#68 Daniel Ludwig: The Invisible Billionaire

What I learned from reading The Invisible Billionaire: Daniel Ludwig by Jerry Shields. The cameraman was excited and more than a little nervous. In a matter of moments he would enjoy a unique opportunity: the chance to snap the first unposed picture ever taken of the richest man in the world. The strange thing was that most Americans had never even heard of Daniel Keith Ludwig. How could a man in these days of mass media coverage and public obsession with world records, manage to accumulate a $3 billion fortune with hardly anyone becoming aware of it? Obsessed with privacy, he reportedly pays a major public relations firm fat fees to keep his name out of the papers. Daniel Ludwig is a man nobody knows yet his tanker fleet rivals those of the fabulous Greeks whose names are symbols of wealth. His empire began with shipping, grew big with shipbuilding, is branching out now into other fields. With Ludwig, work is almost an obsession. Spartan in personal habits, business gets almost 100% of his attention. Once a project begins Ludwig doesn't rest easy until completion date. Ludwig’s most notable characteristic, besides his imagination and pertinacity, is a lifelong penchant for keeping his mouth shut. He is interested in achievement, not fame. I'm in this business because I like it. I have no hobbies. D. K. was strictly a solo act. His zest for these operations is that of the lone wolf. He shares neither the rewards nor the risks with anyone. Ludwig doesn't drink much, he doesn't smoke at all, he doesn't entertain lavishly. He counts cakories religiously. His only bad habit is work and that he can't stop. Even as a boy Daniel exhibited a strong drive toward the acquisition of money. During the mid-to-late-1920s Ludwig was more involved in buying and selling ships than he was in operating them. The result was that hundreds of government-owned vessels, built at taxpayers' expense, were being sold off at well below cost both to legitimate shippers and to speculators who did the minimum required renovation work and then sold the ships for a quick profit. He never liked spending money unless there was a good chance that it would make him more. The advantage of bulk carriers was versatility; these ships were to be designed in such a way that they could haul either dry cargo (coal or metal ores) or liquids (petroleum or gasoline) without expensive, time-consuming structural conversion. If the oil market fell off, a bulk carrier could haul ore for a while. Or it could haul oil in one direction and coal or ore on the voyage home. Ludwig needed a way to obtain ready money without either taking partners or assuming heavy mortgages. His early experiences with partnerships had been costly, and borrowing to finance ship renovation was no better. It was at this time that D. K. came up with the "two-name paper" arrangement he later said was the chief reason for his wealth. It all sounded so simple: go to an oil company; get it to sign a long-term charter to ship so much oil on a regular basis; take the charter to a bank and, using it as collateral, obtain a loan to build or renovate a ship to haul the oil to fulfill the charter. The plan was legal, logical, and ingenious. He was able to start his climb toward being the world's biggest shipper mainly because he had finally managed to hook into the big time. He was now hauling oil for the Rockefeller empire. One of the main reasons he had been buying old ships was to salvage and sell the parts removed during renovation. When he purchased a surplus ship he could recoup much of his investment by selling off the old engine and other machinery. Marine salvage was as familiar to D. K. as his own face in the mirror. Some years later, the captain of a Ludwig ship made the extravagant mistake of mailing in a report of several pages held together by a paper clip. He received a sharp rebuke: "We do not pay to send ironmongery by air mail!"D. K.'s tightfistedness, however, persisted after the Depression, putting him in sharp contrast to such free spenders as Onassis and Niarchos. It also was largely responsible for many of his innovations in the shipbuilding industry. Most of Ludwig's shipbuilding innovations were aimed toward a single goal: increasing payload without increasing cost. He was ever on the lookout for ways to reduce tanker design to the bare-bones minimum. His ships had much thinner decks than the industry standard. A modification that meant less weight and a smaller fuel bill. D. K.'s ridding his ships of any feature that did not contribute to profits pleased his own obsessive sense of economy and kept him a step ahead of the competition. When someone asked why he didn't put a grand piano aboard his ships, as Stavros Niarchos did, Ludwig snapped, "You can't carry oil in a grand piano."He had learned something by now. Opportunities exist on the frontiers where most men dare not venture, and it is often the case that the farther the frontier, the greater the opportunity. Much of Ludwig's success was due to his willingness to venture where more timid entrepreneurs dared not go. --- Before starting construction, however, D. K. had a little chore to perform, one that he intended to do personally. Twice he had trusted the word of specialists, and twice he had been burned. He had believed them when they told him he could bring fully loaded 60,000 ton ore carriers down the Orinoco without running them aground. And his geologists had failed to discover, until after considerable work was done, that the coral rock underlying Grand Bahama Island was too fragile to support giant supertankers. These episodes had cost D. K. considerable time and expense, so before building a refinery in Panama, he decided to check out the site himself. Dressed in baggy work clothes, he caught a night flight out of New York to Panama City and arrived at Tocumen Airport just about dawn. He sauntered into a little village store at the bay's edge just as it was opening, casual as any gringo tourist down for a holiday and a bit of fishing. Pulling a quarter out of his pocket, he paid for his purchases: a heavy bolt costing a nickel and a twenty-cent ball of string. As a few loiterers watched with amused curiosity, he unwound the string, measured it out in six-foot lengths, and tied a knot at each interval. Then he made a slip knot at one end and drew it tight around the bolt. This done, he went outside, made arrangements with the dock owner to rent a motorboat, and spent the rest of the morning and afternoon puttering around the bay, checking with his weighted line the accuracy of every sounding marked on a nautical chart he had brought along. Only when he had satisfied himself that the water was as deep as the chart said did he fly back to New York and give the signal to begin construction. ---An engineer by training and temperament, he much preferred machines to men. Humans were unreliable and had far too many needs. With a machine, you only had to give it a little fuel and maintenance occasionally and it would perform faithfully and uncomplainingly until it wore out. It didn't ask for food, shelter, clothing, or higher wages. I do not have anything to say to anybody. I do not give press interviews. To hell with you. I'm busy. A clever, mechanically inventive mind committed to the principle of getting the maximum utility and profit from the minimum expenditure of time, space, energy, and money. Plus an ambition that seemingly knows no limits. Plus a decided preference for deeds over words, machines over men. Plus a high degree of ruthlessness. ---- 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

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• 0:00David Senra?

  The cameraman was excited and more than a little nervous. In a matter of moments, he would enjoy a unique opportunity. The chance to snap the first unposed picture ever taken of the richest man in the world. The strange thing was that most Americans had never even heard of Daniel Keith Ludwig. It was hard to figure, how could a man, any man, in these days of mass media coverage and public obsession with world records, manage to accumulate a $3 billion fortune with hardly anyone becoming aware of it? As the old man drew close, the photographer raised his camera and aimed. Ludwig, surprised, turned his head and looked up. The shutter clicked.

• 0:45David Senra?

  The next instant, the world's richest man, 80 years old but still fit and trim from daily swims, charged the startled newsman and grabbed him in a half-nelson, presumably to wrestle him to the sidewalk and take the camera. But the photographer, recovering from this unexpected attack, twisted out of Ludwig's grasp and ran down the street with his prized picture, leaving Daniel glaring angrily at his retreating back. Okay, so that's an excerpt from the book that I want to talk to you about today, which is "The Invisible Billionaire: Daniel Ludwig," by Jerry Shields.

• 1:26David Senra?

  And this is another old book, somewhat old book I should say. It was actually first published in 1986, when Daniel Ludwig was still alive. And this is another example of this idea that you and I always talk about, which is books are the original links. I was, I first, I had no idea who Daniel Ludwig was. It wasn't until I was reading a book about Malcolm McLean, and you remember I did a podcast on him a few months ago, and in it, Malcolm is competing with Daniel's company, trying to become the first company that sets the standards for shipping containers and basically, you know, takes the lead in like-

• 2:10David Senra?

  This new revolution and Daniel quickly realizes he doesn't, it's better to work with Malcolm than against him. So he winds up investing in Malcolm's company. And the eight and a half million dollar investment he makes in Malcolm's company. A few years later turns into fifty million dollar profit for Daniel. And so that intrigued me. I was like, who's this guy that just makes fifty, almost fifty million dollars by accident? And so I searched for books and this is the only, the only book I could find on him. And surprisingly enough, a lot of information, even on the internet, like there's, there's not a lot that's known about him. And we're going to see why. Well, here's, and let me just go to the book. So we'll get right into this.

• 2:53David Senra?

  This is something about his personality and it says, obsessed with privacy. He reportedly pays a major public relations firm fat fees to keep his names out of the papers. So Daniel did not give many interviews throughout his life. I think the, the book references about two. I want to read some parts that stuck out to me in the introduction. Where you have a writer from Business Week that is trying unsuccessfully to get an interview with him. So he shows up at his company headquarters in Manhattan. It's on Madison Avenue. And it says, he got no farther than what he described as an unadorned and nameless reception room. Before being turned away by a polite but distinctly unhelpful employee. So he can't get an interview. So he starts doing research for the article that he's going to write on Daniel.

• 3:38David Senra?

  And he says, undaunted, the writer kept digging, reading shipping records and talking to people in the industry. Out of the research, he began to form a picture of this invisible magnet. And this is some of the writing that he wrote. He says, limelight shy Daniel K Ludwig. It began as a man nobody knows. Yet his tanker fleet rivals those of the fabulous Greeks, whose names are symbols of wealth. His empire began with shipping, grew big with shipbuilding and is now branching out into other fields. Okay. So that is a, one hell of an understatement. There's this great visual in the, the back, the front cover of the book, inside in the back. And it shows, I'm just gonna, I guess I should start there. So you, I can give you a scope of the size of the empire that Ludwig builds throughout his life. So.

• 4:24David Senra?

  It has a map of the globe. This is something that he published later on in his life when he was seeking outside investment. And it just goes into all the different countries he has companies operating in. So he's got, I don't know, hundreds of different companies spread throughout the world. And so it says stuff like this, say, United States, and then within the United States, it lists all the different businesses he has. Like, not the names per se, but what they do, like financial services, mining, hotels, office towers, housing, shipping. In Canada, he's got agriculture. In the Bahamas, he does financial services, hotels and real estate. Mexico, he's got hotels and housing. Panama, agriculture. Brazil, agriculture, mining and housing. Yugoslavia, shipping. South Africa, mining and housing. Singapore, shipping. Hong Kong, financial services, manufacturing, refining.

• 5:09David Senra?

  Indonesia, refining, petroleum and gas exploration. It just goes on and on and on. Financial services in Switzerland, shipping in Germany. The size and scope of this organization, a few weeks ago, I said I'd never come across somebody else that had such an intricate web of companies like Henry Kaiser. The only reason I said this is because I hadn't read this book yet, because he's right up there, if not surpassed Kaiser in the complexity of the conglomerate that this guy has built. Okay, so going back to the article, I'm just going to read a couple more quotes here. He says, "DK, as Ludwig's close associates call him," and so DK is actually what the author refers to him as throughout the most of the book as well, "isn't the tycoon type that bowls people over with an aggressive personality.

• 5:53David Senra?

  Nearly six feet tall with black, slightly graying hair, he's described by friends as a quiet, rather relaxed businessman who doesn't talk much." It says the writer concluded that DK was all business, quoting from the article a little, a few paragraphs down. It says, "With Ludwig, work is almost an obsession. A non-smoker, only a moderate drinker, Spartan in personal habits, business gets almost 100% of his attention. If he's retiring in outside life, in company operations, he's, if he's retiring in outside life, meaning you just, you won't notice him. In company operations, he is stage front most of the time. A one-man director who relies on assistants and images..." ...between to clean up the details.

• 6:36David Senra?

  On a project, his greatest gift is seeing the big picture. Once a project begins, Ludwig doesn't rest until completion date. There's no lack of projects, and associate speaks of his unlimited ingenuity in dreaming up new ways of doing things. He willingly gambles on an idea that looks good, but his formula is to add a large dose of hard work to the gamble. So this whole idea of ingenuity, it's really helpful to think for Daniel first and foremost as an engineer, as we'll see, who turns into an entrepreneur. So that kind of informs a lot of his personality, and then his companies are kind of imbued? What's that word I'm looking for? Imbibed? Can't remember the word.

• 7:20David Senra?

  Basically, his personality comes through, like it's manifested in how he organizes his companies. So it says, "In rising to the top, he has made hardly any arch enemies. Among shipping people, his reputation varies from not too well-liked to a damn-nice guy. But few really know him, for he keeps deliberately to himself." So I'm just gonna keep harping on his personality, because I think understanding his personality from the very beginning is extremely helpful, at least it was extremely helpful for me in understanding why he made the business decisions he made. So to that end, here's more from this writer. "The writer was, however, struck by the fact that DK was a mystery, even in the town where

• 8:05David Senra?

  he lived." So he goes and interviews, since Daniel won't talk to me, he goes and interviews his neighbors. And he's living in Connecticut at the time, before he moves to Manhattan. He actually builds, building right next to Central Park and lives in the penthouse. So he talks about his house. It says, "Few of the neighbors who see his un-ostentatious house have more than inkling of his business stature. Ludwig's most notable characteristic, besides his imagination and pernicity, is a lifelong penchant for keeping his mouth shut." So it talks about, they attributed this to the shipbuilder's single-minded absorption with getting things done. He is interested in achievement, not fame.

• 8:49David Senra?

  So then, now they're gonna quote from, he actually gave this guy Saunders at Fortune Magazine, an interview. And this is a quote from that interview. He says, "I'm in this business because I like it. I have no hobbies." "DK was strictly a solo act. His zest for these operations is that of the lone wolf. He shares neither the rewards nor the risks with anyone." It's interesting that he says that word. They said he has a penchant for keeping his mouth shut. Later on in his life, his biggest mistake is this 20-year project he undertakes in the rainforest in Brazil. It actually takes him from like a multi-billionaire to down to like a net worth of around like 400 to 500 million,

• 9:29David Senra?

  although it's, the exact number's kind of hard to gauge because his companies were private and then he also transferred some of his wealth to a cancer research institute in Switzerland. But nonetheless, it was like a complete, huge debacle. And something that I found interesting when I was reading the book is, so he's going from meetings like, he had to collaborate with the Brazilian government at the time. And so he's going to a meeting with the government of Brazil, and he's asked by a reporter, "Hey, do you have anything to say to the people of Brazil?" And at the time, he's probably like, let's say, 75. He's up there in age. And he says, "I don't have anything to say to the people of Brazil. I don't have anything to say to anybody." He's like, I'm, he's basically, he told the guy to go screw himself. He thinks, like, "To hell with you. I'm busy."

• 10:15David Senra?

  So, he definitely has a penchant for keeping his mouth shut. He kinda had like this singular focus on work and nothing else. Okay, so, in this interview though, that he's giving later on in life, he talks a little bit about his early life. And he says, so he's talking about, you know, he came from humble beginnings. And I'll go into more detail there, of course. He says, "The account included the stuff of which Horatio Alger stories were made: hard work, thrift, ingenuity, luck and pluck, and a driving desire to succeed."

• 10:49David Senra?

  And how all of this had brought Ludwig from a childhood of limited means in South Haven, Michigan to possession of one of the world's greatest fortunes. So I have to confess my ignorance here. I had to look up because several of the books that I've read so far, they reference, I guess this writer was really popular around this time, Horatio Alger. So this is what Wikipedia says about him. It says, "Horatio Alger Jr. was an American writer of young adult novels about impoverished boys and their rise from humble backgrounds to lives of middle-class security and comfort through hard work, determination, courage, and honesty." So now, after I looked that up, it kind of makes sense why they're in these biographies

• 11:30David Senra?

  that I'm reading, like this writer is referenced so many times because I think one of the main pleasures of doing this podcast is the fact that it's a constant reminder that, you know, no one becomes the, like, no one's born the richest man in the world or richest person in the world. You know, you don't even have to go that high. No one's born a successful entrepreneur. Like, you make yourself into one. Okay, so it says, "This narrative revealed a boy interested in boats and a young man who struck out on his own as a ship owner and operator before the age of 20. After struggling through several lean years during the shipping slump that followed World War I, Ludwig said that he had just started making money as an oil hauler when the Depression

• 12:13David Senra?

  hit, wiping out nearly everything he had." So I'll go into more detail about that, too. But this is, this part's important because it's about his personality and then how his business started. But he had persevered and during the mid-1930s had developed an ingenious, this is so, this is maybe his best, the best idea out of the entire book, other than like he's got some great traits of, you know, being focused, willing to take chances, being very frugal, as I'll get to. I mean, that's an understatement and I'll tell you more about that. All right. So it says, "He had persevered and during the mid-1930s had developed an ingenious ship financing scheme that would make his fortune." This is really smart. "The idea was to use other people's credit. First, he would go to an oil company and persuade it to grant him a long-term charter

• 12:57David Senra?

  to haul its petroleum. This done, he would go to a bank, where using the charter as collateral, he'd take out a loan to obtain a ship to haul the petroleum. Instead of paying DK, each oil company would make the charter payments directly to the bank, which would deduct the loan payment and put whatever was left into Ludwig's accounts." And this is the summary. The beauty of this scheme was that it allowed DK to build or renovate tankers without having to put up collateral or use his own credits. The oil companies were satisfied because they were getting their petroleum hauled at bargain rates. The banks were satisfied because oil companies were a much better credit risk than a small shipper like Ludwig. And DK was more than satisfied.

• 13:41David Senra?

  As long as he took care to fulfill his charter contracts, he had a small but steady income. And more important, by the time the contract expired, he was the owner of a paid up ship without having invested any of his own money. That's just really, really smart. This mutually beneficial financing arrangement was the foundation of his shipping empire. Once he got things rolling in the late 1930s, it was simply a matter of hard work and efficiency. Plus a genius for innovative shipping designs, that's where his engineering skills come into play, to become one of the world's largest ship owners. DK has been responsible for several major changes in shipbuilding. Some were designed and structural modifications to eliminate non-essentials while increasing

• 14:25David Senra?

  a ship's cargo carrying capacity. So it's something to know right up front about DK is that, you know, many of the billions that he made came from hauling oil, basically. And what I couldn't understand, because I have some experience learning about the oil business from some of the books that we've covered, is why are these, and I should have known better, honestly, but when I was reading this book, I was like, why are they, like, he does a deal with like the Standard Oil Company, Rockefeller Company, and other companies. I'm like, I don't understand, like Rockefeller was credited almost for inventing vertical integration, like they're owning all aspects of their business and then some. If you think about the kickbacks he was getting from the railroads, like why are they not

• 15:08David Senra?

  shipping their own, their own product? And the book answers that a few chapters later where it's talked about, well, they were, they were, their monopolies were being busted up. So Ludwig took advantage of the regulation that said, hey, you guys are way too powerful. You need to like break up, I think Standard Oil was broken up to what? Like four different oil companies Chevron, Mobil, Texaco, I think those are the ones off the top of my head. But, um, so anyways, they, they were basically forced to not transport their own oil. And because of that, they were willing to guarantee this charter to him. Then the banks that he would go to and do this, what he calls, what did he call it again?

• 15:49David Senra?

  He called it a, so he calls it mutually beneficial financing arrangement. So not only was Standard Oil in one of the companies that were doing this with him, but then they would refer him to the bank to issue the credit that Standard Oil also owned or had like a, like a percent ownership in. Okay. So let's go back to that Fortune article. So this is interesting. They call it, this is a little bit about his monumental stinginess. So it says Ludwig's organization is staffed with competent people, but not one too many. The present setup allows him to step, to step into any decision anywhere in the organization. Ludwig's frugality, Sanders concluded, Saunders concluded, that's the, the person writing the

• 16:33David Senra?

  Fortune article, made him almost an aesthetic despite his great wealth. Loving his work to the ultimate degree, Ludwig is unable to take much pleasure from anything else. He counts calories religiously, doesn't drink much, doesn't smoke at all, and he doesn't entertain lavishly. His only bad habit is work and that he can't stop. So now we're going to get into his early life and his first venture into shipping. It says, even as a boy in South Haven, young Daniel exhibited a strong drive towards the acquisition of money. He worked at a dance pavilion, he shined shoes and he sold peanuts and popcorn.

• 17:16David Senra?

  He saved most of what he had made. Some of this money he invested in what he termed his first venture into shipping. And now this is a quote from Daniel, at nine, or excuse me, from Saunders. At nine, he scraped together $75 to buy a sunken 26 foot boat that seemed beyond salvaging. But he raised her, slaved all winter on repairs and chartered her out the following summer for more than twice her cost. He did not act as crew since he was too small to crank the massive one cylinder engine. Okay, so a few years later, for reasons really unknown, his dad moves him, he's around 15 years old at the time, takes him from Michigan and makes Daniel come with him down to Texas

• 18:00David Senra?

  and separates him from basically everything he knows, including his mom. And we're not too sure why that happened. But it says, "Once in Texas, DK found himself more or less on his own. His father had other things to do and could spend little time with the boy. A thousand miles from home, taken away from family, from school, from friends, the 15-year-old must have felt miserable and frightened." So he starts working. It says, "DK was a runner for a company that, basically, they're dealers in marine equipment." It says, "DK was a runner, going out in small boats to sell supplies to the ships that anchored in Port Arthur, Port Arthur, Texas. At the same time, he went to night school to get the math he needed for a marine engineer's degree." The youngster had finished only

• 18:44David Senra?

  8th grade in Michigan before being taken to Texas. And so then he gets a job being a ship chancellor's assistant. So it says, "Being a ship chancellor's assistant was an education in and of itself, and the boy was learning much that he was to use later." After a year or so in Port Arthur, DK returned to Michigan. So then he gets a job, and he tells, later on in his life, he's reflecting on this, he says he's working for 20 cents an hour at a marine engine plant at Three Rivers, Michigan. "The job at the engine plant was another educational experience. It gave DK a thorough knowledge of marine mechanics and helped him to complete the work requirements for his engineer's certificate."

• 19:27David Senra?

  So let me pause right there. There is an extreme sense of efficiency in not only how Daniel would run his business, but how he ran his life. So every experience he had, even that first experience at nine, then this other experience where he was introduced to at 15, and so on and so forth, he never wastes anything he learns. That information and that knowledge just continues to compound throughout his life, and he uses it to spot opportunities that eventually help him build his massively successful company. And then these experiences that he's having at the marine engine plant is definitely an example of that. Okay, so it says, "He was evidently a fast learner and a good worker. After a little more than a year at Three Rivers, he was considered competent enough by company

• 20:10David Senra?

  officials to be sent to the Pacific Northwest and Alaska to do installation work."

• 20:16David Senra?

  Shortly after his arrival in the Northwest, he started moonlighting. And this is the start of his very first business. This is again, what I was just referencing, like, he just doesn't waste any opportunities. So shortly after his arrival in Northwest, he started moonlighting, installing ships' engines on his own time, as well as for the company. So the company pays to train him to learn this skill, and then he's like, "Oh, well, now I have a skill that's rather in demand, like, why don't I just cut the company out of this?" Uh, he found the work so profitable that he soon drew his last wages and at nineteen, went permanently into business for himself. It was a profitable time to do so, the year was nineteen sixteen, and the shipping industry was booming. Much of Europe was engaged in a world war.

• 21:00David Senra?

  Okay, so this is a smart way to pay for a boat, plus how to make money from prohibition, plus a post, what he calls a postgraduate course in shrewd trading. Um, so he was about, he was about to become the owner of a vessel for the first time since his salvage effort at the age of nine. He was a decade older now and much better equipped to handle the responsibility. So he identifies this, uh, it's called an old sidewheel lake steamer, and it's called the Idlewild. So this, the old sidewheel lake steamer was up for sale through a Detroit bank, which had gotten her through foreclosure. She could be bought for a mere five thousand dollars. And then, this is something that he's gonna do for his whole life.

• 21:43David Senra?

  So he winds up, um, borrowing the money to, for, to, he's getting a boat, first of all, worth much less than, than it should be, uh, like, for much less than it's actually worth because it's a foreclosure, and then he realizes, "Hey, uh, since he's, he knows a lot about shipping and, and the equipment that it takes, and he does a lot of work himself, he's like, "There's a lot of, um, supplies and equipment in the boat, like, in the boat, that I could then scrap out and sell, and it basically recoups my cost for the actual vehicle." So he almost immediately recovered the purchase price by gutting, selling off her machinery and boilers, and turning into her, turning her into an iron-holed barge.

• 22:23David Senra?

  Okay, so that right there, what he's doing at 19 years old for $5,000 is basically the foundation of his most profitable business. He would buy these tankers, in a lot of cases he'd buy them from the US government, because there's these boom and bust cycles that happen in shipping before, during, and after wars. So after the war, World War I, and he does the same thing in World War II, he's buying up ships, and in some cases he gets like, let's say a ship is worth $250,000, he'd get it for about 10%, like 25,000. And then they'd have so many, like so much equipment, like he'd sell the engines and everything else that he'd get, he's essentially getting it for free, would refit it so it could haul oil and petroleum, among other minerals and stuff.

• 23:08David Senra?

  But it's actually really, really smart, is what he's doing here, and he's doing it at a really young age. So when he does this, he turns it into an iron-holed barge, and then he advertised in a New York paper for a charterer, just saying, "Hey, I have a boat, who wants to charter it? And why not stay in Detroit?" He decides to go to New York. He says, "In Manhattan beat the heart of the world of commerce. Goods and money flowed in and out of New York Harbor like lifeblood for the rest of the globe." So he's going, he's identified this opportunity at a really young age, he's like, "Hey, there's..." His grandfather tried to build like a shipping empire in Michigan, wind up going bankrupt, and he's like, "This is not, there's not opportunity, like my ambitions are much larger, I need to go to where that is." So he goes to New York. So he says, "The ad drew a response from this guy named Kaplan, a New Yorker who had

• 23:52David Senra?

  virtually cornered the market in a blackstrap molasses." So Kaplan is the guy who's gonna give him the postgraduate course on shrew trading. Again, Ludwig does not waste any time, he's constantly learning. So I had heard this before, I was like, "Why the hell were these people making so much money in molasses?" But it's because of prohibition, so we're gonna go into that a little bit here. So the molasses DK was hauling was not intended to go on biscuits. He'd take it up from New York to up to Canada. So he says, "At the Toronto distillery, it was turned into rum and brought back across the border into those states, which had already outlawed the importation and sale of liquor."

• 24:30David Senra?

  Since he was merely hauling molasses to Canada, DK was doing nothing illegal, but he was an important part of the process and stood to make money from it. After two years, the charter agreement was broken off. So he basically had a misunderstanding with this guy Kaplan, and he feels he kinda got cheated by him. But later on, he tells Fortune Magazine, he says, "He ruefully credits Kaplan with giving him a sort of postgraduate course in shrewd trading." "The relationship was terminated, though the two men do business in friendly fashion to this day." And that's about sixty, forty to fifty years later. They're still doing business together, so it's interesting. And so, I'm gonna skip over major parts of the book, like I do every time,

• 25:12David Senra?

  but he gets caught up and actually arrested when he's still a young man, because he's, not only does he have his own boats, boats, he's doing the, running molasses and other things. He hasn't gotten to oil yet. But he does like repair work and works on other boats. And one of the boats he's working on gets busted because they're carrying liquor. They're carrying liquor from Britain and from the Bahamas, and they're trying to sneak it into the United States during prohibition. But the charges are eventually dropped. Okay, so this is how Ludwig starts more shipping companies. "After his breakup with Kaplan, he did general hauling with a few broken-down tugboats until the bottom fell out of the shipping market in the early post-war years." It's World War I at this time.

• 25:57David Senra?

  "Most of his cargoes consisted of lumber and barrel staves before he decided to switch to oil transport." And why did he switch to oil transport? Just because he was paying attention. He's like, "I've been getting ten or fifteen cents to haul cargo." That's per hundred pounds, right? So ten or fifteen cents to haul cargo and lumber. "I saw the tanker boys getting three or four times as much for oil." So it's like, "Why, I'm doing the same amount of work, why don't I try to make four times the money?" So it says, "His first experience of patrolling hauling came in 1921. He had heard a small refinery in Fall River, Massachusetts that had a contract to haul fuel oil for the Navy. If he could find any vessels, he'd be able to charter them to the refinery. In a Long Island shipyard, he found a little tanker

• 26:41David Senra?

  that had been started under government contract during the war and was ninety-eight percent complete when the armistice was declared." This is kinda crazy, this happens not only in World War I, but World War II too. There you have these huge infrastructure machines building everything that countries need for the war. And then as soon as it's over, that work is stopped almost immediately and you see assets like this that it needs 2% completion. And I get in a brand new tanker. He says, "Since then, there had been no incentive to finish her, but Ludwig could lease her cheaply if he was willing to put on the final few touches," which of course he was. Selling some of his old tugboats, he got enough money to complete the vessel, then talked the coastguard into giving him a certificate of seaworthiness.

• 27:23David Senra?

  He wasn't even sure how to pronounce her name. Now, this is so important because, you know, we've talked about this idea of frugality that, you know, just like you should watch where your expenses are in your personal life, like companies, the most successful people at entrepreneurship, like they're, they understand that little, little cost compound, right? And anywhere from Jeff Bezos to John Bogle to anybody that we've covered on the podcast knows that, hey, you just don't mess around with this. And frugality and paying attention and making sure he's being productive with his money is something that Ludwig definitely shared with some of the other entrepreneurs we've covered. And this is an example of that. He wasn't even sure how to pronounce her name, but because it would have cost him $50 to

• 28:06David Senra?

  paint it out and put on a new one, he decided to leave it as it was. So the boat wasn't big enough to allow DK to fulfill the charter agreement he had made with Fall River. So he found a larger ship in Baltimore. This one's called the Wiko. The Wiko had already many years, was already many years past her prime. In fact, she was the fourth or fifth oil taker ever built. And since her maiden voyage in 1888, had hauled many a barrel of crude for Standard Oil. So this is what 40 plus years after that? Close to 40 years after that? Standard had decided to scrap her and sold her to a scrap dealer. Learning of this, Ludwig traveled to Baltimore and after looking it over, decided that the Wiko was good for a few more trips.

• 28:50David Senra?

  The scrap dealer was willing to let her go for $25,000, $5,000 upfront, and the rest over time. Even the down payment, according to Ludwig, was more money than he had on hand. In order to raise it, he had to take on a partner. And this is important because he hates, he learns that he doesn't want partners after this. William Thomason, a shipper DK had met during the war, offered to put up the rest of the front money in exchange for 51% of the venture. Soon Thomason wanted it all and asked his junior partner to get out. Ludwig settled for $40,000 in cash, plus a few old tugboats, and his greedy partner got the rest. But still, so he didn't, he was upset that the business ended, but he goes from not having $5,000 to now having $40,000.

• 29:33David Senra?

  So he's just leveled up a little bit and it gives him a little bit of access to more opportunities in the future. Accepting the settlement, he used the money to go into another partnership with a group out of New England that owned a chain of filling stations in Boston. Together, the three formed a new company. And so they're going to be hauling petroleum. And this is another example. So it actually says, for DK, so even though there's three of them, DK was the chief, he was the CEO, he was the one running it. His job was keeping things going. Most of them were just, they were just investors, basically. But it leads us to the point where this is a fundamental part of his personality and something that he carries in all of his company. And that's these two things.

• 30:15David Senra?

  It's only spend money on what's important and then sell your byproducts. If you can find undervalued ships for yourself, then you can do so for others. So it says, the name of the company they make is called Amtakers. So Amtakers was operating on a shoestring and could not afford office space. The company, however, was able to buy two more ships. So DK's like, listen, I'm not going to sit in an office anyways. I'm not going to pay money for an office space. Later on in life, of course, he's going to, but he doesn't have the assets at this time. But I will spend and will leverage myself as much as possible to buy assets that can actually make me more money. So not only are they shipping petroleum and products like that, but it says during the mid to late 1920s,

• 30:58David Senra?

  Ludwig was more involved in buying and selling ships than he was in operating them. So this is kind of, if you remember the podcast I did on Kirk Kerkorian, how he got started. He started a charter airline, but in the process of starting a charter airline, he got really good at buying undervalued airplanes and then reselling them for a profit. And so since he was already doing that for his own company, like why not make it a second business? And this is exactly what Kirk did. And you're seeing that again here in that Daniel's doing the same thing, but he's doing it in ships. And so, yeah, they're making a little bit of money chartering out their boats, but he's like, "I can just make immediate profit. I can find a boat for, let's say, $200,000 to sell for $400,000. Like, I'm making way more money doing less work,

• 31:41David Senra?

  so I'm gonna go ahead and do that. I had to learn the skill for myself. I can then do it for other people." Okay, so this is an example of that. This is how Daniel made $500,000 in profit reselling government ships. This is after World War I. It says, "The sale of surplus ships at bargain prices, much less than what it would have been to cost to build the vessels from scratch, had never really been authorized by Congress. But the practice started almost as soon as the armistice was declared. It was never seriously questioned. The result was that hundreds of government-owned vessels, built at taxpayers' expense, was being sold off at well below cost, both to legitimate shippers and to speculators who did the minimum required renovation work,

• 32:25David Senra?

  and then sold the ships for a quick profit."

• 32:29David Senra?

  So they wind up, um, the book has all these different names of boats. I feel if I would just list it off, it gets, it was confusing for me to keep track of, so I'm not gonna read them to you. I'm just gonna tell you, hey, he's buying three ships in this process for not a lot of money. So it says, "The total investment of the three ships was just under half a million dollars. But what made the deal attractive was that the shipping board," now, this is an actual government agency, run by the US federal government, it's actually phased out because of corruption, and replaced with the Maritime Commission, and then that one was also corrupt and phased out later on, but they stick around for a little bit. So it says, "The shipping board required investors to put up only 10% of the purchase price. The rest could be paid over time.

• 33:11David Senra?

  Thus, by investing less than $50,000, Daniel could buy three ships, remodel and sell them, use the parts of the proceeds to pay off the purchase price and renovation costs, like he was doing previously, and pocket the rest. If they managed to sell the vessels for $1 million, they would reap over half a million dollar profit on an investment of over $50,000." And so this is a very integral part of how, you know, somebody could start with... Little to no money, like Daniel was, had a hard time coming up with $5,000 to buy his first ship, and starts to get wealthy rather rapidly. I mean, you're making, you're putting up 50 grand, and some of that you're borrowing,

• 33:51David Senra?

  and you're making 500,000 on top of it, and then using what's already in, like, you're basically buying an asset, piecing it off, and recouping most of that cost anyways. So this is, the note I left myself was finding a unique solution to too much leverage at the beginning of the depression. So, um, that scheme I just described to you works really well for a few years. But then you have the Great Depression starts and credit titans, and what happens to all the people that are over-leveraged. Um, you see this, you know, throughout history over and over again, they go bankrupt. I always reference my, my, one of my favorite storytellers, writers of all time is Michael Lewis. One of my favorite books is The Big Short.

• 34:30David Senra?

  And Steve Eisman, one of the people that became a billionaire off of, um, shorting the housing, the US housing market, uh, during the subprime crisis. I was watching an interview with him one day on YouTube, and he just said something that sticks, stuck out in my mind forever. And he's talking about all the people, like, you know, the high-paid CEOs of all these, uh, banks and investment firms. And he says, he's, he summarized like their activities, uh, leading up to the subprime crisis. And he says, "They mistook leverage for genius." And, um, I think that's, you know, this whole idea that, that history doesn't repeat, but human nature does. You're gonna see that, you can go back thousands of years, maybe not thousands, but hundreds of years, and see the same thing happening over and over again.

• 35:13David Senra?

  That anytime you have this kind of like highly concentrated financial leverage, in good times, these people look like geniuses, in bad times, they go bankrupt. Alright, so it says, "During the Fortune interview in 1957, DK told Saunders that in his early business years, he was always in hawk." There may have been a good reason, as long as you're in hawk, it's hard for a creditor to collect money from you. Ludwig came up with a solution to his debt problem. The suggestion was so outrageous that nobody else would have dared to put it forth. This is that that sentence is the entire reason I'm reading this part to you because that's part of his, his MO. He just comes up with some outrageous ideas that, that, that no, they're so outrageous that, and business, he starts businesses on top of these ideas.

• 35:58David Senra?

  It's like, and that winds up leading to him to have no competition to very beginning because no one even need to think about doing it. So he said, uh, what he said to the shipping board was, because he's having a hard time now making these payments when the depression was in effect and he still owe the shipping board money. So in effect, he owns the US government money. So what he said to the shipping board was in effect, hey, we bought these, these ships from you. We renovated one, we sold it and paid off its indebtedness. We fixed up another and want to keep that. Uh, so now you just have the third one you haven't accounted for, right? So why don't you take back the one we haven't remodeled to pay for the two we still owe on? So they're not getting money, they're just getting an asset back that frankly is not worth what he wants to pay it off for. Like they, they don't have any use for it. They have to fund another buyer.

• 36:42David Senra?

  He might be able to put it into productive use, but they certainly can't. Incredibly, somebody at the shipping board brought the idea. So it's just a reminder, you only need like, things around you are a lot more malleable than you think they are because you just have to usually convince a small handful of people. I mean, in some cases, only one person to agree to, to your suggestion. In his case, he just needed one person with authority at the shipping board to say, yeah, I'll take that, I'll take the asset that you haven't paid for. Uh, you only put a small percentage down. We'll take it back and we'll act like you give me back something you haven't paid off. We'll pay off the second, the, the, the other ship. It's such a bizarre thing they, they agreed to. But again, we're not rational creatures, we're rationalizing creatures.

• 37:27David Senra?

  And so you're gonna, you see the, these kind of, you know, irrational, what looks like in hindsight, an irrational decision where, you know, people engage in that kind of behavior all the time. Um, this is a, just a reminder of his frugal personality. This is one sentence I thought was interesting. He never liked spending money unless there was a good chance that it would make him more.

• 37:46David Senra?

  And again, that's one of the principles of his business. Okay, so he's, again, he's, he's had moderate success up until this point, but that any kind of progress he was making basically got wiped out. And so this was the state of his business in 1934. And I find this extremely motivating because within 10 years, it's his, you know, that he's one of, he's very wealthy. A shipping board auditor reviewing the company's situation came to the unavoidable conclusion. Ametakers was, for all practical, practical purposes, insolvent. The firm had no securities left to borrow on, and virtually no chance remained that the massive liabilities could be paid off from the ship's small earnings.

• 38:29David Senra?

  So that is a dire crappy situation to be in, and he fights his way through and reverses his fortune, and we're going to get there in a minute. He's still doing the same thing, so this is actually interesting. So he sets this up, and we see this. Well, let me read it to you first, and then let me tell you what it made me think of when I had read something a few years ago. During the 1930s, Ludwig bought, bought, purchased several more ships and set up Delaware registered corporations to operate them. So each ship was a separate company, okay? At this time, he's getting help from his dad. He borrowed some money from him, and his dad's also in the shipping industry, but it's not at all clear. A lot of people think his dad was just a bootlegger,

• 39:11David Senra?

  like he was just running rum from, like, the Caribbean into the United States. But he kind of, records of him kind of disappeared, so we're not actually sure about that. So even though Daniel, his name's Daniel F., where he was on the company paperwork, but he says stayed firmly in the background, and his son was the chief executive officer of each company. And then eventually, just, he disappears off the paperwork, so we're not sure what happened. By the spring of 1936, D.K. was ready for another expansion. This one had both, both a bit of a problem and the beauty of a new idea. The problem was to get the shipping board to sell him more surplus ships, though he was still encumbered by the loans. So he's still in debt to them, right? He says, "The new idea was a way of renovating those freighters

• 39:54David Senra?

  into a new type of cargo hauler, the bulk carrier." This is basically the linchpin of his empire. His main company is called National Bulk Carriers. The advantage of bulk carriers was versatility. These ships were to be designed in such a way that they could haul either dry cargo like coal or liquids like petroleum and gasoline without expensive, time-consuming structural conversion. If the oil market fell off, a bulk carrier could haul ore for a while. Or it could haul oil in one direction and coal or ore in the voyage home. So it's actually really smart. The evidence suggests that Lugwir was reacting to the Maritime Commission, so now the Maritime Commission is going to replace the Shipping Board, call for fast merchant ships to replace

• 40:35David Senra?

  the old, slow tankers and currently plying the trade routes. And that with his eye for economy, he figured he could make more money by converting old freighters into bulk carriers rather than ordinary tankers. Whether the bulk carrier was his idea or not, D.K. was quick to see its advantages and cash in on it. He set up another Delaware company, National Bulk Carriers, in June of 1936, and this later became the flagship corporation for his fleet of companies. Okay, so the reason this is so important, why they would incorporate in Delaware is first of all, they were really friendly to companies.

• 41:18David Senra?

  But because some of these ships had mortgages on them that were not being fulfilled, like he had, let's say, 10 ships, 10 different companies, if one or two or three didn't pay, it didn't affect his other ones. So the reason I said, he used it basically to keep taxes low and to not, like to offset his liability. But I was reading, it reminded me of something that people were doing, and I think they do it, I'm sure they do it in America too, but I was reading about some, like, one of the most expensive real estate sections in the world is this place in London where they have extremely expensive residential housing. And the article I was reading was this investigative report about, hey, why are, like, none of these, the most expensive properties, some of the most expensive properties in the world

• 42:03David Senra?

  owned by people, they're owned by companies. So let's say the house was located at 123 Main Street. That, the name of the Company we 123 Main Street LLC or 123 Main Street Incorporated, whatever the case is. And so what they realized was that because, let's say you bought a house 10 years ago and the taxes you had to pay on it, the equivalent of property taxes, it didn't, it was capped at like the percentage it could go up. So let's say it go up 1% a year, but it would reset once it would change. So let's say your value of your house greatly increased in 10 years. The, and you sell the house, the new buyer has to pay a lot more in taxes. What they realized was, instead of selling the house, they just sell the company that owned the house.

• 42:46David Senra?

  And the taxes never reset because it showed that, hey, this, this house was purchased, you know, 10 years ago, but the company's been sold three or four times since then. So that's still happening today, present day. This is a very similar scheme to what he's doing with boats. And again, instead of it being houses, he's doing it to tankers. Oh, and this is important too, something he did that's smart. He knew his weaknesses. So a reminder to know your weaknesses and to hire someone strong in that area. Because up until this point, he's got this whole network and web of companies, but he doesn't actually know if he's making that much money or not. He's not a numbers person per se. He's an operator. He's really good at sniffing out ways to make things more efficient.

• 43:28David Senra?

  So he hires somebody that just basically runs all the numbers because up until this point, you know, he's not optimizing his, like the financial returns he's getting, even though he's rather frugal. So he says, "With the advent of national bulk, a new figure appeared on the scene. William Wagner was about the same age as DK, but in managing money, he seemed much older and wiser. A former shipping board auditor, he would, over the next 34 years, provide the financial expertise that Ludwig Enterprises had previously lacked." And remember that debacle I mentioned earlier that happens in the jungles of Brazil? Wagner stays with him for 34 years, but then he dies in the middle of that project. And the financial, like the finances of that project go off the rails.

• 44:14David Senra?

  I think the numbers are hard to lock down, but I've read Ludwig invested $625 million of his own money into the project and he borrowed $919 million. So let's say he's in there for, you know, one and a half billion dollars. He never sees a return off that. And a lot of people think it's because once Wagner died, no one like, no one was actually keeping him in check, like from a financial perspective. And he respected Wagner where he doesn't, you know, this, this author is not shy. Jerry Shields, the author, does a good job at painting the whole picture of Daniel. And like I've said before, like we're humans, all of us have flaws, no one's perfect. So he might've been really great at business, but he's also, you know, a bit of an asshole.

• 44:59David Senra?

  You just, you see his flaws, you see his warts, you see everything, you know. The author, it's not, it's not, you know, we're not idolizing him here. We're learning, for our purposes on this podcast, we want to learn like the ideas that he had that were good and that were, lead to success. But we also want to study his failures and the part of his personality, maybe that wasn't as good. So we can kind of avoid making those same mistakes. Let's benefit from his experience. Okay, so I, the note I left myself on the next page was, "Most of what happens in life is out of your control, but you can control how you respond to it." So this is 1936, there's like rumors and war is really good for the shipping industry as we've studied multiple times. So it says, "Wars and rumors of wars presaged an upturn in international commerce, which

• 45:42David Senra?

  for cargo haulers meant greater demand and higher revenues. A tanker or other merchant vessel that has been sitting idly at the docks since the start of the Great Depression can now be spruced up and hired out on a long-term basis at high rates or sold for a handsome price." So that paragraph is basically describing, like, you know, he's kind of in a crappy position. Like he was over-leveraged, making a little bit of money, but it wasn't at all clear in the 1930s that he was going to emerge on the other side of this as a successful entrepreneur. He just realized, hey, this is coming, let me react, let me, let me snatch this opportunity that's presented and let me build the foundation of my business on that, is what he does.

• 46:23David Senra?

  So the two-name paper idea, plus shipping for Rockefeller equals Ludwig's wealth. The two-name paper idea is the idea where he's, what I referenced earlier about how he goes and says, "Hey, I get, hey, oil company, give me a charter to charter your oil." "Oh, bank, look at this charter I have for, for, you know, Standard Oil or whatever oil company was, now we finance me either buying or renovating a ship." And so this is literally the key to his wealth. Says Lugwood needed a way to obtain ready money without either taking partners or assuming having mortgages. He never took partners again. He hated partners. I'm pretty sure he hated people based on the way he talks to them and kinda, I think

• 47:05David Senra?

  if he was alive now, people would think he has like Asperger's. His early experience with partnerships had been costly and barring to finance ships, ship renovation was no better. It was at this time that DK came up with the two name paper arrangement he later told Fortune Magazine was the chief reason for his wealth, and I already talked about it a little bit. Go to an oil company, get it to sign a long-term charter to ship so much oil on a regular basis, take the charter to a bank and using it as collateral, obtain a loan to build or renovate a ship to haul the oil to fulfill the charter. The plan was legal, logical, and ingenious. I think that's, again, like, the opportunities for, this opportunity was in plain sight,

• 47:47David Senra?

  but it took somebody that was thoughtful and willing to take risks to seize that opportunity. And that happens constantly, like, there's still opportunities that are out there that nobody has observed yet, and just taking the time to think about it and to notice it gives you an advantage. He says, "In 1936, he was able to start his climb toward being the world's biggest shipper, mainly because he was now hauling oil for the Rockefeller empire." And this book not only is interesting, so I'm only talking to you really about the parts that I feel like are useful in running our own companies, but there's so much information here about like, I mean, these shipping and oil companies, they have incestuous relationships

• 48:29David Senra?

  not only with other shipping and oil companies, but with state governments, with intelligence agencies, which it's just, there's just so many crazy stories that I'm not even gonna get to a chance to talk to you about that the book covers. So if you're into history like I am, especially like, you know, things that people might consider like conspiracy theory, like the rigging of the oil market, at the time, people are like, "Oh, that's not happening, we found out 25 years later, oh, it was happening." Like, I just find that interesting, how so little of the important things, like...

• 49:04David Senra?

  And not the important things in life, but yeah, so little of like things that really fundamentally changed to what we live in are observable to us. That these people, that's hidden from us. So I'll tell you a little bit about this, but. Um, oh, so this, we got to the part I was referencing earlier, the note I left myself was like, why would a vertically integrated oil company hire another company to ship its oil? Well, this is the reason. All right. It says, one immediate effect of the Anacari Pact was to make a long-term charter, was to make long-term chartering a viable proposition for petroleum haulers. So let me, let me back up to tell you what this is because I never heard of it and it blew my mind. So it says the Anacari, and I, you know, I'm not, you know, by now I'm not, there's no way I'm pronouncing this word correctly. If I'm just gonna go with it.

• 49:46David Senra?

  So it says, the Anacari, Anacari, Anacari Agreement was an early attempt to restrict petroleum production signed in Scotland in September, 1928. The discovery of the East Texas oil field in 1930s led to a boom in production that caused prices to fall, leading the Railroad Commission of Texas to control production. So basically, that's actually not even a good description. It's, it's, uh, basically they're trying to like start a cartel. So you have a bunch of oil producing companies and they meet secretly. We don't find out, the US government doesn't find out about this for like another 25 years. And they're saying, hey, we're gonna work in concert, but no one's like, you can't talk about this. And so they're, they would try to control how much they produce so they keep the prices high and kind of control the market is basically what's going on. So.

• 50:30David Senra?

  Um, okay. So it says, one immediate effect of the Anacari Pact was to make long-term chartering a viable proposition for petroleum haulers. Only in a market where supplies and prices, only in a market where supplies and prices were controlled, that's what they're trying to do. And relatively predictable could an oil company afford to commit itself to five or 10 years into the future by contracting to ship a specified amount of oil at a fixed rate. These contracts, which, which take place over a long period of time, like I just said, is where Daniel makes his money. And only in that kind of stable market was it possible for a young tanker operator like Daniel Ludwig to go to a major oil company and ask it to sign a charter to collateralize a loan to build. A ship to haul the company's oil for five years or more. So that's the basically agreement we keep talking about.

• 51:14David Senra?

  By signing a charter agreement with the Rockefeller-controlled transport company, DK was getting into the international cartel at a very basic and vital level. So you see what's happening here is like, he's working for the people that have set up this illegal cartel. So he's not doing anything illegal per se, but he's definitely going to benefit financially because of this. As long as the cartel prospered, he too would prosper. Why, one might wonder, would an oil company in such an advantageous position charter ships from an outside operator rather than building and operating ships of its own? That's what I was wondering. Partly for the same reason there continues to be a number of oil companies instead of a single one.

• 51:54David Senra?

  The illusion of competition and decentralization has to be maintained. So again, people like, this is basically a conspiracy theory that was, this was not a theory, it was actually, this is an actual conspiracy. For a small group of people to control one of the most valuable assets in the world, and it actually happened. So this is the US government, and again, they're doing it because they're, they're, they understand that you need to give them the illusion of competition and decentralization, even if that's not true. The US government still had laws on the books dating from the muckraking days at the turn of the century, when public outcry led to trust busting.

• 52:38David Senra?

  What was in fact a tightly controlled situation must not look like one from the outside. So that's also why I found the book so interesting, because there's all kinds of these like hidden machinations that these people are doing, that we don't find out till, in many cases, after these people are dead. And again, if that's happening in the 1930s, 1940s, what's the chance it's not happening right now? The probability it's not happening right now is zero. We just don't, we won't know about what that is until later on. But it is definitely happening now. It happened in the past, it'll happen in the future. Okay, reminder that tough times don't last, but tough people do. It says, "During the depths of the depression Ludwig was mirrored deep in debt, saddled with do-nothing partners, desperately pressed to keep the shipping board and the banks

• 53:22David Senra?

  from foreclosing on his few ships, and burdened with an unhappy marriage. Now, five years later, DK was in good financial shape, the owner of a growing fleet of ships and corporations, out of debt, and enjoying a profitable relationship with the government, the banks, and the oil companies. Moreover, he was building a reliable staff, and he had a happier marriage." So again, everybody goes through bad times. I know social media makes it, portrays it like none of us do, but we all do. And just, I love these reminders from history that, hey, everybody has to deal with this kind of shit, but you just keep persevering, you have a positive mental attitude, you keep moving forward, and eventually, like, the bad times are not going to last forever.

• 54:06David Senra?

  Let's see, I wrote on this page, "I chuckled."

• 54:11David Senra?

  Oh, okay, so this is a story, this is happening in 1938. So, these banks are still lending him money for these ships that he's using for the transportation of his oil, right? So this is the recollection of a Bank of Manhattan official that was one of the bankers that had lent Ludwig money. And so, let me just read this short story, because I thought, this short story to you, because I thought it was funny. "He wanted to borrow only about $200,000, but it took a year to talk the bank into it. Finally, the bank's officer said to me, 'Okay, go ahead if you want to, but we think it's a lemon. The ink wasn't dry on the contract when the 1938 hurricane came along.'" So remember, this is the bank official talking.

• 54:55David Senra?

  "I couldn't sleep that night because the ship, which is called the Phoenix, was in northeastern waters. The next day, I called up and asked, 'How's my collateral?' Ludwig answered, 'When we find the goddamn thing, I'll let you know,' and slammed down the phone. What had happened was that she was tied up at the Fall River dock, and when the hurricane came, the dock crew had cut her loose. She ended up on a street in Fall River, and they had to have a contractor, had to dig a channel to get her back to the ocean. But she had insurance coverage of every kind, and we never lost a penny. I carried pictures of her around the bank, and I was a laughingstock. But the loan was paid on schedule, and we had no trouble."

• 55:33David Senra?

  I just thought it was funny. It's like, when I find it, I'll let you know. I'm busy. Like, that's kind of like a recurring thing with him. Like, don't call me right now.

• 55:41David Senra?

  Okay, I'm skipping ahead. Okay, so one reason Ludwig was so secretive, remember at the beginning of the book, it talks about, most people hire PR firms to get their, their company's publicity. He hires them to, to keep his name out of everything. And he does this because he's in, a lot of the businesses he's, he's in is like uncharted territory. Kind of markets of one that he's kind of making himself. And why would you want publicity on that? Like, you want to keep that advantage as long as possible to, to pull as much profit out as possible, right? And some of the auctions, in this case where he's buying, where he's buying boats from the Maritime Commission, some of these auctions had no other bidders.

• 56:23David Senra?

  So people didn't even know that you could buy these assets for so cheap. Daniel figured it out and he just kept his mouth shut. So he says, one, and this is, again, his modus operandi, he uses over and over again in different domains. One of the main reasons he had been buying old ships was to salvage and sell the parts, and sell the parts during renovation. When he purchased a surplus ship, unless it was forbidden by the contract, he could recoup much of the investment by selling off the old engine and other machinery. Marine salvage was as familiar to DK as his own face in the mirror. Remember, he did that for years when he was younger. He knows, this is, uh, somebody that worked with him describing him. He knows where every piece of equipment being sold as scrap or surplus is.

• 57:06David Senra?

  He is a brilliant man. It gets you all upset sometimes, the way his mind runs. So he's bidding at the time, he's, he's bidding on, um, this, this boat called the Invincible. And, uh, he didn't bid until he sent like a marine engineer down there and inspect and make sure like the, the equipment he thinks he could sell is still in op, in working condition. And so in this case, they said, yeah, it's in working condition. After he took ownership of the boat, he realized, oh no, it's not. So it says, if Ludwig couldn't resell the invisibles engine, Invincible's engine, he didn't want the ship. It was that simple and had been all along. All the delays and excuses over a period of two years, he was fighting with them, trying to get his down payment back on this,

• 57:49David Senra?

  had been so much smoke to conceal the fact that Ludwig had signed a contract to purchase a ship he couldn't immediately recover his money from through salvage profits. So the reason I bring that up is that, The reason on the previous page, I was like, listen, when you're secretive, like he didn't want to give up an advantage. They kept asking like, why aren't you taking the ship? Like, why? Like, he'd put a down payment down and then he'd try to buy other boats from the maritime commission. Like, what about this one? Like, what are you doing? And he'd make up excuses like, oh, it's too small, or, oh, it's this, or it's so that. He would never would tell them, oh, I'm not going to buy it because then I can't recoup all my costs from you guys by salvaging the equipment.

• 58:27David Senra?

  Again, he didn't want people to know what he was doing because, once people know that there's an opportunity, what's going to happen? He's going to invite unwanted competition in. And then the profit margins that he was currently enjoying as a market of one would be eroded away. Okay, more about his legendary stinginess. Geez, I am, there is a lot of notes in this book. This is another monster book. I feel like I've been beating myself up the last few weeks because I'm at like, probably 15, 20 hour reads each week, over and over again. I need a, I need a short book here, man. I gotta catch up. All right, Ludwig's stinginess would become legendary in the shipping industry. The captain of a Ludwig ship sleeps in a bunk, not a bed. He has but two easy chairs in his cabin, which has plain durable linoleum on the deck.

• 59:10David Senra?

  Luxuries like the white carpet in the owner's suite on, so Nicoros Levarios, this is, actually, he's got two main competitors. One of which you'll probably know who this is. Aristote Onassis and Stravos Nicoros are these two Greek shipping magnets that compete with Ludwig a lot throughout his life. So actually, let me just tell you all the different, you know how we talk about books as original links? These, all these different entrepreneurs that he either does business with or is mentioned in the book, a lot of them I've done podcasts on. So we talked about Malcolm McLean, did a podcast on him. Ludwig sold something to Howard Hughes, did a podcast on him.

• 59:51David Senra?

  Ludwig invested in a Kaiser aluminum, which was started by Henry Kaiser, that was a couple of weeks ago. H.L. Hunt, John Getty, or Jay Getty, Aristote Onassis, Stravos Nicoros, like, it's just amazing how I keep being exposed to more and more people I can find books on. And I've been, I'm searching because these Greek guys are kind of crazy. I read their Wikipedia pages, uh, as I like, cause I want to learn more about them as I was reading this book. And I was like, oh, I gotta find biographies because they're, they're nuts. So anyways, they're, they're, he's talking about, hey, luxuries like the white carpet. That's, that's in, um, Stravos Nikaros, one of his, some of his ships. Ludwig would not do that. He would not spend more money than he need to, because she wasn't getting a return on it. Um, so, uh, would never have an owner's suite anyways.

• 1:00:33David Senra?

  Nor did D.K. Mellow as he grew richer and older. A 1970 Time article remarked, quote, "Few if any of the Ludwig ships have air conditioning and none has a swimming pool for the crew that is common on ships owned by less parsimonious men." A little later, the author Kenneth Lamont wrote, "When I asked a friend of mine who used to sail on tankers what he thought of Ludwig, he almost dropped his drink in the violence of his reaction."

• 1:01:01David Senra?

  So maybe he chuckled too. "Respectable tankmen, I gathered, look on Ludwig's ships as hardly more humane than ships, than ships of the, of the slave trade. In fact, except for the officers, American seamen are never tempted to sign on in any of Ludwig's ships." The part I thought was funny, how he says, "He dropped his drink in the violence of his reaction." Imagine being asked your opinion on somebody's, on somebody's, like, the way they do business. I guess it's the way they, they design their products, right? Because this is his product, uh, and it's violent reaction. Over the years, Ludwig earned the reputation of being the Scrooge of the shipping industry. One of his employees, the story goes, on being asked to suggest a design for a fleet

• 1:01:41David Senra?

  flag symbolizing the Ludwig Enterprises, submitted a drawing of two hands stretching a rubber dollar bill. Some years later, the captain of a Ludwig ship made the extravagant mistake of ma- oh, this is, this is hilarious. This guy's insane. "Some years later, the captain of a Ludwig ship made the extravagant mistake of mailing in a report of several pages held together by a paperclip. He received a sharp rebuke from Ludwig. We do not pay to send iron by airmail."

• 1:02:12David Senra?

  It's a paperclip, man. DK's tight-fistedness persisted after the Depression, putting in a sharp contract to such free spenders as Onassis and Nicoros. That's probably not how you pronounce that guy's name either. It also was largely responsible for many of his innovations in the shipbuilding industry. So again, there's the dichotomy of of human beings. Like, a lot of what is, could be a strength can be turned into a weakness as well. So it says, "Small expenses compound," another example of that. "Most of Ludwig's shipbuilding innovations were aimed toward a single goal: increasing payload without increasing costs." So, again, this is one of the fundamental principles of business that can be applied in all kinds of domains. We're seeing this now in Ludwig and shipping, but we just covered this with Conrad Hilton.

• 1:02:56David Senra?

  If you haven't listened to that podcast, go back and listen to it. Like, he made money by buying, essentially, he started out buying flop houses, these crappy motels and hotels, and he would just, we're ruthless at using, if you're buying a motel, you're buying real estate. And that real estate has like a finite amount of square footage, right? So what Conrad would do is go in there and make sure that every single square foot of that property was was productive, it was earning revenue. So Ludwig's kind of doing the same thing here. "He was ever on the lookout for ways to reduce tanker design to the bare modes minimum. His ships, for example, had much thinner decks than the industry standard, a modification that meant less weight and a smaller fuel bill." That's important when you, as your, as your, the size of your company scales, right?

• 1:03:38David Senra?

  One of his ideas that did not work led to another that did. "After realizing that the mast on a modern ship was only a long hollow cylinder of heavy steel, Ludwig asked his marine architect to design a mast capable of being filled with oil." That's hilarious. That didn't work, right? But we just said it's going to lead to something that did. "There was no sense in hauling a mast full of nothing but air all the way across thousands of miles of ocean. When Drake reported," that's the engineer's name, "when Drake reported that such a design was neither practical nor cost-effective, Ludwig decided to eliminate masts for his future ships and instead install small, thin pipes just strong enough to carry the required running lights." DK's ridding his ships of any feature that did not contribute to profits pleased his

• 1:04:23David Senra?

  own obsessive sense of economy and kept him a step ahead of the competition. When someone asked why he didn't put a grand piano aboard his ships as Stravos Nicoros did, Ludwig snapped: "You can't carry oil in a grand piano."

• 1:04:40David Senra?

  So there's a lot to admire and learn from Ludwig. His sense of efficiency, his hard work, him identifying opportunities that were where other people were maybe scared or unwilling to do. But we can't like paper over the fact that he got wealthy from legalized corruption. And so here's an example of that. Okay, so he owns a shipyard called Wielding. So in 1943, Wielding Shipyard built three more ships. All were contracted by National Bulk, his other company, using the Maritime Commission as middleman, and all were requisitioned by the WSA when built, which would then assign them to National Bulk to operate. So he's basically getting paid in both sides of his pocket. The financial involvement involved in this roundabout scheme are worth examining.

• 1:05:25David Senra?

  National Bulk, in effect, was buying ships from itself and laying in profit at both ends, all with the consent and cooperation of the Maritime Commission and the War Shipping Administration. That's the WSA I just referenced. So these are two government organizations, completely corrupt, and Ludwig was taking advantage of it. And as were other people that made centuries of fortune off of this. National Bulk's end mechanism was the construction of reserve funds the company had opened jointly with the government at Chemical Bank and Bank of Manhattan. So again, this was legal even though it's corrupt, right? So that's why I said it's legalized corruption.

• 1:06:08David Senra?

  When you put money into these accounts, because it was like a joint venture with the US government, you'd have to pay taxes on it. So you could just leave money in there and you could never pay taxes on it. So you take this money he wasn't paying taxes on, he could then use it to pay Wielding Shipyard, which is basically essentially paying himself, to build new tankers and could write up the bill at that end any way he pleased, as long as it was not absurdly out of line, because there was no oversight here. The oversight didn't come till after the war. Like the Rockefeller Organization, DK had mastered the practice of keeping his money by transferring it from one pocket to another, meaning transferring from one company that he owns to another company he owns. And as a tax exempt, cash flowed out of the National Bulk, his main company, to Wielding

• 1:06:53David Senra?

  Shipyard, his other company. The government agencies were providing Ludwig with exceedingly profitable ways of replacing it. The War Shipping Administration agreed to buy some of his older ships at inflated prices, and maritime allowed him to trade in others on new construction at similarly high rates, eight to 10 times what the vessels were actually worth. So think about what I mentioned earlier. Previously, he's buying ships from them at 10% of the cost. And now, later on, he's selling them ships at 10, basically 10 times what they're worth. It's the exact opposite. He's making money on both buying them unbelievably cheaply and then marking them up and selling them back way, way higher than their actual value.

• 1:07:36David Senra?

  "Since the Maritime Commission, which had been created to replace the corrupt US shipping board, was now itself rank with corruption. Under the guise of the procure of merchant shipping for wartime, it had become a cornucopia of profits for wily shipowners eager to dip into the US Treasury." So they do, Senator George Akin starts probing their maritime's financial records, and he's saying that the agency had misspent $6 billion of taxpayer money in overpayments to shipowners and shipbuilders. That winds up being way less. It was like estimated to be about $21 billion, and that's in $1940. So who knows, it's probably over a trillion dollars today.

• 1:08:18David Senra?

  So there's been many companies and many of these fortunes built off of legalist corruption, basically. Okay, so this is a reminder. So this is, you know, obviously not encouraging you to engage in colonial capitalism, but this is a reminder that life is malleable. So he also realizes that, hey, I can, that, there's a thing called the Maritime Commission, right? And I have contracts with them, but really, those are just words written on paper. And the Maritime Commission is just a group of individuals. And I, if I can convince one or two individuals with authority, I can kind of make my own rules, right? And so I'm, I'm, I'm using this example, like highlighting example of how he uses to make money, but it could be applied to so many other demands.

• 1:09:00David Senra?

  "Many of the surplus ships needed repair work before they could be put into service, and the Maritime Commission usually contributed generously to cover the costs of repairing war damage." This is after World War II, by the way. We've gone way ahead in the timeline. But there was also a clause in the purchase contract stipulating that any materials removed from these ships during renovation had to be scrapped. This condition was now, this didn't exist before. This condition was now standard in maritime ship sales contracts, but DK did not want to abide by it. If he could make some money by finding a buyer willing to pay more for removed parts in a scrap dealer, why shouldn't he be allowed to do so? It was a shame to waste anything that could not be turned into a profit.

• 1:09:43David Senra?

  So when he got a particularly tempting offer, Ludwig wrote the maritime commission with a proposition. He found a company, says, "Hey, this company's willing to pay $100,000 for a turbine bind that I just removed from a damaged ship. Let me sell the engine," DK said to the commission, "and I'll split the proceeds with you 50/50." On its face, the offer was in violation of the contract, but the commissioners accepted Ludwig's proposition with a single modification. "We want $55,000, not 50." Done and done. On these terms, the deal was made. The commission got a nice piece of change, and Ludwig got a lot more out of the engine than he would have by selling it for scrapped. And this is the most important part. He also got something else.

• 1:10:27David Senra?

  Maritime's permission to violate contract terms and sell excess equipment and materials for whatever he could get, as long as he was willing to cut in the agency for a fair share of the money. And what's pretty crazy is this starts into yet another company he starts. To handle the sales of what he was now removing from his surplus ships, DK set up another company, Atlas Metals Corporation. Atlas Metals gave Ludwig a profitable little sideline. Oh, this is another example of the idea that, you know, watch your costs because costs compound. And Ludwig started out in the shipping industry way before Aristotle Onassis and Stravos Nikros did. So how were they able to catch up and, in some cases, pass Ludwig? Well, he was an American company. They were based in Argentina and they were using, well, let me just read it.

• 1:11:13David Senra?

  They had virtually cornered the Mideast to Europe oil hauling trade, taking business away from Ludwig and other American shippers by cutting their charter rates. Flag of convenience ships. So basically, they would just say the assets are owned by a company or by a country that has low, low taxes and almost no regulation. So flag of convenience ships with no taxes and regulations and with inexpensive foreign crews could still make money at rates that would bankrupt an American shipper who paid US taxes and wages and had to maintain his ships in adequate state of repair. While Ludwig had been concentrating on becoming America's largest shipper, Onassis and Nicoros had been using Panamanian registry and cheap rates to beat him where it counted,

• 1:11:57David Senra?

  getting charters to haul oil. You see this today, you ever gone on a cruise? Why, when you go on a cruise, the company might be, let's say Royal Caribbean is an American company, but their asset, the boat, if you look at where it's like registered in the Cayman Islands or the Bahamian Islands. And when you, when you're on the cruise ship, you realize, hey, there's all the, the working and the staff is from different parts of the world. Well, why are they from different parts of the world? Because they, it's lower labor costs. It still goes on today. It's again, so it's funny that I just flipped the page too. Sound familiar? History doesn't repeat, human nature does. So I just gave you an example of that, and this is another one.

• 1:12:39David Senra?

  The, the results, when they, they, they looked into all the corruption that happened after World War II, this report came out on about 21 billion, I was telling you about 26 billion, whatever it was. It says, this is a quote from them. "At no time in history of American business have so few made so much money with so little risk, and all at the expense of the taxpayers. Not only of this generation, but of generations to come. The shipowners got off scot-free with not a charge brought against them." That, you could literally take that paragraph, put it, drop it into 2009, 2010, and it still holds true. "At no time in the history of business have so few people made so much money with so little risk, all at the expense of taxpayers."

• 1:13:23David Senra?

  That's why it's so important to, I think, to study history. So you're just not surprised by any of this.

• 1:13:28David Senra?

  This is just me basically advertising that I think you should probably buy the book if you're interested in history. The book is full of stories like this covert wars between nations, companies, individuals, and this is just, this is a plot between this that's happening in the 1940s and it's insane. It has to do with Aristotle Onassis making a deal with the king of Saudi Arabia to basically they're trying to like he was trying to even though the cartel's already in place, the oil cartel, he's trying to get to make even more money and kind of have influence into it. The US did not like this. So you have the Eisenhower administration and Richard Nixon, all these people are saying, hey, we're

• 1:14:13David Senra?

  gonna kind of destroy Onassis to break this agreement he just made with the king of Saudi Arabia. So it says, "It was Nixon, the Dole's and Brownall then who had real political, these are just names you don't really need to know, who had real political power in the Eisenhower administration. They pulled the levers and kept the wheels turning the way the corporate powers wished. Just now, these men were concerned with bringing Onassis down a few pegs," and this is the plot, it's insane. "The plot would involve phone taps and the planning of stories, some true, some half true, and some false in cooperative foreign and domestic newspapers, all with the purpose of changing Onassis's image from that of a glamorous celebrity to a cunning villain. After he'd been sufficiently smeared, the

• 1:14:56David Senra?

  US Department of Justice would start suits against him that, it hoped, would force him to relinquish his exclusive rights to haul Saudi oil. The money for funding the operation was to be passed through an emissary of Stravos Nikos. Nikos had a vested interest in seeing the Saudi contract, which is called the Jeddah Agreement, scrapped. So of course, did Daniel Ludwig, and the question arises as to whether Ludwig was also involved in the plot." So this whole, again, this covert cooperation hidden from everybody's view and in many cases deliberately like obscufated is the word, I don't know how to pronounce it, but like basically like deliberately, they're misleading. Getting the public on purpose for their own ends.

• 1:15:40David Senra?

  Um, and again, that's just a few paragraphs. The book has so many. I mean, think about it, you're just dealing with, what is these, maybe the shipping industry and the oil industry? They're multi-trillion dollar industries. So when this much money is at stake, you can, you can assume that, that humans are going to do whatever, a- anything possible to get, uh, their hands on that kind of wealth. Okay, we're almost done. There's so much, again, I can't like, the guy had his hands in all kinds of stuff, so, um, you know, for the whole story, make sure you read the book, but this is a good idea that can stand on its own. Ludwig learned where opportunities exist. This is so important, still true to this day. Um, so he's, he's down in Venezuela. This is before he has that, that,

• 1:16:23David Senra?

  I don't even covering that in the podcast. I, it's just, I guess I gave you the important parts, like, he was used to succeeding where others failed, which is, you know, can reaffirm like your positive, uh, like opinion of yourself, but you don't really know, the dichotomy there is you don't really know when you're wrong. Because you're used to everybody saying you're wrong and then you wind up right, but sometimes everybody's saying you're wrong and you're wrong. And that's how he loses, you know, most of his fortune in the jungles of Venezuela. But before that, he goes down, he takes this trip down there. And it says, but for Ludwig, the trip was more than just a pleasure, John. It gave him the chance to look at several sites where he was thinking about starting projects. One was Mexico's Pacific coast.

• 1:17:08David Senra?

  Um, here at a place called Black Warrior Lagoon, where huge underground deposits of brine, concentrations of salt in the water are around 30%, nearly 10 times the salt, the salt of seawater. By the simple process of pumping this brine to the surface and letting it stand in pools where the hot sun could evaporate the water, one could produce millions of tons of salt. I'm telling you how he winds up becoming one of the, the world's largest producers of salt. Which could then be gathered and exported. The economy of the procedure appealed to D.K. All he had to do was bring up the brine and nature would do the processing. The main problem was labor. This part of Baja California was nearly unpopulated and he would have

• 1:17:53David Senra?

  and he would have to import workers and build places for them to live. Not only to live, but to shop and to go to church, etc., etc. The Baja coast was so remote that he would have to build an entire town if he was gonna develop the salt deposits. But he had learned something by now. Opportunities exist on the frontiers where most people dare not venture. And it is often the case that the farther the frontier, the greater the opportunity. The majority of businessmen are tied to cities where the ingredients of development already exist. Labor, energy, supplies, building materials, transportation, and so on. Competition also exists there.

• 1:18:35David Senra?

  And the way to escape it is to either do something no one else is doing, or do it where no one else is doing it. Much of Ludwig's success was due to his willingness to venture where more timid entrepreneurs dared not go. And the end result of this is, uh, his, it's a wild success. Output increased to as much as 4 million tons a year, making it the largest producer of solar salt in the world. Um, which even crazy is most of the salt went to Japan and Can- Canada. And, uh, this one, uh, plant had enough capacity to keep Japan supplied with all the salt it could use. So he basically starts supplying an entire country. One person or one, I guess, company is supplying all of that.

• 1:19:19David Senra?

  It's amazing. Um, okay. Uh, this is a great anecdote here.

• 1:19:27David Senra?

  And the takeaway I took, the idea I took away from this is, you know, sometimes you just have to do it yourself. Um, so he was embarking on an ambitious project in Panama. He wanted to build a 55,000 barrel a day refinery and adjoining petrochemical complex. Okay, so he's got this idea, he's gonna build this down in Panama. However, before starting construction, however, DK had a little chore to perform. One that he intended to do personally. Twice, he had trusted the word of specialists, and twice, he had been burned. He had believed them when they told him he could bring a fully loaded 60,000 ton, uh, bulk carrier down the river without running them aground. That was false.

• 1:20:11David Senra?

  And his geologists had failed, and his geologists had failed to discover, until after considerable work was done, that the coral rock underlying Grand Bahama Island was too fragile to support giant supertankers. So these are two failed projects of his. It's mentioned in the book, I've skipped over them, but basically, the expert said, "Yeah, this is possible." And then he finds out through doing the work, it's not possible. These episodes cost DK considerable time and expense, so before building a refinery in Panama, he decided to check out the site himself. Dressed in baggy work clothes, he caught a night flight out of New York to Panama City and arrived just about dawn. He sauntered into a little village store at the bay's edge just as it was opening. Casuals any gringo tourist down for a holiday and a bit of fishing.

• 1:20:54David Senra?

  Pulling a quarter out of his pocket, he paid for his purchases. A heavy bolt costing a nickel, and a 20 cent ball of string. Um, he unwound the string, measured it out in six foot lengths, and tied a knot at each interval. Then he made a slipknot at one end and drew it tight around the bolt. This done, he went outside, made arrangements with the dock owner to rent a motorboat, and spent the rest of the morning and afternoon puttering around the bay, checking with his weighted line, the accuracy of every sounding marked on a nautical chart, on a nautical chart he had brought along. Only when he had satisfied himself that the water was as deep as the chart said, did

• 1:21:36David Senra?

  he fly back to New York and give the signal to begin construction. I mean, that's pretty amazing. At this time that he's doing this work, and the reason I said, you know, sometimes you have to do it yourself, he's already been burned, again, he learns from all his experiences, doesn't waste any of his time. He's... Close to a billionaire. And he's going out on a little fishing boat in Panama, just making sure that the markings on his chart are accurate. Because if not, if they're not accurate, it's going to cost him a lot of money in the future. So, I really enjoyed that story. Um, let's see. Oh, in addition to owning and operating companies, he also made a lot of money in the stock market. So, I referenced earlier, he invested 8.5 million in McLean's company. That turned into about 50 million dollars.

• 1:22:21David Senra?

  You can learn more about that on Founder's Number 61, if you haven't listened to it already. But, here's another one. So, this writer is talking about, like, why are you buying, like, why do you own stock in all these other oil companies if you're also, like, transporting the oil companies? It says, "The writer, who was unaware of the incestuous habits of the oil industry, or was naive, tried to raise moral issues in an amoral business." And so, he's talking to Wagner, which is Ludwig's second-in-command guy. And Wagner reassured him that Ludwig is primarily interested in the appreciation of the value of stock, not looking for tanker cargo in the purchase of shares. So, he's not trying to, like, he's not trying to take over the company, he's just realizing, hey, this is undervalued, I can make money.

• 1:23:06David Senra?

  And indeed, DK, 19 months after buying the stock, would sell it for 146 million dollars, reaping a handsome 46 million dollar profit on his short-term investment. And I just want, just two more things. I'm going to leave you with, just, towards the end of the book, I think it would be helpful if I would have read this at the beginning of the book, because it really, I think, is a good summary of getting to know him as a person, and then using that as, like, a prism to, like, view, you know, how he organized his company. So, it says, "An engineer by training and temperament, he much preferred machines to men. Humans were unreliable and had far too many needs.

• 1:23:50David Senra?

  With a machine, you could, you only had to give it a little fuel and maintenance occasionally, and it would perform faithfully and uncomplainingly until it wore out. It didn't ask for food, shelter, clothing, or higher wages." So, in that jory, that project in, um, in, in, uh, the rainforest, he gets mad because...

• 1:24:13David Senra?

  And it costs, obviously costs a lot of money. A lot of the work he thought he could do with with machines, once they got the machines on there, the machines were basically destroying the soil as he's trying to like make, turn the rainforest into like a productive environment. The machines he was using to try to do that were also at the same time destroying all the nutrients in the soil. So it wound up, he was trying to build like the world's largest, he had a good idea in theory that hey, 30 years from now, we're gonna have a huge paper shortage. Let me start, um, let me start planting trees and I want to be basically the largest producer of pulp, paper pulp in the world. And so he, he takes a long-term view, which could, could very well be a positive thing. It winds up obviously not working on

• 1:24:57David Senra?

  in this case, but he basically destroyed the soil, his own soil and the trees wouldn't grow. They, they would start yield like half as much as he needed to. And it's just a, it was terrible. He wound up selling it and uh, not making any money and the company he sold to would have to assume like hundreds of millions of dollars of debt. So anyways, um, this whole thing about, uh, they're saying with a machine, uh, that he preferred machines to men. He was really pissed off that now he, they had to like take the equipment back from the rainforest and he had to use people instead. Um, and then I'll close here. That's just a description of him. He says, "Daniel, a clever mechanically inventive mind committed to the principle of getting the maximum utility and profit from the minimum expenditure

• 1:25:39David Senra?

  of time, space, energy and money. An ambition that seemingly knows no limits. A decided preference for deeds over words, machines over men, and a high degree of ruthlessness." So I'll leave the story there. If you want to learn more about Dan, the world of Daniel Ludwig, uh, one of the least known but most successful people that I've ever come across, you can buy the book. I'll leave a link in the show notes below, but you can also go to amazon.com/ shop/ founderspodcast and you'll be able to see this book. You can buy it. The Invisible Billionaire, Daniel Ludwig by Jerry Shields. You'll see every

• 1:26:24David Senra?

  single other book that I've ever done for the podcast and you'll see the, the book I'm currently working on for next week. Alright, that's where I'll leave it. I will talk to you next week.