Deep Dive
Shownotes Transcript
If you listen to last week episode on j pol getty's autobots phy, you know that getting placed a lot of time and energy and money into building relationships with other entrepreneurs, investors and executives. He knew that relationships between these types of people often produce non lennar returns.
He knew that relationships run the world so much so that he bought a seventy two room estate that served as what he called a age on center, essentially a place specifically created to build relationships. I have not bought in a state to help you build relationship other founders, investors and executives, but I do run out entire venues, and I host founders events so you can build relationships with other founders, investors and executives that listen to this podcast. These events last for two days, and they are all inclusive.
That means all you have to do is get there and I take care. The rest. That means your ticket covers lodging, meals and access to every single event.
If you want to comment, hang out with me and other high value listeners of this podcast for two days makes you come to a founders event. There is one happening july twenty nine through the thirty first in Scotti valley, california. And you can sign up to attend by going to founders podcast dot com for such events.
That is, founders podcast dot com for such events. I hope to see you there, and I hope you enjoy this episode on how to be rich by j. paul. The book I wanted talk about today is how to be rich and is writing by jay pag gei. He did not start out as a book.
As a matter of fact, the book I hold my hand was first published over sixty years ago, but IT started out because the founder of playboy magazine, hugh hair, approach jao in the ninety sixties, and he asked him to write a series of column s so he wind up writing. Jp, getting wound up writing over five years, nineteen different essays with the goal of transfering and educating, basically transfer his experience and the knowledge that jpl get he had about building businesses to the next generation, to what he can see, what he called the Younger businessman of his day. Now keep in mind, when he is writing these essays, he seventy three years old, so almost everybody else is Younger than him.
And as such, this book is very different from the autobots phy of tapotte, which I covered last week. Really the way I would think about reading this book and what this pog guess is going to be is we just have one of, if not the richest person on the planet at the time he's writing this. And he is just telling us the lessons that he derived from sixty years, nearly sixty years, of building businesses.
And so I wanted jump right into why this is a good use of our time. And then then, jack, he tells us why he's doing this at first, is why this is a good use of our time. My entire adult life has been devoted to building and Operating business enterprises.
So he knows a thing or two. This is why he is doing this. I and so many other successful businessmen have so frequently noted that many Young people today enter upon their business careers without sufficient grounding and preparation.
They fail to grass the long range picture. They do not understand and and appreciate the univerSally applicable fundamentals, the basic philosophes, the unless implications and ramifications and the numerous responsiblities, which are the absolute essentials of business. And he just says, right at the very beginning and something repeat throughout the S.
A. In the book, I would like to convince Young business men that there are no sure fire formulas for success in business. And so that is the first time that mentions that the fact there's no share for a quick and easy formula for success of business.
But you'll see he repeats. He's got a handful of principles and he's just going to repeat them in different context throughout the book. So he does give us some background into his life, trying not to overlap too much for what I covered on his autobiography.
But I do want to start out because he starts to the book with this essay called how I made my first billion. And the first part of that essay is this haulage, this respect, this love for his father. His father was a hero.
His father was the best money over you. As we saw last week, he credits a lot of his success, he says, overall, began his automotive phy. My seat at the table was set for me, and that seat was set by my father.
Do not compare me to john e rock feller rockfeller a eagle and I am, but a sparrow is the line that he uses autobiography. He just has this deep respect for these self made men. We talks about this as the sun of a successful oil man.
I ve been exposed to the virus of oil fever ever since childhood. Addie, when I talked about last episode, one of the best things that George getty, his father, ever did was exposed his son to business at a very Young. He is like a ten, seven years old when he's visiting oil fields.
He has all these questions. There is no possible way that a ten, seven old can possibly understand everything that's going on on building an oil business and any business really. But IT constantly stretches his understanding of the world.
And then he is is able to pick up these ideas little by little, as is exposed to more and more. I think a good idea. This is my father.
He was a self made man who had known extreme poverty in his youth, just like rock feller, a Johnny rock feler who obviously want to get his serious as well. My father had a practice ly limitless capacity for hard work, and he had an almost uncanny talent for finding oil. And he was interesting, what pop to mine when I got to that paragraph, I would guy droit down on the note myself.
This is just like William and her se's father. I have a book I did, William and on her spoored. Phy, you know, I think two hundred episodes ago, something like that, I have a book on the host family dynasty that I will eventually read and turn into the pocket.
But there's a lot of similarities, not that I think about IT between jpl getting willing round of her. They were, they were both sons of very successful men. Both of their fathers took in a neat interest in developing the talent of their son.
Getty's father made his money in oil. In the fact that a lot of people that ran into and met George ff. Getty said that he had this know, he smell oil.
Well, you can go go back and read about the George horse, which is really rent of uh, herse's father George hers wounds up founding the sink of the homestake mine. He actually listed IT on the socky change in 1 and seventy nine。 That mine produced gold from one hundred and seventy nine all the way up until two thousand.
One, I bring that up because get is about to mention the similarities between the gold rush, the california gold rush, what was happening in oklahoma about sixty years later. But the similarities between the fathers is, anyway, the met George, i've get, he thought, you know, he could smell oil. He just had the senate capacity to find oil.
The same thing was said about George, host for gold. In fact, the native americans in the area where he was mining for gold gave George host a nickname, and they called him the boy that the earth talks to. And so jpl getty tells us what the oil energy was like when he was introduced to IT.
He says the atmosphere was identical to that which historians described as prevAiling in the california gold fields during the eighteen forty nine gold rush in oklahoma. The fever was to find oil, not gold, and he was an the mic. And so after college, getty starts up his own oil company.
He tells about how this came to be. My father rejected any ideas that a successful man son should be given money as a gift after he was old enough to earn his own living. My father did find out some of my early Operations, but IT was solely on a seventy thirty percent basis.
So that means this is out of the money to buy the leases in the equipment is is if you find any oil, I get seventy percent of the profits and some financing the entire thing, and you get thirty percent. And the difference between the beginning of his father's oil career in his own and his father was immediately successful. I think it's something like he, the first forty, at the first forty three wells that he drawled forty two came back, producers, he had like, a year with nothing was happening.
And he like, well, I can't quit now and he believed he couldn't quit because he says wild cutting was in my blood. And he talks about this little small business city starts. IT is going to eventually make him one of the richest people in the world.
He says, at this point, I acted as my own geologist, legal advisor, drilling superintendent, explosion expert. And as rough neck and rose bet, I Operated in much the same manner as most other wild cutlers at this time. With one important exception of this is facing in those days the science of petroleum um geology had not yet gained very wide acceptance in the oil fields.
Many oil man sneered openly at the idea that some damp book warm could help them find oil. I was among the few who believed in geology. I studied the subject avidly at every opportunity and applied what I learned to my Operations.
And so then he's going to describe the difference stream, like the wild cutters. So think of the wild cutters as the startups and then these entrenched vereker tic oil company. So something he's going to repeat over over again in different giving different sets of advice is the danger to become standardize, to become theocratic.
And so even though he's writing about the his very early days in business fifty years after IT happened, there is initial principles that he still hears to even when his business much larger, much more complex, you know worth billions compared to a million dollars, which is what he's going to make right now. And he says we all faced heavy competition and opposition from major oil firms. He's onna tell a several stories south book about how they they do not play fairly, to say least, and how he saw some these problems, some these huge companies did not always abide by the rules when they engage illegal or financial infighting to smother an independent wildcatter.
This wind up being a good thing for getty, because I made him and made him develop skills that he needed to survive. I'm reading about these techniques that that he needs to develop to serve this opposition from company, and thinking about l. Jordan than most officers have done on Michael Jordan.
When if you listen to epsom, two twelve is like the seven hundred page bargrave y of Michael jorden that I read. In that book, IT talks about the fact that he could not get pass for several years, couldn't pass the detroit pistons, they were in his way to win the chapin ship. He couldn't get pass the playoff, and he concerned to adapt and change his game, his body, his training methods, his practice habits, to overcome that obstacle.
But on the other side, the obstacle now, he has a skill set that he won't have had if he didn't have that obscure that problem to begin with. The exacting thing is happening here. Wild cutter developed traits and techniques which enabled them to stay in business.
We became flexible, adaptable and versatile, adept at improvisation and innovation, if for no other reason that because we had to, we had to. In order to survive, the big companies employed vast numbers of specialist and consultants. They house them in large and expensive offices.
The wildcatters found our experts among the hard bitten veteran oil field workers. We did our own administrative and paperwork, keeping both to a minimum. As for offices, these more often are not troubled.
Ed, with us in our mud covered automobile iles, we drove from one drilling site to another. So we are still, in his essay, the first S A called how I made my first billion. And he's going to talk about how a major oil company or collection of major oil companies are trying to squeeze and how one other major oil company wants up helping him.
And so he is a collection of wells that he's drilling in each well right now is bring in thousands of barrels of oil a day. And all the sudden he cannot find a buyer for his crude production. He goes to all the firms and they refuse to deal with him.
And this is when he realized, oh, this is a giant oil company is trying to squeak me because they want to buy my walls for discounted Price. The motors behind this boycott came clear when I received several calls from brokers offering to buy the least at a very low Price. The brokers fused to name the principles they represented.
By then I was an old hand in the petroleum industries. I recognize all the classic signs indicating a well organized squaze play. Certain interest wanted my lease either I sold out at a ridiculous low Price, or IT be left without any market for the oil produced by the walls on the property.
Unable to sell my oil, I had to find some way to store IT. And so that is the first rupee makes us OK. No one will buy this oil.
I'm not going to shut down the walls. I will least storage tanks, and I will store the oil until I can solve the problem and find a buyer. But he knows the clock is ticking, and he says, when the tanks are topped off, I would have no choice but to shut down my Operation entirely.
And the next thing he does really smart, go straight to the top. He goes to the ultimate decision make up. Now he still doesn't know who trying to squeak them. And so at this point, the largest oil company is shell oil. And so he goes and makes an appointment with the shells company president, sir George lay Jones.
He says, in desperation, I aimed high, meaning he, when straw to the top, he add and ask for an interview with him personally and was informed that he would be happy to see me. And so getta describes this meeting that he's having with sir George, says sir George listened attentively to what I had to say. The deepening scale that each across his face, as he heard me, was all the proof I needed that his firm was not a party to the boycott and that he hardly disapproved of such tactics.
When I finished talking, he smiled, relaxed. Grant will help you. As a start, the company would buy the next one points million barrels of crude oil that I produced.
In addition, sir George told me a pipeline would be constructed to link my wells with the shell oil company's pipeline network, and construction was to commence the very next day. And so I just love that simple little story because I think there's too very valuable. License is one.
You have to stop the bleeding. The worst thing that getty could have done, its panic, and then, you know, sold out a very valuable leashes because he was getting squeeze in his reserves cases. The I can sell IT that i'm going to stored, that at least stops the bleeding for now.
And then he knows you have to entry for the top. You have to go to the ultimate decision maker because the president of shell can look, you have a commitment right now, my word, in this one meeting over by the next one point seven million barrels. And then tomorrow, tomorrow morning, sending a construction crew, so your all go straight to our pipelines.
Before I move on, there is another note that I left myself in this section and I wrote, no wonder he wanted complete control. IT is a very obvious. If you read jiao gettings autobahns y, what did he do during and after the depression is like, I I am not just gonna just going to be drilling wells.
I am going to build a vertically integrated oil company. I'm going to be a complete control of my entire business. And there's many examples in this book is many examples in the automobile by j.
Poetsch, where he is constant, disappointed by relying on what's going on in the other guys shop. And so at this point is life. He doesn't have pipelines, he doesn't have his own words, he doesn't have his supertankers, but he's gonna get them. And I can't help but think experiences like this heavily influenced him in that direction. And so that is the next part that I want to skip to, because he talks about the fact that his father dies and it's the great depression is happening.
And every all of his advisers, he's still a Young men, and all of his advisers are saying, hey, we need to liquidity everything now says many advised me, liquid everything to sell out not only my father's holdings, but my own firms and interest as well as well. The business situation can only get worse. They predicted the economy is going to disGrace completely.
They said, I didn't see things that way at all. He so macular, he goes the exact opposite. So you have the consensus, you, this is the end of the world, sell now. At least you can convert some of your assets even if there you know, pending dollar interaction al cash.
And when I get to this section, and when he starts target with that, you know what? Actually, I began to envision a completely integrated and self contain oil business, just like john e rock filler. And just as IT was remarkable effect that john I rock folded at the very beginning of the oil industry, right he got, and right the very beginning when they first discovered oil pennsylania ia.
Everybody thought, all this is the only places is going to be, this is going to be a quick book, and this, this entire industry is going to this, right, right? And rock. Vella did not believe that.
He believed that I was enduring. And we see that getty has faith in this idea. And I want to really pause here, because now that read the autobots phi, read this book, this is one of the most important turning points in his entire life.
Think about this, like this decision that he's making us, a Young man in nineteen twenty OK. What path before you get to? What do you want to do on the left hand side? We, hey, we're going to sell everything.
You know, the world is ending. At least we have a lot of money. The right is i'm going to double down.
I'm going to make this my life work. I'm not only like to sell my oil wealth, i'm going to invest more money in this. This is no different.
Then, when Steve jobs said in the comments and address that, you can connect the dots looking forward. You can only connect the dots looking backwards. So you have to trust in something just your gun, destiny, life, carma, whatever.
But what rockville knew, what getting knew, what Steve jobs knew. You have to put your faith in something. The future is always unknown. And so he says, in business, IT is never easy to go against the beliefs and attitude all by the majority. That is exactly what he's doing.
In the point in life, the businessmen who moves counter to the tide of revealing opinion must expect to be obstructed, derided dad, and is one thing to say if for his competitors, for people in the media, people he doesn't know to doubt him, is his friends and family are doing IT as well. My friends and equines felt my buying spray would prove a fatal mistake. And so this idea to listen to your own inner voice, to make decisions based on what you want your life to be, now what the consensus, S R R, the prevAiling opinion at the time, your friends or queen.
This is important because he didn't make his first billion in nineteen thirty. If he didn't think about this, he needed to do what he's going through. Now where he's vertically integrating, he's taking over the this giant oil company.
He's getting capacity and skills that he that his company did not possessed because twenty years later, he winds up getting the biggest deal of his life. He gets the concession of the neutral zone, the saudi arabian portion of the neutral talks. The fact of twenty years after he blocked this consensus ded not selling out, i'm doubling down more of my assets.
He gets this concession from the king of starter ababa. And what crazy is in the neutral zone they're going to wind up producing that is going to wind up producing thirteen billion barrels of oil. I just love thinking about that story.
There's the idea behind IT. You know, there's handful of decisions that we make that will change the trajectory of our entire lives. And when we make the decision, usually we don't have the data, we don't know. We have to put our faith in something so want to move on to an excess a and really nice I say to me it's IT talks about the fact that optimism is a moral duty and he's writing to the Young businessmen of that day and so many were saying like there's no more opportunity. This is nineteen sixty five so he says, there will always be room for the man with energy and imagination, the man who can successfully implement new ideas into new products and services.
Anyone who has achieve success is frequently ask the same question by the people who meets, how can I do this too? And then he runs into all these pessimistic Young people that you don't have to worry about as competitors because they they are. So misc won't even start.
But you were lucky. You started in business at a time when I was still possible to make millions. You couldn't do IT.
Nowadays, no one could. I never cease to be astounded by the prevalence of this negative and totally ironist attitude among supposably intelligent people. So something that picked up over over, I think, the the single best description of what businesses i've ever heard. I. Years ago, I actually came from Richard branson and he says that a business is just an idea that make someone else's life Better.
And I think that such an important thing to remember because not just for the the statement I do you think that the statement effect, but the reason that there were always be unlimited opportunity is because there's unlimited ways to make other people's lives Better. So the reason that there's always unlimited opportunity is because of business is just an idea that makes somebody else life Better. And there is always ways to make other people's lives Better.
So imagine being this negative, pessimistic Young person in one thousand and sixty five, the name of the sage. You can make a million today. And the response is, no, you can.
And one of the most markable things about reading books, you know, other sixty seven years old, four hundred years, you just see people say the same things over and over again. And so he's going to talk about some of the the reasons that these people say, no, you can do this today. You got in right at the right time, but that time has passed, SHE says.
I consider myself neither a profit nor an economist, nor a political scientist. I speak simply as a practical working businessman. I believe the outlook for business is good and that they will become even Better as time goes on.
We can see from our vantage point that that prediction was accurate, right? I feel that american businesses men have ample reasons to be optimistic about their prospects and profits for years and even decades to come is also true about that. He was also read about that.
Rather, I say this fully aware that in some american business circles, IT has long been fashionable to bomb E A lack of opportunity. And so what he means by that is all of this list excuses about what's happening now, and these are impossible problems for the the businessmen of today overcome. So touch about high taxation, excessive labor cost, unfair foreign competition, creeping socialism.
And his response to this is also another of reading this book in his autograph. Y. J.
Pog is going to hold the reader, hold unit to a high standard. He does not like excuses. I said last week his favorite saying was the sign that was on Harry truman's desk.
The book stops here. You could clear that, get bleves in extreme ownership. So this is what he says to my way of thinking. All of this is shared nonsense. The complaints are merely convenient alibis for the uni magin ative, the incompetent, the nearby ted and narrow minded and the lazy.
I can't see any validity to the argument's advance by the pessimist and the defeated, but then calamity howlers have always been with us chanting one dismal and discourse ing course or another again, something he repeats over over again he is a vacuous reader of history and just like can get this day just like before get this day, just like in the day that you N I occupy you're always going to have the pessimist that defeat is they're always chanting one dismal al and discouraging excuse or another. And so the way I think about what get teaching us right now is that optimism m moral duty and that pessimism aborts opportunities. He says there are always opportunities to reach businesses.
Men s can profit if they will only recognize and seize them. The last things that american business needs are complaints, alibis and defeated philosophy. S what american business does need and an ever increasing numbers.
And I believe this with my whole heart, by the way, what not just american business, business world does need, and in an ever increasing numbers, are Young businessmen who are willing and able to assume the responsibility lie s of progressive, vigorous industrial and commercial leadership. The rewards awaiting such men are practically limitless. Many Young, qualified, highly qualified Young applicants give up before they start.
And so then getting has advised for Young entrepreneurs that don't give into pessimism, don't give into defeat sm, and actually try to seize opportunities. And so he actually starts out by quoting Harry truman. He said that Harry truman said I would study the lives of great men and famous women.
And I found that the men and women who got to the top for those who did the jobs they had in hand, with everything they had with energy and enthusiasm and hard work. And so when I got to that line, that says those who got to the top or those who did the jobs they had in hand with everything they had IT, maybe think of something that charlie monger would repeat. He said that human buffett believed in collies prescription.
And monger said that ninety eight percent of our attention was devoted to the task at hand. We are believer s in carlist prescription, and then he defines IT that the job a man is to do is the job at hand and not civilized, dimly in the distance back together, there are absolutely no safe or share fire. Formulate for achieving success in business.
I believe that there are some fundamental rules of the game which you followed will tip the odds for success in your favor. These are rules i've applied in which every millionaire businessman with whom I am acquitted has also followed. And so he actually makes a list to ten different things.
Number one, choose a field which he knows and understands, so figured are where your circle of competence. Number two, you should never lose sight of the central aim for all businesses, which is to produce more and Better goods to more people. Number three, a sense of thrift is essential for success in business.
The businessman must to himself to practice economy where ever possible. Number four, be always beyond guard against the temptation to over expand or launch expansion programs. Blindly forced growth can be fatal to any business, new or old.
I never beat that. Forced growth can be fatal to any new business, to any business new or old. There's a great line from David pack ker, the founder of hp, where he says that more companies die from indigestion, starvation.
And I think that's exactly what gehe's getting to there for. Number four. Number five, a businessman must run his own business.
He cannot expect his employees to think or do as well as he can. He must maintain close and constant supervision over the entire business. Number six, the businesses.
Women must be constantly alert for new ways to improve his products and services and increase his production and sales. Soak really way, saying, as you should invest in technology, that is something that the great entrepreneurship getty, during getting an after getty, all believed. In fact, if you read Andrew, autobiography was probably published eighty years before this book came out, or maybe sixty years, something like that.
But one of the main lessons when you study the early days, and as carney built his steel empire, there is there is a theme in that book which is investing in technology， the savings compound. He gives you advantage over slowing moving competitors and can be the different train of profit and a loss. Number seven, borrowed money was always be promptly repaid.
Nothing will destroy a career faster than a bad credit rating. Number eight, a businessman must constantly seek untapped or under exploited markets. Number nine, guarantees should always be honored in the customer's favor. The business that is known to be completely reliable will have little difficulty filling its order books in keeping them filled. And number ten, no matter how many millions and individual masses, if he is in business, he must always consider his wealth as a means for improving living conditions everywhere.
And number ten is just a lesson that his father to the fact that, you know, don't just sit on a unch of gold coins like your screaming duck, you have more money than you never need reinvestment to making more products and services that make other people's lives Better. So I want to skip head. He has an essay called the millionaire mentality.
There's a lot of these ideas in here that I picked up on reading these books, reading this biography, and I call this founder mentality. But I just want to tell you a quick story that comes from the sa. It's about the importance of incentives and then making sure that you have people because you don't have to be a founder to have funder mentality, but your top talent should all have founders mentality.
He, or what jo getty describes as millionaire talk. And so he goes and he realizes that he's got in over two hundred different businesses by the time he rates this book and he talks about the site visit and his his top guy running the site, he's like, know guys got a brain. What's going on here? He's here everyday.
And yet, as soon as I get here within an hour, I see a list of things that could be improved and soak. He's havens the conversation with them and he says, hey, I only need to spend an hour on one of the sites. And I spot several things that we could do Better or cheaper and increased production and profit.
I told Frankly, I can understand why you don't see them too. And this is the response. But you own the properties, the superintended declared.
You have a direct personal interest in everything that happens that's enough to sharpen any man's eyes to ways of saving and thereby making more money and get his response. He is really good with people. Actually, he is not.
He doesn't get angry like, well, I pay you to do a job as or yelling doesn't fire what what, Michael? Successful people listen. Those who don't listen don't last long.
So getting here this response you goes, oh, two to truth be told, I never thought of IT quite in that way before. So he molded over with this guy. George said for a couple days, he's like, okay, how can I reline our incentives? So George starts thinking like an owner and so he he proposes an I D.
A. He goes back and says, say, George, I an idea, instead of paying you salary, i'll give you a percent of the profits. And we can just consider this.
The test is not permanent, but if he works out, you'll make more money. And so what happens is he comes back, he says, I inspected my properties again some sixty days after George Miller took over under this new incentive relationship. I checked the Operations, my newly, but could find nothing wrong.
And the reason getty is telling that story because he believes that most of the people in your organza fit into handful of categories. And so he's going to describe some of the categories. The first category is the entrepreneurs says in this first group, or those individuals who work best when they work entirely for themselves, when they own and Operate their own businesses, such men do not want to be employed by anyone.
Their desire is to be completely independent. They care nothing for the security that a salary job offers. They want to create their own security, what a great line.
They want to create their own security and build their own futures entirely on their own. But every business is gonna one or maybe they know is only a handful coffers, but is all points. The next segment, the second group of people. May never want to build their own business or found their own business, but they're excessively talented if you give them the right incentive structures, he says.
Next are the men who do not want to go to business for themselves, but who achieve the best and sometimes spectacular results when they are employed by others and share in the profits of the business they want to earn in proportion to what they produce with neither floors nor ceilings on their incomes. George Miller was one who fit into this category, and so get his advice to entrepreneurs is really spend a lot of time cultivating and maxims ing the talent. And it's in the second group.
Then he's got of the third and fourth group. The fourth was really funny calls, like the postal clerks. Really, what is telling this is like, don't we waste your time with these type of people? And one thing he says is that there are some people that just do not have the ability are the desire to learn.
And you run into these people with business. And ten years of experience supposed to have ten years experience really has only one years experience repeated ten times over. And then that kind of person is related to the fourth category, which is really the opposite of this idea, that getting repeats of an idea at the box ops here, that the truly talent person wants to take ownership of the outcome.
He wants to take responsibility for mistakes. He wants take responsibility ties for the successes. But then you have a lot of people with the poster clerks, which essentially don't care at all about how the business performs.
They just want their paycheck. They're not really paying attention. And he says, these are the ones who do the least and demand the most. They view the company for which they work as a corner copia, from which good thing should flow to them, rather than is something to which they are loyalty in which they should strive to build. So again, those are, don't wish your time with that kind of person.
But then he goes back to the most important category, which is that category number two, you have that executive, you have that talent person, you have somebody, your company, they have this millionaire mentality, even if are not the founder of the company, they may not be the C. E. O of the company, but they have that founder mentality.
And one way they reveal themselves is by thinking small, which is really faster. Just make more sense in a minute. It's more important for the man with the millionaire mentality to be able to think small in the sense that he gives me ticula attention to even the small, small details.
And this is no opportunity to reduce cost in his business. This is such an important point. What might seem to be penny pinching at one level might be large scale economy at another.
I have an excEllent story from rock fellows by graph tighten, which which a illustrate what he means there. I'll get there one second. The giant that he talks about, this example of a giant U.
S. Corporation that actually made a study of the contents of the trash basket. So the waste baskets in its administrative offices. So each night for a week, they had team of workers come in, empty the waste and then they'd sort out the usable items and the company property, which had actually been tossed into them.
So like paper clips, rubber bands, a racist stuff like that, stuff that could be reused, ed, they took an imitator of them in the trash, and they multiplied, ed, that total by fifty two, to estimate what this was costing them for a year. And they figured out that more than thirty thousand dollars was being wasted each year. And so then getting has an example that happened inside of one of his own companies.
He says, a bright junior executive. The sky had the millionaire mental mentality, the founder mentality. He devised a shortcut in a production Operation, which saved half a cent per unit, but add IT up to a total yearly savings over twenty five thousand dollars.
Which is remarkable, is, again, this is how they reveal themselves to you, right? This talent is in your organza. And there's clever ways in which they revealed that they are possessing more talent and drive in the position that they currently have.
Because this guy once saving the company twenty five dollars a year that was more than twice of its annual salary. This Young man quite definitely has what I turned the millionaire talk. He is the ownership mentality, the fanner's mentality, right? He is, incidently, no longer a junior executive.
And so this idea about teaching everybody inside your organization to think small. And so this is a great example in the biography of rock veller got titan, where a rock veller is thinking small, I think, demonstrates the principal that get you trying to teach you. And I am going to read from tighten this.
After watching machine solar caps to the cans, he asked the expert, how many drops solar do you use on each can? forty. The men replied, have you ever tried thirty eight rock filer rest? No, I have not.
Would you mind having some sealed with thirty eight? And then let me know. When thirty eight drops were applied, a small percentage, the cans leaked, but none leaked when they applied thirty nine drops.
Hence thirty nine drops to sada became the new standard instituted at all standard oil refineries. That one drop of salter said, rock fella, still smiling in retirement, save twenty five hundred dollars the first year. But that export business kept on increasing after that and doubled and could draped and became immensely greater than IT was then. And the savings has gone steadily along. One drop on each can has a mounted sense to to a savings of many hundreds of thousands of dollars.
And so the next few s says, get he keeps going back to what are the kind of people like what makes a great executive, what makes a poor executive, what makes the person that you want in your team? What is makes the person that you want to fire? And he warns about this type of organization, man, that you're gonna see.
There's just a bunch of them that they reappear in every organization and they have that the worst traits and an executive can have. And any time they get, he finds people like these in the organization, he removes them from his organization. And so the the two terrible traits that they have is the way they speak to suborn and the way they kiss us to the bosses.
And so he describes this occurring management personality that he sees on everything he personifies. The two worst qualities anyone holding down in management job could possible possess. His attitude towards his subordinate is clearly that of a slave driver.
His attitude towards his superior is that of a complete blocker underly, devoid of imagination or common sense. And so immediately after describing the kind of executive you don't want, he talks about the kind that you want. The very first thing you should look for in the executives, the dehra, in the team, the rebuilding, is the ability to think and act for themselves without costly running to disappears for advice.
This is his, he, he loves making lists, which I love as well. So this is getting five lessons on leadership. And these leadership trades are not only for your executive team, but also for you yourself.
Number one example is the best means to instruct or inspire others. Number two, a good executive accept full responsibility for the actions of the people under him. How many times repeat that over over in his automotive phy? He's repeating in every single essay, you must have extreme motor y.
You must take responsibility for your actions. He talks about, people make excuses. He used different words.
What essentially is like the people make excuses. Ses is just losers. They're never gonna anything. Number three, the best leader never ask anyone under him to do anything that he is unwilling to do himself.
One of the things that getting prize themselves is that on in an oil business, he can do every single job he knew. He knows his business from A D. C.
Therefore, there's no problem he can solve. Number four, the man in charge must be fair but firm with his suborn. He does not hamper them, and he always bears in mind the famous breeds contempt.
He believes that you should treat them fairly, that you hold them high standard, that you don't pumper them, but you don't become friends with them. He doesn't believe that leads to a good outcome. Five, praise should always be given in public, and criticism should always be delivered in private.
And what I love is he makes this list is like a summary for his experiences. And then he summarizes the summary. So he says, I learn my own lessons and lead many years ago in the tough, no nonsense school provided by the oil fields.
And so he talks about, from me, from an employee perspective, the best kind of boss and leader you can possibly be. So this is an old time. Rigger r once told him that OK, he says, the best boss is one who knows the business Better than I do.
But trust me, that's the kind of man i'll work my tail offer, knows the business Better than me. But trust me, and something getting gets into the fact that executives must have the scale they have to communicate clearly and quickly. This is something the polling was gifted a section of time.
So he says, time is money in business. Misunderstandings in the interpretation of requests. Usually it's overcomplicated right. Misunderstanding is in interpretation. Request reports or instructions are very costly.
The good executive is one who can explain things and tell people what needs be done quickly and clearly need to repeat that. The good executives, one who can explain things and tell people what needs we don't quickly. And clearly, I don't think anybody else is Better at this.
In Apollo, i'm going to read something from one Apollo spider graphs. Long orders, which require much time to prepare, to read and to understand, are the enemies of speed. No polling could issue orders of a few sentences, which clearly expressed his intentions and required little time to issue and to understand.
Time is money in business, right? That's exactly we get you to said no point. Me was able to get his point across in little time to make IT to issue and to understand.
So what I think about, what I got to that quote in the opinion is, clear thinking plus clear writing, equals more speed. And so another talent and skill that you want your top team and executives in your company to have is this idea of foggy. In fact, gei says that he's looking for the habitually drifty person.
Listen to this, an individual who is naturally drifty will have an infinitely greater chance for success than another of equal ability who does not possess this quality. The habitually fifteen person will be able to immediately recognize opportunities for lowering overhead. How many times when I even half to the book, he just repeating this over and over again?
You've got to watch your cost. You've got to be efficient. The person who has formed thrifty habits will always have a fluid reserve to meet contingencies.
And Carry him through slack periods. In fact, when I got to the session, there's two things apart to my mind and never forgot. It's it's fascinating how you can read a book.
You spend twenty five hours reading a book, maybe read four, five hundred pages, whatever cases. And you know, just maybe a sentence that that you can read, one sentence that you never forget, one paragraph that you never forget. And so immediately came to mind when I got to this part is there's a book called a few lessons from warn buffet.
He was episode two hundred and two. And something about IT and monger notice is that there is that this has been cost conscious being drift. IT is habitual.
IT is a habit. Listen s our experiences. This is buffet. Right now. Our experience has been that the manager of an already high cost Operation frequently, it's uncommonly resourceful in finding new ways to add overhead.
To add overhead IT is his obbo ude in adding expenses, while the manager of a tightly run Operation usually continues to find additional methods to curtail cost, even when his cost are already well below those of his competitors. Buff is not the only person that noticed through out history. It's not the only sentence where I haven't read the book in years.
And I still remember sam walton in his automotive phy, says IT is plainly, as you can possibly say, IT. You can make a lot of different mistakes and still recover if you run an efficient Operation. Or you can be brilliant and still got a business if you're too inefficient.
I love the idea that your brilliance can actually be negated because you're too inefficient. Another thing that can net brilliance is, but you just have the right temperament. You get when something bad happens, you pen if you get scared.
So something that get you preaches over over gan and buffer t says this as well, is that you have to stay home. You cannot panic. And he was actually getting this advice as Young man from an older businessman in this with the older businessman, and told them, because problems are obviously inevitable, trouble, stress, all that is inevitable.
As he says, always think of yourself as a man who is just fAllen overboard in the middle of a lake. If you keep your width about you, you can always swim to sure, or at least flow until someone fishes you out. But if you lose your head in panic, you're finished, your drown.
That's a very summer to win. Buffett says that you know, ordinary intelligence not being an absolute and like that table stakes, but once, if you have at least ordinary intelligence, what then you need to build a successful career business if you need temperament to control the urges that actually get other people in the trouble. And so other people, let's stress to feed them.
Other people start to panic. All the people in capable staying calm and making the the right decision. And we are. He saw that get he developed that talent early in life when he was talking about the fact that imagine being a Young man with not a lot of resources, you think you hit patter. You have all these wells producing thousands of bells of oil today.
And then suddenly one of your unknown and unnamed big competence completely squeeze you and cuts off all your ability to sell your oil. What they want to get IT to do was the opposite. What he did, they didn't expect to state, commonly wanted him to panic and then buy yourself as his very valuable assets to them.
And he didn't. He had the rate temperament to control the urges that get other people into trouble. And so i've skip ahead to another essay is called business blenders and booby trapped and he just were counting a bunch of these reoccurring mistakes and problems that you're likely to run into.
And so not only is this section great writing, but IT reinforces two of his principles, that one, you need to be where the work is happening. In two, get rid of the reaux racy. Get rid of the paper shoffner.
No work about work, just work. No work about work, work. And he's noticing, because you have this rise on these business school graduates that there is building paper empire, and he hates IT.
The writing is clariss. Young men generally start out in the business world today as strictly disciplined and passively obedient to some pagan coat. By the time they leave college where they receive overspecialized educations, they are virtually sacrificed to the organization.
Organization is capitalized in putting quotations, right? So there's a the head of this paging cold and they are dedicated to serving the complex rituals of writing mammals and buck passing. They are and remain forever closeted from the unanointed lady of the rank and file production workers.
Procedure rules are their most honored fetishes. They are conditioned to meet periodical in a solum cn clave and pour over the esoteric of statistical tables and committee reports. They are far removed from the harsh, mundane realities of commerce.
I made my first million dollars in the front sea of a battered second hand model tea ford. This model tea served as my executive office and field headquarters, and sometimes even as my bedroom, almost every other wild cutter Operated in much the same manner. He had no fixed hours, no five day work week.
He had to be his own promoter, his own geologist, legal explosive expert, drilling superintendent, and jack of all trades. Most of his time we spent in the field working alongside his men. We wild counters eliminated all unnecessary administrative overhead expenses in our Operations.
We familiarized ourselves to is comparing on, contrasting with the business, education these Young guys to had, which he finds relatively useless to the business education he got actually working. We've familiarize ourselves, surely, with all aspects of our business and cut all of our costs down by exercising unceasing and vigilant supervision over every phase of our business. Years ago, business men automatically kept administrative over, had to absolutely imam.
The present day trend is in exactly the opposite direction. The modern business mania is to build greater and ever greater paper shuffling employers. I still believe that the less overhead there isn't a business, the Better.
And he's not done. He does not hold any punches here. This reminds me a lot of flash wab.
Highly recommend reading less wb s autobiographies. Engage your hands on one charly monger recommended multiple times reading that book. And at the very minimum, just listen to the episode a lush waw, which is episode three thirty.
He's going, he's going to sound, get sounds a lot like swab and swab sounds a lot like getting. And so getting is going going forward. Here, he says any executive can do much Better job if he kills off his business suit once in a while, climbs into a set of overall, and gets his hands dirty down in the plant.
The vice president in charge of purchasing who has fed the raw materials he into a processing fed or molding oven, can do a much Better job of purchasing. He can often learn more by listening to the conversation of a few production workers for an hour. Then he came by reading ten thousand specification seats.
Advertising in sales managers who have Operated live or punch press. And i've actually made a component of the product about which they advertise. We much more convincing and successful in their sales campaigns.
The employee relations expert will have a much clear and Better understanding of employee problems in psychology if he spends more time among the employees and less in his panel, the office dreaming up new morale building gim ics. If you have a business, make sure you're the one who's running IT. If you don't want to accept the headaches of being the boss, then either close the business down or sell IT to someone who will except the responsibility.
E, S. And of course, he ends the essay with a list of history is greater, interpreter urs said he study that did exactly that. They accepted the responsibility is, they paid attention. They were where the work happens, talks about Andrew meli, talks about Andrew carnegie, talks about Harry ford to George hartford. He talks about sample press.
He talks joane rock feller and get his mind is all the information that he learned from reading and studying the great entrance of the past, so we, then he could use in a building his own company. Get is a perfect illustration of that lines. And porter ison act, the fact that there's ideas with billions and get and life and crew, that is literally true.
There's ideas with billions and a thirty dollar history book. And one of the things I love about getting is that he's got this like a deepa to knowledge. He reads vacuously on the topic, but then he, he, he is common sense that he learned to just dealing with Normal workers and being with the work is done.
And you just see that he uses a lot like what I would call common sense and psychology and in action to get his point across without harming his relationship with his employees is really, really good at that. In fact, I love his definition of how he thinks about management. He says the primary function of management is to obtain results through people.
Primary function of manager, except ten results through people. And so IT gives a great example of how he does this. And again, you just like how to win friends and influences people.
He understood how to influence, to build relationships with his suborners, with people that work form. And so he talks about in one of his companies that employee morale was sagging and soon found out why, said several executives had gotten into their heads. They could arrive for work anywhere from thirty minutes to an hour late each morning.
Naturally, this did not set very well. The rank file workers who required to punch time clock and were dark pay if they were tardy. I ve always felt that bad management psychology is best countered by forcefully positive applied psychology.
Listen to what he does is very I did not waste time issuing threats of disciplinary action. I simply announce that I would now be holding daily conference, which I expected all management personnel to be present, and the conference would begin forty five minutes before the start of the regular working day. I lost a bit sleep in the next two weeks, so, but I want a major battle.
My executives got the idea. There is no more habitual tardies, and worker moral was restored. And so then getting provides another example. Hey, we need to meet bad management psychology with forcefully positive applied psychology.
And so he says, I learned an executive had taken some company, company and nails with which he constructed a dog can on his backyard. I felt that he had said a dangerous president, which could lead to all kinds of trouble and cause losses to sore if employees learn that he gotten away with this. Since he was a valuable man, I did not want to fire him and relied on another applied psychology strategy.
I sent the man a pleasant worded memo asking for a detailed inventory of the material he taken and saying I would have a praised and the value charge against salary. The inventory was prepared, the total value was found to be about four dollars, and this sum was duly charged against his pay. I got the point across this message spread throughout the company, and the worker is realizing that not even executives could get away with appropriating company property.
Took the lesson to heart themselves. And something that reappears throughout this book. IT also has mentioned multiple times and and autobiographical. He's really helped out not only like building you mentors and stock context by ratio reading history, but there's always like over businessman that help him out throughout his entire career.
And he learns a very valuable lesson on business leadership from an older, more successful, at the time, older, more successful businessmen. And IT is related to this idea that, you know, you have to take on, you don't panic in that business is problem. So the best companies are just effective problem solving machines.
I remember learning as a youth an invaluable lesson from a man who even then had extensive business holdings and who would later become one of america's wealth est industries. I ran into a one day in the lobby of a chicago hotel. How are things going? I ask them.
Not good, terrible. In fact, he replied with a smile. One of my companies has been shoved into a tight corner by the competition.
Another is Operating in the red, and the third doesn't have the cash to meet its short term debt that fall do this month. So a Young get you like what the hell is smiling about what's happening and get us them like you don't seen. You don't acting like your worried what's going on here.
Paul, i'm not the least bit worried, he answer, to tell you the truth, I needed something like this to get me up on my toes. Everything has been going entirely too smoothly for far too long, and occasional crisis is good for a business man. There is no Better exercise for him.
Then they have a few masses to clean up every now and then. And this is the punch line. The perfect business does not exist.
The perfect business does not exist. Snack difficulties and crisis crop up in every business. The truly great leader views reverses calmly and cool.
He is fully aware that they're bound to occur occasionally, and he refuses to be unnerved by them. And so as uni discussed, when we went over japan, get his automotive phy, he never retired. He worked until the day he died. And one of the reasons, I think in addition to him being completely obsessed and working holic and just completely dedicated to what he was doing, I really think that he believed that you should treat your businesses like this, living, breathing, constantly changing things.
And so there's one paragraph that really illustrates his management stone, the way he in his business, the concept that any status code is perfect and permanent, that one must, under no circumstances, raise questions, voice doubts or seek improvements, can only produce complacency, then stagnation and finally collapse. There is always something wrong everywhere. And all through out these essays, and throughout the entire book is can see giving advice on how he views the accumulation of assets of you wanna be investing and not a speculator you don't want interpret the compounding really the the entire book, he's just teaching us that is all about the long term that you should keep a forces of cash.
You should reinvest in your business, use that sparingly, and doing so we'll help you survive to read long term benefits. And this becomes increasingly value because that goes against human nature. Most people come up to like, hey, you're rich.
How do I get rich but faster? And so get his advice, you can use that important human nature to your benefit. And so he gives this one story where most of the people, the early days, is their own. They were just trying to sell contracts. They had no desire to build a long term business.
And they all look, look, come much money made in twenty four hours and so get tells the story about a guy who bought an oil lease for four thousand dollars twenty four hours later he sells to get for eight thousand and he like, look, look much money. I made a made four thousand dollars in twenty four hours and get is like, yeah, bt, over the next twelve years I made eight hundred grand on that least. All the money is in the long term, you want to own, not trade.
He tells a salary story about, there is a huge real state bubble in miami in the nineteen one. In fact, there's a book writing about IT. My friend Jason book me called bubble the sun, or eventually make an episode about IT.
But getting shares an antidote from this time period where this reality brings this client out, and he shows them this piece of useless swamp plan. And the client said, you're crazy. No one could ever build anything on this. Land is worthless.
So what? The router replied, land down here ain't for owner. It's for trading and get his point as you want to own, not trade.
And so I believe in bedded in these stories about the fact that human, natural, legal stray is why most people don't build wealth. You have to resist the poll to confirm. You have to resist the the pull to imitate people around you.
He is entire essay called the modernized man, which is just as wave after wave of sadness that he sees the Young people coming to business and IT contrast niche with one of his last essays, which is the art of individuals. Getty has an incredible ending to this essay that really ham point of why it's so dangerous to become standardized, to become magism. He says, resist the temptation to force yourself into the pattern of the structured man.
One needs only to remember that the groove may be safe, but that is, time wears away. At IT, the groove first becomes a right, and then finally a grave. And if you go back to the title of the book how to be rich, one of the keys is difference.
One of the keys is rejecting what getty calls the coat of conformity. The successful entrepreneur, the leader, the innovator, is the exceptional man. He is not a conformist, except in his adherents to his own ideals and his own beliefs.
You will find the conformance, the organization man, in an every increasing number in the business world today. He believes that conformity is essential for for success in his career. One of these types was complaining to me that he wasn't getting ahead faster now and ask me if I could offer any advice.
How can I achieve success and wealth and business? He asked. How can I make a million dollars? I can give you any share fire formulas.
I replied, but i'm certain of one thing, you'll ll go much further if you stop trying to look and act and think like everyone else. The conformist only demonstrates that he's on imaginative, unenterprising and mediocre. In contrast, the successful businessman's nonconformity is most obvious and evident in the manner and methods of his business Operations and activities.
These will be unorthodox in the sense that they are radically unlike those of his less imaginative and less successful competitors. Often his in ate impatients with a futurity of superficial conventions and document of all kinds will manifest itself in varying degrees of personal incentive ity. And so he list examples of other great entrepreneurship studies that had the traits.
He talks john e iraq. Ella talks about hour huge. He talks about burbo q. He talks about cond Hilton.
He says, the people that fall into confirming they make a massive mistake, they fall to a fundamental falls acy. The notion that the majority is automatically and invariably rate, such as hardly the case. The majority is by no means of indent, just because IT is the majority.
In fact, this is increment line. In fact, I found that the line which divides majority opinion from mass steria, he's often so fine, has to be virtually invisible. The note I dropped down as a note to myself, think for yourself.
Don't look around. Look in. Don't look around. Look in. The truly successful businessman is essentially a decenter, a rebel who is seldom, if ever, satisfy with the satisfaction.
He creates wealth by constantly seeking and often finding new and Better ways to do and make things in business. The mistake of conformity is sapping the dynamic individualism that is the most Priceless quality and executive or businessmen en can possibly possess. There are many pressures that forced the Young man of today to be a confirm.
He has been boarded from all sides by arguments. He does not understand that the arguments are those of the almost words, and they never will bees who want him, his company, to share the misery of their frustrations and failures. Conforming keeps him a second stream player.
By conforming, he misses the limitless opportunities which today present themselves to the individualist. I want security, he declares. IT is a confession of weakness and characters.
The men who will make their Marks and commerce, industry and finance are the ones with free, willing imaginations and strong, highly individualism personalities. They rely on their own judgment rather than on surveys, studies and committee meetings. They know that every business situation is different from the next, and that no thousand volumes could ever contained enough rules to cover all contingencies.
The successful businessman is no narrows specialist. He knows and understands all all aspects of his business. He can spot a production bottles neck as quickly as he can, an accounting error.
The successful businessman is a leader who solicits opinion and advice from his aborn its, but makes the final decisions, gives the orders and assumes the responsibility for whatever happens. I've said IT before. I'll say that again, there's a fantastic demand for such men in business today.
The non conformist, the leader and the originator has an excEllent chance to make his fortune in the business world. To be truly rich. A man was lived by his own values.
IT has always been my contention that an individual who can be relied upon to be himself and to not confirm, and to be honest and to himself, can be relied upon in every other way. He places value on himself in his principles. And that, in the final analysis, is the measure of the true worth of any man.
And that is where I leave IT highly recommend picking up this little book. You could read IT all the way through. You could pick IT up and read IT S A by esa, but I do think he's got a ton of useful advice here, and I think it's well worth reading.
If you buy the book using the links in the show, you part of player are available. Founders pocket that com. You'll be supporting the podcast at the same time.
That is three hundred and fifty three books down one thousand ago. And I talked again soon. So very crick, I want to tell you about this tool that I built, that if j.
pol. Getty was alive, I know he would subscribe to cause not only in this book on how to be rich, but also his autobiography is constantly reference. You heard IT rock, feler, cond Hilton, Andrew carnegie, Henry ford, Andrew melon. He is consulting, referencing the fact that he study these people that he downloaded into his brain. The ideas that they used to build their business that he could use to build his business.
So after reading the two books that get he wrote, it's obvious that if he was alive, I believe that he would subscribe to founders note because charlie monger said that learning from history's a form of leverage and founders notes to give you the superpower to do this on demand. And when I tell you that years and years of my life has gone into making this tool, that is not an exaggeration. Since two thousand and eight, i've been inputting all of my notes and highlights for every book that i've ever read for this podcast into this APP called read wise.
For years i've been posting about reads on social media. I've mentioned revise on past episodes of this podcast. I would talk about revise when I was interviewed on other podcast, but for years I was the only one that I had access to this tool.
And so last year I approach tristan, who is one of the founders of read wise. I had built a relationship with trust previously, and I said, hey, can we build a tool together? Because for years, people asking if they can have access to my advice.
And so their way we can build a product that allows other people to see what I see, because I think that would be tremendously valuable. And the result is that you now have access in the ability to the giant surtur's database of the collective knowledge of history s greatest entrepreneurs. So there are two primary ways in which I use founders notes in both of these features, I think, be excessively valuable for you.
The first is key words. So any topic that i'm thinking about, any topic that I need help on, any topic that I wanted know more about, I just searched that topic into the search bar. The perfect example of this is one time I was asked by listener, how did his, he's great treaters think about hiring? I literally just type in hiring into the keyword search.
And all the sudden there's ten or fifteen different examples of history customers talking about useful ideas that they discovered on hiring. The second feature, the second way to search the giant searched databases of his death, the knowledge of his news, is by asking sage. Sage is the A.
I. Assistance that Operates on top of founders notes. U. S. Sage, a question. And sage will read all my notes on my highlights and a transcript for every episode and make a concise summary of the ideas for you.
These two features give you superpower because that allows you to access the collective knowledge of history cys entrepreneur's demand when you need IT. And that is not all. I just added a new feature as well.
There is now a private podcast feed with bonus episodes available to every founders. Note scriber, there are already fifty short episodes available. This private pcf e will be updated with new episodes, so all the episodes will be short and focused on one topic.
So episodes could be about a subject like leadership, or about a person like the best ideas of James dyson. In fact, that's the the next episode I M working on right now. You can find instructions on how to set up your private pakistani when you log in the founders notes.
But it's already fifty waiting there for you, and i'm making more right now. So in summer, if you're going to invest and you're going to spend hours and hours listening to different founders abodes, I would encourage you heavily to invest in a subscription for founders notes. IT makes the lessons that you're learning on the podcast even more powerful.
And again, IT gives you the superpower to tap into the collective knowledge of history as good as entrepreneurs on demand. And you can do that easily by going to founders notes, stuck on that is, founders with the next founders notes, doc com and subscribing today. Thank you very much for listening. Thank you very much for the extra support, and I talk to you soon.