#16 Titan: The Life of John D. Rockefeller

What I learned from reading Titan: The Life of John D. Rockefeller by Ron Chernow. [0:01] Rockefeller was a unique hybrid in American business, both the instinctive first-generation entrepreneur who founded the company and the analytical second-generation manager who extends and develops it. [0:30] Having created an empire of unfathomable complexity, he was smart enough to see that he had to submerge his identity in the organization. [0:43] Don’t say that I out to do this or that. We ought to do it. Never forget that we are partners. Whatever is done for the general good is done for the good of us all. —John D. Rockefeller. [0:55] He preferred outspoken colleagues to weak-kneed sycophants. [1:14] That he created one of the first multinational corporations, selling kerosene around the world and setting a business pattern for the next century, was arguable his greatest feat. [2:48] The spot chosen for the new refinery tells much about Rockefeller’s approach to business. . . Able to ship by water or over land, Rockefeller gained the critical leverage he needed to secure preferential rates on transportation which was why he agonized over plant locations throughout his career. [6:02] This is before the invention of the car. Kerosene was the main byproduct of oil. People used it to have lighting in their houses. Before Rockefeller, only rich people were able to do this. After Rockefeller, everyone could do it. [6:41] There’s a lot of people making money in refining. People hear about other people making money in refining. They follow in like lemmings and this causes refining capacity to be triple the amount that is actually needed. By then 90% of refineries were operating in the red. [7:46] “So many wells were flowing that the price of oil kept falling, yet they went right on drilling.” — John D. Rockefeller. [8:08] “Often-times the most difficult competition comes, not from the strong, the intelligent, the conservative competitor, but from the man who is holding on by the eyelids and is ignorant of his costs, and anyway he's got to keep running or bust!” —John D. Rockefeller [8:57] As someone who tended toward optimism, seeing opportunity in every disaster, he studied the situation exhaustively instead of bemoaning his bad luck. [10:55] Rockefeller is hated for the creation of a cartel. He is hated for succeeding at it. There are many people trying to do very similar things. They would criticize Rockefeller for what they were attempting to do themselves. [14:46] From the outset, Rockefeller’s plans had a wide streak of megalomania. He said, “The Standard Oil company will someday refine all the oil and make all the barrels.” [15:35] Rockefeller decided that the leading men [executives] would receive no salary but would profit solely from the appreciation of their shares and rising dividends which Rockefeller thought a more potent stimulus to work. [17:10] He was pretty crazy. He had three daughters and a son. By the time he had his son, he had more money than he could spend in a lifetime. His son remembers growing up and only wearing dresses because his dad refused to buy new clothes. [17:38] Rockefeller never allowed his office decor to flaunt the prosperity of the business, lest it arouse unwanted curiosity. [19:33] His strategy would be to subjugate one part of the battlefield, consolidate his forces, and then move briskly onto the next conquest. [19:54] The year revealed both his finest and most problematic qualities as a businessman: His visionary leadership, his courageous persistence, his capacity to think in strategic terms, but also his lust for domination, his messianic, self-righteousness, and his contempt for those shortsighted mortals who made the mistake of standing in his way. [20:50] Rockefeller had such a fanatical desire to control expenses. He’d show up to work at 6:30 in the morning and leave at 10 at night and the entire time he was rooting out inefficiencies. If he could save a penny he would. As a result, even if someone was in the same business Rockefeller’s business was much more profitable —even before he built his cartel. [23:34] Rockefeller was extremely secretive. He equated silence with strength. He didn’t like people who bragged or told other people what their intentions were. [25:06] The depressed atmosphere only strengthened his resolve. [28:57] One Rockefeller biographer called the drawback an instrument of competitive cruelty unparalleled in industry. [30:55] One other factor tempted the railroads to come to terms with Rockefeller. In a far-sighted, tactical maneuver he had begun to accumulate hundreds of tank cars —what you would ship oil in if you don't want to use barrels—which would be in perpetual and perpetually short supply. [32:05] One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and crafted mutually advantageous terms. Instead of ruining the railroads, Rockefeller tried to help them prosper albeit in a way that fortified his own position. [37:57] This is the insane part. Between February 17th and March 28th, Rockefeller swallowed up 22 of his 26 competitors. This makes him the world’s largest oil refiner at 31 years old. [40:32] Rockefeller was dedicated to secrecy: Many of these competitors didn’t even know they were being bought by Standard Oil. [47:24] Rockefeller would constantly overpay for competitors just to knock them out of the business. [47:58] He was now living a fantasy of extravagant wealth that would have dwarfed the most feeble daydreams of his father. Few people beyond the oil business had ever heard of him. [48:26] It is very hard to compete with somebody you don’t even know exists. [48:56] It is a lot smarter to make money quietly so you don’t invite competition. [49:11] The Prize: The Epic Quest for Oil, Money & Power [49:52] Books are the original