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    #307: The World's Great Family Dynasties: Rockefeller, Rothschild, Morgan, & Toyada

    en-usJune 12, 2023

    Podcast Summary

    • Enhancing experiences through small improvementsSmall improvements in products, services, and processes can lead to significant enhancements in personal and business life. Upgrading sleep technology and internet solutions are examples of such investments.

      Small improvements or features in products or services can significantly enhance our experiences and quality of life. The speaker shared his experience of how controlling the temperature of his mattress with 8 Sleep improved his sleep quality, making it a worthwhile investment despite its price. Similarly, businesses can benefit from upgrading their Internet and WiFi with METER, which offers faster, simpler, and more secure solutions. In both personal and business contexts, optimizing experiences and solutions can lead to noticeable improvements. Additionally, the speaker mentioned the importance of selling a business when it's the right time. Tiny, a company that provides straightforward cash exits for founders, can help simplify the process. This can be particularly valuable for founders looking to focus on new ventures or retire. Lastly, the speaker shared a personal anecdote about the importance of family and business, emphasizing the significance of laying a strong foundation for both. He recommended listening to an interview he did on the Invest Like the Best podcast for more insights into his personal history.

    • Family businesses can be threatened by their own success and wealthSuccess and wealth can distract family business heirs, leading to neglect and downfall, as seen in dynasties across industries

      The continuity of family businesses can be threatened by their own success and wealth. As dynasties grow in power and prestige, heirs may become distracted by politics, culture, and the pursuit of luxury, leading them to neglect their businesses. Nathan Rothschild, a legendary entrepreneur, serves as an example of how outsiders can rise to control the center. Once they have amassed significant wealth, these families often copy their competitors and indulge in inflated ambitions, which can ultimately lead to their downfall. This trend is consistent across industries, from banking to automobiles to natural resources. The author, David Landes, highlights this pattern in his book "Dynasties, Fortunes and Misfortunes of the World's Great Family Businesses," after studying 11 dynasties throughout history.

    • From humble beginnings to global prominence: The Rothschilds' rise to powerThe Rothschilds, starting from a ghetto in Frankfurt, rose to global prominence through tenacity, persistence, and intense focus on their business and family.

      The Rothschild family, despite starting from humble beginnings in a ghetto in Frankfurt, rose to global prominence through their tenacity, persistence, and intense focus. They turned their adversity into an asset by developing a network of Jewish traders and financiers, and they placed absolute trust in their family as their greatest resource. This focus on building up their business and family has been passed down from generation to generation, making the Rothschilds an exceptional case study in dynastic success. The Rothschilds' founder and subsequent generations were obsessed with their work, with their appetite for success growing with each achievement. They continued to work tirelessly, viewing their descendants as the fruits of their labor rather than as idle and self-indulgent heirs. This mentality allowed the Rothschilds to overcome adversity and build a global empire, making them a notable exception to the trend of dynasties that squander their wealth and influence.

    • Rothschild's Unique Business Strategy: Long-Term Relationships and Family TiesThe Rothschilds built a business empire by prioritizing long-term relationships and involving their entire family in the business, leading to success in various industries and continents.

      Mayer Amschel Rothschild, the founder of the Rothschild dynasty, overcame oppressive conditions to build a business empire through a unique combination of innate talent, specific knowledge, and long-term relationships. He started as a merchant and money lender, with a talent for math and a keen understanding of rare coins. Despite living in poverty, he valued long-term relationships over short-term profit and involved his entire family in the business. They sold various merchandise, from fabrics to spices, and lived in a crowded house filled with goods. Mayer's third son, Nathan Rothschild, immigrated to England and, with extreme self-belief, quickly made a fortune and married into a wealthy Jewish family. Nathan's boldness and confidence gave the Rothschilds a special advantage in the competitive world of banking.

    • Rothschilds and Morgans: Financial Dynasties Who Changed HistoryThe Rothschilds and Morgans, through absolute discretion and strategic financing, became influential financial dynasties, shaping history by funding governments and industrial enterprises.

      The Rothschild and Morgan families were influential financial dynasties who rose to power at pivotal moments in history by providing funding to governments and industrial enterprises. Nathan Rothschild, in particular, made a fortune by financing the British government during Wellington's campaign against Napoleon, despite the challenges of maintaining discretion and secrecy. The Morgans, inspired by the Rothschilds, replicated their success in America. The Rothschilds' success was built on their mastery of absolute discretion and the development of a logistical network for moving wealth around Europe. While many details of their transactions remain a mystery, their impact on history is undeniable. The stories of these families illustrate the importance of being in the right place at the right time with the right skills and connections.

    • Maintaining control and continuity through strict family rulesThe Rothschilds' focus on preserving wealth and maintaining control led to a shift from active investment and growth to a more cautious, custodial approach, but allowed them to maintain their wealth for centuries

      The Rothschild family, led by Mayer Rothschild, established strict rules and guidelines to maintain control and continuity of their business and wealth across generations. These rules included limiting family involvement to direct male descendants and emphasizing preservation over innovation. However, as time passed and new generations came of age, the family's adherence to these rules weakened, leading to a shift from active investment and growth to a more cautious, custodial approach. This case study highlights the tension between a founder's desire to innovate and grow versus a family's desire to preserve wealth and maintain control. Ultimately, the Rothschilds' focus on preservation allowed them to maintain their wealth for centuries, but it came at the cost of potential missed opportunities for growth.

    • The Rothschilds vs. The Morgans: Different Approaches to Business DynastiesThe Rothschilds maintained their exclusive family enterprise, attributed to a genetic predisposition for making money, while the Morgans evolved their family bank into a corporate structure and recommended having numerous kids for business continuity.

      The Rothschild family, known for their persistence and tenacity in business across centuries, stands out as one of the most important dynasties in modern history. Unlike the Morgans, who needed outside partners and evolved their family bank into a corporate structure, the Rothschilds maintained their exclusive family enterprise. The secret to their success seems to be a genetic predisposition for making money. The Morgan family, on the other hand, couldn't maintain the same level of control due to a smaller family size. They recommended having numerous kids to increase the chances of business continuity. The Morgan dynasty started with Joseph Morgan, who made a fortune in real estate and insurance, and passed his business acumen to his son, Junius. Junius then sent his son, JP Morgan, to Europe for education before taking over the family's growing wealth. These families' stories illustrate the unique approaches to wealth accumulation and dynasty building in business history.

    • Junius Morgan's Unique Approach to Building a Global Banking DynastyJunius Morgan's ambitious aspirations, European inspiration, and unique work style led to the creation of a successful banking dynasty, which evolved into JPMorgan Chase through strategic partnerships and acquisitions.

      The Morgan family, specifically Junius Morgan, built a global family fortune through ambitious aspirations and a unique approach to work. Junius, inspired by European banking dynasties like the Barings and Rothschilds, aimed to create a dynasty and set out to do so. His work style, characterized by intense periods of activity followed by long vacations and travel, was unlike the "grinders" most commonly associated with business founders. This approach allowed him to build a successful banking career, starting from a local level and eventually reaching international prominence. The launch of the Morgan family's banking dynasty was facilitated by a partnership with George Peabody, a high-quality merchant banker in London. This partnership, which began in 1854, eventually evolved into JPMorgan Chase through various acquisitions and transitions. The history of the Morgan family's banking empire often overlooks the significant role Junius played in its success, but his ambition, drive, and unique work style were crucial in establishing the family's place and fame in international banking.

    • J.P. Morgan's father's loan to FranceJ.P. Morgan's success rooted in father's France loan, faced resistance in England, expanded to America, financed major industries, formed US Steel

      J.P. Morgan's rise to prominence in international finance was driven by his father Junius's decision to underwrite a loan for France during a time when other leading British banks declined. This transaction brought Junius significant wealth and established him as a major player in finance. However, his newfound status was met with resistance from established families and businesses in England. Later, Junius sent his son J.P. to America to expand their business, which proved to be perfectly timed as the American economy was experiencing rapid growth. J.P. became a key figure in financing major industries such as railroads, oceanic transportation, and steel, leading to the formation of US Steel, the world's first billion-dollar corporation. J.P.'s relentless drive and determination, despite facing harsh criticism and demands from his father, contributed to his success in this new world of large-scale business syndicates and monopolies.

    • J.P. Morgan's strategic acquisition of Carnegie Steel and Sakichi Toyoda's innovations in textiles and automobilesJ.P. Morgan's acquisition of Carnegie Steel was a strategic move to prevent competition, while Sakichi Toyoda's determination led him to innovations in textiles and automobiles.

      J.P. Morgan's acquisition of Andrew Carnegie's Carnegie Steel company in 1901 was a strategic move to prevent competition in the steel industry. Morgan recognized Carnegie's ability to integrate backward and forward, enabling him to undersell competitors. Morgan bought Carnegie out for around $400 million, but Carnegie later regretted selling too cheaply and believed he could have asked for $100 million more. Morgan's strength was identifying new technologies and business opportunities, leading him to form General Electric. However, after Morgan's death in 1913, the firm's reliance on outside talent and lack of strong male heirs differed significantly from the Rothschilds' dynasty. In a separate context, Sakichi Toyoda, the founder of Toyota, started in the textile industry. Born in 1867 in a rural village, he learned the importance of hard work from his carpenter father. Despite the area's agricultural focus, Toyoda's determination led him to innovations in the textile industry and eventually the automobile industry, founding Toyota Motor Corporation.

    • Innovating in the textile industry led Toyoda to create efficient looms and build a successful business.Innovation, hard work, and a relentless focus on improving products can help entrepreneurs build a successful business, even when facing competition.

      Sakichi Toyoda, the patriarch of the Toyota dynasty, created his initial wealth by innovating and creating new technology, specifically in the textile industry. His fascination with improving looms led him to create a more efficient wooden handloom, which increased productivity by 40-50%. Despite facing competition from European and British looms, Toyoda's response was to work harder and improve his product. His persistence paid off when his new looms found a ready market abroad, providing the seed money for the Toyota Motor Company. This story highlights the importance of innovation, hard work, and a relentless focus on improving products to build a successful business. Toyoda's philosophy of doing it yourself, insisting on quality, and creating something that benefits society resonates with modern entrepreneurs like James Dyson. His willingness to sell his patents and pivot to a new industry, despite his age, demonstrates the importance of adapting to changing markets and industries.

    • Leveraging competition and studying successful systems for Toyota's growthDuring the early development of the Japanese automobile industry, Kiichiro Toyoda prioritized creating a positive impact on society and building a successful production system. He studied competitors and even copied an engine design to create a car using interchangeable parts with Chevy, providing an advantage in resource-limited Japan.

      Making a positive impact on society and creating a successful system of production were top priorities for Kiichiro Toyoda during the early development of the Japanese automobile industry. Toyota, starting from the late 1920s, recognized the importance of not only creating reliable cars but also building an industry and a production system. To achieve this, Kiichiro studied competitors like Sam Walton and even copied an engine design from Chevy. This approach allowed Toyota to create a car that could use Chevy replacement parts, providing an advantage in a country with limited resources. This focus on creating a successful system of production, which would later become known as the Toyota Production System, has been a significant factor in Toyota's long-term success.

    • Starting small and being resourcefulSuccessful entrepreneurs and businesses start small, test the market, and adapt to changing circumstances

      Starting small and being resourceful are key elements for successful entrepreneurs and businesses, as shown by the story of Mailman and Toyota. Mailman began as a Gmail plugin, testing the market and gaining customers before potentially expanding into a full email service. Similarly, Toyota started out resource-constrained, experimenting with lean production and even pivoting to making food during World War II. This resourcefulness allowed Toyota to survive and eventually thrive in a free market. The story of both Mailman and Toyota highlights the importance of starting small, testing the market, and being adaptable to changing circumstances.

    • Learning from other industries and overcoming self-perceived limitationsEiji Toyoda's journey to the US led to Toyota's implementation of the Production System, revolutionizing manufacturing globally. Rockefeller's success in the oil industry was due to his unique skills and timing, but his descendants lacked his drive.

      Toyota's success story is a testament to overcoming self-perceived limitations and learning from other industries. Eiji Toyoda, after feeling like a third class auto company due to Japan's history, traveled to the United States to learn and gain confidence. He returned with a sense that nothing was beyond Toyota's abilities, leading to the implementation of the Toyota Production System (TPS) and the transformation of manufacturing worldwide. On the other hand, the Rockefeller story is about one man's brilliance and the right place, right time, right skills combination. John D. Rockefeller's success in the oil industry was due to his ambition, cunning, and cleverness, but his descendants did not inherit his drive to lead the family enterprise. Both stories illustrate the importance of resilience, continuous learning, and seizing opportunities.

    • John D. Rockefeller's religious belief fueled his pursuit of wealth and entrepreneurial successRockefeller's religious belief in wealth as a sign of God's grace drove him to accumulate it, capitalize on oil industry potential, secure discounts, and form a cartel, leaving a lasting impact on the oil industry

      John D. Rockefeller's religious belief in the pursuit of wealth drove him to become one of the most successful entrepreneurs in history. He saw wealth as a sign of God's grace and believed that his mission was to accumulate it in order to give it away for the betterment of humanity. Rockefeller's talent, thoughtfulness, and intense curiosity, combined with being in the right place at the right time, allowed him to capitalize on the oil industry's potential. He recognized the importance of transportation in moving the oil and saw the potential in using railways to gain a competitive edge. Rockefeller's ability to secure discounts and rebates for himself and his competitors through secret deals with railways was a major factor in his success. Despite the ethical concerns and eventual illegality of these practices, Rockefeller was able to persuade most major refiners to join his cartel, ensuring steady cargo and good rail rates. While some hated him, others became rich by taking his advice to sell or exchange their stock. Rockefeller's fundamental belief in his mission and his entrepreneurial skills allowed him to overcome the disconnect between his methods and his goals, leaving a lasting impact on the oil industry.

    • John D. Rockefeller's Strategic Buying and Monopolization of the Oil IndustryJohn D. Rockefeller's success in the oil industry came from long-term vision, strategic buying, confidential deals, lower costs, and avoiding family involvement.

      John D. Rockefeller's success in the oil industry was due in large part to his long-term vision and strategic thinking. He was able to buy out competitors and keep deals confidential, allowing him to secretly control and monopolize the industry. Rockefeller's approach of offering cash or stock in Standard Oil to potential sellers, along with his ability to sell oil at a lower cost than his competitors, gave him a significant advantage. Additionally, Rockefeller's decision to keep his children ignorant of the family fortune and not pass on the business to them led to the dissolution of the Rockefeller dynasty, transforming it into merely a family fortune. This story highlights the importance of strategic thinking, long-term vision, and keeping a low profile in entrepreneurship and business.

    • Join the speaker on a literary journey through AMA sessions and email newslettersEngage in insightful discussions and expand your knowledge by joining the speaker's AMA sessions and subscribing to his email newsletter, where he shares top 10 insights from each book he reads.

      The speaker, who has conducted numerous AMA (Ask Me Anything) episodes, invites listeners to engage directly with him through these sessions. He also encourages joining his email newsletter, where he shares his top 10 insights from each book he reads. With 307 books under his belt and 1,000 more to go, this is an excellent opportunity for those interested in gaining valuable insights from a wide range of literature. By listening to the AMA episodes and subscribing to the newsletter, you can benefit from the speaker's extensive reading and distillation of key learnings. So, whether you're looking to expand your knowledge, engage in insightful discussions, or simply learn something new, consider joining the speaker on this literary journey.

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    (2:30) Sam Walton built his business on a very simple idea: Buy cheap. Sell low. Every day. With a smile.

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    (2:00) My father was a self-made man who had known extreme poverty in his youth and had a practically limitless capacity for hard work.

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    (0:01) At the age of twelve I was an orphan.

    (1:00) My uncles made me become self-reliant very early in life. Looking back, I believe that it is to this, that much of my success is due.

    (9:00) The idea of wearing a watch on one's wrist was thought to be contrary to the conception of masculinity.

    (10:00) Prior to World War 1 wristwatches for men did not exist.

    (11:00) Business is problems. The best companies are just effective problem solving machines.

    (12:00) My personal opinion is that pocket watches will almost completely disappear and that wrist watches will replace them definitively! I am not mistaken in this opinion and you will see that I am right." —Hans Wilsdorf, 1914

    (14:00) The highest order bit is belief: I had very early realized the manifold possibilities of the wristlet watch and, feeling sure that they would materialize in time, I resolutely went on my way. Rolex was thus able to get several years ahead of other watch manufacturers who persisted in clinging to the pocket watch as their chief product.

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    (20:00) Business Breakdowns #65 Rolex: Timeless Excellence

    (27:00)   Rolex was effectively the first watch brand to have real marketing dollars put behind a watch. Rolex did this in a concentrated way and they've continued to do it in a way that is simply just unmatched by others in their industry.

    (28:00) It's tempting during recession to cut back on consumer advertising. At the start of each of the last three recessions, the growth of spending on such advertising had slowed by an average of 27 percent. But consumer studies of those recessions had showed that companies that didn't cut their ads had, in the recovery, captured the most market share. So we didn't cut our ad budget. In fact, we raised it to gain brand recognition, which continued advertising sustains. — Four Seasons: The Story of a Business Philosophy by Isadore Sharp. (Founders #184)

    (32:00) Social proof is a form of leverage. — Poor Charlie's Almanack: The Wit and Wisdom of Charlie Munger. (Founders #329)

    (34:00) What really matters is Hans understood the opportunity better than anybody else, and invested heavily in developing the technology to bring his ideas to fruition.

    (35:00) On keeping the main thing the main thing for decades: In developing and extending my business, I have always had certain aims in mind, a course from which I never deviated.

    (41:00) Rolex wanted to only be associated with the best. They ran an ad with the headline: Men who guide the destinies of the world, where Rolex watches.

    (43:00) Opportunity creates more opportunites. The Oyster unlocked the opportunity for the Perpetual.

    (44:00) The easier you make something for the customer, the larger the market gets: “My vision was to create the first fully packaged computer. We were no longer aiming for the handful of hobbyists who liked to assemble their own computers, who knew how to buy transformers and keyboards. For every one of them there were a thousand people who would want the machine to be ready to run.” — Steve Jobs

    (48:00) More sources:

    Rolex Jubilee: Vade Mecum by Hans Wilsdorf

    Rolex Magazine: The Hans Wilsdorf Years

    Hodinkee: Inside the Manufacture. Going Where Few Have Gone Before -- Inside All Four Rolex Manufacturing Facilities 

    Vintage Watchstraps Blog: Hans Wilsdorf and Rolex

    Business Breakdowns #65 Rolex: Timeless Excellence

    Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands by Jean Noel Kapferer and Vincent Bastien 

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    #350 How To Sell Like Steve Jobs

    #350 How To Sell Like Steve Jobs

    What I learned from reading The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience by Carmine Gallo 

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    (1:00) You've got to start with the customer experience and work back toward the technology—not the other way around.  —Steve Jobs in 1997

    (6:00) Why should I care = What does this do for me?

    (6:00) The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals by Frank Partnoy.  (Founders #348)

    (7:00) Easy to understand, easy to spread.

    (8:00) An American Saga: Juan Trippe and His Pan Am Empire by Robert Daley 

    (8:00) The Fish That Ate the Whale: The Life and Times of America's Banana King by Rich Cohen. (Founders #255)

    (9:00)  love how crystal clear this value proposition is. Instead of 3 days driving on dangerous road, it’s 1.5 hours by air. That’s a 48x improvement in time savings. This allows the company to work so much faster. The best B2B companies save businesses time.

    (10:00) Great Advertising Founders Episodes:

    Albert Lasker (Founders #206)

    Claude Hopkins (Founders #170 and #207)

    David Ogilvy (Founders #82, 89, 169, 189, 306, 343) 

    (12:00) Advertising which promises no benefit to the consumer does not sell, yet the majority of campaigns contain no promise whatever. (That is the most important sentence in this book. Read it again.) — Ogilvy on Advertising 

    (13:00) Repeat, repeat, repeat. Human nature has a flaw. We forget that we forget.

    (19:00) Start with the problem. Do not start talking about your product before you describe the problem your product solves.

    (23:00) The Invisible Billionaire: Daniel Ludwig by Jerry Shields. (Founders #292)

    (27:00) Being so well known has advantages of scale—what you might call an informational advantage.

    Psychologists use the term social proof. We are all influenced-subconsciously and, to some extent, consciously-by what we see others do and approve.

    Therefore, if everybody's buying something, we think it's better.

    We don't like to be the one guy who's out of step.

    The social proof phenomenon, which comes right out of psychology, gives huge advantages to scale.

    —  the NEW Poor Charlie's Almanack: The Wit and Wisdom of Charlie Munger (Founders #329)

    (29:00) Marketing is theatre.

    (32:00) Belief is irresistible. — Shoe Dog: A Memoir by the Creator of Nike by Phil Knight.  (Founders #186)

    (35:00) I think one of the things that really separates us from the high primates is that we’re tool builders. I read a study that measured the efficiency of locomotion for various species on the planet. The condor used the least energy to move a kilometer. And, humans came in with a rather unimpressive showing, about a third of the way down the list. It was not too proud a showing for the crown of creation. So, that didn’t look so good. But, then somebody at Scientific American had the insight to test the efficiency of locomotion for a man on a bicycle. And, a man on a bicycle, a human on a bicycle, blew the condor away, completely off the top of the charts.

    And that’s what a computer is to me. What a computer is to me is it’s the most remarkable tool that we’ve ever come up with, it’s the equivalent of a bicycle for our minds.

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    #349 How Steve Jobs Kept Things Simple

    #349 How Steve Jobs Kept Things Simple

    What I learned from reading Insanely Simple: The Obsession That Drives Apple's Success by Ken Segall. 

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    Can you give me a summary of Warren Buffett's best ideas? (Substitute any founder covered on the podcast and you'll get a comprehensive and easy to read summary of their ideas) 

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    (1:30) Steve wanted Apple to make a product that was simply amazing and amazingly simple.

    (3:00) If you don’t zero in on your bureaucracy every so often, you will naturally build in layers. You never set out to add bureaucracy. You just get it. Period. Without even knowing it. So you always have to be looking to eliminate it.  — Sam Walton: Made In America by Sam Walton. (Founders #234)

    (5:00) Steve was always easy to understand. He would either approve a demo, or he would request to see something different next time. Whenever Steve reviewed a demo, he would say, often with highly detailed specificity, what he wanted to happen next.  — Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs by Ken Kocienda. (Founders #281)

    (7:00) Watch this video. Andy Miller tells GREAT Steve Jobs stories

    (10:00) Many are familiar with the re-emergence of Apple. They may not be as familiar with the fact that it has few, if any parallels.
    When did a founder ever return to the company from which he had been rudely rejected to engineer a turnaround as complete and spectacular as Apple's? While turnarounds are difficult in any circumstances they are doubly difficult in a technology company. It is not too much of a stretch to say that Steve founded Apple not once but twice. And the second time he was alone. 

    —  Return to the Little Kingdom: Steve Jobs and the Creation of Appleby Michael Moritz.

    (15:00) If the ultimate decision maker is involved every step of the way the quality of the work increases.

    (20:00) "You asked the question, What was your process like?' I kind of laugh because process is an organized way of doing things. I have to remind you, during the 'Walt Period' of designing Disneyland, we didn't have processes. We just did the work. Processes came later. All of these things had never been done before. Walt had gathered up all these people who had never designed a theme park, a Disneyland. So we're in the same boat at one time, and we figure out what to do and how to do it on the fly as we go along with it and not even discuss plans, timing, or anything. We just worked and Walt just walked around and had suggestions." — Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World by Richard Snow. (Founders #347)

    (23:00) The further you get away from 1 the more complexity you invite in.

    (25:00) Your goal: A single idea expressed clearly.

    (26:00) Jony Ive: Steve was the most focused person I’ve met in my life

    (28:00) Editing your thinking is an act of service.

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    Michael Jordan In His Own Words

    Michael Jordan In His Own Words

    What I learned from reading Driven From Within by Michael Jordan and Mark Vancil. 

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    Episode Outline: 

    Players who practice hard when no one is paying attention play well when everyone is watching.

    It's hard, but it's fair. I live by those words. 

    To this day, I don't enjoy working. I enjoy playing, and figuring out how to connect playing with business. To me, that's my niche. People talk about my work ethic as a player, but they don't understand. What appeared to be hard work to others was simply playing for me.

    You have to be uncompromised in your level of commitment to whatever you are doing, or it can disappear as fast as it appeared. 

    Look around, just about any person or entity achieving at a high level has the same focus. The morning after Tiger Woods rallied to beat Phil Mickelson at the Ford Championship in 2005, he was in the gym by 6:30 to work out. No lights. No cameras. No glitz or glamour. Uncompromised. 

    I knew going against the grain was just part of the process.

    The mind will play tricks on you. The mind was telling you that you couldn't go any further. The mind was telling you how much it hurt. The mind was telling you these things to keep you from reaching your goal. But you have to see past that, turn it all off if you are going to get where you want to be.

    I would wake up in the morning thinking: How am I going to attack today?

    I’m not so dominant that I can’t listen to creative ideas coming from other people. Successful people listen. Those who don’t listen, don’t survive long.

    In all honesty, I don't know what's ahead. If you ask me what I'm going to do in five years, I can't tell you. This moment? Now that's a different story. I know what I'm doing moment to moment, but I have no idea what's ahead. I'm so connected to this moment that I don't make assumptions about what might come next, because I don't want to lose touch with the present. Once you make assumptions about something that might happen, or might not happen, you start limiting the potential outcomes. 

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    Can you give me a summary of Warren Buffett's best ideas? (Substitute any founder covered on the podcast and you'll get a comprehensive and easy to read summary of their ideas) 

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    Founders
    en-usMay 12, 2024

    #348 The Financial Genius Behind A Century of Wall Street Scandals: Ivar Kreuger

    #348 The Financial Genius Behind A Century of Wall Street Scandals: Ivar Kreuger

    What I learned from reading The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals by Frank Partnoy. 

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    Episode Outline: 

    1. Ivar was charismatic. His charisma was not natural. Ivar spent hours every day just preparing to talk. He practiced his lines for hours like great actors do.

    2. Ivar’s first pitch was simple, easy to understand, and legitimate: By investing in Swedish Match, Americans could earn profits from a monopoly abroad.

    3. Joseph Duveen noticed that Europe had plenty of art and America had plenty of money, and his entire astonishing career was the product of that simple observation. — The Days of Duveen by S.N. Behrman.  (Founders #339 Joseph Duveen: Robber Baron Art Dealer)

    4. Ivar studied Rockefeller and Carnegie: Ivar's plan was to limit competition and increase profits by securing a monopoly on match sales throughout the world, mimicking the nineteenth century oil, sugar, and steel trusts.

    5. When investors were manic, they would purchase just about anything. But during the panic that inevitably followed mania, the opposite was true. No one would buy.

    6. The problem isn’t getting rich. The problem is staying sane. — Charlie Munger

    7. Ivar understood human psychology. If something is limited and hard to get to that increases desire. This works for both products (like a Ferrari) and people (celebrities). Ivar was becoming a business celebrity.

    8.  I’ve never believed in risking what my family and friends have and need in order to pursue what they don't have and don't need. — The Essays of Warren Buffett by Warren Buffett and Lawrence Cunningham. (Founders #227)

    9. Great ideas are simple ideas: Ivar hooked Durant with his simple, brilliant idea: government loans in exchange for match monopolies.

    10. Ivar wrote to his parents, "I cannot believe that I am intended to spend my life making money for second-rate people. I shall bring American methods back home. Wait and see - I shall do great things. I'm bursting with ideas. I am only wondering which to carry out first."

    11. Ivar’s network of companies was far too complex for anyone to understand: It was like a corporate family tree from hell, and it extended into obscurity.

    12. “Victory in our industry is spelled survival.”   —Steve Jobs

    13. Ivar's financial statements were sloppy and incomplete. Yet investors nevertheless clamored to buy his securities.

    14. As more cash flowed in the questions went away. This is why Ponzi like schemes can last so long. People don’t want to believe. They don’t want the cash to stop.

    15. A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by Ed Thorp. (Founders #222)

    16.  A summary of Charlie Munger on incentives:

    1. We all underestimate the power of incentives.
    2. Never, ever think about anything else before the power of incentives.
    3. The most important rule: get the incentives right.

    17. This is nuts! Fake phones and hired actors!

    Next to the desk was a table with three telephones. The middle phone was a dummy, a non-working phone that Ivar could cause to ring by stepping on a button under the desk. That button was a way to speed the exit of talkative visitors who were staying too long. Ivar also used the middle phone to impress his supporters. When Percy Rockefeller visited Ivar pretended to receive calls from various European government officials, including Mussolini and Stalin. That evening, Ivar threw a lavish party and introduced Rockefeller to numerous "ambassadors" from various countries, who actually were movie extras he had hired for the night.

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    #347 How Walt Disney Built His Greatest Creation: Disneyland

    #347 How Walt Disney Built His Greatest Creation: Disneyland

    What I learned from reading Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World by Richard Snow. 

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    (8:00) When in 1955 we heard that Disney had opened an amusement park under his own name, it appeared certain that we could not look forward to anything new from Mr. Disney.

    We were quite wrong.

    He had, instead, created his masterpiece.

    (13:00) This may be the greatest product launch of all time: He had run eight months of his television program. He hadn't named his new show Walt Disney Presents or The Wonderful World of Walt Disney.

    It was called simply Disneyland, and every weekly episode was an advertisement for the still unborn park.

    (15:00) Disneyland is the extension of the powerful personality of one man.

    (15:00) The creation of Disneyland was Walt Disney’s personal taste in physical form.

    (24:00) How strange that the boss would just drop it. Walt doesn’t give up. So he must have something else in mind.

    (26:00) Their mediocrity is my opportunity. It is an opportunity because there is so much room for improvement.

    (36:00) Roy Disney never lost his calm understanding that the company's prosperity rested not on the rock of conventional business practices, but on the churning, extravagant, perfectionist imagination of his younger brother.

    (41:00) Walt Disney’s decision to not relinquish his TV rights to United Artists was made in 1936. This decision paid dividends 20 years later. Hold on. Technology -- developed by other people -- constantly benefited Disney's business. Many such cases in the history of entrepreneurship.

    (43:00) Walt Disney did not look around. He looked in. He looked in to his personal taste and built a business that was authentic to himself.

    (54:00) "You asked the question, What was your process like?' I kind of laugh because process is an organized way of doing things. I have to remind you, during the 'Walt Period' of designing Disneyland, we didn't have processes.

    We just did the work. Processes came later. All of these things had never been done before.

    Walt had gathered up all these people who had never designed a theme park, a Disneyland.

    So we're in the same boat at one time, and we figure out what to do and how to do it on the fly as we go along with it and not even discuss plans, timing, or anything.

    We just worked and Walt just walked around and had suggestions."

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    Related Episodes

    #239 The Wright Brothers

    #239 The Wright Brothers

    What I learned from rereading The Wright Brothers by David McCullough.

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    [3:40] Relentlessly Resourceful by Paul Graham

    [4:11] If I were running a startup, this would be the phrase I'd tape to the mirror. "Make something people want" is the destination, but "Be relentlessly resourceful" is how you get there.

    [5:35] Everybody engaged in complicated work needs colleagues. Just the discipline of having to put your thoughts in order with somebody else is a very useful thing. —Charlie Munger

    [6:44] No bird soars in a calm.

    [10:30] Neither ever chose to be anything other than himself.

    [11:36] Wilbur was a little bothered by what others might be thinking or saying.

    [11:46] What the two had in common above all was a unity of purpose and unyielding determination.

    [15:09] Every mind should be true to itself —should think, investigate and conclude for itself.

    [17:53] My Life in Advertising (Founders #170)

    [19:33] Overdrive: Bill Gates and the Race to Control Cyberspace (Founders #174)

    [19:39] Hard Drive: Bill Gates and the Making of the Microsoft Empire (Founders #140)

    [23:56] I wish to avail myself of all that is already known.

    [30:32] Like the inspiring lectures of a great professor, the book had opened his eyes and started him thinking in ways he never had.

    [34:29] In no way did any of this discourage or deter Wilbur and Orville Wright, any more than the fact that they had had no college education, no formal technical training, no experience working with anyone other than themselves, no friends in high places, no financial backers, no government subsidies, and little money of their own. Or the entirely real possibility that at some point, like Otto Lilienthal, they could be killed.

    [36:07] When once this idea has invaded the brain it possesses it exclusively.

    [38:23] I’ve never found anybody that didn’t want to help me if I asked them for help. I called up Bill Hewlett when I was 12 years old. He answered the phone himself. I told him I wanted to build a frequency counter. I asked if he had any spare parts I could have. He laughed. He gave me the parts. And he gave me a summer job at HP working on the assembly line putting together frequency counters. I have never found anyone who said no, or hung up the phone. I just ask. Most people never pick up the phone and call. And that is what separates the people who do things, versus the people who just dream about them. You have to act. —Steve Jobs

    [41:47] You wanted to start a company. You knew that it was going to be hard. What are you complaining for?

    [42:17] Jay Z: Decoded (Founders #238)

    [42:56] They had their whole heart and soul in what they were doing.

    [46:28] You should follow your energy.

    [53:49] The Wright brothers have blinders on mentality. They don't care what other people say. They just say I'm working at this. I don't care what other people think.

    [54:16] The brothers proceeded entirely on their own and in their own way.

    [58:21] This is the blueprint they are using: Test. Iterate. Test. Iterate. Work long hours. Concentrate and ignore the naysayers.

    [1:00:31] Wilbur was always ready to jump into an argument with both sleeves rolled up. He believed in a good scrap. He believed it brought out new ways of looking at things and helped round off corners.

    [1:00:57] Amazon Unbound: Jeff Bezos and the Invention of a Global Empire (Founders #180)

    [1:02:26] Pour gasoline on promising sparks.

    [1:04:14] It is very bad policy to ask one flying machine man, about the experiments of another, because every flying machine man thinks that his method is the correct one.

    [1:08:46] Stephen King On Writing: A Memoir of the Craft (Founders #210)

    [1:10:26] They were always thinking of the next thing to do. They didn't waste much time worrying about the past.

    [1:11:05] Look around, just about any person or entity achieving at a high level has the same focus. The morning after Tiger Woods rallied to beat Phil Mickelson at the Ford Championship in 2005, he was in the gym by 6:30 to work out. No lights. No cameras. No glitz or glamour. Uncompromised. — Driven From Within (Founders #213)

    [1:12:56] They would have to learn to accommodate themselves to the circumstances.

    [1:20:42] The best dividends on labor invested have invariably come from seeking more knowledge rather than more power.

    [1:27:37] He went his way always in his own way.

    [1:31:45] A man who works for the immediate present and its immediate rewards is nothing but a fool.

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    #132 Edwin Land (Steve Jobs's Hero)

    #132 Edwin Land (Steve Jobs's Hero)

    What I learned from reading The Instant Image: Edwin Land and the Polaroid Experience by Mark Olshaker. 

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    [1:42] The word “problem” had completely departed from Edwin land's vocabulary to be replaced by the word “opportunity”. 

    [2:01] What was it about this man and his company that allowed such confidence and seeming lack of concern with the traditional top priorities of American business? 

    [2:38] There is something unique about Polaroid having to do both with the human dimension of the company, and with a unity of vision of its founder and guiding genius.  

    [3:36] Perhaps the single most important aspect of Land's character is his ability to regard things around him in a new and totally different way.  

    [4:14] Right from the beginning of his career Land had paid scant attention to what experts had to say, trusting his own instincts instead.  

    [4:49] Land has always believed that for any item sufficiently ingenious and intriguing, a new market could be created. Conventional wisdom has little capacity with which to evaluate a market that did not exist prior to the product that defines it. 

    [5:21] He feels that creativity is an individual thing. Not generally applicable to group generation. 

    [5:52] Land is a man deeply caught up in the creative potential of the individual. 

    [6:33] An institution is the lengthened shadow of one man. 

    [7:43] Apple founder Steve Jobs once hailed Edwin Land, the founder of Polaroid and the father of instant photography, as "a national treasure" and once confessed to a reporter that meeting Land was "like visiting a shrine." By his own admission, Jobs modeled much of his own career after Land’s. Both Jobs and Land stand out today as unique and towering figures in the history of technology. Neither had a college degree, but both built highly successful and innovative organizations. Jobs and Land were both perfectionists with an almost fanatic attentiveness to detail, in addition to being consummate showmen and instinctive marketers. In many ways, Edwin Land was the original Steve Jobs.  

    [8:36] There's a rule that they don't teach you at the Harvard business school. It is, if anything is worth doing it's worth doing to excess

    [11:22] Steve Jobs: I always thought of myself as a humanities person as a kid, but I liked electronics. Then I read something that one of my heroes, Edwin Land of Polaroid, said about the importance of people who could stand at the intersection of humanities and sciences. And I decided that's what I wanted to do.  

    [12:51] In a world full of cooks, Edwin Land was a chef. [Link to The Cook and The Chef: Elon Musk’s Secret Sauce]  

    [19:34] Land was asked what he wanted to be when he was younger: I had two goals. To be the world's greatest scientist and to be the world's greatest novelist. 

    [21:28] Everyone acknowledged that the future of Polaroid corporation would be determined by what went on in the brain of Edwin Land. 

    [22:01] My motto is very personal and may not fit anyone else or any other company. It is: Don't do anything that someone else can do.  

    [22:54] Fortunately our company has been one which has been dedicated throughout its life to making only things which others can not make.  

    [25:06] Land had far more faith in his own potential, and that of the company he inspired, than did any of the experts looking in from the outside.  

    [27:30] Polaroid failed to build a successful company by selling to other businesses: Each [product] would have involved millions of dollars in revenue for the company, but each invention involved a certain degree of transformation of an existing industry controlled by an existing power structure. From this Land realizes he needs to control the relationship with the customer. He realizes he needs to sell directly to the end user

    [36:16] Edwin Land is inspired by, and learned from, people that came before him. One example of this is Alexander Graham Bell. Edwin Land is not worried about the marketing [of a new product] because Bell went through the same thing: Land apparently lost little sleep over the initial situation, calling to mind that the same sort of reaction had greeted the public introduction of Bell's telephone, 70 years earlier. The telephone had been a dominant symbol in Land's thinking. He began making numerous connections between his camera and the telephone.  

    [40:16] Over the years, I have learned that every significant invention has several characteristics. By definition it must be startling, unexpected, and must come into a world that is not prepared for it. If the world were prepared for it, it would not be much of an invention.  

    [40:46] It is the public's role to resist [a new invention, a new product/service]. 

    [41:29] It took us a lifetime to understand that if we're to make a new commodity —a commodity of beauty —then we must be prepared for the extensive teaching program needed to prepare society for the magnitude of our invention

    [45:12] Only the individual— and not the large group— can see a part of the world in a totally new and different way.  

    [48:08] Land's view is that a company should be scientifically daring and financially conservative. 

    [50:30] To understand more about every aspect of light, Edwin Land read every single book on light that was available in the New York City Public Library. That reminded me of one of my favorite lectures ever: Running Down A Dream: How to Succeed and Thrive in a Career You Love

    [51:59] Land on the problem with formal education: Young people for the most part —unless they are geniuses— after a very short time in college, give up any hope of being individually great. 

    [54:16] Among all the components and Land's intellectual arsenal, the chief one seems to be simple concentration.  

    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested, so my poor wallet suffers.”— Gareth

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    #254 John D. Rockefeller: The Founding Father of the Rockefellers

    #254 John D. Rockefeller: The Founding Father of the Rockefellers

    What I learned from reading John D: The Founding Father of the Rockefellers by David Freeman Hawke.

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    [0:07] He transmitted messages in code and secrecy covered all of his operations.

    [0:39]  Rockefeller compared himself to Napoleon.

    [2:20] He could think quicker and along more individual and original lines than any of them.

    [2:35] It is always hard to successfully control what you don't understand.

    [3:32] Titan: The Life of John D. Rockefeller by Ron Chernow. (Founders #248)

    [7:27] By the time I was a man — long before it —I had learned the underlying principles of business and the rules of business as well as many men acquire them by the time they are 40. I needed no one to advise me about the nature of transactions with which I had been carrying on since childhood.

    [8:59] Random Reminiscences of Men and Events by John D. Rockefeller. (Founders #148)

    [10:55] You should try to expose yourself to experiences that are slightly ahead of your skillset or understanding and you should do so constantly.

    [13:48] A veteran of long-distance provider MCI, Price came to Amazon in 1999. He blundered early by suggesting in a meeting that Amazon executives who traveled frequently should be permitted to fly business-class. Bezos often said he wanted his colleagues to speak their minds, but at times it seemed he did not appreciate being personally challenged. “You would have thought I was trying to stop the Earth from tilting on its axis,” Price says, recalling that moment with horror years later. “Jeff slammed his hand on the table and said, ‘That is not how an owner thinks! That’s the dumbest idea I’ve ever heard.’ — The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone (Founders #179)

    [18:42] He saw that posted rates, supposedly fixed, could also be negotiated. All was not as it seemed on the outside.

    [20:45] He was the greatest borrower I ever saw.

    [22:12] What if the president of a bank refused to make me a loan? That was nothing. That made no difference to me; simply meant that I must look elsewhere until I got what I wanted.

    [26:07] Hard Drive: Bill Gates and the Making of the Microsoft Empire by James Wallace and Jim Erickson (Founders #140)

    [26:41] Lost from view is the Rockefeller that Cleveland knew in the 1860s— a vigorous, alert gentleman with a quiet, but extraordinary personality.

    [29:10] Small egos do not build giant companies.

    [30:23] When Money Was In Fashion: Henry Goldman, Goldman Sachs, and the Founding of Wall Street by June Breton Fisher. (Founders #255)

    [33:10] The customer-experience path we've chosen requires us to have an efficient cost structure. The good news for shareowners is that we see much opportunity for improvement in that regard. Everywhere we look we find what experienced Japanese manufacturers would call muda, or waste.* I find this incredibly energizing. I see it as potential-years and years of variable and fixed productivity gains and more efficient, higher velocity, more flexible capital expenditures. — Invent and Wander: The Collected Writings of Jeff Bezos (Founders #155)

    [34:54] Other refiners groused about these restrictions, but in general they accepted them as facts to live with. Rockefeller refused to do so.

    [38:55] Last Train to Paradise: Henry Flagler and the Spectacular Rise and Fall of the Railroad that Crossed an Ocean by Les Standiford. (Founders #247)

    [40:15] You don’t want turnover on your core product team. Knowledge compounds. Don’t interrupt the compounding. — Softwar: An Intimate Portrait of Larry Ellison and Oracle by Matthew Symonds (Founders #124)

    [47:47] 1. You raise money so you can increase production. 2. Use your increased production to get better rates on transportation than other refiners. 3. Use your increased profits —because you have better transportation —to buy your competitors. 4. You continue to find secret sources of income.

    [55:23] Most simply doubted that Rockefeller's plan would work. John, it cannot be done, they said.

    [56:13] It was ruthless efficiency and hyper competence.

    [1:00:07] Rockefeller loves secret allies.

    [1:00:31] The secret ownership of other companies was so well preserved that often a refiner enraged by Standard’s ruthless tactics would refuse its offer to buy him out and sell instead to a local competitor—unaware that he had in fact sold out to Standard.

    [1:02:01] He believed that Standard Oil stock is the most valuable thing in the world to own and always bought more of it.

    [1:05:57] Check out how Rockefeller turns an expense into a profit center: Standard purchased a half interest in Chess, Carley & Company, the largest distributor of refined oil to the South and Southwest. Together they purchased a number of the newly introduced bulk tank cars. Chess-Carley shipped turpentine from southern pine forests to Cleveland, where the cars were emptied and the turpentine was sold in the local market. The tank cars were then filled with kerosene and sent back to Louisville for distribution. In a single swoop the huge expense of shipment by barrels had been eliminated.

    [1:09:22] He proceeded in the same steady, methodical way that a farmer plowed a field.

    [1:13:47] The danger Potts and the Pennsylvania railroad posed to his creation convinced Rockefeller that the time had come to pick a fight with the world's largest industrial corporation.

    [1:23:20] Rockefeller would have horse-drawn carriages drive up and down the streets and sell oil directly.

    [1:28:28] I think it is fair to say that the strong men who were competitors in the oil refining business, the aggressive men in the best financial condition, and the most intelligent, indeed the class of men who would be most likely to survive in the competitive struggle, were the men who were most likely to take up our idea of cooperation.

    [1:33:09] Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons by Edward J. Renehan Jr.

    [1:35:38] Jay Gould was the single most unsettling force ever to appear on the American industrial scene.

    [1:36:22] Among wheelers and dealers of his day Gould had no peer.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested, so my poor wallet suffers. ”— Gareth

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    #234 Sam Walton: Made In America

    #234 Sam Walton: Made In America

    What I learned from rereading Sam Walton: Made In America by Sam Walton.

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    [1:56] The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone. (Founders #179)

    [5:45] We just got after it and stayed after it.

    [6:06] Foxes and Hedgehogs

    [6:39] Hedgehogs may not be as clever as foxes but they obsessively measure and track everything about their business, and over time, they acquire deep, relevant knowledge and expertise. Their single minded approach may appear risky at times but they are conservative by nature. Hedgehogs don’t speculate or make foolish bets. If all their eggs are in that one proverbial basket, they follow Mark Twain’s advice – and watch that basket very carefully.

    [7:17] The thing with Hedgehogs is that they never give up. They keep at it – and they don’t ever get bored because they just love what they do – and they have a lot of fun along the way.

    [7:28] Hedgehogs are the ones who build great, lasting companies. As entrepreneurs, they are the rarest of breeds – those who can start something anew, make it work, stick with it, and build something special, and ultimately, inspire others along the way, with their determination, dedication and commitment.

    [8:49] At first, we amazed ourselves. And before too long, we amazed everybody else too.

    [9:26] Think about how crazy this is. He died weeks after that writing this. His last days were spent categorizing and organizing his knowledge so future generations can benefit.

    [12:32] Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger(Founders #90)

    [12:56] "It's quite interesting to think about Walmart starting from a single store in Arkansas – against Sears, Roebuck with its name, reputation and all of its billions. How does a guy in Bentonville, Arkansas, with no money, blow right by Sears? And he does it in his own lifetime – in fact, during his own late lifetime because he was already pretty old by the time he started out with one little store. He played the chain store game harder and better than anyone else. Walton invented practically nothing. But he copied everything anybody else ever did that was smart – and he did it with more fanaticism. So he just blew right by them all. —Charlie Munger

    [17:11] What motivates the man is the desire to absolutely be on the top of the heap.

    [17:32] Practice your craft so much that you're the best in the world at it and the money will take care of itself.

    [18:44] We exist to provide value to our customers.

    [21:18] A Conversation with Paul Graham

    [22:32] It never occurred to me that I might lose; to me, it was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy.

    [26:42] Time to Make the Donuts: The Founder of Dunkin Donuts Shares an American Journey by William Rosenberg. (Founders #231)

    [29:35] It didn’t take me long to start experimenting—that’s just the way I am and always have been.

    [30:56] Do things that other people are not doing.

    [33:13] The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley by Jimmy Soni. (Founders #233)

    [33:41] I think my constant fiddling and meddling with the status quo may have been one of the biggest contributions to the later success of Wal Mart.

    [34:10] Our money was made by controlling expenses. I gotta read that again because it's so important. Our money was made by controlling expenses.

    [37:49] Sam Walton: The Inside Story of America's Richest Man (Founders #150)

    [38:37] I’ve always thought of problems as challenges, and this one wasn’t any different. I didn’t dwell on my disappointment. The challenge at hand was simple enough to figure out: I had to pick myself up and get on with it, do it all over again, only even better this time.

    [42:47] Four Seasons: The Story of a Business Philosophy by Isadore Sharp. (Founders #184)

    [45:12] The Autobiography of Andrew Carnegie by Andrew Carnegie (Founders #74)

    [47:08] Sol Price: Retail Revolutionary & Social Innovator by Robert E. Price. (Founders #107)

    [49:56] Sam had a really simple hypothesis for the first Wal Mart: We were trying to find out if customers in a town of 6,000 people would come to our kind of a barn and buy the same merchandise strictly because of price. The answer was yes.

    [52:19] I have always been a Maverick who enjoys shaking things up and creating a little anarchy.

    [54:23] In business we often find that the winning system goes almost ridiculously far in maximizing and/or minimizing one or a few variables. —Charlie Munger

    [55:02] He does something really smart here. And this is something I missed the first time I read the book. He finds a way to force himself to know the numbers for every single store.

    [56:13] Distant Force: A Memoir of the Teledyne Corporation and the Man Who Created It by Dr. George Roberts. (Founders #110)

    [58:11] Driven From Within by Michael Jordan and Mark Vancil. (Founders #213)  I’m not so dominant that I can’t listen to creative ideas coming from other people. Successful people listen. Those who don’t listen, don’t survive long. —Michael Jordan

    [58:43] We paid absolutely no attention whatsoever to the way things were supposed to be done, you know, the way the rules of retail said it had to be done.

    [1:03:15] Estée: A Success Story by Estée Lauder. (Founders #217)

    [1:04:00] One thing I never did—which I’m really proud of—was to push any of my kids too hard. I knew I was a fairly overactive fellow, and I didn’t expect them to try to be just like me.

    [1:06:38] I was never in anything for the short haul.

    [1:10:36] Michael Jordan: The Life by Roland Lazenby. (Founders #212) Like so many NBA players, Drexler was operating mostly off his great store of talent, absent any serious attention to the important details of the game. Jordan had been surprised to learn how lazy many of his Olympic teammates were about practice, how they were deceiving themselves about what the game required.

    [1:11:56] And you can think about Sam constantly learning from everybody else, visiting stores —that is a form of practice. Every single craft has a form of practice. It just is not as obvious as it is in sports.

    [1:13:26] He proceeds to extract every piece of information in your possession.

    [1:15:37]  He has just been a master of taking the best of everything everybody else is doing and adapting it to his own needs.

    [1:18:52] We were serious operators who were in it for the long haul, that we had a disciplined financial philosophy, and that we had growth on our minds.

    [1:19:54] Most people seem surprised to learn that I've never done much investing in anything except Walmart.

    [1:20:42] He's like I just figured out the Walmart's worked. And then all I did was focus on making more of them. You don't have to over-complicate it.

    [1:23:04] If you ask me if I'm an organized person, I would say flat out, no, not at all. Being organized would really slow me down. (Optimize for flexibility)

    [1:24:26] The Difference Between God and Larry Ellison: God Doesn't Think He's Larry Ellison by Mike Wilson (Founders #127): My view is different. My view is that there are only a handful of things that are really important, and you devote all your time to those and forget everything else. If you try to do all thousand things, answer all thousand phone calls, you will dilute your efforts in those areas that are really essential

    [1:26:15]  I think one of Sam's greatest strengths is that he is totally unpredictable. He is always his own person. He is totally independent in his thinking.

    [1:26:45] If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them. —Bruce Lee

    [1:28:40] You can’t possibly know the TAM. You are in the middle of inventing the TAM.

    [1:30:08] There is no speed limit by Derek Sivers

    [1:31:54] Built From Scratch: How A Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion (Founders #45)

    [1:41:35]  I like to keep everybody guessing. I don't want our competitors getting too comfortable with feeling that they can predict what we're going to do next.

    [1:42:25] He ties that investment int technology with the compounding savings and over the long-term, he's going to destroy his competition just off this one metric alone.

    [1:43:39] Big Brown: The Untold Story of UPS by Greg Niemann. (Founders #192)

    [1:47:56] Sam’s 10 Rules for Building A Business

    [1:48:04] One thing I don’t even have on my list is “work hard.” If you don’t know that already, or you’re not willing to do it, you probably won’t be going far enough to need my list anyway.

    [1:48:51] Commit to your business. Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work.

    [1:50:54] Control your expenses better than your competition. This is where you can always find the competitive advantage. For twenty-five years running—long before Wal-Mart was known as the nation’s largest retailer—we ranked number one in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

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    I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth

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    #121 Billy Durant and Alfred Sloan (General Motors)

    #121 Billy Durant and Alfred Sloan (General Motors)

    What I learned from reading Billy, Alfred, and General Motors: The Story of Two Unique Men, A Legendary Company, and a Remarkable Time in American History by William Pelfrey.

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    [0:01] They were oil and water in all respects. Billy Durant, the high school dropout, was the flamboyant dreamer and gambler, focused on personal relationships and risk. Alfred Sloan, the MIT engineer, was the stern organizer and manager, focused on data, logic, and profit.

    [4:40] The paradox of this book in two sentences: Sloan’s most constant criticism of Durant was that he acted on instinct and whim rather than facts. Yet the achievements and decisions of Durant the dreamer were what made Sloan the manager’s spectacular career possible.

    [6:50] Alfred Sloan telling us it is a lot harder to stay successful over a long period of time: “The perpetuation of an unusual success or the maintenance of an unusually high standard of leadership in any industry is sometimes more difficult than the attainment of that success or leadership in the first place.”

    [10:45] Walter Chrysler left the highest paying job in the entire automobile industry because of Billy Durant’s wasted his time: More than once, Chrysler had been summoned by Durant only to be kept waiting then to discover that the urgent matter that needed to be discussed was nothing that couldn’t have been resolved quickly at the plant level rather than wasting top management’s time and brainpower.

    [12:52] Sloan believed Billy Durant had no right to be distracted by the financial markets while Durant was supposed to be running General Motors: Sometimes I used to feel as if he were always holding a telephone in his hand. I think there were twenty telephones in his private office and a switchboard. He had private wires to brokers’ offices across the continent. In the same minute, he would buy in San Francisco, sell in Boston. It did not seem to me that the operating head of a corporation had any right to devote himself to the market, even if the stock of the corporation was involved. 

    [17:13] Billy Durant will remind you that everything is possible: What was it in Billy’s genes and character that had led the high school dropout from rural Michigan to even dream of building an empire that would change the world?

    [20:30] Billy Durant would tell you to control the things that are important to your business: Billy Durant would never forget the bitter lesson of what he saw as Paterson’s treachery: Always control your own production and, whenever possible, all of the links in the supply chain.

    [23:05] Unlike Durant, Alfred Sloan had a singular focus. His singular focus was General Motors: By the early 1930s, Alfred Sloan was widely considered to be one of the richest men in the world, but he had no known hobbies and had never sold a single share of General Motors stock. His only known investment of either time or money in anything beyond the domain of General Motors was the purchase of a yacht at the urging of friends and his wife. 

    [26:37] There are ideas worth billions in a $30 history book: In Henry Singleton’s case that is literally true. Reading Sloan’s book had a multiple billion dollar effect on the outcome of Teledyne.

    [29:04] Sloan would not tolerate any excuses: Sloan is kinda like Yoda. Do or do not. There is no try.

    [29:48] A key ideological difference between Alfred Sloan and Billy Durant was how growth should be financed: What Alfred didn’t mention in his letter was that Hyatt’s growth had come from reinvestment of the company’s own profits, rather than the acquisition and stock market strategy mastered by Billy Durant. A divergence of fundamental strategy that would be at the core of the General Motors crisis and showdown of 1920.

    [31:12] An important lesson from history is that new and important industries can start out looking like toys: In 1899 the automobile industry in America was no more than the strange and wild obsession of a few tinkerers and an amusing diversion for the wealthy investors who backed them. Cars were still widely considered impractical toys and dangerous nuisances by most people. 

    [34:35] Alfred Sloan admired and copied Henry Leland, founder of Cadillac and Lincoln: Of all the American automobile industry’s unique and colorful characters, the one whom Alfred Sloan most admired and emulated was Henry Leland. Leland was a perfectionist who expected and demanded higher standards than any of his peers. He accepted no excuses and suffered no fools. Sloan devoted more words and detail to what he learned from Leland than he did any other person.

    [45:55] Alfred Sloan on why vertical integration was so important in the automobile industry: Every piece of the motor car is essential in the sense that the automobile is not complete unless every part is available. Delay in delivery of any part stops the work. A dependable supply of parts might well make the difference between success and failure.

    [48:08] Henry Ford's ONE idea was different from every other automobile manufacturer: He was determined to concentrate on the low end of the market, where he believed that high volume would drive costs down and at the same time feed even more demand for the product. It was a fundamental difference in philosophy.

    [49:35] Comparing and contrasting Billy Durant and Alfred Sloan’s approach to growth: For him, the thrill was always in the next deal, not in the nuts and bolts of daily operations. In his mind, empires were built by conquest, not through internal growth. And the road to conquest was through other people’s money and other people’s confidence in his genius, rather than the quiet, conservative road of knowing the fundamentals of manufacturing and marketing, as was followed by the likes of Henry Leland and Alfred P. Sloan.

    [56:05] Why Innovation is so important. We must arm the rebels! The automobile sparked not only the great oil boom it also sparked innovations in petroleum refining and metal alloys that led to further innovation in chemicals. It also spawned the motel industry as well as gasoline retailing. Thanks solely to the demand for gasoline to run the internal combustion engine automobile, crude oil production in the United States soared.The first gasoline pump appeared in 1905. By 1915, Standard Oil had developed the first chain of gasoline service stations. In 1916, the federal government began funding the interstate highway system. Ten years later, motels and road side restaurants were common in every state. Thanks to Henry Ford’s Model T, Billy Durant’s vision of a nation transformed by the automobile had become a reality.

    [57:47] When most of your revenue comes from one or two major customers you are fragile. Or Why Alfred Sloan sold Hyatt Roller Bearing to Billy Durant: The problem for Alfred and his peers was that, compared with the manufacturers, the suppliers’ pockets were not nearly as deep. Expanding their production capacity meant investment in new plant and equipment, but there was no guarantee that the boom would continue once these commitments were made. Nor was there any guarantee from the manufacturers that they would not shift to a different supplier with lower cost at some point in the future, leaving Supplier A stuck with both excess capacity and the cost of the original expansion.

    [1:14:23] How Alred Sloan positioned General Motors product line: Sloan developed a product strategy targeted at buyers’ specific aspirations. Its essence was to divide the market into price segments and offer cars with the most appeal and value in each segment. Sloan called it “a car for every purse and purpose.” No General Motors vehicle division or brand would compete against any other in any of the segments; each was to have a distinct identity and appeal to a distinct buyer.

    [1:15:10] David Ogilvy on positioning your product: Now consider how you want to ‘position’ your product. This curious verb is in great favor among marketing experts, but no two of them agree what it means. My own definition is ‘what the product does, and who it is for.’ I could have positioned Dove as a detergent bar for men with dirty hands, but chose instead to position it as a toilet bar for women with dry skin. This is still working 25 years later.

    [1:16:48] Alfred Sloan —like Sam Walton—made it a priority to visit dealers: I made it a practice throughout the 1920s and early thirties to make personal visits to dealers. I went into almost every city in the United States, visiting from five to ten dealers a day. I would meet them in their own places of business, talk with them across their own desks in their closing rooms and ask them for suggestions and criticism concerning their relations with the corporation, the character of the product, the corporation’s policies, the trend of consumer demand, their view of the future, and many other things of interest in the business. I made careful notes of all the points that came up, and when I got back home I studied them.

    [1:20:46] Billy Durant’s metaphor on the difference between him and Alfred Sloan: But, you see, this infantry captain didn’t have the disadvantage of a West Point education and he didn’t know he couldn’t do it, so he just went ahead and did it anyway.

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