#237 Julio Lobo (Cuba's Last Sugar Tycoon)

What I learned from reading The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon by John Paul Rathbone. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- [2:02] Beyond Possible: One Man, Fourteen Peaks, and the Mountaineering Achievement of a Lifetime (Founders #236) [3:22] This is a cautionary tale. [6:18] One of the main lessons of the book is just how fast things can change. [6:25] The History of Cuba in 50 Events [10:14] Lobo walked with a limp due to a murder attempt 14 years before that had blown a four inch chunk out of his skull. [12:29] One of the most human of all desires is to perpetuate what you have created. [12:55] Lobo thinks he has leverage when he really doesn’t. [18:39] He dies in poverty. Imagine having $5 billion and then at the end of your life having to rely on an allowance from your adult daughters. [20:30] I think about what Charlie Munger says: Don't try to be really smart. Just try to be consistently not dumb over a long period of time. [20:58] Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams (Founders #146) [22:59] Chico, I was born naked. I will probably die naked. And some of the happiest moments of my life happened when I was naked. [29:01] From an early age it was apparent that Lobo sought not only wealth but glory too. [30:21] He was an individualist who did not spare himself any sacrifice to attain his objectives. [31:26] The clearest path to wealth is building a business that benefits somebody else's life. Make a product or service that makes somebody else's life better. Do that for a long period of time and keep improving it. [33:45] His father told him I would much rather you make your mistakes now than later when I may not be around to pick up your pieces. [38:16] It turns out that almost being executed makes you impatient for large success. [40:32] If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it. —Warren Buffett from The Essays of Warren Buffett (Founders #227) [45:09] Think about the type of funeral you want. There is a story about a person who died. The minister said it is now time to say something nice about the deceased. After long time a person came up and said, “His brother was worse.” That is not the kind of funeral you want. —Charlie Munger [50:34] Alfred Nobel: A Biography (Founders #163) [52:30] The Fish That Ate the Whale: The Life and Times of America's Banana King(Founders #37) [54:26] They almost resorted to a duel, which was still common in Cuba at the time, where differences were often settled with machetes at dawn. [1:04:34] There are times when chasing the things money can buy, one loses sight of the things which money can't buy and are usually free. [1:05:10] The Almanack of Naval Ravikant: A Guide to Wealth and Happiness (Founders #191) [1:05:17] A calm mind, a fit body and a house full of love, these things cannot be bought, they must be earned. —Naval Ravikant [1:08:52] His business collapsed like a house of cards. [1:09:34] It was the same ending that befell so many other famous speculators throughout history. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

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

• 0:00David Senra?

  Cuba has known many rich men since Christopher Columbus first introduced sugarcane to the island. Thomas Terry, the most successful sugar planter of Cuba's colonial years, left $25 million on his death in 1886. Not bad considering that then the richest man in the world, William Astor, left just 50 million. Yet Cuba does not have to look back more than a century to find extreme riches. In Havana today, to have Creces-like wealth is referred to be as rich as Julio Lobo. Julio Lobo was the richest man in Cuba before Castro's revolution did away with such men. Lobo's life frames the 60-odd years of the pre-revolutionary Cuban Republic.

• 0:44David Senra?

  He was born in 1898, the year that Cuba won independence after 30 years of fighting against Spain, and he left the country in 1960, two years after Castro's guerrillas came down from the hills. In his heyday, Lobo was known as the king of sugar, not just of Havana, but of the world, with an estimated personal fortune of $200 million, about $5 billion in today's dollars. Yet he was also a financier of such talent that Castro's government, which was communist, asked Lobo, a full-blooded capitalist, to work for them after the revolution had begun. So Lobo captures the period's contradictions, too.

• 1:27David Senra?

  Lobo's life has the explosiveness of a Hollywood movie. He swam the Mississippi as a young man. He fenced in duels. He survived assassin's bullets, and was put against a wall to be shot, but pardoned at the last moment. He courted movie stars, raised a family, and made, and then lost, two fortunes.

• 1:51David Senra?

  That is an excerpt from the book I'm going to talk to you about today, which is "The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon." And it was written by John Paul Rathbone. So it's funny, on the last podcast, I did on the book Beyond Possible, which is written by a very inspiring figure named Nims Persia, this mountaineer and special forces operator from Nepal. Something Nims said in the book where he's climbing mountains and he passes-- actually, I'm just going to read the excerpt for you real quick, in case you missed it. He says, "He's climbing one of the highest mountains in the world." And he says, "There's a number of unpleasant reminders of the harsh and unforgiving nature of life at high altitude. I passed at least three corpses along the way, the most unsettling being a man in a

• 2:34David Senra?

  bright yellow summit suit, whose jaw was set askew in a grin. I kept thinking of the man in the bright yellow suit," and now you hear Nims's inner monologue. He says, "That could be you if you don't take care, brother. I still had plenty of hard work to do." And so I tried to translate that idea that Nims had in his inner monologue to our primary purpose on the podcast, which is to learn from the people that came before us. And what I realized is like, hey, it's a good idea to study dead companies. Please send me book recommendations on entrepreneurs that failed, or companies that were once successful and then fell from that perch. And so I got several book recommendations, a bunch of books I ordered for that. But we didn't have to wait long. And this book, I didn't know that going into this book. This book has been on my desk for quite a while, probably for a few months.

• 3:16David Senra?

  And I didn't know, picking it up, that this was actually going to be largely-- I didn't know until I got to the end of the book, that this is going to be largely a cautionary tale. And so let's go to the introduction. The author tells us why he is writing this book, why he spent so many years crafting this story. "I had been fascinated by those elegant, decadent years all my life. The curiosity was an inevitable outgrowth of my mother's exile. She was born in Havana and raised in a conventional, upper-class Cuban world. My mother was a close friend of Julio Lobo's younger daughter. When I was a child and couldn't sleep, my mother would stroke my hair and murmur descriptions of her life in Cuba until I closed my eyes."

• 3:57David Senra?

  And so this book weaves his family's story with the life story of Julio Lobo. A lot of it comes from what he learned from his mother. There's a ton of pictures of his family. And one of the pictures that he shares in the book will also demonstrate the vast wealth that Lobo had. And so he's describing his mother as like a teenager. Another shows my mother with a group of friends standing in the shallow end of a swimming pool. It is a photograph of a swimming pool at one of Julio Lobo's many estates outside of Havana. It is also the same pool that Lobo filled with perfume so that Esther Williams, the Hollywood starlet, could practice her swimming routines when she visited the island. So Lobo had enough wealth, not only did he have multiple vast estates, but so much

• 4:41David Senra?

  wealth that he could actually fill a swimming pool with perfume. Okay, so the way the book is set up, it starts at the end of his empire crumbling. It's 1960. He's 63 years old. He's going to be forced to flee Cuba, and he has almost all of his assets on the island. So let's go to this meeting that he's going to have. Che Guevara summoned the sugar magnate Julio Lobo to his office at the Cuban Central Bank in Havana. It would be a midnight meeting. The Cuban Revolution was barely 18 months old. An inexperienced government was remaking the island. Lobo was then the most important force in the world sugar market. 62 years old, he was known as an authoritarian empire builder who handled about half the 6 million tons

• 5:24David Senra?

  of sugar that Cuba produced annually. And so just to give you a background of why this is so important, almost the entire Cuban economy was sugar. There's estimates that it was at the low end, 30%, responsible for 30% of Cuba's entire GDP. I've seen numbers as high as 60%. And so we have this one guy who, over many decades, like four decades, had built up this empire where he's essentially controlling half of that. As part of his personal fortune, he controlled 14 sugar mills in Cuba. He owned hundreds of thousands of acres, and they had just, so keep that in mind. So they're saying he owns hundreds of thousands of acres. Castro had just put out a decree that no one could own more than, I think, 900 acres. So he's well above that limit, right?

• 6:08David Senra?

  So he owns hundreds of thousands of acres of land, had a trading office in New York, London, Madrid, and Manila. He also owned a bank, an insurance company, shipping interests, and a telecommunications firm. And then we get into, I think, one of the main lessons of the book is just how fast things can change. So at the same time that I'm reading this book, I actually read this 51-page book. It's called The History of Cuba and 50 Events. I've read a bunch of History of Cuba because my dad was born there. And so just like this author, I grew up on, you know, stories of Cuba and Castro and everything else. And a lot of the history of Cuba is, you know, dictator after dictator, foreign power after foreign power, just running, ruling the island. And so the reason I say one of the main reasons, the lessons of the book is just how fast

• 6:50David Senra?

  things can change and how you shouldn't really rely on your ability to predict the future, which is the downfall of Lobo many times because he was primarily a speculator. Lobo had beef with Batista, who was in power before Castro. And so Lobo actually helps Castro get to power. And he doesn't realize, because no one, the weird thing about, if you go back and read a lot of history of Castro's, like, the first few years before he took power and the first few years after, people were saying, no, no, he's not, he's not, you know, he's for democracy, he's not a dictator. They were saying he's even anti-communist. And so we get a little bit of that. "Lobo had fiercely opposed the corrupt Batista government. 'We didn't care who overthrew Batista,' he said, 'so long as somebody did.' He had even helped finance Fidel Castro's rebels a few years earlier."

• 7:32David Senra?

  Now, that's important because, let's say it's 1956, he's helping, 1955, 1956, he's helping finance Fidel Castro's rebels. Four years later, Castro is going to destroy his $2 billion fortune. That is the lesson there. "That, however, was before Castro's plans, and eventually his communist leadings had been fully revealed." And then this is the punchline here. "Since then, much of Lobo's land, although not yet his sugar mills, had been confiscated by the rebel leader whom Lobo had once helped." And so then the author points out that Lobo was not alone in making this mistake. A lot of people didn't like Batista the second time he took power, so the most recent time right before Castro overthrew him. And so his mom is in, there's this famous scene, if you've ever seen Godfather 2, one of my favorite movies of all time, where Michael

• 8:17David Senra?

  and Fredo are in Cuba the night that Batista flees and that Castro takes power. So his mom, John Paul's mom, was there too. There's pictures of the New Year's Eve party. And so this is her, like, very common interpretation of what happened at the time of the event. So it says Havana was, this is his mom talking. Havana was buzzing, there was excitement and hope in the air. She's writing in a diary at the time, and so he's reading his mother's diary many years later. The whole country seemed to be behind Fidel. Cuba was free of Batista and all that he represented. We were on our way to true democracy. Think about how crazy that statement is. I mean, I'm not faulting her, I understand why she said that, but Fidel is literally the opposite of democracy.

• 8:59David Senra?

  In the following days, and in his, it's funny because his mom comes around full circle. She winds up, like most Cuban exiles, detesting and hating Castro. In the following days, my mother watched the televised show trials of Batista's henchmen, led by Che Guevara, and succumbed to the hypnotic chant, it's in Spanish, I'm going to translate it, against the wall, against the wall. She felt, remember, she's young too, like, she doesn't understand. Her father nails it, he gets it right away. She felt that there was no difference between a mock and a real trial, as the outcome would have been the same. But my grandfather, her father, viewed the proceedings and subsequent firing squad executions with distaste, and maintained that they marked the beginning of the end. He was right.

• 9:44David Senra?

  A few weeks later, Castro nationalized my grandfather's department store, who called it. Shortly afterward, everyone in my mother's family boarded a flight for the United States. And so then we go back to this meeting that Lobo is having with Che, and the author does a great job of just talking about how crazy Lobo's life was. This is just unbelievable. Like, so many of the stories that we study on this podcast, and why I think reading biography is just so important, you just see the full scope and the wide variance that a life can happen in one lifetime. Lobo walked with a limp due to a murder attempt 14 years before that had blown a four-inch chunk out of his skull after he supposedly refused to pay $50,000 in protection money

• 10:27David Senra?

  to a gang of Cuban mobsters. The machine gun bullets had also shattered his right leg and left knee. So later on, he winds up having to leave Cuba, when he's in his 60s, goes to New York, winds up making a giant mistake, which we'll talk about later on, losing another fortune, then having to essentially retire in poverty in Madrid. When he's an old man, he's like 80 years old, he winds up slipping outside, falling and bumping his head, he has to get surgery. The surgeon in Madrid Half a century later, still finds shrapnel in the base of Lobo's skull from this attempted assassination attempt. It's insane. I'll get to more about the shooting later, too. Inside the Central Bank was a mess.

• 11:10David Senra?

  Guevara, who had only been—can you imagine? This is how stupid Castro is. Who should be the president of the Central Bank? Che Guevara? Are you kidding me? Guevara had only been Central Bank president for a few weeks, but the once-pristine financial building was dirty and disorganized, with papers all over the floor. And so there's all these things that are happening in the mind of Lobo as he's sitting there talking to Guevara. I want to pull out three sentences for you. They're all separate, and they tell you a lot about him. Lobo has this intense fascination with Napoleon. That's throughout the entire book. He had, I think, one of the largest collections of Napoleon artifacts in the world. He had his death mask. He had locks of his hair. He had a bunch of letters that he wrote. He had some of his molars in his teeth.

• 11:54David Senra?

  And so you can really think of Lobo as the Napoleon of sugar. There's a lot that you can learn from this guy that I think some positive traits he has. But there's also, like I said, it's a cautionary tale. Lobo used to say that Napoleon was a lonely character, and so was he. Lobo was candid to the point of brutality, but he can't do that right now in this meeting. And then three, he talks about why he stayed around, why so many people had the presence of mind to get the hell out of Cuba. And not only did he stay way longer than he should have, but he kept all of his assets on the island. And he says, "One of the most human of all desires is to perpetuate what you have created." And so now we go into the dialogue that Guevara and Lobo are going to have.

• 12:38David Senra?

  I went back, and I have a lot of highlights in the next two or three pages, and then went back and left a note after. And I just note to myself, this is a dangerous game to play. No money in the world is worth this. So it says to separate, to separate sugar from Cuba, Lobo knew, he thinks essentially Lobo thinks he has leverage when he really doesn't because you're expecting, like you would think you're dealing with rational actors. Castro and Guevara, and you can prove this because they have a 50, in Castro's case, Guevara dies, obviously, but Che dies, obviously, but Castro has a 50-year history of incompetence. Because Lobo is going to make the point that of course, sugar is so important to the financial health of our island, we can't just cut it off. You're not dealing with rational people.

• 13:23David Senra?

  And I guess I should preface this entire podcast, like, obviously, like, I was raised on stories of this my whole life. I met a ton of Cubans that came over on rafts, like a kid, I'm talking about like a little kid, what's my first memories when I'm like five, six, seven, eight years old, is meeting people that risked their lives coming over on rafts to get to America and to flee Castro. You're talking about hundreds, the estimate is something like hundreds of thousands of peoples that did this. The people that died on the low end, they're talking about from 1959 until now, the low end estimate is 16,000 Cubans died at sea trying to escape this brutal dictator. On the high end, that estimate is 100,000 people, many of these people being children.

• 14:07David Senra?

  So this is not, like, I can't be unbiased here. So I'm just warning you that, like, there's a, and I had a conversation with myself before I started, like, do not be induced into a state of rage, because many times I'm reading the book and I was induced into a state of rage because I cannot for the life of me understand the people that also view this event in a positive light. They say things like, oh, look at the high literacy rate, look at the education. When I've met hundreds, probably thousands of people that fled Cuba for the United States, not one of them would tell you that Castro was good for their country, their home, the one that they had to flee, in many cases, leave family behind. There's a great, I was listening to Anthony, as prep for the podcast too, I was listening

• 14:50David Senra?

  to Anthony Bourdain talk about, you know, he famously went to Cuba, like, six years ago, when they had recently opened it up to, to more Americans at the time, and he had filmed there. He said essentially, like, when you sit down with somebody, it becomes political because you're sitting down with local Cubans and they have no food. All they have is rice and beans, small portions of that. The author goes to Cuba for research of the book. And what a local Cuban will say to somebody else that he doesn't like to corrupt government officials, you know what their insult is? It's in the book. That guy eats a lot of meat. That's how they know the government is corrupt because they get meat and we don't. These people don't even have food or the internet.

• 15:34David Senra?

  It's just a wild, it's just a wild story. It's just a wild, crazy experience also, just something that just fundamentally altered, like, my view on the world. So it says, "To separate sugar from Cuba, Lobo knew one might as well chop away the arterial system of a body and imagine that it could somehow survive." So despite Che's plans for Soviet-style industrialization and self-sufficiency, Cuba's revolutionary government needed sugar. Because of that, it also needed men like Lobo, or at least he thought. This was the aim of Che's meeting that night. Castro was going to seize Lobo's sugar mills in a few days, and Che wanted to convince Lobo to stay and keep his expertise in Cuba. So Che's smart enough to realize that they need his skills, but dumb because listen to the offer he thinks that this person's gonna accept, right?

• 16:17David Senra?

  The offer that Che was gonna make Lobo was a relatively modest salary. He's gonna pay him $2,000 a month and the right to keep one of your homes. This is a guy worth $200 million at the time. Nobody's going to take that deal. So Che says, "It is impossible for us to permit you, who represent the very idea of capitalism in Cuba, to remain as you are." Lobo was used to playing all the angles as a speculator. He may have remembered Napoleon saying, "I am sometimes a fox and sometimes a lion. The whole secret lies in knowing when to be one or the other." And so Lobo starts to become the fox. Lobo asks Guevara how he could integrate himself in with the revolution. Che laid out his terms. Lobo would become general manager of the Cuban sugar industry under the revolutionary government.

• 17:02David Senra?

  His job was to be, would be to nationalize all aspects of the business. He would lose all of his properties but one and keep an income of $2,000 a month. So then the author talks about this interview he did with Lobo's, essentially like his right-hand man, somebody he worked for a long time. This guy is Leon, he's still alive. Lobo's long dead by the time the book was written. Leon is living in Miami, like many Cuban exiles. And it says Leon had just celebrated his 91st birthday when I talked to him. And so he's talking. Now Leon is relating for us the meeting that Che and Lobo are having. And he says, "The notion that Lobo might surrender his empire, his creations, to anyone else, let alone a communist government, was impossible." And so Lobo plays it cool. He's like, "Let me think about this, let me get back to you."

• 17:46David Senra?

  Lobo had already made up his mind. Outside on the street, as he got back into his car, Lobo wondered if his refusal to reveal that decision had consigned him to prison or worse. And so what I meant is, well, this is not a game you want to play. He is trying to outwit and essentially escape, right? From people that, for the past two years, have put people up against walls and murdered them for entertainment. They literally, they did this in stadiums. They did this as a public spectacle. And so now we get into the first aspect of the cautionary tale. It's like, humans are very bad at predicting the future. And so it says, "Lobo simply couldn't conceive that his empire was gone." And that's the thing.

• 18:29David Senra?

  He's losing the empire technically in 1960. He lost it the day Castro took power. And if he would have acted then, he could have saved... He dies in poverty. He dies in poverty. Imagine having $5 billion and then, at the end of your life, having to rely on an allowance from your adult daughters. It did not have to be like that. Other rich businessmen wind up figuring out ways to get... They saw the writing on the wall, right? So it says, "Other businessmen had already taken their money out of Cuba." One family, the Gutierrez family, had moved $40 million abroad. You could have got money out. And there's so many things going on. You leave. My dad's dad...

• 19:12David Senra?

  I think about him a lot because I didn't know, like, he died when I was too young to remember him. And so there is a narrative that only the rich were able to flee Cuba, like, even the author kind of makes that because his family, his mother's family was rich. That's not true at all. My grandfather was not rich. He worked as a butcher and then he worked in a factory that produced socks. And so even though I don't know him, or even though I never got a chance to know him, I owe my life to that man. Because somehow he knew. So you go to 1950, if you go to 1958, my grandfather is around 37 years old. He's got a wife and a young son. That son is my dad. And in 1959, my grandfather knew enough that we got to get the hell out of here now.

• 19:58David Senra?

  And he fled to New York, eventually went to Miami. He went to a country that he didn't speak the language, had no skills. My grandfather had no skills. He had no education. And he had a young family to protect and provide for. That one decision by someone I never knew changed the entire trajectory of my life. I'm just so thankful for that. I have like tears in my eyes. All right, so it goes back to this Lobo, and so essentially what he's saying, what the author's saying is like, you know, Lobo didn't have to do this, right? He was, he just makes so many bad decisions. He's really smart. I think about what Charlie Munger says. It's like, don't try to be really smart, just try to be consistently not dumb over a long period of time.

• 20:39David Senra?

  Lobo has some brilliant moves and then he erases all the gains he gets from his brilliant moves by being dumb. And this is the case, like, Lobo had continued, so all these other people are moving their money out, right? Many of them escaped, some get stuck there. Lobo had continued to invest in Cuba to the last. He winds up buying, remember Milton Hershey, the founder of Hershey Chocolate? I did his biography a long time ago. It's like Founder's Number 146, if you haven't listened to it. Right before this happens, Lobo does one of his biggest deals ever and he has to take out a giant loan from an American bank to buy Milton Hershey's, Milton Hershey's long dead by this point, but to buy Milton Hershey's sugar factories because Lobo was constantly trying to expand his sugar mill empire in Cuba.

• 21:24David Senra?

  And so that's what it means. Like, Lobo had continued to invest in Cuba to the last. This was a bad decision because he was going to wind up in the future, and I'll get there later. He's going to wind up speculating in New York, trading sugar commodities, losing money, so much money. And then he gets a margin call on this loan. And that puts him in bankruptcy. And then by that time, he's too old. That's it. Like, he crapped out. So it says, "Lobo had continued to invest in the last." "Lobo believed, like so many others, that he could somehow control Castro, or that the Americans, who are only 90 miles away, would." And so he makes another fatal mistake. In early 1960, so a few months before he's talking, or a few weeks before he talks to Che and has to leave, Lobo insists that a letter of credit worth millions of dollars of sugar cargoes

• 22:05David Senra?

  that was dispatched to the United States should be remitted to Havana rather than to his office in New York. Well, that was a gigantic mistake because then he could flee to New York with millions of dollars, right? "If I don't do that, the revolutionary government will take everything," he explained at the time. "They're going to take it, everything anyways, Lobo." Now it was the clear, I guess I just ran over my own point. "Now it's clear that the government would take it all anyway." The next day, Lobo went to his office in Old Havana. When he arrived, the building was roped off, guards were posted around the doors, and a former office boy was wearing a militia man's uniform and sitting behind his desk, his feet up, smoking a large cigar.

• 22:48David Senra?

  So now you have a young kid that used to work in your office, and look how he's going to talk to him. "Now we've got you where we want you," he said to Lobo. "How is that?" replied Lobo. "Stripped of everything, almost naked." "Chico, I was born naked. I will probably die naked. And some of the happiest moments of my life happened when I was naked." That's actually pretty funny. Lobo shot back and then left. That afternoon, Lobo caught a crowded flight to Mexico, and from there, he flew to New York. He took with him a small suitcase. He left behind his art collection, his palaces, his vast enterprises. Lobo was then 62, and if not an old man, then at an age when most people think of retiring rather than starting again.

• 23:32David Senra?

  As he was ready to leave the island, he told his secretary, "This is the end." Of course, it was not the end. It was just another beginning. And everything that came before, or that follows after, flows from this thought.

• 23:45David Senra?

  Now, this is absolutely wild. I think if you go through the book and look at my notes, "This is wild" is the most common note I have in the book. Because his father, Julio's father, is also thrown out of his country by a dictator named Castro. They were Venezuelan. They actually had to flee. They were not Cuban. They wound up settling in Cuba after getting thrown out of Venezuela. And then his mom, I love Lobo's mom. We're gonna get there in a minute. So this is Lobo's dad and his quick life story. He's 14 and his father dies. So then at the age of 14, he starts working at the National Bank, working as a clerk to support his mother and family. Six years later, after learning accounting, French, and English in his spare time,

• 24:29David Senra?

  he was appointed chief accountant. By the time he was 22, Lobo's dad had joined the board of directors. This is insane. Three years later, he ran the bank. It was a remarkable achievement. And then just like at the apex of Lobo, his son's life, where he gets thrown out, he's like, "Oh, I got this huge opportunity in front of me." He gets kicked out of the country. Life seemed to be full of promise until President Cipriano Castro threw them out of the country. And so I think when he gets thrown out of the country, same situation. He's like 25. I think he has two young kids. Lobo's already born. He gets an opportunity. He's like, "Maybe I should go to America." He gets a job offer from somebody new to be a deputy manager of the North American Trust Company. At the time, the North American Trust Company also had an office in Havana. So that's how they wind up in Havana.

• 25:13David Senra?

  And so this is the wild twist, because many years in the future, his mother is going to try to physically assault the Castro that kicked her out of her country, which is Venezuela. So it says, "From his father, Lobo inherited ambition and humor. From his fiery mother, he inherited a sharp temper." "May the mountains fall on your head," Virginia had shouted at Castro's This is the Venezuelan Castro. "at Castro's presidential palace as she left Caracas, shaking a fist at the despot who had run her family out of the country." "Virginia exacted a more satisfying revenge 13 years later." This is wild. Castro, by then, was deposed from power and then had arrived in Havana to drum up support

• 25:58David Senra?

  for a counter-revolution. So Virginia found out where he was staying, headed to Castro's hotel and waited in the lobby. When Castro appeared, she rushed him with her umbrella, and the hotel staff had to pry it from her hands as she beat her old enemy in the head. And so as the author constantly visits Cuba during the writing of the book, there's also these fantastic characters. It has nothing to do with the story. I just want to pull out one sentence here because I just love this. There's a poet and a writer. Her name is Dolce Maria. She's 89 years old when she wins this Spanish, this European literary prize due to her writing and her poetry. And I just love the fire in her. And I obviously think this is the wrong path she took,

• 26:42David Senra?

  but I like what she says here. And so when she wins this award at 89 years old, the interviewer is asking her, like, why didn't-- The interviewer said, "Why had you not left the island after the revolutionary?" Dolce Maria simply replied, "I was here first." And there's also devastating stories. So you know what an exile is, obviously. They flee the country. They say conditions got so bad in Cuba. And there's a couple of people that are interviewed in this book. They're called in exiles. And these are people-- Actually, let me just find it real quick and I'll just read to you. It says at the end of the book, I wasn't even going to put this in, but I thought it was-- I don't think I've ever heard this before. So it talks about, he's interviewing a very old lady. "She never went out," she said. "The last time she made a day excursion was three years ago.

• 27:27David Senra?

  Besides, where would she go? Everything was so expensive. So she stayed indoors and scrapped by on their ration cards and a monthly pension of 150 pesos a month from the government." The government supports her so great. You know what 150 pesos a month is? Seven dollars. "Other than weekend visits by her children, and then some of her kids were able to escape and immigrate to the United States, that was it. Such isolation made Angela and Maria extreme examples of in exiles. People who have turned their back on Cuba they find ugly are threatening and stay indoors. It is a mirror image of the exiles abroad." So they literally isolate themselves in the house. And I wrote-- I'm not even going to tell you what I wrote in the margin.

• 28:11David Senra?

  I've already lost a little bit so far. So the lady I'm telling you about, I think she's like 90 years old at the time. And she's cared for by her daughter, who's 75? 74, something like that? So there's just crazy stories in the book. That's basically the point I'm making to you. So now we go to Lobo's early life. Really, his father plays a huge role in the trajectory of his life. He counsels him. A lot of the Lobo family saved letters and they let the author read them. And a lot of those letters have survived, or just like a father counseling a young son. At this point, he's like college age. And he says, "Lobo was both a loner and an adventurer. The incidents that he remembered from his childhood show the same determination and impulsiveness of his later life. It was an explosive mix as his father foresaw.

• 28:56David Senra?

  He would write to him," and a lot of this is in Spanish, "control your passions," he would counsel his son. From an early age, it was apparent that Lobo sought not only wealth, but glory too. And so Lobo was just a teenager. When he learns about people, this is another sugar, wealthy sugar founder. This guy's name is Manuel Rionda. And he owns this company called, or he owned a company called Cubicane. Cubicane was the largest sugar company in the world. Rionda called it his baby. Lobo was spurred on by the fortunes that men like his father and Rionda made. So Rionda owned sugar mills. His father is a commodities trader, and sugar is one of the things that he trades. There's other things like peas and, you know, all kinds of different other commodities.

• 29:40David Senra?

  But what Lobo decides to do, he's like, "No, no, I'm going to focus on sugar." And so he winds up going to the United States. He goes to LSU, so Louisiana State University, and he's studying sugar engineering. I didn't even know there was a degree path like that. So he, basically, what Lobo was, the benefit Lobo had was the fact he found what he was going to focus on at an early age. And so he focuses on it when he's 18, up until he loses everything when he's in his 60s. And so then we get his personality. These are the positive, in my opinion, the positive parts of his personality. Even as a young man, he focused everything with a, he focused with a passionate and single-minded determination. His friend in college describes him, "He was an individualist who did not spare himself

• 30:24David Senra?

  any sacrifice to attain his objectives." He has a fantastic work ethic.

• 30:31David Senra?

  This is when Julio's in his 20s. This is advice from his dad, one of the surviving letters I was just telling you about. Most of the surviving letters are from his father. They began offering sage advice to a young man about to begin his career. And they end in tones of respect towards a man he regarded as his equal. So they wind up being partners. His father then retires and Lobo takes over and drastically expands the business. And his father says, "Take care. Work with faith. Cultivate your spirit and dominate your passions." That's something he repeats over and over again. Dominate your passions, don't let them dominate you. It's actually really good advice, and I'm not sure Lobo actually heeded that advice. And so in the book, there is a million stories of these boom and busts that happen in commodity markets. I'm going to read this to you.

• 31:13David Senra?

  This is a huge boom and bust during his first year in the sugar business. I'll tell you my own takeaway here. I don't understand, like, I talk to a lot of entrepreneurs, founders, it seems like they're just so obsessed with speculation. When to me, like, the clearest path to wealth, that you actually have influence and control over, is building a business that benefits somebody else's life. Like, make a product or service and make somebody else's life better, right? And then do that for a long period of time, keep improving it. That seems to me to be the surest path to wealth. There's so much energy and attention dedicated to, instead of doing that, to like speculating and trying to make money really, really quickly. And then they wind up, for every few people that actually succeed at doing that and then get out at the top, there's thousands of people that you don't see that held on too

• 31:57David Senra?

  long and were absolutely ruined, Lobo being one of them. I just don't understand this. It's not that I don't understand this obsession with speculation. Like, human history is full of people that want to get rich for doing the least amount of work possible. I just don't think that your goal, your stated goal, actually, is more likely achieved through speculation than it is through just building a business that you own and control and you can actually influence the outcome of. By the end of March, the sugar price had risen to 12 cents. By mid-May, it stood at 20 cents and half, 20 and a half cents. Up and up and up rose the price of sugar, as did the harvest, to 3.75 million tons, the second highest in Cuban history. Then, just as fast, down, down, down, down, down, the price fell. By August, it had dropped to 11 cents, and by Christmas, it had dropped to 3, 3 cents.

• 32:40David Senra?

  During the first year in business, Lobo, the future king of sugar, the man who would later say, "I am the market," watched his fortunes balloon and then collapse. And so, this is about like the money that he's running. The firm is still controlled by his father. It's called like Galvin Lobo at the time. His father sells and escapes the worst part of the crash. And I, he does something that's actually kind of smart here, his dad, that is. His dad sees like his, you know, he keeps on saying, "Dominate your passions, like you're extremely focused, you work really hard, but you're also, you're to risk on in the business that we're, we like, we have to survive, right?" And so, he actually promotes Julio more quickly than he wanted to?

• 33:23David Senra?

  And that seems counterintuitive, because Julio could make some drastic mistakes, right? But his point was, is like, "I want you to make your mistakes early in life, when I'm still alive, so I can help you." I don't think I've ever come across that idea before. Like, that was really interesting. Now, he directed, now, Lobo directed their, their operations, day-to-day sugar trading operation. It was a fast promotion to a senior position. But as his father told him, "I would much rather you make your mistakes now than later, when I may not be around to pick up your pieces." So, to me, his father's older, he's been involved in business since he was 14, he understands that the, your mistakes are inevitable. No one's going to get through their career without making mistakes. So, therefore, I need to accelerate my son's learning, so I can actually, because this

• 34:06David Senra?

  guy's very passionate and has the heart of a speculator, that he could get himself in trouble, and if I'm not around, maybe I passed, I'm dead, or whatever the case is, he can get himself in trouble. Hopefully, by putting more, he'd be more responsibility on him, he'll actually absorb the lessons as he, as he goes through these inevitable mistakes that he's going to make. And so there's other stories in the book of sugar barons, people that made a lot of money in sugar and did not wind up losing everything in their lifetime like Lobo does. One of these is the author's great-great-grandfather, and the note I have for myself is the author's great-great-grandfather was a G. His obituary described him as a man of simple habits, who woke at 5 o'clock every morning and worked at his standing desk until the last hour. He left behind 12 children, 32 grandchildren,

• 34:51David Senra?

  16 great-grandchildren, and a business worth $8 million. That is an insane amount of money. You're talking about $8 million. I think this is in like 1920.

• 35:03David Senra?

  And so I fast forward a few years in the story, his dad winds up being right because Julio is going to lose a ton of money because he's buying the dip. Well, it keeps falling. So you didn't buy the dip, you're about to go bankrupt. The sugar price continued to drop. 2.5 cents was enough to cover production costs. In 1932, you know, sugar prices have gone up to 30 cents a pound. Like, it's crazy the swings in this market. And a lot of this is because there's all kinds of corrupt governments trying to control quotas, and there's cartels, all this other stuff I'm omitting from the book. So it says in 1932, so you need 2.5 cents to break even, right? And Julio's trying to buy not only sugar, but he's also buying mills. 2.5 cents was enough to cover cost of production. In 1932, the price dropped to 7 tenths of 1 cent.

• 35:49David Senra?

  Mills closed, unemployment grew. Lobo wrote to his father of the disastrous results suffered by our house over the past four years due solely and exclusively to me. And then he asks his dad, to be relieved of his management duties, I would rather work as a foot soldier. Lobo had been humbled for a moment. And so this is early 1930s. He's also, the hard part here is you're not only in a wildly volatile commodities market, but you're also dealing with several dictators coming through, there's a coup. This, and this is another, another myself on this page. This is wild. So this is Machado, this is another dictator. And he was a Cuban dictator who was feeding his enemy, he literally feeding his opponents

• 36:34David Senra?

  to sharks. Like you got on his bad side and he'd feed you to sharks. What the hell is happening here? He winds up getting deposed. He fled Cuba by plane. As he flew over the island, he saw the Cuban sky stained red by fires of the burning homes of his former supporters. The violence unleashed by Machado's departure was unlike any other that Cuba had experienced since its independence. Throughout the island, gunshots and shouts summoned witnesses to impromptu executions. There was a New York Times correspondent that was in Havana at the time, and he watched one of Machado's supporters reach his end outside the Capitol Building. This group identifies, hey, this is a former supporter, and they rush him. A huge stone smashed against the side of his head. A bullet struck him in the breast.

• 37:17David Senra?

  He sagged, clinging to a light post for support. His revolver empty, so he tried to shoot his way out of this, and that wasn't successful. The crowd were howling like devils and closed in. Across the street, on the balcony of his hotel, his wife and two children saw him beaten to death. The body was completely unrecognizable when the mob finished their work. And this is when Lobo's pulled up against the wall and saying he's going to be shot. Can you imagine living through this? Shortly after the siege, a group of armed guards came to Lobo's office and arrested him. The soldiers told Lobo that he was to be shot the next day for plotting against the government, which he never did. It is largely believed this happened because Lobo, throughout his entire life, was constantly

• 37:58David Senra?

  critical of all these different governments that happened in Cuba over the span of his career have these restrictive sugar policies. He's operating in, this is not a free market by any means. And so he's blindfolded, put up against the wall, he protested his innocence, and was released when the authorities realized they had made a mistake. And it turns out that being, almost being executed, makes you impatient for large success. Only a year had passed since Lobo had been put up against the wall and, had been put up against the wall and almost shot. The humility, the humility that Lobo had felt years before, when he offered his resignation, had also passed. Lobo now felt impatient. Even in the midst of a global depression, he wanted to take on the world. His opportunity came in 1934

• 38:41David Senra?

  with a remarkable feat of market manipulation. He tried to corner the sugar market multiple times throughout his life. Lobo never commented on how he cornered the New York sugar market that December. It was, he would merely say later, "the only perfect squeeze that was ever pulled off." And then as he's telling the story, he goes back, the author talks about when he's in Cuba doing research. I'm just going to pull two things for you. I think it illustrates to why this is so frustrating to me. Although a nation of naturally savvy entrepreneurs, Cubans have been subject to a half-century experiment in socialism that has ground most of the economy into dust. So he's walking down the street, he says, "Pssst, someone had whispered to me from a dark Havana doorway in the early 1990s, as if he were a pimp or a drug

• 39:22David Senra?

  dealer. You want to buy some cabbage?" And he also talks about how speculation is in the blood. He says, "Cubans also have a particular fondness for speculative wages. Before Castro, Cubans bet on cockfights, the lottery, high lie, horse races, baseball, and every sort of device that casinos could think of." My dad, when I was a kid, he took me to cockfights. And again, I was young. I was probably like eight years old. And I don't know if at the time, I made the connection, but I certainly do now, where it's just like, well, you know, people, people spend all this time, sports betting, and betting on cockfights, and all this other stuff. It's just like, but none of you guys are wealthy. In fact, most of you are pretty poor. And so my point was like, can't you deduce? Like, if you're engaged in this activity constantly, and you think it's great, like all this gambling, speculation, whatever you want to call

• 40:06David Senra?

  it, sports betting, but you're not wealthy, like, clearly, over, and you've been engaged in this for a long time, clearly, that's not a profitable activity you should be directing your attention to. And clearly, over the long term, you don't really have a high chance of success. There's a quote in, Warren Buffett, I think nails this, of why you should just focus on building a business, have some kind of control over that. He talks about speculation in his shareholder letters. Let me read this quote to you. This is Warren speaking. If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There's nothing improper about that. I know, however, and this is really-- Warren puts into words better than I can, like my feeling on this. There is nothing improper about that.

• 40:47David Senra?

  I know, however, that I am unable to speculate successfully, and I'm skeptical of those who claim sustained success at doing so. And Lobo is going to be the perfect example of what Warren Buffett's about to tell us because he's got these wild gyrations in his wealth. Makes a lot of money, loses it, makes a lot of money, but he died poor. Relying on the charity of his adult children. There is nobody alive that would pick that path in advance. You know how I want my life to end? I want my life to end by getting an allowance for my two adult daughters as an 80-year-old man. So Warren says, there's nothing improper about that. I know, however, I'm unable to speculate successfully, and I'm skeptical of those who claim sustained success at doing so. Half of all coin flippers will win their first toss.

• 41:32David Senra?

  None of those winners has an expectation of profit if he continues to play the game. Lobo continued to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it. Now, remember that sentence. The fact that a given asset has appreciated in the past is never a reason to buy it. When he finally goes bust, everybody's selling, "Sell, you can book a profit." He's saying, "No, it's going higher." It did not go higher. So the author quotes John Maynard Keynes a few times. I was surprised to see Keynes quoted multiple times in Warren Buffett shareholder letters as well. And I think Warren probably learned, understood part of this from what Keynes had written.

• 42:12David Senra?

  And Keynes had once argued that the speculator is not so much a prophet as a risk bearer. If he happens to be a prophet also, he will become extremely, indeed, preposterously rich. And we know that most humans are nonprofits. So this is really how, give you an insight into how Lobo worked. And again, I think if he just applied all this energy to building a business instead of speculating, like, he would have died wealthy. Lobo had a legendary appetite for work. Lobo's days began at dawn. An office boy would arrive at his house at 6:30 each morning, carrying a clutch of decoded cables that had been sent overnight from Lobo's agents in Europe, the Middle East, and Asia. Lobo worked his way through the messages over breakfast, wrote his replies, and then the office boy would return to the office to code the telexes and send them off.

• 42:56David Senra?

  When Lobo arrived at the office about 8 o'clock, replies from his morning cables had waited him. "In that way, I gained a huge advantage over my competitors," he said, "who got into their Wall Street offices at 10 a.m." At his peak, Lobo handled almost half of Cuba's sales to the United States of sugar, half of Puerto Rico's sales of sugar, and almost 60% of the Philippines. Some believe the sheer size of his operation gave him a dangerous ability to rig market prices to his own benefit and to the industry's harm. Lobo's response to such talk was always to shrug. "No one man can control a commodity as big as this." Lobo would respond to 600 messages a day, and he would eat lunch at his desk. This is more on his love of speculation and how he viewed money-making as an intellectual competition.

• 43:38David Senra?

  Speculators are also, by their very nature, outsiders. They observe dispassionately from the sidelines, waiting for the moment to strike. Lobo viewed business as an almost intellectual exercise, like a game of chess. "If you get it right," Lobo used to tell me, "you get the other man into checkmate. That is where the fun is." Now, here's another problem. So there's other notes that I just left. They're not even in the book. This book spawned so many thoughts, and really, again, I'm talking to myself when I say this stuff. Like, this is a very cautionary tale for me. Two notes, let me tell you, these are the two notes that I put on my desk that aren't even in the book, but one has to do with exactly what he's saying. He's like, "Oh, I like to checkmate other men and do all this other stuff," right? He dies.

• 44:19David Senra?

  He winds up collecting way more enemies than friends during his life, and very few people, a handful of people, even bother showing up to his funeral. And so as much as I don't want to emulate Julio Lobo, like, to the degree that I want to avoid a lot of his sentences, the opposite direction I want to copy. You know, I've told you over and over again, one of my personal heroes, Charlie Munger, no doubt. And he said something at a commencement address. That I absolutely love. And I think it talks about, like, you don't play games like this. Like, this is just a silly, stupid way to go through life. And so Charlie Munger, again, he's famous for saying, like, think of the outcome that you want and work backwards from that, right? And so he says, think about, this is Charlie speaking now. His advice, as an old man, old successful man, he's given to young people, right?

• 45:04David Senra?

  This is very important to pay attention to when, like, this, this knowledge is passed to generations, in my opinion. Think about the type of funeral you want. There's a story about a person who died. The minister said, it's now time to say something nice about the deceased. Nobody came forward. After a long time, a person came up and said, his brother was worse. This is not the type of funeral you want. And I think what Lobo mistook is like, yeah, I'm competitive, I'm driven, I want to be the best I possibly can. I want, like, my life's work to be as good as possible. But I feel no desire to pull other people down as I do that. And in fact, it's the opposite. I try to encourage people, try to help people as much as possible because I want a lot of people that actually give a shit about me at my funeral.

• 45:47David Senra?

  Or technically, I want nobody to be there because I want to outlive everybody. But you know what I mean? Like, the day's gonna come, like, people in your life, they're going to live longer than you are. Like, you really want a funeral where a hand, that's how they described his, his funeral. A handful of people, a handful. Four, three, two people? You lived your entire life, you built massive wealth, you lost it all, and most people thought you were a jerk? And this is why I think Charlie said also, another thing is why he tells us to read a bunch of biographies and not just collect ideas. He's like, you gotta become friends with the eminent dead because the ideas stick to you. Like, we talked about in the past, like, if your product can evoke emotion, you win. Biographies, and books in general, evoke emotion.

• 46:29David Senra?

  I'm not gonna forget the story that I've read here because of the emotions that it drew in me. It's like, you have this huge, like, smart, capable man making mistake after mistake after mistake. And it's unnecessary. That's like the tragedy in all this. This is not necessary. You can be rich and still be liked. You can be rich and nice to other humans. There's a lot of non-business lessons in this book. It's more of a lesson on, like, what kind of life do you want? I don't want Julio Lobo's life. I would like a life like Munger. He's surrounded by family that seem to love him, he's got people that respect him, he tries to help people, he shares everything he knows. He wound up getting rich as hell, like, and he stayed rich. He clearly, like, he clearly has figured some stuff out. Like, he knows some things that we should probably, like, pay attention to when he speaks

• 47:14David Senra?

  and read his writing and all this other stuff. I don't know. I just don't feel that way about Julio. And just, it's, again, I'm repeating myself. I'll move on. It's just a tragedy. It's a cautionary tale. That is the reason why you want to listen to this podcast or why you want to read the book. These are some traits, positive traits that Julio had. This is more in his schedule. He still found time to exercise regularly, which was very unusual in those years. He fenced, he boxed, and he sunbathed. He also organized his growing Napoleon collection, and he read copiously. So that's where I'm most jealous of Julio. He's got this beautiful, and there's a picture of it in the book, and I'm mistaken, he's got this beautiful, private library, and he spends a lot of time, a lot of his time reading. And for the rest of his life, after he destroys his business, he just reads and studies and stuff like that.

• 47:55David Senra?

  And so, again, I think I'd be not doing you, I'd be doing you a disservice if I don't warn you against the siren sound of speculation. Lobo, he made a bet that, he's 41 years old at this point, sorry. He makes a bet that sugar's going to spike because it's the beginning of World War II, and he's saying sugar's going to spike because it did so at the beginning of World War I. And it doesn't, and now he's pushed to the brink of insolvency. It soon became clear there'd be no major disruption to Europe's sugar crop that year, and therefore, no spike in the sugar price either. Lobo had a position that was huge. He had over 300,000 tons of sugar, and he had lost a fortune. He faced losses of $4 million, which is $60 million in today's money. Lobo was in his New York office.

• 48:39David Senra?

  He put the phone down and stood at the window of his office, 23 stories above Wall Street. It was late at night. "Death is nothing," said Napoleon, "but to live defeated and inglorious is to die early." Lobo wondered if he should just throw himself out onto the empty streets. He turned away from the window and left the office. He walked down the street and went into church. He starts having a direct conversation with God. "Lord, why are you punishing me like this?" he recalled asking. "I've been a good son, a good father, a good brother," although, though not, as Lobo admitted, "a good husband." So he talks about, like, he was married, he went to getting, he gets divorced twice. He just cheats on his wife all the time, and then the second time, he marries a gold digger. They're married for less than six months, and she takes a million dollars from him because they had a prenup. A million dollars that he, she winds up marrying a rich industrialist. They still write letters, even though they're, like, late into their life.

• 49:23David Senra?

  She winds up marrying another rich guy. He die, he's writing her letters from, like, a small apartment in Madrid, so that million dollars would have come in handy. I've been a hard and honest worker. And while you may have reasons to punish me, why are you punishing the rest of my family too? Then he stood up and walked out of the church and caught a train uptown. When he arrived at his hotel, he had a string of messages waiting for him. "The French government," Lobo read, "needed prompt delivery of 300,000 tons of refined white sugar, the same size as his position." Thanks, and so this, just this random act wound up saving him from being insolvent at 41. Remember, he's going to be insolvent in 63, 64. "Thanks to good fortune, the grace of God, everything ended well." But it was a very dangerous moment for the house, meaning his, he called like, you know,

• 50:06David Senra?

  the House of Morgan, like these banks used to be called like house, the family names. That's what he's referring to there. But it was a very dangerous moment for the house, Lobo later remembered in his memoirs. "It was also the only time in my life when I truly felt lost." Now, that is a crazy statement, and the author explains why. Lobo wrote that last sentence in his 70s, as he reviewed his life from exile in Madrid. It seems odd that someone who had suffered a homemade bomb exploding in his face, that's a, he was trying to find a way to, before he started working in the sugar industry, he was inspired by the life story of Alfred Nobel, who made a ton of money selling dynamite. I covered that on Founder's Number 163, if you haven't heard that, his life story. So he's thinking he's going to make like an improved grenade and make a fortune just like Alfred Nobel, and it winds up blowing up in his face.

• 50:51David Senra?

  He had like crying shards of glass out of his eyes for weeks and stuff. It was pretty crazy. So it says, "exploded in his face, had been put up against the wall to be shot, and seen the bulk of his fortune confiscated after the revolution, should call the almost hidden moment in a dark office on Wall Street the only time when he felt he was lost." As Lobo recalled, "it was the only then, after making a market miscalculation, that it was his fault and nobody else's, that he felt a true sense of desolation." So he's saying, his point is like all the other stuff, maybe it was outside of my control, this I did to myself. And so that's why it was my darkest period. So eventually, he runs out, the speculation ends. Like, the market changes so much that he can't find a way to make money. So he's like, OK, I'm going to switch strategies.

• 51:33David Senra?

  I'm going to still try to trade sugar commodities, but I'm going to actually produce sugar and own mills. And so this is now the second half of his career, where he just starts collecting all these mills in Cuba. So it says, "To this date, he had only worked as a financial speculator, buying and trading sugar. Now he started to purchase mills." So he starts this in 1943. He buys his first one, then buys two other plantations in 1944, another one in 1945, in 1946. I'm not going to tell you the names, it's irrelevant. This is happening over like a decade. And his strategy was like, "I don't want to buy a single big mill, I want to have a bunch of small mills." None of them was large, but together they made a massive operation. By the end of the 1950s, so this is now 17 years after he started this, Lobo's mills

• 52:17David Senra?

  produced over half a million tons of sugar, which was 9% of the Cuban harvest. The crop they milled each year was worth more than $50 million. And so something he does that's actually smart, he actually shows up. Most of these... So if you remember Sam Zemiri, the entrepreneur from that book I did all the way back on Founders Number 37, which is The Fish That Ate the Whale, The Life and Times of America's Banana King. He had a massive advantage because he started at the very bottom of the banana industry. He knew how to do literally every job. He'd work the fields, he could run the business, he could buy ships, he could do everything. And what Sam did that other, his competitors didn't, is like, he'd be where the production happened. So he'd be in Honduras, I haven't read the book in a while, so like, the other countries that he operated in. While most other founders and runners are, I guess, they were professional managers,

• 53:02David Senra?

  they weren't even founders. Professional managers of his competitors were away in like Boston and very far away. So that's the same thing that's happening in Cuban sugar mills. A lot of them are owned by Americans and other places. They're essentially like, tried to manage remotely. And so he is still trading. So he works seven days a week, Lobo. But he'll show up and he actually manages, like, he'll show up and be, and like, walk the mills, he gets to know the people and everything else. So it says, "The frequency of these unannounced visits set Lobo apart from the tradition of absentee owner managers. Lobo did not travel to his mills as a tourist. One of the things that I learned is that you can't manage a mill by remote control," he said.

• 53:44David Senra?

  "He would stop to talk with workers, many whom he knew by name and who knew him as Julio in turn. This lack of pretension was one of Lobo's most appealing features." And so that's something we've seen over and over again in the history of entrepreneurship. Sam Walton, Les Schwab, Ingvar Kamprad, they're saying, they all say, get out of your office and get into your store. Be where the, stay close to the money. Be where the money is happening, where the money is made. And then, again, these are just wild, crazy stories. This is a wild book. Imagine, no, I'm not gonna laugh at myself. Imagine having to settle your business disputes with a machete. Lobo had argued bitterly with another planter named Nunez. They had once been co-investors, but had quarreled over everything. They almost

• 54:26David Senra?

  resorted to a duel, which was still common in Cuba at the time, where differences were often settled with machetes at dawn. I mean, just imagine that. You co-invest with somebody else, you have a disagreement with another founder, with an investor, can't, you're arguing over email, and he's like, okay, we can't, we're not coming to an agreement here. I'll meet you tomorrow at dawn with a machete. Now, we're gonna have another mistake that Lobo makes, and it's his arrogance. Like, I'm not afraid of these people. There are certain people in life that you should absolutely be afraid of, especially known murderers and gangsters. Lobo was at his desk when the phone rang. It was Alberto Alvarez, which was one of the ministers of state at this other dictator that's in charge

• 55:11David Senra?

  currently at the time in Cuba. "What are you still doing in your office so late?" asked Alvarez. "I don't know why this seems changed to you," Lobo says. "I'm often here until much later. It's only 7:00 PM." "Well, take care. I want to warn you that they are going to kidnap you." They refer to the trigger-happy, there's a term, it's called, they're political militias that had fought against Machado in 1933, this is many years later, and they started out as political militias and have since degenerated into gangs of armed thugs. They were student revolutionaries of old and are now much more interested in money than liberty. So they go around targeting people, robbing people, and now they're starting to try to assassinate very rich business people in Cuba.

• 55:54David Senra?

  And so Alvarez hears about a plan that they're gonna, they're gonna kill Lobo. So he warns Lobo. Lobo thanked Alvarez for calling, put the phone down and turned to Carlotta. Carlotta is his longtime secretary. He told her, massive mistake here too, Lobo. He told her he wasn't worried about the men that were supposedly gonna kidnap him. They know they won't get a cent from me, he said. Despite the minister's warning, Lobo recalled that he felt in a buoyant mood. So he gets into the car, starts taking the drive home. He discounted the possibility that anything serious might happen. Everything else was going so well in his life. So his business is doing fantastic. Then there's a car that starts trailing him. The car had been trailing him for a while. It suddenly drew close to his rear bumper and the first shot came through the back window, whistled past his head and punched a hole through the windshield.

• 56:37David Senra?

  There is a, there's a picture on this page of Lobo after his shot and it is grotesque. Then the attackers pulled alongside, firing from close range. The next shot hit Lobo in the head, right leg and left knee. Lobo's car swerved and crashed into a telegraph pole. So the car speeds off thinking they killed him, right? The lights of the nearest house flickered and went out. Inside that house was a 24-year-old doctor who was having dinner with his wife. He ran to the front door to find out what was going on. And he saw the car on his front lawn, steam rising from the crumpled hood and rushed to see if there are any survivors from the crash. I am Julio Lobo, groaned the folded body inside the car. I am wounded. Call my family. Then Lobo blacked out.

• 57:21David Senra?

  It was the 43rd shooting that year. So again, you're not afraid of something that is happening all the time. That doesn't make any sense. Five blocks away at Lobo's home, his daughter Leonor, Lenore, I don't know how to pronounce her name, was brushing her hair, listening to a popular radio show when the announcer suddenly broke off the program. We interrupt this broadcast to bring you extraordinary news that Julio Lobo has been shot and killed. And so now we find there's another note I left myself that was similar to a note I left previous in the book. This is where he's talking with Che. This is not a situation you want to find yourself in. No money in the world is worth this. So he's in the hospital. This reminds me of another Godfather scene when they try to kill Don Corleone, Michael's father. And then Michael and another guy have to actually pretend like they're detectives and they're protecting him.

• 58:06David Senra?

  They essentially try to kill him, right? They unsuccessfully tried to kill him. So then they try to put a hit on him in the hospital. They're gonna try to kill him in the hospital again. So it says, "A colonel from the administration burst into the room and approached Lobo's bed. In the name of General Perez, the acting head of the army, you can stay here as long as you need to until you are fully restored to health." Turning to the rest of the people in the room, he added in a loud voice, "Mr. Lobo, you can be sure that you will be fully protected by the army while you are here." But it was a pantomime performance of military authority because the colonel then came closer to the bed, bent over Lobo's head, and whispered in his ear, "If I were you, I'd leave immediately as the people who shot you are nearby." And so they wind up whisking him away to another hospital where he can actually have protection.

• 58:50David Senra?

  And he essentially wants to, he's still not recovered, obviously. He wants to make a confession before he's having a dangerous surgery, a surgery that he may not ever wake up from. And so he asked to speak to a priest. "Father, I've lost a lot of blood. The wounds make it hard to concentrate, and I've forgotten how to confess. I just want to say that, other than killing and stealing, I have broken all other of the commandments many times. Absolve me, Father. I cannot remain conscious anymore." And this is now the darkest period of his life. He has these, several times throughout the book, he has these things where it's like something traumatic happens, he's like, "Oh, maybe I'll change my ways." But he can't. He's like completely obsessed with work to the detriment of everything else. He wrote that work left him with a flat taste in his mouth. "It used to be a source of diversion and pleasure for me, and I was starting to feel

• 59:35David Senra?

  enthusiastic again about fresh projects, but no longer. He felt like an uprooted tree, which cannot be transplanted without fear of damaging its roots." He said that he could not make plans and was unsure of what to do, and that he needed to think things through. So he's in the United States at the time, and he's thinking, "Maybe I'll just stay here." He winds up going back to Cuba and building up his company again. And then there's death and destruction all around him. Lobo sought out fresh consultations after his return to Cuba. He and Maria divorced. She had long known about his affairs. Formal separation was only a matter of time, and it was easier with their two daughters grown and abroad at school. He found only more sadness than death. Less than a year later, his mother died. Virginia, who had seemed almost immortal in her family's eyes when she had smashed

• 1:00:17David Senra?

  an umbrella over Castro's head, the Venezuelan Castro, had been unwell for several months, slipping in and out of a coma, no longer recognizing the familiar faces around her bed. Six weeks later, Lobo's spry, 80-year-old father collapsed, felled by a broken heart. His father had been married to Virginia for 55 years. Death caught him on a glorious December morning as he dressed for battle at the office, like a good general, with his boots on. Two months later, on Valentine's Day, Lobo's younger brother, Jacob, committed suicide with a bullet to his head. So think about that. Within a span of, let's say, a year and a half, Lobo's almost assassinated, he gets divorced, his mother dies, his father dies, and his brother commits suicide.

• 1:01:01David Senra?

  And then he has all these throughout his life. He talks about like money. He almost like wants to give up everything. He says money, and he's writing, this is before he loses everything. And money does not only, not only does not bring happiness, sometimes it destroys it. And I sometimes even think it is no less than the devil's invention. The only, this is 10 years before he loses everything, 13 years before he loses everything. The only way money can bring happy, and this is, he got so close, he knew it, he just didn't act on it, act on it. The only way money can bring happiness is if it is used to do good and to help the less fortunate. And then it goes into this, this like parallel between, like essentially he's trying to emulate Napoleon. And these traits are not bad, negative in and of itself, like if you direct them in

• 1:01:46David Senra?

  a positive manner, right? So it says, "Doubtless, Lobo saw himself reflected in Napoleon's character." So he's talking about the things that he learned from Napoleon that he thinks he has as well. "An infinite capacity for taking pain." I feel like me and you have been talking about this over and over again. My favorite quote from the founder of Four Seasons, "Excellence is the capacity to take pain." "An infinite capacity for taking pains, an intuitive sense, an indomitable will, and a firmness of action." Again, These traits directed in a positive direction. You can actually not only improve your life, but everybody else's. Lobo had an extraordinary ability to create, but to create, one has to believe firmly in what one is doing. When he embarked on a course of action, he applied all his energies until he achieved it. All these are positive thoughts and traits. He went direct to his objective.

• 1:02:31David Senra?

  Often, he achieved it. Sometimes, he failed, but he had the uncommon courage to accept the consequences of his actions. He never complained when a project failed, and he was always prepared to start again. One sentence here, I just wrote the same. I do this as well. Talks about, he's got this extensive library that I'm jealous of. He jotted down notes in the margins of histories, memoirs, and biographies that he collected. So, a few years before Castro takes power, he's trying to do a deal with Batista. Batista's really corrupt at this point, doesn't want working up, and Lobo is under a great deal of stress, and he winds up having a heart attack, and a few months later, has a stroke. He says, "I was traveling on the highway of life at a breathtaking speed, and in doing so, could neither heed nor appreciate the landscape." So essentially, he's too focused on work that I'm not actually enjoying it.

• 1:03:15David Senra?

  "Now I could take my blinders off and leisurely enjoy the vista. I'm glad and relieved this is my compensation." So, again, all these periods of self-reflection usually come after something tragic, like, "I almost went bankrupt." "I got shot." In this case, I had a heart attack and stroke. But they're temporary, and he goes back to his old ways. "The life I'd been living could hardly be called life." Looking at it retrospectively, Lobo said. "I hope that my chances will be better this time, and that it'll enable me to live life to the fullest. It was only a passing fancy." Even as he recuperated, Lobo admitted to a growing restlessness and continued to act on it. "It was as if the sugar business that ran in his veins made rest impossible." And so, even while he's close to dying, he's still compulsively working.

• 1:03:56David Senra?

  Lobo closed negotiations to buy a new mill, signing the deed from inside an oxygen tent. A telephone by his bedside kept him in touch with the daily ups and downs of the international sugar market, a made-for, ghoulish scene, the stricken millionaire supposedly at death's door, unable to desist from his schemes. And he knows, because there's all these notes he left people in letters. Just one line here. "There were many assholes in Cuba," Lobo wrote. "I was the biggest of them all." This is another example. He's got these several recollections throughout the book, like this. This is after his second divorce. And again, I think it's just a warning from somebody from the grave. "There are times when chasing the things money can buy, one

• 1:04:37David Senra?

  loses sight of the things which money can't buy and are usually free." And he talks about the fact that he treated women as essentially as objects. He has love for his daughters, but he never had like a happy home, a happy relationship with any women in his life. They were essentially like just further conquests on the path of his, like his constant empire building. So I think that's interesting. He's talking about money, right? "There are the times when chasing the things money can buy, one loses sight of the things which money can't buy and are usually free." One of my favorite quotes from that book we did a little while ago, The Almanac of Naval Ravikant, when Naval says, "A calm mind, a fit body,

• 1:05:20David Senra?

  and a house full of love. These things cannot be bought, they must be earned." I think there's like an echo to that idea that Naval had in that book that Lobo's writing in this letter. It's like, "I'm chasing money, things that can be bought, and that caused me to lose sight of the things that are actually valuable. And they're so valuable because you have to earn them, but they're also free." So now we get back to the point where he's forced to flee Cuba, and this is just what a sentence. "On the flight from Havana, the last great capitalist to leave Cuba carried with him only a regulation small suitcase and what he could fit in his pockets." And so he escapes to America. He's in New York. And it says, "For every Cuban, like Jesús, I don't know how to pronounce his last name, who had bought a sugar mill in Venezuela, or for every business family like the Gutierrez,

• 1:06:05David Senra?

  which had transferred 40 million abroad before the revolution, most other Cubans had kept what money they had on the island. That included Lobo." So the only thing he has in New York, it says, he has a total of all these contracts and stuff, that totaled $5 million, which is a fraction of Lobo's original $200 million fortune. So immediately, he goes from $200 million fortune down to $5, right? But here's the problem. Some of these loan guarantees are by American banks. So he has actually a negative net worth when he comes to America. He still owns Citibank, almost $7 million from the purchase of the Hershey Mills, a debt that he had secured against his own name. This reduced his net worth to less than zero. Although he was 63, an age when most people think about retiring, he set back to work with zeal.

• 1:06:49David Senra?

  So the note I left myself here is this is not going to end well. This is where he just, he loses everything speculating again. The revolution had robbed Lobo of his sugar mills, but he still had his contacts, his prestige, and his traders' instincts. The year 1963 was the wildest in the sugar market in four decades. Lobo's New York office would handle a fifth of all foreign sugar that entered the United States. Some of Lobo's speculations had gone exceptionally well. At the start of the year, sugar price was at 2.5 cents a pound. By May, it was at 13 cents. Prices then rose another 2 cents in one week. Lobo had bought 100,000 tons at 11 cents per pound, a position worth $22 million. Prices began to rise again. Leon, that's the guy that I mentioned earlier, that interviewed with the author when he's

• 1:07:33David Senra?

  91 years old, living in Miami, Leon urged him to sell. "He could sell, declare a fat profit, and give everyone a handsome bonus," Leon remembers telling Lobo. But Lobo, ever willing to take the risk, the big risk, wanted to let his bet ride. "The market is going higher," he told Leon. Lobo could not resist the siren call of great opportunity, the possibility of doing better than merely well. With a big win, Lobo could pay off his old Hershey debt, and he could even start to rebuild his empire. "The trouble was that it was really tough to fight the decision of a man who had such a record of good decisions," remembered Leon. The sugar price edged ahead by half a cent, and it seemed that Lobo, 66 years old, still had a magic touch. But all men make mistakes, and as Carl Popper said, "Great men make great mistakes."

• 1:08:18David Senra?

  The sugar price began to fall. When the descent accelerated, Lobo could not wiggle out of his position. The sugar price dropped to 4.5 cents. Lobo had bought at a price more than twice as high. He had lost $6 million. Now that Hershey deal returned to haunt him. On July 1st, squeezed for cash due to his trading losses, Lobo missed a $500,000 payment on the $6 million he still owned Citibank. When he skipped the payment, the total of Lobo's Hershey debt immediately came due. Learning of this, sugar traders demanded immediate payment of the $6 million that Lobo separately owned him. His business collapsed like a house of cards. Lobo declared bankruptcy and sought Chapter 11 protection.

• 1:09:00David Senra?

  Lobo made brave promises at first. He said he would roll up his sleeves, keep working, and trade his way out of losses. "I will take the consequences, as I always have in the 45 years of world sugar trade," he said. "I'll pay everyone," he added confidently. But he was crazy, Leon remembered. There was no way he could pay. Our lawyer said Julio should be taken to see a psychiatrist. This was a man who had always kept his word with the world, and now he just didn't understand that he couldn't. And this next sentence is exactly why you and I are engaged in studying the history of entrepreneurship. It was the same ending that befell so many other famous speculators throughout history.

• 1:09:43David Senra?

  "My creative years are over," Lobo said, a man who had once moved markets with a nod of his head, who had expected subordinates to snap to attention when he came into the office, now lived off the monthly payments that his daughter sent him.

• 1:10:03David Senra?

  And that is where I'll leave it. For the full story, buy the book, The Sugar King of a Van: The Rise and Fall, The Fall of Julio Lobo, Cuba's Last Tycoon. I'll leave a link in the show notes. If you buy the book using that link, you'll be supporting the podcast at the same time. If you have a friend or a colleague or a family member and you want to buy them a gift subscription, give them a gift subscription to Founders. I'll leave a link in the show notes as well. And you can also go to founderspodcast.com and you'll see in the header, buy a gift subscription. That is 237 books down, 1,000 to go, and I'll talk to you again soon.