#283 Andrew Carnegie

What I learned from rereading The Autobiography of Andrew Carnegie by Andrew Carnegie. ---- Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes ---- Follow one of my favorite podcasts Invest Like The Best ---- (1:01) 3 part series on Andrew Carnegie and Henry Clay Frick: Meet You In Hell: Andrew Carnegie Henry Clay Frick, and the Bitter Partnership That Transformed America by Les Standiford. (Founders #73) The Autobiography of Andrew Carnegie by Andrew Carnegie (Founders #74) Henry Clay Frick: The Life of the Perfect Capitalist by Quentin Skrabec Jr. (Founders #75) (2:00) What these guys all had in common is they were hell bent on knowing their business down to the last cent. They were obsessed with having the lowest cost structure in their industry. (2:00) Highlights from Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Changed America: —Cut the prices, scoop the market, watch the costs, and the profits will take care of themselves. —Frick knows his business down to the ground. —Frick’s rise from humble beginnings was obviously intriguing to him. It signaled to Carnegie that Frick was another of the fellow “fittest,” and those were the individuals with whom Carnegie sought to align himself. —Carnegie would repeat the mantra time and again: profits and prices were cyclical, subject to any number of transient forces of the marketplace. Costs, however, could be strictly controlled, and in Carnegie’s view, any savings achieved in the costs of goods were permanent. —On this issue the two men were of one mind. Frick had made his way in coke by the same reckoning that Carnegie had in rail and steel: if you knew your costs down to the penny, you were always on firm ground. (6:00) Benjamin Franklin: An American Life by Walter Isaacson. (Founders #115) (7:00) A sunny disposition is worth more than a fortune. Young people should know that it can be cultivated; that the mind like the body can be moved from the shade into sunshine. (7:00) The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. (Founders #100) (8:00) The most important judge of your life story is yourself. (9:00) You can always understand the son by the story of his father. The story of the father is embedded in the son. —Francis Ford Coppola: A Filmmaker's Life by Michael Schumacher. (Founders #242) (10:00) Invest in technology, the savings compound, it gives you an advantage over slower moving competitors, and can be the difference between a profit and a loss. (17:00) He is working from sunrise to sunset for $1.20 a week and he is ecstatic about being able to help his family avoid poverty. (18:00) Andrew Carnegie had manic levels of optimism. (20:00) Do not delay. Do it now. It is a great mistake not to seize the opportunity. Having got myself in, I proposed to stay there if I could. (21:00) I felt that my foot was upon the ladder and that I was about to climb. (21:00) Lesson from Andrew Carnegie’s early life: Focus on whatever job is in front of you at this very moment and do the best you can. You can never know what opportunities that will unlock in the future. (24:00) On the miracle of reading and having free access to a 400 volume personal library: In this way the windows were opened in the walls of my dungeon through which the light of knowledge streamed in. Every day's toil and even the long hours of night service were lightened by the book which I carried about with me and read in the intervals that could be snatched from duty. And the future was made bright by the thought that when Saturday came a new volume could be obtained. (26:00) To Colonel James Anderson, Founder of Free Libraries in Western Pennsylvania: He opened his Library to working boys and upon Saturday afternoons acted as librarian, thus dedicating not only his books but himself to the noble work. This monument is erected in grateful remembrance by Andrew Carnegie, one of the "working boys" to whom were thus opened the precious treasures of knowledge and imagination through which youth may ascend. (28:00) Running Down A Dream: How to Succeed and Thrive in a Career You Love by Bill Gurley (36:00) Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons by Edward J. Renehan Jr. (Founders #258) (43:00) This policy is a true secret of success: Uphill work it will be. (46:00) Put all your eggs in one basket and watch that basket. (46:00) The most expensive way to pay for anything is with time. (48:00) The men who have succeeded are men who have chosen one line and stuck to it. It is surprising how few men appreciate the enormous dividends derivable from investment in their own business. (48:00) My advice to young men would be not only to concentrate their whole time and attention on the one business in life in which they engage, but to put every dollar of their capital into it. (51:00) The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow. (Founders #139) (52:00) Last Train to Paradise: Henry Flagler and the Spectacular Rise and Fall of the Railroad that Crossed an Ocean by Les Standiford. (Founders #247) ---- Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

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

• 0:00David Senra?

  Nothing stranger ever came out of the story of this poor Scotch boy who came to America and step by step, through many trials and triumphs, became the great steelmaster, built up a colossal industry, amassed an enormous fortune, and then deliberately and systematically gave away the whole of it for the enlightenment and betterment of mankind. Not only that, he established a gospel of wealth that can be neither ignored nor forgotten, and set a pace in distribution that succeeding millionaires have followed as a precedent. That is an excerpt from the book that I'm going to talk to you about today, which is written over 100 years ago, which is the autobiography of Andrew Carnegie. This is my second time reading the autobiography of Andrew Carnegie. A few years ago, I did a three-part series on Andrew Carnegie and his partner Henry

• 0:45David Senra?

  Clay Frick. If you're interested in diving deeper into that, it's episode 73, 74, and 75. To prepare for this podcast, not only did I reread Andrew Carnegie's autobiography, but I reread all my notes and highlights from the fantastic book, which I did on episode 73, which is called Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Transformed America. And so it occurred to me last night, as I was rereading my highlights from Meet You in Hell, there's a handful of highlights that I think I should tell you first before we jump into Carnegie's autobiography, that I think will give you context in how he approached building his businesses, and what he had in common with some of other history's greatest entrepreneurs, Henry Clay Frick, obviously being one of them, which is his partner, but also Jay Gould and John D. Rockefeller. And it's this idea that they started out learning bookkeeping, because they thought

• 1:29David Senra?

  that was the language of business. And what these guys all had in common is they were hell-bent on knowing their business down to the last cent. They were obsessed with having the lowest-cost structure out of anybody in their industry. And so here's a few highlights from Meet You in Hell. The first one is this mantra that Carnegie and Henry Clay Frick would repeat. They said, "Cut the prices, scoop the market, watch the costs, and the profits will take care of themselves." And this autobiography does not go into nearly the detail that I think is required to understand the success of Carnegie and how important his partnership with Henry Clay Frick was. So I'll be rereading Meet You in Hell the next few weeks and making another podcast on it because it's just, there's so many lessons out of the book and it's just an absolutely fantastic written book. But one thing that Carnegie, that attracted

• 2:14David Senra?

  Carnegie to Frick was two things. Here's the first, here's the first highlight. It says Frick knows his business down to the ground. And then the second is the fact that Carnegie believed in some form of like social Darwinism. And that if you were born in abject poverty like he was, like Henry Clay Frick was, and you were able to figure out a way to rise to the top and to build wealth, that was a signal for some kind of form of intelligence. And so it said, Frick's rise from humble beginnings was obviously intriguing to him, meaning to Carnegie. It signaled to Carnegie that Frick was another of the fellow, quote, "fittest." And those were the individuals with whom Carnegie sought to align himself. And then two more highlights about this very, I can't, like, I can't repeat enough. It is so important to understand. I think this is the one common

• 2:58David Senra?

  advantage, whether it's Sam Walton, John D. Rockefeller, Carnegie, Frick, Henry Ford, the managers of all the Berkshire businesses, they are obsessed with keeping their costs low. Here's the first highlight. Carnegie would repeat the mantra time and time again. "Profits and prices were cyclical, subject to any number of transient forces on the marketplace. Costs, however, would be strictly controlled. And in Carnegie's view, any savings achieved in the cost of goods were permanent." Second highlight. "On this issue, the two men were of one mind. Frick had made his way in coke," that is the, the business that Frick monopolized and that Carnegie winds up buying and folding into his steel empire. So it says, "Frick

• 3:40David Senra?

  had made his way in coke by the same reckoning that Carnegie had in rail and steel. If you knew your costs down to the penny, you were always on firm ground." And then one more thing before we jump into the autobiography of Andrew Carnegie, just- This is unbelievable, the amount of financial success that Andrew had. Andrew sells his company, his steel company, to JP Morgan for $480 million. JP Morgan combines that with US Steel and it becomes the world's first billion-dollar corporation. Okay, so Carnegie starts the book, talking about his parents' childhood, but then the first thing he says, one of the first things he says is like, why he decided to write an autobiography. This, I love how all this connects together. So he is gonna tell us that, how the autobiography of Judge Mellon, so he calls him Judge Mellon,

• 4:25David Senra?

  that is Thomas Mellon. Thomas Mellon is the founder of the Mellon family dynasty. I have a ton, I have like three books on Mellon and his sons, I just haven't got around to reading them yet. But they're one of the most important family dynasties in American business history. And so Carnegie's saying, hey, I enjoyed Judge Mellon's autobiography so much, it made me realize that I should write my own, and then I'm gonna tell you how all this ties together. It's fantastic. And so Carnegie says, "A book of this kind, written years ago," he means an autobiography, "a book of this kind, written years ago by my friend Judge Mellon, gave me so much pleasure. The story which the judge told has proved a source of infinite satisfaction to his friends and must continue to influence succeeding generations of his family to live well. In like manner, I intend to tell my story."

• 5:09David Senra?

  And I thought that was really interesting, because when I reread that, I thought of what Mellon said. So Carnegie is influenced by Mellon, Mellon in turn was influenced by the autobiography of Ben Franklin. This is a quote, a highlight I have from Ben, from the biography of Benjamin Franklin, written by Walter Isaacson, and it said, "Thomas Mellon erected a statue of Franklin in his bank's headquarters. He declared that Franklin had inspired him to leave his family farm and go into business." And this is what Mellon said, this exact person that Carnegie had just read the autobiography of. "I regard the reading of Franklin's autobiography as a turning point in my life. Here was Franklin, poorer than myself, who by industry, thrift, and frugality had become learned and wise, and elevated to wealth and fame.

• 5:51David Senra?

  I read the book again and again and wondered if I might not do something in the same line by similar means."

• 5:59David Senra?

  And so the reason I'm glad that Carnegie put that at the beginning of the book, because this book is only 330 pages. It is actually incredibly difficult to read. It's not, to me, it's not 330 pages. It's like double that because you have to, at least I had to, reread many pages twice to actually understand what he's saying. But it also jumps around a lot. So I would think of what you and I are going to go over today as more of like random thoughts and ideas that he found valuable throughout his life. And the first of those ideas that I think is really valuable is default optimism as a grand rule for life. And he says, "I think my optimistic nature, my ability to shed trouble and to laugh through life, must have been inherited from my grandfather, whose name I'm proud to bear. A sunny disposition is worth more than fortune. Young people

• 6:41David Senra?

  should know that it can be cultivated and that the mind like the body can be moved from the shade into sunshine. Let us move it then. Laugh trouble away if possible, and one usually can't." And then he goes right into another idea that I think is fantastic. You and I have talked about this. This is something we learned from Warren Buffett on episode 100. It's this idea of inner scorecard, that the most important judge of your life story is actually yourself. And so Carnegie turns that into a motto that he uses for his entire life. He calls it the judge within. The judge within sits in the Supreme Court and can never be cheated. Hence the grand rule of life. Your own reproach alone do fear. This motto, adopted early in my life, has meant more to me than all of the sermons I ever heard. And so I want to jump right into the life circumstances that motivated Carnegie to build wealth. And at this point in his life, he's a young

• 7:26David Senra?

  boy, living in Scotland, and a change in technology is actually going to send his family into poverty because they did not react, his father did not react fast enough. His father manufactured linen, but he did it by hand. And it says, "The change from handloom weaving to steamloom weaving was disastrous to our family. My father did not recognize the impending revolution and was struggling under the old system. His looms sank greatly in value, and it became necessary for my mother to step forward and endeavor to repair the family fortune. So she opened a small shop." I remembered that shortly after this, I began to learn what poverty meant. And this is his reaction to this. And then and there came the resolve that I would cure that when I got to be a man.

• 8:10David Senra?

  This is an unbelievably important story to understand Andrew Carnegie and his approach to building his business. He was the opposite of his father. His father was run over by technological revolutions. Andrew Carnegie built his wealth as a result of responding to and being a head of technological revolutions. This reminded me of, all the way back on founders number 242, I read the fantastic biography of Francis Ford Coppola. And there's a fantastic line in that book that I think describes something that repeats throughout human history. And it says, "You can always understand the son by the story of his father. The story of the father is embedded in the son." That is exactly true for Andrew Carnegie. In Coppola's case, he was spent with like, his dad was frustrated, often unemployed. He hated anybody who was successful.

• 8:55David Senra?

  And Francis took like his own father's family and directed into this like insane work ethic and drive to be successful. And so Carnegie is a child. I think he's like eight, maybe 10 years old, maybe 11 years old at this point in the story. And he's realizing, oh, wait a minute. If you don't take advantage of the increase in technology in your industry, you could be thrown into a life of abject poverty. So one of the main lessons that I learned, you know, three or four years ago from this book, probably the main lesson is my interpretation of what, how Andrew Carnegie built his business. And it's something I've repeated dozens of times on the podcast. And it says, "Invest in technology. The savings compound. It gives you an advantage over slower moving competitors and can be the difference between a profit and loss." We are very far away from,

• 9:40David Senra?

  there's a bunch of businesses that Carnegie is going to be engaged in before he finds the steel business, which is where he made all of his wealth. Right? Now, he's a rich man before he, you know, in relative terms, a rich person before he starts working in steel. And he becomes one of the richest people in the world. Right? And what was fascinating is that he was an early adopter of this thing called the Bessemer process, right? And he's in America at the time. The Bessemer process is being developed in England. And the Bessemer process was a new way of actually refining steel from molten pig iron. So it was a process that made production of steel cheap, efficient, and resulted in the mass production of steel on a scale that had never been seen before. Think about what we learned with Henry Ford.

• 10:23David Senra?

  His slow invention of the mass production of cars resulted in the production of the Model T on a level that we had never, that human history had never seen before, right? Carnegie was able to produce steel on a scale that was never seen before. And so remember these points for later, we'll get into it, we're still in his early life. I just thought it was really interesting how this all fits together. So he talks about school. He says, "School was a perfect delight to me, and if anything occurred which prevented my attendance, I was unhappy. This happened every now and again because my morning duty was to bring water from the well." So a main theme of him and everybody in the family constantly having to help each other out. All of them are going to work, all of them are going to pull their resources. Even at a young age, I mentioned Carnegie's obsession with cost. He's, I think, like 13 years old, and he's going to know every single dollar of expense that his family's, it's almost like the family bookkeeper in a sense.

• 11:08David Senra?

  So he says, "I earned a reputation of being an awful laddie, even when he was in school. I developed a strain of argumentativeness and combativeness, which has always remained with me." So that's no surprise, you and I. Founders are much higher on the disagreeableness scale than, you know, people that are not founders. So he's talking about, hey, I had to get the well from the water before school, then I go to school. Again, he's maybe 10 years old at this time. Then after school, he has to help his mom. "I had often the shop errands to run after school. But in looking back upon my life, I have the satisfaction of feeling that I became useful to my parents, even at the early age of 10." And this is what I meant about an early introduction to business and bookkeeping. "Soon after, the accounts of various people who dealt with the shop were entrusted to

• 11:49David Senra?

  my keeping, so that I had become acquainted with business affairs even in childhood." And so then he talks about the first business that he starts, his first tiny business that he starts as a young kid in Scotland. The takeaway here is that hire people that know more than you and then study human nature. Later in life, Carnegie said his success came not from what he knew, but his fact that he could organize people that knew more than he and understand how each individual fit into his entire system and the overall objective of his businesses. In fact, there is a quote from "Meet You in Hell" that I forgot to read to you that I think describes his approach. It says Carnegie's approach may seem ruthless, but the idea of treating the complex process of manufacturing like a giant machine with parts that must be constantly retooled

• 12:34David Senra?

  seemed to him completely natural. And he did that with both man and machine. And so I'm going to read this section to you. I got to change some words here because this is some weird language. It's going to be hard to follow. But he says, "My first business venture was securing my companion's services for a season as an employer. The compensation being that the young rabbits should be named after them." So he is put in charge of keeping pigeons and rabbits, and he's got to feed them. And so gathering food, or actually foraging food, actually, he finds a way to outsource to other kids with no compensation. He just says, "Hey, if you help me collect dandelions and clover and all the food for the rabbits and the pigeons, you can name, or I will name, the rabbits after you." And so he's got all these workers, these young kid workers, going out to the field, doing all this foraging, bringing the food back

• 13:19David Senra?

  so he could feed the pigeons and rabbits. This is his takeaway. "I treasure this remembrance. I treasure the remembrance of this plan as the earliest evidence of organizing power upon the development of which my material success in life has hung, a success not to be attributed to what I have known or done myself, but to the faculty of knowing and choosing others who did know better than myself." And so his point that he's about to make here in the second part of the paragraph, he's like, "Even when I was building these giant factories, I didn't actually understand how they ran. I just found people that understood that individual part of this overall machine, and I understood how all these working parts interacted for the goal of the entire machine. Precious knowledge, this for any man to possess. I did not understand steam machinery, but I tried to understand that much more complicated piece of mechanism. Man."

• 14:06David Senra?

  So then he talks about this is the very end of his dad's business. They have to sell all the looms and the furniture by auction. The problem is, these are meager assets. They're outdated technology. He says, "The proceeds of the sale were most disappointing. The looms brought hardly anything. And the result was that 20 pounds more were needed to enable the family to pay passage for America. So they are flat broke. They have to even borrow money for the passage, the transportation on ship, to actually get to America where they feel there's a better opportunity waiting for the family. And this is the state of his family. My father was then 43, my mother 33, I was 13, and my brother was 5. And he says, "Once he got on the boat, I had left school forever." So not even a high school education.

• 14:48David Senra?

  "I would just ask you to put yourself in his father's shoes for a minute." And how devastating this would have to be. Picture yourself 43 years old, you're married, you have two small children to support. You have to leave the only country you've ever known, and you don't have a dollar to your name. I think that fear of failure, the fear of being in that position is unbelievably motivating. And so he talks about how terrifying this part of his life was. He's like, "I need to be able to help out. The great question now was, what could be found for me to do? I wanted to get to work so that I might help the family to start in our new land. The prospect of want had become to me a frightful nightmare." And so he says, "My thoughts of this period centered in the determination that we should

• 15:33David Senra?

  make and save enough money to produce $300 a year, $25 a month, which I figured was the sum required to keep the family without being dependent upon others." So Andrew and his dad get jobs at the cotton factory. Again, Andrew's 13 years old. He says, "In this factory, my dad also obtained for me a position as a bobbin boy." So there's like a young boys that are like running errands for the people working in. Sometimes you have to fix machinery. It's like, kind of like a helper kind of person. "And my first work was done there at $1.20 per week." So he's getting paid $1.20 a week. What does he have to do for that? And again, this is, he's so happy at the opportunity to be able to do this because he's contributing almost $5 to that goal of, hey, let's just make $25 a month and we

• 16:17David Senra?

  won't be, you know, in poverty anymore. It was a hard life. We had to rise before breakfast in the darkness, reach the factory before it was daylight, and work until after dark. So he's working from sunrise to sunset for $1.20 a week and he is ecstatic. This job gave me the feeling that I was doing something for my world, which is our family. I have made millions since, but none of those millions gave me such happiness as my first week's earnings. I was now a helper of the family, a breadwinner, and no longer a total charge upon my parents. And we see his relentless default optimism here, even when he's making $1.20 a week, having to work from sunrise to sunset.

• 17:00David Senra?

  My hopes were high and I looked every day for some change to take place. What the change was to be, I didn't know, but I felt certain if I kept on, it would happen. And when Carnegie was a young boy, one of his heroes was the Scottish hero, William Wallace. And so at this point, he's like, oh, I'll just ask myself, what would William Wallace do? And he says, at that point in my life, I was not beyond asking myself what Wallace would have done and what a Scotsman ought to do. One thing I was for sure, he ought never to give up. And so the note I left myself when I read this the first time was manic levels of optimism. This is another theme in Andrew Carnegie's life. I think a main lesson of his life story is do the best you possibly can with the job that's right in front of you. If you do the best possible, as you can with the opportunities right in front of you, it's going to unlock opportunities you can't possibly foresee.

• 17:43David Senra?

  He's constantly taking like an entry level job, doing a really good job, then getting promoted, then he gets promoted again and again. And so this happens at the factory and it says, "It now became my duty to bathe the newly made spools in vats of oil. I never succeeded in overcoming the nausea produced by the smell of oil. But if I had to lose breakfast or dinner, I had all the better appetite for supper and the allotted work was done." So I know that's funny writing, but think about what he's saying there. "The smell of oil made me sick and it made me vomit. Oh, well, I'll have more room in my stomach for dinner." So eventually he's going to move from the factory into the office. This is what I meant about being skilled in bookkeeping. His supervisor is named Mr. Hay. Mr. Hay kept his books in single entry and I was able to handle them for him. But hearing that all the great firms kept their books in double, well, we kept hearing

• 18:27David Senra?

  that all the great firms kept their books in double entry. So he's got like a small group of super motivated, like considering like other fellow ambitious friends that are in a similar position where he is in life, but they're not satisfied and they want to rise together. So he's got a small group, it's like four or five, four or five other boys. He says, "We all determined to attend night school during the winter and learn double entry bookkeeping." And so what Andrew will do is he's constantly willing to jump from job to job. If the opportunity is better, there's a guy. So the main, the two main, at this point in American history, the two main technological revolutions that are taking place are the railroad industry and the telegraph industry. And so he's going to play, Carnegie's going to play a role in both by working for both telegraph companies and railroad companies that lead him to starting his own businesses later on.

• 19:12David Senra?

  He's going to build bridges and then help build rail lines. He does that with iron first, he realizes weight. Steel's way better than iron. I should jump into steel before everybody else realizes this is an opportunity. So there's a guy named David Brooks, who was a manager of a telegraph office, just happened to ask Carnegie's uncle if he knew any, like a young boy that would act as a messenger. And Carnegie does something incredibly intelligent here. And the note I left myself is do not delay, do it now. One of the most important ideas in the book. The interview was successful. I took care to explain that I did not know Pittsburgh, that perhaps I would not do, and I would not be strong enough, but all I wanted was a trial. He asked me how soon I could come, and I said I could stay now if wanted. And looking back over the circumstance, I think that answer might well be pondered

• 19:57David Senra?

  by young men. It is a great mistake not to seize the opportunity. The position, meaning the job, was offered to me. Something might occur, some other boy might be sent for. Having got myself in, I proposed to stay there if I could. And he feels this is his biggest, his one big break in life. And that is how in 1850, I got my first real start in life. From the dark cellar, running a steam engine, so out of the factory into the office a week. Think about this, running a steam engine at $2 a week, being covered with dirt. I was lifted into paradise. Yes, heaven as it seemed to me, with newspapers, pens, pencils, and sunshine about me. There was not a minute in which I could not learn something, or find out how much

• 20:43David Senra?

  there was to learn, and how little I knew. This is a fantastic line. I felt that my foot was upon the ladder and that I was about to climb. And so then he repeats this idea. It's like, listen, you have to focus on whatever job in the front of you at this very moment and just do the best you can because you never know what opportunities that will unlock in the future. And so as a messenger boy in these days, he's running messages to a bunch of really successful businessmen, older, smarter, more successful businessmen that are looking for young, hardworking people to help and to give a chance to. And so he says, "A messenger boy in those days had many pleasures. He met with very kind men to whom he looked up with respect. They spoke to him a pleasant word and complimented him on his promptness and asked him to deliver a message on the way back to the office." And so this is what I mean about the writing is a little weird. He's talking about himself here.

• 21:28David Senra?

  "I do not know a situation which a boy is more apt to attract attention, which is all a really clever boy requires in order to rise. Wise men are always looking out for clever boys." And so just like every other job he has, at this point, he's working incredibly long hours, but he's really still thankful and optimistic. One of the greatest philanthropic gifts that Andrew Carnegie gave to the world is the fact that he built all these libraries. He was obsessed with building libraries. Now, why? Because he benefited greatly from the kindness of an older person that had a personal library. Andrew did not have extra money for books, didn't have time to go to school, and so a library served as a form of self-education for a driven, young person obsessed with trying to build wealth and be successful in life. That was true in his day in the 1850s.

• 22:13David Senra?

  It's still true to now. It's just way easier for us to obtain this information. "With all their pleasures, the messenger boys were hard-working. Every other evening they required to be on duty, and so the office closed. On these nights, it was seldom that I reached home before 11 o'clock. This did not leave much time for self-improvement, nor did the wants of the family leave any money for books. There came, however, like a blessing from above, a means by which the treasures of literature were unfolded to me." So this guy named Colonel James Anderson, and he says, I bless his name as I write this, "announced that he would open his library of 400 volumes to books, so that any young man could take out each Saturday afternoon a book which could be exchanged for another on the succeeding Saturday." Now, this is incredible. Like, this is some of the nicest...

• 22:56David Senra?

  This book is not well-written, in my opinion, but this language is fantastic. This is the miracle on reading, right? In this way, so the fact that he now had free access, he could read a book a week for free, he could pick one out of 400 volumes, right? In this way, the windows were open in the walls of my dungeon through which the light of knowledge streamed in. Every day's toil and even the long hours of night service were enlightened by the book which I carried about with me and read in the intervals that could be snatched from duty. And the future was made bright by the thought that when Saturday came, a new volume could be obtained. And so Andrew pays this back when he's older.

• 23:40David Senra?

  I mentioned, I'm gonna skip over the names, like this little crew, he's got a young group of fellow workers, they're all hungry from knowledge. It's really what you and I are doing here. We do it through podcasting and reading books, right? They're doing it because they're meeting at the library themselves. But it's the exact same idea behind it, I'm gonna skip the names. So it says, "All these members of our circle share with me the invaluable privilege of the use of Colonel Anderson's library. Books which it would have been impossible for me to obtain elsewhere whereby his wise generosity placed within my reach. And to him, I owe a taste for literature which I would not exchange for all the millions that were ever amassed by man. Life would be quite intolerable without it." And I'm gonna interrupt this paragraph because this is a really interesting idea. Spending time working, reading, and on self-improvement, it keeps you away from crappy people, he calls

• 24:23David Senra?

  it low fellowship, like, you know, low-quality people, and bad habits. Now, remember, this is all reinforced because he's got a group of other people that they're not out there doing what a lot of boys, young boys at his age are doing. They're not getting drunk, they're not committing crimes, they're trying to build successful careers and a base of knowledge that'll serve that goal of building a successful career. It's absolutely fantastic. I love this part. The next part actually made me tear up. I'll get there in one second. "Life would be quite intolerable without it. Nothing contributed so much to keep my companions and myself clear of low fellowship and bad habits as the generosity of the good Colonel. Later, when fortune smiled upon me, one of my first duties was the erection of a monument to my benefactor." Think about that. He made a statue. It was so important to me.

• 25:08David Senra?

  It's how we started the podcast. It's like, books are magic. The impact they can have on your life, like, I get goosebumps thinking about it. You have Thomas M. saying, "Hey, your book, Ben Franklin, was so important to me that later in life, when I'm a rich man because you motivated me to build wealth, to take risks, right? I'm gonna put a statue of you in my bank." You have Carnegie doing the same thing. It's like, "Do you understand what you did for my life, Colonel James Anderson?" I had no idea how little I knew. You opened up the world of collective knowledge for me for free. So and it made such a difference in my life that I put a statue now in front of a hall and library in Diamond Square. And then on that statue Carnegie writes the following inscription.

• 25:53David Senra?

  This gives me, this has made me tear up. "To Colonel James Anderson, founder of Free Libraries in Western Pennsylvania. He opened his library to working boys and upon Saturday afternoons acted as librarian, thus dedicating not only his books but himself to the noble work. This monument is erected in grateful remembrance by Andrew Carnegie, one of those quote, 'working boys,' to whom were thus opened the precious treasures of knowledge and imagination through which youth may ascend." This is where Andrew decides, "I'm going to spend a large chunk of my wealth building free public libraries. The treasures of the world which books contain were opened to me at the right moment. The fundamental advantage of a library is that it gives nothing for nothing.

• 26:38David Senra?

  Youth must acquire knowledge themselves. There is no escape from this." And if you think about how even crazy, like how difficult it was to get a book in his age, right? The book I'm reading now, you can read for free. It is freely available online. You could buy the Kindle version and read it on your phone for 99 cents. But I like the port. The book is going to make you work for it. It is not an easy to read book, but there's a lot of ideas that'll be helpful in your career. It's, do you have the drive to want to do so, right? Because he's saying the same thing. The fundamental advantage of a library is that it gives nothing for nothing. Youth must acquire knowledge themselves. There is no escape from this. And I've told you about this before. I think you combine this idea, right? That a library will give you nothing for nothing. You have to actually pick it up. You have to actually do the work. You have to actually read the words. You have to think about what they're meaning. You have to take notes. You have to review this. You have to do all these things, right?

• 27:22David Senra?

  Makes me think of, I combine that idea to what I consider is the best talk on YouTube for founders. It's called, I've told you this a million times, Running Down a Dream by Bill Gurley. I will leave a link in the show notes. If you haven't seen it, you can just type into YouTube. It is a crime that that video has less than 100,000 views. But by watching that video, you'll see the great lengths that so many people go to to actually chase their dreams and make their dreams a reality. Every single person covered in that video knows the fundamental advantage in using a library or any kind of learning, right? And a lot of them were readers. The fundamental advantage of a library, which you also be a professional, like doing research on your own, doesn't have to just be books, but it's like, it gives you nothing for nothing. You have to acquire the knowledge yourself. And the reason I recommend that talk so much and to watch it over and over again,

• 28:07David Senra?

  and so many people have reached out to me and sent me messages about being influenced by that talk, is because it holds you to such a high standard. It says in that, it's like, you don't have to be the smartest, most brilliant person. I will never be like genius level intellect like an Ed Thorp, or Henry Singleton, or DaVinci. But I can just go about and collect more information and constantly expose myself. That's what Bill's main message is like, man, it just, you have no excuses. The information is free on the internet. You just have to go and collect it. And implied in that is like, most people won't even do that step. So when I read about like this young kid who's distraught, had left his family home, his father's in abject poverty, his mom's having to work night and day, his son, or

• 28:51David Senra?

  his brother's five, so he's gonna start working soon too. And it's just like, you see, he's like, he was so hungry for any kind of information that would get him out of the situation he's in. Imagine working from morning till night, not going home and laying about, but reading, but searching, but pushing. I love this part of the story. And then another note I forgot to read to you that I thought was funny about the section, "Books don't read themselves." Okay, so he's working inside of a Telegraph office at this point. This is something I mentioned earlier, that he's kind of like the bookkeeper of his family. They clearly put a lot of responsibility on him, they saw that he was young and gifted. So he says, "I did not spend any of my extra dimes. Every penny that I could save, I knew was needed at home. My parents were wise and nothing was withheld from me.

• 29:35David Senra?

  I knew every week the receipts of each of the three who were working, my father, my mother, myself, and I knew all the expenditures." He's doing the exact same thing at 13. As he says later on in life, "If you know your cost down to the penny, you're always on firm ground." And so now, this is a few years later, talks about the fact that him and his brother share a room, they have to sleep in the attic. And they spent, stay up at night whispering, talking about the great businesses that they're going to build. They wound up being partners. So it says, Tom was just nine years old. We slept in the attic together. And after we were safely in bed, I whispered the secret to my dear little brother. Even at his early age, he knew what it meant, and we talked over the future. So if he's nine, I think Andrew's around 17 at this point, it was then for the first time, I sketched to him how we would go into business together, that

• 30:16David Senra?

  the firm of Carnegie Brothers would be a great one, and that father and mother should yet ride in their carriage. He goes into more detail about why he used the word riding the carriage. He didn't understand how like, the different levels of wealth. He thought like, the highest level of wealth that he had, you know, personally, personally seen at this point was people that were able to ride in a carriage. So he's like, okay, we're gonna work hard, and we're gonna give father and mother. So we're gonna make so much money that they can ride in their, in a carriage. And so there's just this like, slow, linear progression in the amount of money that he starts, you know, working at 13. Now he's 17. He's now getting a raise. He gets a raise, a $2 and 25 a month raise. Remember, he's like, we just gotta make 25 bucks a month. He's now making $13.50. So he's halfway

• 30:58David Senra?

  there by himself. And the reason this is etched in his life, even many, many years later, you know, he's writing this book, maybe 50 years later, whatever the case is, it's because of how proud his parents were. "I produced the extra $2 and 1/4. The surprise was great, and it took some moments for them to grasp the situation, but it soon dawned upon them. Then, father's glance of loving pride and mother's blazing eyes soon wet with tears, told their feeling. It was their boy's first triumph, meaning himself, and proved positive that he was worthy of promotion. No subsequent success or recognition of any kind ever thrilled me as much as this did." And then we're gonna see a demonstration of a lifelong trait that Andrew had, especially pronounced when he was a young man on the rise. This is one of my favorite quotes of

• 31:42David Senra?

  Charlie Munger, talks about the importance of being a learning machine. I've said multiple times on the podcast, it pops out. It's like, learning machines who refuse to quit are incredibly hard to beat. Charlie Munger says, "I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up. And boy, does that help, particularly when you have a long run ahead of you." That perfectly describes where we are in Andrew Carnegie's life. He's still a teenager. Having to sweep out the operating room in the morning, the boys had an opportunity of practicing upon the telegraph instruments before the operators arrived. It's like being able to learn how to program on one of the first computers. Like, that's the way you could think about this. This was a new chance. I soon began to play with the key and to talk with the boys who were at the other stations who had like purposes to my own.

• 32:26David Senra?

  Whenever one learns to do anything, he has never to wait long for an opportunity of putting his knowledge to use. This is important because he's going to meet this guy named Thomas Scott, who works for the Pennsylvania Railroad, who's going to be like a mentor to him. Who eventually, this eventually leads, so this new skill that he's learning, puts him to working with Thomas Scott and the Pennsylvania Railroad, which eventually leads him to decide to manufacture if steel will be his main focus. That there's no way he could have predicted that opportunity as a 17-year-old saying, hey, I should learn this new machine. These telegraph lines are being put in every city. I see them constantly. Maybe I should actually use my time. And why does he say you never have to wait long to learn a skill? Because a year later, he begins as a telegraph operator. It's like getting a job at Google in 2004. Why is that?

• 33:11David Senra?

  Because now it doubles his salary. I began as a telegraph operator at the tremendous salary of $25 per month, which I thought was a fortune. Five years ago, he's making $1.20 a week, and he's in a factory as a bobbin' boy. And maybe later on, he's working $2, making $2, and he's putting all these spools and vats of oil, throwing up, and like, okay, that's cool. I'm going to have more room for dinner. And here's the punchline. Knowledge is sure to prove useful in one way or another. It always tells. And so I'd mentioned the fact that him, in his spare time, learning the skill, gets an increase in salary. Then Thomas Scott actually asks, this is before he works for Thomas Scott. Thomas Scott plays a huge role in his life. Later on, Andrew Carnegie considers, he says that Thomas Scott was a genius. And so Carnegie is friends with one of Scott's assistants,

• 33:55David Senra?

  and he says, "I was surprised one day by one of his assistants, to whom I was acquainted, telling me that Mr. Scott had asked him whether he thought that I could be obtained as his clerk and telegraph operator. And his friend told Thomas Scott, he's like, no, I don't think he's interested." And then Carnegie says, "But when I heard this, I said at once, not so fast. He can have me. I want to get out of a mere office life. Please go and tell him so." Now, this is crazy. The result was that I was engaged, hired, in 1853, at a salary of $35 a month. As Mr. Scott's clerk and operator. This is literally a life-changing job because he's now at the center. Remember, he's at the center of two rapidly growing industries. We're still right before the Civil War, okay?

• 34:37David Senra?

  So he's at the center of two rapidly growing industries, which is railroads, telegraphs. It says, "It was not long after this that the railroad company constructed its own telegraph line. We had to supply with operators. Most of these operators were taught in our offices. The telegraph business continued to increase with startling rapidity. We could scarcely provide facilities fast enough." So I think they make it up. I don't remember if it was in this book or the book I read on Jay Gould. But they make the difference in the increase in technology. It's like, okay, the difference of getting your messages in a week as opposed to getting them in an hour. And so he goes back to this idea that why successful older people are always looking to help younger people who drive. Andrew does not have a lot of money right now, but he has a desire to learn and he's willing to work really hard. And so Andrew gives this advice for future generations.

• 35:20David Senra?

  "The battle of life is already half-won by the young man who is brought personally in contact with high officials. And the great aim of every boy should be to do something beyond the sphere of his duties, being going the extra step, something which attracts the attention of those over him." There's stories in this book where there's like three or four, maybe five other similar-aged people working in the same office as him, and he distinguishes himself. He rises faster than they do because he just does more than they're willing to do. And so now, many pages later, but this is something he repeats over and over again. He's like, "Listen, I had so much help when I was a young person. If you get yourself in that position, please help other people progress in their careers when you have the opportunity to do so." He says, "I'm a firm believer in the doctrine that people deserving necessary assistance

• 36:04David Senra?

  at critical periods in their career usually receive it. There are many splendid natures in the world, men and women who are not only willing, but anxious to stretch forth a helping hand to those they know to be worthy. You have to work for it, right? It's not, it does not come for free. As a rule, those who show willingness to help themselves need not fear about obtaining the help of others." So up until this point, every dollar that he's ever made has come through like his own physical toil. And Mr. Scott is clearly in a mentoring relationship with him, teaches him about investing. Carnegie doesn't know what the hell that is. And so this is way before there's like insider trading rules. But Mr. Scott says, hey, you should, do you have $500? If you have $500, you should really make this investment. It'll be worth it. Mr. Scott asked me if I had $500. If so, he said he wished to make an investment for me.

• 36:48David Senra?

  500 cents was much nearer my capital. I certainly had not $50 saved for investment, but I was not going to miss the chance of becoming financially connected with my leader and great man. So I said boldly that I thought I could manage that sum. What's crazy is how much faith his mom had in Andrew. She's willing to mortgage the family home. They mortgaged the family home to get $500 to make this investment. So he hands it over to Mr. Scott. He gets 10 shares in return. That was my first investment. In those good old days, monthly dividends were more plentiful than now. One morning, a white envelope was lying upon my desk. I opened the envelope. All it contained was a check for $10. I shall remember that check as long as I live. It gave me the first penny of revenue from capital, something that had not worked for with the sweat of my brow.

• 37:33David Senra?

  Eureka, I cried. Here's the goose that lays the golden eggs. So let's go back to this idea. He's working that office. Took time, his spare time, he learned the telegraph, how to operate a telegraph. Comes a telegraph operator, does a good job at that, gets recruited to work for Mr. Scott. Now, this is many years later. Mr. Scott works for Pennsylvania Railroad, but now during the Civil War, he is the, I think he's Assistant Secretary of War, if I'm not mistaken. And as a result of this, he brings Andrew, a much younger person helping him, to Washington to help with his work. As a result of that, Andrew Carnegie gets to meet Abraham Lincoln. And this is what Carnegie thought of Lincoln. Lincoln would occasionally come into an office and sit at the desk awaiting replies to telegrams.

• 38:16David Senra?

  He was certainly one of the most homely men I ever saw, but when excited or telling a story, intellect shone through his eyes and illuminated his face to a degree which I have seldom or never seen in any other. His manners were perfect, and he had a kind word for everybody, even the youngest boy in the office. And so so far, he's master of the telegraph. He's learning a lot about the railroad industry. He winds up getting, telling them about a new way to make railway cars, but also railway lines. He gets a small interest in this business. And this reminded me of Jeff Bezos writing in his shareholder letters last week, that you have to use trends in technology to your advantage, that you need to use them as a tailwind instead of ignoring them and then wind up being a headwind to your career.

• 38:59David Senra?

  And so it's through this work that he realizes he can start a business to build bridges. So it says, "The railway lines of America were fast becoming dangerous for want of new rails, and this state of affairs led me to organize a railmaking concern in Pittsburgh." And so while he's doing this work, he says, "When I was at work with this, I had seen in the Pennsylvania Railroad Company's works the first small bridge built of iron. It proved a success. I saw that it would never do to depend further upon wooden bridges." And so again, direct opposite response that his father would have, he's like, "Wait a minute, I have a front row seat at this because I'm working with the Pennsylvania Railroad. They're replacing, like, they had all this problem with wooden bridges. They figured out a way to build railroad bridges with iron. It was so superior, I realized right then and there, no one's going to build wooden bridges anymore. This is going to be the future.

• 39:44David Senra?

  I should start a bridge-building company, building bridges out of iron." And so he says, "I would organize a company to build iron bridges. I asked my friend, Mr. Scott, that's his mentor, of the Pennsylvania Railroad, to go in with us in the venture, which he did. Each of us paid for one-fifth interest at a cost of $1,250. Looking back at it now, the sum seemed very small, but tall oaks from little acorns grow." And so this goes back to this idea that you and I talk about all the time. You're not supposed to copy the what, you copy the how. He spots the opportunity for iron bridges while working with the Pennsylvania Railroad, right? Jay Gould spotted the opportunity for telegraph, to building telegraph companies during his work on the railroads. Peter Thiel spotted the opportunity for Palantir based on solving payment fraud at PayPal.

• 40:28David Senra?

  Keep your eyes open. You never know when these insights that you just happen to have noticed are going to turn into giant companies. And so he goes into one of his main lessons that he learned from his bridge-building business, that the surest foundation of a business is on the quality of its product. The Keystone Bridge Works has always been a source of satisfaction to me. Almost every concern that had undertaken to erect iron bridges in America had failed. Many of the structures themselves had fallen and some of the worst railway disasters in America had been caused in that way. Some of the bridges had given way under wind pressure, but nothing has ever happened to a Keystone Bridge. And so he says, "There's been no luck about this. We only use, we only use the best material and enough of it, making our own, our own iron and later our own steel."

• 41:09David Senra?

  I'm going to interrupt that, um, that paragraph, something that's a main theme of Carnegie. You've seen this now in his career, where we are in his career now, it's going to be even more pronounced later in his career. He prioritized vertical integration to make sure that he controlled companies of all aspects of his steel business. We see that doing the same thing in his, beginning to do the same thing in his bridge building business. He wanted control. If you were supplying, if you're a company supplying something, a business process that Carnegie needed, he's going to find a way to buy, to either buy your business or take you over or partner with you so he can control the process. That's how he winds up partnering with Henry Clay Frick, maybe a decade, maybe a decade and a half from where we're at the start. So back to this paragraph. "We were our own severest inspectors and we would build a safe structure or none at all.

• 41:53David Senra?

  When asked to build a bridge which we knew to be insufficient, of insufficient strength or unscientific design, we absolutely declined." And he says, "This policy is a true secret of success. Uphill work, it will be." And it's through the bridge building company, he decides, "Hey, I gotta manufacture my own iron." And this is where he realizes, "Oh, your mediocrity is my opportunity." As it became, he's essentially introducing cost accounting to manufacturing. "Gentlemen, watch your cost," is something that, I think that might be Frick. I can't remember, either Carnegie or Frick would repeat that over and over again. "Watch your cost, gentlemen, watch your cost, watch your cost, watch your cost." "As I became acquainted with the manufacture of iron, I was greatly surprised to find that the cost of each of the various processes was unknown. It was a lump business. And until stock was taken and the books balanced at the end of the year, the manufacturers were in total ignorance of results.

• 42:37David Senra?

  I heard of men who thought their business at the end of the year would show a loss and had, and had found a profit and vice versa. I felt as if we were moles burrowing in the dark. And to me, this was intolerable. I insisted upon such a system of weighing and accounting being introduced throughout our works as would enable us to know what our cost was for each process and especially what each man who was working for them was doing, who saved material, who wasted it, and who produced the best results." And he says, "He ran into a human nature they want to change. Every single manager in the mills was against his new system." And he said it took years before he was able to actually install an accurate system. But this was the end result. Eventually, we began to know not only what every department was doing,

• 43:20David Senra?

  but what each one of the many men working at the furnaces were doing, and thus to compare one with another. One of the chief sources of success in manufacturing is the introduction and strict maintenance of a perfect system of accounting. That's a main theme. How many times have you repeated this in the books before? So that responsibility for money and materials can be brought home to every man. Owners, who in the office would not trust a clerk with $5 without having a check upon him, were supplying tons of material daily to men in the mills without exacting an account of their stewardship by weighing what each returned in the finished form. And this is the part that jumped out. I've never forgotten the idea that you need to invest in technology, the savings compound. It gives you an advantage over slower-moving competitors and can be a difference between a profit and a loss.

• 44:04David Senra?

  The exact opposite approach that his father took and the older heads of Pittsburgh manufacturers would make fun of him because he's investing in all these new machines. Technology is just a better way to do something, right? I well remember the criticisms made by the older heads among the Pittsburgh manufacturers about the extravagant expenditures we were making upon these new-fangled furnaces. But in the heating of great masses of material, almost half the waste could sometimes be saved by using the new furnaces. The expenditure would have been justified even if it had been doubled. Yet it was many years before we were followed in this new departure. And by the time they copy him, it's too late, right? And in some of those years, the margin of profit was so small that most of what was made up, most of the profit was made from the savings derived from the adoption of the improved furnaces.

• 44:50David Senra?

  Our strict, and this is how it all relates together, our strict system of accounting enabled us to detect the great waste possible in heating large masses of iron. Andrew is famous for his dedication to the idea that put all your eggs in one basket and watch that basket. He also understood how valuable your attention is, that the fact is, the most expensive way to pay for anything is with time. And so he knows, he's like, I found what I want to do in life, and so I'm only going to focus on that. And so he took this to the extreme where he's like, I'm even going to sell off any stocks I have of outside of my business because I don't want any of my mental processing power directed at anything other than my steel company, which this wound up being a genius-level move, most of which, most people just do the exact opposite, especially in today's modern age. They're completely distracted,

• 45:35David Senra?

  where all your attention should go into your business. They included some stocks and securities that were quoted on the New York Stock Exchange. And I found that when I opened my paper in the morning, I was tempted to look first at the quotations of the stock market. When you wake up in the morning, what Andrew's telling us, you should be focused on your business and improving that, not on your investments. As I determined to sell my interest in every outside business and concentrate my attention upon my manufacturing, I further resolved not to even own any stocks. And he's saying, this was such a good idea for me, for my career. Most people don't do it, and this is why he feels is a good idea. Such a course should be commended itself to every man in the manufacturing business and to all professional men. For the manufacturing man especially, his mind must be kept calm and free if he's decide wisely the problems

• 46:18David Senra?

  which are continually coming before him. This is something that Jeff Bezos talked about last week. Nothing tells in the long run like good judgment. And no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the stock market. His mind is upon the stocks and not upon the points that require calm thought. And so he picks up the same idea later on, quotes that quote I just said. He said, I had become interested in, you know, building railroads in the Western States. That seemed like a giant opportunity, but he realized the greatest opportunity. He, first of all, can't do multiple things, right? So he's like, the greatest opportunity is in steel. I gotta get out of everything. And so he says, I gradually drew from all such enterprises and made up my mind to put all of one's eggs in one basket.

• 47:01David Senra?

  I determined that the proper policy was to put all good eggs in one basket and watch that basket. I believe that the true road of preeminent success in any line is to make yourself master in that lot. I have no faith in the policy of scattering one's resources. And in my experience, I have rarely, if ever, met a man who achieved preeminence in money-making who was interested in many concerns. So he's saying, the wealth is built from one great business. The men who have succeeded are men who have chosen one line and stuck to it. It is surprising how few men appreciate the enormous dividends derivable from investment in their own business. And yet, most businessmen whom I have known invest in bank shares and faraway enterprises, while the true gold mine lies right in their own factories.

• 47:44David Senra?

  My advice to young men would be not only to concentrate their whole time and attention on the, on the one business in life in which they engage, but to put every dollar of their capital into it. As for myself, my decision was taken early. I would concentrate upon the manufacture of iron and steel and be a master in that.

• 48:05David Senra?

  So the method they're using to produce steel is relatively new technology. There's way more unknown unknowns than there are known knowns. And so they have the idea, Carnegie and his partners have the idea, it's like, hey, what if we hire somebody, not just manufacturers, but actually chemists? Because Carnegie suspected there was still a ton of waste in the process. And he made this decision and all his competitors actually thought he was just being extravagant. Like he was just a ridiculous expenditure. And Carnegie had a secret for a while, because he was the only one doing this, that chemists actually make the difference between waste and profit. He says, what fools we had been. But then there was this consolation. We were not as great as fools as our competitors. It was years after we had taken chemistry to guide us, that it was said by the proprietors of some other furnaces, that they could not afford to employ a chemist.

• 48:50David Senra?

  Had they known the truth, they would have known that they could not afford to be without one. Looking back, it seems pardonable to record, "We were the first to employ a chemist at blast furnaces, something our competitors pronounced extravagant." And so he says, "The Lucy furnace became the most profitable branch of our business, because we had almost the entire monopoly of scientific management." Then, as a result of being profitable, where our competitors are losing, you can actually expand faster. Having discovered the secret, it was not long before we decided to erect an additional furnace. And so he makes the point from the very beginning, repeated throughout the book, you should really embrace technology. You should be jumping to what you feel is the superior method, not waiting for competitors to say it's superior method, but using your own judgment.

• 49:34David Senra?

  Talks about the idea, it's like, hey, everybody's using iron. We used iron in our bridge works, but it was very clear that steel was superior. And he says, "King iron was about to be deposed by the new king steel." And it's because of the work that they were doing on bridges, that they said this rapid substitution of steel for iron became very obvious to them. A few pages later, it says, "Steel had ascended the throne and was driving away all other inferior material." So he gets in early, vertically integrates, watches costs more than anybody else, and continually reinvests in technology. And the result is, our profits had reached $40 million per year. And the prospect of increased earnings before us was amazing. Our successors, when he sold to the United States Steel Corporation soon after, our purchase netted 60 million in one year.

• 50:19David Senra?

  There's a great story in, if you've ever read The House of Morgan, the biography of the Morgan family dynasty. I covered it all the way back on Founder's Number 139. But there's a hilarious story in that book where after Morgan pays 480 million for Andrew's company, it says Andrew Carnegie celebrated too quickly. He later admitted to Morgan that he sold out too cheap by 100 million. Morgan replied, "Very likely Andrew." And after that, he goes into philanthropy, writes The Gospel of Wealth. And then most of the book is actually, I would just skip over most of the book because it has to do with politics. And then it's a weird autobiography because it just ends. He was supposed to continue writing and then he never did. So the end of the book, it says, he ends on a great line, says, "Nothing is impossible to genius." Here, the manuscript ends abruptly. And so that is where I'll leave it.

• 51:03David Senra?

  I'll leave a link below if you want to buy the book. You can read the full story. You can also get it for free online if you want to as well. But my personal recommendation, if you want to learn more about Andrew Carnegie, I think the narrative structure in the book, Meet You in Hell, Andrew Carnegie, Henry Clay Frick and the Bitter Partnership to Change America is absolutely fantastic. You might find it interesting that the same author of Meet You in Hell is also the author of the biography of Henry Flagler that I read for episode 247. Both of those books are very fascinating. Both, Meet You in Hell is about two very formidable individuals. Henry Flagler, biography of Henry Flagler, one of, you know, history's most formidable individuals. No way you could be the partner of John D. Rockefeller and not be a formidable individual. And like I said earlier, I will reread that. I already have like the next 12, so that's what, like three months of books planned out.

• 51:48David Senra?

  It's unbelievable, the quality of founders that you and I are about to study. But I will include the Meet You in Hell book in there because I think it's absolutely fantastic. So that is 283 books down, 1,000 to go, and I'll talk to you again soon.