Rockefeller: Lots to take away and lots to let him keep
It's been longer than I intended between letters. Just going out on a limb... This probably won't be the last time it takes me longer to put a letter out than I want. I find it difficult to write these unless I'm completely undistracted, which is easier said than done between family life and trying to be a present, contributing employee at work. I'm not complaining though. That's exactly how I want it.
During this absent stretch I have squeezed in time to read Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow. Many of you (at the time of writing this there are actually none of you), I'm sure, have heard of this book as it has been recommended by many influential entrepreneurs and investors. In particular, Warren Buffett has recommended this book. I wasn't entirely sure what I would be able to take away from this book when I started it, but considering the source of the recommendation I decided I wasn't going to ask any questions and just get on with it.
This isn't a review. It's a reflection on what resonated the most with me. For many people interested in business, investing, and entrepreneurship, it would probably be easy to ignore the shortcomings or flaws in Rockefeller. I would like to start out with my feelings towards the bad.
Rockefeller seemed to be a two-faced man. I think that's the superficial evaluation of him. He was a ruthless businessman whose intellect surpassed most of his competitors, and he capitalized on that advantage relentlessly. He had an uncanny ability to see where the oil business was heading and how he intended to control it. He was two steps ahead of everyone. Much of what drove him was the self-righteous complex he possessed. He genuinely believed that he was a steward acting on God's behalf and that it was his duty to support (or control) the oil business for the betterment of mankind. I would argue that to a certain degree he did accomplish this, but I am conflicted on the methods by which he did it.
Rockefeller was extremely good at hiring the right people to do the dirty work for him and even better at turning his cheek when people came looking for who was responsible. He was a mastermind at creating complex networks that thwarted journalists, investigators, and the law at almost every turn. He understood the power of investing money in ways that were difficult for outsiders to recognize or quantify, yet produced insane returns. He contributed significant amounts of money to politicians who in turn helped create barriers for his business practices within the law. He was willing to slash prices of his own products so severely, sometimes to the point of loss, in order to starve out his competition because he knew he could hold his breath longer. Strategically, he purchased refineries and other businesses with competitive geographical locations. He owned significant fleets of tank cars to which he knew rail companies would need to pay him to use... to ship his own oil. The man was everywhere all at once.
I hope that as an investor I can learn from his tactics to more readily recognize when the administration of a prospective investment is deploying similar strategies to create their own moat. That is one of my takeaways from the book. Even though Standard Oil was a business of more than a hundred years ago, I want to find companies that similarly understand how to tactically position themselves for long-term growth. Of course, I also want to find honest and moral owners and operators who don't exhibit ruthless business at the expense of others. I hope understanding the ugly proves just as valuable as understanding the good. I want to identify it quicker than the other guy.
The feelings I had towards Rockefeller throughout the book were so conflicting because on the flip side he was a devoted family man. He was reliable. He was philanthropic (potentially the most influential philanthropist of all time). He was stoic.
"Success comes from keeping the ears open and the mouth closed." - John D. Rockefeller
Rockefeller was known to speak far less than he was spoken to. He spent a lot of time listening and analyzing his employees and his opponents and only once he had taken the whole situation into account would he speak. This almost created a scarcity effect on his words. He was never the center of attention, but he was always the center of attention. At business meetings with his counterparts and subordinates he tended to sit back and let everyone else speak first. When he finally offered his opinions or decisions everyone else knew to listen. This quality was especially useful in negotiations. His opponents frequently cited how difficult it was to know what he was thinking because he was so selective with his words. He embodied patience.
As patient as Rockefeller was, he was just as decisive. He would contemplate problems for long periods of time. He would table conversations often. He deliberated within himself. What I loved most about him was when he came to a conclusion he acted with conviction. This directly relates to the type of behavior I want to exhibit with my investments and I am certain that this is one of the reasons people like Buffett hold this biography in high praise. To me I find that true conviction, the kind that leaves you with no reservations, is the hardest skill to hone. I want to be able to make an investment decision after days, weeks, months and even years of deliberation with no doubt in my mind that I am right. Will I be right every time? The wise emphasize that I won't be, but that's not the point. Without conviction all the home run opportunities will fly right on by.
Rockefeller also had a good instinct for bringing on incredibly capable leaders. He didn't shy away from strong personalities. In fact, he seemed to prefer them because he knew they weren't scared to accomplish difficult feats. He often hired adversaries he respected from previous business altercations. His understanding of acquiring talent and letting them run was one of his redeeming qualities as the head of an efficient, monstrous machine. Buffett often references this strategy. He loves strong operators for his businesses and to step back and give them the runway to do what they need to do.
Aside from being one of the most infamous business leaders in history, he was also one of the most philanthropic leaders ever. Rockefeller didn't care to use his wealth for himself, at least relative to other tycoons. He was practical and frowned upon flaunting money. Just as he felt he was a steward of God in his business he also felt it was his duty to give his wealth away meaningfully and practically. A quality about his giving that I respect very much was his desire to give anonymously. As he became more wealthy it became increasingly hard to give in complete secrecy, but he did attempt to keep his name off of most of his donations. He tried so hard to keep his name out of the public eye that the places you do see his name required a considerable amount of convincing. There were a couple of reasons for this. He was aware of the infamy of his name. There was plenty of public distaste for it. He also had deep Baptist views to which it was virtue to help others not for your own gain, but theirs. When giving away his money he preferred to do it without recognition. Whether it's one reason or the other I have an immense amount of respect for his desire to give. It's one of the motivators for me to build wealth so that my family and I can have a greater array of ways to give.
There's honestly so much more to this book, but I don't want this to turn into a full review or recount. I just wanted to put down on paper the things that resonated the most with me. You'll find that exceptional people like Rockefeller produce lasting ripple effects for generations to come. His influence reached far beyond Standard Oil, shaping American industry, legislation, philanthropy, medicine, and education in ways we probably don't even fully appreciate today. I think there is so much to learn from Rockefeller, both the man and the company he built. The good and the bad.