#206 Albert D. Lasker (the creation of the advertising industry)

What I learned from reading The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century by Jeffrey L. Cruikshank and Arthur W. Schultz. ---- 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. ----Advertising is a very simple thing. I can give it to you in three words: Salesmanship in print. Before he arrived on the scene, advertising agencies were mostly brokers of space in newspapers and magazines. With Lasker's prodding, the industry became a creative force and began earning substantial commissions. His rare ability to put troubled geniuses to work on challenging problems grew in part from the fact that he himself had been driven by "a thousand devils.”Albert measured himself against the man who had braved the privations and horrors of the Civil War, epidemics, and hurricanes and made several fortunes in a foreign and sometimes hostile land. Thomas was often taken aback by his young colleague's unconventional views and methods. He decided that he could represent as well as anybody, because at least as far as he could tell, nobody in his office really knew anything much about the business they were in. He was beginning to suspect that advertising agencies were leaving an enormous amount of money on the table. Lasker felt sure that he could build the business, and boost commissions if he could improve the agency's copywriting. You are insufferably egotistical on the things you know nothing about, and you are painfully modest about those things about which you know everything. Hopkins began imparting his theory of copywriting. We should never brag about a client's product, he said, or plead with consumers to buy it. Instead, we must figure out how to appeal to the consumer's self-interest. Lasker argued that rather than maintaining many modestly successful small brands, the company needed to create one overwhelmingly powerful product. ---- 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?

  Who was this Albert Lasker? Whose energy and imagination ran in so many directions at once? And who was, in his own words, "driven by a thousand devils"? His friends considered him charming, brilliant, thrilling, and exhausting. His subordinates admired him enormously and dreaded his arrival at the office and the tumult that inevitably ensued. Clients quickly learned that there was no such thing as a "half embrace of" or "by" Albert Lasker. He pursued life with a fervor that offended and alienated many people. "A lot of people can't stand me," he once admitted, "because they think I'm too aggressive and too dynamic." Little men, to use his terminology, were driven off by it.

• 0:45David Senra?

  Big men, such as RCA's David Sarnoff and American Tobacco's George Washington Hill, drew energy from it. They looked forward to fighting with Lasker. They learned from him, too. "He's the only man I felt I'd like to murder every now and then," Herbert Field confessed, almost 20 years after being pushed out of his senior position at the advertising agency, then adding, "There isn't a finer man living." "I'd like to kick him in the back," said a former associate, who left under duress, but then added, "I've never met a man as colorful and viral and as personable as Mr. Albert Lasker. Never." Lasker's energy and passion infused both his personal and professional lives, and

• 1:30David Senra?

  sometimes those two lives converged. One Monday morning in 1939, his top lieutenants gathered for their weekly State of the Agency meeting. This was no ordinary Monday, however. It was the first meeting after the very public unraveling of Lasker's second marriage. A disastrous union with a Hollywood starlet that fell apart even before their honeymoon ended. Everyone in the room knew all the salacious details. All were eager to see how the boss would handle the situation. The door from Lasker's office opened, and he walked in and said, "Gentlemen, in his life, every man has a right to make one mistake. I have made mine." And then the meeting began.

• 2:16David Senra?

  Lasker, who's often referred to as the father of modern advertising, exerted an enormous influence on his industry. Before he arrived on the scene, advertising agencies were mostly brokers of space in newspapers and magazines. With Lasker's prodding, the industry became a creative force and began earning substantial commissions. Lasker worked his magic by relying on the power of ideas. The list of companies and brands that he helped launch or revitalize, in large part through the selective amplification of powerful ideas and in part through his own instinct for drama, is unparalleled in the history of advertising. Lasker invented a particular kind of ad agency, one that delivered high service to

• 2:59David Senra?

  a relatively small number of key accounts, most often driven by a personal relationship between himself and the head of the client company. The result was high margins and, for Lasker, enormous personal wealth. He maintained close relationships with dozens of powerful businesspeople and applied the insights he gained in one context to give advice in others. "Give him an equal knowledge of the facts," said RCA's legendary head David Zarnoff, "and I'd rather have his judgment than anybody else's I know." Sometimes Lasker failed, and failed spectacularly, but he always rebounded. Lasker's scope and impact were nothing short of astounding, and he knew it.

• 3:44David Senra?

  "There wasn't a living American in so many ways each day, partially responsible for people doing as many things as I was," he once commented. "That is provable," he said. Lasker was blessed, or cursed, with an extraordinary high energy level, but there was another side to this intensity. He suffered most of his adult life from a major depressive illness. At the age of 27, he experienced a complete mental and emotional collapse. "I could do nothing but cry," he said. And unfortunately for Lasker, the pattern set by this first breakdown persisted for most of his life. "I always say that I got over all my breakdowns, except the first one." He slept poorly, drank heavily.

• 4:29David Senra?

  Under the influence of alcohol, he once attempted to drive a horse-drawn carriage into a bar. He suffered from dramatic mood swings and indulged in impulsive behaviors. Drawing on his reserves of energy, self-awareness, and determination, Lasker fought back against his illness. He survived and flourished. His rare ability to put troubled geniuses to work on challenging problems, legendary advertising talents like John E. Kennedy and Claude Hopkins, grew in part from the fact that he himself had been driven by a thousand devils. In his final years, Lasker developed an absolute passion for anonymity in everything he did. Little by little, Lasker became invisible.

• 5:14David Senra?

  The curtain that Lasker created between himself and the pages of history became almost impenetrable. This book parts that curtain to reveal the man behind it, the real and extraordinary Albert Lasker, The Man Who Sold America.

• 5:33David Senra?

  That was an excerpt from the book I'm going to talk to you about today, which is The Man Who Sold America, The Amazing But True Story of Albert Lasker and the Creation of the Advertising Century, and it was written by Jeffrey Crujenschenk and Arthur Schulz. And before I jump back into the book, I just want to tell you how this ties into everything else that we've been talking about. I first learned of the name Albert Lasker because David Ogilvy, in his book, Ogilvy on Advertising, the last chapter of that book is all about the six advertising pioneers that David studied.

• 6:06David Senra?

  Took ideas from and then used those ideas in his own career. And the first one, the first person he mentions is Albert Lasker. So I want to pull a couple quotes about Albert Lasker from David Ogilvy. This to give you an overview into Lasker's life and how important he was. He says, Albert Lasker made more money than anyone in the history of the advertising business. And he spent more and he got his money's worth. And he's the one that, that, so David Ogilvy always talks about like, what is advertising? And he learned what advertising was, like the true meaning of what it means of advertising from Lasker. Lasker in turn learned that from this brilliant but manic copyrighting talent, which we'll get into later, this guy named Johnny Kennedy.

• 6:51David Senra?

  And he says, advertising was salesmanship in print. A definite, now this is Ogilvy talking about that, about what that meant to him. A definition that has never been improved. And so now Ogilvy talks about, hey, Lasker took this very simple idea, but he took that simple idea very seriously. Lasker held that if an advertising agency could write copy which sold the product, nothing else was needed. So that he just focused on one thing. I'm going to write copy. The people that work for me are going to write copy. We're going to sell more products for you and you're going to pay us for doing, doing that for you. And that as a result of just having this really simple business with a, just a handful of clients, he's able to increase profit margins. He says like profit margins like seven times higher than the typical agency.

• 7:35David Senra?

  By distancing with marketers, art directors and researchers, Lasker saved so much money that he was able to make a profit, which is probably the world's record. He ran Lord & Thomas, which is the agency that he's going to work for and then eventually take over. He ran Lord & Thomas as a dictatorship. As you all know, he told his staff, I am the owner of this business and therefore I decide the policies. He owned 95% of the shares. After he retired, he said that he had never attended a director's meeting and did not think that one had ever been held. He loathed talking on the telephone and abominated committees. He never belonged to an advertising club and avoided his competitors. He was not shy about conspicuous consumption. His weekend estate outside Chicago had a staff of 50.

• 8:20David Senra?

  He wants to find an administrator as somebody without brains. He once said, "I didn't want to make a great fortune. I wanted to show what I could do with my brains." He could be overbearing, intolerant, and arrogant. He could be bad-tempered, demanding, and inconsiderate. And he had three prolonged nervous breakdowns. One afternoon, late in 1942, and this is after, I didn't know this, I was reading this. He spent 40 years doing the same job. So it says, "One afternoon, late in 1942, he suddenly said to Mary," this is his third wife, "Mary, I have decided to get out of the advertising business." "Two days later, he gave Lord and Thomas to three of his bright young men for a token payment of $100,000."

• 9:04David Senra?

  Okay, so let's jump back into this book. This is a giant book with a ton of information. He lived an unbelievably full and complex life. It took me about 20 hours to read, take notes, and really digest the life story of Albert Lasker before I sat down to talk to you. So I'm going to focus mostly, like when I went back and read over my notes, mostly I want to focus on the way, the insights he had to his business, which was very fascinating, the fact that you have all these people working, and this is one of, I think, the main lessons from his life. So you have all these people at the time, working in the advertising industry, and they didn't actually understand the potential their industry had.

• 9:45David Senra?

  And Lasker is the very first person to realize, and he does this intentionally, that, hey, we have a lot, the market for advertising and for our services is a lot larger, and you guys are leaving a lot of money on the table. So I'm going to talk a lot about that today. To understand Lasker, though, to give you an insight into who he was, you have to understand the impact that his father had on him. And this last paragraph that I'm going to read to you here, you'll understand how formidable an individual That Morris Lasker was immigrated from Germany to rural America in the 1800s with nothing, became a peddler, and then built this gigantic business empire. So it says, "Morris exercised enormous influence over his son.

• 10:30David Senra?

  He directed his career, his career choice, withheld and then granted permission for him to get married, loaned him money for a wedding ring, and was the voice of conscience that whispered into his son's ear." This is not very, you know what this reminded me when I thought about the influence that Morris has on Albert? Back when I did the story of the House of Morgan, where JP Morgan is by far the most famous family member of the Morgan family. But Junius, his father, was the one, he's like the influence, he's the person that influenced the influencer. Morris is the same situation here. So it says, and because Albert Lasker, but before he dies, he's one of, even though he was extremely, he tried to maintain anonymity, he's extremely famous. Famous, maybe not to the general population, but friends of presidents, constantly invited

• 11:14David Senra?

  to the White House, multiple White Houses, worked in government, wind up having close personal relationships with all of the top business people in the country. But we see a lot of the inspiration and advice came from his father. So it says, very similar to, like I said, the Junius and JP Morgan relationship, if you've read the book, The House of Morgan. I think it's founders number 139, if you want to go back and listen to it. So it says, "He loaned him money, was voice of his conscience, and whispered in his son's ears. One of Albert Lasker's closest friends and business associates said that Morris's words exerted a powerful and abiding influence on Albert." Same thing, you could change Junius and JP, and that sentence is still completely correct.

• 11:57David Senra?

  "I have never seen any of the letters from his father, but my goodness, I heard by the hour what was in those letters. The effect was tremendous. These were words from an oracle." And without spending too much time on the background of his father, this paragraph is really going to give you, it gives you a complete story of who he was. Throughout his life, Albert measured himself against the man who had braved the privations and horrors of the Civil War, epidemics, and hurricanes, and made several fortunes in a foreign and sometimes hostile land. And you're not going to be able to do that unless you're a formidable individual. So that gives you an insight. I want to go into just a little bit more about his dad. This is during the economic panic of 1983.

• 12:42David Senra?

  His dad almost lost his business and has a mental breakdown. And we'll see Albert talk about what he learned, what the lessons he learned during this period were something he never forgot. Albert also, there was no official diagnosis at the time and not, not a treatment, but it's widely acknowledged that Albert suffered from bipolar disorder and his father might have too. So it says, "By this time, Morris had interests in flour mills and other commercial properties throughout Texas, and he had placed mortgages on all these properties to pay for his development projects, his real estate development. He was severely over-leveraged and cash was short." That's a bad position to be in when the panic of 1893 hits, right? "Rather than force his family to live in reduced circumstances, Morris sent his wife and the younger children to Germany for a year.

• 13:26David Senra?

  Only Albert remained at home with his father. It was a bad arrangement with surreal consequences for Albert. While he slept or pretended asleep, his father would stealthily enter his bedroom and pace. Albert recalled, 'I would see a wraith-like figure. It would be my father, sleepless from worry. Sometimes for hours, I would beware of the pat, pat, pat of his bare feet pacing the room. I would become wide awake from more disturbing sounds. He would smack the palm of his hands against one another and groan. If I sat up, he would talk to me. He was a lion at bay, bewildered by misfortunes that threatened to be overwhelming. What caused him anguish was no ordinary fear of losing money.

• 14:07David Senra?

  All his dreams, all his terrors, were caused by the prospect of being unable to meet his business obligations."

• 14:16David Senra?

  And that is also a trait that Albert has. Later on in his life, he's extremely wealthy. He wants, if he does like, uh, he wants to be investing in some of the companies that he does advertising for, right? And if, in some cases, those, those companies go bad. And if he would recommend that investment previously to like a friend or a coworker, he felt so terrible, even though he was losing money, he would reimburse the person he recommended the investment for. So he just felt like his, he had betrayed that person by recommending a bad investment. So this is on the rare, on the rare occasions that Morris was able to sleep, he was beset by dark dreams. During the night, Albert could hear him sleep, his sleeping father's fing- ugh, listen to this. Albert could hear his sleeping father's fingernails raking through the rug next to his bed.

• 15:00David Senra?

  Within a few months, Morris had clawed his way through the rug's thick fibers and laid bare a patch of flooring. And so it says, was this simply the anguish of a merchant facing ruin, or was Morris suffering through the kind of affective disorder that would soon afflict his son? Some of Morris's symptoms, the insomnia, the obsessiveness, the intermittent ability to take action, the inclination to simplify his life through his self-imposed solitude, hint at the kind of emotional distress that has surfaced across the Lasker generations. For Albert, the memory of those sleepless nights, uh, never, never receded. I received the full impact of the panic as a lesson. Throughout my business life, I never borrowed.

• 15:43David Senra?

  I never asked a living soul to lend me on the premise that I perceived some way of making money. At the same time, Morris's travails had a near, near-term impact. They made Albert all the more impatient to make his own way in life. And so this idea where he's like, I never borrowed, I own 95% of my company. This is, really speaks to how profitable the insight, that he has one fundamental idea that he built his entire career off of. And once that happens, and it's, it winds up being extremely effective, and that's realizing the power of copyrighting on sales and combining potent copyrighting, copyrighting from, from creative geniuses like Kennedy and Hopkins with the leverage that advertising gives a company. His company prints money.

• 16:28David Senra?

  He's just got million, and this is in the early 1900s, he's just got millions and millions and millions of dollars sitting in his company account. And part of the reason that he was able to make his company so profitable, as you're reading and what I guess it echoes in that one sentence that Ogilvy quoted on, him on, where he says, "An administrator is somebody without brains." If you analyze the structure of how Albert built his company, it didn't have excessive layers of management, it didn't have a bunch of expenses. As he builds it, he has offices throughout the country. He might have one manager in that office, and then the rest of the people are just creative people. So his expenses are basically office space and talent, and he will pay record salaries and bonuses for talent. And we'll go into more of that.

• 17:13David Senra?

  I have a lot of highlights about how he talks about the importance of talent. I really think that a lot of these ideas that you see a bunch of history's greatest entrepreneurs use can be described in the most efficient way by Steve Jobs. Because when I started thinking about the way Albert structured his business, the fact that he would go after the top talent, he would analyze the best advertising that he liked and find out, okay, who wrote this, and then hard press the person and recruit him, it reminds me of what Steve Jobs said, and I think he just describes the importance of people. And Steve said, "In everything I've done, it really pays to go after the best people in the world." And I think if you combine that insight by Steve Jobs with some quotes that Peter Thiel

• 17:54David Senra?

  put in his book Zero to One about the fact that we don't live in a normal world, we live under a power law, well, that applies to people, too. So Peter says, "We don't live in a normal world, we live under a power law." Power law, so named because exponential equations describe severely unequal distributions. That applies to people's talent, right? The severely unequal distribution, you're going to find out. And Hopkins, you might already know, because I did Hopkins, who works for Lasker, arguably the greatest copywriters ever lived. I think his founder's number 178 did his autobiography. It's not that Hopkins is twice as good as the next best copywriter. When you add leverage to his judgment and his talent, which is what advertising does,

• 18:36David Senra?

  he's a thousand times, 10,000 times as effective as the average copywriter. So let me go back to this. "We don't live in a normal world, we live under a power law." Power law, so named because exponential equations describe severely unequal distributions is the law of the universe. It defines our surroundings so completely that we usually don't even see it. So to finish, to finish my, my thought here, it's you, you have a very simplified cost structure, right? You're not wasting money. He's got a bunch of other departments that people that build advertising agencies after him feel are important. Albert just focused on, hey, I have personal relationships. He's one of the greatest salespeople you'll ever meet. So he'll go out and he'll sell heads of companies, right, that have large,

• 19:19David Senra?

  the potential to have large advertising budgets. So that's a source of leverage that Albert gets that he's not to pay for, right? So you combine that large source of leverage with the best copywriting talent on the planet, which is in turn going to sell more products for the people that have these budgets that keep increasing and, and Albert's business grows because he gets a percentage of that. And then you combine that with a low cost structure. And that's why the guy can have what Ove was talking about. He's got, just in his country state, he had a small company working there, just taking care of it, had an 18 hole golf course, you know, staff of 40 people, 50 people, whatever it was. So in essence, he just built this giant cash flow machine, didn't have any debt. In fact, I was very surprised, and I don't think I'm going to cover it on some of these. He gets

• 20:02David Senra?

  involved in all these companies. And when, if his clients get in a hole, I was just talking about, hey, I learned from, from the stress my dad was under, the fact that he was leveraged at the worst time, that, you know, I'm never going to borrow money. I don't want to deal with debt. What's weird is he chose to, to be on the other side of the transaction. So in some cases, he winds up losing a lot of money because he'll lend out hundreds of thousands of dollars. Remember, we're in the early 1900s. That's the equivalent of tens of millions of dollars today. And he does it at like unbelievably low interest rates, four or 5%. And several of these, these loans, these investments, whatever you want to call it, wind up going bad. Okay. So anyways, I'm going to fast forward. I want to get to the point. His first love, he thought he was going to be a reporter. He liked, he worked part-time in a newspaper industry. He's like, okay, I'm going to go be a journalist.

• 20:46David Senra?

  And this is where his dad kind of steers his, his career because he didn't like at the time, most reporters and journalists were known for just getting hammered all day. There's a lot of alcohol in this book. And so his dad's like, no, no, I want you to agree to at least try this, this, this, to work in the advertising agency. They're in Galveston, Texas at the time. He goes up to, to Chicago and he's going to work for the agency, Lord & Thomas. And that's the one he's eventually going to, to completely change and take over. So it says, "Out of devotion to his father, Albert agreed. He didn't know, he would later said, he later said, what, what, how much this hurt me. From hanging out with the hard drinking crew in the newsroom, Albert had learned to despise the business side of the shop." To ask a reporter to become an advertising man was to enter a life of shame.

• 21:31David Senra?

  I thought my father doesn't know what he's asking of me, but I'll go do this for a few weeks. Lord & Thomas agreed to give Albert a three-month trial at a starting salary of $10 a week. Albert quickly agreed to these terms, secretly pleased at the three-month limit. In the spring of 1898, he boarded a train for Chicago with but one goal: do his time, satisfy his father, and then be turned free to pursue his real passion: journalism. So that is 1898. He is going to work at Lord & Thomas till, what, 1942? So 44 years. Start, "Okay, I'll be here for three months, whatever, and then I'll go do what I really want to do." And then he winds up mastering the industry of advertising and just dominating for 44 years.

• 22:16David Senra?

  So let's go to the state of the advertising agency as Lasker starts working in it. And there's something that's happening here where there's going to be three main factors that converge that are going to transform the advertising industry. And it reminds me of, Charlie Munger has this idea that he talks about called the Lalapooza, Lalapoozpluza effect. And he talks about it in terms of like human psychology and how it affects investors, right? So it's Munger's term for the phenomenon where different biases layer and interlock with one another. He calls the Lalapooz, Lalapalooza effect. It occurs when multiple different tendencies and mental models combined to act in the same direction. This makes them especially powerful drivers of behavior, more powerful than they are alone, and can lead to both positive and negative results.

• 23:01David Senra?

  So I really, that's what I thought of when I got to this section. And hopefully this makes sense when I pull some highlights here for you. So it says, "The industry was still young, and it was evolving quickly. Advertising is also looked down upon as like, uh, like for, it was like scammy. And, you know, somebody, it was for people that were like disreputable." So it says, "Advertising had once been the exclusive province of circuses and patent medicine vendors." So patent medicine vendors. It's interesting that some of the greatest copyrighters actually got their start selling patent medicine vendors. These were dubious, like, medical remedies. There's no way to prove the actual benefit that the product promises you. If you go back and look at the history of patent medicine, this is where the term snake oil comes from.

• 23:46David Senra?

  So it just had a bad... And what's interesting is even though you couldn't prove the effectiveness of the product, it's how successful some of these companies were. And part of that was because they were one of the first industries to realize the potency of advertising. So it says, you know, you've got the circuses, patent medicine vendors, patent medicine vendors, a tarnished legacy that contributed to its unsavory reputation. Gradually, though, a number of factors converged to make advertising a necessity and therefore increasingly acceptable. And so this is the first of these three factors that converge, right? One factor was the flood of complicated and specialized manufactured goods that began pouring out of America's factory towards the end of the 19th century.

• 24:30David Senra?

  And it's fascinating because the book goes into amazing detail about all these different little companies that they're doing advertising for, that they have investments in. And Lasker gets involved because he has to overtake a company he loaned money to. And he gets involved with a battle, which he loses, a pricing war, with Campbell's Soup Company. And today, you know Campbell's Soup Company's still around. No one thinks of it as a technology company. But the reason it was so dominant is because it was the most advanced technology company in the industry that it happened to work in, which at the time was how the hell do you get food that doesn't immediately expire? How can you can it and ship it all across the country?

• 25:11David Senra?

  And they wind up selling something like 20 million cans of soup a year in like 1910 or something like that. It's just amazing. So I'll get to that more later. It just blew my mind, the fact that, you know, this is the advantage, I guess, is the way to think about it, that technology always gives you. Because we think of technology maybe modern day, like, you know, information technology, bits, you know? But it's really just, we thought of it as just a better way to do something. So it says, okay, we have all these new factories, these new entrepreneurs, these new businesses are popping up because they're able to make new products that are coming out of factories that couldn't have existed 10 or 20 years earlier. Then you have the development of a national transportation network. And I've read a bunch of books, and they're in the archive, about the railroad robber barons, entrepreneurs.

• 25:54David Senra?

  There are so many parallels between the early days of the railroad industry and the early days of the internet. They're both platforms that allowed the opportunity for so many more businesses to exist and to flourish that without the platform, they wouldn't have had that opportunity. So another factor was the development of the national transportation network, the railroads. The railroad's total miles nearly doubled in the decade in which Albert Lasker reported for work. An army of intermediaries also arose to help distribute the flood of new manufactured goods. These are department stores, mail order houses, and the like. Chicago, where he's at, was the epicenter of that activity. So then we have these giant other companies, Marshall Field, Montgomery Ward and Company, Sears Roebuck. Sears is doing $10 million in sales in 1900.

• 26:38David Senra?

  That's insane. Montgomery Ward was also, you know, a lot of people have mailing lists and all this other, is like the equivalent of, I guess, having like a massive email list today, right? Montgomery Ward had a mailing, it was mailing out this catalog, more than 3 million copies. The catalog that they mailed out, right, is 600 pages, and they're doing that in 1904. What was the entire population of America in 1900? I mean, that had to be a huge percentage of the overall population, right? The final factor contributing to the rise of advertising, and of course, made possible by that advertising, was the emergence of national magazines and newspapers.

• 27:19David Senra?

  The circulation of daily newspapers in the United States jumped from 250,000 in 1860 to 2.2 million in 1900. And around 1900 is when Albert starts working in the advertising agency, advertising industry, rather. And so think about what's happening here. You have, all these new products are being made, you have a way to ship products over large distances that previously you couldn't. You'd have to get it there by horseback or carriage or something like that. And then you have a way, a new way, to let millions of people know that your products exist. So this wraps this whole section up. And as advertising became a necessity, a new trade arose to meet that need.

• 28:02David Senra?

  Okay, so now with that background, when he reports for work, and this is where I'm going to spend so much of my time, because this idea is so powerful. Okay, so this is the major flaw that Lasker notices and exploits. And this is the one idea he built his entire business empire around. And this is still an idea that's available to you and I. So it says, "Advertising firms did little more than broker space in publications." I'm going to go into way more detail about this. I'm just giving it over to you, okay? "Like its competitors, Lord and Thomas rarely wrote the copy for the ads." Lasker says, "The agencies at the time were painfully shy in accepting responsibility for creative work." So his job is just literally go around, talk to owners of businesses and sell them. Say, "Hey, we will advertise for you.

• 28:48David Senra?

  We will find the best publications and magazines. You make the ads, we'll place them, and you pay us a small commission." Right? That is the entire advertising agency. And then, or, excuse me, advertising industry. Keep mixing those two words up. And what he realizes, no one actually understands the business they're in. And we're going to get to that. So it says, in these early, so Lasker's a gifted salesperson. He signs up a lot of new accounts for the agency. He's young, he's hungry, he wants to be his own man, he wants to be rich. So he's extremely motivated. "It was these early successes that convinced Lasker to delay his move to New York. I was quite a hero by accident," Lasker later recalled, "and I was having fun. He did not expect to be so good at signing up accounts." So when that three-month period, his initial three-month period, he's like, "Oh, I'm making good money, let me just stick around and see what happens."

• 29:33David Senra?

  And so he starts being mentored by the owner of the agency. This is Thomas. He's, I think, three decades, a couple decades older than Lasker. He starts out as a boss, then his partner, and then his adversary. So it says, "Thomas took note of Lasker's unexpected talents. He began inviting him into his office for chats and liked what he heard." And I need to put this, I need to bring this to your attention, so you understand, like, this is not... I don't know why, there's like a little bit of like a Kanye West aspect to Albert Lasker. He's just, if you ever hear Kanye West do an interview, like he just did this, not just, but I guess a while back, like did this three, three long, two or three hour long interview,

• 30:15David Senra?

  podcast with Joe Rogan, it's, it's hard to keep track of what the hell's going on. I feel Lasker had a lot of that with him, too. So it says, "When the probationary period ended, that three month thing, Thomas asked Lasker to stay, and Lasker, influenced by his substantial raise that Thomas put on the table, readily agreed. Lasker was becoming quite attached to Thomas. This affection was mutual, even though Thomas was often taken aback by his young colleagues' unconventional views and methods. When Lasker's dad came to visit his son in Chicago, some 18 months later, Thomas told Morris," so now his boss is talking to his dad, "that his son was either a genius or crazy."

• 30:57David Senra?

  And so now, having read a couple hundred of these biographies where I think people would qualify, are they genius, are they crazy? I would say that they're not either or, they're both. And I think it's part, and part of the, due to their like outside successes, part of, part of that is due to the fact that they are able to maintain both of those capacities, the capacity for both genius and crazy in one individual. And Lasker definitely has that. And so let's get to his big break. And he does two smart things here. They're trying to, the agency is trying to sign up this, this guy in Cincinnati that manufactures a lot of alcohol. They sent a salesperson down there, the guy's like, "Kick rocks, no, we're not doing it." So then they send, he's like, "Lasker, like, maybe you could, you know, you're, you're selling like crazy, maybe you could convince this guy where the other salesperson failed."

• 31:42David Senra?

  And so he does two smart things here. One, he doesn't give up after an initial rejection. And two, he gains confidence by realizing that he knows as much as anyone else about the industry because they don't actually understand their own industry. So let me read this part to you. First, we get to his mindset, how it's like, he's just sick with worry about failing at this opportunity. "Albert was anxious about the task that lay ahead, lay ahead of him. I remember really, literally and figuratively shaking as my whole, so my whole body was, was sweating." My hands were clammy. It was hard for me to talk because I then realized that I let I let them fool themselves, that there was any chance that I, a kid who didn't know

• 32:23David Senra?

  anything about advertising, was going and didn't, so they're sending, he's saying, I convinced them to send me down here. And yet, like, I think this is like a, an example of like imposter syndrome. He's like, I don't actually know anything about this. And then, why is he so worried? I felt I was going to disgrace myself. And so what I mean about him doing something smart by not giving up, he goes down, first thing in the morning, the guy's like, get the hell out of my office. Like, I've already told you people know, like, get out of here. So Lasker hangs around for a little bit. He's like, I gotta figure another way in, winds up calling him. They're both German. So he's like, this guy's gonna go home. He's gonna have a heavy lunch and he's gonna take a nap. So I'm gonna hit him after he ate and after he slept. He calls him back. He's like, listen, this, this is

• 33:08David Senra?

  the person that you kicked out of your office earlier. Just give me a few minutes. I'm a young person. This is the very beginning of my career. Please treat me as you would your young son or your young nephew. And the guy's like, all right, fine. Come back to the office. He's in a better mood. Lasker winds up, or Lasker winds up selling the guy. And he winds up agreeing to come with Lord and Thomas. And so he says, on his way back to the distillery, Lasker suddenly discovered that his fear had left him. He decided that he could represent Lord and Thomas as well as anybody else, because at least as far as he could tell, nobody in his office really knew much about the business they were in. So little was known about the principles of advertising that I had as good a right to talk about them as anyone. So he goes to this meeting with way more confidence, winds up selling the guy. Several hours later, I don't know how to pronounce his name. This

• 33:52David Senra?

  guy was sold. Fireworks burst within him. Lasker wrote later, he had looked failures squarely in the eye and realized that he very much wanted to succeed at this new venture. He had to admit it. He was having fun. And the sums that he was now bringing into the office were beyond anything he might have imagined. I was on my way to building up a clientele of $25,000 per year, he later recalled. And that was enormous. That was respectability, he said.

• 34:18David Senra?

  And what's also interesting about this part about him being so nervous, this is something that he had to deal with his entire life. He thought he was an imposter. He had imposter syndrome. It says, "Long after he earned a reputation as a pioneer and a giant in the advertising field, he would shake and with fear before that first meeting. Throughout his life, Lasker lived with a fear of getting called out or being discovered as unqualified for the task in front of him. Lasker confessed to a feeling of deep inadequacies, a feeling that I was going to be very unhappy because I was untrained and inadequate, a feeling that I was attempting to do something that I knew I wasn't competent to do." And so that idea of being scared, even long after, you know, from the outside, it's like, why is this guy worried?

• 35:00David Senra?

  He's still, even before he takes his first meeting, he's still worried. The best way to think about this that I found is Jimmy Iovine. And he always talks about, you know, instead of using fear, fear is very, it's very powerful. If you can figure out a way to wrestle fear to push you from behind rather than stand in front of you. And so there's a quote, I think it's in that great documentary, The Defiant Ones, where he's talking about, "I felt fear my whole career. It took me a while, but I finally trained myself. It's the moment I feel fear and I realize, okay, I'm afraid. That's the moment I have to force myself to go towards whatever's making me afraid." And he's like, "That was very helpful in my career." Jimmy's talking now. "That was very helpful in my career. Just train yourself. Okay, I feel fear, go forward."

• 35:42David Senra?

  And his point is like, you can't get rid of fear, so you have to use it as a tool. Okay, so this is where we get into the foundational idea that he builds his career on. So it says, "He was beginning," and this is so, this is so powerful. "He was beginning to suspect that advertising agencies, certainly including his own, were leaving an enormous amount of money on the table." I have to point this out. Like, there are, it's not like there's only a few advertising agencies. There is a bunch of advertising agencies. There are tons of people working in an industry they don't understand. The point here is not that this still applies to the advertising agency today. The point is that you can find an industry, and usually it's at the beginning days, where the people that are actually operating it don't understand the true potential.

• 36:28David Senra?

  Because that's the market size of the advertising agency, or excuse me, I did it again, advertising industry at this point is 1%, 5% of what it truly could be. And it took Lasker constantly asking, well, why are we doing this? Like, why are we not thinking about this? So it says, emboldened by his successes, Lasker pushed Thomas to think more broadly about the creative aspects of advertising. Why the hell, his whole point is to Thomas is, why the hell are we just brokers? Like, why don't we actually try to sell more product, get creative, sell more product? If we sell more product, wouldn't our clients have more money to spend on advertising? And if they have more money to spend on advertising, when we get, since the larger, the number increases, we get a percentage of that, we would make a lot more money. This is crazy, what he does

• 37:12David Senra?

  right here. And it's crazy, meaning like, smart. But Thomas and his partner Lord were content to continue on as the middlemen they always had been. And that's another important point. I want to pull up two quotes from James Dyson's biography, the second autobiography, the one I just did. Founder's number 205. He was extreme, Dyson was extremely inspired by Buckminster Fuller. Buckminster Fuller was also here of Steve Jobs, other people. And Buckminster Fuller said, "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete, the entrenched professional will always resist longer than the market." Right? So he's like, hey, we

• 37:55David Senra?

  can make a lot more money if we just get good at copywriting and doing sales for our clients. But you can't tell that to Thomas and Lord. These guys are, I don't know, maybe in their 40s. Let's see where we are in the story. I think they're probably in their early 40s. They've been working in this industry forever. They see nothing wrong. Like, there's nothing wrong with this. Like, we go, we're brokers, we make a percentage of the sales we place. Like, no, we don't need to do this. That's very similar to what Fuller said. You don't change things by fighting the existing reality. You create a new reality. Lasker said, "They felt fine if they could do good copy, but it never occurred to them that copy could make a tremendous difference." That is the point of leverage that Lasker

• 38:35David Senra?

  has identified and he's going to exploit. Okay. Before I go on, back to the Lasker biography, though. This is something that Dyson talked about over and over again. He's like, listen, I'm not, I'm not the first person to invent a vacuum cleaner. I'm not the first person to invent a hairdryer. I'm not the first person to invent a wheelbarrow. All I realized is kept asking, why are these things like this? And so there's a quote in the, in, in the book I just did on Founder's Number 205. This was another of those products that were used frequently by hun- by hundreds of millions of people that were stuck in a technological time warp. And what Dyson's point there and what Lasker's discovering here is the same principle. Most people just accept things as they are.

• 39:18David Senra?

  They don't realize that you have the ability to manipulate them, that they're malleable, that you can improve them, and by doing so, you create an entire, something that's entirely new. And that is exactly what Lasker does and produces this gigantic fortune. And then not only did he produce a gigantic fortune, think about how he has to be, if not the, he might be the most influential person in the history of advertising, because you think about all the generations that come after him that he influences, and then all the people that they influence in turn. You can, you can, a lot of these ideas derive, or originate, excuse me, from Lasker. So he says, "Lasker felt sure that he could build the business and boost Lord and Thomas commissions if he could improve the agency's copywriting." So he goes to, and he, he does a test.

• 40:02David Senra?

  This is a big, something that's a big principle of, of Lasker and then Hopkins as well, is you gotta test, you're, the world is too complex to think that you know what's gonna happen. So just do a test first and you'll discover, there'll be insights through this, this process of trial and error that are previously undiscoverable to you. And so he goes to this guy, what are they selling? Hearing aids. And so he goes to this guy in Louisville, Kentucky, that's, that's only paying them 6%, right? And it's 6%, and they're not doing any of the, the creative work. They're just brokering advertising space. They're middlemen. So he says, "They made an unorthodox proposal to one of Lord and Thomas's clients, who was then paying a 6% commission. Lasker proposed that his firm write the copy and develop the artwork for future ads.

• 40:45David Senra?

  If the ads showed good results, the advertiser would then agree to pay a 15% commission." So you're only paying for results. Almost any business would say yes to this, right? Company owner George Wilson agreed. And so this is a result, much to George Wilson's surprise and ours, Lasker later recalled, it worked. And so what happens if you're going to sell a lot more product? Wilson increased its monthly ad budget from $2,000 to $6,000, and more importantly, agreed to pay the 15% commission that Lasker demanded. And so, okay, before they were getting 6% of 2,000, now they're getting 15% of 6,000. Now you see how his, what's working here for the hearing aids, he applies to all the businesses that he works with.

• 41:27David Senra?

  And what happens is when they see results, they inevitably say, oh, I'm going to reinvest in more advertising. And so this is the result. Instead of making $1,400 a year annually on the account, Lord & Thomas would now make almost $11,000. So this one test, he's like, whoa, I just 10x'd what we were making off this one client from this one test. Why was I the first person to see this? And so he starts asking, he's like, well, what is advertising really? And he didn't understand advertising. It takes him meeting this guy named Johnny Kennedy, which I'll get to in a minute, because he's like, oh, maybe it's news. And so this is where Lasker does something, another smart thing. He does a fundamental analysis of the industry he's in. He's studying, he wants to know all the players, he wants to know the history,

• 42:10David Senra?

  he wants to understand what is happening here. How is it possible for this young kid, I think he's like 22 at the time, 21 years old when he does this test, to just, to come to a realization that everybody else is missing? So it says, "This put more pressure on him to resolve his uncertainty about the substance of advertising. What exactly was good advertising? Remember, these questions are unknown. Lasker felt compelled to discover the essence of advertising. I had to find out what advertising was about." And so he's talking about this point. "I haven't been able to find the man who could tell me what advertising is." And this is hilarious. Lord & Thomas's slogan at the time was "advertise judiciously." So I paused when I read that part. I don't know what the hell that means.

• 42:53David Senra?

  Do you know, if somebody said, if this is my, if I'm coming to you, this is my business, and you were reading an ad that says, "Lord & Thomas, advertise judiciously." What the hell does that mean? And so Lasker applies the principle that we saw when Jobs came back to Apple, where he's analyzing this confused product line. He's like, well, why am I going to recommend the 4,400 over the 3,400? And when is it time to jump up to the 7,600 over the 6,600? And he spent a few weeks, he's like, wait a minute. If I can't figure this out, how the hell are customers going to figure this out? And so this is another opening that Lasker applies a very similar thinking. He's like, no one at the firm could explain exactly what that meant. If they can't explain what it means, it means no one knows. And so this is where we get back to that fundamental part of human nature, that we

• 43:38David Senra?

  just kind of accept things. We're limited mental bandwidth. We can't question everything. You know, I come to work for Lord & Thomas, there's a bunch of people in the office, they got customers. Apparently, somebody's going to know what advertised judiciously means. So this is what Lasker's like, okay, I'm asking these questions, I'm getting, I don't know. And so he's like, oh, okay, here's my opportunity. Lasker started scrutinizing all the ads in newspapers and magazines. And then he just applies, like, which ones do stick out to me? He finds this one guy that's in Chicago, this guy named Fuller, and he's like, oh, this is interesting. Fuller is writing his ads, because everybody's reading newspapers at the time. You know, there's 2 million people in America that read newspapers every day. So Fuller just made his ads look like newspapers. It's like, this is, people are already reading this. So this is where Lasker's like, oh, maybe advertising is news.

• 44:23David Senra?

  Fuller wrote and ran ads that looked exactly like newspaper copy, in the same typeface as the newspaper, and told stories about happy users of the product. That's an idea he's going to steal later on. Other departures in advertising also intrigued Lasker. This goes back to the patent medicine industry that's extremely successful at the time. So there's this guy named Dr. Shoup, who is most likely not a doctor, but he's running ads. He says he was running ads with a provocative headline, "What Tea Drinking Does For Rheumatics." Every time he saw this ad, Lasker stopped and read it, even though he didn't use patent medicines, didn't have rheumatism, and didn't drink tea. Why was the concept so striking? And this is where you have this twist of fate that was, that's going to change Lasker's life.

• 45:06David Senra?

  He's doing this inventory, he's trying to figure out what's going on, he's at the office at 6:00 PM. So a messenger boy comes in with this memo, and it's a simple note, and it says, "I am in the bar downstairs. I can tell you what advertising is. I know you don't know." It will mean much to me to have you know what it is, and it will mean much to you. If you wish to know what advertising is, send the word "yes" down by the bellboy. Signed, John E. Kennedy. So of course, Lasker's like, yes, I've been looking for somebody to answer this question. Come on up. They have this meeting. It says Lasker was intrigued in part because Kennedy had written the ads for Dr. Shoup. So remember that ad where he's like, why am I reading an ad? I don't drink tea.

• 45:51David Senra?

  I don't buy medicine. Like, what is... Why is this ad? And I guess this is why I need to back up and tell you why I'm so fascinated by this. And I'm going to keep running down all the biographies I can about advertising people. Because not only, like, I think Ogilvy... I told you before, like, I discovered Ogilvy through this podcast, through the reading that I was doing for this podcast, rather didn't... I don't think I knew who he was before I started Founders. And then I just become, like, completely obsessed with his writing, his approach to work, that he's become a personal hero of mine. But also, like, obviously, the heads of advertising companies are going to have these outsized personalities that are just fundamentally charismatic and interesting, right? But what they do is magic to me. It is magic. And you'll see that today where it's just...

• 46:34David Senra?

  The difference in one ad and another that's about the same product, but by written and the creative aspect of the ad is made by a different person, a person that actually knows what they're doing. A person like Kennedy, a person like Hopkins, a person like Ogilvy. It's like 18 to 1, 20 to 1. And you wonder, like, how is that possible? You're spending the exact same amount, right, on the ad, and yet one gets you 20 times the amount of sales. All right, so let's go to this. Lasker was intrigued in part because Kennedy had written the ads for Dr. Shoup. When he pressed him, Kenny countered by asking Lasker what his conception of advertising was. "It's news," Lasker replied.

• 47:16David Senra?

  No, Kennedy said. News is a technique of presentation, but advertising is a very simple thing, and I can give it to you in three words. Salesmanship in print, Kennedy said. Remember when I started, when I read you that excerpt from the beginning from Ogilvy and Advertising? This conversation is happening in 1904. Ogilvy is writing that book, I think, in 1964. Sixty years later, he's saying that that definition of what advertising is has never been improved. And so Kennedy's getting to his point. And as soon as, this is why, there's a, you know, I'll read my notes to you after this, it'll make more sense. But this, Lasker immediately gets this. He's like, oh, because he's obsessed with

• 47:57David Senra?

  with big ideas. Great advertising did the same work as great salesmen. Advertising multiplied the work of a salesman who wrote it thousandfold. Remember, you and I have been talking about the fact that Lasker found points of leverage and exploited them. Now, you have leverage in the sense of gigantic advertising budgets, right, for these big companies that he has personal relationships with, and the leverage, then he combines that leverage with the leverage that advertising gives you, right? I don't need to send out, and a lot of people, you know, sales at this time, and a lot of the insights that they applied to copyrighting came from door-to-door salesmen. Well, think about how expensive it is to have, to employ a thousand, two thousand, five thousand salespeople, and how time-intensive it was, which you could do that same thing with with the millions of

• 48:42David Senra?

  people that are reading newspapers every day, just put an ad in front of them. So it says, advertising multiplied the work of a salesman who wrote it a thousandfold. The minute he told me that, Lasker said. The very second he told me, I understood it. Finally, there was an idea on the table with which Lasker could work with. So I'm still on this page. I want to read my notes, a lot of which I've already kind of explained to you because they've been on my mind this entire time. This is an absolutely fantastic book. There's so much I'm not going to include, so if this piques your interest, read it. There's, I mean, almost all my highlights are going to come from like this, this part of his career because I found it so fascinating, but it's just, it's, it's just an unbelievable story. I mean, the subtitle says, "The Amazing But True Story of Albert Lasker." It's just

• 49:27David Senra?

  remarkable. So it says, "Finally, an idea I can work with, leverage, people are power law." I've already talked to you about that. "Steve Jobs and Everything I Did." These are just notes I jot down to try to, so I can understand what, like, to hopefully improve my reading comprehension. "Steve Jobs and Everything I Did: It Pays to Go After the Best People." The reason why, which is what we're going to get to here, reason why. And the note I left myself, this is also another fundamental principle that Lasker, Hopkins, and Kennedy have influenced the entire advertising industry with. But you, what's interesting is, you know, people are extremely self-interested. You have to tell them, like, what is the benefit? Ogilvy says, "The most important, your most important job when you're doing an ad is

• 50:10David Senra?

  what is the benefit you're going to promise? Do not just say, 'Hey, I make tires. Buy them.'" No, everybody acts out of self-interest. So they, they use this idea that you have to say the reason why. And the, um, once you learn this, you will see what's interesting to, because I didn't, I don't think, I definitely didn't know this before I started reading about it. But what's interesting is, once you learn it, you see the absence of this everywhere. Because just like the consumer acts in the self-interest, the advertiser acts in their self-interest when they should be focused on the interest of the customer. So let's get into this. It says, "Kennedy was under contract," oh, so this is what I meant about, you gotta pay your people. Like, it doesn't matter what, what this guy's

• 50:54David Senra?

  going to cost you. You have to get them. "Kennedy was under contract to his patent medicine firm for an annual salary of $16,000." That is insane in 1904. To give you a difference, a copywriter working for Lasker at the time would make 1,400 a year. But the patent medicine firm values Kennedy's talent so much that they're paying him $16,000. So Lasker takes over this contract. He's like, "We have to pay this guy." And luckily, Thomas goes along with it, which is remarkable. Tells him how much he valued a young Lasker's opinion. So this is where he's just like, "Hey, Kennedy, I'm paying you. Teach me everything you know."

• 51:35David Senra?

  So you also see a humbleness on his part, right? He's technically Kennedy's boss. But they start doing, they build it essentially like a tutor, like being tutored. I just listened to another, I think I told you this before, I just listened to another of Dan Carlin's Addendum series. He's doing the series on Alexander the Great's mom. And in that, just as a random side note, he talks about that Alexander's father had hired a private tutor for his son. So King Philip is having Alexander the Great, or who will turn into Alexander the Great, he's like, "He's not going to go to school. He's going to have his private tutor." You know who he hired? Aristotle. What the hell? Imagine Aristotle was your teacher, was teaching you one-on-one. So this is not very different from what, this is like, Kennedy's like the Aristotle

• 52:20David Senra?

  of the copywriting industry. So he's like, "Hey, you've got to tutor me, dude." Lasker asked him for a tutorial in his theory of advertising. Kennedy agreed, and so for the next year, they did their respective jobs during the day, and then met for classes after hours. Kennedy was a superb teacher, one-on-one. And so what Kennedy is teaching Lasker here, right now, when Lasker's still in his early twenties, are principles that Lasker will use until he leaves, until he retires in his 60s. So it says, "They focused on the application of this principle, a lesson that Kennedy called 'reason why.'" So he says, "Advertisers," Kennedy said disapprovingly, "seemed to believe that consumers should

• 53:04David Senra?

  buy their goods because it was good for the advertisers, and this arrogant attitude came through loud and clear in their copy." "Nonsense," said Kennedy. "Advertisers had to give consumers a reason why they should buy the advertised goods."

• 53:21David Senra?

  Reasons why created demand, which essentially is reasons why create customers, right? Now we get into dealing with genius or crazy? No, probably both. When he was with Kennedy, he felt he was in the presence of a great man. Yet Kennedy was eccentric, egocentric, utterly inconsiderate of everyone else, and expensive. This is what Olga V told us. It's like, you gotta learn to manage the geese that lay the golden eggs. A lot of the talent is going to come from nonconformists, misfits, and dissenters. They're hard to deal with, but they're worth it. He probably learned that from Lasker, because Lasker's realizing, this guy's crazy, but he's really good at what he does.

• 54:03David Senra?

  He says, "He held the key for which Lasker had been searching, and history ultimately proved that Lasker's faith in the power of copy was well-placed." Now, this is very fascinating. It's not like he was just gifted, and we saw this with Hopkins, and Founder's Number 170. Hopkins is like, "Listen, the only reason I can write an authoritative book on advertising is because I just spent more time doing it than everybody else. I worked 12 hours a day, seven days a week. I've done this for years, and that's the only reason. This stuff is hard." Lasker, when he was watching the massacre at work, discovered that writing did not come easily to Kennedy. And so, this is a description of that. "He had to think everything out laboriously, with labored pains. I imagine he corrected an advertisement 25 to 50 times before he would release it.

• 54:46David Senra?

  And to write his key ad, which is the first ad of the campaign, might take him a month or six weeks for one ad, okay? He would be lost to the world for two hours, thinking out a paragraph of 50 words. Then laboriously, he would underline and scratch out until maybe half or three-quarters of the words were taken out. He would hunt for a word, and then seek to polish the sentence so that its impact was not to be resisted." And so, when I get to this section, the note I jotted down on this page is something I learned. I've mentioned this guy a couple of times that I think there's a lot of lessons that entrepreneurs can get if you focus on these young independent musicians.

• 55:28David Senra?

  Because they've analyzed the music industry, which is notorious for just abusing the talent. I think something like seven cents on the dollar, 10, 15 cents on the dollar, something like that, go to the actual person making the music. And so there's this young independent musician who's been at it for a long time. His name is Russ. In fact, I was just watching yesterday, I was just watching an interview he did with this guy named Steve Stout. Steve Stout, he's been in the music industry for decades. He's actually the manager of one of my favorite rappers, Nas. But Steve Stout also founded this company called United Masters. Steve Stout is friends with people like Ben Horowitz, the famous venture capitalist.

• 56:10David Senra?

  And Steve Stout's an interesting person because just the way he thinks about business and what he's trying to do is very fascinating. Anyways, I was watching this conversation. They're just talking about independent, like, why independent artists, the ones that are most successful, think of themselves as businesses? And I think there's a lot of insights that Russ has derived through experience on an individual level that can be applied to companies. So anyways, there's something that Russ said that was very interesting. And it's an illustration of what's taking place at this point in the book. And he says, "The public praises people for what they practice in private." "The public praises people for what they practice in private." We only see the end result. We don't see the process that went into that. Lasker is now seeing the process. He saw the end result.

• 56:54David Senra?

  He had been reading, he didn't know he was reading Kennedy's ads, but he had been reading Kennedy's ads, like, why am I drawn to this? I'm not even interested in this product. Why the hell am I reading this ad? And yet, he's realizing, okay, that ad that I read might have taken this guy weeks to do. And it's an agonizing, hard process for him. So the public praises people for what they practice in private.

• 57:17David Senra?

  And so let's get into the result. And what is he using? He's talking about the ad that he would just watch them write. Reasons why abounded. Do twice the wash in half the time. Let our machine pay for itself. Use the washer four weeks at our expense. And then conclude it with a note of urgency. This offer may be withdrawn at any time. At any time it overcrowds our factory. And this is why I say that the reason I'm so interested in this is because to me, this is indistinguishable from magic. And why do I say that? Because the company that they're doing this ad for, that hired them. This is the results. In the first seven days, it generated 1,547 inquiries for a per-inquiry cost of 47 cents.

• 57:59David Senra?

  The company had been accustomed to paying upwards of $20 per inquiry. That is why Jobs is telling you, in everything I've ever done, it paid to go after the best people in the world. They were paying $20 for something and happy to pay $20 for something that Kennedy can deliver for 40 times cheaper. And if you take an already profitable company and you reduce their customer acquisition costs by 40 times, you're going to get wealthy. So this is wild. So they're learning all these insights. They use this like this great laboratory for their customers, right? And then they derive their insights and then they use it to get more customers themselves. So this is really on out teaching the competition. And this will change their entire business.

• 58:43David Senra?

  So Lasker and Kennedy get together. They do, they release this, the series of essays, right? So think about this, like everybody says in advertising, you've got to start with service, right? Don't say, hey, just buy my tires, buy my thing. Hey, this is the thing I have, why don't you buy it? That doesn't work. But if you, you give them something. So they're going to give them a bunch of, I guess we'd call this content marketing today, which is like, okay, I'm going to write, I think it's like a dozen essays. These are all the principles that we've learned that are helpful. And at the very end of that, of this, instead of running an ad, I guess, let me, let me back up. So if you're an advertising agency, maybe you put an ad in newspaper. Hey, your company, you want to help with advertising? Hire us. Okay, well, that's one way to do it. Lasker and Kennedy say, hey, here's 12, here's 12 essays, a small book, right?

• 59:28David Senra?

  Of everything we know about advertising. If you want to talk over on how you, we can improve, help you improve your advertising at the end of, at the, at the end of this book, this pamphlet, this book, whatever you want to call it, here's our contact information. Which one are you going to do business with? And so it says, "The response was overwhelming. In response to these advertisements, it was nothing for us to receive hundreds of letters a week from leading manufacturers all over the United States." In other words, Lasker and Kennedy refined their craft on the client's nickel and delivered increasingly effective advertising to those clients. Lasker later referred to this early work, which tracked the agency's work for some 300 accounts, as "a great laboratory," and it was one of the foundations upon which Lasker's genius as a business consultant was based.

• 1:00:13David Senra?

  And so that's what they go back to David Sarnoff, head of RCA. He's like, "Listen, if you give, like, if there's nobody, like, if all facts can be known, I want Lasker's judgment." And so he would go around, not only are you going to hire him to do advertising, but he's like, "Listen, I'm working with 15, 20, 30 different companies, right? And I'm going to tell you the insights that I learned from them." Like, I'm spending time, I'm not working on your business right now, right? I'm working with this other guy. But I had an insight I derived from his work that I can tell you about that might help you in your work. Is that not the same principle of what we're doing? Why are we reading hundreds of biographies of entrepreneurs? Because we're like, "Hey, you know, there's really smart people throughout history. They built these gigantic companies. What is the chance that they worked for 50 years and derived no insights that are valuable?

• 1:00:57David Senra?

  The probability of that is exactly zero. So why doesn't somebody go out, read all these books, find out what they, come back and tell everybody else what they learned, so then we can then keep these ideas going and push them to for future generations of entrepreneurs?" It's the exact same thing what Lasker's doing. He's like, "Dude, I have this gigantic laboratory. I'm coming up with all these insights that other people aren't, and then I can use that to build it." He's using that to build his own business. Because then I can go and talk, when I go and sell somebody, I'd be like, "Hey, you know, I have a lot more knowledge than the person that's just throwing an ad in a newspaper." And I've demonstrated that knowledge, because not only can you see my ads, but then I have this, this body of work that I can point to, where it's like, "Hey, look, there's an entire book of everything we learned." That person is more likely to hire them.

• 1:01:41David Senra?

  Ogilvy used something similar. He did this, like, huge direct mail campaign. And he, he sent like a 16-page report to the head of Sam Bronfman, who I also read his biography. He's the head of Seagram's, this gigantic alcohol company. And so Ogilvy gets a call one day, and Sam is on the line quoting passages from this 16-page report that Ogilvy had sent him. And then what happened? At the end of the call, he hires Ogilvy. That's exactly what Lasker's doing here. And then let's get to another thing, another smart thing that Lasker realized. He's like, yeah, I'm OK at writing copy. I'm OK. But Kennedy is way better. So he's smart enough to know what he should keep doing and what he needs to hire for.

• 1:02:25David Senra?

  And again, this is important because what Steve Jobs said, people make all the difference. Lasker's awareness that he should get out of the writing and Lasker had the awareness that he should get out of the writing and into the business. He knew that his strengths lay in editing rather than writing. He had assessed his copywriting skills as compared with Kennedy's and decided he wasn't good enough. So this, this, um, this association with Lasker only, or with Kennedy only lasts like a year and a half, two years, but it, it plays an important role for the rest of his career. And something Lasker's doing here is realizing also is like, OK, I know my strengths and weaknesses, right? I also know Kennedy's. He can teach one-on-one. Lasker tried to have Kennedy teach, uh, like every other copywriter in the, like in groups. And he's like, he's just not good at that. So Lasker winds up taking the job and, and as teacher, he learns the insights from Kennedy.

• 1:03:08David Senra?

  OK, then he, then he's the one teaching the classes at night for, for his copywriters and his creative people working in the industry. This is something that I've noticed that the best leaders in history, they, they all consider themselves teachers. Uh, think about what, what Jim Senegal, founder of Costco, told us, right? If you're not, if you're in the leadership role, right? Your management, leadership, whatever it is, if you're not spending 90% of your job teaching, you're not doing your job. And he's used this quote multiple times. Another way he said it is teaching is 90% of your job. He put it even more succinctly for us. And that's another insight that he learned from his mentor, Sol Price, by far the most influential retailer that has ever lived. He's giving an interview. Jim Senegal goes like, man, you, you, you were mentored by Sol Price.

• 1:03:53David Senra?

  You must have learned a lot from him. And he's like, huh, no, not a lot. I learned everything from Sol Price, everything. And what the lessons he learned from Sol Price makes Jim a billionaire. And Sol says something that's fantastic because he is the one that taught Jim, teach, teach, teach, teach, seeing Lasker doing the same thing here. And Sol Price said, listen, you, you train an animal. You teach a human or teach a person, I think is the, the way he said it. Uh, so it says, um, Lasker conveyed the master's insights to them. We had a class at least twice a week for three or four years, and the sessions would last four or five hours at a stretch. Now we get into more of the fact that genius is unmanageable, but it's worth it. He's under a lot of stress because Kennedy is really hard to do with this.

• 1:04:39David Senra?

  He says, "If I had nothing else, just managing him was a man breaking job because you had to sit on top of him to get the work out." He had very long lapses where he couldn't work at all. Kennedy turned out to be a basket full of contradictions. He was hard to know and hard to talk to. Lord and Lasker's genius lived a life of extremely productive highs and miserable lows. He lost interest in accounts almost as soon as he solved their initial challenge, leaving Lasker to struggle with a client whose expectations had now been elevated by Kennedy's talents. He was like a bee. He went and sipped the pollen of a flower, and if he got it, his interest was gone. He wanted to try another flower. He would work almost nonstop, several days running, and then disappear on a binge for weeks on end. He was, he drank a lot.

• 1:05:24David Senra?

  He was an alcoholic. He was suspicious and paranoid. He was a man who was impossible to get along with, as Lasker said. Lasker believed that he was the only person who ever got along with Kennedy. But that was my business to get along with him, out of Lasker, and it was worth the price. Kennedy proved to be fundamentally unreliable, and he couldn't be managed. So he winds up leaving in 1906. He had one big message to give, and from the day he left, he regressed, he retrogressed steadily. It fell to others to extend Kennedy's powerful concepts and put them to their fullest use. Okay, so I'm fast forwarding in Lasker's life. This is how he becomes a partner. And really, the lesson here is you just can't be afraid to ask. He was convinced, like, he's making so much money, he's like, "I can go out, like, I gotta run my own show." He does not like having partners.

• 1:06:09David Senra?

  He does not like having bosses. And so he tells Thomas he's gonna quit. And Thomas, actually, Thomas finds out he's gonna quit through one of their clients. And the client's like, "Listen, Lasker's, I'm gonna, I have a year contract with your firm, but if, when that contract expires, if you don't keep Lasker, I'm jumping to him." And then we see Lasker just has a lot of bravado. We're seeing this negotiation, because he's gotta come up with money to buy out Thomas's partner, Lord. So it says, "The only way to hang on to Lasker and his accounts was to make Lasker a partner. Thomas told Lasker that he had decided to take Van Kamp's advice, that's the client, and make both Lasker and Erwin partners in the firm, that's the guy that

• 1:06:52David Senra?

  was going to follow Lasker. He had already approached co-founder and partner Lord and introduced him to resign, and induced him to resign. They had put a value of $200,000 in the business, which meant that Lord's half interest could be acquired for $100,000. He wants $30,000 down. Then came the hard part. How do I find $30,000? Lasker scraped together the $10,000 in loans from friends, and then Erwin came up with $5,000. Okay, so they need 15 grand. This left them $15,000 short. In an astounding display of bravado, Lasker then demanded that Ambrose Thomas, that Ambrose is his first name, that Thomas make him a gift of the remaining $15,000, arguing that going into business on his own

• 1:07:31David Senra?

  would cost Lasker far less than 15,000. Remarkably, Thomas agrees. On February 1, 1904, Albert Lasker, excuse me, became a quarter-partner in Lord and Thomas." So there's some animosity that starts happening between Lasker and Thomas, just like Kennedy, Lasker's unmanageable as well. So the older partner is, what, he's 55 years old, and Lasker's 26. And they're on a walk, and they're going to check out, like, they're going to a store together, and the older guy's like, "You need to take an extended break. Like, why don't you go off?" I think they want him to take off, like, a couple months or something, like, maybe half a year, and the firm will pay for it, right?

• 1:08:14David Senra?

  But Lasker's like, "No, I don't want a vacation. Like, I'm young, I don't want, like, I want to learn more." And so it says, "Thomas again urged Lasker to take an extended vacation. If you don't take this vacation," Thomas said, "we will bury you by the time you are 36," saying, "You're just working way too hard, you're under too much pressure." Those were his last words that Thomas ever uttered. At that moment, he gasped for air and fell dead, the victim of a massive heart attack. In the wake of Thomas's death, there was no way Lasker could abandon Lord and Thomas, so now he's not going to quit and go on his own, right? "By the terms of the partnership agreement, Thomas's interest in the firm now was divided equally between the two surviving partners. At the age of 26," and that surviving partner's not going to stay around for very long, "at the age of 26, Lasker was the leader and

• 1:08:57David Senra?

  half-owner of the second-largest advertising agency in the United States, with billings in excess of $3 million."

• 1:09:05David Senra?

  So now he's at an extremely young age, running a company he wasn't expecting to run, no mentor, like no older mentor there anymore. He's under an extreme amount of pressure and this is where he breaks down. He has the first of many breakdowns. This is the one he says he never gets over. "The business pressures that Lasker was already finding onerous before now became unbearable. His condition worsened." He's also got issues because his wife, he married like a young vibrant wife, she winds up getting typhoid fever and then there's complications from typhoid fever. There was like the inflammation of veins. I forgot the name of the condition, but I looked it up and now that condition is perfectly treatable. They just couldn't do it at the time. So she becomes an invalid. She has like hard time walking the rest of her life. Then her, so she can't, he's got to take care of her. And then her family business, her dad's business

• 1:09:50David Senra?

  collapses. And so now he's got to support her entire extended family. So he's got a ton of pressure on him and he just snaps. In April 1907, he experienced a total collapse. "He looked at the world and couldn't stop crying. I had a terrible breakdown. I couldn't work. I couldn't keep going anymore. My wife, of course, was never well. She was an invalid all through our 35 years of married life. And there was a tremendous burden on her and her condition because I couldn't do anything but cry. Literally, I lost control to do anything but cry. I had done nothing but work from the time I was 12. I just had a good old fashioned breakdown. And in fact, my life ever since has been a struggle from breakdowns. I always say I got over all my breakdowns except the first one."

• 1:10:32David Senra?

  And so now they're talking about like, what would it be considered today? Most likely, he was affected by bipolar 2 disorder. In 1907, though, the only option for an individual who couldn't stop crying was to retreat from the world. So that's what Lasker did. So I'm going to talk more about this in a little bit, but I just want to bring this to your attention because this is also an opportunity that Lasker, and now he's about to recruit Hopkins, are going to exploit. And that's really thinking about canned goods, canned food goods, as the technology of its day, because it was. The perfection of new canning techniques, especially ways of preventing solder from getting into the food, and the invention of new distribution channels opened up an unprecedented opportunity

• 1:11:15David Senra?

  in the 1890s. Now, food companies like A.J. Heinz, the ketchup guy, began producing an array of canned goods aimed at consumers. And so we'll see, just like technology companies today, they hire, you know, best and brightest scientists and engineers from places like MIT. The soup company Campbell does the same thing back in the day and they do it to, they exploit this to just their massive advantage. They wind up putting one of Lasker's businesses out of business. But first, Lasker needs a new Kennedy. This is where we're introduced to Claude Hopkins. There are a lot of ideas repeated in this book that Hopkins talks about in his autobiography, which if you're selling anything, highly recommend

• 1:11:58David Senra?

  you read it. I'm going to do a bonus episode for you on Hopkins' book Scientific Advertising. This is the book that Hopkins wrote while he worked for Lasker. Lasker hid it in a safe for 20 years. Then when it was finally released, it has sold over 8 million copies since then. And actually, if you buy the Kindle version of My Life in Advertising by Claude Hopkins, it comes with Scientific Advertising. So I have both the Kindle version of Scientific Advertising and then I have the paperback version. I reread the paperback version and I'm going to, the bonus episode should be out pretty soon. And so a lot of, I'm going to skip over a lot of his ideas. They're in the book, in this book, and in Hopkins' books, and Ogilvy talks about them in his books. Highly recommend you acquainting yourself with them because I think they're valuable. But I do want to give you some

• 1:12:43David Senra?

  background on Hopkins. I don't want to repeat too much since I've already done a complete podcast on him, but it says, "Claude Hopkins claimed that his mother was left a widow when Claude was 10 years old, but the sketchy available evidence suggests that his dad just abandoned his family. In either case, for the next decade, Hopkins struggled alongside his mother to keep the family housed and fed. He sold his mother's silver polish door to door. He cleaned two schoolhouses at the beginning and end of each school day. He delivered a newspaper to 65 houses before dinner. On Sundays, he worked as a church janitor." I'm giving you this background because this guy has an insane work ethic. And later in life, he applies that insane work ethic to one thing and one thing only, advertising. He has no other hobbies, no interests but advertising. This is the same guy that can sit at home, eventually he makes a lot of money because he starts realizing

• 1:13:28David Senra?

  when he leaves Lasker, he takes equity in the businesses that he advertises for. And so he built another fortune doing that. But even Lasker was paying him the equivalent of... It's like the equivalent of like $4 million a year in today's dollars. And last and Hopkins would work from home by himself with just a typewriter. So that gives you an insight into like how valuable this guy's skills were. Right. So it says, on Sundays, he worked as a church janitor and during summer vacations, he did farm work for the rest of his life, even after becoming an extraordinary wealthy man, he feared sleeping slipping back into desperate poverty of his youth. As a result, he maintained a seven day a week, 12 hour day, 12 hour day work regimen. And this is that quote that I butchered or tried to paraphrase earlier.

• 1:14:09David Senra?

  If I've gone higher than any others in advertising or done more, the fact is not due to exceptional ability, but to exceptional hours. It means that I have sacrificed all else in life to excel in this one profession. It means a man is to be pitied rather than envied, perhaps. That's a quote from his autobiography where he's looking back. He's like, I wouldn't advise my son to do what I did.

• 1:14:31David Senra?

  And so this is how Lasker recruits and convinces Hopkins to come work for him. He found Hopkins because he's like, who was writing these ads? These ads are fantastic. And so this is Hopkins talking about being recruited by Lasker. Mr. Lasker said, I have searched the country for copy. This is the copy I got in New York. This is Philadelphia. I have spent thousands of dollars to get the best copy obtainable. You see the results. Neither you nor I would submit it. Now I ask you to help me. Give me three ads which will, which will start this campaign and your wife and your wife may go down to Michigan Avenue to select any car on the street and have it charged to me. As far as I know, no ordinary human being has ever resisted Albert Lasker. He has commanded what he, what he would in this world.

• 1:15:15David Senra?

  Presidents have made him their pal. Nothing he desired has ever been forbidden him. So I yielded as all do to his persuasiveness. And then this is just Hopkins talking about appealing to self-interest. I'll go into more detail in the bonus episode that'll come out after this one. But this is, I brought this up earlier. Kennedy said the same thing. And you, once you realize this, you'll see this everywhere. This company is just saying, think from their point of view. They're always screwing this up. Hopkins began imparting his theory on copyrighting. "We should never brag about a client's product," he said, "or plead with the consumers to buy it. Instead, we must figure out how to appeal to the consumer's self-interest. The group we call 'everybody' is actually a collection of individuals, each mainly concerned about him or herself.

• 1:16:00David Senra?

  We must get down to the individuals," he said. "We must treat people in advertising as we treat them in person." Hopkins saw himself as a teacher. So I'm fast forwarding. This is when one of the companies that he's doing advertising for winds up, well, essentially finds out later, like lying and borrowing money from a bunch of people, Alasker being one of those people. So he has this like multiple hundred thousand dollar loan that he gives them. They default, so they wind up turning that loan into equity. And there's a bunch of other like business people that are trying to run this company. It's in the canned goods. And there's another like industrialist that is partnering up with Alasker because that industrialist had also lent money to these people.

• 1:16:43David Senra?

  But really, and the book goes into way more detail about this, really, the lesson I'm pulling out here is like, this is what happens when you run into a technologically superior direct competitor. And so what happens here is this is also going to remind me of something that we learned from Andrew Carney, I'll get there in a minute. So Alasker's partner on this deal goes and meets with, because their new competitor is Campbell's Soup. And they're literally selling the same product. They're directly competing. And so he takes a tour of them. It says, "They soon realized that Van Camp," which was their company, "was playing a losing hand. In December 1919, he took a tour of Campbell's Soup's state-of-the-art manufacturing complex. The tour was conducted by Dr.

• 1:17:24David Senra?

  John Dorrance, an MIT-trained chemist credited with the invention of condensed soups. Erwin grasped instantly just how hard it would be for his slow-moving company to compete with this powerhouse. Van Camp's sales volume was about $20 million a year at this point. That was roughly the same as Campbell's. But this facility was light years ahead of any Van Camp plant."

• 1:17:51David Senra?

  So from the outside, it's like, oh, we're doing about the same amount of sales. Maybe we can compete with these guys. And then they take, they realize, oh, they have vastly superior technology. We're about to get rolled over here. We will have, we will have to have our costs right and as low as Campbell's, he said. He make, Campbell, he makes good goods. I can, I can well see the difference in our positions. We are fast getting to the point where we must do something. Campbell's Soup launched a price war against Van Camp and other local producers of soups and canned goods. It means slim profits for us, they said, for whatever length of time that he chooses to continue his present plan. I'm fast forwarding and what do you think's gonna happen? Lasker offered his own biting epitaph for Van Camp.

• 1:18:34David Senra?

  We managed to make a great failure of it and then we sold out. And so it is kind of funny to think of canned soup companies as like the leading technology company of their day, but they were vastly technologically superior from their direct competitor and they win and they won. And that's a very, very old idea. Andrew Carnegie talked about this when he was coming up in the steel business. He would always invest in the latest technology. If there was a new machine that helped him do his work even a slightly bit faster, better, cheaper, et cetera, he would buy it. And then the older guys in the business are like, you're wasting your money chasing after every new technology. Like, what are you doing? And the takeaway from that section was, I'll paraphrase what Kennedy said, or Carnegie

• 1:19:15David Senra?

  said, invest in technology, the savings compound, and sometimes it's the, the single difference between a profit and a loss. And so there was like a highly cyclical nature of the industry at the time. And sometimes because he was, he was able, he had better technology, he was able to produce his product at a lower price, he would be able to make money at prices that his competitors could not, even if that was a temporary like price decrease. And so it gave him a massive advantage. And you know, he went to build, building the biggest steel company in the world until he sold it to JP Morgan. So I guess just to sum up, invest in technology, the savings compound, and sometimes it's the difference between profit and loss.

• 1:19:58David Senra?

  This is the takeaway that Lasker is realizing. He's like, man, I'm really good at advertising, but I'm really bad at managing these other businesses. And so really, just stay within your circle of competence. I learned a great lesson there. I could be poisoned to any manufacturing business where I had any say in the manufacturing end, that my specialty was publicity and distribution. And so there's a bunch of interludes in his life. Not only does he have a nurse breakdowns, but then he goes and does public service. He buys the Chicago Cubs. He does all kinds of crazy stuff. But the section I'm going to pull out here is he winds up taking his foot off the pedal and others, that allowed other people to build on and extend his fundamental insights, which I think is our duty, right?

• 1:20:42David Senra?

  We have to learn what the greatest people in history knew. And then we don't, we're not just copying them. We're adding something. We're like taking their ideas, filtering it through our unique set of experiences, combining the two, and we create something new. This is what his partners wind up, or excuse me, his competitors wind up doing. New competitors run the horizon. One of them, BDO, was founded by three young veterans of World War I. All graduates of prestigious colleges and nearly a generation younger than Lasker, the three principals at BDO took for granted some of his innovations, such as the reason why advertising, and moved beyond them. So they combine his idea, that advertising is salesmanship in print, that you need a reason why, and then they start analyzing the psychology behind consumer behavior. They focus more on the psychology of the consumer, and they met with almost immediate success.

• 1:21:25David Senra?

  So they, using his ideas as a foundation and adding on to it, wind up jump starting. You know, before advertising agencies would take decades to build up, these guys wind up having like the fourth largest advertising agency in the country in just a few years. Lasker acknowledged that Lord and Thomas had lost ground during his absence. He says, "I was out for five years in public service, and during that period, advertising began to be so widely understood that we no longer stood out." So he has like a second wave. He comes back and he revolutionizes and creates, helps create two new products that were not sold, Kleenex and Kotex. And so the reason, they wouldn't sell tampons, they wouldn't advertise with them, or they call them like sanitary napkins, or they use some kind of euphemism for what I guess we call tampons today. And I just want to bring you to your attention like two things.

• 1:22:09David Senra?

  One is about don't artificially narrow the market for your product, which again, like can be applied to so many different domains. But this is how Lasker overcame objections. And this is, this is reminding me of Coco Chanel, understanding her advantage over her competitors. So it says, "A huge barrier had to be overcome before even the most effective copy could do its job. Mainstream magazines had to be persuaded to carry the advertisements." And so you have males that are, own all the women publications. So this guy named Edward Bach, he publishes the largest magazine at the time, Ladies' Home Journal. He's like, "I'm not doing these ads, like, kick rocks." And it's funny, because it says Bach was then considered the nation's leading authority on women's manners and morals. How ridiculous is that, right? And this is exactly what Coco

• 1:22:51David Senra?

  Chanel realized. She's like, "All my competitors are men. They don't know women. I'm gonna beat them because they're..." Let me save that insight, in case you haven't listened to Coco Chanel thing until I'm done with this and it'll make more sense. So it says, so he tells Albert, "No." And Albert's like, "Okay, I need..." Albert didn't take "no" for an answer. He hops on a train and goes to his, to his office, to Bach's office. And this is the argument that he made to overcome the objection, which was really smart. He says, "Listen, I don't agree with your reservations about Kotex advertising, but I respect them. I know they're based on your vast knowledge of what American women are thinking and what appeals to them." So he's buttering up first, right? "Because of that, I'd like to ask you if you'd let me put that knowledge to the test, right here in your office. Would

• 1:23:36David Senra?

  you be willing to call in your secretary and have her read the first Kotex advertisement that we'd like to place in the journal? If she's embarrassed or repelled by it, I'll accept your judgment. There'll be no further arguments." Bach's like, "All right, that seems fair." Bach brings in the secretary. So it says, "The door opened to admit a dignified, white-haired lady, seemingly around 60." So it says Bach explained the situation and handed her the copy, which she began to quietly read. About halfway through," and Hopkins is the one that wrote this for Alaska, "about halfway through Hopkins' text, the woman looked up. "Why, Mr. Bach, this is a wonderful thing. I certainly think we should run this in the journal. Women deserve to be told about it." So this leading, what'd they just call him? The leading, considered the nation's

• 1:24:19David Senra?

  leading authority on women, manners and morals. That's not a job for a man. I think that's ridiculous, right? It says, "In those few short minutes, the biggest obstacle of the distribution of a product vitally important to millions of women vanished." So he is going to make a ton of money advertising a product that previously people wouldn't advertise. And so the reason I say that reminds me about... Coco Chanel's point that she had an edge. She understood like, I have an edge because I actually know what women want. My competitors are men. I have a massive advantage. And so she comes out with her clothes and they're very simple. Some cases, they're like, they're not brightly colored. She took everything that was popular at the time.

• 1:25:00David Senra?

  She compared it to like her competitors and she made fun of people like Christian Dior, Balenciaga, all these, Yves Saint Laurent, all these brands that are still famous to this day. And she called them the boys and she did that as like derogatory. And she's like, they dress us, they dress women as they think women like, like as if we're costumes in a freaking play. Like, do you not know how uncomfortable wearing your dress is? No, you don't because you don't wear your dress. And so Coco attacks it from, she's like, I just designed clothes that I like. And if I, the chances are, the chances are, if I like the clothes, then other women will like them. And that, you know, she has wild success. She says later on, I found a quote after I recorded the last podcast on Coco. She's like, she's like, I don't do fashion, I am fashion.

• 1:25:44David Senra?

  Which I thought, you know, was very bold. She's a very bold person, which I really enjoyed reading about her. But I just thought that was such a good, an obvious, but fundamental insight. It's like, oh, these, they don't even know the game they're playing. Like, I have an insight that they don't. They don't see their blind spot. And I'm going to drive my brand, The House of Chanel, through that massive gap that you left open for me. And if you haven't gone back, I've done two podcasts on Coco Chanel. I listened to the most recent one recently. Just amazing life stories. From orphan to richest woman in the world. This is a wild, wild story. All right, this is about artificially limiting the, you might have artificially limited the number of customers for your product. Survey them to see if, if they discovered use cases for your product that you missed. So Kleenex, right?

• 1:26:29David Senra?

  Comes out, it starts as a, a way to like, to line the inside of gas masks. What the hell? That surprised, that surprised me a lot. So then they're like, okay, well, maybe we, like, it might be better off. It goes from being used as a... Lining to gas mask, which never really works, to a way to remove makeup, to then something to be like a disposable handkerchief. Like, think about those three different use cases in the markets that are associated with each use case, right? How big is the market for lining gas masks compared to how many, to taking off makeup, to blowing your nose? It goes from small market to a little bigger to gigantic, right?

• 1:27:13David Senra?

  So, sales started to grow in 1930. Lasker recommended that they make a survey to discover how people were using Kleenex, and the results were surprising. Many more people, it turned out, were using the tissues to wipe noses than to remove makeup. This presented a potential boon. The market of the product might as well triple if it weren't purely a makeup-related purchase. Quickly, the product's name was changed to Kleenex Disposable Handkerchiefs. And that is another, like, one insight. Again, very simple idea. Let's survey the customers. Maybe they found uses that we missed. We're not taking off makeup, right? This is a male-dominated company. Realize, hey, we're also blowing their nose. That winds up generating another fortune for Lasker because the producer of Kleenex at the time is still a private company,

• 1:27:58David Senra?

  and Lasker is able, they invite him to buy into the private company, which he agrees to do. This is some, just some more advice. Again, the book is just full of interesting applications of Lasker's idea to different companies. Fascinating, fascinating. Read. But this is really reminds me, so he does a lot of advertising for the tobacco industry, and he helps guide them because, and this is something that we learned from Charlie Munger and Warren Buffett. They're like, and Henry Singleton, and Andrew Carnegie, and John D. Rockefeller, and Edwin Land. All these people say the same thing. They're like, listen, diversification, you know, everybody's like, diversify, diversify. Diversification only makes sense if you don't know what you're doing.

• 1:28:41David Senra?

  But if you have a winner, you need to bet heavy. Do not diversify. And so Lasker's saying the same thing, like they're making, I don't know, like 50 different products. He's like, what are you doing? Put all your ammunition, you have one great product here. Their first piece of advice to American Tobacco must have been, come as a surprise, "Stop advertising most of your brands." Lasker argued that rather than maintaining many modestly successful small brands, the company needed to create one overwhelmingly powerful product. Instead of spending a little money and a moderate amount on money on each of these 50 products, take what you spend on them and put it behind Lucky. This is Lucky Strike, one of the most famous cigarette brands ever made, right? So even during this second act, this renaissance of his career later on, he still has breakdowns.

• 1:29:26David Senra?

  He has to spend a bunch of months in Johns Hopkins. Like, he never, I can think towards the end of his life. I think the last 10 years of his life, he winds up going to therapy and trying to figure, and basically figuring it out. But I want to tell you insights about his personality. You've kind of already probably derived this from a lot of the stories I've shared with you. But this comes from his wife, which is very interesting. So it says, Flora, like, her name's Flora. "Flora, like so many others, found her husband a challenge. Albert was exhausting, demanding, and difficult, but he's also endlessly interesting and energizing. He was aggressive and hard-headed," this is her words. "He had all these animal spirits all the time." And really, the reason I wanted to read this section to you is because this sentence that she says is really fascinating about the, like, the dyna-dymicism?

• 1:30:10David Senra?

  I don't know what I'm looking for there. Like, the paradox of his, or dichotomy, maybe, of his personality. "You are insufferably egotistical on the things you know nothing about, and you are painfully modest about the things about which you know everything." That's what, that might be my favorite sentence in the entire book. "You are insufferably egotistical on the things you know nothing about, and you are painfully modest about the things about which you know everything." And then I just want to pull out another, I mean, the fact that Albert feels this way, this whole like imposter syndrome thing. Now granted, like we talk about the entrepreneurial emotional roller coaster all the time. When you're doing something difficult, like you're going to alternate between two states and almost two states exclusively, euphoria and

• 1:30:53David Senra?

  terror. The highest highs and the lowest lows. I think reading the life stories, realizing that this is normal. Like when you're high, like you're doing well, you're like, oh my God, this is the best feeling alive. I feel like a superhuman, right? This is thrilling. But when you're, that, that part takes care of itself. But when you inevitably fall, it's like, this isn't going to work. I'm a loser. This, I may have made a mistake, whatever. Like you've just got to know, like reading these life stories, like, okay, everybody, this is not a unique feeling to me. Everybody feels this way. And so I'm going to read this section to you. He's lost and falling into the deep depression. At this point in his life, he's one of the richest people in the country, one of the most respected people in the country. He's on a first name basis with presidents. He's invited to the

• 1:31:36David Senra?

  White House all the time. He's got deep personal friendships with captains of industry. It's not enough. That's, that's not the, those are external things. It's the internal, like struggle, these monologues that we have to struggle through. He was fragile and rudderless and the, and he had a perception that he wasn't a big man. He saw himself as weak and small, unable to justify his existence. And so eventually this is where he, he gets out of the, this is the end, really, to think about this. This is the end of his career. Forty, what do we say, 44 years in the same job. If Lord and Thomas were to go forward, it would require a substantial rebuilding on

• 1:32:21David Senra?

  Lasker's part. And now at 62, Lasker was feeling his age. I'm tired. I go to bed tired. And when I wake up, I wake up more tired than when I went to sleep. One reason, he said, was that he was bored. For many years, changes in the industry had been making the job less fun for him. And the strange new world of advertising, now dominated by marketing vice presidents and account reps, no longer played to his strengths. The pioneering days of advertising, he believed, were over. There is nothing left in advertising which is inspiring to me, he said. The final compelling reason to shut down Lord and Thomas was financial. By 1942, as a result of his opulent lifestyle, his real estate purchases, his philanthropic

• 1:33:04David Senra?

  efforts, his settlements with Doris Kenyon, that's his second wife that he divorced after their honeymoon, and his generous gifts to his children and to Mary, that's his third wife, he gave all of his children's $5 million. You know, that would probably be the equivalent of tens of millions, maybe 20, 30 million dollars today, maybe more. And he gave his wife a million, his third wife a million dollars. He was extremely like, he made a lot of money, but he would give it away to people. Like even his settlement with his second wife, he didn't have to give her, they had a prenup and everything, and he just wound up giving her like half a million dollars or something like that. But the point the author's making here is that he's running low on cash. He spent tens of millions of dollars in 1930, 1940 dollars, which is just amazing. So it says his generous gifts to his children and Mary, Lasker was running low on cash.

• 1:33:48David Senra?

  His taxable income, which mainly consisted of Lord and Thomas's salary, was just under $200,000 a year, which was down from nearly $900,000 six years previously. He still owned about $1.5 million in marketable equities, but most of his wealth was tied up in Lord and Thomas's cash reserves. For much of the previous year, Mary and then his son Edward had been encouraging Lasker to begin taking capital out of Lord and Thomas, but Lasker couldn't bring himself to cut the cord. If the payout came in the form of dividends, it would be subject to a tax rate of close to 80%. So he's got millions of dollars stuck in the company, and if he takes it out, he's gonna give up, he's only gonna get 20% of it. And so this is where there's a loophole and it kind of expedites him.

• 1:34:33David Senra?

  He's already feeling, hey, I'm not in this anymore. He's gonna live for about another 10 years after this, but he's gotta act now, and this is why. There was a loophole, however. The federal tax code specified a flat tax rate for businesses in liquidation. That rate had been 12.5% until 1941, when it was raised to 15%. But in 1942, the tax rate went up again to 25%. And the liquidation that would have cost Lasker something like $800,000 in taxes in 1941 would now cost $1.2 million. Lasker's legal and financial advisors warned him that the rate was likely to be raised again, perhaps to a level that would make liquidation unfeasible.

• 1:35:15David Senra?

  Lasker returned from lunch one day and told his wife that he decided to give up the company. Lasker had made his decision and now he would not look back. He had turned full circle from hectic business to a calm and consoling life filled with endless unexpected wonders, and he was using his large fortune to seed a growing list of projects in the public interest. He had traded what he saw as a life of repetition for one of new exploration and discovery, and he wanted to make the closing of the first so complete and so unequivocal that it could never impinge upon the second.

• 1:35:54David Senra?

  And that is where I'll leave it. It is an absolutely fantastic story. There is so much more in the book that I couldn't even get to.

• 1:36:01David Senra?

  So if this podcast was interesting to you, most likely you'd like reading the book. If you want to buy the book, excuse me, if you want to read the book and support the podcast at the same time, if you buy the book using the link that's in the show notes in your podcast player, Amazon will send you a small percentage of sale, no additional cost to you. If you want to see every single book that I've ever done for the podcast in reverse chronological order, you go to amazon.com/shop/founderspodcast. If you want to support the podcast and a friend at the same time, I'll leave a link in the show notes. If you want to buy a friend or coworker a gift subscription to the podcast, if you select the annual option, I will extend it so your friend has lifetime access to founders. So their access never expires.

• 1:36:45David Senra?

  If you want to get yourself lifetime access, if you haven't done so already, I will leave a link in the show notes to do that as well. That is 206 books down, 1,000 to go, and I'll talk to you again soon.