me, too. So you need timber, right? In your factory. So other Cleveland refineries would buy and ship timber to their shops, where Rockefeller

• 51:01David Senra?

  had the, had the wood sawed in the woods, then dried in kilns, reducing its weight and slicing transportation costs in half.

• 51:13David Senra?

  So now, all the timber that I need, my competitors are paying double, right? They're paying more than double for barrels. This is something he just keeps killing people on costs. And this is, I'll get to it later, I'll make the point later on, because I know I have notes on this, but the idea is just like, you have lower costs, means more profit. More profit means he starts buying out his competitors. It's just this virtuous cycle that he uses over and over again. But this is like, I can't stress this enough. He had like, this insane attention to every single process, where it's just like, at one point, they're like soldering, I think they're closing barrels or something like that, and he's like, "Well, how many drops of solder do you use?" "Like, 40." "Have you tried using 38?" "They tried 38, it leaks." "They tried 39, it doesn't." And he's bragging about that later in life, where he's just like, "That one thing, you

• 51:58David Senra?

  know, saved me hundreds of thousands of dollars a year, because of the scale of my operation." He never, he's sitting, and he applies this at home, too. I have highlights, I'm not going to include in the podcast, but it's an old man, sitting there, watching like, the people that work in his house, cut like, little pieces of wood for the fire, and he's like, "Well, how long is that?" "So, like, 14 inches." He's like, "Try 12." "They try 12, they notice no difference." Just like, that's just the way he thought, and he applied that to everything. And then he talks about the stress of trying to build a business in a brand-new industry. There's a ton of uncertainty. He says, "In this early period, Rockefeller was a chronic warrior, who labored under a great deal of self-imposed stress. I shall never forget how hungry I was in those days. I stayed out of doors, day and night.

• 52:41David Senra?

  I ran up and down the tops of freight cars, when necessary. I hurried up all the boys." And I think later in life, he talks about all the stress and anxiety during this period, like, even as the richest person on the planet, it wasn't worth it. He's like, "I'd never recover from all that stress." I recently learned this maxim from Sam Hinky, that I think is fantastic, and he says, "You should always have the longest view in the room." That's exactly what Rockefeller did here. "There were two types of oilmen. Those who thought the sudden boom was an unstable mirage, and who cashed in their profits as soon as possible, and those like Rockefeller, who saw petroleum as the basis of an enduring, an enduring economic revolution." Having the longest view in the room benefits Rockefeller later on because a lot

• 53:23David Senra?

  of his competitors that he buys out, they're so short sighted, they just sell because they're like, okay, I can just make money right now. And there were so many of them that had that short term thinking, which I think is completely natural to humans, by the way. And it's just that greatly benefited this just slow, methodical march to complete industry domination that plays out in this book. We got to go back to just how stressed he was and the fact that his bottleneck is always going to be money. And then eventually, he's just going to get so much more money that that becomes like his main asset. And that's what usually helps him put a lot of his competitors out of business. At this stage of his career, he turned inescapably to the bankers. One can hardly recognize how difficult it was to get capital for active business enterprises at this time. In the beginning, we had to

• 54:06David Senra?

  go to the banks, almost on our knees, to get money and credit. When dealing with the banks, he facilitated between caution and daring. This is wild. So, kind of like the euphoria and terror, you know, entrepreneurial emotional roller coaster you and I always talk about. He often went to bed worrying about how he would repay his large volume of loans. Then he awoke in the morning, refreshed by a night's sleep, and determined to borrow even more. It's impossible to comprehend Rockefeller's breathtaking ascent without realizing that he had always moved into battle backed by abundant cash. Whether riding out downturns, because remember, you're talking over the first like 40 years, 30, I think he retires from Standard Oil like 40 years, I think he ran it for 30 or 40 years, I can't remember. There had to be, you know, three, four major, you know, financial panics in

• 54:50David Senra?

  there. And he takes advantage of every single one because he's got a ton of cash when everybody's kind of running away. It's impossible to comprehend Rockefeller's breathtaking ascent without realizing that he always moved into battle backed by an abundant cash. Whether riding out downturns or coasting on booms, he had, he kept plentiful reserves, so in good times and bad, right? And won many bidding contests, simply because his war chest was deeper. That's really important because at this stage, remember, he's primarily a refiner, right? That's important because there was a finite number of competitors. So he could kind of wipe out the entire board. And by the time other people jump in, he's just too powerful to stop. At one point, he controls like 90% of every single important part of his industry.

• 55:31David Senra?

  The next nearest competitor is like 20 times less his size, to give you an idea of just the difference between the company he's building and the company all of his competitors are trying to build. And then we see again the benefit of impatience. And really, what I told you, I think it was on the Alexander, the great podcast of what I learned about the intolerance of slowness. That's actually Alexis Rivas, who's the founder of Cover. I actually met him recently. I flew out to LA just to meet him because I just love that description. It's one of my favorite things anybody's ever said to me. He's completely intolerant of slowness. Rockefeller's the same way. One is again impressed by the fantastic forward motion of his career, how quickly he evolved from humble supplicant to impatient businessman.

• 56:14David Senra?

  And that is also what caused him to break up with his partners because he saw this gigantic opportunity in front of him, like, hey, calm down or slow down, you know, don't be so daring. He would think things through. He's very patient in like his, the way he like master his plans and his conspiracies. But once he was sure, he just, there was no brakes. He just took off. And so at this point, we're still not in Standard Oil. They're going to eventually make the company official. They're going to sell shares. This is still a partnership. And now this is where, and this is where, what I meant was like Rockefeller is also smart about grabbing partners that lack things that, like that have skills that he lacks. So this is where he pulls in Henry Flagler, not going to repeat anything I talked about last week, but this is really important because I think this is an illustration of what Charlie Munger says and the role that he really feels that he played for Warren Buffett.

• 56:59David Senra?

  He's like, everybody engaged in complicated work needs colleagues. The discipline of having to put your thoughts in order with somebody else is a very useful thing. That's Charlie Munger saying. For all Rockefeller's self-assurance, he needed one associate who would share his daydreams, endorse his plans, and stiffen his resolve. And that indispensable alter ego was Henry Flagler. And what's crazy to me is now having read that biography of Flagler and now having read Rockefeller's biography twice, I just could not, like, they're both extremely formidable people. Rockefeller assembled like the dream team of business. They would both be unbelievably gifted on their own. And the fact that they were able to work together for 15 to 20 years, not fight and to actually help each other. It's just absolutely remarkable to me.

• 57:44David Senra?

  So Flagler not only brings like backup, but he also brings this really, really wealthy Cleveland family, the Harknesses. And so Harkness is going to give $100,000. He also, as precondition of his investment, he wanted Henry to become treasure. And so Rockefeller welcomed this. He needed money. He wanted help. He wanted talent. And he's also got like an older, more successful businessman at the time, you know, telling him. He's like, this is what he says, "Young man, you can have all my money you want. You're on the right track and I am with you." And it says, "Since Harkness was also director of banks, railroads, mining, real estate and manufacturing companies," he's like a little tycoon himself, right? "This tie ushered Rockefeller into a new universe of business connections." Rockefeller was just 27.

• 58:29David Senra?

  And it talks about his focus on not only money, but recruiting. "Starting with Flagler's recruitment, Rockefeller began to assemble the team of capable executives who would transform the Cleveland Refiner into the world's strongest industrial company." That is an insane sentence. The world's strongest industrial company. It's insane because it's true. "Neither was interested," him or Flagler, this is also good, "neither was interested in modest success, and they were both prepared to go as far and as fast as the marketplace allowed." Flagler, this is such a great description of him too, "Flagler had been chastened by failure and was acquainted with the perils of complacency." Flagler was also default aggressive and, well, today they would say wildly unethical.

• 59:13David Senra?

  And so at this time, remember, there's like really no rules to this game. Like they're inventing the game. I mean, they're laying really the foundation of the game that you and I are playing today, if you think about it. So Flagler keeps this quote on his desk, gives you an idea of who he is. "Do unto others as they would do unto you, and do it first." What makes Flagler's ethics, or lack thereof, consequential for Rockefeller's career was that he was the mastermind of many negotiations with the railroads. And that was the single most controversial aspect of Standard Oil history, because essentially they're just rigging the game in their favor. And why is that important? Because transportation assumed a pivotal place in the petroleum business for an elementary reason. Oil was a cheap, standardized commodity, so transportation costs inevitably figured as a critical factor in the competitive struggle.

• 59:59David Senra?

  And that's kind of an echo of an idea that Buffett, that Warren Buffett writes about in his shareholder letters. He's like, listen, man, if you're engaged in a commodity business, like you have to be the low-cost provider. And so, again, it goes into why they had this advantage. Like, how come they-- size is gonna be a big part, too, but why could they keep pressing the railroads into doing these kickbacks, right? So it says, "The overriding reason for his attachment to Cleveland was that it was a hub for so many transportation networks that he had tremendous room to maneuver in freight negotiations." He had a bunch of options. He could send oil by water, greatly enhancing his bargaining power with the railroads. Armed with this potent weapon, Rockefeller obtained such excellent railroad rates. Fed by rail links, Cleveland also

• 1:00:39David Senra?

  served as a natural gateway to Western markets. Other Cleveland refiners evidently made the same calculation, so a few years later, the city now supported 50 refineries. He is, I think, four years into the oil business at this point. Now, this is the way Rockefeller thinks. It's important for me to point this out to you. He says, "Other Cleveland refiners figured that out. Okay, we're making the same calculation. Cleveland's a good spot to post up. A lot of people believe that. The city now supports 50 refineries." Rockefeller looked at that as a problem to solve. And so Flagler and Rockefeller are gonna figure out a way to have way lower costs than their competitors. It also says, "With virtuosic brilliance, Rockefeller and Flagler played all the three major railroads

• 1:01:23David Senra?

  against each other in seemingly endless permutations. They even managed to manipulate such notorious figures as Jay Gould. Rockefeller, when asked"--I gotta read about Jay Gould. He's in all these books over and over again. Rockefeller, when asked the name the greatest businessman he had ever met, instantly cited Gould. Gould, himself, later asserted that John D. Rockefeller had possessed "the highest genius for constructive organization in American economic history." And so you can think of all these rebates and everything. It's just like a network of secret companies. I'll go into a lot of detail, but J. Gold actually does a partnership with them. J. Gold hatched a secret deal with Rockefeller and Flagler that gave them shares in a subsidiary company. Now, this was a transportation company, and it was the first major pipeline network that

• 1:02:06David Senra?

  would serve the oil regions of western Pennsylvania, where at this point in time, I think it's almost the entire, like, the entire collection of oil in the world. As the years pass, you obviously find in California, Texas, towards the end of his career, they find it in Saudi Arabia. But it's like the most important center for oil in the world at this point. And so Gold's like, hey, let's make the pipeline, because not only can you ship by water and rail, now it's a new technology. And that's the way they reference it. It's a really important way to think about it. It's like, now we have this new technology, it was like, forget rail, forget water, forget barrels, let's just run in pipes. And why is that important? Because that gave them more leverage to get rebates for the railroads.

• 1:02:44David Senra?

  And so because of this massive pipeline network, they received a staggering 75% rebate on oil shipped through one railroad system. So 75% discount. You're shipping oil, and you're paying, you know, a dollar. I'm shipping oil. I pay 25 cents. And then they go into, there's a lot more detail, there's a lot more people involved. I'm going to simplify this, but this is really the punchline here. The young Cleveland refiners, meaning Rockefeller and Flagler, secured covert rates that allowed them to ship crude oil to Cleveland and then refined oil to New York for only $1.65 per barrel compared to an officially listed rate, the advertised rate, is the way to think

• 1:03:28David Senra?

  about that, of other railroads, of $2.40. And why is that important? Because their competitors don't know this is happening. So later on, they're like, yeah, we're going to compete with these guys. No, you can't buy us out. Are you insane? Like, let's go head to head. And then when they try to buy them out, they show them the books, and they're like, oh, Rockefeller and Flagler are making a profit at a price that causes me to go out of business. I have no choice but to sell.

• 1:03:53David Senra?

  And this is a great description of this deal from the railroad's perspective and why Rockefeller was so happy about it, never shy about his accomplishments. Rockefeller knew that he had broached a revolutionary deal. From that moment, the railroads acquired, and remember, railroads are the largest businesses in the country at this point. Oil is going to be second and obviously overtake it. So, from that moment, the railroads acquired a vested interest in the creation of a gigantic oil monopoly that would lower their costs, boost their profits, and generally simplify their lives. An ominous fact for small, struggling refiners who were gradually weeded out in the savage competitive strife. But this is also another example of the importance of stacking opportunities because the only reason he was able to do this is not only was he smart to figure out, okay,

• 1:04:36David Senra?

  I could ship by land to railroads, I could ship by water, I could also now ship by land to pipelines, but because he had run his business so efficiently, he was gigantic. He had to get big first to be able to get that, and then this deal just makes him even bigger. Even before Rockefeller accepted his first rebate, he was the world's largest refiner, equal in size to the next three largest Cleveland refineries combined. In fact, it was the unparalleled scope of his operation that enabled him to cut this exceptional deal in the first place. And so he is still rather unknown at this point in his career, but people, other people, people in the know, especially in the railroad industry, remember Cornelius Vanderbilt is still alive at this point. He's much older, but he's seeing what Rockefeller's doing, so he's like, alright, I gotta get on this guy's team.

• 1:05:19David Senra?

  Went to making an investment, that's gonna come later, but Rockefeller, he just thought he was the best in the world, I guess is the way to think that, because they're like, hey, Vanderbilt wants to meet with you, come to his office in New York. And Rockefeller's like, no, you're coming to me. This point is worth underscoring. 29-year-old John D. Rockefeller demanded that 74-year-old Vanderbilt, the emperor of the railroad world, come to him. This refusal to truckle, bend, or bow to others. This insistence on dealing with other people on his own terms, time and turf, distinguished Rockefeller throughout his career. And then I need to make a point to you.

• 1:06:02David Senra?

  Rockefeller did not invent the railroad rebate. It was a common practice in other industries, right? He just applied it to oil. So it says, "It was a common practice in all descriptions of freighting, not peculiar to oil. It was used in merchandising, grain, in everything." He was just the first one to think, hey, let's do this for oil, too. And then we see the personality of the founders embedded into the foundation of the company. He says, "I hate frills. I like useful things, beautiful things. They're admirable, but frills bore me very much." The way he built his business was really this way. No frills, no waste, and he's just focused on business and family. He detested waste. He was hyper-competitive. His family socialized only within a small circle of family members, business associates,

• 1:06:45David Senra?

  and church friends, and never went to clubs or dinner parties. "Club life did not appeal to me," said Rockefeller. "I was meeting all the people I needed to meet in my day's work." Another great idea from him. Design a schedule that you can maintain for a long time. He worked at a more leisurely pace than many other executives, napping daily after lunch and often dozing in the lounge chair after dinner. By his mid-30s, he had installed a telegraph wire between his home and his office so that he could spend three or four afternoons each week at home, planting trees, gardening, and enjoying the sunshine. Rockefeller did not do this in a purely recreational spirit, but mingled work and rest to pace himself and improve his productivity. So there's really no, like, work-life balance. It's like, to use the idea from Jeff Bezos, it's more work-life harmony.

• 1:07:29David Senra?

  So it says, "I'm not doing this just for pure recreational spirit, but I mingled work and rest to pace himself and improve his productivity. It is remarkable how much we could all do if we avoid hustling and go along at an even pace." Remember his description of his neighbors, that he would just, like, slowly plod. Walking down the side of like the road, just sitting there thinking like that's kind of how he did his work too. Just step by step by step. And then obviously he's got this huge advantage because he's developing one of the greatest monopolies the world's ever seen. In his rigidly compartmentalized life, each hour was tightly budgeted, whether for business, religion, family, or exercise. Oh, he's a fitness buff. That was also something surprising, something I forgot. These daily rituals helped to deal, helped him deal with the unbelievable tensions that

• 1:08:14David Senra?

  might otherwise have been, become ungovernable. He was under terrific strain in creating his oil empire. He fretted endlessly about his company. "For years on end, I never had a solid night's sleep," he said. "I was always worrying about how it was going to come out. I tossed about in bed night after night after night over the outcome. All the fortune that I have made has not served to compensate for the anxiety of that period." So I mentioned earlier this insane examples of his frugality. Number one, he's already wealthy at this time. His three children were forced to share one bicycle. His son, John Jr., confessed that until the age of eight, he wore only dresses because he was the youngest child and all of his older siblings were girls.

• 1:08:59David Senra?

  So he's going along, trying to consolidate as much as possible. There is not only an economic depression that's about to happen, but also the prices drop of kerosene because there's such an overproduction. And so this is when he realizes, he's like, oh, what happens in my business is my business, but also what happens to the industry is my business. And this is where he thinks, I think there's a line in the book where he thought, he's like, I have to instill order in this like this godless industry. Like, that's the way he thought about it. So it says rampant speculation had so overbuilt the industry that Rockefeller estimated 90% of all oil refineries were operating in the red. Go back to that, what the author told us, it's so important that he had these gigantic cash reserves. And it was for a reason like this. 90% of the oil refineries are operating the red. Remember, he's always turning a profit, so he doesn't have the problem.

• 1:09:43David Senra?

  And he's got a bunch of, like, this huge cash reserve. So it led to a rival in Cleveland, this guy named Alexander, to offer his interest for 10 cents on the dollar. Rockefeller obviously buys that up. Rockefeller started to doubt the workings of Adam Smith's theoretical invisible hand. So many wells were flowing that the price of oil kept falling, yet they went right on drilling. Rockefeller feared that his wealth might be snatched away from him. As someone who tended towards optimism, he said that he would always see opportunity in every disaster, so that's what that means by that. He studied the situation exhaustively instead of bemoaning his bad luck. He saw that his individual success as a refiner was now menaced by industry-wide failure, and that it therefore demanded a systemic solution. This was a momentous insight, pregnant with consequences.

• 1:10:28David Senra?

  Instead of just tending to his own business, he began to conceive of the industry as a gigantic, interrelated mechanism, and thought in terms of strategic alliances and long-term planning. This was the start of his campaign to replace competition with cooperation. So this is what I meant about these robber barons just thought differently than we do. Competition was something to, like, a problem to solve. Cooperation made more sense to them. It's interesting that all these people were born in the same time, I think, all in the 1830s, because this is how J. P. Morgan thought as well. Obviously Vanderbilt, a little older than them, he thought that way. Back on Founder's number 139, when I read The House of Morgan, this line about J. P. Morgan, I never forgot. And it says, "He saw competition as a destructive, inefficient force."

• 1:11:13David Senra?

  I'm reading this to you because the way he saw it was the same way Rockefeller saw it. "He saw competition as a destructive, inefficient force, and favored long-scale, or, excuse me, large-scale combination as the cure." Once, when the manager of the Moet and Chandon Wine Company complained about industry problems, J. P. Morgan suggested that he buy up the entire champagne country. That's just mind-blowing. Like, don't buy up your competitors, buy up the entire industry. And so that insight, the reason that Chernow says it's such a momentum insight is because this is what leads to the creation of Standard Oil. Because they're like, okay, we can't just control our company. We gotta control the oil industry to do that. We need a lot of money. And you know, there's really no such thing as like gigantic conglomerates or like multinational

• 1:11:57David Senra?

  corporations at this time. They had like skirt laws where you couldn't even own, like if you were, like your corporate structure was like, say, in one state, you weren't allowed to own assets in other states. It was just a completely different world than we live in now. The tricky part for Rockefeller and Flagler was how to supplement their capital without relinquishing control. The solution was to incorporate, which would enable them to share, sell shares to select outside investors. That's what makes them wealthy. "I wish I had the brains to think of it," said Rockefeller, "but it was Henry Flagler's idea." And to give you an idea of Rockefeller's ambition, he said, "The Standard Oil Company will someday refine all the oil and make all the barrels." It was his idea to make sure that they didn't have salaries. So it says Rockefeller's decision was that the leading men would receive no salary, but

• 1:12:41David Senra?

  would profit solely from the appreciation of their shares and rising dividends, which Rockefeller thought was a more potent stimulation for work. And on the same page, it talks about, you know, he did not want ostentatious partners. He thought that if you're inviting competition, if people think you're making a lot of money. "The office shared by Rockefeller and Flagler was somber and austere. Rockefeller never allowed his office decor to flaunt the prosperity of his business lest it arouse unwanted curiosity. From the start, he owned more shares of Standard Oil than anybody else and exploited every opportunity to augment his stake." Now, this part was absolutely insane because it really is a testament to human behavior. So remember, this is going to be one of the most valuable companies in history, but they

• 1:13:24David Senra?

  are offering shares to the public during an economic slump and economic panic. So they're offering the opportunity, think about it this way, they're offering the opportunity of a lifetime to investors, and investors are scared. And there's also just some great writing. "Rich investors did not line up to invest in Standard Oil. It was an inauspicious time for new ventures." This is in 1969, there was this crash called Black Friday. Beyond that, the speculative, and then not only that, you have an economic, you have a huge economic collapse, but they're also, it's like, the very beginning of an industry. Right? Beyond that, the speculative aura of the oil industry still deterred many reputable,

• 1:14:04David Senra?

  quote unquote, businessmen. Rockefeller never forgot how his scheme was savagely derided. As Rockefeller recalled it, "It was a course," meaning his idea, "which older and more conservative businessmen shrink back from." Remember, the investment opportunity of a lifetime, and they're running in the opposite direction. Not only are they running in the opposite direction, they're telling other people that Rockefeller is reckless and insane. What happens the very next year? Rockefeller managed to pay dividends of 105% during the first year of operations, despite one of the worst financial bloodbaths in the industry's early history. That's insane. This is such great writing here. "The man with the craving for order was about to impose his iron rule on this lawless, godless business.

• 1:14:48David Senra?

  As he scanned the field of battle, the first target of opportunity lay close to home, the 26 rival Cleveland refiners. His strategy would be to subjugate one part of the battlefield, consolidate his forces, and then move briskly on to the next conquest. His victory over the Cleveland refiners would be the first, but the most controversial campaign of his career. The year revealed both his finest and most problematic qualities as a businessman. His visionary leadership, his courageous persistence, his capacity to think in strategic terms, which to me is probably his most admirable trait, the one I'm trying to, I'd like to, to copy and emulate the most, but also his lust for domination,

• 1:15:31David Senra?

  his messianic self-righteousness, and his contempt for those short-sighted mortals who made the mistake of standing in his way." So the Cleveland massacre is this event in history where he's going to swallow up almost all of his competitors, right? That leads him to start building the biggest monopoly, the oil monopoly in the world. There's a couple of things that have to happen first that I'm going to go over. So I'm going to read my note to you first, and I think that'll help with the understanding of it. Number one, acquire an oil buyer, but don't let anybody know that you own it. He uses that over and over again. Number two, and he'd buy other refineries, buy other businesses and say, hey, like, we own it, you don't mention that to anybody at all. So number one, acquire an oil buyer and don't let anyone know.

• 1:16:16David Senra?

  Number two, raise a ton of money as everyone else is scrambling for survival. So that's a quote from Warren Buffett shareholder letters. He says, "We play offense while others scramble for survival." He runs the same playbook as Rockefeller in the sense that he always gets this massive cash reserve. So number two, raise a ton of money as everyone else is scrambling for survival. Number three, get lower prices for your company and higher prices for your competitors. It's not just enough, this is why this guy's so crazy, it's not just enough to have the lower cost than anybody else, he wants you to pay more. So it says Rockefeller engineered a covert acquisition of, I'll just skip the name, it's a New York, it's one of New York's premier oil buyers. This gave Rockefeller a sophisticated purchasing agency at a critical moment. Why?

• 1:17:01David Senra?

  Because oil prices were now being set on exchanges as opposed to just, you know, deals worked out individually. It's like, no, now we all see the same data, right? So that's why you had to buy the oil buyer. This move set a pattern of stealth that shadowed Rockefeller's career. He made the company feign independence of Standard Oil while it actually acted as its cat's paw. Bracing for the tumultuous events ahead, he boosted the firm's capital from 1 million to 3.5 million. Remember, this is during an industry-wide collapse. So I buy the oil buyer, I raise a bunch of money, now they all meet, Rockefeller and the Standard Oil, and they're like, hey, we're going to buy up all the refining, as many refining properties as we can in Cleveland. He says, "This was the opening shot of a bloody skirmish that historians came to label as the Cleveland massacre.

• 1:17:46David Senra?

  The mayhem in Cleveland began when Rockefeller struck a clandestine deal with Tom Scott." Tom Scott is the overlord of the Pennsylvania Railroad. The Pennsylvania Railroad is one of the most important players in the oil industry because the oil is all in Pennsylvania and he has a major transportation network to get the oil to other places. Right? The same year Vanderbilt discreetly invested $50,000 in Standard Oil. How do you know it's a monopoly? Because Vanderbilt's giving you money. So Scott presents an audacious scheme that he devised, which proposed an alliance between the three most powerful railroads, his railroad being one of them, and a handful of refineries, notably Standard Oil. To implement this, Scott had obtained a shell organization.

• 1:18:31David Senra?

  Some of this stuff is a little boring. It's important to know, so I'm not going to tell you all the boring stuff. But at this point, the thing about this is essentially they think, economic historians think that this is really the first real holding company in American history. That is what, it just allows you to do things that other companies couldn't do because they were restrained by state laws. But it's called the SIC, it's called the South Improvement Company. Really, this thing's going to fall apart. So I'm just telling you because what they're doing here, this sneaky rebates, collusion, getting rid of competition, it doesn't work because people find out about it. But he runs this playbook over and over again in different ways throughout his entire life. That's why I'm telling you. And people were so scared of it that from the time it was proposed to the time it was

• 1:19:15David Senra?

  struck down and found out, that's when Rockefeller does the Cleveland Massacre. So Rockefeller wielded this threat as a weapon. Right? So it says, "Under the term of this proposed PAC, the railroads would sharply raise freight rates for all refiners. But the refiners in the SIC, Rockefeller being one of them, would receive such substantial rebates, up to 50% off, that their competitive edge over rivals would widen dramatically. In the most deadly innovation, the members would also receive drawbacks on shipments made by rival refiners." That is, the railroads would give Standard Oil a rebate for every barrel shipped by other refiners. Why is that also important? Right?

• 1:19:57David Senra?

  Standard Oil would receive comprehensive information about all oil shipped by their competitors. Imagine competing in an industry and you're the only one that knows the capacity and the output of every, not only yourself, but every single other company in your industry. That is insane. So the way I summarize everything going on, because this goes on for quite a bit. And so I needed a way to compress this so I can like take this idea with me in the future. Lower prices for me, higher prices for you. Valuable intel for me, none for you. And why was Rockefeller invited? Like this, think about this, this opportunity opened up because of Rockefeller's size. This is a reward, another example of stacking opportunities. This is a reward for previous operating excellence.

• 1:20:41David Senra?

  This is insane how this all fits together. Listen, if you don't want to read the whole book, I can understand 700 pages. I was telling my friend Liberty, I was reading this book. He's like, oh, man, that's a brick. But read the first, I would say 300 pages. Because then, you know, I'm way less interested in the last 40 years of his life. Uh, you know, when just he's not building his business anymore. But damn, the first 300 pages of this book. Oh, read up until it might be like 350. I'll tell you what page. Read up until he retires. It's just incredible. Why did the nation's leading railroads offer Rockefeller terms so generous as to render them all? But omnipotent in oil refining. Uh, the railroads had engaged in such fierce price wars between each other that freight rates had sharply fallen. So they don't want to compete with each other either.

• 1:21:25David Senra?

  They want collusion, just like he wants. They want the same thing in their industry that he wants in theirs. Just a way to think about that. They needed somebody to arbitrate their disputes and save them from their own cutthroat tactics. Standard Oil would act as a quote unquote evener for the three railroads and ensure that each received a predetermined share of oil traffic. So one of the biggest things that they're shipping at this time is oil. If we have, if we do a deal with Rockefeller, he owns the oil industry for all intents and purposes. He can say, hey, I'm not, you don't stop fighting for prices, right? You each get, you know, 25% goes here, 50% goes here, 25% here. I will distribute them evenly. So that's what they're talking about that Rockefeller would become their official umpire. Rockefeller is not one to insist on the good graces of other people or rely on the good graces of other people.

• 1:22:09David Senra?

  So he also puts pressure on the railroads. He puts pressure on the railroads because he says, I'll do pipelines. He says, I'll throw, I'll, I'll ship oil through water. What he also did was try to monopolize the collection of, of tank cars. So they eventually start shipping oil instead of barrels. They put them in like these gigantic tanks, right? Rockefeller goes up and tries to buy the entire supply and then forces the railroads to lease them back from him. This is what I mean about root, like it's such ruthless. It's hyper competence and ruthless efficiency. It's unbelievable. One other far sighted, one other factor, excuse me, one other factor tempted the railroads to come to terms with Rockefeller. In a far sighted tactical maneuver, he had begun

• 1:22:51David Senra?

  to accumulate hundreds of tank cars, which would be in perpetually short supply. Oh my goodness, both refiners and railroads were struggling with excess capacity. Rockefeller's supreme insight was that he could solve his industry's problems by solving the railroads' problems at the same time, creating a double cartel in oil and rails. Instead of ruining the railroads, Rockefeller tried to help them prosper, prosper, albeit in a way that fortified his own position.

• 1:23:25David Senra?

  And that leads us to the Cleveland massacre. This is where Rockefeller's going to wind up being the world's largest oil founder at 31 years old. It's insane. Critics regarded this as a dress rehearsal for the Grand Pageant, the place where he first revealed his master plan to be implemented in a thousand secret, disguised, and indirect ways. While the SIC was alive, Rockefeller engineered his most important coup, the swift relentless consolidation of Cleveland's refineries, which gave him irresistible momentum. The threat of the SIC was the invisible club that he wavered, that he waved over Cleveland's refiners, forcing them to submit to his domination between, excuse me, between February 17th and March 28th. So we're talking, what was that, like a month and 10 days, month and 11 days? Between,

• 1:24:09David Senra?

  that is, so we're talking a month and 11 days, right? That is, between the first rumors of the SIC and the time that it was scuttled, because they found out about it, Rockefeller swallowed up 22 of his 26 competitors. And this is how he'd pitch them. Rockefeller outlined his plan for a vast efficient industry under standard oil control. He would tell them about the impending capital increases of standard oil, I have more money than you, and then he would ask them point blank, if we can agree upon values and terms, do you want to come in? And so a lot of these, this is just one example, but they're like, okay, before, I need to examine your books before I sell my company to you, right? And this is where like his obsession with low costs and collusion.

• 1:24:53David Senra?

  You know, really starts to pay dividends. That afternoon, he surveyed Standard Oil's ledgers and he was thunderstruck by the profits. Remember, at one point in the industry, 90% of them are operating in a loss. And this guy's got profits coming out of his eyeballs. And so he's like, listen, you can't compete with me. We already know it's a fated company. Come in, take the... And he says like, listen, I'm going to give you Standard Oil cash. Or, excuse me, Standard Oil stock. And a lot of these people were, again, go back to short-sightedness and short-term thinking. They took cash, and the biggest mistake you could ever make in your life. But he says, just listen, I will give you Standard Oil Company. I... Excuse me, Standard Oil Company stock or cash. I advise you to take the stock. It will be for your own good. This is what one of his competitors said about Rockefeller.

• 1:25:35David Senra?

  "He knew that he and his associates had a better knowledge of the business and a better command of the business than anyone else. You never saw anyone as confident as he was. Take Standard Oil stock," he urged them, "and your family will never know want." And since most of his competitors were losing money, he winds up buying the typical refinery, cost him a quarter of their construction costs. This is what I meant about ruthless. You can really think about them as they're ruthless, they're aggressive, and they're large. During the Cleveland massacre, Rockefeller savored a feeling of sweet revenge against some of the older men who had patronized him when he started in business. This was especially true of one of his original bosses. This is...

• 1:26:20David Senra?

  This is crazy. This is one of the guys that he was working as a bookkeeper for, who now got into refining, refining, rather. After Hewlett came to Rockefeller's home to plead for mercy, Rockefeller told him his firm would never survive if it didn't sell out to Standard Oil. He made a cryptic statement that entered into Rockefeller folklore. "I have ways of making money you know nothing about." Hewlett and his partners sold out. And a massive advantage that Rockefeller had that his competitors didn't is he was one of the first entrepreneurs in history to realize the value in economies of scale. Rockefeller borrowed heavily to build gigantic plants so that he could drastically slash his unit costs. Funny, because Rockefeller and Henry Ford wind up becoming friends

• 1:27:02David Senra?

  much later in life when Rockefeller's a very old man, you could say that Ford figured out the same thing. Rockefeller borrowed heavily to build gigantic plants so that he could drastically slash his unit costs. The volume of trade was what he always regarded as of paramount importance. Early on, Rockefeller realized that in the capital-intensive refining business, sheer size mattered greatly because it translated into economies of scale. During his career, Rockefeller cut the unit cost of refined oil in half, and he never deviated from this gospel of industrial efficiency. So that was at 31, right? He tries his first example of, let's do widespread collusion. It's a secret plan. It falls apart. Then he's like, okay, then let's make it a public

• 1:27:45David Senra?

  plan because other refineries, other refiners didn't like the plan because they weren't invited in. He's like, I'll invite everybody in. So he tries again. And that's the thing about him being so persistent. It's like, oh, you stopped me one, two, one time, two times, three times? That's fine. Get ready for my fourth, my fifth, my sixth, my seventh, my eighth attempt. I only have to get in once, and you're not going to stop me every time, is the way to think about what he's doing. And so eventually, he gives up on the idea of just even asking other for permission. He's like, forget it. I tried another cartel. That failed too. He's gonna be, he's 34 years old, so this is like three years of lapse since where we were in the story previously. And he just says, like, forget it. I'm gonna do this myself. And again, the advantage he has is he's doing this during a financial

• 1:28:26David Senra?

  panic. And he's just got more assets and money while everybody else is running scared. Rockefeller had clarified one thing in his own mind. Voluntary associations couldn't move with the speed, unity, and efficiency that he wanted. He was now through with ineffectual alliances and ready to bring the industry to heel under standard oil control. The idea was mine. The idea was persisted in spite of opposition of some who became faint-hearted at the magnitude of the undertaking. And what he means there is like, I'm controlling the whole industry. By 1873, he had crossed his own Rubicon and never looked back. Once embarked on this course of action, he wasn't a man to be hobbled by doubts. The mad dash for riches that followed the Civil War ended in a prolonged slump that ground on for six years. So he had this huge boom. Then you have the bubble pop and you've got six years of economic depression is the

• 1:29:11David Senra?

  way you can think about it. What happens during those times? Same thing that happens all the time. The stock exchange shuts down, a bunch of bank failures, widespread bankruptcies, massive unemployment, wages decreased by 25%. Eventually, this is how bad it got. It was cheaper to buy oil than it was to buy water. And so this is a fantastic historical analogy that Chernow gives us. Just as Carnegie expanded his steel operations after the 1873 panic, so Rockefeller, so did Rockefeller. He saw the slump as a chance to translate his master blueprint into reality. He would capitalize on rival companies selling at distressed sale prices. He slashed Standard Oil's dividend to increase its cash reserves.

• 1:29:53David Senra?

  Standard Oil weathered the six-year depression magnificently, a fact Rockefeller attributed to its conservative financial policy and unparalleled access to bank credit and investor cash. And then what does he do when he buys your company? Rockefeller was equally secretive and asked them, the people he was buying, to continue operating under their original names and not divulge their Standard Oil ownership. They were instructed to retain their original stationery and keep secret accounts. And they also talked about this later. This is like the third time they mentioned it. I didn't mention it to you previously. They didn't like writing things down. So clearly, they didn't want people to find out. A lot of this was like handshake, verbal. Some of this stuff's gonna pop up on paper, but they looked down upon that.

• 1:30:38David Senra?

  Don't write it. Don't tell anybody. Secrecy is extremely important to us. And then because they would, once you come into Standard Oil, you make a lot more money. He said, hey, stop, don't be flashy. Rockefeller warned that the refiners that joined Standard Oil not to parade their sudden wealth, lest people wonder where they got the cash. And this was hilarious because he'd like interrogate them. And he's like, hey, you don't have any ambition to drive fast horses, do you? And I just laugh, I put in the margin, laugh out loud. Fast horses are like the Ferraris of their day. This idea is like, you go out and buy a bunch of horses, you're racing up and down the street. It's so funny how human behavior is like consistent, right? We just use different technology. You know, it's like, oh, look, I'm rich because I got faster horses. They're like better, you know, better, higher quality.

• 1:31:22David Senra?

  Well, people are gonna wanna know where you got the money. And then he just keeps running this playbook. And this is what I mentioned earlier. I was like, oh, this is genius. His management team was founders. He just wanted people that had run, they were so good, they were good enough to run their own businesses. Now you come in and like you just add your skills to like, we're all focused on the same goal. Instead of you trying to make your, my, my company A competing with company B, it's like, no, we're both jumping into company A and just making it better. He was not only purchasing refineries, but he was assembling a managerial team. The creation of Standard Oil was often less of a matter of stamping out competitors than as seducing them to cooperate. And then he uses that same playbook. When people, people like, no, I don't want to come along. He's like, take a look at my books. When this guy hesitated, Rockefeller played his trump card. He invited them to inspect the Standard Oil

• 1:32:05David Senra?

  books. When they later examined them, that he was taken aback. Rockefeller could manufacture kerosene so inexpensively that he could sell below his, the guy's name's Warden, below Warden's production cost and earn a profit. So at this point in the story, the same playbook that he's running that he ran in Cleveland, a few years later, he's doing the same thing. He's like, oh, you know what? I want all the Pittsburgh refineries too. I'll just take them all. So it says of 22 Pittsburgh refineries in existence, when Rockefeller struck his deal, only one was still in existence two years later. And then how did he choose not only who to buy? It's really the one idea applied over and over and over again for a long period of time. Rockefeller was buying refineries in strategic railroad and shipping hubs where he could negotiate excellent transportation rates. Why is that important?

• 1:32:49David Senra?

  Because what did Warren Buffett say? When a company is selling a commodity, being the low cost producer is all important. But one of his production costs is his transportation rates. He never took his eye off that. And so a few weeks ago, on that Francis Greenberger podcast, it was episode 243, there's an idea that in there I really liked that Francis said, he's like, listen, once something works once, immediately start scaling it. Do not dilly-dally. So as he's buying up all these refineries, doing, like, he just keeps pushing. And so what he'll do is as Rockefeller, I should be clear, Rockefeller buys up refineries, he'll then use some of the people that ran those refineries as talent to go buy up other refineries. And he pushes them so fast, this is again, another example of being intolerant

• 1:33:30David Senra?

  of slowness. So it says, in September 1875, Standard Oil formed the Acme Oil Company, a front organization to take over several local refineries under Archibald's guidance. So this is the guy running it. He's also going to run it with this guy named Camden. But the important part here is that how fast they move. Within months, he had bought or leased 27 other refineries, moving at such a pace, such a hectic pace, that he nearly drove himself to collapse. And so he buys up refineries, takes their talent, gets them to go out and buy other refineries, moves extremely fast. That's not enough. This is what he also does. A lot of people, when they're, when they're approached, they don't want to sell to Standard Oil. Like, they're getting too big, that's too dangerous. So what does he do? He, some of the people he bought refineries, say, "Don't tell them that you're with me. Go and buy,

• 1:34:14David Senra?

  try to buy their refinery as if you're gonna compete against me." They don't, what I'm saying here is like, the refiners that, some of the refiners that he's buying, don't know that they're selling to Standard Oil. They literally think that they're selling to a competitor of Standard Oil. Just so relentless. This is the end result. The completion of this campaign left Rockefeller still in his 30s, the sole master of American oil refining. It also meant that he had monopolized the world kerosene market. He was now living a fantasy of extravagant wealth, and few people beyond the oil business had ever even heard of him. And part of this is that he actually had a belief in oil, for the long term, that wound

• 1:34:55David Senra?

  up being a massive advantage. People were still doubting him, even at this point. So he talks about, like, the mistakes that the people are making, where he's like, "Listen, I don't want to give you cash. I want," he's like, "I'm always," he always wants to conserve his cash, right? Because like, his, his biggest problem is bank, or excuse me, his bankroll, his bottleneck, like I said earlier, is just like, it's always like, "How the hell do I bankroll this marathon buying spree that I'm on?" And so he always offered the option of taking payment in either cash or stock, and he dreaded the choice of cash. And so he says, "If they chose cash, he often had to scramble among banks to scrounge up money. By encouraging opponents to take stock, he conserved funds and also enlisted the allegiance of foes in his burgeoning enterprise." If you remember that podcast he did on the founder of UPS. It was episode 192. He, his

• 1:35:38David Senra?

  name's Jim Casey. He, he used this exact same strategy as well. Now, here's the problem. People, this one decision, "Do I want cash or do I want stock?" can literally change the life of your grandchildren. "It mortified Rockefeller that so few trusting souls took Standard Oil's stock. They doubted that Rockefeller and his young Turks could realize their experimental plan." This is such a crazy sentence. "American high society in the 20th century would be loaded with descendants of those refiners who opted for stock."

• 1:36:12David Senra?

  Rockefeller would tell them, "Sell everything you've got, even the shirt on your back, but hold on to the stock." Think about it, why is he saying that? Because he knew, once this monopoly is built, there is no stopping it.

• 1:36:26David Senra?

  A few pages later, it brings up the fact that his long-term, having the longest view in the room, was a massive advantage for him. And the demise of the railroads to some degree. Standard Oil also profited immeasurably from the revolution in oil transport as barrels gave way to tank cars. Why is that important? The railroads balked at investing in rolling stock that couldn't also transport general freight. So it's like, I can't, I'm not gonna buy this because this is only good for my oil customers. So Rockefeller stepped up boldly into this breach. He would build oil tank cars, which he then would turn around and lease back to the roads for a special mileage allowance. What does that mean? For a kickback. I'm gonna pause here. Think about what's happening.

• 1:37:09David Senra?

  This guy is relentless at finding points of leverage. This is also gonna lead him to build a giant pipeline network. It takes some time. He was a little so to that. But he's gonna wind up building a pipeline network as a defensive maneuver. And it strengthens his company because he owns almost all the tank cars on the biggest railroads. So it says, "Standard Oil's position grew unassailable. At a moment's notice, it could crush either railroad by threatening to withdraw its tank cars. If you don't have tank cars, you can't ship oil. If you can't ship oil, your railroad is bankrupt." It's just amazing. He's got a handful of ideas. He just supplies them over and over again. He goes further than any reasonable person will, and he's relentless. Remember that playbook about, "Hey, I'm gonna buy oil refineries, no one's gonna know it's me."

• 1:37:54David Senra?

  He does the same thing for the pipelines. He buys up, he realizes, "Oh, these guys are way ahead of us building pipelines. Fine, we'll buy them." Right? And then what happens? The pipelines formed the core of a new venture that pretended to be free of Standard Oil control. My refineries are set up so I can ship by water. Now I have the railroads to the point where I own all their tank cars. I can bankrupt them if they get on my wrong side. Now I own the biggest pipeline network. No one knows it's me. And why is this important? Because this set him up to extract maximum advantage from both the railroads and pipelines, so long as these two means of transport coexisted in the oil business.

• 1:38:35David Senra?

  Rockefeller and his team are so bloody, efficient, and smart, you just cannot believe it. And so, let's go into more of his philosophy on how he runs his business and his life. He was schooled in secrecy. He trained his face to be a stony mask, so that when underlings brought him telegrams, they couldn't tell from his expression whether the news was favorable or not. When I got to that part, reminded me about Enzo Ferrari. I think this is, I've done two or three podcasts, I think I did three podcasts on Enzo Ferrari. But I think this is in episode number 98. He wore sunglasses his entire life. Enzo Ferrari would wear sunglasses everywhere because he didn't want people to be able to read his eyes. Rockefeller did not want you to know what he was thinking, so much so that he disciplined himself so his face, there was no facial expressions.

• 1:39:20David Senra?

  This is crazy. Two of his favorite ideas. Rockefeller equated silence with strength. Weak men had loose tongues and blabbed to reporters, while prudent businessmen kept their own counsel. He would say, "Success comes from keeping the ears open and the mouth closed." He made a habit of hearing as much as possible and saying as little as possible to gain a tactical edge. When angry, he tended to grow quiet. He liked to tell how a blustering contractor stormed into his office and launched into a tirade against him. Rockefeller didn't look up until the man had exhausted himself. Then he said, "I didn't catch that. I didn't catch what you were saying. Would you mind repeating that?" Much of the time, this is how he spent his time, thinking. Remember, he's just alone in his office, very similar to like Henry Singleton, reserved

• 1:40:05David Senra?

  a lot of time for thinking. He optimized for focus and concentration, okay? So it says, "Much of the time, he was closeted in his office. He paced his Spartan office, hands laced behind his back." During meetings, he was a relentless, a restless, excuse me, a restless note taker. He once asked rhetorically, "Do not many of us who fail to achieve big things fail because we lack concentration? The art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else." He adhered to a fixed schedule. He would move through the day in a frictionless manner. He never wasted time on frivolous things. Even his daily breaks, the mid-morning snack or the post-launch nap, were designed to

• 1:40:48David Senra?

  conserve energy and help him to strike an ideal balance between his, his physical and mental forces. As he once remarked, "It's not good to keep all the forces at tension all the time." He was also a really good delegator. So highly did Rockefeller value personnel that during the first years of Standard Oil, he personally attended to routine hiring matters. Taking for granted the growth of his empire, he hired talented people as found, not as needed. I need to, I need to, uh, repeat that. Taking for granted the growth of his empire, he hired talented people as he found them, not as he needed them. He especially prized executives with social skills. "The ability to deal with people is as purchasable a commodity as sugar or coffee," he said.

• 1:41:31David Senra?

  "And I pay more for that ability than any other one under the sun." Many employees said he never lost his temper, never raised his voice, never uttered a profane or slang word, and never acted discourteously. He defied many stereotypes of the overbearing tycoon. He was a fitness buff, and he placed in the accounting department in his office a contravance, like an exercise contravance, that he pushed and pulled for exercise. And to make sure that he could trust his employees, he tested them, and then once he trusted them, he just left them alone. At first, he tested them exhaustively. Yet, once he trusted them, he bestowed enormous powers upon them and did not intrude unless something radically misfired. "One of the best ways to develop workers," he said, "when you're sure that they have

• 1:42:14David Senra?

  character and you think they have ability, is to take them to a deep place, throw them in, and make them sink or swim." Part of the Standard Oil gospel was to train your subordinate to do your job. As Rockefeller instructed a recruit, this is very, this reminds me of Paul Orfalea, the founder of Kinko's, back on Founder's number 181. He talked about being, the importance of being on top of your business and not in your business. You need time to, like, try to, to delegate as much as possible so you can actually be thinking like long-term strategic. Like, especially as the business grows, like, your judgment is more valuable, right? It was different when you had one store, but when you had 200 stores, like, every single little decision is really important. So it says, "Part of the Standard Oil gospel was to train your subordinate to do your job," as Rockefeller instructed a recruit. "Has anyone given you the law of our office? No?

• 1:42:59David Senra?

  It is this: nobody does anything if you can get anybody else to do it. As soon as you can, get someone whom you can rely on, train him in the work, and then sit down and think about some way for the Standard Oil Company to make more money. True to this policy, Rockefeller tried to relieve himself from the intricate web of administrative details and dedicate more of his time to broad policy decisions. He never did anything haphazardly." And he also set a very high bar for quality. Says, "This passion for excellence originated with Rockefeller and radiated throughout the organization. The ethos of Standard Oil's operations around the world was John D. Rockefeller's personality writ large." How many times have we seen that over and over and over again in these stories? It's crazy.

• 1:43:43David Senra?

  "He was a matchless executive, on erring monitor of the stream of proposals channeled into him daily. He had an extraordinary reactive ability, a first-rate power of judgment when presented with options. For this reason, he resembles the modern chief executive more than he does his domineering industrial contemporaries. He extended rationality from the top of his organization down to the lowest rung. Every cost in the Standard Oil universe was computed to several decimal places." And why is that important? Because he knew the bigger that you are, the more important attending to small details becomes. This is an example of that. "After watching a machine solder caps to the cans, he asked the resident expert, 'How many drops of solder do you use on each can?'"

• 1:44:27David Senra?

  I probably pronounced that wrong. "Solder? Solder?" "Forty," the man replied. "Have you ever tried 38? No. Would you mind having some steel with 38 and let me know?" When 38 drops were applied, a small percentage of cans leaked, but none leaked at 39. Hence, 39 drops became the new standard instituted at all Standard Oil refineries. That one drop, said Rockefeller, still smiling in retirement, saved $2,500 the first year. But the export business kept on increasing after that, and doubled, and quadrupled, and became immensely greater than it was then, and the savings has gone up steadily since. One drop on each can has amounted to many hundreds of thousands of dollars. He performed many similar feats, fractionally reducing the length of staves on the width

• 1:45:10David Senra?

  of iron hoops without weakening a barrel's strength. He was never a foolish penny pincher, however. For example, he saved on repairs by insisting that Standard only build substantial plants, these are like factories, right? Even if that meant higher startup costs. So he's under a lot of stress, but he found a source of strength in his church. And really, I just want to bring this out, really important, because everybody needs this. Rockefeller is one of the most formidable humans in history, right? And he still needs like a pep. Really, just never discount the value of inspiration. He needed spiritual refreshment. That's what he called going to church. Praising the ministry's role, he once said he needed "good preaching to wind me up like an old clock, once or twice a week." And how does he know he has a monopoly?

• 1:45:51David Senra?

  Because he makes money in booms and he makes money in busts. And this is the way he describes, and he's like, "Listen, you guys should..." There's just a giant gap between his company being number one and number two. It's just incredible, right? But the way he looks at it is like, "Why did you not do the same thing? That opportunity was available to all. I was just the one that grabbed it." He mockingly described his foes' attitude as follows: "We have disregarded all advice and produced oil in excess of the means of storing and shipping it. We have not built storage of our own. How dare you refuse to take all that we produce? Why do you not pay us the high prices of 1876 without regard to the fact that the glut has depressed every market?" He's just saying, he's just like, "I'm a professional, you're an amateur."

• 1:46:34David Senra?

  Rockefeller had positioned himself exactly where he wished to be, poised to profit from either surplus or scarcity, and all but immune to the vagaries of the marketplace.

• 1:46:45David Senra?

  And the dangers of putting your business in the hands of somebody else, which was exactly what the railroads did for Rockefeller. He eventually realizes like pipeline, the pipeline technology is just so much more efficient. I'm going to move all of my volume over there. And this is really, I'm just going to give you, because this goes on for like a bunch of pages. I think my note does a good job of summarizing it. Incredible. I'm going to use my deal with the railroads as an asset to increase my position in oil, which is my true end, right? By the time anybody realizes and can do anything about it, I've already moved on to a superior transportation method. This is more on how he worked and really why he is just worthy of serious study. Rockefeller was a unique hybrid in American business, both the instinctive first generation entrepreneur who founds a company

• 1:47:29David Senra?

  and the analytical second generation manager who extends and develops it. He wasn't the sort of rugged, self-made mogul who becomes quickly irrelevant to his own organization. Having created an empire of unfathomable complexity, he was smart enough to see that he had to submerge his identity in the organization. Many people noted that Rockefeller seldom said, "I." "Don't say that I ought to do this or that," he preached to colleagues. "We ought to do it. Never forget that we're partners." He preferred outspoken colleagues to weak-kneed sycophants and welcomed differences of opinion so long as they weren't personalized. By creating new industrial forms, Rockefeller left his stamp on an age that lauded inventors, not administrators, that he created one of the first multinational corporations

• 1:48:12David Senra?

  selling kerosene around the world and setting a business pattern for the next century was arguably his greatest feat. As he said, "Our nation was in a state of transition from agriculture to manufacturing and commerce, and we had to invent methods and machinery as we went along." I want to extend this point a few pages later. This is why he was such a rare talent. Rockefeller always sees a little further than the rest of us. This is one of his partners. He really was a Superman. He not only envisioned a new system of business upon a grand scale, but he also had the patience, the courage, and the audacity to put it into effect in the face of almost insufferable difficulties, sticking to his purpose with a tenacity and confidence that were simply amazing. In the last analysis, Rockefeller prevailed at Standard Oil because he had mastered

• 1:48:56David Senra?

  a method for solving problems that carried him far beyond his native endowment. He believed that there was a time to think and then a time to act. He brooded over problems and quietly matured plans for extended periods. Once he made up his mind, however, he was no longer troubled by doubts and pursued his vision with undeviating faith. He was like a projectile that, once launched, could never be stopped, never recalled, and never diverted. And once he perfected it, he walked away. He had perfected the gleaming machinery of Standard Oil, and, his appointed task done, he felt he should pass the reins to younger men. The business had ceased to amuse him.

• 1:49:39David Senra?

  It lacked freshness and variety, and he withdrew. So in 1897, Rockefeller walked away from the empire that had consumed his energies for more than 30 years. He entered retirement just at the birth of the American automobile industry. The automobile would make John D. Rockefeller far richer in retirement than at work. And that is where I'll leave it. For the full story, highly recommend buying the book. There's so much more in here. I spent nearly 50 hours digesting and researching this book this week. There is a link below. If you buy the book using that link, you're supporting the podcast at the same time. The very best way to support founders is to give a gift description to a friend, family member, or colleague.

• 1:50:24David Senra?

  That, as always, there's a link below in your podcast player and also available at founderspodcast.com. That is 248 books down, 1,000 to go. And I'll talk to you again soon.