Standard Oil Part II (Extended Cut)

We bring the epic saga of Standard Oil and John D. Rockefeller to a close (for now) with two of history's greatest second acts: Rockefeller's pioneering of modern philanthropy (and really modern life itself), and perhaps the single greatest shareholder value "unlock" of all-time in the breakup of Standard Oil. And like any great American saga, of course the good guys win in the end. The only question is... just who were the good guys?? *Links:* - Titan by Ron Chernow: https://www.amazon.com/gp/product/1400077303/ - Episode sources: https://www.acquired.fm/episodes/standard-oil-part-ii#sources *Carve Outs:* - The to-be-announced (as of recording) M1X MacBook Pro... - Starfish Space: https://www.starfishspace.com/ - Peloton: https://www.onepeloton.com/ *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

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

• 0:00Ben Gilbert?

  Dude, this is gonna especially kill you as someone that travels even for like two and three day trips just with a backpack.

• 0:07David Rosenthal?

  Oh, it's so gonna kill me.

• 0:09Ben Gilbert?

  Like, you're never traveling that way again.

• 0:11David Rosenthal?

  I know.

• 0:11Ben Gilbert?

  You're checking like car seats and backpacks and I'll see you at baggage claim, my friend.

• 0:18David Rosenthal?

  Oh, my God.

• 0:37Ben Gilbert?

  Welcome to season nine, episode five of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

• 0:51David Rosenthal?

  And I'm David Rosenthal and I'm an angel investor based in San Francisco.

• 0:57Ben Gilbert?

  And we are your hosts. When we last left our hero, villain, unclear, we saw John D. Rockefeller

• 1:07Ben Gilbert?

  supporting the Sherman Antitrust Act as a piece of dead-on-the-vine legislation with really nothing to fear from it. Today, we will cover Standard Oil from 1890 through their, spoiler alert, breakup in 1911.

• 1:22David Rosenthal?

  Ben, you're ruining the punchline.

• 1:25Ben Gilbert?

  We're gonna cover Rockefeller's legacy and philanthropy and how today's world is a Rockefeller-shaped one in more ways than one. We will also debate the fighter points of where Standard Oil crossed the line between using legitimate business practices like operational efficiency and economies of scale into straight-up abuses of power to grow their massive, massive profits.

• 1:50David Rosenthal?

  You mean like bribing elected officials?

• 1:52Ben Gilbert?

  David, I, look, I don't want to spoil anything here, I guess, other than the breakup.

• 1:58Ben Gilbert?

  Well, listeners, we want to say thank you.

• 2:02David Rosenthal?

  Yeah, we have had a pretty crazy month here at Acquired. Starting with the TSMC episode, we have just been on, I don't know what it is. Y'all like semiconductors, but the show has been growing hugely. So much good stuff is going on. We were talking beforehand, like, we really do want to keep our intros shorter and just start getting right into the stories.

• 2:23Ben Gilbert?

  And in particular, thank you to our old listeners for spreading the gospel. We've really enjoyed the slow, methodical, linear growth. I think it's helped us hone the product of Acquired. But of course, like, an explosive growth spurt is always a fun thing. So thank you to those of you for spreading the word over the years and welcome to all the new folks.

• 2:43David Rosenthal?

  And then two unrelated to the episode, but special little fun thing to talk about. We are about to have a new addition to the acquired family.

• 2:53Ben Gilbert?

  Yeah, not an on-air addition, though.

• 2:55David Rosenthal?

  No, not on air. This is so crazy. By the time y'all hear this, Jenny and I will have had a little baby girl that we are expecting any day now. Honestly, it was like coming down to the wire of recording this is very nerve wracking.

• 3:09Ben Gilbert?

  This was almost a serious cliffhanger where we just did part one and then David disappeared.

• 3:14David Rosenthal?

  A bunch of my friends were asking me like, hey, like, so excited for you and, you know, the baby and all that. But you're going to get recording for part two in before the baby comes.

• 3:23Ben Gilbert?

  Well, David, congratulations. So excited for you and Jenny.

• 3:27David Rosenthal?

  Yeah, we can't wait.

• 3:29Ben Gilbert?

  All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF. Then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 3:48David Rosenthal?

  Yep, your risk surface changes every week now. A vendor turns on an AI feature or someone writes in a new model without telling IT. And your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote unquote shadow AI running with no security review. You at all.

• 4:09Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes and cuts the time that you'd spend on vendor assessments in half.

• 4:31David Rosenthal?

  In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor and Snowflake all stay audit ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 4:49Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance and the work to earn and prove trust. We're huge fans of Vanta over here and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V A N T A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you. Well, David, this one, we're going to cover some companies that are newer. So we actually need to say, this is not investment advice. This is for entertainment and educational purposes. We may hold some of the companies that we're talking about, but they're pretty old companies and they're super merged together at this point.

• 5:34David Rosenthal?

  All right. So last we left our plucky anti-heroes. Ben, as you said, the Sherman Antitrust Act had just passed. Everybody's having a good laugh about it. The political money is still flowing around like hotcakes or fine wine, which of course Rockefeller didn't drink.

• 5:54Ben Gilbert?

  And what was the language that made everyone feel like the legislation was DOA?

• 5:59David Rosenthal?

  Yes, the key modifying clause in the Sherman Antitrust Act was in restraint of trade. So everything, all combinations were outlawed if they were, quote, in restraint of trade.

• 6:12Ben Gilbert?

  Which was not defined.

• 6:13David Rosenthal?

  Nobody knows what that means. It's like Will Ferrell, like.

• 6:16Ben Gilbert?

  It's provocative.

• 6:17David Rosenthal?

  Gets the people going.

• 6:20David Rosenthal?

  Uh, okay. So speaking of going, Standard Oil is going. You know, we said this at the end of part one, like they've won. They've like won capitalism. They've won like America.

• 6:31Ben Gilbert?

  90% market share. The whole kerosene market 90% belongs to them.

• 6:35David Rosenthal?

  It's game over, but we did kind of hand wave over a bunch of stuff at the end of last time. One, there was some trouble brewing back in the home front, back in the state of Ohio. We're going to cover that. And then the big thing that we really just spent like 15 seconds on last time was the whole, you know, like, oh yeah, JD retires. What was going on with that? Why does he just walk away and ride off into the sunset?

• 6:58Ben Gilbert?

  Cause he stayed titularly. His name was still on the door.

• 7:03David Rosenthal?

  Oh, yeah.

• 7:04Ben Gilbert?

  And I think he actually did want to walk away, right?

• 7:07David Rosenthal?

  Oh, he did.

• 7:08Ben Gilbert?

  But they thought it would be like bad for the shareholders.

• 7:12David Rosenthal?

  Maybe, maybe we'll see. All right. So first, let's cover the trouble on the home front back in Ohio. So right as the Sherman Act was passing, state legislature members in Ohio, remember they're like, they're pretty pissed at Rockefeller and Standard Oil. And like this goes all the way back to the Cleveland massacre. He has a lot of enemies back home. So the state attorney general, guy named David Watson, he decides that he's going to bring a case. I don't think it was actually an antitrust case, but he argues that it's not. The case is that Standard Oil is in violation of the state corporation laws

• 7:52David Rosenthal?

  in that they are a Ohio corporation, but they are conducting illegal interstate commerce is what they allege. Standard Oil created this trust structure that was so brilliant, but this suit is like, hey, this is just a sham and a front. You didn't really transfer any assets here and you're actually breaking our laws. So it takes a couple of years, but by 1892, the case reaches the Ohio Supreme Court, the state Supreme Court, which rules against Standard Oil, which means that the trust has to be dissolved. This is the letter of what this means. This Ohio ruling is like game over.

• 8:35David Rosenthal?

  But obviously that's not what happened. So how do they get around this? This seems like a pretty big problem. Well, it turns out our Standard Oil friends have an escape plan that they've already hatched that they have in their back pocket just for this very occasion. So Standard Oil lawyers had figured out that in the state of New Jersey, now they have operations, Standard Oil has operations in New Jersey, but there's no Rockefeller and crew. They're at 26 Broadway in New York. You know, it started in Ohio. There's no real reason why headquarters, you know, they don't have any special attachment to New Jersey.

• 9:14David Rosenthal?

  But in New Jersey, there actually is a loophole in state corporate law at the time that did allow New Jersey corporations to straight up hold stock in other out of state corporations. No even need for a trust structure. What Ohio is suing them for, New Jersey just allows.

• 9:37Ben Gilbert?

  That was the reason why they needed the trust structure in the first place is because Standard Oil of Ohio couldn't own any other Standard Oil companies that are operating in any other states and they couldn't have operations in other states. So it was like, it's just this crazy remnant of the fact that we are the United States and

• 9:57David Rosenthal?

  Yep.

• 9:57Ben Gilbert?

  every single state to date had basically said, if you have a charter to operate a corporation in our state, that's all the business you can do. Your total addressable market is our state.

• 10:07David Rosenthal?

  So they've got this loophole in New Jersey. What do they do? Boom. They just reorganized the whole thing and they transfer all the assets into the new Standard Oil of New Jersey. Or again, at least they make a public show of this. They tell the courts, they tell everybody like, oh, yeah, yeah, yeah. This is what we're doing. You know, whether they actually do this or not, maybe see a little later in the episode. Doesn't matter, though. Problem solved. So as turnout writes in Titan, quote, "The 1892 overhaul was mostly shadow play, a charade to appease the courts. The executive committee at 26 Broadway, of course, the Rockefeller and all the Flagler

• 10:48David Rosenthal?

  and all the cronies, was formally dissolved, but the members lost only their titles and were soon converted by the nicest legal cunning into the presidents of 20 affiliated companies. In standard parlance, these men were now, quote, 'the gentleman upstairs,' or alternatively, quote, 'the gentleman in room 1400.' Nobody had to switch seats at the lunch table, and Rockefeller and his coterie ruled as absolutely as before."

• 11:18Ben Gilbert?

  Fascinating. And so you've got this Standard Oil of New Jersey that by the letter of the law owns wholly or near wholly all these other, at this point, 20-some companies that are operating in all these other states. And so the way that that sort of structurally looked is all the people who were the trustees of the Standard Oil Trust are now the presidents of all those companies, and they're working remotely from Manhattan.

• 11:43David Rosenthal?

  They were ahead of the curve. So this is great for Standard Oil. And this goes on for a while, but slowly, but then noticeably, over the years, everybody starts to notice something's a little different about Rockefeller. He's always been like aloof, you know, famously during meetings, he would lie down on a chaise lounge and have his eyes closed, and people would think he's asleep, but then he would jump in.

• 12:08Ben Gilbert?

  Oh, these are like Standard Oil board meetings.

• 12:10David Rosenthal?

  Yeah, yeah, exactly. But he's actually listening like intently to everything. Like, he's always been a little weird, you know, in how he operates, but super laser focused and engaged in the business. And he kind of starts like drifting away slowly, and he seems weird. He starts not coming into the office every day. I think first he stops coming in on Saturdays, and then he like takes longer time off. He starts missing the sacred executive committee or gentleman upstairs lunch meetings. And there really are two things happening to Rockefeller at this time. One is sort of like short-term good, but long-term bad. And the other one is short-term bad, but long-term good. So he kind of doesn't have anything left to prove at this point.

• 12:55David Rosenthal?

  He's outwitted everybody. Of course, we talked about the Jay-Z Rockefeller connection last time, but it's like the Black Album with Jay-Z where he's like, "I'm retiring. I'm done." Literally, what more can I say here? Chernow writes, quote, "In explaining his retirement," which this would lead to, "the Rockefeller literature has always stressed his health and the heavy burden of his charities, though another factor contributed as well. He had perfected the gleaming machinery of Standard Oil and his appointed task done." Remember, he felt like this was his divine duty from God. "He felt he should pass the reins on to younger men." As Gates, who we'll talk about in a minute, put it, "The business,

• 13:35David Rosenthal?

  quote, "had ceased to amuse him. It lacked the freshness and variety and had become merely irksome, and he withdrew."

• 13:44Ben Gilbert?

  So what you're saying is Rockefeller is really only like a zero to one guy and maybe like a one to 10 guy and kind of like a 10 to 100 guy, but maybe not 100 to 1,000 guy. Or perhaps, I mean, he's already at scale. So it's most like, he's not really a 1,000 to 1,100 guy.

• 13:58David Rosenthal?

  I think this might be part of what you're seeing with all these big tech CEOs now. It's like, "Bazinga. What more can I do here, guys?"

• 14:05Ben Gilbert?

  Yeah. And you know, the public sentiment has to be weighing on Rockefeller too, where he's like, "Look, I believe in my heart of hearts that what I've done here is virtuous. I truly believe this is my calling and what God wants me to do. I do believe that I've brought light to the world in a reliable, cheap way. I believe that I've provided 100,000 jobs, good jobs for people, and everyone hates me." I don't think he was necessarily overly concerned with other people's view of him. Like, he was not a externally motivated man, but that has to grate on you over time where you're, you know, working your ass off and you believe you're in the right, at least the vast majority of the time. And yet-

• 14:46Ben Gilbert?

  The world is either espousing incredible hatred toward you or begging you for your money constantly.

• 14:54David Rosenthal?

  I mean, yeah, he's just like, it's just kind of not fun anymore. So he wants, we've alluded to this. He wants, and he tries to fully actually resign from the company. He talks to John Archbold, who he wants to take over and says like, you know, look, my heart's not in it anymore. I'm ready to go have another chapter in my life. But Archbold and some of the other executives, they're like, well, your name on the, like, it really matters. Like, I think it would be bad for the troops. And we've just had these, you know, brushes with the government. I think it really would help things if it just in title only, you stay involved, you remain the president titularly of Standard Oil.

• 15:40Ben Gilbert?

  And of course, that means you remain an officer of the company and all the liability that comes with that. And just keep the title, man.

• 15:46David Rosenthal?

  Yeah, it's really to honor you.

• 15:50David Rosenthal?

  Oh, man, these, I was gonna save this little quip for later, but I'll use it now of, you swim with the sharks, you sleep with the fishes. Archbold and Flagler and all these guys, they were something. So this was a very, very bad move for Rockefeller and a freaking great move for all of the other execs, especially Archbold at Standard Oil. Okay, so you said charity and like everybody asking John D for his money. So this is the other piece of it that long-term becomes just one of the greatest things to ever happen to America and the world, I think. But he's really, really struggling with what to do with his wealth.

• 16:32David Rosenthal?

  And in particular, all these causes, you know, remember, he wants to do great works. He feels called by God to, wants to make the money to then do great works with the money.

• 16:41Ben Gilbert?

  And he's been donating all along the way, kind of in these smaller chunks, but to everyone at church on Sundays, to the church to maintain it. I mean, he's been charitable thus far.

• 16:51David Rosenthal?

  Yep, and it's kind of trained. People around him who he gives to, organizations who he gives to, and now the general public who knows about this, that, oh, hey, you can just ask John D. for money, and he might give you money. And he's super stressed out about this. Like, I wouldn't find that very stressful if just constantly all day. And he's getting thousands of letters a week, just asking for money.

• 17:15Ben Gilbert?

  He's not into the like, cool billionaire stuff ideas. He wants to donate. And so he's finding it incredibly challenging that what he wants to do is find high return on society ways to give this money away that align with his beliefs. So he's, you know, looking for either good Christian values, ways to give it away, or at least not anything that's antithetical to his beliefs. The last thing that he wants to do is say, ah, there's too much inbound, I'm just going to ignore it. This is his mission in life, is to answer these pleas.

• 17:49David Rosenthal?

  Yeah, Chernow found this great quote from him, and I don't know if it was something he said to somebody or in his papers or not, but I think this really says a lot about what he was, how he was feeling. So this is directly from Rockefeller, about this time. "I investigated and worked myself almost to a nervous breakdown in groping my way without sufficient guide or chart through the ever widening field of philanthropic endeavor. It was forced upon me to organize and plan this department upon as distinct lines of progress as our other business affairs."

• 18:21Ben Gilbert?

  Well, important to note here is, the notion of philanthropic organization does not yet exist in America. There's no Gates Foundation. There's no playbook for like, I'm going to start a 501(c)(3) and employ people that work at this nonprofit that will figure out how to give the money away. It's kind of random and scattershot the way that everyone donates. And so there's not a playbook of like, cool, I'll spin up this organization to give away my wealth.

• 18:46David Rosenthal?

  Yep. And he's doing it all himself. It's all on his shoulders. Folks might know who either were familiar before or have gone and looked up John D. on the internet since our part one. His appearance radically changes during this time. So he was, you know, kind of like Devil Bill. He had a lot of Devil Bill in him. Like a big guy. You know, he's very like, his personality is understated, but like, he was, you know, a presence. He starts shriveling up, he's losing weight, he gets, um...

• 19:14Ben Gilbert?

  Alopecia, he loses his hair.

• 19:16David Rosenthal?

  All of his hair on his entire body, not just like his head, his eyebrows, his mustache. He always had a big bushy mustache, the rest of his body, for the whole rest of his life. His hair is gone and it's all just because of this stress that's weighing on him.

• 19:29Ben Gilbert?

  And frankly, the incredible amount of work that he had done. Standard Oil had some trying times, but he's not new to stress.

• 19:37David Rosenthal?

  Yep. This is really my interpretation here. You know, some I think comes from turnout, but um, he loved every minute of Standard Oil. I think if it were just Standard Oil, I don't think any of this would have happened. I really think the weight of this wealth and this philanthropy was like this albatross just like hanging around his neck.

• 19:57Ben Gilbert?

  And let me give a quick scope for a moment. When you say the weight of his wealth, let's talk about his wealth so far at this point in time and that we can check in later and update the numbers. So in 1890, he was generating $10 million in annual income just from Standard Oil dividends, from a variety of sources. Inflation adjusted, it's like 30x today.

• 20:20David Rosenthal?

  Yeah, it's just insane.

• 20:22Ben Gilbert?

  The other thing to think about is this is before the federal government enacted the income tax. So this is 10 million post-tax dollars.

• 20:31David Rosenthal?

  Not even post-tax, there's the concept of tax.

• 20:33Ben Gilbert?

  Well, but it's like the notion of a post-tax dollar today.

• 20:35David Rosenthal?

  Yeah, it's just straight money.

• 20:37Ben Gilbert?

  He really just has this self-perpetuating wealth because he owns 257,000 of the 973,000 shares of Standard Oil. So he owns a quarter of Standard Oil and he's generating these dividends. At this point in time, I think Rockefeller was trying to keep it pretty modest, these like 11% annual dividends, but he himself was receiving 3 million in these annual dividends. He had $24 million invested outside of Standard Oil and things like railroads and real estate and steamships and like a dozen of each of these types of companies. He was invested in banks, Chase Manhattan, he had a very close relationship there and put a lot of money in there.

• 21:21Ben Gilbert?

  I think by the time he actually retires, he's worth about $200 million.

• 21:27David Rosenthal?

  Yeah, gosh, I think this happened after he retired. In a roundabout way, he ends up owning a significant iron mining and/or deposit operation that ends up getting rolled up into US Steel when JP Morgan rolls up US Steel. JP Morgan, not the bank, the person rolls up US Steel.

• 21:47Ben Gilbert?

  Which is of course Carnegie Steel that he's rolling up into.

• 21:51David Rosenthal?

  Yep, exactly. And he makes 80 million on that transaction.

• 21:58Ben Gilbert?

  80 of his $200 million of wealth come from this US Steel roll up that he was fortunate enough to have made an investment in this iron company. It's just wild. So he's got, at this point, of course, owning a quarter of Standard Oil, generating 10 million a year in annual income, got all these investments across all these industries. And then boom, US Steel happens to him too.

• 22:19David Rosenthal?

  Man, strength leads to strength.

• 22:21Ben Gilbert?

  For sure.

• 22:22David Rosenthal?

  I guess it applies to people too, not just institutions.

• 22:25Ben Gilbert?

  And one last comment on this Rockefeller wealth. You know, I mentioned that we're still in sort of this 1890 to 1892 timeframe, but I mentioned that point when he's worth 200 million in 1902. The GDP of the United States at that point was $24 billion. So even at that point, there's still a decade before Standard Oil gets broken up and he owns a quarter of it. He already has 1% of the US's GDP as his personal net worth. Already the richest person that will ever exist in America, including Bezos, all these people.

• 23:04David Rosenthal?

  Yeah, well, it'll be interesting to see how things play out in the coming years. But yeah, crazy. So he's got all this weighing on him. He's trying to be the best, the greatest of all time, trying to be the GOAT, the Tom Brady, if you will, in both business and philanthropy. Finally, in 1891, he not gives up, but says like, I gotta find a different way to make this work. And he convinces a man named Frederick Gates, who he had been working with on the University of Chicago project, which we'll talk about in a sec, to come, move to New York. And help him with the philanthropic endeavors that he's undertaking. And this is so novel. This ends up creating what leads to the Rockefeller Foundation, you know,

• 23:48David Rosenthal?

  a family office, all the stuff about how we think, oh yeah, this is how it's done today. This is where it starts. He starts this whole thing. He engages. He writes a letter to Gates. He says, I am in trouble, Mr. Gates. The pressure of these appeals for gifts has become too great for endurance. I haven't the time or strength with all my heavy business responsibilities to deal with these demands properly. I am so constituted as to be unable to give away money with any satisfaction until I have made the most careful inquiry as to the worthiness of the cause. These investigations are now taking more of my time and energy than Standard Oil itself. Either I must part with the burden or stop giving entirely, and I cannot do the latter.

• 24:32Ben Gilbert?

  That sums it up right there. It's crazy to me that he's still the same old Rockefeller. He's obsessed with digging into every little detail, knowing how the money is going to be used. It's actually very similar to the Buffett comparison that we made earlier. You think about the episode that we did with, I think it was Berkshire Hathaway, part two, when he starts donating some of his money. Warren was obsessed with analyzing the return on an investment. And so when he was going to donate, he was obsessed with understanding, how can I maximize the impact of that investment? Which of course was this large burden for him. And so that's why he ended up deciding, actually, I'm just going to go give it all to the Gates Foundation and they can figure it out and then I don't have to think about it. Whereas there are no foundations yet.

• 25:13Ben Gilbert?

  So you have Rockefeller here with a similar obsession with making sure that every penny is deployed in the most optimal way. He did his whole business career. And how frustrating.

• 25:25David Rosenthal?

  Yeah. Well, and I think there's one key difference though, between Rockefeller and Buffett. I think they both have this outlook. But Buffett, I think he doesn't have a genuine like want to be involved in it. He has this outlook. This is the way it should be, but I don't have a passion to do it myself. Rockefeller has the passion to do it himself. I want to run Standard Oil and I want to do this myself, but I need help. So he brings in Gates.

• 25:53Ben Gilbert?

  They basically invent philanthropy.

• 25:55David Rosenthal?

  Yes, they do. We're gonna have so much fun on this episode still to come, but I think if there's one thing to take away from this part two, it's part one was Rockefeller and Standard Oil invented modern business. The thing to take away here is they invent philanthropy. And coming out of that is like so many cornerstones of what modern life is for all of us, or almost all of us that are listening, that we just take for granted.

• 26:21Ben Gilbert?

  Yeah. And we say invent philanthropy. They invent the sort of systematic and organizational giving away of money. They don't invent tithing. That's a biblical concept, but they really do invent modern philanthropy.

• 26:33David Rosenthal?

  Yeah. All right, so let's get into it. So the first big project, well, Ben, as you said, he had been giving all his life, even going back to his bookkeeping days. The first significant project that he and the family do is actually Spelman Seminary, what becomes Spelman College, the HBCU Women's College in Atlanta. In the early 1880s, they financed the building of that.

• 26:53Ben Gilbert?

  Cede Spelman.

• 26:54David Rosenthal?

  Spelman is the maiden name of his wife, Cede Spelman. Yeah. Pretty amazing that that was the first major project that they do.

• 27:01Ben Gilbert?

  Just to not over credit, I think they already had like a few hundred people enrolled and they were raising money locally and they just had some debts. And so Rockefeller came in and just wiped out all the debt, funded it.

• 27:12David Rosenthal?

  And then building the campus there too.

• 27:14Ben Gilbert?

  It is the first liberal arts college for black women in America. And also worth pointing out about Rockefeller's character, which I find fascinating because a lot of times you study people from this era. You know, they're a product of their time and so they have a very low opinion of people that aren't white men. And Rockefeller does have some less savory parts in reference to comments that he's made about other ethnic groups here and there. But he went from pre-Civil War, being an abolitionist, a big supporter of Lincoln, to really like carrying that through and then putting his money where his mouth is and really advocating for the rights of black people after the Civil War.

• 27:51David Rosenthal?

  Yeah.

• 27:52Ben Gilbert?

  It's almost silly to say this, but like for a rich white guy of the time, he's remarkably not racist.

• 27:59David Rosenthal?

  Yeah, so much about him is remarkably modern. Like you say, he doesn't have a perfect track record on anything. And he doesn't have a perfect track record on, you know, women and women's rights. Most glaringly, I think they, he said he had five children. One died very young, four children that survived to adulthood. The three eldest were daughters and then Junior was the youngest, one son. The daughters are like, fine, you can do stuff, whatever. But Junior, you're getting all the money and you're going to be my successor.

• 28:28Ben Gilbert?

  Very similar to the New York Times story in that respect where the money flowed through the male lineage.

• 28:33David Rosenthal?

  But as you say, remarkably striking how close to modern he was in his sensibilities. So that was Spelman, that was the first big project. And then there's the University of Chicago, which obviously is this amazing institution and achievement. I think this project is really what put him over the edge psychologically, though. This was hard. So it started in the early 1880s. There was this movement to build a true Baptist university in America. And remember Rockefeller's Baptist, you know, all the Ivy League schools started as religious or quasi-religious institutions, but they weren't Baptist. With the exception of Brown, Brown had a lot of Baptist influence. And that's where Junior, Rockefeller's son, went.

• 29:18David Rosenthal?

  But it wasn't strictly Baptist, I don't think. They wanted to build like a real Baptist university.

• 29:23Ben Gilbert?

  And the Ivy Leagues at this point in time are becoming more and more secular. The Baptist educational community is sort of worried about, uh oh, what's about to take off? Is this sort of secular education movement? And all the best and brightest are going to flock to those types of institutions.

• 29:37David Rosenthal?

  And remember, you know, what did we say the first time about the Baptists? They're evangelical, you know, it's not about the wealth per se, but they want to recruit. And so this movement is like, we want to put this university in New York City. Attract everybody, the big city, America, post-war, et cetera.

• 29:55David Rosenthal?

  JD, of course, the perfect benefactor for this. So he gets involved. It becomes a mess. A guy running the initiative, a guy named Augustus Strong, who's a Baptist minister, he ends up sort of scheming Rockefeller's oldest daughter, Bessie, ends up marrying his son. So they get like very involved, but then the project falls apart and Rockefeller withdraws his support. Awkward. It eventually does morph into trying to build this project in Chicago instead. And the idea is that, so we think Chicago's Midwest, like it was the West then, but it was the biggest city in the frontier. I think it was already the second biggest city in America at that point. Here was sort of new

• 30:40David Rosenthal?

  ground. We can build this Baptist university and then it'll be a model template and we'll build a bunch more Baptist universities all over the country.

• 30:49Ben Gilbert?

  And two more benefits too. One of which is it's really expensive to build stuff in Manhattan. And so it's a lot cheaper to get building materials out there and hire construction crews. And then of course, you have Rockefeller who really wants to do these good works because he thinks they're the right things to do, not because he thinks he's repenting for some business sins that he's done. And he's really, really afraid of anything that looks like I'm doing a charitable thing in order to curry public favor. So they don't hate me for the business. Anytime anybody would insinuate, well, this is a good way for you to make up for all the Standard Oil stuff. He would just excommunicate them. And so it

• 31:32Ben Gilbert?

  was convenient that it was in Chicago because he sort of felt like if it's in New York, then people will sort of view it as me trying to influence the public to like me. And I don't want to be seen as attempting to do that.

• 31:48David Rosenthal?

  So you're saying the opposite of what Rockefeller wants might be something like Leland Stanford University, or Vanderbilt University, or Duke University, all wonderful institutions. I went to one of them, but yeah, these are people who want their names on the building, so to speak.

• 32:07Ben Gilbert?

  For most listeners, I bet you're like, wait. Rockefeller started, founded the University of Chicago, and that is exactly what he was going for.

• 32:16David Rosenthal?

  And it wasn't just universities. Obviously, probably some of you are thinking like, well, you're talking about how Rockefeller pioneered philanthropy and all that, but you guys are missing something. There was another wealthy white dude at the time who was pretty dang philanthropic, Andrew Carnegie, of course, and they were big time rivals. You know, Carnegie did something pretty amazing. He created the American Public Library System.

• 32:43Ben Gilbert?

  Oh, I didn't know that.

• 32:44David Rosenthal?

  Yeah. You know how there's like a library in every town in America? That's Carnegie. He created those libraries and funded them.

• 32:52Ben Gilbert?

  I assume that was taxes.

• 32:55David Rosenthal?

  No.

• 32:55Ben Gilbert?

  I guess it probably is funded by taxes, like public libraries.

• 32:59David Rosenthal?

  Well, I think they're, you know, government institutions today, but they were created and sort of given to America. And he also did internationally too, created a bunch of library systems. You know, one of the reasons for sure that he did that is how do you make sure your name goes down in history? Get a plaque or a statue in front of a big building in every town in America with your name on it. That was not Rockefeller's style.

• 33:25Ben Gilbert?

  Yeah.

• 33:26David Rosenthal?

  This is at the time, sort of a nebulous concept, but he wanted what he was doing to really be like Standard Oil in that, you know, what did Standard Oil do? They had all of these different operations, you know, in different states, but also different companies. Remember, they bought up all these other companies and it wasn't that they absorbed them whole cloth. They kept operating these individual companies on their own with support from the mothership, but they were expected to be profitable, have good tight operations in a decentralized manner.

• 34:00Ben Gilbert?

  They would just have to pass a quality bar for making sure that they had good reliable product and then they would slap the Standard brand on it.

• 34:06David Rosenthal?

  Yep. And the standard brain, what was standard itself, it was about setting the standard. It was about creating, doing this sort of quote unquote, research to create the best processes that would get disseminated out to the decentralized organization. That's what he wants for philanthropy. So, once he brings Gates in, they start thinking about this and they turn their attention to the state of medicine and health in America and in the world. They do something pretty amazing. So in 1901, they decide to set up the Rockefeller Institute for Medical Research in New York City. This is amazing. They buy a farm on the east side of Manhattan,

• 34:51David Rosenthal?

  overlooking the East River in the upper 60s. Literally in the middle of Manhattan, there's this farm. And they set up this medical research institution there. And the idea is it's going to be pure, basic research. And Turner has this great quote of Rockefeller talking to his son, to Junior. He says, John, we have money, but it will have value for mankind only if we can find able men with ideas, imagination and courage to put it into productive use. Rockefeller placed the scientists at this institution, not the trustees in charge of expenditures. And this was revolutionary. This was the institute's secret formula.

• 35:35David Rosenthal?

  Gather great minds, liberate them from petty cares, and let them chase intellectual chimeras without pressure or meddling. If the founders created an atmosphere conducive to creativity, things would presumably happen. So at this little research institution, goes on to become Rockefeller University. Ben, had you heard of Rockefeller University before we did the research for this?

• 36:01Ben Gilbert?

  I hadn't, and I've been blown away by the amount of medical research that's come out of it.

• 36:06David Rosenthal?

  So a small sample, I'm just gonna like a read from Wikipedia here. If you go to the Wikipedia entry for Rockefeller University, these are the things that have come out of this. First to culture the infectious agent associated with syphilis, showed that viruses can be oncogenic, which enabled the field of tumor biology. Identified the genetic defect associated with arthritic sclerosis, the leading cause of heart attacks in the US. Development of the practice of travel vaccination, identified the phenomenon of autoimmune disease, developed virology as an independent field, developed the first peptide antibiotic.

• 36:44Ben Gilbert?

  Crazy.

• 36:45David Rosenthal?

  Showed that genes are structurally composed of DNA, discovered blood groups.

• 36:50Ben Gilbert?

  Just casual, all the blood groups that exist.

• 36:53David Rosenthal?

  Yeah. Developed methadone as treatment of heroin addiction. And devised the AIDS drug cocktail.

• 37:00Ben Gilbert?

  Whoa, really?

• 37:01David Rosenthal?

  Yes. So this institute, it wasn't until the 50s that it would become Rockefeller University. So during Rockefeller's life, he never intended to create a university with his name on it. You know, here's much later, this is a quote from Winston Churchill, talking about John Rockefeller. "When history passes its final verdict on John D. Rockefeller, it may well be that his endowment of research will be recognized as a milestone in the progress of the race."

• 37:30Ben Gilbert?

  Boom, that is a pretty ringing endorsement. Winston Churchill.

• 37:35David Rosenthal?

  Yeah, this is very far from what all these other philanthropic folks had in mind.

• 37:44Ben Gilbert?

  It was diametrically opposed to the University of Chicago project, where that was super high overhead, big deal, out of the gate, lot of pomp and circumstance. And with the Rockefeller University, or what would become that, it was almost like the lean startup.

• 38:01David Rosenthal?

  Yeah, you've never heard of it.

• 38:02Ben Gilbert?

  And they didn't make a big deal at the beginning, and they didn't build a special campus. It was very much like, let's get a bunch of really smart people, the brightest in their field together, we'll pay them good money, and we'll kind of see.

• 38:13David Rosenthal?

  Let them come here and work on what they want to work on. They go even further. So the first head of the institute who they recruited was this guy named Simon Flexner. And Flexner was a physician. Remember, we're talking about how modern Rockefeller is, and how modern Standard Oil is, and how modern this philanthropy is. Remember, his father, Bill, was a doctor, quote unquote? He was a witch doctor. That's what medicine, in the practical sense, looked like in America. You know, it was really closer to that at this time still.

• 38:46Ben Gilbert?

  I mean, at best, it was homeopathy.

• 38:48David Rosenthal?

  At best, which Rockefeller was actually sympathetic to himself for a long time. But Gates and Rockefeller and the family, they work with Flexner, and they say, You know, we've done all this research in this science. How can we change how medicine is practiced? So they go to Hopkins, they take the Johns Hopkins model, which is what we know as medical school today. Four years, post undergrad, and they spread it out. They don't go create another university to teach another medical school. They go create medical schools at all the other universities in America. Before this, other medical schools, you didn't need a college degree. There was no standardization. So they go first to the University of Chicago, then to Yale, then to Vanderbilt, then to

• 39:31David Rosenthal?

  all these other institutions, and they just give tens of millions of dollars.

• 39:36Ben Gilbert?

  So they just start medical schools?

• 39:37David Rosenthal?

  To start medical schools in the model of Johns Hopkins. And this creates, you know, modern practical medicine as we know it today. Then they go even further. So they go back to Hopkins and they say, we will fund creating a new school here attached to the medical school, a public health school. So they create the first school of public health at Hopkins, and then they go to Harvard, and they do the same thing there. And it's all behind the scenes. This is so Rockefeller and so Standard Oil.

• 40:12Ben Gilbert?

  And is this being sort of managed by Frederick Gates?

• 40:15David Rosenthal?

  Yeah. Gates and now the Rockefeller's, like Junior gets very involved in this and ultimately takes it over. But Senior and Junior and Gates, the three of them together, along with the staff that they're building, they're driving all of this.

• 40:29Ben Gilbert?

  So listeners, as you can tell by now, Standard Oil Part Two is really like Rockefeller Part Two. I mean, we're dancing in and out of Standard Oil here, but there's the scope of what the early Standard Oil money allowed the Rockefeller family to do is just unbelievable.

• 40:46David Rosenthal?

  Yep. To sort of put a bow on all of this here. So they're thinking the whole time, they're like, how do we really institutionalize this? Senior's getting older, they built up this office, this is unique. How do we make this something that's going to perpetuate indefinitely? They set up in 1913, they get a charter from the state of New York. I don't know exactly how this works. I think it was a federal charter granted in the state of New York to create the Rockefeller Foundation, which still exists to this day. They give away hundreds of millions of dollars a year to causes from medicine to education to the arts, to all sorts of things.

• 41:26Ben Gilbert?

  It's also because it's been privately held this whole time. We also don't have an exact figure of what the sum of all these different pockets of Rockefeller family wealth are worth. I mean, it's kind of astonishing that we don't, but we don't. There have been scholars who have tried to pour into this and there are estimates, but it's tough.

• 41:47David Rosenthal?

  Yeah, I think that's probably where we should leave it. Right, Ben? You know, Rockefeller, Standard Oil, he won business. He's won philanthropy. He's won like America. There's kind of nothing more to see here, right? You know, everybody lives happily ever after.

• 42:00Ben Gilbert?

  Not quite.

• 42:01David Rosenthal?

  Eh, not quite. You know, Ben, you've been on the mafia movie and content kick, you know, The Godfather and all that in your carve outs. I think it's time to bring in the one good part of Godfather, part three.

• 42:17David Rosenthal?

  Just when I thought I was out.

• 42:19Ben Gilbert?

  They pull me back in.

• 42:23David Rosenthal?

  Yeah, I think there's a little more to the story.

• 42:25Ben Gilbert?

  Yeah, you shouldn't have stayed president. Should not have left your name on the door.

• 42:29David Rosenthal?

  Here we go. The breakup of Standard Oil.

• 42:33Ben Gilbert?

  So let's review a few numbers before diving into the breakup story. So Rockefeller had sort of handed over to Archibald, you know, the day to day of running the company. That modest 11% dividend, Archibald's a pretty big shareholder. All his friends are pretty big shareholders. That ratcheted up to 31% in 1897 and then 33% in 1899. So we are cutting big dividend checks to all these shareholders.

• 43:02David Rosenthal?

  Which Rockefeller actually was not happy about, paradoxically.

• 43:06Ben Gilbert?

  No, he liked keeping it super modest, keeping the cash in the business, reinvesting it. The share price, so this is interesting. It's not a publicly traded company. And so we don't get to see the books.

• 43:18David Rosenthal?

  But shares do change hands.

• 43:20Ben Gilbert?

  But shares do change hands. And so every day in the newspaper, a share price is published at which it's kind of the reference price people are deciding to trade.

• 43:28David Rosenthal?

  It's like a direct offering.

• 43:29Ben Gilbert?

  Yes. The share price went from $176 in 1896 to then three years later, $458.

• 43:38Ben Gilbert?

  So the stock is running, as they say.

• 43:41David Rosenthal?

  It's a nice Tesla-like move there.

• 43:44Ben Gilbert?

  Yes, which not really. The stock movement that we're seeing today in meme stocks is just a totally different multiple than we're talking about here, but unbelievable three-year run from 176 to 458. You then sort of look at that dividend policy. How much of that is there in total? From 1893 to 1901, they paid out $250 million to shareholders. Keep in mind Rockefeller is making 25% of that. He's upset, but he's also making just a crap ton of money. And so the thing to sort of land on here is this is all before the automobile. This is all still the kerosene business.

• 44:27Ben Gilbert?

  And there's this seminal point right around 1898 where cars start happening. It starts working. We go from 800 cars in 1898 to then two years later, 8,000 cars. And so it's starting to happen. Standard Oil is realizing, wait a minute. We finally can use this useless gasoline product. And so even in his retirement, Rockefeller's real wealth ends up getting piled on top of his sort of paltry wealth that we talked about earlier from the mass market adoption of the internal combustion engine.

• 45:05David Rosenthal?

  Yep, yep. So right around that time when the automobile was taking off, there's two parts to the breakup story that we're going to talk about here. And they're both good for everybody. One is the breakup, which is good. Very good. And two is the automobile, which is very good. And they happened on the same parallel paths. So in 1897, right as this run-up in the auto industry is starting, and right as JD had fully tried to walk away from the business, good old state of Ohio.

• 45:45David Rosenthal?

  They bring charges again, back to the top of the show here. They're like, okay, you guys moved to New Jersey, but like still, you're still breaking our laws. We still don't like you. And so what they do is a government official gets ahold of some old trust shares and they try and go redeem the shares of the trust. They're like, oh, well, if you did what you said you were gonna do, I should be able to go get shares in Standard Oil New Jersey and then the holding company of underlying, you know, all of these other companies. And they can't actually do it. So they're like, aha, you guys, you defrauded everybody. So they bring a case. Rockefeller actually gets called to testify in this case. And he puts on this great show.

• 46:31David Rosenthal?

  He pretends to be this doddering old man who's senile and like, can't remember anything. It's amazing.

• 46:38Ben Gilbert?

  Oh, when he's on the stand, it's like he's wandering through the mist. Oh, I can't remember. Oh, it's been, uh, he goes from like, one of the sharpest, brightest people to ever live in American history to seemingly having no recollection of really how anything kinda came together.

• 46:54David Rosenthal?

  Yep. Oh, God, how did that, how did that happen? I, you know, where are those trust shares? Gosh, I don't know, Mr. Prosecutor. The state doesn't actually win the case, but it's kind of a distraction. It starts to move public opinion, which is what really counts, the court of public opinion, against Standard Oil. But they win and everybody's like, oh, okay, fine. Like, you know, we're gonna make it. Also, at the same time as this case is going on, there's a presidential election happening. It was actually when it started in 1896 was the election. And, uh, it's a really terrifying figure from Standard Oil's point of view, running for president here.

• 47:36David Rosenthal?

  William Jennings Bryan, the celebrated, the OG populist. His thing was, um, America was gonna get crucified on a cross of gold, right? That was his, uh,

• 47:47Ben Gilbert?

  Yep, populism and silver, the two things I remember from American history about him.

• 47:51David Rosenthal?

  Motherhood and apple pie.

• 47:53Ben Gilbert?

  That and he was like around forever. I was like, how is this guy still alive? He was in the American national political scene for decades and decades and decades.

• 48:02David Rosenthal?

  Hmm. Still alive. Hmm. Just a striking choice of words there. So Brian loses, of course, doesn't become president. And who does become president? The best person that Standard and all these other trusts, JP Morgan and Carnegie, everybody could imagine, William McKinley, the celebrated conservative.

• 48:20Ben Gilbert?

  Republican from Ohio.

• 48:22David Rosenthal?

  Yep. Yep. Good old boy. Standard contributed a cool quarter million dollars to his campaign. Everybody is just pumped. McKinley's campaign manager, a guy named Mark Hanna, actually went to high school with John D. Back when he was going to high school before Wild Bill pulled him out. And he's like, deep in the family with these guys. He sends a telegram when McKinley wins that literally reads, "God is in his heaven. All is right with the world."

• 48:54Ben Gilbert?

  That's a gloating telegram if I've ever seen one.

• 48:56David Rosenthal?

  Oh my God, there's fist bumping going on all over the place. McKinley is just like, literally sent from God here, from Standard's perspective. Fast forward a couple of years, though. All's good on the federal level. But we start getting some trouble with the states again. And this time it's not Ohio. This time it is right close to the new home, the actual home in New York, is in New York when the feisty new governor of New York starts making some noises about coming after the trusts, in particular, the oil trust with Standard Oil. None other than Theodore Roosevelt, the new governor of New York.

• 49:40Ben Gilbert?

  Which I didn't realize what he did before becoming president. And I didn't realize he was involved in bringing this suit against Standard Oil.

• 49:47David Rosenthal?

  Ooh, he was, he was very involved.

• 49:51Ben Gilbert?

  If Rockefeller was bad, there's a chance Theodore Roosevelt was better.

• 49:56David Rosenthal?

  Oh, he was the ultimate badass. Once again, Andy Sparks on Twitter, the best, reminded me that Theodore Roosevelt, literally like all the glee that we had in part one for Rockefeller and Standard Oil and Flagler and mafia dons and everything that they're doing, could have just an equal glee on the other side when he was unsuccessfully running for president later in life. He gets shot before a speech. He literally gets shot in the chest.

• 50:23Ben Gilbert?

  Oh, that's right. And he gives the speech anyway, right?

• 50:25David Rosenthal?

  And he's on the way to deliver the speech. He's being driven. He gets shot by a botched assassination attempt. He's got a bullet in his chest. The driver starts to divert and take him to the hospital and he's like, oh, no, no, young man. I'm gonna give that speech. He goes to the venue and he sort of starts the speech and he's like, I'd like everybody to be as quiet as possible. I don't know if y'all realize that I was just shot. And he gives the speech and then he goes to the hospital. Oh, Teddy Roosevelt's the best.

• 51:01Ben Gilbert?

  There's a great David McCullough biography about him. Is it Mornings on Horseback? Is that the?

• 51:06David Rosenthal?

  Oh, I think that that might be it. That sounds familiar. I've been to his estate in Sagamore Hill, I think it is called. It's on Long Island.

• 51:14Ben Gilbert?

  Huh, cool.

• 51:15David Rosenthal?

  It's super cool. Teddy also had, you know, by modern standards, a problematic figure in his, all of his hunting and, you know, all of that.

• 51:22Ben Gilbert?

  Yeah, I was gonna say, are there pelts everywhere?

• 51:23David Rosenthal?

  My favorite is there's a trash can made of an elephant hoof.

• 51:27Ben Gilbert?

  Oh, my God.

• 51:29David Rosenthal?

  Crazy.

• 51:30Ben Gilbert?

  All right. So this is the guy that is gonna challenge John D.

• 51:34David Rosenthal?

  So Standard and the business community and Mark Hannah, they come up with a brilliant, genius solution to their new problems from Roosevelt in the state of New York. Remember, they like control the Republican Party at this point. They get Roosevelt nominated as the Vice President on the ticket for McKinley's reelection campaign in 1900.

• 51:59Ben Gilbert?

  This will get rid of him.

• 52:00David Rosenthal?

  This will get rid of him, like, send him to be VP, you know, it'll be like, great for his political career, but you're gonna get him out of New York. And everybody knows VPs do, basically, not.

• 52:10Ben Gilbert?

  Right, put him in the corner.

• 52:11David Rosenthal?

  Put him in the corner. Now, of course, McKinley wins in a landslide again, problem solved, everybody's high fiving.

• 52:17Ben Gilbert?

  What year is this?

• 52:18David Rosenthal?

  This is, you know, the fall of 1900, when the election happens, it's all great, McKinley gets re-inaugurated in 1901. And then he gets shot and he dies.

• 52:31David Rosenthal?

  Oops. Unlike Roosevelt, he does not survive.

• 52:36Ben Gilbert?

  Did the Secret Service exist yet? Are they bad at their jobs, or are they just not around yet?

• 52:40David Rosenthal?

  That's a good question. I don't know. Such a wild world. And also that this would like continue for ever, you know, not forever, but Reagan got shot, right? Like, was he the last president to actually be shot?

• 52:54Ben Gilbert?

  That's a good question. Yeah, they seem to catch him early now.

• 52:57David Rosenthal?

  Yeah, goodness. Obviously, we don't, I don't mean to make light of McKinley being shot and dying, but this is literally the worst nightmare possible.

• 53:07Ben Gilbert?

  Suddenly, public enemy number one, or private enemy number one for Standard Oil is now in the White House.

• 53:12David Rosenthal?

  Yes, now in the White House.

• 53:17David Rosenthal?

  So TR, I mean, I'm sure everybody's upset about the assassination and whatnot, but once he, you know, gets done with mourning, he's like, oh, you MFers, I've got you right where I want you now. And he's about to get some serious ammo, because right at the same time, literally the same month, that TR is inaugurated as president, September 1901.

• 53:43David Rosenthal?

  A amazing pioneering woman journalist named Ida Minerva Tarbell, who's a writer for McClure's magazine, National Magazine, which is going to be important, National Magazine, starts working on a new project that she pitches to the editor McClure, "The History of Standard Oil" as a book to come out in serial form in the magazine.

• 54:09Ben Gilbert?

  Now, one might say Ida has an axe to grind from her own past.

• 54:14David Rosenthal?

  This is the birth of investigative journalism as we know it today. Daniel Yergin, the great historian who wrote "The Prize," which so many people have recommended after Part One that we that we read. Ben, you read a little bit of it.

• 54:27Ben Gilbert?

  Yeah, I quickly realized like, oh, this is mostly about US Saudi Arabia relations, and we are so not going to get to that in Part Two.

• 54:35David Rosenthal?

  Yeah, so we'll have to cover "The Prize" and the rest of the international oil history another time. But he, celebrated historian, he calls this book, "The History of Standard Oil," quote, "Maybe the single most influential book on business ever published in the United States." Amazing. Tarbell and her colleagues at McClure's become known as the muckrakers. You know, if you've heard the term muckraking journalists, she's them. Do you know who coins the term muckrakers?

• 55:04Ben Gilbert?

  Ooh, no, I don't.

• 55:06David Rosenthal?

  Teddy Roosevelt himself.

• 55:07Ben Gilbert?

  No way.

• 55:08David Rosenthal?

  Yes. So great. He gives a speech. He talks about about how great they are. Yeah, so she was this amazing character. Now, you said she might have some agenda.

• 55:16Ben Gilbert?

  Yes, a little bit of personal history to color her point of view here.

• 55:19David Rosenthal?

  Yeah, so where is Ida from? You know, she's like this international woman. She lives in Paris for a while, but she's, you know, based in New York. She's writing for this erudite magazine. But her roots are actually somewhere sort of close to home in this story.

• 55:34Ben Gilbert?

  Kind of Western Pennsylvania area?

• 55:36David Rosenthal?

  Yeah, yeah, you know, like the wild, you know, east back in the day. Yeah, she grew up in Titusville.

• 55:42Ben Gilbert?

  And her dad was an oil refiner, right?

• 55:47David Rosenthal?

  Not only did she grow up in Titusville while the beginnings of the oil industry were happening, her dad was a producer, like a driller, who got totally flattened by Standard Oil and was one of the leaders of the rebellion against the South Improvement Company stuff and everything that was going on at that point in time.

• 56:07David Rosenthal?

  And I don't know if you knew this, not only her dad, her brother goes into the oil business and her brother becomes a senior executive at Pure Oil.

• 56:18Ben Gilbert?

  Which is the most legitimate competitor to Standard, right?

• 56:21David Rosenthal?

  I don't think we talked about this in part one. Part of the strategy was they got to like 90 ish percent market share in refined oil products coming out of the US. They didn't want to get to 100% because they wanted to keep up some charade of competition.

• 56:35Ben Gilbert?

  It's like having Bing out there in the search engines.

• 56:37David Rosenthal?

  Exactly. Sorry Bing. So the Bing of Standard Oil was pure oil that they allowed to survive. And guess who's the senior executive there?

• 56:47Ben Gilbert?

  Ida's brother.

• 56:48David Rosenthal?

  William Walter Tarbell, Ida's brother.

• 56:51Ben Gilbert?

  By the way, I do have the actual stat that we pulled from PitchBook sent us this great tear sheet that Standard Oil controlled 91% of oil refinement in 1904 and 85% of even the final sales.

• 57:04David Rosenthal?

  Wow.

• 57:05Ben Gilbert?

  Monopoly.

• 57:09David Rosenthal?

  You said it. She's got this agenda, one might say, but she is a very serious journalist. So she spends a year just researching. She wants to find the real history. Like, nobody's uncovered how this actually went down.

• 57:23Ben Gilbert?

  Well, and she starts by going to Titusville to rekindle her roots and remember what it was like and stew up some feelings of anti Rockefeller before embarking on doing this.

• 57:34David Rosenthal?

  So Chernow writes, "From the perspective of nearly a century later, Ida Tarbell's series remains the most impressive thing ever written about Standard Oil." That is high praise. I mean, yeah, a century later, like so much ink has been spilled, but for Chernow to say, "This is the most impressive thing ever written."

• 57:52Ben Gilbert?

  I almost ordered the book, by the way, but I was like, this is going to be way too hard to read.

• 57:56David Rosenthal?

  Well, we'll just take Chernow's word for it here. I trust him. He continues, "A tour de force of reportage that dissects the trust's machinations with withering clarity. She laid down a clear chronology, provided a trenchant account of how the combine had evolved, and made the convoluted history of the oil industry comprehensible. In the dispassionate manner associated with McClure's, she sliced open America's most secretive business and showed all the hidden gears and wheels turning inside it."

• 58:29David Rosenthal?

  It remains one of the great case studies of what a single journalist armed with the facts can do against seemingly invincible powers. And this is like a freaking nuclear bomb goes off in Standard Oil and around the country. Like this captivates America. It was like the Elizabeth Holmes trial is going on and like Theranos, that was nothing compared to this.

• 58:53Ben Gilbert?

  Right. It's like that trial meets the half decade long pitchforks against Facebook and the privacy plus the anti-Amazon sentiment. Like there were no equivalent companies to Standard Oil. There were other trusts that rose up and sort of were following their business practices, but no one as big or as bad or as loathed by America as the Standard Oil Trust.

• 59:17David Rosenthal?

  It runs for 19 monthly installments. So for like almost two years. I don't have the exact numbers here, but the circulation of McClure's triples or quadruples during this time. Like it grows by hundreds of thousands of people. And remember, it's national. This is new. You know, like in the past Standard, it, you know, they didn't really care about the press, right? Because it was all like, you know, local stuff or whatever. Like we can crush all this.

• 59:43Ben Gilbert?

  So there's a delicious piece of irony in this being a national publication. We do have this unbelievable unprecedented period in the early 1900s where you have golden era of media, of magazines, of newspapers. And when you think about it, well, what's the media business model that was the winning one at the time? It was advertising. And so you got all these corporations and trusts that are making all this profit. And what they're doing is they're advertising to potential consumers in these publications who now have all these consumer eyeballs. And they're like, we gotta get really epic stories to tell. And so literally the profitability of the business model that Standard pioneered that is funding the organizations that are now coming after them.

• 1:00:29David Rosenthal?

  Oh, the parallels today are so good. I was on The Wirecutter the other day, which is fantastic. Love The Wirecutter, you know, owned by the New York Times. They have affiliate links on The Wirecutter.

• 1:00:40Ben Gilbert?

  Great acquisition.

• 1:00:41David Rosenthal?

  Great acquisition to Amazon. Amazon, Facebook, all the like, the press today is coming after these companies in many ways, you know, rightly so, although not like they don't have their own agendas too. They're taking advertising from them, too.

• 1:00:55Ben Gilbert?

  It's crazy.

• 1:00:56David Rosenthal?

  So crazy. So in the history, Tarvell uncovers and documents exactly how the Cleveland massacre went down. If you remember from part one, we read a sort of fictionalized quote of how Standard approached the independent refiners in Cleveland with, hey, you got two choices here. We can crush you or we can buy you out at a valuation that we ascribe. That quote came from

• 1:01:21Ben Gilbert?

  Oh, yeah.

• 1:01:21David Rosenthal?

  This history.

• 1:01:22Ben Gilbert?

  We wouldn't know these things. All the stuff we said in part one, we wouldn't know without Ida because the only other real account is Rockefeller talking to his official biographer, William O. Inglis.

• 1:01:34David Rosenthal?

  Which was never published during the time.

• 1:01:36Ben Gilbert?

  Right. Toward the end of his life, he only sort of breaks character once or twice. And it's really not that interesting or not that spicy of a story. And still, he says, you know what? Actually, there's too much here. You should just store it in the family archives. And so like, it doesn't come out and it ends up just being a source for future biographers in the future after they get the family's permission. It really is Ida Tarvell who discovered all the stuff that we've talked about.

• 1:02:02David Rosenthal?

  I mean, there's lots of big stuff that she uncovers. The fact that there were secret subsidiaries that were nominally, you know, people thought were competitors of Standard Oil, but were actually owned by Standard Oil. She finds out that they're still currently at the time engaging in illegal practices with the railroads. There's a whole thing about how they sneak papers out of, I think, the Cleveland office of Standard Oil, showing that the railroads are sending information about competitor shipments to Standard Oil offices. That comes out in the piece. So the fact that this was a national magazine, Standard and Rockefeller, when all this comes out, even though the antitrust cases are going on.

• 1:02:47David Rosenthal?

  They don't do anything. You know, their playbook, they've never been faced with something like this before. And the standard response is silence. They don't respond. They don't mount a counter campaign, even though there's a lot of stuff in Tarbell's history that's wrong, that they very legitimately could have taken issue with.

• 1:03:06Ben Gilbert?

  Yeah, that strategy works until some boiling over point. It reminds me a lot of Apple. If you think back to Antennagate is a great example where like, Apple doesn't comment on rumors one way or another, because if they say that a rumor is not true, then it means that it substantiates all the ones that they don't comment on. But then you have something like Antennagate, where it wasn't as big a deal, but it was a deal. And so Steve Jobs flies back from vacation on Hawaii with his family to hold the next, you know, same week press conference about it. There is some boiling over point where like, if you don't say something, it is way worse.

• 1:03:39David Rosenthal?

  Up to a certain point, saying something makes you look guilty. But then past a certain point, not saying something makes you look guilty. And Standard passed this point. So not saying anything made them look super freaking guilty in the eyes of the public. You know, and to be fair, they were guilty of a lot of stuff. So that's how they respond to the Tarbell piece.

• 1:04:02Ben Gilbert?

  Yep.

• 1:04:02David Rosenthal?

  Then on the Roosevelt pressure front, Roosevelt's first term goes by, and miraculously, they managed to skate by. Nothing like major happens in terms of breaking on the antitrust front, even though Roosevelt wants it to. So when he's running for election in the 1904 campaign, which would be the first sort of mandate for him from the people, Standard tries to run the same playbook they've always run. They cozy up to him. And they're like, Teddy, let's all be friends here. We've got a lot of money. You know, this is big for you. This is your first election on a national stage. You could really use our support. How

• 1:04:44David Rosenthal?

  about we make some campaign donations? And Roosevelt's campaign managers, they're like, sure, we could use the money. We'll take the money. And they do. And Standard wasn't the only trust to do this. All the other big trusts did this too. This is one of my favorite quotes in all of Titan, which is actually from Henry Frick, who was an executive at US Steel, about what happens here. Turner writes that Frick summed up the situation best after the election with, quote, "We bought the son of a bitch, but he wouldn't stay bought."

• 1:05:17David Rosenthal?

  Oh, wow.

• 1:05:18Ben Gilbert?

  And who's Frick?

• 1:05:20David Rosenthal?

  I can't remember if he was running US Steel at the point, or if he was a senior executive at US Steel, so not Standard Oil.

• 1:05:25Ben Gilbert?

  That's right. I think, yeah, he's the one that like got Rockefeller and Rockefeller Jr. On the Board of Directors of US Steel.

• 1:05:33David Rosenthal?

  Ah, yeah, I think that's right. They were all buddies.

• 1:05:37Ben Gilbert?

  Yep.

• 1:05:37David Rosenthal?

  So after the election, which Roosevelt wins in a landslide, because he's got the support of business behind him. Now he's like, all right, I've got the mandate. I'm going to make this happen. So, right after he's re inaugurated in February 1905, Congress passes a unanimous resolution urging individual states to conduct antitrust investigations into Standard Oil. And immediately, a whole bunch of states bring cases, including Missouri, which is where everything eventually ends up going down. Great state of Missouri. They subpoena JD to come and testify in front of a grand jury in this investigation. JD,

• 1:06:21David Rosenthal?

  he obviously doesn't want to do this, so he goes into hiding. He literally goes on the lam. At the same time, the state of Ohio, they go a step further. They issue a warrant for Rockefeller's arrest.

• 1:06:33Ben Gilbert?

  It's so crazy. Like, it's the world's wealthiest man. It's not like he's leaving the country or anything, but he's just trying to like, say super low key about where he is.

• 1:06:42David Rosenthal?

  He disappears, like there are process servers trying to serve him with the subpoena and the warrant for his arrest all over the country, trying to track him down.

• 1:06:49Ben Gilbert?

  They're jumping over the fence of, I think it's Patantico Hills, his residence in New York. There's some servant or something who sees this person leap over the fence and fall. And they're like, can we help you?

• 1:07:04David Rosenthal?

  So he won't even tell his family where he is. The Standard Oil executives don't know where he is. It's amazing. He just disappears for like, two years. During this time, he's sending letters with no return address, constantly to 26 Broadway, to Archbold, and to all the other directors of Standard Oil, being like, guys, I actually want to resign. He's sending his letter of resignation perpetually, every week.

• 1:07:29Ben Gilbert?

  It's crazy, because at the same time, he's building all these medical universities and medical schools that are attached to all these other colleges. And these thousands of letters are coming in, asking for money. And he's dodging the government, because they keep trying to get him in court.

• 1:07:44David Rosenthal?

  He's like a Bond villain. It's amazing.

• 1:07:46Ben Gilbert?

  It's crazy.

• 1:07:47David Rosenthal?

  It's so great. So Archbold, they refuse to let him resign. They're like, "Mmm, nah, I don't know where you are. Sorry, bud."

• 1:07:56Ben Gilbert?

  Well, and at this point, those guys are, a lot of them are sort of defending themselves and throwing Rockefeller to the bus. They're saying, "Oh, Standard Oil may have acted in this illegal way, but like I certainly didn't." You even have executives at Standard Oil talking and giving first-party accounts to Ida Tarbell.

• 1:08:15David Rosenthal?

  To Tarbell, yes.

• 1:08:16Ben Gilbert?

  To try and shield themselves.

• 1:08:17David Rosenthal?

  Exactly. So the primary guy who talked to Tarbell and did this was a executive and I think a board member named Henry Rogers. And Chernow finds this quote, I think he said this to Tarbell, this quote from Rogers says, quote, "We told him," Rockefeller, J.D., "that he had to keep the title of president. These cases against us were pending in the courts, and we told him if any of us had to go to jail, he would have to go with us." It's the freaking mafia. It's amazing. So this is it. You know, Rockefeller, he can stay on the run. He can stay on the lam as long as he wants, but like, the jig is up. This is like the end of The Sopranos where, I forget whatever the situation was, but like, Tony's getting whacked here.

• 1:09:02David Rosenthal?

  Standard Oil is getting whacked.

• 1:09:03Ben Gilbert?

  We don't know if Tony was whacked.

• 1:09:05David Rosenthal?

  Yeah, right. Okay. We don't know, but didn't the show's producers say?

• 1:09:10Ben Gilbert?

  And then they unset it.

• 1:09:11David Rosenthal?

  Oh, and then they unset it.

• 1:09:12Ben Gilbert?

  They said, "Oh, that's not exactly what I was referring to."

• 1:09:15David Rosenthal?

  Interesting, interesting. So June of 1906, Roosevelt directly directs the US Attorney, like in a secret nighttime meeting, he calls the US Attorney General into his office and he's like, "I'm directing you to open a federal antitrust investigation into Standard Oil." And then on November 18th, 1906, that suit is filed in Missouri. Federal antitrust suit against Standard Oil on the grounds.

• 1:09:49David Rosenthal?

  You know what the grounds are. They have violated the Sherman

• 1:09:54Ben Gilbert?

  Antitrust Act.

• 1:09:57David Rosenthal?

  They are in restraint of trade.

• 1:09:59Ben Gilbert?

  Which is really interesting because it was definitely true in 1890. It was true through the 1890s, but their dominance was fading at this point. In like the late 19 aughts, you were already getting into a situation where there was major foreign influence. I mean, there was lots of oil found in Russia and in the Middle East. You're starting to get discoveries in Texas.

• 1:10:23David Rosenthal?

  Yep, California.

• 1:10:25Ben Gilbert?

  And who was it that said that if there was oil found west of the Mississippi, they would drink all of it?

• 1:10:32David Rosenthal?

  I haven't heard that one.

• 1:10:33Ben Gilbert?

  There was some Standard Oil crony at one point that was so confident that there was no oil west of the Mississippi that they would drink it if anybody found any. So Standard Oil's strong suit was not Texas. And of course, the Permian Basin would become where tons of oil ended up being found.

• 1:10:49David Rosenthal?

  Yep. Texaco or what became Texaco and Gulf, I think also came out of Texas.

• 1:10:56Ben Gilbert?

  Yep.

• 1:10:56David Rosenthal?

  Yeah, the monopoly was fading anyway, which probably was the other factor that made, there are three things. One, Roosevelt bought the son of a bitch, but he didn't stay bought. Two, Tarbell and the muckrakers and public opinion.

• 1:11:11David Rosenthal?

  And three, like legitimately, they weren't that, you know, they're still the most powerful company in the world, but they weren't as powerful.

• 1:11:18Ben Gilbert?

  So I don't want to flash forward too far here, but I do know that in 1911, when the federal antitrust law.

• 1:11:26David Rosenthal?

  When things go down.

• 1:11:27Ben Gilbert?

  When things go down, which I'll just leave there for a second. Their market share had eroded to 64%. There were at least 147 other refining companies competing with it in the United States. At that point, John D. had left the company. And so you do have this really interesting sort of scenario where, I don't know, did it need to be broken up at that point? Are we chasing demons of 20 years earlier? I think we'll hold on that for now, but I think that's the thing to sort of noodle on at this point.

• 1:11:55David Rosenthal?

  A bunch of like crazy drama happens between 1906 and 1911, but it's all a sideshow. It just takes that long for all this to get to the Supreme Court and then. Judgment Day, May 15th, 1911, US Supreme Court Chief Justice Edward White reads the decision.

• 1:12:17Ben Gilbert?

  And this is like Standard Oil v. United States, right?

• 1:12:20David Rosenthal?

  Yes, this is the big one.

• 1:12:21Ben Gilbert?

  Yeah.

• 1:12:22David Rosenthal?

  And Standard in the, oh gosh, what's the circuit below the Supreme Court? Federal Court of Appeals, maybe some appellate court?

• 1:12:30Ben Gilbert?

  I'm not sure.

• 1:12:31David Rosenthal?

  I should know this as child of two lawyers and these two parents are all lawyers. They'll be yelling at me listening to this. Anyway, Standard had lost every step of the way. And then the final appeal, of course, is to the Supreme Court. The Supreme Court upholds the decision of finding against Standard Oil. They are indeed in restraint of trade and orders them. I don't know if it was the Supreme Court that ordered this remedy or if this was what had been ordered at the lower courts and they upheld it to be irrevocably. Cannot undo this, broken up into 34 separate companies. And it has to happen within the next six months.

• 1:13:14Ben Gilbert?

  It's a fast timeframe to be able to disassemble a company.

• 1:13:17David Rosenthal?

  Seriously, especially because all of the, you know, previous changes in corporate structure at Standard Oil, it may or may not have actually happened. Like they said it happened if it like, did it really happen, but this, no, like they gotta do this this time.

• 1:13:30Ben Gilbert?

  There's some tech debt. There's some legal debt to go and undo here.

• 1:13:34David Rosenthal?

  Did you read about Rockefeller's reaction when he gets the news?

• 1:13:38Ben Gilbert?

  Is this when he's on the golf course and a messenger just brings it on like a little piece of paper?

• 1:13:43David Rosenthal?

  So this is the best.

• 1:13:45Ben Gilbert?

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• 1:15:34Ben Gilbert?

  Okay, so take us back to the golf course, David.

• 1:15:37David Rosenthal?

  So Rockefeller, he had come out of hiding at this point. One of the crazy things that happened in the interim between 1906 and 1911 was Roosevelt got really pissed about this. There was a judge in Chicago that almost blew up the whole case. He subpoenaed Rockefeller and was willing to, because he wanted him to come testify and was willing to grant him criminal immunity if he came to testify. So Rockefeller was like, I'll take that deal.

• 1:16:01Ben Gilbert?

  Oh, and he couldn't be tried again for double jeopardy then? So this would have been the one?

• 1:16:05David Rosenthal?

  He couldn't be criminally prosecuted after this.

• 1:16:08Ben Gilbert?

  Huh.

• 1:16:09David Rosenthal?

  Sidebar, but this is ridiculous, what happened. So he does the whole doddering old man thing again. I don't know.

• 1:16:14Ben Gilbert?

  I've lost my way.

• 1:16:15David Rosenthal?

  What? Who are you?

• 1:16:18Ben Gilbert?

  What's oil?

• 1:16:19David Rosenthal?

  What's oil? The judge gets nothing out of him, but he's so pissed. At the end of the process, I forget what the exact case was. He levies a $29 million fine on Standard Oil, which is like by like two orders of magnitude, the highest fine ever given to a company ever at this point. That's crazy. Yeah. Is that over a billion dollars today? I don't know. It was a lot of freaking money. I mean, now like companies get fined all the time, but this was, I think it was one, if not two orders of magnitude higher of an intervention than the government had ever done in private enterprise before. So what does this do? This sends the stock market plummeting because everybody's like, oh crap, the government's going to start coming after all of these companies.

• 1:17:04David Rosenthal?

  And they already knew the government wanted to, but this is the first time it was like, oh crap, this has teeth. And so there's a panic in the stock market. Oh, does Rockefeller buy? Rockefeller, not, you know, he buys the dip. That'd be the, the easy joke to make here, but even more, he offers to bail out the freaking country because now he's come out of hiding. Oh, is this the panic of 1893? This was in like 19, gosh, I don't know, eight, 1909, sometime around then, sometime between six and 11. Got it. But there's a huge panic. Everybody's pressuring him like, hey, you're the wealthiest man in America. You know, say something when, you know, when there's a panic now and Buffett comes out and reassures everybody. Never bet against America. Yeah, it's never bet against America.

• 1:17:48David Rosenthal?

  Rockefeller does Buffett one better. He comes out and he's like, I'll backstop everything personally. So he restores confidence in everybody. Just a great irony here. That's the best sideshow of this whole thing. So at this point, he can't be tried criminally. Yeah, he's going to get off scot free for the rest of his life. By 1911, he actually had left Standard Oil. Well, so when the breakup happens in December, his resignation is, is accepted at that point in time. And then he rides off into the sunset. The great thing, we'll talk about this in a sec. He just becomes the happiest man on earth after this. He's so happy.

• 1:18:25Ben Gilbert?

  He's golfing, he's vacationing, he's becoming more of a socialite.

• 1:18:29David Rosenthal?

  All of his worries about philanthropy, that albatross is off his shoulders. He's created this institution. He's done these great things for the world. Doesn't have to worry about Standard Oil first. Literally, he's got to get out of jail card free for the rest of his life. So messenger comes, he's on the golf course on the fateful May 15th, 1911. Not a care in the world. He's golfing actually with the local Catholic priest in Tarrytown. They were buds.

• 1:18:57Ben Gilbert?

  He loved this private golf course that he owned because he could take people out and restrict them from ever talking business. And so he got to be like jovial and social exactly on his terms.

• 1:19:09David Rosenthal?

  Yeah, like he doesn't talk business anymore. He just like, after he gets the get out of jail free card, literally, he's the happiest man in the world. So they're on the golf course, he gets the messenger running up. Ah, the Supreme Court ruled against Standard Oil, it's gonna be broken up. This is how the legend goes. He gets the news, he turns to the priest smiling and he says, Father Lennon, whose name was Lennon, have you some money? And everybody in the golfing party is like, uh, geez, John, I mean, I know this is bad that Standard's gonna get broken up, but you're not gonna be bankrupt. You don't need the Catholic priest here in Tarrytown. You got some real estate assets at least that you can sell off and like, you know, support yourself in your old age here.

• 1:19:51David Rosenthal?

  Father Lennon's like, uh, well, what, why do you ask, John? Rockefeller says, because if you did, you should buy some Standard Oil stock right now.

• 1:20:05David Rosenthal?

  And he's so right. This is the great irony. This is the best, best thing that ever happened to Standard Oil's share price, not at that exact moment, of course, at that exact moment, the share price went tumbling, but in the long run, to Rockefeller, the line, and it's true, is that he made more money in retirement and after Standard Oil was broken up than he did while he was working. Turnout writes here, this was literally the luckiest stroke of Rockefeller's career. Precisely because he lost the antitrust suit, Rockefeller was converted from a mere millionaire with an estimated net worth of 300 million in 1911 into something just short of history's first billionaire. So remember, he owned a quarter of the

• 1:20:50David Rosenthal?

  Company trust, you know, whatever the thing.

• 1:20:53Ben Gilbert?

  And he basically never sold shares. He was always a buyer from other people. Anytime he had a dispute with a partner or another board member, I'll buy you out.

• 1:21:01David Rosenthal?

  And because his mafia cronies, Archbold and Flagler, I think Flagler was gone at this point, but they kept raising the dividend against his wishes. He was just getting this geyser of cash every year and that was financing all the philanthropy and whatnot. So yeah, he wasn't selling. He still owns a quarter of this dang thing. When the breakup happens, so it's broken up into 34 companies. Standard Oil of New Jersey, the main one, but then all the other, you know, operations in the various states and refining and whatnot are separated out.

• 1:21:34Ben Gilbert?

  And when they get separated out, I'm pretty sure they become publicly traded companies. And so the financials, the books get opened and people can see what ludicrously good businesses these are.

• 1:21:45David Rosenthal?

  Well, so yes, you can see what ludicrously the financials, but also not just the financials, the assets, they own all sorts of crap in these things. It's not just like the oil offer. They own God knows what. They're all these like secret assets and all these, you know, competitors and operations and upstream and downstream stuff that people thought were competitors, but really weren't.

• 1:22:07Ben Gilbert?

  Forests to build barrels and everything we talked about in the first one.

• 1:22:11David Rosenthal?

  Railroad cars, all this stuff.

• 1:22:13Ben Gilbert?

  Ability to make, take metals and turn them into pipes and plumbing operations and it's crazy.

• 1:22:18David Rosenthal?

  Yep. So December 1st, 1911, the breakup takes effect. 34 companies, they all get publicly listed. I don't know if it was on the New York Stock Exchange or whatever, but on a stock exchange, you know, for the first time. I don't think immediately, but over the next year. Standard Oil of New Jersey goes from a initial share price of $360 a share to $595 a share over your year one. Standard Oil of New York goes from 260 to 580. Standard Oil of Indiana goes from 3,500 to 9,500 a share and so on and so on.

• 1:22:57Ben Gilbert?

  Whoa, close to tripling.

• 1:22:59David Rosenthal?

  Yeah, all of these companies, literally newspapers across America, because this is like, this is just selling papers here, all this news. They start running daily box scores. I don't know if it was alongside the sports section or whatnot, keeping track of Rockefeller's net worth. So yeah, I hope that the Catholic priest had some money to go buy the dip.

• 1:23:17Ben Gilbert?

  I love that that's the stock tip, too. He's like, all right, everyone's about to know what a great business this is.

• 1:23:23David Rosenthal?

  Jesus says buy the dip. Another one of the just amazing things here. So of course, you know, we finally have to separate out these assets, you know, everybody on the executive committee that met for lunch every day, you know, the famous thing that were titularly the presidents of all the separate companies. Now they actually are, so they can't meet for lunch anymore. Got to separate out. No more lunch meetings at 26 Broadway. Instead, at JD's suggestion, you know, sort of like a voice from the golf course. He's like, how about y'all meet for coffee at 10:30 instead? So they continue meeting every day at 10:30.

• 1:23:59Ben Gilbert?

  Just giving the finger to the government.

• 1:24:00David Rosenthal?

  It's like the old line about, you know, when a European monarch dies and they say, you know, the king is dead, long live the king, or the monarch is dead, long live the monarch. Standard Oil is dead, long live Standard Oil. That is exactly what happens here.

• 1:24:15Ben Gilbert?

  And so it's interesting in thinking about why, at least in theory, why the government wanted to break up Standard Oil. It wasn't that they wanted to necessarily, again, in theory, punish the owners of Standard Oil, because that they wildly failed at. It was literally like, we want to increase competition and theoretically it will benefit consumers. But again, I really want to underscore that for the vast majority of cases, and let's take out the like weird supermarket stuff they were doing and some of the terrible things they were doing at the railroads, it really all was just a benefit to consumers.

• 1:24:50David Rosenthal?

  Yep.

• 1:24:51Ben Gilbert?

  So you ended up with consumers generally pretty happy from all this standardization over the years, competitors super pissed, and now the shareholders of Standard are all just wildly rich beyond their wildest dreams. It's actually quite interesting to think about the people that like took the deal in the Cleveland massacre. If they had held, that would have gone really well for them.

• 1:25:10David Rosenthal?

  So Chief Justice Edward White, who presided over the verdict and read the decision, he was actually like a very conservative figure and very business friendly. So he had had this sort of pet theory, and this was a chance to like write this into law. You know, remember there was the modifying clause on the Sherman Antitrust Act was in restraint of trade. And I was like, what is that?

• 1:25:33Ben Gilbert?

  Oh, so this was an ability to define what restraint of trade is.

• 1:25:36David Rosenthal?

  I think it was called like the reasonableness doctrine, or the reason, something like that, that he wanted to be like, yeah, in restraint of trade, within reason. And this is what you're talking about here. Let's be reasonable about this. It's not actually that bad for customers.

• 1:25:53Ben Gilbert?

  Yeah. So interesting.

• 1:25:55David Rosenthal?

  And Roosevelt was pissed about this because he wasn't the president anymore by the time this happened. Roosevelt and like Tarbell and the muckraking crew and all the progressives, they wanted all the Standard Oil people to go to jail. They wanted to end this practice forever. And of course, that's not what happened.

• 1:26:10Ben Gilbert?

  And they wanted to make it so other people were afraid enough that they would never try it again in the future.

• 1:26:15David Rosenthal?

  Yep. And it ended up being this very middle, not even middle ground, like very business friendly, quote unquote, conservative, final approach to it.

• 1:26:24Ben Gilbert?

  The government had a really big investment in this, where we talked about how Standard Oil is really the first modern corporation. Roosevelt sort of set the playbook for the modern billionaire. We've talked about how he invented modern philanthropy. This is also massively expanding the

• 1:26:44Ben Gilbert?

  Might of the Justice Department in a way that the US had never seen before. Cause in the 1890s, the entire Justice Department staff in Washington was 18 lawyers.

• 1:26:55David Rosenthal?

  Oh yeah, I remember reading about this.

• 1:26:57Ben Gilbert?

  In order to go after Standard Oil, they massively, massively staffed up. I assume it just never went down from there.

• 1:27:05David Rosenthal?

  So there is another reason too, why the breakup ended up being great for Standard Oil and for its shareholders. And I don't think the government was thinking about this probably at all as a consequence of the breakup, but I think does speak to, there's like a really important lesson here about the danger of too much centralization and consolidation of power in a single entity. And that is that, so we've alluded all along to the fact that it was automobile sales and the going from kerosene to gasoline that was really gonna take Standard Oil and the whole energy industry to the moon, to the next level here. That's not what Rockefeller and the cronies and all the people that were having lunch

• 1:27:49David Rosenthal?

  at 26 Broadway or coffee, that's not what they were built for. They were, that was like, you know, they weren't against it, but that wasn't their game. And as long as they were in charge and as long as Standard Oil was this singular, monolithic, you know, in practice thing, a lot of the sort of young Turks within the organization that were focused on this new market felt stifled. So the breakup allowed these people, the new blood to rise to the top. So Chernow writes, "While the old guard at 26 Broadway mourned the trust's passage, some young Turks at the operating companies were overjoyed. One of these extraordinary mavericks, Dr. William M. Burton of Standard Oil of Indiana,

• 1:28:32David Rosenthal?

  thought that Roosevelt had performed an inestimable service. After the 1911 dismemberment, he said, 'It was felt all along the line, younger men were given a chance.' Burton patented an exceptionally valuable process in 1913, two years later, for quote unquote, 'cracking crude oil.' That is, for refining it so as to yield a far higher percentage of gasoline. This discovery permitted Standard of Indiana to reap incredible windfall royalties." And you know, if you remember from, we were looking up on the last episode, what did Standard of Indiana become?

• 1:29:12Ben Gilbert?

  Amaco.

• 1:29:13David Rosenthal?

  Amaco. And it was all this, you know, innovation was alive and well again within the oil industry here and within all the standard sort of children. So Standard Oil of Indiana becomes Amaco.

• 1:29:27Ben Gilbert?

  Yeah, can I talk about the spinouts?

• 1:29:29David Rosenthal?

  Yeah, let's talk about them.

• 1:29:30Ben Gilbert?

  All right, so the spinouts of the 34, many of them you'll know, to say the least.

• 1:29:35David Rosenthal?

  Especially if you grew up in America, but even if you didn't, you'll know.

• 1:29:38Ben Gilbert?

  Yeah, the first one was Standard Oil of New Jersey, but its name in the spinout was not Standard Oil of New Jersey. It was the Eastern Seaboard Standard Oil, or the acronym ESSO, E-S-S-O, which is a little cute wink, wink, nudge, nudge by Rockefeller and crew to say, and we're still S-O.

• 1:30:01David Rosenthal?

  I just love these, our anti-heroes here, like they're just such characters. The whole thing reminded me, I think this was when I was growing up, maybe you too, the ESSO, which I had no idea what that referred to until recently. The marketing slogan was, put a tiger in your tank. Do you remember that?

• 1:30:21Ben Gilbert?

  Oh, no.

• 1:30:22David Rosenthal?

  Yeah, it was so good. And literally, I mean, like this breakup and allowing these companies to flourish puts a tiger in everybody's tank here.

• 1:30:31Ben Gilbert?

  Yeah, so ESSO becomes Exxon. Standard Oil of New York becomes Mobil. Standard Oil of Indiana, as we mentioned, becomes Amaco. Standard Oil of California becomes Chevron.

• 1:30:44David Rosenthal?

  Boom.

• 1:30:45Ben Gilbert?

  Standard Oil of Ohio, which became So-Hio, then got bought by BP to become BP America.

• 1:30:54David Rosenthal?

  Heard of them.

• 1:30:54Ben Gilbert?

  The Ohio Oil Company, which became Marathon, and then also the Speedway brand.

• 1:31:01David Rosenthal?

  Ooh.

• 1:31:02Ben Gilbert?

  The Atlantic Refining Company, which got shortened to A-R-C-O. Part of that was spun off and bought by Sunoco, and then the rest of it was acquired by BP. And then ironically, they sold that brand over to Marathon. So a lot of internal dealings here still. Continental Oil became Conoco, which of course is now ConocoPhillips. And the South Penn Oil Company became Pennzoil.

• 1:31:29David Rosenthal?

  Oh, I didn't know that one. I missed that one. Ah, that's cool. Cause yeah, there were all these other oil products that they were developing and marketing.

• 1:31:38Ben Gilbert?

  Yep.

• 1:31:39David Rosenthal?

  Man, I didn't know Pennzoil was a Standard Oil child.

• 1:31:42Ben Gilbert?

  And here's the craziest thing is if you trace it all the way back and you look at the Standard Oil of New Jersey and Standard Oil of New York, Exxon and Mobil together accounted for more than half of the whole Standard Oil business prior to 1911. So ExxonMobil really is the primary re-conglomeration of the majority of the original Standard Oil.

• 1:32:05David Rosenthal?

  Yeah. So fascinating.

• 1:32:07Ben Gilbert?

  It was almost like an evil laugh that I want to have after that line because it is, you're right, it's delicious and it's a century in the making.

• 1:32:14David Rosenthal?

  Yeah. Well, should it be an evil laugh? We'll debate in a second. All right, let's put a bow on, on this whole thing, shall we?

• 1:32:23Ben Gilbert?

  I want to end with just illustrating Standard's wealth here, more in particular Rockefeller's wealth. Cause we've talked about a few figures over time. One of them was the 1902 audit that showed he was worth about 200 million. Then around 1911, the around 300 million. Well, he actually, with all the stock pops in the split up and the move into the gasoline market for internal combustion engines, his personal wealth by 1913, just two years after the breakup, was $900 million. So in 2021 inflation adjusted dollars, if you literally just do the inflation math, that's about 25 billion.

• 1:33:02Ben Gilbert?

  But the more accurate way to look at it would be to say, actually, that's like 3% of GDP, which was still only $40 billion relative, of course, to 21 trillion today. So if you base it on GDP, that figure is about $470 billion.

• 1:33:24David Rosenthal?

  Yeah, the figures I had in my mind and that I think are on Wikipedia are in that sort of 300 to 500 billion adjusted net worth range.

• 1:33:32Ben Gilbert?

  Yeah. I do think we should think about him like he was a 470 billionaire. Not in terms of purchasing capacity, but in terms of societal impact. The analogy doesn't scale all the way back. Like if you think about. When the GDP of America was $1,000, if someone had 500 of that, sure, they controlled half the wealth in the nation, but they didn't have the purchasing power that someone who would have $10 trillion today would have. So it's an imperfect way of scaling it, but there is no one who controls 2% to 3% of the nation's GDP in their pockets, the way that Rockefeller did in 1913. So let's think of him like a 470 billionaire.

• 1:34:13David Rosenthal?

  Well, and here's the thing, he had already given away about half of his wealth at that point.

• 1:34:18Ben Gilbert?

  Yes. That's the nutty thing, is you already had what would become Rockefeller University. You already had the University of Chicago. You already had all these medical endowments. It's wild. And so you look today, like Bezos and Musk are about $190, $200 billion. You've got Gates at $130 billion, again, from all the philanthropy, about tied with Zuckerberg. Buffett these days has about $100 billion, again, from the philanthropy. So if you think that Rockefeller, he sort of had the potential to have like 700, 800 billion in terms of the amount of sort of influence of the nation's wealth that he controlled.

• 1:34:52David Rosenthal?

  Which probably would be about all of the other moguls today combined, right?

• 1:34:57Ben Gilbert?

  That is exactly where I'm going.

• 1:34:59David Rosenthal?

  Perfect. Well, and that's the perfect analogy. He kind of was that. I mean, yes, there was Carnegie, there was J.B. Morgan, there was a generation earlier, there was Vanderbilt, there was Stanford out in the West and like all that. Yep, for sure. But this is the scale, like, yeah, nobody could touch Rockefeller.

• 1:35:15Ben Gilbert?

  So we should transition into sort of the family generational wealth from here, because there's a few interesting things about it. So by the time of his death in 1937, his remaining fortune, of course, which is largely tied up in various family trusts, was estimated to be about $1.4 billion in $1937. So that's about 1.5% of GDP. It's about $315 billion of today's dollars. The Rockefeller family is now seven generations in. There's about 170 heirs. According to Forbes, they have a fortune of about $11 billion in 2016. So obviously been doing a tremendous amount of philanthropy. I do think that $11 billion, it's kind of an unknown, we can estimate it all we want, but like,

• 1:35:59Ben Gilbert?

  there are multiple Rockefeller family trusts and philanthropies and wealth management groups and, you know, it's a maze.

• 1:36:08David Rosenthal?

  There is literally a business and a business ecosystem. Around the Rockefeller family, which is crazy. I actually went to college with several of them.

• 1:36:17Ben Gilbert?

  Rockco is a wealth management firm for the Rockefeller family.

• 1:36:21David Rosenthal?

  Venrock, the venture capital firm?

• 1:36:24Ben Gilbert?

  Okay, so this is what I wanted to talk about. So obviously, The Rock is Rockefeller. And for those not familiar, who want a crazy tie from this episode to modern day, Venrock was one of the earliest investors in none other than Apple Computer.

• 1:36:39David Rosenthal?

  That's right. That's right. It was.

• 1:36:42Ben Gilbert?

  Just amazing how full circle this comes.

• 1:36:45David Rosenthal?

  Alongside Arthur Rock.

• 1:36:47Ben Gilbert?

  Yep. So this really bucks the trend of, have you ever heard the phrase, David, "shirt sleeves to shirt sleeves in three generations"?

• 1:36:54David Rosenthal?

  I didn't know the three generations part, but I've heard shirt sleeves to shirt sleeves. Yeah.

• 1:36:58Ben Gilbert?

  It's like the general idea that because of taxes and the fact that this is when you have errors and they have errors and they have errors, this is an exponential distribution of wealth. So it just, everything keeps getting cut in smaller and smaller pieces pretty quickly. That has not been the case.

• 1:37:13David Rosenthal?

  Yeah, it has not been the case. But I think the other thing, obviously not in every case, but it's pretty hard, hard, nobody would shed any tears, but you know, maybe you should. It's a hard psychological set of cards to be dealt.

• 1:37:25Ben Gilbert?

  Yes. Boo hoo, trust fund of multi-billion.

• 1:37:28David Rosenthal?

  Right. But it wreaks havoc on people's psychology.

• 1:37:31Ben Gilbert?

  How do you go live a regular life when you know you have that in the bank? So I just find it fascinating how like the shirt sleeves to shirt sleeves thing hasn't really been true. There's been no real like major lawsuits that we know of, or feuds, or public scandals. They're out of the news. It's this family with 170 heirs that still wields tens of billions of dollars at the very least, is involved in all these projects. And you really never hear about them.

• 1:37:57David Rosenthal?

  Yeah. You know, again, because like when we were talking about the philanthropy, like Rockefeller didn't want his name on stuff. So you know, all these universities, all this stuff, you know, you don't know that it's Rockefeller money, but then there's the one great exception of Rockefeller Center.

• 1:38:11Ben Gilbert?

  Yeah. So I got the list. You ready? So this is what I spent my last hour doing before we recorded. So we talked about Spelman College. We talked about the University of Chicago. We talked about Rockefeller University and all the unbelievable. Unbelievable medical breakthroughs. We talked about the grant that he made to Johns Hopkins that ended up funding the discovery of a cure for scarlet fever, which is pretty cool. And then, so here's, this continues. From 1915 to 1940, Junior financed, designed, and directed the construction of a network of carriage roads through Acadia National Park, and then refinanced the whole restoration of the park in 1947. So it's this really interesting thing where Junior, whereas Senior kind of left his mark in medical research, he decided

• 1:38:56Ben Gilbert?

  that that was something that he could do that was not necessarily religious, but moral. And so it aligned well with his religious views and the stamp that he wanted to put on the world. In fact, Rockefeller was so well-known for being the medical donor that when Carnegie got approached with projects like this, he would go, "I do believe you're looking for Mr. Rockefeller." Rockefeller put his stamp there. Junior was a naturalist. He really wanted to endow parks and things like that. So, check this out. Junior was a huge part of the donation to restore and recreate Colonial Williamsburg.

• 1:39:30David Rosenthal?

  Yes.

• 1:39:30Ben Gilbert?

  For anybody that's been there.

• 1:39:31David Rosenthal?

  Yep. That was the main funding of the recreation of Colonial Williamsburg. Yep.

• 1:39:36Ben Gilbert?

  Congress in 1926 authorized the creation of the Great Smoky Mountains National Park, but there was no nucleus of federally owned land to actually develop it. So Junior contributed $5 million in 1926. The US government then kicked in $2 million, and private citizens from Tennessee and North Carolina pitched in to assemble the land for the park piece by piece.

• 1:39:59David Rosenthal?

  Junior led the round. The government participated, basically.

• 1:40:03Ben Gilbert?

  Yes. Then you've got Abby Aldrich Rockefeller, who I believe, is she Junior's wife?

• 1:40:09David Rosenthal?

  Junior's wife, yep. Oh, you're gonna talk about what I think you're gonna talk about here?

• 1:40:12Ben Gilbert?

  The MoMA.

• 1:40:13David Rosenthal?

  The MoMA!

• 1:40:13Ben Gilbert?

  The Museum of Modern Art in New York City was her brainchild.

• 1:40:16David Rosenthal?

  Which...

• 1:40:18David Rosenthal?

  The land that the MoMA is on, the buildings, the space?

• 1:40:20Ben Gilbert?

  Yeah.

• 1:40:21David Rosenthal?

  Those were the first Rockefeller mansions in New York.

• 1:40:23Ben Gilbert?

  Oh, no way.

• 1:40:24David Rosenthal?

  Not that, I think they tore down the buildings and the MoMA is a new building there. But that land was when the family first moved from Cleveland to New York. They bought two mansions next door to each other, one for senior and one for junior. Right there. And that land, I think, is now the MoMA.

• 1:40:42Ben Gilbert?

  Wild. Well, and then nearby there, there's obviously Rockefeller Center, which was a junior project.

• 1:40:48David Rosenthal?

  Rockefeller Center is fascinating, right? Because it was a business project. It was Junior's main business project and everybody thought he was crazy. Like, who would want to be headquartered? Then he recruited.

• 1:40:59Ben Gilbert?

  GE to be an anchor tenant.

• 1:41:01David Rosenthal?

  And RKO, like in the Radio City Music Hall. The reason it's called Radio City is he recruited all the media organizations to come headquarter there.

• 1:41:10Ben Gilbert?

  Now, not to mention NBC.

• 1:41:12David Rosenthal?

  Yep, yep. You know, 30 Rock, like Rockefeller Center, the ice skating rink. Senior loved ice skating.

• 1:41:19Ben Gilbert?

  Oh yeah, that was his winter thing instead of golf. And I think ice skating even started earlier in his life.

• 1:41:24David Rosenthal?

  It did, yeah, back in Ohio.

• 1:41:25Ben Gilbert?

  Cause he was like a big fitness buff, but interestingly not for vanity purposes, for longevity purposes. He wanted to live to be 100, came close at 98, but he was, to put it exactly the way that I think he thought about it, afraid of dying. And so anything that was for health and longevity was sort of virtuous to him.

• 1:41:43David Rosenthal?

  HBO and the Silicon Valley writers team could have a field day with Rockefeller if they were to go do like a retro version of Silicon Valley.

• 1:41:52Ben Gilbert?

  All right. So the party continues. In 1945, Junior donated eight and a half million dollars, which I think is something on the order of 100 million today, to just go buy the land for the UN. This is right after World War II, that would become where they built the UN building in New York.

• 1:42:10David Rosenthal?

  That's awesome.

• 1:42:12Ben Gilbert?

  And just donated it. He continues, "The area that is now Grand Teton National Park was privately owned until the 1930s, when Junior started buying up the land that would eventually, he would donate to become much of the park, especially the actual Jackson Hole area." I really could go on too with large areas of the Redwood State Park in California, or Embarcadero Center, the buildings in San Francisco.

• 1:42:35David Rosenthal?

  No way.

• 1:42:37Ben Gilbert?

  Yeah, yeah. Again, more of a business project, less of a philanthropy necessarily, but that was a Rockefeller investment.

• 1:42:43David Rosenthal?

  This family, you know, this man like, and the company, and company, and then companies, the foundation, the institutions, you know, and then the family that he begat, like every aspect of American life was touched and modernized by the Rockefellers. It's insane.

• 1:43:04Ben Gilbert?

  Yeah, you're playing right into my, what I tried to say at the top of the show and what I was alluding to when our world is a Rockefeller shaped one, and in more ways than just Standard Oil. All right. Well, there's definitely some playbook and other things that I want to talk about here, but first let's talk about power. So we reviewed, I think we probably did the seven powers justice in part one, and we don't need to do it again. But I do want to make a point, especially because we sort of teased it in the intro of where did they have legitimate business practices and where did they kind of run afoul? Where the initial power that they had in the business really came from

• 1:43:44Ben Gilbert?

  like their operating excellence, creating economies of scale, innovating clever production inventions and refining. But then later on, they clearly leveraged their scale position to like, put competitors out of business, screw over partners like the railroad, try and gobble up as much of the value chain in really sort of nefarious ways. And eventually, they just straight up used racketeering and bribery to sort of ensure that their very profitable business at 90% market share could continue.

• 1:44:14David Rosenthal?

  One fun little sidebar that I missed in the notes on that literally was straight up bribery. You know, I think we've only talked about political campaign donations. Archbold was, he was really somebody, when he took over.

• 1:44:28David Rosenthal?

  He actually put legislators on the payroll, not campaign donations, just like, you get $15,000 a year, you, you get $20,000 a year to do what we want in perpetuity.

• 1:44:41Ben Gilbert?

  I think the best way to put it is probably they became unsatisfied with what they had accomplished and they just kept pushing. This is probably the right transition point to what would have happened otherwise. I mean, what if the trust hadn't gotten broken up? And I think we should examine it from Standard Oil shareholders' perspective, which I think we're all going to say like, what would have been worse? Consumers' perspective and then competitors' perspective. And in part, maybe even before what would have happened if they hadn't been broken up, maybe we should examine what would have happened if they hadn't gone into nefarious business practices. What if they just were the leading innovator and they had the best

• 1:45:25Ben Gilbert?

  operational excellence and they were operating at large scale so they could have legal scale dynamics out at play?

• 1:45:32David Rosenthal?

  Yeah. You know, it's funny, my thoughts on this, it's like, uh, I don't know, we're talking about boiling points earlier in the episode. I think up until a certain point, as we hopefully laid out in part one, what they were doing was, I don't want to bring morals into it, but it was a chaotic point in both American history and in the industry. It was chaos in the oil industry in the early days. And kinda, you know, is Rockefeller's argument, right? We would have all beat each other to death and maybe somebody, maybe we would have emerged the winner eventually, but we accelerate. It's like, um, foundation, you know, for people who've read Asimov's foundation, right? Like, the whole premise

• 1:46:17David Rosenthal?

  is there will be chaos for 50,000 years or 1,000 years if we have the Selden plan to like, get everybody through to the other side and it'll happen much faster and suffering will be alleviated. That's what Standard Oil did in the early days. I would say that there is a lot of merit to that. But once that happened, especially after Rockefeller left, you know, Archbold and the other cronies, they kept using those tactics even after they'd already crossed the point, and that was bad.

• 1:46:45Ben Gilbert?

  They were insatiable. Even some of the more nefarious tactics, you're right, probably led to good things for everyone, especially for the people who did end up taking Standard Oil shares rather than being run out of business. But then, at some point, it doesn't accrue benefit to anyone in the ecosystems that took to keep pressing your advantage.

• 1:47:06David Rosenthal?

  And the damning piece of evidence here, I don't have the numbers in front of me, but it's in Titan that Chernow quotes, it's actually just a small part of the book. I wish he'd spent more time on it. At a certain point, you know, just like Uber and Lyft today, all monopoly or duopoly type businesses, at a certain point, they did start raising prices on consumers. And in those early days, you know, it was great for consumers. They kept prices artificially low, et cetera, et cetera. But once they did wipe out all the competition, and Rockefeller was against this, but the cronies started doing it, they started raising prices and exploiting monopolistic pricing power. So at a certain point, I think it did become at least not as good for consumers.

• 1:47:45Ben Gilbert?

  Consumer harmful.

• 1:47:47David Rosenthal?

  Yep.

• 1:47:47Ben Gilbert?

  Okay, so what if the trust wasn't broken up? Yeah, it would have eventually become worse for consumers. Well, the competitors thing is interesting. So we've already talked about shareholders. It was great for shareholders that they got broken up. For competitors, it's interesting to me that there was already a very legitimate competitive set emerging by 1906, and certainly by 1911, when they only, they had less than two thirds market share at that point.

• 1:48:10David Rosenthal?

  Yep.

• 1:48:11Ben Gilbert?

  I don't think competitors were having a hard time at this point in history because of the maturation of discovery and drilling technology that we realized there was just way more oil out there than we realized. You drill into the earth's crust under most countries in the world, and you're going to find some oil. And I think that would have eventually driven down their market share, even if the government hadn't broken them up into 34 constituent parts.

• 1:48:45David Rosenthal?

  So we thought, we were debating like, How do we grade this? What analysis do we do? You know, we've talked a little bit about powers here, but we mostly covered that in the last episode. You know, we're going to end with a grade here in a minute, but we want to add a special section for this episode, which is, uh, one of our motivations for doing this series, other than like, it's a really freaking great story and we love telling good stories. It's like, duh, this is happening again now, you know, with tech.

• 1:49:11Ben Gilbert?

  Or let's at least say it's happening in social networking where they're being rolled up together. It's happening in, actually that's the chief offender.

• 1:49:21David Rosenthal?

  Well, and Amazon too, and e-commerce.

• 1:49:22Ben Gilbert?

  Yeah, but not in this like rolling up way. Facebook is the most direct comparable thing to Standard Oil. Apple has plenty of offenses in potentially abusing their App Store privilege, but I think that's a little bit of a different thing.

• 1:49:36David Rosenthal?

  Yep. Certainly on the antitrust sentiment in the public, though, I think that expands to all of big tech right now and the government and in the public, not just social networking.

• 1:49:46Ben Gilbert?

  Yep. Somehow not Microsoft this time around, but yeah.

• 1:49:49David Rosenthal?

  Right. They already had their day in court. But yeah, sorry. We thought this was a really apt thing to do right now. And so we thought for this section, we would kind of just brainstorm and go through and catalog like, all right, what are the similarities and differences? Let's enumerate them between the Standard Oil story and the situation with big tech today. And this is the one, I hadn't thought about this before we recorded, but as you were saying, the market had already started to change by the time the breakup happened and the competitors were emerging in a way that nobody thought they could before. And that was because of American condition. I think that's happening now too.

• 1:50:27Ben Gilbert?

  Are you saying that Calibra is not going to win web three?

• 1:50:31David Rosenthal?

  I doubt it. Uh, I seriously doubt it. But yeah, like if we rewind two to three years ago, talking to LPs about venture capital fundraising, two to three years ago is where this was like really cute. There were conversations happening where. A legitimate concern was why should we invest in startups right now? Because

• 1:50:52Ben Gilbert?

  Big tech is settled.

• 1:50:53David Rosenthal?

  Well, and they're going to eat everything between Facebook and Amazon and Google and Apple.

• 1:50:58Ben Gilbert?

  All the returns are accruing to scale in a way that's never happened in this industry before. And it's just going to happen indefinitely.

• 1:51:05David Rosenthal?

  Any new market or idea of any import that comes along? The best you're going to be able to hope for is that Facebook buys you for a couple billion dollars. It seemed dire out there. Fast forward to today and like, I don't know about you, Ben, but I am wildly excited about investing in startups and not in big tech companies.

• 1:51:25Ben Gilbert?

  Oh, it feels like the same way that it was at the beginning of the mobile era. It feels like this explosion right now, and particularly web three and a lot of crazy, wrong stuff out there. But there's so much heat and energy and it's such a new paradigm.

• 1:51:37David Rosenthal?

  Yep. And it's not just crypto and web three. How many independent multi-billion or tens of billions of dollars? Public SaaS companies are there out there now, like Amplitude just went public.

• 1:51:50Ben Gilbert?

  There's a new five to $10 billion IPO every other day right now.

• 1:51:53David Rosenthal?

  A few years ago, that would have been unimaginable.

• 1:51:55Ben Gilbert?

  So true. And it's funny, you said a few years ago, the Ben Thompson article, the end of the beginning, which lays out this hypothesis, and he has a really good analysis on it. I think it's probably the best analysis done on, are we done creating new big tech companies forever? That was January of 2020.

• 1:52:15David Rosenthal?

  Oh, wow.

• 1:52:17Ben Gilbert?

  Hadn't been that long.

• 1:52:18David Rosenthal?

  Wow. It might be time for another acquired postulate. I don't know what we're going to name this one.

• 1:52:22Ben Gilbert?

  Ooh, lay it on me and I'll decide.

• 1:52:24David Rosenthal?

  All right. New postulate. Heard it here first. I'm sure we're not the first people to say this. Anytime somebody declares the end of something, this game is over, this market is over, blah, blah, blah.

• 1:52:36Ben Gilbert?

  They're wrong.

• 1:52:37David Rosenthal?

  That is the bottom of the market and is all going up from there because it is never the end.

• 1:52:43Ben Gilbert?

  What was the year that the inspector general of the USPTO said that everything's already been invented?

• 1:52:50David Rosenthal?

  I don't know that one.

• 1:52:51Ben Gilbert?

  That's one of these best quotes ever.

• 1:52:53David Rosenthal?

  So good.

• 1:52:55Ben Gilbert?

  Yeah, it's a really good point.

• 1:52:56David Rosenthal?

  Oh, and just real quick, all those LPs in 20. Oh my God, I'm just thinking about this. I love LPs as a glass, but like 2016, 2017, 2018, when they were nervous and like worried about this and not wanting to invest in venture capital. Oh my God, those were the best years to be investing in venture capital.

• 1:53:15Ben Gilbert?

  That's a great point. Well, I want to make a little bit of an argument against regulation, or at least the nervousness that regulation gives me. Regulation by definition will always limit innovation because it says you can do less stuff in the world.

• 1:53:32David Rosenthal?

  Yep. It's prescriptive.

• 1:53:34Ben Gilbert?

  Yes. And a lot of times that's good. A lot of times that stuff shouldn't be done. People's creativity can lead them to do destructive things. But it does seem to be the case that paradigms break monopolies. And so we may not need legislation or the courts to do it, and that these things will play themselves out. By the fact that 21 years after the Sherman Antitrust Act, Standard Oil's monopoly position was already unseated by the time the ruling came down. If there's so much value destruction going on by a monopoly that we can't afford to wait it out, you know, that's one reasonable argument to either

• 1:54:15Ben Gilbert?

  have law or courts change this. But paradigm shifts happen. New technologies happen and they will always unseat incumbents. And in particular, in this one, it was the advent of electricity, that unseated kerosene and the creation of the internal combustion engine and the massive desire for gasoline, that sort of undid the invention of electricity because suddenly there was this massive market available. But then, right around the same time again, oil is discovered freaking everywhere and we can drill it very easily everywhere. So you sort of have this massive destabilizing forest driven by technology in our ability to go find this product elsewhere.

• 1:54:55David Rosenthal?

  I like that.

• 1:54:56Ben Gilbert?

  So I guess where I'm going with that is it may not always be necessary to go trust bust as long as we're willing to sort of wait it out. And if there's coincidental timing of a new technology, see change.

• 1:55:07David Rosenthal?

  Which I think is the argument that is at least so far, kind of carried the day in terms of what's actually happened with big tech, at least in America, not in China, but in America of, you know, gosh, these are like big hammers and you gotta be really careful about wielding them. And maybe it's better to let it play out a little longer before you bring the hammer down.

• 1:55:30Ben Gilbert?

  Yeah. This is why I was saying that Facebook is the most similar thing to Standard Oil. And just to be extremely blunt about it, Facebook buying Instagram and WhatsApp is a lot like Standard Oil's Cleveland massacre and, you know, the subsequent roll up of all these other refiners elsewhere.

• 1:55:44David Rosenthal?

  Oh, the parallels are exact, right?

• 1:55:46Ben Gilbert?

  Yeah.

• 1:55:46David Rosenthal?

  Literally Zuck went to these founders back in the day and was like, love what you're doing. Here's my competing product that I'm launching next week, you know?

• 1:55:56Ben Gilbert?

  Yeah. Here is the ultimatum. And I'm wondering if the internet and software makes it so that acquisition is not the only way, like growing horizontally via acquisition is not the only way to play Standard Oil's playbook. Should we be concerned about Apple or about Amazon's anti-trusty stuff that might look like Standard Oil in a different way that is not rolling up?

• 1:56:27Ben Gilbert?

  Those are more sort of like platform concerns, platforms either competing with the vendors on them, or perhaps abusing their position in the value chain to take too much of a rake. Whereas Bill Gurley would say a rake too far, you know, obviously the 30% thing with Apple. Those I think are different than what we're talking about here with Standard Oil.

• 1:56:47David Rosenthal?

  Well, if anything, I think Standard Oil. Actually was a, I don't know what's better, what's worse, depends on your perspective. But to my perspective, played these aspects better because they could have taken a rake too far on so many things. But as we talked about in the first episode, they didn't want to put all their partners out of business. They could have crushed the railroads under their foot at any time, but they didn't want to. They wanted them to profit and thrive.

• 1:57:11Ben Gilbert?

  Ooh, maybe actually that's more like Apple where like Apple's keeping the take rate where it is. They're going to take an insane amount of the profits of the work of these partners, but they want to keep the partners around. Like Apple's not gonna, they're like, well, we don't want to go build every app. So it's good to have a developer ecosystem building apps where a standard oil was like, yeah, I'm not sure. We want to actually be the railroads, but it's really nice to extract as much value from them as we can.

• 1:57:34David Rosenthal?

  Yep. And I don't know if I ever even knew the numbers well enough to say in terms of the relationships with the railroads. But I feel like, I don't know, Apple, maybe this is just sentiment, but like, God, that 30% feels really unjustified. Whereas I don't think standard with the railroads and their other partners wanted the partners to feel like they were taking an unjustified piece of the pie. They wanted them to know that they could at a moment's notice. But I think they really did value warm relations, so to speak.

• 1:58:09Ben Gilbert?

  Interesting.

• 1:58:10David Rosenthal?

  All right. Before we move on to a couple fun little last tidbits, I know you have been before we grade, two more similarities I want to highlight resonances between the standard oil and the big tech situation. One is I'm just struck by that quote about standard oil of Indiana at the end and that the sort of young Turks in the ranks thought it was great when the breakup happened. And I think part of what was going on there is the old guard became so ossified in their view of how the world worked and weren't seeing reality anymore. And I think about not all the big tech companies, but again, to pick on Facebook, this really seems on the outside to be the case with Facebook right now. And like the Facebook files and everything going on with the Wall Street

• 1:58:54David Rosenthal?

  Journal, it really seems like leadership there. Again, whatever what's right or wrong. When the Tarbell articles came out and Rockefeller and everybody was like, oh, we don't need to say anything here. They're playing this wrong. I bet there are a lot of people deep within the organization that are actually doing the work who are like, We should have a different strategy here, but can't have their voices heard, you know? Anyway, that's one. The other one similarly that I want to highlight is the press, this sort of duel, the angelic and the less angelic side of the press and people and journalists and their motivations. This is playing out, obviously real time in so

• 1:59:35David Rosenthal?

  many places in tech. Yes, the press is doing great, super valuable, incredibly important investigative work. And yes, they are also humans.

• 1:59:45Ben Gilbert?

  And the New York Times hates Facebook.

• 1:59:48David Rosenthal?

  Yes, they're also humans with agendas. That was true then, and it's true now.

• 1:59:53Ben Gilbert?

  At the end of the day, all of this is a bunch of humans doing things that they are incentivized to do for whatever biological, chemical reasons they're incentivized to do them.

• 2:00:01David Rosenthal?

  Yep, yep.

• 2:00:03Ben Gilbert?

  So the standard trademark was doled out as a part of the breakup to the 34 child companies and each owns a different set of states that they can use it in. Many of these states have a use it or lose it clause in their trademark. And so in many of these states, including California, where Chevron owns the standard trademark, there is one or two gas stations that will carry the logo of the company you're familiar with, but say the word standard. And there's a great one in downtown San Francisco that you can go drive by and be like, wait, I'm sorry, what? Standard? It lives.

• 2:00:40David Rosenthal?

  It lives. It's at Market and Van Ness, right?

• 2:00:43Ben Gilbert?

  Yep.

• 2:00:44David Rosenthal?

  Yep. You drive and you're like, whoa, that should be a Chevron station, but it says standard on it.

• 2:00:49Ben Gilbert?

  So weird. Such a fascinating, it's fun to like, see a remnant of American history on your commute.

• 2:00:56David Rosenthal?

  Yep.

• 2:00:57Ben Gilbert?

  The second one is a very interesting harbinger of what's to come. The foundation, the Rockefeller Foundation's assets, starting all the way back with Standard Oil, and then of course, in what it was broken up into, an enormous holding, as you can imagine, is the oil companies, in particular ExxonMobil.

• 2:01:20Ben Gilbert?

  In December of 2020, just this last year, the foundation pledged to dump their fossil fuel holdings. So you have the, the original oil money pledging divestment.

• 2:01:31David Rosenthal?

  Yeah, interesting.

• 2:01:33Ben Gilbert?

  So that'll be fascinating to watch how that plays out.

• 2:01:36David Rosenthal?

  Is it that they've pledged to do it, but they haven't?

• 2:01:39Ben Gilbert?

  I don't know what the timeframe is yet.

• 2:01:40David Rosenthal?

  I assume they're not going to just dump all of it on the market all at once.

• 2:01:43Ben Gilbert?

  Unload a bunch of Exxon on the market? Yeah, probably not. But to hear John D's descendants pledging, it's this delicious dichotomy of John D believing that we should hold on to the Standard shares because they're going to be so valuable forever and hoard them. And now finally, we're at this moment in history where we're realizing how really terrible it is to burn all these fossil fuels. And even the largest holder of the remnant shares of the Standard Oil Company is now saying it is time for us to get rid of these.

• 2:02:14David Rosenthal?

  Yeah, it'd be super fun to find, we meant to do this on this episode, but there's too much other stuff to get in and we're not experts, but maybe find some guests to a special episode on, I'd love to unpack the oil industry.

• 2:02:28Ben Gilbert?

  Oh, I would love to understand just current ownership structure. What's the cap table look like?

• 2:02:32David Rosenthal?

  Yes, all that too. But also from an environmental standpoint, yeah, fossil fuels are bad, but fossil fuels and oil upgraded the world technologically to where we are now.

• 2:02:47Ben Gilbert?

  Quality of life, no doubt, would not be what we have today if not for all the fossil fuels we burned.

• 2:02:52David Rosenthal?

  Right, right. So like, what is, I don't know, what's the right way to think about this?

• 2:02:58Ben Gilbert?

  And we're not going to change overnight. That's the other thing. It's like, should we all be using clean, safe nuclear? Yes, we should. And it's going to be a long time before that is the case.

• 2:03:07David Rosenthal?

  Yep. So more fun acquired energy stuff to come in the future.

• 2:03:11Ben Gilbert?

  Yep. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 2:03:25David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 2:03:42Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 2:03:57David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Logora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 2:04:21Ben Gilbert?

  And they recently launched Logora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective, then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 2:04:40David Rosenthal?

  And Logora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Logora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Logora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 2:05:10Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you. All right, grading. I thought a fun way to do this would be, so the very classic acquired episodes, very early on especially, were grading an acquisition. So if you were the shareholder of a big company and you use some of the assets of that big company to buy the little company, how good of an investment or a use of those proceeds was it to go buy that little

• 2:05:55Ben Gilbert?

  company? I thought for this one, it would be fun to say, well, I'm the shareholder, or a shareholder of Standard Oil, and let's say the government's not involved, and I, as the management team of the company, are recommending that we break this up into 34 constituent parts. And like, we're not being forced to do anything. This is just the way that we are choosing to rearrange our corporate structure. Everyone's going to get a share in 34 different companies proportional to your share of ownership in the Standard Oil company, and that is the transaction that we are electing to make as a corporation.

• 2:06:28David Rosenthal?

  Are you saying it would be like, I don't know if you're like a shareholder or a board director at Amazon, and do I want to hold Amazon shares with everything, or do I want AWS shares and Amazon shares?

• 2:06:41Ben Gilbert?

  Exactly. Or SpaceX. And you're like, do I want to hold SpaceX shares and Starlink shares? Or even going back to our eBay episode with PayPal. How good of an idea was it to do the spinoff for shareholder value? So I'm leading the witness here, but I don't think it's an A+ necessarily, but it's definitely an A that they did this. From a pure shareholder value perspective, in finally being able to open the books, see how good of a business each of these things were. And there's an open question in my mind of, what if you could just open the books of Standard Oil as a whole, rather than break it into a bunch of little parts? But there is no arguing with, it was a great move. Again, I'll say

• 2:07:23Ben Gilbert?

  it, and it sounds dirty saying it, because it's just such a corporate capitalist phrase, but great move for shareholder value to break it up.

• 2:07:30David Rosenthal?

  Oh, man, this was the OG value unlock move.

• 2:07:35David Rosenthal?

  This is what, you know, investment bankers would be just salivating over today.

• 2:07:42Ben Gilbert?

  Oh, can you imagine the fees on this deal too? You can make so many slide decks.

• 2:07:46David Rosenthal?

  Funny story. I was talking to a friend earlier today. He'll laugh when he listens to this. No identities or anything revealed here, but who was an investment banker back a few years ago, who his group covered Tesla and he was telling me about the 420 day, the day that Elon tweeted, funding secured and just the mass chaos that that unleashed on Wall Street.

• 2:08:13Ben Gilbert?

  Oh, they were like, who's doing the deal if it's already secured?

• 2:08:15David Rosenthal?

  Well, once everybody figured out, oh, the deal was in flux, just the fee potential that like, everybody's eyes lit up to like, we gotta get in to be, you know, lead advisor on whatever this deal is going to be and signing up different buyers and partners and like, I can only imagine the situation if you were a banker and you heard that Standard Oil was considering a spin out. Like it would have been that times 10.

• 2:08:37Ben Gilbert?

  Yeah. In reality, you actually had five years of preparation and lighting up the transaction to do. So it was probably a little bit more organized, but that actually wasn't covered much in Titan. So I'm curious for a more financial history of the breakup to cover. There's got to be like a barbarians at the gate of the Standard Oil breakup.

• 2:08:54David Rosenthal?

  Oh, that would be so good.

• 2:08:57Ben Gilbert?

  All right. So David, what's your grade for you're a shareholder in Standard Oil?

• 2:09:01David Rosenthal?

  This is for sure an A on every dimension. I mean, we've already covered it. Like there's no dimension where this is bad. And it's, I don't know, it's probably borderline A plus. Like, I don't know. Like this is a great, for this type of transaction, I can't think of anything better. Like this is, this is great.

• 2:09:18Ben Gilbert?

  The way that you could actually calculate some kind of return on it is you look at the appreciation and the ensuing decades and compute some kind of IRR on all the component parts and try and look at it versus the previous 15 year IRR on the appreciation of the actual shares of Standard.

• 2:09:34David Rosenthal?

  You get Archibald and Rogers and all that, all those guys out of there and turn this, these places into legitimate operations. Like, oh, it's fantastic.

• 2:09:41Ben Gilbert?

  Young Turks, gasoline centers.

• 2:09:44David Rosenthal?

  Yeah. All right. What do you think?

• 2:09:46Ben Gilbert?

  I mean, that's, yeah, it's an A. These companies went on to become the most valuable companies in the world until big tech, you know?

• 2:09:52David Rosenthal?

  All right. So what does this portend for big tech breakups? Like, should Amazon spin out AWS?

• 2:09:58Ben Gilbert?

  So I'm of the opinion that it's indifferent with Amazon. First of all, we know the size of both businesses. I don't think that it's them both being under one umbrella is creating drag for either one of the organizations. I think Amazon knows how to move pretty fast with both of them. But I also don't buy the like, we're our own first and best customer thing in a way that is value creative on the scale of, oh my God, they're so much better together than they would be apart.

• 2:10:25David Rosenthal?

  I think that's always been a myth that Amazon is the first and best customer of AWS. Like, I don't think that's actually true.

• 2:10:33Ben Gilbert?

  Well, it took a while to move over all the Amazon stuff that was written not on AWS, AWS.

• 2:10:38David Rosenthal?

  Yeah, they were still using Oracle until like last year.

• 2:10:41Ben Gilbert?

  Yeah. So I actually think as a potential Amazon shareholder, I don't know if we should disclose or can disclose on the show, whether I hold it or not, I'm indifferent. Or as a theoretical Amazon shareholder, I'm indifferent to whether it's one company or two.

• 2:10:56David Rosenthal?

  I think we can, or at least I have before. I'm a, I saw Uncle Stu Stewart in our Slack community. He tweeted today with his current valued holdings portfolio. So like,

• 2:11:09Ben Gilbert?

  All bets are off now.

• 2:11:10David Rosenthal?

  All bets are off now.

• 2:11:11Ben Gilbert?

  We're in stonk land.

• 2:11:12David Rosenthal?

  We're in uncharted territory. Yeah. Amazon is, I don't know if it's my biggest holding. I think I have more Bitcoin than Amazon, but anyway, top three for sure. Yeah, I think I'm with you indifferent to maybe slight preference for a spinoff. I think it would probably unlock some.

• 2:11:30Ben Gilbert?

  Get a little standard oil.

• 2:11:31David Rosenthal?

  Value, but I'm probably, it's probably just recency bias by just having done this episode here.

• 2:11:37Ben Gilbert?

  Yep. All right, let's move on to carve outs.

• 2:11:39David Rosenthal?

  Yeah, let's do it. What do you got?

• 2:11:41Ben Gilbert?

  All right, two for me. The first one is the upcoming MacBook Pro with an M1X or an M2 or whatever. I so desperately need this that I.

• 2:11:53David Rosenthal?

  This is your like white whale.

• 2:11:55Ben Gilbert?

  Pre making it my carve out just to will it into existence sooner. I was looking around for like, what should be my carve out? And I looked at my computer and I was like, well, not that thing.

• 2:12:05David Rosenthal?

  You're gonna end up like never upgrading your computer because you're just holding out like

• 2:12:09Ben Gilbert?

  I need it so bad.

• 2:12:10David Rosenthal?

  I think I told you like a year ago that like you should have just gotten a air. I'm on the M1 air. It's freaking fantastic. And then just sell it and get the

• 2:12:18Ben Gilbert?

  I want the superbook.

• 2:12:20David Rosenthal?

  Dude, you should just get an air, use it and then sell it. You'll you will lose like 10 bucks on it. These things keep their value so much.

• 2:12:27Ben Gilbert?

  You're right. If I'm willing to get a new iPhone every year, like a degenerate.

• 2:12:30David Rosenthal?

  But we're so close now. If they don't announce this damn thing like

• 2:12:34Ben Gilbert?

  I right. See, that's I thought it was like three months away forever.

• 2:12:38David Rosenthal?

  Right, right. I think if this is not out by December, I'm literally gonna buy you an air and I'm gonna send it to you. And then I'm gonna charge it to a choir.

• 2:12:47Ben Gilbert?

  Fair. Count me in. I've said it on air. You have my verbal signature.

• 2:12:52David Rosenthal?

  The air is really good.

• 2:12:54Ben Gilbert?

  I bet. Okay, I have a second one, though. We at PSL Ventures just invested in a great company called Starfish Space alongside our friends at NFX and Mac Venture Capital. This company is so freaking cool. This is my first space investment from PSL.

• 2:13:10David Rosenthal?

  Oh, you've been wanting to do this forever.

• 2:13:12Ben Gilbert?

  Man, this company is so cool. It's effectively an outer space tugboat. It's a tiny little satellite that you launch and it attaches to other satellites and can tweak them a little bit. It can just move them back into orbit gently, can do things like extend the life of satellites. It can decommission satellites that are in a dangerous place. I think we've all seen gravity. You don't want that to happen. You know, satellites should be where you want them to be. It's autonomous. It uses electric propulsion. It uses this really cool novel technique to dock to other satellites. That's a super versatile way to do it. And the founders are just top notch. So I just wanted to like, talk about them for anyone that's also a space nerd. Obviously, they're hiring, but I think like, just go to starfishspace.com, check out what this company is doing.

• 2:13:57Ben Gilbert?

  I just love the like incredible innovation unlocked by this birth of the private space tech ecosystem these days.

• 2:14:06David Rosenthal?

  So cool. Thank you, SpaceX. Elon.

• 2:14:09Ben Gilbert?

  Yep.

• 2:14:10David Rosenthal?

  Man, we got a Listeners keep telling us not to do this because we get people's hopes up, but I'll do it anyway. We gotta do some more Elon stuff. We gotta do like a Tesla part two.

• 2:14:22Ben Gilbert?

  Elon, if you're listening, we officially accept.

• 2:14:26David Rosenthal?

  You're invited.

• 2:14:27Ben Gilbert?

  We'll have you for sure on the show.

• 2:14:29David Rosenthal?

  We'll accept your invitation to come on the show.

• 2:14:32Ben Gilbert?

  And if you're listening and you've emailed with Elon like in the last couple of weeks, reply to that email with him and be like, by the way, I think you should do this.

• 2:14:39David Rosenthal?

  Yeah, the next podcast you do. It's gotta be, it's criminal that you haven't done it with us yet.

• 2:14:43Ben Gilbert?

  Terrible.

• 2:14:44David Rosenthal?

  No, but literally, I'm not even like being facetious here. Like, nobody's gonna tell the story better than us. I truly genuinely believe that. So what are we waiting for?

• 2:14:53Ben Gilbert?

  Live on-air Rosenthal sales pitch.

• 2:14:56David Rosenthal?

  Okay.

• 2:14:57Ben Gilbert?

  Give me your carve-outs.

• 2:14:58David Rosenthal?

  My carve-out. This is a funny one. It's like sort of embarrassing, but I'm not embarrassed anymore. So for a long time, I saw all of my friends dropping like flies on this, not just with having babies that we're now doing too. Last of the party, I'm not talking about that, but I resisted for years and I was like, you did this, Ben. And I was like, no way. That is just too on-the-nose millennial. I am not gonna do this.

• 2:15:21Ben Gilbert?

  It was my best pandemic purchase.

• 2:15:23David Rosenthal?

  Sometimes the wisdom of the crowds is right for a reason. I finally became a card-carrying millennial. I broke down. I bought a Peloton and it's great. It's really great. Do you need one? No, actually, I used it for a couple of months. I used just the app and a cheap spin bike from Amazon. It was fantastic. But I found I was using it so much, which like just shocked me. I didn't expect that. Like, it's so, it's so efficient.

• 2:15:49Ben Gilbert?

  You're looking in really good shape.

• 2:15:51David Rosenthal?

  Thank you. Well, and I was thinking, you know, I got the baby coming, like, things are gonna get wild. You know, I'm not gonna have time to just go for long leisurely runs anymore. I want to be efficient or I'm gonna turn into, I'm gonna start looking like my baby all, you know, flabby. So yeah, then I broke down and I, I used Ben's referral code. Thank you. Got a Peloton. Pro tip, so I think this is different for everybody. Initially, I was like, all right, if I'm gonna do it, I'm gonna go all in. Let me get the bike plus. So I got the bike plus initially and it's like really nice for sure. But I had used a regular Peloton before and I was like, this is not, especially with the price drop on the regular Peloton, this is not $1,000 more nice.

• 2:16:27Ben Gilbert?

  I can't believe it's a $1,000 difference.

• 2:16:29David Rosenthal?

  There's so many things wrong with Peloton's pricing strategy, but you know, I don't say, mean this to hurt, but I'm actually helping Peloton now.

• 2:16:35Ben Gilbert?

  John Foley, if you're listening to this, come on the show, we'll talk about the pricing strategy.

• 2:16:39David Rosenthal?

  Yes.

• 2:16:39Ben Gilbert?

  I actually mean it. We should do a Peloton episode. If you know John, if you're friends with him, tell him he should come join us.

• 2:16:44David Rosenthal?

  I love it. This is great. We're just episode planning here.

• 2:16:49David Rosenthal?

  Anyway, yeah, it's great. It's great. Don't get the bike plus, at least right now, it's stupid to spend $1,000 more, but the main bike, it's really freaking great. And now I get amazing workouts in 20 to 40 minutes. And I'm just so glad to now have this heading into crazy parent life.

• 2:17:06Ben Gilbert?

  Welcome to the party, pal.

• 2:17:10David Rosenthal?

  We'll have to check in. We'll, you know, we'll have to do some like acquired group rides or something.

• 2:17:15Ben Gilbert?

  Oh, that'd be fun.

• 2:17:16David Rosenthal?

  It'd be super fun. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 2:17:24Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 2:17:35David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 2:17:55Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system. So teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 2:18:07David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 2:18:18Ben Gilbert?

  There's an acquired Slack. It's got a great URL, acquired.fm/slash/Slack, nice and memorable. We are launching a thing, I think, maybe depending in the order of these episodes as they come out, we will have told you about this on a previous episode, but if not, then we are announcing today. For the first time, or the second time, the existence of the Acquired Job Board. So, so many of you have been posting in the jobs channel for years now in the Slack. You have hired each other, you have gotten new jobs through the acquired community, and it warms our heart to see it because it's really cool to watch so many of you get to go work with each other, Levels, Solana Labs, Vouch, a bunch of different places

• 2:19:00Ben Gilbert?

  that are sort of our friends and, you know, close to the show, have had folks join them. But now, if you go to acquired.fm/jobs, that is in a nice, organized format where you can browse, and there's even a little one-liner next to each job of, it's kind of making their Rosenthal sales pitch of why this is a cool job and you should come work here. We curate them, so there's no one that's allowed to post there that we don't look at and approve and sort of decide personally that we think they're interesting opportunities. So, yeah, go check them out, acquired.fm/jobs. Most of you know about the LP program, but I do want to highlight a recent episode that was friggin' awesome. We haven't shipped it yet as of recording this, but I bet it'll

• 2:19:42Ben Gilbert?

  be out by the time we drop it. It is with Ronel Rumberg, the founder and CEO of Audius.

• 2:19:48David Rosenthal?

  So fun.

• 2:19:49Ben Gilbert?

  I don't think I've had a better Web 3 conversation on or off the show than with Ronel.

• 2:19:55David Rosenthal?

  I thought what was so cool about it was like, we ranged from talking about like, super technical, like, deep stuff, like Ronel is a computer science, like, major at Stanford. Like, we were actually there at the same time I was at GSP, he was at undergrad. So then we were talking about fun, like, tech history stuff from that era. And then like, towards the end, we're like, "Oh yeah, by the way, you're in the music industry, so tell us a little bit about, like, you know, that." And he's like, "Oh, yeah."

• 2:20:21Ben Gilbert?

  Oh, like hanging out with Deadmau5 and Blau and...

• 2:20:23David Rosenthal?

  Yeah, like Deadmau5, like, yeah, he's really cool, he's a cool dude. Like, what?

• 2:20:28Ben Gilbert?

  Yeah, for people who don't know, Audius is crazy. It has 6 million users and it's a crypto application. Like, it's, I think, that, Brave, and MetaMask are probably like the three largest applications by user count in all of crypto right now.

• 2:20:44David Rosenthal?

  Web 3, yeah, yeah. He was like, "Oh yeah, like Blau, Deadmau5, yeah, like, they're really fun to hang out with."

• 2:20:50Ben Gilbert?

  And we got into like the stuff that I was really curious about, which is like, how does a decentralized application work also with like a standard web stack, like a web two stack where you definitely need web servers and you definitely need to serve an application to people using regular browsers. So really fun. I'm actually going to go listen to it because I feel like I've forgotten some of the conversation and want to want to re-listen, but check that out. acquired.fm slash LP. If you want to share this with a friend, you totally, totally should. One-on-ones are our favorite. We like to grow with high affinity rather than when a broadcast method. So pick a person that you think would really enjoy this and please send it to them. And with that, listeners, we will see you next time.

• 2:21:32David Rosenthal?

  We'll see you next time. And well, next time you're going to hear from me because we did build up a little bit of a backlog will actually be in the past. But then the next time I talk to you, my life will have changed. So yeah, it'll be wild.

• 2:21:47Ben Gilbert?

  Totally wild. All right, listeners. Later.

• 2:21:49David Rosenthal?

  We'll see you then.